GRADE 12

ACCOUNTING

SCHOOL BASED ASSESSMENT

PROJECT
PART: B
TERM 2:
12 APRIL 2024
MARKS 100
DURATION 1½ HOURS
TOPICS  Concepts, Corporate governance, and Audit report.
 Companies’ concepts, notes, and Cash flow statement
calculations.
 Concepts and Interpretation of Company Financial
Information

NOTE:
1. You are provided with a question paper and an answer sheet.
2. All questions are compulsory.
3. The task should be administered in class under supervised conditions.
4. Use of non-programmable calculator is allowed.
5. Use a BLACK/BLUE pen ONLY.

This question paper consists of 6 pages only, and 8-pages answer book.

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Accounting 2 NW/April 2024
Grade 12 (Question paper)
QUESTION 1 CORPORATE GOVERNANCE
(20 marks; 15 minutes)
1.1 Choose an explanation from COLUMN B that matches the term in COLUMN
A. Write only the letter (A – E) next to the question numbers (1.1.1 to 1.1.5) in
the ANSWER BOOK.
COLUMN A COLUMN B
1.1.1 Internal Auditor A Impact of business activities on the profit,
as well as the effect on the environment
and social issues
1.1.2 Triple-Bottom Line B Explains the performance of the company
and the major decisions that were taken
1.1.3 Directors’ Report C When a person uses confidential
information which leads to them gaining
an advantage over others.
1.1.4 King Code D Monitors control measures to prevent
mismanagement and fraud
1.1.5 Insider Trading E This sets out the ethical and effective
leadership expected of companies.
(5x1) (5)

1.2 Audit report

REQUIRED:

1.2.1 The following are three types of reports which can be issued after the
financial statements of a company had been audited.
Qualified report Disclaimer of opinion Unqualified report

 Which type of audit report will discourage shareholders to buy (1)

shares in a company.
 Provide TWO reasons why shareholders will not be interested to (4)
buy shares in such a company.

1.2.2 Explain why a company’s financial statements have to be audited by (4)

independent auditors. Provide TWO points.

1.2.3 The following was reported to the company.

One of the directors, the Chief Financial Officer (CFO) and the Independent
Auditor of the company seems to be good friends as they meet socially
every second week.

As a shareholder, why would you be concerned by this kind of (6)

relationship? Explain THREE points (one for each person involved as
indicated in the ANSWER BOOK).

20

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Accounting 3 NW/April 2024
Grade 12 (Question paper)
QUESTION 2 CASH FLOW STATEMENTS
(45 marks; 45 minutes)
2.1 Choose the correct word from those given in brackets. Write only the word
next to the question numbers (2.1.1 to 2.1.5) in the ANSWER BOOK.

2.1.1 An increase in inventory represents an (inflow/outflow) of cash.

2.1.2 An adjustment for (depreciation / income tax) should be made when

calculating the cash effects of operating activities.

2.1.3 A decrease in accounts payable represent an (inflow/outflow) of cash.

2.1.4 Proceeds on loan represents an (inflow/outflow) of cash.

2.1.5 A decrease in debtors will indicate a/an …(inflow/outflow) of cash.

(5 x 1) (5)
2.2 LENAH LTD

The information relates to the financial year ended 30 June 2023.

REQUIRED:

2.2.1 Prepare the Retained Income note on 30 June 2023. (7)

2.2.2 Complete the Cash Flow Statement on 30 June 2023. (27)

NOTE: Some amounts are provided in the ANSWER BOOK.

2.2.3 The Cash Flow Statement highlights some significant (important)

decisions taken by the directors over the past year. Explain TWO of
these significant decisions. Quote figures (above R500 000) to
support your answer. Also explain how these decisions would benefit
the company and the shareholders. (6)

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Accounting 4 NW/April 2024
Grade 12 (Question paper)
INFORMATION:
A Extract: Statement of Comprehensive Income for the year ended
30 June 2023:

Sales R 2 450 000

Depreciation 567 490
Profit before interest expense 1 208 200
Net profit before tax 1 120 000
Net profit after tax 784 000

B Items extracted from Statement of Financial Position on 30 June:

2023 2022
Fixed assets (Carrying value) 3 094 900 2 847 390
Fixed deposit 144 450 277 550
Current assets 2 175 600 2 003 790
Current liabilities 753 065 719 800
Inventories 1 469 700 1 431 000
Trade debtors 603 400 557 340
Cash and cash equivalents 92 840 15 450
SARS: Income tax 9 660 Dr 20 020 Cr
Shareholders for dividends 207 070 150 000
Bank overdraft 0 28 480
Non-current liabilities 735 000 980 000
Ordinary share capital ? 9 520 000
Ordinary shareholders equity 11 887 820 9 814 000

