Mid-Year Exemplar 2011

NAME
GRADE

ACCOUNTING

GRADE 12

MID-YEAR EXEMPLAR 2011

SPECIAL ANSWER BOOK

QUESTION

MARKS

INITIAL

MOD.

1

2

TOTAL

This answer book consists of 16 pages.

AccountingMid-year exemplar 2011

QUESTION 1

1.1 / Choose an explanation from COLUMN B that matches a concept in COLUMN A.
COLUMN A / COLUMN B
1.1.1
1.1.2
1.1.3
1.1.4
1.1.5
/
10
1.2 / GENERAL LEDGER / EFFECT ON ACCOUNTING EQUATION
Account debited / Account credited / Amount / Assets / Owners’ equity / Liabilities
Eg. / Audit fees / Expenses payable / R20 000 / 0 / - / +
10 June 2010
11 June 2010
30 Aug 2010
31 Aug 2010
1 Sept 2010
1 Sept 2010
27 Feb 2011
28 Feb 2011
37
TOTAL MARKS
47

QUESTION 2

2.1 / Identify the items that must be entered in the CRJ. /
8
2.2 / Identify the items that must be entered in the CPJ. /
6
2.3 / Bank reconciliation statement on 30 September 2010
/
18
2.4 / Explain how you would treat cheque No. 8247 for R68 000 when preparing the financial statements on 30 September 2010. /
2
2.5 / In your opinion, was it wise of Tiny Traders to invest R50 000 on a fixed deposit on 15 September 2010? Explain your answer. Quote specific figures or details from the question to support your answer. /
3
TOTAL MARKS
37

QUESTION 3

3.1.1 / Use the weighted average method to calculate the number of digital cameras stolen. /
5
3.1.2 / Use the weighted average method to calculate the value of stock on hand on 28 February 2011. /
9
3.1.3 / Use the weighted average method to calculatethe gross profit for the year ended 28 February 2011. /
5
3.2 / The owner, P. Clarence, is considering changing the stock valuation method from the weighted average to the First-In-First-Out (FIFO) method. Calculate the gross profit using the FIFO method. /
7
3.3 / Calculate the value of closing stock using the FIFO method.
Note: Digital cameras were stolen from the last delivery. /
3
3.4.1 / Comment on the results and explain the difference. /
4
3.4.2 / Advise P. Clarence on whether he should change his stock valuation method to the FIFO method. /
3
TOTAL MARKS
36

QUESTION 4

4.1.1 / Briefly explain the following concepts:
Share capital:
Share premium: /
4

4.1.2

GENERAL LEDGER OF LOVELY STUFF LTD

DrAsset disposalCr

2011
Feb / 28 / Equipment / 2011
Feb / 28 / Accumulated depreciation on equipment / 42 000
Debtors control
6

4.1.3LOVELY STUFF LIMITED

INCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2011

Sales / 2 400 000
Gross profit for the year
Other operating income
Operating expenses
Operating profit
Profit before interest expense
Profit before tax
Net profit for the year
42

4.1.4NOTES TO THE BALANCE SHEET ON 28 FEBRUARY 2011

TANGIBLE/FIXED ASSETS / Equipment / Vehicles
140 000 / 19 000
320 000 / 220 000
(180 000) / (201 000)
0 / 120 000
0
(32 000)
260 000
11
4.2.1 / Why would shareholders of any company be concerned about the long-term prospects of the company? Explain, by providing two reasons. /
4
4.2.2 / How does the sale of the 30% of land and buildings affect the company’s sustainability? /
2
4.2.3 / Explain the serious nature of a ‘qualified audit report’. What are the possible consequences for this company? /
4
4.2.4 / Refer to Paragraph 4. Do you agree with the Directors Report on this matter? You somehow remember reading the media last year that there was a court case in which the company was fined R1,8m for disposal of waste in the nearby River. /
3
4.2.5 / As a shareholder you are unhappy with the way in which the directors have managed the company.
Explain two points, including a concept such as transparency.
Are the shareholders to blame in any way? Explain.
Provide a suggestion for the future /
12
TOTAL MARKS
88

QUESTION 5

5.1UMLAZI LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2011
Cash effects of operating activities / 39 500
Cash effects of investing activities
Cash effects of financing activities
Net change in cash equivalents
Cash equivalents – beginning of year
Cash equivalents – end of year
29
5.2 / Calculate the number of new shares that were issued on 1 March 2010. /
4
5.3 / Calculate the price at which each new share was issued on 1March 2010. /
4
5.4 / Calculate the debt equity ratio on 28 February 2011. /
5
5.5 / Umlazi Limited would like to repay the mortgage loan over two years. Do you think this is advisable? Explain your answer by quoting TWO appropriate figures or financial indicators. /
9
5.6 / The directors are of the opinion that the shareholders should be very satisfied with the performance of the company for the financial year ended 28 February 2011.
Explain THREE points to support their opinion. Refer to appropriate financial indicators to support their opinion. /
9
5.6 / As a shareholder owning 10 000 shares in Umlazi Limited, would you sell your shares on the Stock Exchange where the current price is 350 cents. Provide a valid reason by quoting financial indicators or figures to support your answer. /
4
TOTAL MARKS
64

QUESTION 6

6.1 / Explain the difference between VAT INPUT and VAT OUTPUT. /
4
6.2 / Would Billy have to charge VAT on all his sales? Briefly explain. /
3
6.3 / Billy has made FOUR errors when completing his return form. Use the given information to find all the errors that Billy has made and calculate the correct amount payable to or receivable from SARS.
Error 1
Error 2
Error 3
Error 4
Amount payable to/receivable from SARS /
13

AccountingMid-year exemplar 2011

6.4 / Give Billy advice on how he can prevent problems like this in future. Discuss TWO points. /
4
6.5 / Billy is thinking of continuing to claim VAT Input on all zero-rated goods as this will reduce the amount of VAT he has to pay to SARS. Advise him on this decision and the possible consequences. /
4

TOTAL: 300