MARKS: 150 

TIME: 2 hours 

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. 7. Where applicable, show all calculations to ONE decimal point. 
6. Write neatly and legibly. 

Use the information in the table below as a guide when answering the question  paper. Try NOT to deviate from it.

QUESTION 1: RECONCILIATIONS AND INTERNAL CONTROL (45 marks; 35 minutes) 

1.1 Indicate whether the following statements are TRUE or FALSE. Write only ‘true’ or ‘false’ next to the numbers (1.1.1 to 1.1.5) in the ANSWER BOOK. 

1.1.1 Credit card sales are regarded as cash transactions. (1) 
1.1.2 Businesses that do online banking, do not need to do bank  reconciliations. (1) 
1.1.3 Interest on overdraft is recorded as bank charges. (1) 1.1.4 A credit balance on the bank statement indicates a favourable balance. (1) 
1.1.5 A business must record cash losses immediately when suspected,  according to the materiality concept of GAAP. (1) 

1.2 BANK RECONCILIATION 

You are provided with information from the records of Bird Traders. Sam Sly is  the only person responsible for bank deposits. 

REQUIRED: 

1.2.1 Calculate the correct totals in the Cash Receipts Journal and Cash  Payments Journal for June 2024. Use the table in the ANSWER BOOK. (14) 
1.2.2 Prepare the Bank Reconciliation Statement on 30 June 2024. (7) 
1.2.3 It appears that it will not be possible for Bird Traders to recover the  outstanding deposit dated 24 May 2024 (see Information A). 
Explain ONE point to illustrate a possible cause of the missing deposit. 
Provide ONE action that could be taken against Sam Sly. (4) 

INFORMATION: 

A. Except for an outstanding deposit, R30 000, dated 24 May 2024 received  for cash sales, all outstanding items that appeared on the Bank  reconciliation statement on 31 May 2024 were correctly reflected on the  Bank Statement of June 2024. 
The R30 000 was never deposited into the bank account. Sam Sly cannot  account for the missing cash. Bird Traders decided to write off this amount. 

B. The balance on the bank statement on 30 June 2024 is R40 090  (favourable). 

C. The provisional totals in the cash journals for June 2024, before reconciling  with the bank statement, are: 

• • Total for Cash Receipts Journal, R710 000 
  • Total for Cash Payments Journal, R663 600 

D. The June 2024 bank statement reflected charges for internet banking  R1 800, service fees R510 and interest on the favourable bank balance,  R240.

E. Two direct deposits appeared on the bank statement only:

• • R8 500 from a tenant, G Hair 
  • R15 000 from Super Foods. This seems to be a mistake, as Super  Foods is not known to Bird Traders.  

F. EFT no. 633 for a computer was reflected as R4 850 in the CPJ, but on the  bank statement it was reflected as R8 450. The amount on the bank  statement is correct. 

G. An EFT for R2 450 in favour of Spic and Span for cleaning services was  duplicated on the bank statement. 

H. The following items appeared in the Cash Journals for June 2024, but not  on the bank statement for June 2024: 

• • EFT no. 653, R3 250 
  • Deposit on 30 June 2024, R27 900  

I. The balance of the bank account on 30 June 2024 is the balancing figure.

1.3 CREDITORS’ RECONCILIATION 

You are provided with information from the records of Shark Traders for  June 2024. Shark Traders buys goods on credit from Dragon Suppliers. 

REQUIRED: 

1.3.1 Show the changes to the Creditors Ledger account balance and the Statement balance for each of the differences listed below. Indicate whether the amount must be added (+) or subtracted (-) to the given balance. Use the table provided in the ANSWER BOOK. (13) 

1.3.2 Refer to information (vi): 

An investigation revealed that these goods were ordered by the owner for  his personal use. As an internal auditor, what advice would you offer the  owner regarding the purchase of goods through the business’s accounts? Give ONE point. Make reference to a GAAP principle in your explanation. (2) 

INFORMATION: 

A. Balance of Dragon Suppliers in the Creditors Ledger account, R174 640 (Cr). 
Balance as per statement received from Dragon Suppliers, R190 800 (Dr).

B. An investigation revealed the following differences: 

(i) A payment of R13 000 by Shark Traders was omitted in the Creditors  Ledger Account of Dragon Suppliers and on the Statement received. 

