ACCOUNTING
GRADE 12 
NSC PAST PAPERS AND MEMOS
FEBRUARY/MARCH 2017

INSTRUCTIONS AND INFORMATION 
Read the 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 information in the table below as a guide when answering the  question paper. Try NOT to deviate from it. 

QUESTION 2: 40 marks; 25 minutes 

QUESTION 3: 75 marks; 45 minutes 

QUESTION 4: 70 marks; 40 minutes 

QUESTION 5: 45 marks; 25 minutes 

QUESTION 6: 40 marks; 25 minutes

QUESTIONS

QUESTION 1: VAT AND RECONCILIATION (30 marks; 20 minutes)
1.1 CONCEPTS 
REQUIRED: 
Choose a description from COLUMN B that matches the term in COLUMN A.  Write only the letter (A–D) next to the question number (1.1.1–1.1.3) in the  ANSWER BOOK, for example 1.1.4. E. 

(3 x 1) (3) 

1.2 VALUE-ADDED TAX (VAT) 
Thanda Traders is a VAT-registered business. All items are subject to VAT  at 14%. 
REQUIRED: 

1.2.1 Calculate the amount of VAT either receivable from or payable to SARS on 31 July 2016. Indicate whether this amount is receivable  or payable. (9) 
1.2.2  The owner wants to change the VAT amount on bad debts from  R840 to R4 200. Give ONE reason why you would disagree with  him. (2) 

INFORMATION: 
The following transactions relate to Thanda Traders for the VAT period ended  31 July 2016:

1.3 BANK RECONCILIATION 
The following information relates to Sizwe Traders for July 2016. REQUIRED: 

1.3.1 Calculate the correct balance of the Bank Account in the General  Ledger on 31 July 2016. State if this balance is favourable or  unfavourable. (8) 
1.3.2 Prepare the Bank Reconciliation Statement on 31 July 2016. (6) 
1.3.3  Refer to Information C. Explain ONE internal control measure that the business should  implement to ensure that this will not happen in the future. (2) 

INFORMATION: 
A. Extract from the Bank Reconciliation Statement on 30 June 2016: 

B. The balance in the Bank Account was provisionally calculated as a  favourable balance of R16 785 on 31 July 2016, before taking into  account the items listed below. 
C. Cheque No. 186 does not appear on the Bank Statement for  July 2016. 
D. The following items appeared only on the July Bank Statement: 

• Interest earned on favourable bank balance, R285 
• Bank charges, R950 
• Unidentified debit order of R1 950. The bank promised to  correct this error on the August 2016 Bank Statement. 

E. Cheque No. 374 appeared correctly on the Bank Statement as  R8 450. The Cash Journal shows it as R4 850. 
F. The outstanding deposit of R37 800 does not appear on the Bank  Statement for July 2016. An investigation revealed that this money  was never deposited. The cashier has disappeared. 
G. The following entries were only in the Cash Journals for July 2016: 

• A deposit of R27 180 made on 31 July 2016 
• Cheque No. 401 (dated 18 July 2016), R18 600 

H. The balance on the Bank Statement on 31 July 2016 is the missing  figure. 

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QUESTION 2: INVENTORY VALUATION AND PROBLEM-SOLVING (40 marks; 25 minutes) 
2.1 CONCEPTS 
Complete the following sentences by filling in the missing words. Write only  the words next to the question number (2.1.1–2.1.3) in the ANSWER BOOK. 

2.1.1 The method that is appropriate for very expensive, individually  recognisable items is the … method. (1) 
2.1.2 The method that assumes that the older stock is sold first is the …  method. (1) 
2.1.3 The method that divides the total cost of goods available for sale  by the number of units is the … method. (1) 

2.2 AB SPORT SHOP 
André Brand is the owner of this business. This business uses the periodic  inventory system. 

2.2.1 Calculate the unit price of cricket bats on 1 July 2015. (2) 
2.2.2 Calculate the value of the stock on hand on 30 June 2016 using  the weighted-average method. (10)
2.2.3 Calculate the gross profit on 30 June 2016. (5) 
2.2.4 Calculate how long (in days) it is expected to sell the closing stock  of 465 cricket bats. Use the closing stock in your calculation. (4) 
2.2.5 André is concerned about the control of cricket bats.  (5) 

• • Provide a calculation to support his concern.
  • How can André solve this problem? Explain ONE point. (2)

INFORMATION: 
A. STOCK OF CRICKET BATS 

B. PURCHASES, RETURNS AND CARRIAGE 

C. SALES 
Total sales of R5 400 000 comprised 3 000 cricket bats sold at R1 800 each.
2.3 PROBLEM-SOLVING 
Best Phones sells one brand of cellphone. The owner, Bennie Roos, has three  branches in different shopping malls. The table below reflects annual figures of  the branches for the financial year ended 28 February 2017 as presented by  the bookkeeper. 
REQUIRED: 
Identify ONE problem relating to each branch. Quote figures to support your  answer. In EACH case, offer Bennie advice. (9) 

