ACCOUNTING
SCHOOL BASED ASSESSMENT EXEMPLARS - CAPS
GRADE 12
TEACHER'S GUIDE\

TABLE OF CONTENT
CONTENT PAGE 
 1 Introduction     3
 2 Objectives/Aims of the project    3
 3 Assessment tasks as outlined by NCS and CAPS     5
 4 Scope of the project    6
 5 Quality assurance process   followed    6
 6 Inclusions in this publication    6
     
  Task A :
First Term – Report: Companies

This task is suitable for Grade 12 learners from 2014 (CAPS).  
 
    Question paper 7-9
    Answer book 10-14
     
 

Task B :
First Term – Test: Financial statements of a company 

This task includes shares of no par value and repurchase of shares.
This task is suitable for Grade 12 learners from 2014 (CAPS). 

 
    Question paper 15-18
    Answer book 19-22
     
 

Task C:
Second Term – Project:  
Published financial statements of Famous Brands Ltd 
This task is suitable for Grade 12 from 2014 (CAPS). 

 
    Combined question paper and answer book 23-29
    Resource material 30-36
     
 

Task D Third Term – Case Study: Cash Budget and Debtors 
This task is suitable for Grade 12 from 2014 (CAPS). 

 
    Question paper 37-41
    Answer book 42-46
     
  Marking Guidelines 47
    Task A 48-52
    Task B 53-55
    Task C 56-61
    Task D 62-65

 

1. INTRODUCTION 
Assessment is a continuous planned process of identifying, gathering and interpreting information about the  performance of learners, using various forms of assessment. It involves four steps: generating and collecting  evidence of achievement; evaluating this evidence; recording the findings and using this information to understand  and assist in the learner’s development to improve the process of learning and teaching. Assessment should be  both informal (assessment for learning) and formal (assessment of learning). In both cases regular feedback  should be provided to learners to enhance the learning experience. 
School-based assessment (SBA) is a purposeful collection of learners’ work that tells the story of the learners’  efforts, progress or achievement in given area(s). The quality of SBA tasks is integral to learners’ preparation  for the final examinations. This book serves as a resource of four exemplar SBA tasks for schools and subject  teachers of Accounting. SBA marks are formally recorded by you, the teacher, for progression and certification  purposes. The SBA component is compulsory for all learners. Learners who cannot comply with the requirements  specified according to the policy may not be eligible to enter for the subject in the final examination. 
The formal assessment tasks provide you with a systematic way of evaluation on how well learners are progressing.  The book includes tests, a project and a case study. Formal assessment tasks form part of a year-long formal  programme of assessment. These tasks should not be taken lightly and learners should be encouraged to submit  their best possible efforts for final assessment.  
Educators are expected ensure that assessment tasks are relevant to and suitable for the learners being taught.  Teachers should adapt the tasks to suit the learners’ level of understanding and they should be context bound;  however, they should also take cognisance of the requirements as set out in the Curriculum and Assessment  Policy Statement (CAPS) document.  
This publication comprises four tasks that address the demands of the Grade 12 Accounting curriculum.  It is expected that these tasks will serve as a valuable resource to: 

  • Accounting teachers, in providing examples of the types and standards of school-based assessment tasks  that would be appropriate for their learners 
  • Grade 12 Accounting learners, in providing material that will assist them in preparation for the National  Senior Certificate examinations 

2. THE AIMS AND OBJECTIVES OF THE PROJECT 

  • School-based assessment provides a more balanced and trustworthy assessment system, increasing the  range and diversity of assessment tasks. 
  • The exemplar tasks are aimed at reflecting the depth of the curriculum content appropriate for Grade 12. 
  • They reflect the desired cognitive demands as per Bloom’s revised taxonomy: remembering, understanding,  applying, analysing, evaluating and creating. 
  • School-based assessment improves the validity of assessment by including aspects that cannot be assessed  in formal examination settings. 
  • It improves the reliability of assessment because judgements will be based on many observations of the  learner over an extended period of time. 
  • There is a beneficial effect on teaching and learning, not only in relation to the critical analysis and evaluation  of Accounting information and creative problem-solving, but also on teaching and assessment practices.
  • It empowers teachers to become part of the assessment process and enhances collaboration and sharing  of expertise within and across schools. 
  • It has a professional development function, building up teachers’ skills in assessment practices, which can  then be transferred to other areas of the curriculum. 

The tasks focus on the content of the National Curriculum Statement (NCS) effective in 2013, and contain exposure  to certain aspects of new content of the Curriculum and Assessment Policy Statement (CAPS) effective from 2014. 
The distinctive characteristics of SBA (and its strengths as one relatively small component of a coherent assessment  system) have implications for its design and implementation, in particular the nature of the assessment tasks and  the role of the teacher standardisation procedures. These implications are summarised as follows: 

  • The assessment process should be linked to and be a logical outcome of the normal teaching programme,  as teaching, learning and assessment should be complementary parts of the whole educational experience  (that is, the SBA component is not a separate one-off activity that can be timetabled or prepared for as if it  were a separate element of the curriculum). 
  • The assessment process should provide a richer picture of what learners can do than that provided by the  external examination by taking more samples over a longer period of time and by more closely approximating  real-life and low stress conditions (i.e. the SBA component is not a one-off activity done under pseudo-exam  conditions by unfamiliar assessors). 
  • The formative/summative distinction exists in SBA, but is much less rigid and fixed than in a testing culture,  i.e. learners should receive constructive feedback and have opportunities to ask questions about specific  aspects of their progress after each planned SBA assessment activity, which will both enhance Accounting  skills and help learners prepare for the final external examination (i.e. the SBA component is not a purely  summative assessment). 
  • The SBA process, to be effective, has to be highly contextualised, dialogic and sensitive to learners’ needs,  i.e. the SBA component is not and cannot be treated as identical to an external exam in which texts, tasks  and task conditions are totally standardised and all contextual variables controlled; to attempt to do so would  be to negate the very rationale for SBA, hence schools and teachers must be granted a certain degree of  trust and autonomy in the design, implementation and specific timing of the assessment tasks. 
  • Teachers should ensure that learners understand the assessment criteria and their relevance for self- and  peer assessment. Teachers should also have used these criteria for informal assessment and teaching  purposes before they conduct any formal assessments so that they are familiar with the criteria and the  assessment process. 