(ii) An invoice for R28 600 received from Dragon Suppliers was recorded  correctly by Shark Traders. The statement of account reflected R26 800. 

(iii) Shark Traders correctly recorded a discount of R1 600 for early  payment. This was not shown on the statement. 

(iv) Shark Traders recorded a debit note for R2 500 in the ledger account  of Dragon Suppliers in error. This was for goods returned to another supplier. 

(v) A credit note for R4 000 received from Dragon Suppliers for an  allowance granted, was incorrectly recorded as an invoice by Shark Traders. 

(vi) The statement of account showed the following items that were not  recorded by Shark Traders: 

• • Delivery charges for the month, R7 060 
  • Invoice for goods purchased, R4 800

(vii) A payment of R10 000 made on 28 June 2024 by Shark Traders, was  recorded in the Creditors Ledger account of Dragon Suppliers. The statement was dated 26 June 2024. 

QUESTION 2: COST ACCOUNTING (50 marks; 40 minutes) 

2.1 Match the concepts in COLUMN A with a description in COLUMN B. Write only  the letters (A–E) next to the question numbers (2.1.1 to 2.1.5) in the ANSWER  BOOK. 

2.2 TENTS FOR AFRICA LTD 

Tents for Africa Ltd manufactures tents for outdoor camping.  

REQUIRED: 

2.2.1 Calculate the direct material cost. (6)

2.2.2 Calculate the factory overhead cost. (11)

2.2.3 Prepare the Production Cost Statement for the year ended 31 May 2024. (10)

INFORMATION: 

A. Stock on hand: 

B. Raw material purchased during the financial year, R1 492 500. 

Carriage paid on raw material purchased, R77 000. 
Raw material returned to suppliers, R1 500. 

C. Factory overheads: 

• Rent expense must be shared between the factory, sales department  and office in the ratio 5 : 1 : 1. 
• The factory is responsible for 75% of the water and electricity expenses.
• ⅔ of the insurance expenses must be allocated to the factory. 
• Indirect material was used as follows: 10% by the offices, 25% by the  sales department and the balance by the factory.

D. 396 tents were produced at a cost of R8 100 each. 

E. Direct labour cost is the balancing amount. 

2.3 BRIGHT LTD 

Bright Ltd produces rechargeable battery units for use during load shedding. The  financial year ended 29 February 2024. 

REQUIRED: 

2.3.1 Calculate the break-even point for the year ended 29 February 2024. (6) 

2.3.2 Compare and comment on the break-even point and the level of  production for 2023 and 2024. Quote figures. (6) 

2.3.3 Provide TWO possible reasons for the increase in direct material cost  per unit for the current financial year and suggest TWO ways in which  this can be controlled. (6) 

INFORMATION: 

A. Costs for the year ended 28/29 February: 

B. Additional information for the financial year ended 28/29 February:  

QUESTION 3: INVENTORY AND INTERNAL CONTROL (30 marks; 25 minutes) 

3.1 Choose the correct answer from the options given in brackets. Write only the  answer next to the question numbers (3.1.1 to 3.1.3) in the ANSWER BOOK. 

3.1.1 The (specific identification / weighted average) stock valuation method is  best suited for similar items, with similar prices which is bought in large  quantities. (1) 

3.1.2 Stock valued according to the (first-in-first-out / weighted average) method  is best suited for stock where technological innovations are important. (1) 

3.1.3 The (specific identification / first-in-first-out) stock valuation method is best  suited for expensive, individually identifiable stock items. (1) 

3.2 INVENTORY VALUATION 

You are provided with information relating to Thandi Traders, owned by Thandi  Buzi. The business sells tracksuits. The business uses the periodic inventory  system and the first-in-first-out (FIFO) method to value their stock. The financial  year ended 30 April 2024. 