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QUESTION 3: COMPANY FINANCIAL STATEMENTS AND INTERPRETATION (75 marks; 45 minutes) 
You are provided with information from the records of Gandhi Ltd for the financial year  ended 28 February 2017. 
REQUIRED: 
3.1 Complete the Income Statement for the year ended 28 February 2017. Note  that some information is included in the ANSWER BOOK. (33) 
3.2 Prepare the following notes to the Balance Sheet: 

3.2.1 Ordinary share capital (10) 
3.2.2 Retained income (10) 

3.3 Complete the EQUITY AND LIABILITIES section of the Balance Sheet.  Show workings in brackets. (16) 
3.4 On 1 March 2016, B Sly (a shareholder) owned 400 000 ordinary shares.  On 31 March 2016, she bought an additional 80 000 shares.  On 28 February 2017, she convinced the CEO to repurchase 250 000 shares  from other shareholders. 

3.4.1 Calculate B Sly's percentage shareholding in the company before  and after the share buy-back. (4) 
3.4.2 Explain why the other shareholders will be concerned about this  transaction. (2) 

INFORMATION: 
A. The following balances/totals, amongst others, appeared in the books on 28 February 2017: 

B. The gross profit for the year ended 28 February 2017 was calculated at  R3 150 000. A mark-up of 60% on cost was achieved.
C. The following adjustments must still be brought into account: 

• Stocktaking on 28 February 2017 reflected trading stock of R207 500 on  hand. 
• Provision for bad debts must be increased to R21 600. 
• One third (1/3) of the audit fee was still due on 28 February 2017. 
• One of the three directors is still owed his fee for February 2017. All three  directors received the same monthly fee. 
• A vacant storeroom was rented out from 1 June 2016.  On 1 January 2017 the rent was increased by R2 700 per month. The  rent for February 2017 is outstanding. 
• Sundry expenses are the balancing figure. 

D. Loan: Anca Bank 
Interest on the loan is capitalised, but no entry has been made in the books. A monthly instalment of R5 200 (including interest) is paid. This was taken  into account. The loan statement showed a closing balance of R487 000. The  company plans to increase their loan repayments in order to settle 20% of the  loan balance in the next financial year. 
E. Operating profit on sales was 14,5%. 
F. Income tax at 32% of the net profit amounted to R396 800. 
G. Share capital and dividends: 

• The company is registered with an authorised share capital of 1 200 000  ordinary shares. 
• 85% of the authorised shares were in issue on 1 March 2016. 
• On 31 March 2016, the directors issued all the unissued shares.  EFT payments totalling R756 000 were received. 
• On 27 February 2017, the company repurchased 250 000 shares at  R4,15 per share. 
• An interim dividend was paid on 6 September 2016. 
• A final dividend of 25 cents per share was declared on 28 February 2017.  All shareholders (including the shares repurchased) were entitled to final  dividends. This must still be brought into account. 

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QUESTION 4: CASH FLOW STATEMENT AND INTERPRETATION (70 marks; 40 minutes) 
4.1 CONCEPTS 
Choose the correct term to complete each of the following statements.  Write only the term next to the question number (4.1.1–4.1.4) in the  ANSWER BOOK. 

4.1.1 An increase in trading stock will indicate a/an … (1) 
4.1.2  The difference between current assets and current liabilities is  referred to as … (1) 
4.1.3 … is regarded as a non-cash item. (1) 
4.1.4 A decrease in debtors will indicate a/an … (1) 

4.2 BRAZILIA LTD 
The following information relates to Brazilia Ltd for the financial year ended  31 October 2016. 
REQUIRED: 

4.2.1 State ONE purpose of a Cash Flow Statement.  (2) 
4.2.2 Complete the Cash Flow Statement for the year ended  31 October 2016. Some of the figures have already been entered  for you. (27) 
4.2.3 Calculate the following financial indicators for the financial year  ended 31 October 2016. Round off your calculation to ONE  decimal point or to the nearest cent, where applicable. 

• • Acid-test ratio  (4)
  • % return on shareholder's equity (ROSHE) (4)
  • Earnings per share (EPS) (3) 

INFORMATION: 
A. Extract from the Income Statement for the year ended  31 October 2016:

B. Figures identified from the Balance Sheet on 31 October: 

C. Figures extracted from the notes to the Balance Sheet on 31 October: 

D. Share capital 

• The authorised share capital of the company is 5 000 000 shares. 
• 700 000 shares were in issue on 31 October 2015, the last day of  the previous financial year. 
• 120 000 new shares were issued on 1 November 2015, the  beginning of the current financial year. 
• 20 000 shares were repurchased on 31 October 2016 at R15,50  each. The average issue price of the shares on the date of  repurchase was R9,10 per share. These shares qualify for final  dividends. 

E. Dividends 
The directors paid an interim dividend of R533 000 on 28 May 2016.

F. Fixed assets 

• Extensions to the building were undertaken at a cost of R1 360 000  during the financial year. No other fixed assets were purchased. 
• Equipment was sold at carrying value during the financial year.