The project provides exemplar tasks that are aimed at: 

  • Reflecting the depth of Accounting curriculum content appropriate for Grade 12 
  • Reflecting the desired cognitive demands as per Bloom’s revised taxonomy: remembering, understanding,  applying, analysing, evaluating and creating 
  • Containing questions and sub-questions that reflect appropriate degrees of challenge: easy, medium and  difficult 
  • Focusing on content of the National Curriculum Statement (NCS) effective in 2013; and contain exposure to  certain aspects of new content of the Curriculum and Assessment Policy Statement (CAPS) effective from  2014, i.e. shares of no par value and repurchase (buy-back) of shares – refer to Task B Version (i).

3. ASSESSMENT TASKS AS OUTLINED BY THE NCS AND CAPS  
The final Grade 12 mark is calculated from the National Senior Certificate (NSC) examination that learners will  write (out of 300 marks) plus school-based assessment (out of 100 marks). The curriculum stipulates the following  seven formal tasks that comprise school–based assessment in Accounting:  
SCHOOL–BASED ASSESSMENT TASKS: NCS AND CAPS 

Term 

Details 

Marks 

Converted to

1st term

Report 

50 marks 

10 marks

Test 

100 marks 

20 marks

2nd term

Project 

50 marks 

20 marks

Mid-year examination 

300 marks 

20 marks

3rd term

Case study 

50 marks 

10 marks

Trial examination 

300 marks 

20 marks

    100 marks

4. SCOPE OF THE PROJECT

 

Task A 

Task B  

Version (i)

Task B 

Version (ii)

Task C 

Task D

Types of task 

Written report 

Test 

Test 

Project 

Case study

Compliance with  NCS or CAPS 

NCS and CAPS 

CAPS only 

NCS only 

NCS and  CAPS

NCS and  CAPS

Content covered

Part (a): Report  on a listed JSE company 
Part (b): Internal  auditor’s report on company  internal control

Asset  disposal,  Income  Statement,  Balance  Sheet and  Notes

Asset  disposal,  Income  Statement,  Balance  Sheet and  Notes

Interpretation of published financial  statements and audit  report 

Cash Budget  and Debtors  Age Analysis

Tested in  

examinations

Part (a): NO 
Part (b): YES

YES 

YES 

YES 

YES

Skills assessed  that are similar to  skills assessed by  examinations

Understanding  theory of  companies and  internal control;  Problem–solving

Preparing  ledger  accounts  and financial  statements

Preparing  ledger  accounts  and financial  statements

Analysis and interpretation  of financial  information

Analysis and  interpretation  of financial  information;  
Creative  problem– solving

Skills assessed  that are different  to skills assessed  by examinations

Research of a  

listed company 

– 

Dealing with  quantity of  information  in published  annual  reports

5. QUALITY ASSURANCE PROCESS FOLLOWED (SUBJECT SPECIFIC) 
The purpose of this document is to provide both teachers and the learners with a set of benchmarked school based assessment (SBA) tasks. It contains useful information and guidelines in the form of exemplars. 
A team of experts comprising teachers and subject advisors from the provinces was appointed by the DBE to  develop and compile assessment tasks. This panel of experts spent a period of four days at the DBE developing  tasks based on guidelines and policies. Moderation and quality assurance of the tasks were undertaken by national  and provincial examiners and moderators. The assessment tasks were further refined by the national internal  moderators to ensure that they are in line with the CAPS document.  

6. INCLUSIONS IN THIS PUBLICATION 
For each assessment task, this publication includes:  

  • Question papers, answer sheets and marking guidelines. 
  • Resource material is also provided for the Project (refer to the Appendix).  
  • Instructions and notes to learners and teachers are provided in the question papers, answer sheets and  marking guidelines on how to administer the assessment tasks, answer questions and apply the marking  guideline. 

QP Task A 
NOTE TO TEACHERS: This task is relevant to Grade 12 learners from 2014 (i.e. relevant to CAPS). This task  comprises two parts. You may adapt the material to take the needs of your class group into account. For example,  you may require them to do Part A on their own and Part B in class. Or you may require the class to do only Part  B as a formal report and undertake Part A as an extension task in class on a weekly basis. If you choose to adapt  the material in any way, you should ensure that the task comprises 50 marks as per CAPS. 