REQUIRED: 

3.2.1 Calculate the value of the closing stock on 30 April 2024 using the FIFO  method. (7) 

3.2.2 Calculate: 

• • Mark-up percentage achieved on cost 
  • Stock holding period (in days) using the average stock 

3.2.3 The business tries to achieve a 30% mark-up on cost. 

As the internal auditor, explain TWO points of concern relating to the mark up achieved, that you would investigate, after studying the available information. (4) 

3.2.4 Discuss whether the owner should be satisfied with the stock holding  period. (The stock holding period for 2023 was 30 days.) (4) 

3.2.5 Thandi Traders are planning to donate 10 tracksuits to the local netball club  for an upcoming tournament. The sales manager alleged that this will be a  waste of money and lost profit. 
Explain why you would DISAGREE with him. Provide TWO points. (4)

INFORMATION: 

A. Stock balances for tracksuits: 

B. Purchases and returns: 

C. Sales and cost of sales: 

QUESTION 4: FIXED ASSETS (25 marks; 20 minutes)

4.1 FIXED ASSETS 

The information relates to Zee’s Wholesalers. The financial year ended  29 February 2024.  

REQUIRED: 

4.1.1 Prepare the Asset Disposal account on 31 December 2023. (6) 

4.1.2 Calculate the total depreciation on vehicles for the year ended  29 February 2024. (5) 

4.1.3 Calculate the carrying value of vehicles on 29 February 2024. (5) INFORMATION: 

A. Balances:  

B. Additional information: 

(i) On 31 December 2023 a vehicle was sold for R30 000 cash. No  entries were made for this transaction. 
The cost price of the vehicle sold was R132 400 and accumulated depreciation on the vehicle sold was R86 450 on 1 March 2023.  
(ii) Vehicles depreciate at 15% p.a. on cost.

4.2 MANAGING FIXED ASSETS 

Sam Chauke is the owner of three printing shops. Each shop has its own  manager. Each shop has a laser printer designed for bulk printing of up to  100 000 copies per month. R2,40 per copy is charged. 

REQUIRED: 

Identify ONE problem in relation to each shop, quoting figures in identifying each  problem.  
Provide ONE point of advice for solving each problem identified. (9)

INFORMATION FOR MAY 2024: 

MARKING GUIDELINE

MARKS: 150 

MARKING PRINCIPLES: 

1. Unless otherwise stated in the marking guidelines, penalties for foreign items are applied only if the candidate  is not losing marks elsewhere in the question for that item (no penalty for misplaced item). No double penalty  applied. 
2. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks  on the figures for that item. 
3. Unless otherwise stated, give full marks for the correct answer. If answer is incorrect, mark the workings  provided. 
4. If a pre-adjustment figure is shown as a final figure, allocate the part-mark for the working for that figure (not  the method mark for the answer). NOTE: if figures are stipulated in marking guidelines for component parts  within workings that earn no part marks, these will not carry the method mark for final answer as well. 
5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the  mark. If no + or – sign or bracket is provided, assume that the figure is positive. 
6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from  candidates. 
7. If candidates provide more that the required number of responses, inspect all responses to give benefit to the  candidate. Penalties may be applied for foreign entries if candidates earn full marks on a question (max. -2  per question) 
8. This marking guideline is not for public distribution, as certain items might imply incorrect treatment. The  adjustments made are due to nuances in certain questions. 
9. Where penalties are applied, the marks for that section of the question cannot be a final negative.
10. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer.
11. Operation means 'check operation'. 'One part correct' means operation and one part correct. NOTE: check operation must be +, -, x, ÷ as per candidate's calculation (if valid) or per marking guidelines.
12. In calculations, do not award marks for workings if numerator and denominator are swapped – this also  applies to ratios. 
13. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at  least in part. Indicate with a ⌧. 
14. Be aware of candidates who provide valid alternatives beyond the marking guideline. Note that one  comment could contain different aspects. 
15. Codes: f = foreign item; p = placement/presentation. 

QUESTION 1 

1.1 CONCEPTS 

1.1.1 True ✓ 

1.1.2 False ✓ 

1.1.3 False ✓ 

1.1.4 True ✓ 

1.1.5 False ✓

1.2 BANK RECONCILIATION 

1.2.1 CASH RECEIPTS JOURNAL  

CASH PAYMENTS JOURNAL

1.2.2 Bank Reconciliation Statement on 30 June 2024 

1.2.3 It appears that it will not be possible for Bird Traders to recover the  outstanding deposit dated 24 May 2024. 

Explain ONE point to illustrate a possible cause of the missing deposit.  Any ONE ✓✓ Accept incomplete answers for part marks 

• • Lack of proper internal control 
  • Lack of division of duties makes it easier to carry out fraudulent activities,  undetected [Only No division of duties (one mark)] 
  • Theft of cash by employees with access to it. 
  • Poor cash handling procedures: Inadequate controls or procedures may  result in cash being misplaced or lost. 
  • Insufficient supervision or monitoring of cash-related activities 

Provide ONE action that could be taken against Sam Sly. 

