ACCOUNTING GRADE 12

EASY MARKS

PAPER
ONE

2023

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 SUMMARY OF ACCOUNTING CONTENT ACROSS TWO PAPERS
Grade 12 Implementation date: 2020
GRADE 12: PAPER 1 GRADE 12: PAPER 2
Recording, Reporting and Evaluation of Financial Information & Corporate Manufacturing, Forecasting & Internal Auditing and Control
Governance
12.1.1 Concepts relating to companies 12.2.1 Analysis & interpretation of reconciliations: bank, debtors, creditors, age-analysis
12.1.2 Concepts relating to GAAP & IFRS 12.2.2 Value Added Tax - Input, Output & calculations
12.1.3 Unique ledger accounts of companies & interpretation thereof 12.2.3 Manufacturing concepts
Manufacturing: Production Cost Statement & Notes; Abridged (short-form) Income
12.1.4 Accounting equation of companies 12.2.4
Statement & Notes
12.1.5 Adjustments & final accounts of companies; Trial balances 12.2.5 Analysis & interpretation of cost information, unit costs & break-even point
12.1.6 Income Statement (Statement of Comprehensive Income) of companies 12.2.6 Analysis & interpretation of Cash Budget for sole traders and companies
12.1.7 Balance Sheet (Statement of Financial Position) & Notes of companies 12.2.7 Analysis & interpretation of Projected Income Statement for sole traders and companies
12.2.8 Application of internal control & audit processes: cash, fixed assets, inventories, debtors,
12.1.8 Cash Flow Statement of companies
creditors, income & expenses (including salaries/wages) & including financial indicators #
12.1.9 Analysis and interpretation of financial statements of companies * 12.2.9 Recording & control of fixed assets including depreciation & asset disposal
Analysis and interpretation of published financial statements & audit report of
12.1.10 12.2.10 Perpetual and periodic stock systems; valuation and control of inventories
companies
Valuation of fixed assets for reporting purposes including additions, depreciation
12.1.11 12.2.11 Ethical behaviour in financial environments
& disposal
12.1.12 Ethical behaviour and corporate governance in financial environments
12.1.13 Inventory valuation for reporting purposes (FIFO, WA & Specific Identification)
12.1.14 Professional bodies & Code of conduct
12.1.15 Legislation governing companies (overview only)
12.1.16 Close corporations (not examinable)

* Financial Indicators for Financial Reporting (Grade 12 Paper 1)
Gross profit on sales; Gross profit on cost of sales; Net profit on sales; Operating expenses
on sales; Operating profit on sales; Current ratio; Acid test ratio; Stock turnover rate; Stock
holding period; Average debtors’ collection period; Average creditors’ payment period;
Solvency ratio; Debt equity ratio (gearing); Return on shareholders’ equity; Return on total
capital employed; Net asset value per share; Dividends per share; Earnings per share;
Dividend pay-out rate
# Financial Indicators for Internal Control (Grade 12 Paper 2)
Profitability - Gross profit on cost of sales; Net profit on sales; Operating expenses on sales;
Operating profit on sales
Liquidity - Stock turnover rate; Stock holding period; Average debtors’ collection period; Average
creditors’ payment period
 PAPER ONE EASY MARKS

INCOME STATEMENT - EASY MARKS

STATEMENT OF COMPREHENSIVE INCOME - 28 FEBRUARY 2023

* one part correct
Sales 14 677 200 *
Cost of sales (6 966 000)
Gross profit 7 711 200 
Other income 175 000 
Income 1-3 plus method marks income *
Gross operating profit 7 886 200 
Operating expenses (6 286 200) 
Expenses 4-5 plus method marks expens *
Operating profit es
1 600 000 
Interest income 25 000
Profit before interest expense 1 625 000 
Interest expense (75 000)
Net profit before tax 1 550 000 
Income tax for the year (496 000)
Net profit after tax (NPAT) 1 054 000
1 + 4 +10 =15

Earn a mark for correctly transferring any figure recorded as NPAT

RETAINED INCOME NOTE:

Balance at beginning 353 800
Net profit after tax 1 054 000
Shares repurchased 360 000x R0,30 (108 000) 
4,10 – 3,80
Ordinary share dividends (783 200) *
Interim 295 200 
Final 2 440 000 x R0,20 488 000 *

Balance at end 485 600 

*one part correct
3- 4 method marks

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EASY MARKS ON NOTES TO FINANCIAL STATEMENTS

Ordinary Share Capital Note on 28 February 2021

800 000 Ordinary shares at the beginning 6 400 000


100 000 New shares issued balancing figure subtract 1 250 000 
repurchased

(30 000) Repurchased 30 000 shares at R8,50   (255 000)

870 000 ✓ Shares at the end of the year 7 395 000

Earn a mark for transferring

the figure you calculated to
+ - 3 method marks the Balance Sheet

(Equity section)

RETAINED INCOME NOTE:

Balance at beginning 865 300 One mark for recording the

figure you calculated in the
Net profit after tax 511 500  Income Statement

Shares repurchased 360 000x R0,30

(108 000) 
4,10 – 3,80

Ordinary share dividends (783 200) *

One mark for transferring the
figure you calculated to trade and
Interim 295 200 
other payables or current
Final 2 440 000 x R0,20 488 000* liabilities

Balance at end 485 600 

Earn a mark for transferring
the figure you calculated to
*one part correct the Balance Sheet (Equity
3- 4 method marks section)

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 Correct signs
(+ or -) are
important.
EXTRACTED FROM NSC 2021 NOV (QUESTION ONE)

4 method marks

NOTE : EXPENSES AND INCOME ARE RECORDERD AS FOLLOWS:

Expenses Entry Income Entry

Omitted expense /expense not Amount is Omitted income/income not Amount
recorded deducted recorded is added
Accrued expenses Deduct Accrued income Add
Prepaid expenses Add Income received in advance Deduct
Interest expense Deduct Interest income Add
Income tax Deduct

Provisional income tax OR ADDITIONAL EXAMPLE

PLUS income tax owing at Assume bad debts for R600
the end of year EQUALS
Net profit before tax x 30% = were added to operating
to income tax expense. income tax income.
The correct entry will be.
- R1 200
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STATEMENT OF FINANCIAL POSITION ON 28 February 2022
EQUITIES AND LIABILITIES
SHAREHOLDERS EQUITY 9 044 000  A mark for adding

Ordinary share capital 950 000 x 8,50 8 075 000 

Retained income 969 000

Non-current liabilities 603 800

Loan: Allan Bank 703 800 – 100 000 603 800 *
Current liabilities 1 069 500 
Trade and other payables 637 000 *
Creditors Control Accrued expenses ,Income received in advance SARS

Shareholders for dividends 332 500 

A mark for an amount you
Current portion of loan check long term
100 000  transferred from long term
loan loan

TOTAL EQUITY AND LIABILITIES SE + NCL + CL 10 717 300 

7 marks plus ( method marks ) * one part correct

NOTE : it’s important to master all the sections of the Balance Sheet ,the examiner can assess
you on the ASSETS SECTION

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A COMPLETE BALANCE SHEET

STATEMENT OF FINANCIAL POSITION ON 28 FEBRUARY 2019

ASSETS
Non-current assets (TA – CA) 10 624 000
Fixed assets From note 3 9 965 000
Fixed deposit Balancing figure 3 659 000
Current assets CL x 0,8 2 320 000
Inventories 1 102 000
Trade and other receivables 1 042 400*
Cash and cash equivalents Balancing figure 175 600

TOTAL ASSETS see total equity and liabilities 12 944 000

EQUITY AND LIABILITIES

Ordinary shareholders' equity 8 637 600
Ordinary share capital 8 152 000
Retained income see note 8 485 600
Non-current liabilities 1 406 400