 ACCOUNTING GRADE 12: TASK A

FIRST TERM ASSESSMENT TASK 

REPORT ON COMPANIES 

QUESTION PAPER 

50 marks 

THIS TASK CONSISTS OF TWO PARTS: 
PART A Report on a public company listed on the JSE. (26) 
PART B Internal auditor’s report on procedures and internal controls in a public company (24) 

50

PART A Report on a public company listed on the JSE [26 marks] 
For this task you will need to use the page in the Business Report in a morning newspaper which lists the public  companies that are traded on the Johannesburg Securities Exchange (JSE). You will need access to this re source on a weekly basis for a period of 5 weeks.  
A rich aunt has earmarked R200 000 of her funds for investment purposes. She wants to buy shares of a public  company listed on the JSE. She requires your advice. Choose a company that is well-known to you from the  share page to complete the following report. 
NOTE TO TEACHER: Each learner must choose a different company. 
REQUIRED 
Prepare a one-page report on the company you have chosen.  
PREPARATION AND RESEARCH FOR YOUR REPORT 

  • On the starting date of this task, calculate the maximum number of shares that your aunt can buy for  R200 000 in the company that you have chosen. Ensure that she buys shares in lots of 100, that is, 100,  200, 300, etc. Also calculate how much cash she will have left on this date after the purchase of shares.  She will place this in a savings account (ignore interest).  
  • For a period of five weeks, make a note of the share price on the same day each week. Calculate the value  of her investment portfolio each week, that is, the value of the shares and the cash. 
  • Find out other interesting information about the company you have chosen, e.g. products sold or services  provided, community service or sponsorship activities of the company, the size of the company, where it  is situated, details of the directors or the CEO, the amount earned by the CEO, or any other news about  the company or its history.  

THE REPORT MUST INCLUDE THE FOLLOWING: 

  • Draw up a table and plot a graph of the company's share price. 
  • Draw up a table and plot a graph of the value of your aunt's investment portfolio in respect of the invest ment in the shares and the cash that she has on hand. Do not consider the interest she will earn on her  savings account. 
  • Further interesting information on the company. 
  • Recommendation on further investment in this company, with reasons. (Should you aunt consider buying  more shares in this company, or should she consider an alternative investment?)

PART B Internal auditor’s report on a public company [24 marks] 
You have been appointed as the internal auditor of Exotic Clothing Ltd, a new public company which is about to  be established. All stock will be bought on credit. They will sell for cash and they will allow customers to buy on  credit. It is expected that there will be approximately 1 000 shareholders. The CEO has asked you to prepare a  report on certain procedures that should be put in place in the company. 
The company currently has four employees in the Accounting department. The CEO is thinking of appointing  Tom to manage fixed assets, Maisy to control trading stock, Bheki to control debtors (accounts receivable) and  Shamila to control cash resources. 
Your report should include: 

  1. Procedures to establish the company
  2. The records that should be kept on each shareholder, together with the reasons why these are necessary
  3. The procedures that should be put in place to ensure that good internal control is exercised over:
    • Fixed assets
    • Trading stock
    • Accounts receivable (debtors)
    • Cash collected 

TOTAL : 50 marks

ACCOUNTING GRADE 12: TASK A 

FIRST TERM ASSESSMENT TASK:  

REPORT ON COMPANIES 

ANSWER BOOK 

THIS TASK CONSISTS OF TWO PARTS: 
PART A Report on a public company listed on the JSE. 
PART B Internal auditor’s report on procedures and internal controls in a public company.

Name of learner

                                                                                                               

School

 

Class

 

 

 

MAXIMUM 

MARKS  ACHIEVED

Part A 

26

 

Part B 

24

 

TOTAL 

50

 

PART A: REPORT ON INVESTMENT PORTFOLIO OF ________________ (name of aunt) 
1.

Name of company:

Category on the share page

 

Starting date of the investment in shares

                                         

Share price on this date

 

Number of shares purchased (in lots of 100)

 

Total value of shares purchased

 

Cash on hand

 

Total value of investment portfolio 

R200 000

                   

 

2.

 

Share  
price

Number of 
shares bought

Total value of  shares

Cash on hand 

Total value of  investment

Week 1

         

Week 2

         

Week 3

         

Week 4

         

Week 5 

         
           
 5

3. 

 Graph of share price each week:                                              

 

 

 

 

          
 4

4.

 Graph of value of investment portfolio each week:                                                                                      

 

 

 

 

 

                          

 

 

 

 

 

              
 4

5.

Further information on the company:                                                        

 

 

 

 

 

              
 5

6.

Recommendation on further investment in this company, with reasons:                  

 

 

 

 

 

              
 4
 
26

PART B  
Internal auditor’s report on procedures to be implemented for Exotic Clothing Ltd
1.

Procedures to establish the company:                                                       

 

 

 

 

 

              
 4

2.

Records that should be kept on each shareholder, together with reasons:                  

 

 

 

 

 

              
 4

3.

Internal control procedures for fixed assets:                                                                

 

 

 

 

 

              
 4

4.

Internal control procedures for trading stock:                                                             

 

 

 

 

 

              
 4

5.

Internal control procedures for accounts receivable (debtors):                                

 

 

 

 

 

              
 4

6.

Internal control procedures for cash collected: :                                                        

 

 

 

 

 

 

              
 4
 
24


Signed: _____________________ (Internal Auditor) Date: ______________

IMPORTANT NOTE TO TEACHERS: The test includes entries relating to the new CAPS curriculum to be  implemented in 2014, with regard to shares of no par value and the repurchase of shares. The test was adapted  from a previous Grade 12 paper (QUESTION 4 of the 2009 NSC backup paper).  

 ACCOUNTING GRADE 12: TASK B 
2014 CAPS VERSION 

FIRST TERM TEST  
FINANCIAL STATEMENTS OF A COMPANY 

QUESTION PAPER 
100 marks; 60 minutes 

QP Task B 

FINANCIAL STATEMENTS OF A COMPANY (100 marks; 60 minutes) 
You are provided with figures from the Pre-Adjustment Trial Balance of Simphiwe Limited. They buy and sell  uniforms and also repair uniforms for their customers, for which they charge a fee. These fees are credited to  the Fee Income Account in the General Ledger. 
By the end of the previous financial year, 30 September 2011, the company had issued 400 000 ordinary shares.  These shares were all issued at different times and at different issue prices. Many of the existing shareholders  had also bought shares on the JSE at prices negotiated with the sellers of those shares. The company also  issued 100 000 new shares on 1 March 2013. 