4.3 GRAYSON LTD AND JONI LTD 
The financial indicators and other information given refer to TWO different  companies, Grayson Ltd and Joni Ltd. Both companies are listed on the stock  exchange. 
NOTE: When answering the questions below, quote the relevant financial  indicators with actual figures (percentages/ratios and/or amounts). 
REQUIRED: 

4.3.1 Which company is NOT handling its working capital effectively?  Explain what the main problem is in respect of their working capital,  by quoting TWO financial indicators. (7) 
4.3.2 The companies have made different decisions regarding the use of  loans. Comment on the degree of risk and financial gearing. Give ONE financial indicator in EACH case for EACH company. (7) 
4.3.3 The dividend policy used by each company has been maintained  for the past four years. Explain the policy used by EACH company. Provide figures to support your explanation in EACH case. (6) 
4.3.4 Should EACH company be satisfied with its share price on the  JSE? Explain. Provide figures. (6) 

INFORMATION: 
The following financial indicators/other information is from the records of  Grayson Ltd and Joni Ltd on 31 March 2016, the financial year-end: 

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QUESTION 5: MANUFACTURING (45 marks; 25 minutes)
5.1 MOSES MANUFACTURERS 
The following information relates to Moses Manufacturers, a small business  that manufactures photo frames. The financial year ended on 30 April 2016. 
REQUIRED: 

5.1.1 Prepare the Production Cost Statement for the year ended  30 April 2016.  (16)
5.1.2 Complete the abridged (shortened) Income Statement to calculate  the net profit for the year ended 30 April 2016.  (8) 

INFORMATION: 
A. 

• Purchases of raw materials for the financial year amounted to  R555 000. 
• Defective material valued at R21 000 was returned to suppliers. 

B. The business produced 39 000 units at a cost of R45 each.
C. The following information was calculated on 30 April 2016.  

D. The following items must be taken into account: 

• Administration cost includes the annual insurance premium of  R22 750; however, 60% must be allocated to the factory. 
• Factory overhead cost includes the full amount of rent paid, R36 300. However, this should have been allocated according to floor area.  The areas are: factory 400 square metres, office 120 square metres,  shop 80 square metres.

5.2 UNIT COSTS AND BREAK-EVEN ANALYSIS 
Bill's Manufacturers is a business that produces pencil cases. Bill is  concerned about his cost of production. 
REQUIRED: 

5.2.1 Explain the difference between fixed cost and variable cost. (2) 
5.2.2 Calculate the break-even point for 2017. (5) 
5.2.3 Comment on the break-even point and the level of production for  2016 and 2017. Explain why the owner should be satisfied or not. (6) 
5.2.4 Identify the variable cost that should be of great concern to the  owner. Explain and provide a calculation to support your answer. (4) 
5.2.5 Despite the fact that there was a decrease in the fixed costs per  unit, the owner is still not satisfied with his control over the fixed  costs. Explain and provide calculation(s) to support his opinion. (4) 

INFORMATION: 

NOTE: Take the inflation rate of 8% into account. 

45

QUESTION 6: BUDGETING (40 marks; 25 minutes) 
You are provided with the incomplete Debtors' Collection Schedule and Cash Budget  of Zeppe Bazaar. 
REQUIRED: 

6.1 Calculate the expected monthly percentage of goods sold on credit. (4) 
6.2 Complete the Debtors' Collection Schedule for March 2017. (5) 
6.3 The owner wants to improve the control over debtors. Credit terms are  30 days. 

6.3.1 Explain why the owner is concerned. Give TWO reasons with  supporting figures. (4) 
6.3.2  Suggest ONE solution for this problem. (2) 

6.4 Calculate the following: 

6.4.1 (a) and (b) as provided in the budget. Use budgeted figures in your  calculations. (11)
6.4.2 The percentage increase in rent on 1 March 2017  (4) 
6.4.3 The amount of the interest on the investment expected to be  received in March 2017  (4) 

6.5 Refer to Information H. 
Identify TWO payments that you consider to be poorly managed in  February 2017. In EACH case, give a suggestion to improve the internal  control of the items identified. (6) 
INFORMATION: 
A. The Debtors' Collection Schedule for February and March 2017 

B. Debtors are expected to pay as follows: 

• 35% is paid in the month of sale. They receive a 2% discount. 
• 40% is paid in the month following the sales month. 
• 22% is paid two months after the sales month. 
• 3% is bad debts.

C. All goods are sold at a profit mark-up of 25% on cost. 
D. Stock sold is replaced in the month of sale (a stock base is maintained). 
E. All stock is purchased on credit. Creditors are paid in the month following the  month of purchase to receive a 5% early settlement discount. 
F. The business employs four sales assistants on the same salary scale. They  will receive an inflationary increase of 7,5%, effective from 1 March 2017. An  additional sales assistant will be employed on 1 March 2017, but she will not  receive the increase. 
G. A fixed deposit matures on 31 March 2017. This will be received together with  interest at 8% p.a. for the last quarter of its term. 
H. EXTRACT FROM BUDGET FOR FEBRUARY 2017 AND MARCH 2017 

I. DEBTORS' AGE ANALYSIS ON 28 FEBRUARY 2017 

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TOTAL: 300