Mortgage loan (1 758 000  – 351 600 ) 1 406 400*

Current liabilities 2 900 000

Trade and other payables 2 017 400*
SARS: Income tax may be part of T&OP 43 000
Shareholders for dividends may be part of T&OP 488 000
Current portion of loan Balancing figure or check Non-Current 351 600
Liabilities
TOTAL EQUITY AND LIABILITIES 12 944 000*

+ - 13 marks

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EASY MARKS ON CASH FLOW STATEMENT

CASH FLOW STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2021

CASH FLOW FROM OPERATING ACTIVITIES 1 180 000

Cash generated from operations
Interest paid
Taxation paid (429 500) *
Dividends paid (277 300) *

CASH FLOW FROM INVESTING ACTIVITIES (1 320 000)

CASH FLOW FROM FINANCING ACTIVITIES 409 000*

Shares issued see 2.1 1 250 000*
Shares repurchased 36 000 one mark two marks
255 000 
+ (30 000
x 1,20) OR 30 000 x R9,70 (291 000)*
see 2.1 (if R1,20 above ASP)

Loan repaid 8 (550 000) *

NET CHANGE IN CASH AND CASH EQUIVALENTS 269 000*

from top (OA + IA + FA)
(75 200)*
CASH AND CASH EQUIVALENTS AT BEGINNING

CASH AND CASH EQUIVALENTS AT END 4 193 800*

+- 10 method marks

Always show a
breakdown of your
calculations to earn
part marks and
method marks

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 Most recent questions
test calculations and
PLUS financial
NOTES TO CASH FLOW STATEMENT indicators
Calculate: Income tax paid
Workings Answer
477 900 – 63 000 – 18 000
    one part correct
R396 900
– 477 900 + 63 000 + 18 000 mark one line / accept brackets
one mark one mark one mark 4
Calculate: Dividends paid
Workings Answer
195 000 + 420 000 1200 000 x 0,35
   one part correct
OR: 195 000 + 792 000 – 372 000 mark one line / accept brackets R615 000
one mark one mark one mark 4
Calculate: Proceeds of shares issued
Workings Answer
one mark two marks
300 000 x R6,20
9 300 000 – 1 860 000 – 7 724 000  one part correct
   R284 000
1 860 000 9 300 000
7 724 000 284 000
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CALCULATIONS FOR FINANCIAL INDICATORS
Debt-equity ratio
Workings Answer
900 000 : 8 980 300 0,1 : 1  3
  one part correct;

Earnings per share (EPS)

Workings Answer
968 800  x 100* one part correct
1 000 000  96,9 cents 
(800 000 + 200 000) 4
Dividend pay-out rate
Workings Answer
(28 + 12) (280 000 + 120 000)
40 cents  x 100* OR 400 000 x 100 41,3% 
one part correct
96,9 cents see EPS above 968 800
Or 97 cents 3
% return on average equity (ROSHE)
Workings Answer
968 800  x 100*
½ (8 980 300  + 7 411 500 ) 11,8% 
4
4 – 5 method marks depending on indicators assessed.

Financial indicators are paired

with Cash Flow

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EASY MARKS

CALCULATIONS FOR FINANCIAL INDICATORS

Debt-equity ratio
Workings Answer
900 000 : 8 980 300 0,1 : 1  3
  one part correct;

Earnings per share (EPS)

Workings Answer
968 800  x 100*
one part correct
1 000 000 
(800 000 + 200 000)
96,9 cents  4
Dividend pay-out rate
Workings Answer
(28 + 12) (280 000 + 120 000)
40 cents  x 100* OR 400 000 x 100 41,3% 
one part correct
96,9 cents see EPS above 968 800
Or 97 cents 3
% return on average equity (ROSHE)
Workings Answer

11,8% 
968 800  x 100*
½ (8 980 300  + 7 411 500 ) 4

4 – 5 method marks depending on indicators assessed.