REQUIRED 

  1. Refer to Information 10 below.
    Calculate the profit or loss on the disposal of the computer. Show workings. You may prepare  an Asset Disposal Account to identify the figure. (8)
  2. Income Statement for the year ended 30 September 2012. (64) 
  3. The following notes to the financial statements:

3.1 Ordinary share capital (13) 
3.2 Retained income  (15)

INFORMATION 

SIMPHIWE LTD 
PRE-ADJUSTMENT TRIAL BALANCE ON 30 SEPTEMBER 2012

 

DEBIT 

CREDIT

Balance Sheet Accounts Section 

R

Ordinary share capital (500 000 shares) 

 

4 410 000

Retained income (1 October 2011) 

 

812 650

Loan from Stay Bank 

 

270 000

Land and buildings at cost 

4 884 000

 

Vehicles at cost 

660 000

 

Equipment at cost 

570 000

 

Accumulated depreciation on vehicles (1 Oct 2011) 

 

123 000

Accumulated depreciation on equipment (1 Oct 2011) 

 

111 000

Debtors’ control 

109 800

 

Creditors’ control 

 

53 880

Trading stock 

1 398 600

 

Bank 

940 500

 

Petty cash 

6 600

 

SARS – Income tax 

390 500

 

Provision for bad debts 

 

4 320

 

Nominal Accounts Section                                       

R

Sales 

 

8 160 000

Cost of sales 

3 930 000

 

Debtors’ allowances 

18 600

 

Salaries and wages 

486 000

 

Discount allowed 

2 710

 

Fee income 

 

314 250

Rent income 

 

168 000

Insurance 

33 000

 

Sundry expenses 

117 750

 

Directors’ fees 

870 000

 

Audit fees 

161 100

 

Consumable stores 

75 600

 

Interest income 

 

7 500

Dividends on ordinary shares (interim) 

264 000

 

ADJUSTMENTS AND ADDITIONAL INFORMATION 

  1. Prepaid expenses in respect of sundry expenses at the year-end, R9 600, have not been taken into  account.
  2. On 30 September 2012, R1 700 was received from A Ethic, whose account had previously been written off  as irrecoverable. The amount was entered in the Debtors’ Control column in the Cash Journal.
  3. The provision for bad debts must be adjusted to R5 410.
  4. There were two directors at the beginning of the accounting period. Directors’ fees have been paid for the  first half of the accounting period. On 1 April 2012, a third director was appointed. All three directors earn  the same monthly fee. Provide for the outstanding fees owed to the directors.
  5. Rent has been received for 14 months.
  6. The following credit note was left out of the Debtors’ Allowances Journal for September in error. The mark up on goods sold was 50% on cost. 

    SIMPHIWE LTD                                                            CREDIT NOTE 4533
                                                                                                     28 Sept 2012 

    Credit: Supaclean Ltd 
    PO Box 340, Westmead, 3610 

       

    Unit price 

    Total
    48

    Uniforms returned 

    R600

    R28 800  
     

    Reduction on fee charged for  repair of uniforms

      R2 250
          R31 050
  7. The loan statement from Stay Bank showed the following: 
    Balance at beginning of financial year   R450 000 
    Repayments during the year R234 000
    Interest capitalised  R ? 
    Balance at end of financial year  R270 000  
  8.  physical stock count on 30 September 2012 showed the following on hand:
    • Consumable stores on hand, R3 600
    • Stock of uniforms on hand, R1 440 000
  9. The depreciation rate on vehicles is 20% p.a. on the diminishing-balance method. A new vehicle was  bought on 1 May 2012 for R165 000 and properly recorded.
  10. Depreciation on equipment is calculated at 10% p.a. on cost price. Note that an item of equipment was  taken over by one of the directors, Ivor Steele, on 30 June 2012 for personal use for R2 400 cash. The  relevant page from the Fixed Assets Register is provided below. No entries have been made in respect of  the disposal of this asset.

    FIXED ASSETS REGISTER  Page 12  
    Item: VYE Computer Ledger Account: Equipment 
    Data Purchased: 1 April 2006 Cost Price: R66 000
    Depreciation Policy: 10% p.a. on cost price
    Date  Depreciation Calculations Current Depreciation  Accumulated Depreciation
    30 Sep 2009  R66 000 × 10%  × 6/12  R3 300  R3 300
    30 Sep 2010  R66 000 × 10%  × 12/12   R6 600  R9 900
    30 Sep 2011 R66 000 × 10%  × 12/12   R6 600  R16 500
    30 June 2012 ? R? R?
  11. Income tax is levied at 30% of net income before tax.
  12. Details of authorised and issued share capital:
    • Authorised: 600 000 ordinary shares of no par value
    • Issued up to 30 September 2011: 400 000 ordinary shares
    • New issue on 1 April 2012: 100 000 shares at an issue price of R9,50 each. These shares did not  qualify for interim dividends.
  13. Dividends:
    • Interim dividends paid on 31 March 2012, 66 cents per share
    • Final dividends declared on 30 September 2012, 82 cents per share
  14. Repurchase of shares: The directors approved the repurchase of 70 000 shares from several sharehold ers at a repurchase price of R11,20 per share. A direct transfer of funds was made from the bank account  to the shareholders on 30 September 2012, but has not yet been recorded. The shares repurchased  qualify for final dividends during the current financial period.  