Any ONE ✓✓ Accept incomplete answers for part marks  

• • Disciplinary hearing / Legal action  
  • Recover outstanding amount from his salary 
  • Move Sly to another department 

1.3 CREDITORS’ RECONCILIATION 

1.3.1

Marks awarded for correct sign with amount. Accept the use of brackets for negative amounts *Operation, one part correct for both totals (does not have to be the same total) 

1.3.2 What advice would you offer the owner regarding the purchase of goods  through the business accounts? Give ONE point. Make reference to a  GAAP principle in your explanation. 

Any valid explanation ✓ 
Reference to the GAAP principle ✓ 

• • The owner should not use the business accounts for private use. ● Private use is always recorded as drawings. 
  • The business account will be distorted and not reflect the correct  information of the operation of the business. 
  • Business entity principle 

QUESTION 2 

2.1 CONCEPTS 

2.1.1 B ✓ 

2.1.2 C ✓ 

2.1.3 A ✓ 

2.1.4 E ✓ 

2.1.5 D ✓ 

2.2.1 Calculate the direct material cost. 

84 800 ✓ + 1 492 500 ✓ + 77 000 ✓ – 1 500 ✓ – 75 200 ✓ = 1 577 600 ☑  One part correct 6 

2.2.2 Calculate the factory overhead cost. 

2.2.3 Production Cost Statement for the year ended 31 May 2024. 

2.3 BRIGHT LTD 

2.3.1 Calculate the break-even point for the year ended 29 February 2024.  

2.3.2 Compare and comment on the break-even point and the level of  production for 2023 and 2024. Quote figures. 

Compare BEP with level of production for 2024 (with figures) ✓✓ 
Compare figures for 2023 and 2024 (with figures) ✓✓ 
General comment ✓✓ any acceptable answer 

• • Bright Ltd did not break even in 2024. The break-even was 1 014 (See 2.3.1) and only 960 units were produced and sold / loss made on 54 units. 
  • In 2023 the break-even was 1 016 and units produced and sold were 1 080/  profit made on 64 units / break-even decreased by only 2 units, but units  produced and sold decreased by 120 units in 2024. 
  • The outcomes for 2024 appear unfavourable. The products are popular, but  it is possible that there are many competitors that could have an influence  on the number of units sold. 

2.3.3 Provide TWO possible reasons for the increase in direct material cost per  unit for the current financial year and suggest TWO ways in which this  can be controlled. 

TWO REASONS: 
Any TWO ✓✓ ✓✓ 

• • Theft of material due to poor internal control  
  • Better quality raw material was used 
  • Increase in transport cost/fuel prices 
  • Increase in wastage / untrained workers 
  • New suppliers charge higher prices  

TWO SUGGESTIONS 
Any TWO ✓ ✓ 

• • Improve internal control to prevent theft / Monitor production 
  • Look for cheaper suppliers / buy local to save on transport cost / buy in  bulk to qualify for discounts 
  • Train workers to minimise wastage 
  • Control stock to identify shortages 
  • Use cutting patterns / cutting machines 
  • Maintaining of machines 
  • Use material of better quality / change supplier 
  • Pay bonuses for minimising wastage 
  • Use offcuts for related products

QUESTION 3 

3.1 CONCEPTS 

3.1.1 Weighted average ✓ 

3.1.2 FIFO ✓ 

3.1.3 Specific identification ✓

3 3.2 INVENTORY VALUATION 

3.2.1

3.2.2 

3.2.3

3.2.4

3.2.5

QUESTION 4 

4.1 FIXED ASSETS 

4.1.1 General ledger of Zee’s Wholesalers

Asset Disposal Account 

4.1.2

4.1.3

4.2 MANAGING FIXED ASSETS 

TOTAL: 150