C. Share capital and dividends:

Authorised share capital: 1 700 000 ordinary shares

1 July 2022 70% of authorised shares were in issue.
31 October 2022 85 000 shares repurchased at R2 above the
average share price. These shares do not qualify for
dividends.
31 December 2022 Interim dividends of 12 cents per share paid.
1 February 2023 Additional shares issued were issued at R9 per share.
30 June 2023 1 380 500 shares were in issue.
30 June 2023 A final dividend was declared.

D. Fixed assets
 Extensions to land and buildings were completed during the year at a cost of
R1 200 000.
 Equipment was sold during the year at carrying value.

45

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Accounting 5 NW/April 2024
Grade 12 (Question paper)
QUESTION 3 INTERPRETATION OF FINANCIAL STATEMENTS
(35 marks; 30 minutes)
3.1 Choose a term from the list below that answers the specific following questions.
Write only the term next to the question numbers (3.1.1 to 3.1.3) in the
ANSWER BOOK.

Return on capital employed; return on equity; solvency; liquidity; profitability

3.1.1 It is the ability of the business to be able to pay off all its debt?

3.1.2 Can the business pay off short-term debts in the next financial year?

3.1.3 Will shareholders be satisfied with the benefit that they receive for
investing in the company?
(3 x 1) (3)
3.2 LETLOTLO LTD

You are provided with information relating to Letlotlo Ltd, a public company,
for the financial year ended 29 February 2024.

REQUIRED:

NOTE: Provide figures, trends, financial indicators, or calculations in EACH

case to support your comments and explanations.

3.2.1 Profitability:

Quote and explain TWO financial indicators to show that the company
is managing its expenses more efficiently. (4)

3.2.2 Liquidity:

The directors are satisfied with the liquidity of the company. Quote
THREE financial indicators to support this statement. (6)

3.2.3 Dividends, Returns and Earnings:

 Comment on the dividend pay-out policy. Provide ONE point. (2)

 A shareholder wants to sell her shares to invest in a 3-year fixed
deposit account at her bank. Explain whether this is a wise
decision. (4)

3.2.4 Risk and gearing:

One of the directors believes that the company could increase loans in
the new financial year. Quote TWO financial indicators (with figures)
and explain each indicator to support her opinion. (6)

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Accounting 6 NW/April 2024
Grade 12 (Question paper)
3.2.5 Share capital and % shareholding: Refer to Information B and C.
The CEO, Malebo Pine, currently owns 46% of the issued shares after
the repurchasing of shares on 30 April 2023. The board of directors
has decided to issue the remaining 950 000 shares in October 2023.
 Calculate the minimum number of shares that Malebo must buy in
October 2023 to gain control of the company. (6)
 Malebo wants to purchase the additional shares at R9,00 without
advertising the shares to the public. Give TWO reasons why you
would not support him. (4)
INFORMATION:
A. Financial Indicators calculated on 29 February:
2024 2023
% Operating expenses on sales 14,5% 20,5 %
% Operating profit on sales 25,8% 23.4%
% Net profit on sales 21,8% 22,2%
Current ratio 2.5: 1 1.8: 1
Acid-test ratio 1,2: 1 0.9: 1
Stock turnover rate 8 times 4 times
Total assets to total liabilities 3,8: 1 5,4 ; 1
Earnings per share 158 cents 130 cents
Dividends per share 169 cents 90 cents
Dividend payout rate 107% 69%
Net asset value per share 1 050 cents 950 cents
Debt-equity ratio 0,7: 1 0,9: 1
% Return on average capital employed 18.4% 13.5%
% Return on average shareholders’ equity 19.8% 19%

B. Additional information on 29 February:

2024 2023
Market price of shares on stock exchange 1 590 cents 1 340 cents
Interest on loan 13% 13%
Interest on alternative investment 12% 8.5%

C. Issue and repurchase of shares:

NO. OF
SHARES
Authorised share capital 3 000 000
Number of shares in issue on 1 March 2023 2 050 000
Number of shares repurchased on 30 April 2023 260 000
Number of shares in issue on 29 February 2024 ?

None of Malebo’s shares were repurchased on 30 April 2023.

35
TOTAL: 100

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