ACCOUNTING
GRADE 12 
NSC EXAMS PAST PAPERS AND MEMOS SEPTEMBER 2019
PREPARATORY EXAMINATIONS

INSTRUCTIONS AND INFORMATION 
Read the following instructions carefully and follow them precisely. 

1. Answer ALL the questions. 
2. A special ANSWER BOOK is provided in which to answer ALL the questions. 
3. Show ALL workings to earn part-marks.
4. You may use a non-programmable calculator. 
5. You may use a dark pencil or blue/black ink to answer the questions. 
6. Where applicable, show all calculations to ONE decimal point. 
7. Write neatly and legibly.
8. Use the table below as a guide when answering the question paper. Try  NOT to deviate from it.

QUESTIONS 

QUESTION 1: DEBTORS AGE-ANALYSIS AND BANK RECONCILIATION (50 marks; 30 minutes) 
1.1 DEBTORS AGE-ANALYSIS 
The owner of Jumbo Traders, Sumi, approached you for assistance in connection  with managing the debtors. 
REQUIRED: 
1.1.1 Explain how the Debtors’ Age Analysis can assist with the control over  debtors. Provide ONE point. (2) 
1.1.2 Calculate the average debtors’ collection period (in days) for the financial  year ended 31 August 2019. (5)

• Comment on whether the business should be satisfied with this. (2) 

1.1.3 Refer to Information C: 
Identify TWO different problems revealed by the Debtors’ Age Analysis.  
Quote evidence and/or figures. In each case, provide advice to improve  the internal control relating to the problem identified.  (6)  

INFORMATION: 

1. The balance of the debtors’ control was R19 800 on 1 September 2018.
2. Total sales for the year amounted to R750 000.
   40% of sales are for cash and the rest on credit.
3. Debtors’ age analysis on 31 August 2019 

1.2 BANK RECONCILIATION  
You are provided with information relating to Simms Traders for July 2019.
REQUIRED: 
1.2.1 Indicate whether the following statements are TRUE or FALSE. Write  only true or false next to the question number ((a)–(d)) in the ANSWER  BOOK. 

1. A cheque that is more than six months old will not be cashed by the  bank because it is a stale cheque.
2. Service fees and interest on bank overdraft will be recorded as bank  charges in the Cash Payments Journal. 
3. A debit balance on the bank statement reflects an unfavourable  balance. 
4. An internal auditor should inspect the bank reconciliation statement  at the end of each month. (4) 

1.2.2 Calculate the correct totals for the Cash Receipts Journal and the Cash  Payments Journal for July 2019. Use the tables provided. (14) 
1.2.3 Prepare the Bank Reconciliation Statement on 31 July 2019. (10) 
1.2.4 Explain how cheque no. 908 should be treated when preparing the  financial statements on 31 July 2019, the financial year-end. (2) 
1.2.5 Refer to information F.  
The bookkeeper has decided to write off the amount of R50 000. 

• Identify the GAAP principle applied by the bookkeeper. (1)
• Provide TWO suggestions on how a similar problem can be  prevented in the future. (4) 

INFORMATION: 

A. Bank reconciliation statement on 30 June 2019

B. Before receiving the July 2019 Bank Statement, the following provisional  totals appeared in the Cash Journals for July 2019: 

• CRJ R 127 670
• CPJ R 68 900 

C. The Bank Statement for July 2019 reflected the following: 

• Bank charges R1 300
• Interest on overdraft R920 
• Debit order for insurance R600 
• Direct deposit of R1 800 for rent from a tenant. 

D. Cheque no. 892 was issued as a donation. It was not cashed. 
E. Cheque no. 897 did not appear in the July 2019 bank statement. 
F. The outstanding deposit (10 May 2019) cannot be traced and the cashier  at that time has since disappeared. It was decided to write off this amount. 
G. A cheque received from Redman Traders dated 25 November 2019 for  R15 000 was not recorded in the July 2019 Cash Receipts Journal. It was  also not deposited during July. 
H. The following items appear in the July 2019 Cash Journals but not on the  July Bank Statement: 

• A deposit of R18 000, dated 27 July 2019 
• Cheque No. 905, dated 31 July 2019
• Cheque No. 908, R3 100, dated 15 December 2019 was issued to a  creditor D. Hart for supplying goods. 