Financial indicators are
paired with Cash Flow

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 Use this structure regularly
when you complete practice
activities, it will assist you to
locate formulas in an exam.
GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET

Gross profit x 100 Gross profit x 100

Sales 1 Cost of sales 1

Net profit before tax x 100 Net profit after tax x 100
Sales 1 Sales 1

Operating expenses x 100 Operating profit x 100

Sales 1 Sales 1

Total assets : Total liabilities Current assets: Current liabilities

(Current assets – Inventories) : Current liabilities Non-current liabilities: Shareholders' equity

(Trade & other receivables + Cash & cash equivalents): Current liabilities

Average trading stock x 365 Cost of sales

Cost of sales 1 Average trading stock

Average creditors x 365

Average debtors x 365
Cost of sales 1
Credit sales 1
(*See note below)
Net income after tax x 100
Net income after tax x 100 Number of issued shares 1
Average shareholders' equity 1 (*See note below)

Net income before tax + Interest on loans x 100

Average shareholders' equity + Average non-current liabilities 1

Shareholders' equity x 100 Dividends for the year x 100

Number of issued shares 1 Number of issued shares 1

Interim dividends x 100 Final dividends x 100

Number of issued shares 1 Number of issued shares 1

Dividends per share x 100 Dividends for the year x 100

Earnings per share 1 Net income after tax 1

Total fixed costs

Selling price per unit – Variable costs per unit

Note:
1. Trading stock at the end of a financial year may be used if required in a question.
2. Credit purchases may be used instead of cost of sales (figures will be the same if stock is
constant).
3. If there is a change in the number of issued shares during a financial year, the weighted-average
number of shares is used in practice.

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 EXRACTED FROM 2021 TRIAL EXAM (DBE)
Comment on the solvency of the company. Quote ONE financial
indicator with figures.
Comment  figure 
The degree of solvency has declined from 5,0 : 1 to 2,0 : 1 (by 3,0 : 1)
Although the solvency declined (trend not good), the business is still
solvent. 2
Explain why the directors are satisfied with the change in the liquidity
of the company. Quote TWO financial indicators with figures. You must be able to
identify liquidity
Financial indicator   figures with explanation   indicators
• Acid test ratio is now more efficient at 0,8 : 1 whereas it was too high
at 2,6 : 1 in 2023 / more productive use of liquid assets (working capital)
• Stock turnover rate has improved from 3 times to 6 times indicating
that stock is sold more quickly. 4

EXTRACTED FROM 2021 TRIAL EXAM (DBE)

Comment on the % return and earnings per share of the company.

Quote TWO financial indicators with figures.
Financial indicator (with trend)   figures with explanation  
• ROSHE declined from 8,7% to 5,3% (by 3,4% percentage points / 39%)
/ compared to alternative investments
• EPS declined from 96 cents to 72 cents (by 24 cents; by 25%) /
representing a drop in profitability (assuming no change to share
capital)
4

BREAK DOWN OF EASY MARKS

• Identify liquidity indicators or, profitability etc. (you get a mark for the name of indicator)
• Compare current and previous indicator and comment (a mark is allocated)
• Figures compared must indicate the trend (increased, decreased, improved)
• Strengthen your comment by quoting alternative investments when you responding to
ROSHE, compare interest on loan to ROTCE, compare debtors’ collection period to creditors
payment period, compare NAV to market price of shares, dividend payout policy - compare
earnings and dividends.

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TOTAL EASY MARKS FOR PAPER ONE

TOPICS FOR PAPER ONE –FINANCIAL REPORTING

1
Topics Marks
Concepts ±7

Correction of net profit after tax ±4

Statement of Financial Position ± 13
Questions

Notes (Retained Income or Ordinary Share Capital ) ±4

Cash flow Statement and Financial Indicators ± 10
Analysis and Interpretation of Financial Statements ± 10

Auditing and Corporate Governance ±5

Total easy marks ±53

ALTERNATIVE ALLOCATION

TOPICS FOR PAPER ONE –FINANCIAL REPORTING

2
Topics Marks
Concepts ±7
Statement of Comprehensive Income ± 14
Questions

Statement of Financial Position (equity OR assets section) ±7

Cash flow Statement and Financial Indicators ± 10
Analysis and Interpretation of Financial Statements ± 10

Auditing and Corporate Governance ±5

Total easy marks ±53

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