ST BENEDICT’S COLLEGE

GRADE 12 ACCOUNTING
PRELIMINARY EXAMINATION PAPER 2

Examiner Mrs T Clifton Date: 15 September 2021

Mr G Pretorius (internal)
Moderators Time: 2 hours
Mrs T Heeralall (external)
QUESTION PAPER AND
Marks 100
ANSWER BOOKLET

Name

PLEASE READ THE FOLLOWING INSTRUCTIONS CAREFULLY

1. This question paper consists of 10 pages, an Information Booklet consisting of 6 pages, with a Formula
Sheet of 1 page. Please check that your Question Paper is complete.
2. Read the questions carefully.
3. Answer the questions in the space provided.
4. It is in your own interest to write legibly and present your work neatly.
5. You may not use red or green ink. You may use a pencil, but please use a soft, dark pencil.
6. All calculations should be rounded off to two decimal places.
7. It is essential that all working details be shown to earn part marks.
8. The allocation of marks and suggested time to be taken for each question are as follows:
Total Time Marks
QUESTION
(marks) (minutes) achieved

Question 1 – Company Analysis (60 minutes) 50

Question 2 – Budgets (38 minutes) 32

Question 3 – Reconciliations (22 minutes) 18

TOTAL 100

Preliminary exam P2 – Question and Answer booklet Page 1 of 10

QUESTION 1 COMPANY ANALYSIS [50 marks; 60 minutes]

Study the information relating to RCL FOODS Ltd provided in the information booklet to answer the
following questions:

1.1 For each of the following statements, circle the most correct answer. You should circle only one
answer.
i. RCL FOODS Ltd is considered to be a ______________ company. (1)
a. Public
b. Private
c. Non-profit
d. Closed

ii. The document required to form a company is the: (1)

a. Directors’ report
b. Auditors’ report
c. Memorandum of incorporation
d. Corporate governance report

iii. Another name for the Income Statement is: (1)

a. Statement of future income
b. Statement of comprehensive income
c. Statement of summarized profits
d. Statement of operating costs

iv. As per the Cash Flow Statement, investing activities refer to … (1)
a. Sourcing cash through loans or sale of shares
b. Purchasing and disposing of tangible assets that generate a return
c. The inflow and outflow of cash linked to business operations
d. The movement of cash linked to tax and dividends payments

v. Who is responsible for the preparation and fair representation of the financial
statements of a company? (1)
a. Shareholders
b. External auditors
c. Senior financial management
d. Company directors

1.2 Public companies need to publish three financial statements. Name the three financial
statements and provide a simple explanation of each highlighting their different purposes. (3)

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1.3.1 Calculate the current ratio for the year ended 30 June 2020.
Discuss the change in current ratio from 2019 and what may have caused it. (5)

1.3.2 Calculate the acid test ratio for the year ended 30 June 2020. (4)

1.3.3 From the above calculations, does RCL FOODS Ltd appear to be holding too much stock? (2)

1.4 Biological assets are divided into two categories and are treated differently in the accounting
records:
Category 1 Category 2
Sugarcane roots Standing sugarcane
Litchi trees Fruit growing on plants
Banana plants

1.4.1 Explain the term ‘Biological assets’ as seen in the Statement of Financial Position. (1)

1.4.2 Discuss how the two different categories are treated in the Statement of Financial Position and
provide a reason for their treatment. (4)

Category 1:

Category 2:

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1.5.1 Calculate the Earnings per Share for the 2020 year. (2)

1.5.2 Calculate the Earnings per Share for the 2019 year. (2)

1.5.3 Suggest the most probable cause during 2020 for the drastic drop in EPS. (1)

1.6 RCL FOODS Ltd paid out a total Dividend of 25c per share for the year ended 30 June 2020.
Quote figures and comment on the dividend payout in 2020. Include insight into a why the opinion
of a long-term investor and a short-term investor would be different regarding the dividend
payout and DPS in 2020. (6)

Dividend payout:

Opinion of long-term investor:

Opinion of short-term investor:

1.7.1 Show how the Return on average Shareholder’s equity is calculated to be 1,12% for the year
ended 30 June 2020. (3)

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1.7.2 Although the Return on Average shareholders’ equity is very low, the share price of
RCL FOODS Ltd has remained fairly stable indicating that investors have remained confident.
Provide two possible reasons as to why investors may still be confident in RCL Foods Ltd and
have chosen not to sell their shares. (2)

1.8.1 Calculate the Debt/Equity ratio as at 30 June 2020. (2)

1.8.2 Comment on the change in the Debt/Equity from 2019 and discuss a decision made by
RCL Foods Ltd in this regard and how it may be of benefit to the company. (5)

1.9 In line with triple-bottom-line reporting, why did RCL FOODS Ltd include the information on
‘Our sustainable impact in 2020’ in their annual integrated report’? (3)

50

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QUESTION 2 BUDGETS [32 marks; 38 minutes]
The following questions are based on the information provided relating to Lola-Jay Creations.
2.1 Complete the Debtors Collection Schedule for July and August 2021. (7)

Credit sales July August

July * * *

August * --- 4 522

* *
<<

Calculations:

2.2 Provide the missing figures represented by the letters A – H: (14)

Calculation (if necessary) Amount

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2.3.1 Calculate the full price of the construction of the studio. (2)

2.3.2 Do you agree with Lola’s decision to open both ‘Lola-Jay on Club’ and ‘Lola-Jay online’?
Justify your choice. (1)

2.4 Lola’s father is an experienced business man and has expressed his concern over Lola’s lack of
internal control/security over two areas of her business.
Discuss important security and controls that Lola needs in the following two areas: (2)

i. Online sales and receiving payments

ii. Stock control over stock kept in newly-built studio

2.5 Lola’s father also believes that she has not planned her advertising effectively.
What can Lola do better in terms of advertising over the budget period? (1)

Preliminary exam P2 – Question and Answer booklet Page 7 of 10

2.6 Lola has agreed to allow Samuel the advancement on his August wages. Samuel has discussed
with Lola that he wants to use the extra money, together with his July wages to purchase an Apple
Macbook that he will use for designing.
2.6.1 Provide two reasons why Lola was happy to allow Samuel this advancement. (2)


2.6.2 Show how the payment to Samuel in July would affect the accounting equation as at 31 July
2021. (You need to show +/- signs, together with the different amounts) (3)

Assets Owners’ Equity Liabilities

32

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QUESTION 3 RECONCILIATIONS [18 marks; 22 minutes]
Use the information provided relating to Gugu’s Goodies to answer the following questions:
3.1 Pam, the bookkeeper, is under the impression that she no longer needs to prepare a bank
reconciliation Statement because cheques are no longer used in the national payment system.
Explain to Pam why her thinking is incorrect. (1)

3.2 Calculate the correct Bank balance in the General Ledger of Gugu’s Goodies on 31 May 2021
after taking the information the bank statement into account. State whether the balance is
favorable or unfavorable. (3)

3.3 Gugu is considering hiring an internal auditor for a month to ensure the accuracy of the recording
of cash transactions.
3.3.1 Explain the role of an internal auditor. (1)

3.3.2 List two types of audit evidence that could be looked at by an internal auditor and explain what
the evidence would be compared to, in order to check the accuracy of cash transactions. (4)

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3.4 Use the statement from Charlie’s Chocolate to draw up the debtor’s age analysis as it should
have appeared on the statement. Do not take the additional information into account. (5)

90 days 60 days 30 days Current

3.5 Use the additional information to draw up the Creditors Reconciliation Statement. (4)

Incorrect balance as per statement

18

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