I. The Bank Statement on 31 July 2019 reflects a credit balance of  R44 040. [50]
QUESTION 2: INVENTORY VALUATION (35 marks; 20 minutes) 
Omega Electronics is a business that sells televisions. The business is owned by Ching Lee. They make use of the WEIGHTED AVERAGE method for stock valuation and use  the periodic inventory system. The financial year ended on 28 February 2019. The  mark-up is 25% on cost. 
REQUIRED: 
2.1 Calculate the following on 28 February 2019: 
2.1.1 Value of the closing stock (10)
2.1.2 Gross profit for the year ended (5) 
2.2 The owner and the accountant disagree on the method of stock valuation.  The accountant wants to use the FIFO method. 
2.2.1 Calculate the stock value on 28 February 2019 using the FIFO method. (7)
2.2.2 Explain the effect on gross profit if the FIFO method is used. (2) 
2.2.3 As an internal auditor, explain the benefits of using the FIFO method to  the owner and the accountant. State TWO points. (4) 
2.3 Ching Lee feels that she was not able to achieve her targeted mark-up % for  2019.  

• Do (or perform) a calculation to confirm whether she is correct. (3)
• Provide TWO suggestions that can be implemented in order to improve  profitability. (4) 

INFORMATION: 
A. Stock of television sets:

B. Purchases and returns of television sets during the year. 

C. Sales for the year, R3 450 300. [35]

QUESTION 3: MANUFACTURING (45 marks; 25 minutes)
3.1 VUMA MANUFACTURERS 
You are provided with information relating to VUMA Manufacturers for the year  ended 28 February 2019. The business produces handbags.
REQUIRED: 
3.1.1 Prepare the following notes to the Production Cost Statement: 

• Direct labour cost (6)
• Factory overhead cost (10) 

3.1.2 Prepare the Production Cost Statement for the year ended  28 February 2019. (10)
INFORMATION: 
A. Stock on hand on 1 March 2018 

B. Stock on hand on 28 February 2019: 

C. Raw materials 

• Raw materials purchased during the year amounted to R1 450 000.
• Raw materials costing R19 000 were returned to the supplier. 

D. Labour 

• The factory has five workers involved in production. Together they  worked a total of 800 hours per month at R50 per hour (normal time).  Only three workers worked 60 hours each per month for overtime  during the current financial year.  The overtime rate is 1½ times the normal rate.
• The employer contributes 1% of normal wage to UIF for all employees.
• Indirect labour amounts to R135 340 including benefits.

E. Figures obtained from the Trial Balance: 

Additional information relating to the above: 

• The water and electricity bill are shared among factory, office and  sales departments in the ratio 4 : 2 : 1.
• 75% of all sundry expenses relate to the factory.
• Rent remained unchanged throughout the financial year. Rent is  allocated according to floor area occupied, as follows: 1 500 square  meters, 500 square meters and 400 square meters for factory, sales  and office departments respectively.
• Insurance cost on equipment is split amongst factory, sales and  office as follows:
  • Factory R48 500
  • Sales 37 400 
  • Office 22 100 

3.2 JPC MANUFACTURERS 
The information relates to JPC Manufacturers consisting of two factories  producing different products: Suitcases and laptop bags. 
The owner, JP has found out that his profit has declined from 2018 to 2019. He  asks for advice.  
REQUIRED: 
3.2.1 Identify ONE variable cost that is not well controlled in each department. Quote figures. In each case, provide a solution for the problem identified. (8) 
3.2.2 Calculate the break-even point of suitcases for 2019. (4) 
3.2.3 Explain whether the business should be satisfied with the production of  suitcases. Quote figures. (3) 
3.2.4 JP wants to adjust the selling price of ONE of the products. What advice  would you offer him? Provide a valid reason for your suggestion by  quoting relevant figures. (4)
INFORMATION: 

[45]

QUESTION 4: FINANCIAL STATEMENTS (60 marks; 35 minutes) 
4.1 Choose the correct description in COLUMN B to match the concept in  COLUMN A. Write only the letters (A–E) next to the question numbers  (4.1.1–4.1.5) in the ANSWER BOOK. 

4.2 CDJ LTD
The information relates to a public company with an authorised share capital of  1 500 000 ordinary shares. The financial year-ended 28 February 2019. 
REQUIRED:  
4.2.1 Complete the Retained Income Note to the Statement of Financial  Position (Balance Sheet). (12) 
4.2.2 Complete the Statement of Financial Position (Balance Sheet) on  28 February 2019. (35) 
4.2.3 At the annual general meeting, the board of directors proposed the  following TWO programmes:  

• Programme 1 R1 500 000 to be allocated for staff training and  development initiatives during the next two financial  years. 
• Programme 2 R1 000 000 to be spent on the upliftment of the  computer facilities at three local schools.  

Vic Pienaar, a young shareholder, was not pleased about this proposal.  He feels that greater dividends should be given to shareholders. 

• Explain why the directors included these proposals in their directors  report. Provide TWO points. (4)
• Provide a different benefit of each of the programmes proposed, to  the company. (4)

INFORMATION: 
A. Balances/Totals on 28 February 2019: 

B. Additionalinformation
(i) Share Capital: 

(ii) Loan agreement with Central Bank: 

• The interest on loan is capitalised. 
• R150 000 of the loan will be paid in the next financial year.

