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 Basic Education
KwaZulu-Natal Department of Education
REPUBLIC OF SOUTH AFRICA

ACCOUNTING

MEMORANDUM

APRIL 2021

NATIONAL
SENIOR CERTIFICATE

GRADE 12

MARKS: 100

MARKING PRINCIPLES:

1. Penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for
that item. No double penalty applied.
2. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect.
3. Where penalties are applied, the marks for that section of the question cannot be a final negative.
4. Codes: f=foreign item; p=placement

This memorandum consists of 6 pages.

Accounting (Grade 212) April 2021 Common Test
NSC

QUESTION 1

1.1 Statement of Comprehensive Income for the year ended 28 February 2021.
Sales (8 800 000 – 19 2003 – 99 2003) Operation one part correct 8 681 600 5
Cost of sales (8 681 600 + 360 000)100/160 Two or nothing (5 651 000) 33
Gross profit Operation 3 030 600 5
Other operating income Operation one part correct 71 500 5
Rent income 70 500 3
10 Provision for bad debts adjustment (3 240 – 2 240) Two or nothing 1000 33

Gross income 3 102 100

Operating expenses Operation (1 799 860) 5
Salaries and wages (681 600 – 20 0003 – 4 0003) 657 600 5
Operation one part correct
Advertising (60 000 – 2 8803) 57 120 3
Bad debts ( 6 730 + 42 0003) 48 730 3
Packing material (15 000 + 8203 – 6 0203) Operation one part correct 9 800 5
Directors fees 550 000 3
Audit fees 188 410 3
Insurance 14 700 3
Trading stock deficit (1 050 300 + 62 000 – 1 002 000) Two or nothing 110 300 33
Depreciation (119 999 3+ 14 800 3) 134 799 5
4 500 + 10 300 Operation one part correct
20 Sundry expenses Balancing figure 28 401 5

Operating profit Candidate must use 15% on sales 1 302 240 5

Interest income 1. 80 000 3
Operating profit before interest expenses Operation 1 382 240 5
Interest expense 2. (182 240) 3
Net profit before taxation 1 200 000 3
Taxation (360 000) 3
7 Net profit after tax 840 000 3 37
Foreign entry -1 max -2

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Accounting (Grade 312) April 2021 Common Test
NSC
1.2 RETAINED INCOME
balance at the beginning (1 480 0003 + 140 0003) 1 620 000 5
Operation one part correct
Buy back of shares (100 000 x 1.40) Two or nothing (140 000) 33
Net profit after tax 840 000 3
Ordinary share dividends Operation one part correct (500 000) 5
Interim dividends (600 000 x 0.30) 180 000 3
Final dividends (800 000 X 0.40) 320 000 3
Balance at the end Operation one part correct 1 820 000 5 10

1.3.1 To whom is the audit report addressed?

Shareholders 3
1

1.3.2 Other than the shareholders list TWO other parties that will be interested in the
audit report of the company. Briefly explain why each would be interested.
PARTY  REASON
Party and a reason 3
Potential new investors To determine whether they can rely on the information in
the financial statements when making investments.
Banks To determine whether they can rely on the information in
the statements when making decisions relating to
lending the company money.
SARS To determine whether they can rely on the information in
the financial statements when assessing the company’s
tax.
Competitors To determine whether they can rely on the information in
the financial statements when comparing their results
with those of the company.

TOTAL MARKS

50

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Accounting (Grade 412) April 2021 Common Test
NSC
QUESTION 2

2.1
2.1.1 C3
2.1.2 E3
2.1.3 A3
2.1.4 D3 4

2.2.1 CACULATION ANSWER

INCOME TAX PAID

296 600 3 + 12 700 3 + 27 200 3 (336 500) 5

4
Award operation if one part correct, final answer must have brackets.

DIVIDENDS PAID

111 000 3+ 317 400 3 – 142 400 3 (286 000) 5

Or 4
111 000 + 175 000
Award operation if one parts correct, final answer must have brackets.

FIXED ASSETS PURCHASED

1 437 200 3+ 221 400 3+ 283 500 3– 1 120 400 3 (821 700) 5 5
Or
1 120 400 – 1 437 200 – 221 400 – 283 500

Award operation if one parts correct, final answer must have brackets.

2.2.3 Net change in cash and cash equivalent 185 5503

Cash and cash equivalent at the beginning (108 800) 3

(15 500 – 124 300)
Cash and cash equivalent at the end 76 7503
3

TOTAL MARKS

20

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Accounting (Grade 512) April 2021 Common Test
NSC

QUESTION 3

3.1
3.1.1 D 3
3.1.2 B 3 3
3.1.3 A 3

3.2
3.2.1 Net asset value per share

4 488 000 3 x 100

880 000 3

510 cents 5 Operation one part correct

3

Return on shareholders’ equity

545 600 3 x 100

½ 3 ( 4 488 000 3 + 3 724 000 3) 1

545 600 x 100

4 106 000 1
Three marks
13.28% or 13.3% 5 Operation one part correct 5

3.2.2 Quote TWO financial indicators (with figures and trends) that indicate an
improvement in the liquidity position of the business.

Indicator 3 3 trend 3 3
Current ratio improved from 1.4 : 1 to 1.9 : 1 by 0.5
Average debtors collection period improved from 57 days to 30 days by 27
days

Do not accept acid test ratio and average creditors’ payments period.

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Accounting (Grade 612) April 2021 Common Test
NSC

3.2.3 The company paid back a large portion of the loan. Explain why this was
a good decision. Quote TWO financial indicators (with figures).

Indicator, trend 3 3 33 Explanation 3 3

Debt/equity ratio decreased/improved from 0.5 : 1 to 0.2 : 1 by 0.3

This indicate a low risk

ROTCE is 20.8% above the interest rate of 11%, by 9.8% 6

This indicate a positive gearing

3.2.4 Comment on the dividend pay-out policy over the past two years.
Provide a possible reason for the policy adopted. Quote figures.
Comment on EPS and DPS for 2020 (with figures): 33

The company paid 52 cents of 65 cents earned, the company distributed

(80%).
OR Only 20% of the net profit was retained.

Comment on EPS and DPS for 2021 (with figures): 33

The company paid 31 cents of 62 cents earned, the company distributed

(50%).
OR 50% of the net profit was retained.

Reason for change 3

Bigger % was retained for future expansion/growth. 5
Efforts being made to increase profitability or to address cash flow problems.

3.2.5 Explain whether the price paid for the share buy-back was fair. Quote
TWO financial indicators (with figures) in your explanation.

Indicator and trend 33 33

The buy- back price was 510 cents per share equal to the NAV of 510 cents,
the price was fair

Market price on JSE is 515 cents per share while shares have been bought
back at 510 cents per share.

TOTAL MARKS

30

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