Total: 100 marks

ACCOUNTING GRADE 12: TASK B  
2014 CAPS VERSION 

FIRST TERM TEST 
FINANCIAL STATEMENTS OF A COMPANY 

ANSWER BOOK

 

Name of learner

                                                                                                               

School

 

Class

 

 

 

MAXIMUM 

MARKS  ACHIEVED

Part 1

8

 

Part 2 

64

 
Part 3.1 13  
Part 3.2 15  

TOTAL 

100

 

 Answer Book Task B 

1.                                          

Calculate the profit or loss on the disposal of the computer.

WORKINS:

 

 

 

ANSWER:                      

              
 8

2. SIMPHIWE LTD
INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2012 

   
   
   
Other operating income     
   
   
   
   
   
   
Operating expenses    
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Profit before interest expense   
   
Profit before tax                                                                      
   
   
                     
64 

3. NOTES TO THE FINANCIAL STATEMENTS 
3.1 

ORDINARY SHARE CAPITAL

                                        

Authorised: 

 
   
   

Issued: 

 
   
   
   
   
                                         
                    
13 

3.2 

RETAINED INCOME

                                          

Balance at beginning of year

 

Add: 

 

Less:

 

Less: 

 
   
   
Balance at the end of the year                                           
                    
 15
 
 100

NOTE TO TEACHERS: This task is relevant to Grade 12 learners from 2014 (i.e. relevant to CAPS). You may  adapt the material to cater for more than 50 marks, but you should ensure that the final mark is converted to 50  marks as per CAPS. Teachers may allow learners to refer to textbooks in completing this task. 

ALSO REFER TO THE SOURCE MATERIAL FOR THIS TASK 
(PAGES 30-36)  

 ACCOUNTING GRADE 12: TASK C 
SECOND TERM PROJECT  

PUBLISHED FINANCIAL STATEMENTS OF A COMPANY 

QUESTION PAPER AND ANSWER BOOK 
(COMBINED) 

50 marks; 90 minutes 

 

Name of learner

                                                                           

School

 

Class

 

 

MARKS ACHIEVED  
 
 50

FAMOUS BRANDS LIMITED 

REQUIRED  
Study the information provided. Answer the questions which follow. As this task is intended as a project, you may  use your textbook as a resource. 

You are also provided with the following financial indicators for the 2011 financial year:
Current ratio = 1,4 : 1                                                            Acid-test ratio = 1,1 : 1                                                           Dividend pay-out rate = 64% 
Debt-equity  ratio = 0,2 : 1                                                     Net asset value per  share = R7,44                                  % return on shareholders’ equity = 33,9% 
EPS = 242 cents                                                                    DPS = 155 cents

1. General information 

1.1 Refer to page 1 of the source material for the icons of the well-known brands that  comprise Famous Brands Ltd. Name FOUR of these brands and describe the product  or service in which each brand specialises.  

 

                                                         Brand                                                              

                                 Description of speciality product  or service                         

1.

   

2.

   

3.

   

4. 

   
               
 2

1.2    

Give the names of the persons who fill the following positions: Chairman of the  Board of Directors, Chief Executive Officer, Group Financial Director and Company  Secretary. Briefly explain the work done by each of them. 

Position 

Name 

Work done

Chairman

                                                                                                                                                                                                                                       

CEO

   

Group financial  

director 

   

Company secretary 

   
             
 3

1.3

Who are the independent auditors of Famous Brands Limited, and how much were  they paid for their services? Their report is not provided in this summary, but there  is a reference to it in Note 3. Briefly explain what this audit report would contain.  

Independent auditors                                          

                                                                                                                                                                 

Audit fees paid

 

Details of audit report 

 
          
3 

1.4

How many directors does the company have, how many of them are executive  directors and how many of them are non-executive directors? Briefly explain  the difference in the roles of these two types of director. 

Number of directors                                                        

Total = Executive = Non-executive = 

Difference in roles

                                                                                                                                                                
                 

2.

Why did the directors decide to show the graphs of the Earnings per Share and Total  Revenue at the top of the page? Briefly explain what these graphs reflect about the  company for the past five years. 

 

 

 

              

3.

Refer to the commentary by the directors, particularly the Overview and the Financial  results. What did the directors say about the changing habits of their customers, and  how did the directors respond to these changes? 

 

 

Briefly explain the major challenges that the company has faced in the current financial  year. 

 

 

The Operational Review states that the company was involved in three main areas:  Franchising, Manufacturing and Logistics. Explain what is meant by each of these  activities, with specific reference to the work that the company does.  

 

 

Franchising

                                                                                                                                   

Manufacturing

 

Logistics

 

The company does not operate only in South Africa. Provide evidence from the  information to prove this point. 

 

 

 

 

 

 

              
 6

4.

Identify the following figures from the financial statements. Also state where you found  each figure, i.e. in the Income Statement (IS), Balance Sheet (BS) or Cash Flow State ment (CFS). 

 

Where found IS, BS or CFS

Amount  in rand

Gross profit

                                                

Operating profit

   

Net profit before tax

   

Taxation expense

   

Taxation paid

   

Amount owed to SARS at year-end

   

Dividends paid

   

Expansion of fixed assets

   

Replacement of fixed assets

   

Fixed assets at year-end

   

Repayment of loans

   

Current portion of loans

   

Long-term portion of loans

   

Stock on hand 

   
             

5.

Refer to Page 1 of the source material for the highlighted indicators. Provide workings for  the following calculations: 

% increase in revenue 

 

 

% increase in operating profit 

 

 

% increase in headline earnings per share (use basic HEPS) 

 

 

% increase in dividends per share 

 

 

           

6. 

 Calculate the following financial indicators for 2012. Refer to the end of the Income  Statement for the number of shares.