(iii) Dividends: 

• An interim dividend of 30 cents per share was paid on  31 August 2018.
• A final dividend of 22 cents per share was declared on 28 February  2019 and must still be brought into account.

(iv) The following adjustments must be taken into consideration for the  drafting of the Balance Sheet only: 

• The rent for February 2019 was not received yet. The space was  rented out since 1 December 2018.
• An additional insurance policy on granite saws was taken out on  1 October 2018. The annual premium of R13 440 was paid. 
• Consumable stores on hand, R1 580. 
• A debtor owing R35 000 was declared insolvent. No entry was made.
• The provision for bad debt must be adjusted to R6 000.
• Audit fees of R9 000 are still outstanding on 28 February 2019. 

(v) Net profit and income tax: 
Income tax for the year was calculated at 30%. 
Net profit before tax is R1 085 600 after all adjustments above were  taken into account. [60]

QUESTION 5: CASH FLOW AND INTERPRETATION (80 marks; 50 minutes) 
The following information relates to Frankfurt Ltd that distributes perfumes to  retailers. The financial year ended on 31 August 2019. 
REQUIRED: 
5.1 Calculate the following concerning the cash flow statement: 
5.1.1 The cash generated from operations (15)
5.1.2 The cash flow from investing activities (10)
5.1.3 The cash flow from financing activities (7)
5.1.4 The net change in cash and cash equivalents (5) 
5.2 Calculate the following financial indicators for 2019: 

• Acid test ratio (4)
• Debt-equity ratio (4)
• Net asset value per share (4)
• Percentage return on total capital employed (8) 

5.3 It was a good decision for the directors to increase the loan. Explain by quoting  TWO financial indicators with figures to support the director’s decision. (6) 
5.4 One of the shareholders wants to sell his shares at 550 cents per share. Explain  why the business should not repurchase these shares. Quote TWO financial  indicators (with figures) to support your opinion. (4) 
5.5 Identify TWO major decisions taken by the directors, as evident from the Cash  Flow Statement. Quote figures. Explain how these decisions would benefit the  business in future. (8) 
5.6 Lee Jenkins owns 20 000 shares in the company. She is not satisfied with the  low dividends she obtained this year.  

• Calculate the amount of dividends she obtained. (2)
• Explain to her why you think the directors changed the dividend pay-out  policy this year. Quote figures. (3)

INFORMATION: 
A. Extract from the Income Statement on 31 August 2019: 

B. Extract from the Balance Sheet on 31 August: 

C. Additional information: 
(i) Ordinary share capital: 

(ii) Extract from Retained income: 

(iii) Fixed assets 

• Fixed assets were bought during the year for R? 
• Fixed assets were sold during the year at book value, R225 000. 

(iv) Trade and other receivables:

(v) Trade and other payables: 

D. Financial indicators: 

[80]

QUESTION 6: CASH BUDGET (30 marks; 20 minutes) 
You are provided with information relating to Stutt LTD. The financial year of the  business ended on 31 July 2019.  
REQUIRED: 
6.1 Provide ONE point why is it a good idea to compare actual figures against  budgeted figures. (2) 
6.2 Refer to the Cash Budget under Information D: 
Identify TWO items that were incorrectly entered in the Cash Budget (2)
6.3 Complete the Debtors Collection Schedule for July 2019. (7)
6.4 Calculate the following: 
6.4.1 Percentage increase in salary and wages with effect from July 2019. (3)
6.4.2 Missing figures, (i) and (ii), in the extract of the Cash Budget. (8) 
6.5 At the end of July 2019 you identified the following when comparing the  budgeted against the actual figures: 

• Explain what you would mention to shareholders about each of the  following items at the end of July 2019.
• In each case advise what effect these items will have on the company. (4) 

6.6 Shareholders are thinking of purchasing the business premises rather than  renting it. 
Explain ONE advantage and ONE disadvantage of this option. (4)
INFORMATION: 
A. Sales, purchases of stock and cost of sales: 
Total sales for April 2019 to July 2019 were as follows:

• 40% of all sales are cash, the rest is on credit. 
• The mark-up is 60% on cost of sales at all times. 
• Stock is replaced on monthly basis. 
• 70% of all purchases are cash, the rest is on credit. 

B. Debtors’ collection: 
Debtors are expected to pay as follows: 

• 30% are expected to pay their account in the month of sale (current) to  qualify for 2,5% discount for early payment. 
• 50% pay in the month following the sales transaction month (30 days).
• 18% pay in the second month (60 days). 
• 2% are written off. 

C. Creditors’ payment: 
Creditors are paid in the month after purchases. 
D. STUTT LTD 
Extract from cash budget for June and July 2019 

[30 ]

TOTAL: 300