 

 

 

Workings 

Answer

Current ratio

                                                                                                  

Acid-test ratio

   

Headline earnings per share  (use weighted average  

number of shares)

   

% return on average equity

   

Net asset value per share (use  number of issued shares)

   

Debt/equity ratio

   

% return on average capital  employed 

   
              

7.

 Comment on the liquidity position of the company. Quote TWO financial indicators to  support your opinion. 

 

 

 

 

           

 8.

Comment on whether the company tends to retain or distribute its profits. Provide evi dence to support your opinion. Briefly explain how this could affect the share price on  the JSE.  

 

 

 

              

9.

Comment on the gearing of the company. Should the company repay loans or take out  more loans? Provide evidence to support your opinion.                              

 

 

 

 

         

10.

In February 2012 the share price of the company on the JSE was R53,00. The price in creased to R79,00 in February 2013. Comment on whether or not you feel the company’s  shares are fairly valued. Provide evidence to support your opinion.   

 

 

 

 

 

             
 3

11.

Should the shareholders be satisfied with the percentage return, earnings and dividends  for the 2012 financial year? Explain. Provide evidence to support your opinion.  

 

 

 

 

          
 4

12.

What do the directors say about the prospects for the future? Would this influence you in  buying shares in Famous Brands Limited?                                               

 

 

 

 

 

           

TOTAL: 50 marks

SOURCE MATERIAL FOR TASK C 

SECOND TERM PROJECT 

Refer to the attached extract from the published annual report of 
FAMOUS BRANDS LIMITED. 

6 pages to follow 

(p 31-36) 

144 task c
145 task c 2
146 task c 3
147 task c 4
148 task c 5
149 task c 6

NOTE TO TEACHERS: This task is relevant to Grade 12 from 2014 (i.e. relevant to CAPS). Teachers may choose  to increase the marks on specific items and mark the case study out of 75 or 100 marks, as long as the final  weighting is as per CAPS.  

ACCOUNTING GRADE 12: TASK D 
THIRD TERM ASSESSMENT TASK  
CASE STUDY: CASH BUDGET AND DEBTORS 

QUESTION PAPER 

50 marks; 60 minutes 

 

Preamble 
Nikke Stores is a retail business that sells sporting goods. The business was originally owned by Bennie Becker.  The financial year ends on 31 December each year. As Bennie’s wife, Mary, had studied Accounting at school,  he asked her to prepare a Cash Budget for the business and to enter the actual figures each month. 
In February 2013, you are provided with this Cash Budget, which also reflects actual figures.  The business had a bank overdraft of R325 400 on 1 December 2012.  
In order to solve the overdraft problem, Bennie Becker decided to admit Mark Mtini as a new business partner  on 28 December 2012. This was not anticipated when Mary drew up the Cash Budget at the beginning of  December. The partnership agreement stated that Mtini’s capital contribution comprised a transfer of cash,  R250 000, and a new delivery vehicle valued at R180 000.  

REQUIRED 

  1. Bennie Bekker feels that his wife made two mistakes in compiling the budget. He says that she  incorrectly left out the following:
    • The monthly depreciation of R4 800 per month
    • The new delivery vehicle, valued at R240 000, provided as capital by Mtini
      What would you say to Bennie regarding the mistakes he thinks his wife made? (2)
  2. Complete the Debtors’ Collection Schedule for December 2012 and January 2013. (4)
  3. Calculate the following for January 2013:
    • Percentage increase in the budgeted salaries and wages (2)
    • Percentage decrease in the amount budgeted for commission income  (2)
  4. The R9 000 per month is the monthly repayment on the purchase of the existing vehicle. This was  bought several months ago for R196 000. At the time of purchase, a deposit of R46 000 was paid.  Instalments are paid over 24 months. Calculate the total finance charges incurred in the purchase  of this vehicle. (2)
  5. Bennie’s son, Bart, used the business vehicle to attend his matric farewell party and was involved  in an accident. The insurance company refused to repair the vehicle as Bart was not listed as a  designated driver and the vehicle was not being used for business purposes. Bennie authorised  payment for the repairs to the damaged vehicle and charged this to Vehicle Expenses. The business  has over-budgeted on normal vehicle expenses and spends 75% of the budgeted amount.
    • What effect did the damage caused by Bart have on the budget?  (2) 
    • Mtini has become aware of this. What is he likely to say to Bennie? State TWO points. (2)
  6. Refer to the Rent in the Cash Budget. A rent increase of 10% takes effect on 1 January 2013. The  actual rent received in December was as per the budget. 
    • Calculate the rent income for December 2012.  (2)
    • Provide a suitable explanation for the actual amount of rent collected in January 2013 being  different from the budgeted amount.  (1)
  7. Payments to creditors:
    • Calculate the budgeted amount to be paid to creditors in January 2013.  (2)
    • Mtini feels that the business need not buy any goods for cash, and that all goods should be  bought on credit. In your opinion, will this improve the business Cash Budget? Explain.  (2)
  8. Bennie Bekker decided to repay the existing loan from Alpha Lenders in full on 31 December 2012  as the interest rate was very high. The interest of 15% p.a. on this loan was not capitalised. He then  decided to take out a new loan with Minty Bank on 1 January 2013. Interest is capitalised on this loan  and according to the agreement a monthly amount of R4 000 is to be paid to Minty Bank on the 25th day of each month.
    • Explain the difference between interest capitalised and interest not capitalised.  (1)
    • Calculate the amount of the loan to be repaid on 31 December 2012. (2)
  9. Use the Cash Budget to identify the missing figures, totals and balances designated A-D. You are  NOT required to identify the other missing figures. (4)
  10. Mtini is worried that the business is not controlling the debtors properly. He asks you for a short report.  Include the following in your report:
    • Calculation of average debtors’ collection period (in days) (2)
    • The percentage of debtors who are complying with the credit terms (as indicated in the Debtors  Age Analysis) (2)
    • A brief comment on the above two calculations (1)
    • Details of the main mistakes that the business is making with regard to debtors. Also provide  the names of specific debtors to illustrate these main problems and suggest a solution for each mistake.  (6)
  11. Consider the actual and budgeted figures for Advertising, Telephone and Insurance. (Note that Mtini  has not drawn any funds as yet.) Comment on each item, and offer ONE point of advice in each case. (6)
  12. Bennie has made two significant decisions by taking out a new loan and admitting a partner to the  business. What would you say to Bennie about these decisions and the effect on the cash flow of the  business? (3) 

INFORMATION ON NEXT TWO PAGES …

INFORMATION 
1.

Cash Budget for two months ending 31 January 2013 (actual figures in shaded columns): 
December 2012 January 2013 

Receipts    December 2012   January 2013 
 BUDGET  ACTUAL  BUDGET   ACTUAL
Cash sales  480 000  452 000  330 000  208 000
Receipts from debtors  ?  189 980  ?  222 685
Commission income  24 000  ?  20 400  12 000
Loan from Minty Bank  0  0  0  120 000
Rent income  ?  ?  15 950  31 900
Capital from M Mtini  0  250 000  0  0
Total Receipts 778 798 926 480 ? 594 585
Payments        
Cash purchases 222 500 245 750 155 000 110 380
Payments to creditors 181 800 162 000 ? 184 000
Telephone 2 800 4 500 2 800 4 200
Repayment on existing vehicle 9 000 9 000 9  000 9 000
Vehicle expenses 8 000 6 400 8 000 37 500
Salaries and wages 68 000 82 800 72 080 72 080
Advertising 5 000 5 000 5 000 5 000
Sundry operating expenses 23 380 19 400 17 300 17 320
Insurance 22 000 16 000 22 000 16 000
Drawings by Bennie Bekker 25 000 25 000 25 000 35 000
Interest on overdraft 4 020 ? ? 0
Interest on loan 500 500 500 0
Repayment of loans 0 ? 0 4 000
Total payments 572 000 620 370 516 930 494 480
Cash surplus/shortfall 206 498 306 110 ? 100 105
Bank(Opening balance) (325 400) (325 400) A C
Bank (Closing balance) ? (19 290) B D

2. Purchases and sales of trading stock 
Stock is replaced on a monthly basis. 
50% of stock is usually purchased on credit. 
Creditors are paid in the month after the purchases, to take advantage of a 10% discount. Goods are sold at a constant mark-up of 80% on cost. 
The budget is worked out on the following total sales figures: 

October 2012 

November 2012 

December 2012 

January 2013

R603 00 

R727 200 

R801 000 

R558 000

Credit sales constitute 40% of the total sales. 

3. Expected collections from debtors: 
Debtors are told that they are expected to pay in the current month or in the month following the sales  transaction month. However, the budget is compiled as follows: 

10% is collected in the transaction month. A discount of 5% is allowed for any payment received in the  transaction month. 
50% is collected in the month after the transaction month. 
35% is collected in the second month after the month of sale. 

4. Debtors Age Analysis on 31 December 2012 

DEBTORS CREDIT LIMIT SEPTEMBER  OCTOBER NOVEMBER DECEMBER  TOTAL
M Minaj  45 000        49 100  49 100
U Usher  85 000    

7 800 

 40 680  48 480
B Beiber  30 000        24 000  24 000
B Britney  100 000  49 125

45 240 

9 050 

 25 865  129 280
J Jemson  12 000  

6 500 

     6 500
W West  50 000        22 000  22 000
D Drake  120 000  29 800

39 000 

24 000 

 26 680  119 480
H Hannah  25 000    

31 100 

 9 300  40 400
W Wayne  45 000  

4 350 

23 270 

 8 740  36 360
Other debtors   ?

 ?  ?
    R156 725  R234 250  R172 500  R201 300 R764 775 
    90 days  60 days  30 days  Current  
Percentage   %  %  %  % 100% 

5. Actual figures from financial statements for year ended 31 December 2012: 

 

For the year

 

Total sales 

R4 600 000

 

Cash sales 

R2 200 000

 

Credit sales 

R2 400 000

 
 

1 January 2012 

31 December 2012

Trade debtors 

R295 225 

R764 775

TOTAL: 50

ACCOUNTING GRADE 12: TASK D 

THIRD TERM ASSESSMENT TASK 

CASE STUDY: CASH BUDGET AND DEBTORS 

ANSWER BOOK  

 

Name of learner

                                                                   

School

 

Class

 

 

MARKS  

ACHIEVED

 
 50

1.

What would you say to Bennie about the mistakes that he says his wife made in compiling  the budget with regard to the depreciation and the contribution of a new delivery vehicle? 

 

 

 

         

2.Debtors’ Collection Schedule for December 2012 and January 2013  

MONTH  CREDIT SALES DECEMBER 2012 JANUARY 2013
October      
November      
December      
January      
Cash from debtors      
          

3.

Calculate % increase in budgeted salaries and wages in January 2013. 

 

 

 

Calculate % decrease in amount budgeted for commission income in January 2013.                           

 

 

 
           

4.

 Calculate total finance charges incurred in the purchase of the vehicle.                                                

 

 

 

       
 2

5.

 Effect on the budget: 

 

 

TWO points that Mtini would mention to Bekker: 

 

 

 

 

6.

 Calculation of rent income for December 2012:

 

 

Suitable explanation: 

 

 

 

7.

Calculate the budgeted payments to creditors in January 2013. 

 

 

 

Mtini feels that the business need not buy any goods for cash, and that all goods should  be bought on credit. In your opinion, will this improve the business Cash Budget? Explain. 

 

 

 
 

8.

 Explain the difference between interest capitalised and interest not capitalised. 

 

 

 

Calculate the amount of the loan repaid on 31 December 2012. 

 

 

 

 

9.

 Use the Cash Budget to identify the missing figures, totals and balances designated  A–D. You are NOT required to identify other missing figures

                          A                                                    B                                                                C                                                                        D                        
 

10.

Calculation of average debtors’ collection period (in days): (2)

 

Calculation of % of debtors who are complying with the credit terms (as indicated in the  Debtors Age Analysis): (2)

 

Brief comment on the above two calculations: (1)

 

Details of the main mistakes that the business is making with regard to debtors. Also  provide the names of specific debtors to illustrate these main problems and suggest a  solution for each mistake. (6)

                     MISTAKES                                            DEFAULTING DEBTORS                                            SOLUTION                      
     
                                  

11. Consider the actual and budgeted figures for Advertising, Telephone and Advertising.  (Note that Mtini has not drawn any funds as yet.) Comment on each item, and offer ONE  point of advice in each case. 

                       COMMENT                                            ADVICE                      
ADVERTISING    
TELEPHONE    
INSURANCE    
 

12.

Bennie has made two significant decisions by taking out a new loan and  admitting a partner to the business. What would you say to Bennie about  these decisions and the effect on the cash flow of the business? 

 

 

 

 

 

 

 

 

 
 
50

MARKING  GUIDELINES

NOTE TO TEACHERS: This task is relevant to Grade 12 learners from 2014 (i.e. relevant to CAPS). This task  comprises two parts. You may adapt the material to take the needs of your class group into account. For example,  you may require them to do Part A on their own and Part B in class. Or you may require the class to do only Part  B as a formal report, and undertake Part A as an extension task in class on a weekly basis. If you choose to adapt  the material in any way, you should ensure that the task comprises 50 marks as per CAPS. 

ACCOUNTING GRADE 12: TASK A 

FIRST TERM ASSESSMENT TASK  

REPORT ON COMPANIES 

MARKING GUIDELINE  

THIS TASK CONSISTS OF TWO PARTS 
PART A Report on a public company listed on the JSE 
PART B Internal auditor’s report on procedures and internal controls in a public company

MARKING GUIDELINE FOR PART A 
PART A  

Report on a public company listed on the JSE 
Marking Rubric 

Criteria 

Poor/Incorrect 

Mark 

Satisfactory 

Mark 

Good 

Mark 

Excellent 

Mark

Maximum number  of shares that  your aunt can buy

Weak calculations  on share  purchase 

0–1

Some aspects  are adequately  covered 

2

Good calculations  presented 

3

Excellent  calculations  showing great  understanding

4

Share price and  other calculations

Weak calculations

0–1

Some aspects  are adequately covered

2

Good calculations presented 

3

Excellent  calculations  presented

4–5

Graph of the  company’s share  price

Weak  presentation of  information in  graph

0–1

Some aspects  are adequately covered 

2

Good preparation  of graph 

3

Excellent graph  presented 

4

Graph of the  value of your  aunt’s investment  portfolio

Weak  presentation of  information in  graph

0–1

Some aspects  are adequately covered 

2

Good preparation  of graph 

3

Excellent graph  presented 

4

Further  information on the  company

Poor information  collected on the  company

0–1

Some aspects  are adequately  covered

2

Good information  collected on the  company

3

Excellent  information  collected

4–5

Recommendation  on further  investment in this  company, with  reasons

Poor  recommendations on further  investment

0–1

Some aspects  are adequately  covered 

2

Good  recommendations made 

3

Excellent  recommendations  made 

4

 
26 

MARKING GUIDELINE FOR PART B 
Expected reponses are provided below. Marking guidelines are as follows:  
Excellent answer = 4 marks; Good = 3 marks; Satisfactory = 2 marks; Poor = 1 mark; Incorrect = 0
Internal auditor’s report on procedures to be implemented for Exotic Clothing Ltd: 

1.  (4)

Procedures to establish the company:  

  • The company is started and registered by a promoter
  • A memorandum of incorporation and a prospectus must be drafted in the prescribed form and  submitted to CIPRO (the Companies and Intellectual Properties Commission), together with  the necessary declarations and fees 
  • Company is formed when CIPRO certifies the memorandum of incorporation and declares the  company registered 
  • Public are informed of the company through the publication and distribution of the prospectus 
  • Prospective shareholders must submit full payment for shares ordered by them together with  the share application form – a financial institution will usually be appointed by the company to  handle the share applications and process the specific allotments to shareholders 
  • After allotment, successful applicants are issued with share certificates in respect of the  allotted shares (note that share certificates may be in digital or electronic format) 

2. (4)

Records that should be kept on each shareholder, together with reasons: 

Records  Reason 
  • Completed application form
  • Acknowledges the individuals' intention of  investing in the company  
  • Certified copies of the personal particulars of shareholders 
  • The existence of the individual can be  verified through these details 
  • Banking details of shareholders
  • Dividends will be deposited directly into the  current banking account of the shareholder  
  • Income tax number or tax  registration details 
  • SARS will be directly informed of benefits to  the shareholders 
  • Number of shares allocated to the  shareholder
  • Calculation of dividends 
  • Postal and/or email addresses
  • Financial statements and other details can  be forwarded to the shareholder

3 (4)

Internal control procedures for fixed assets: 

  • Duties to be divided among the employees in the Accounting department so that the work of  one person serves as a check on another to prevent abuse and fraud.
  • Proper procedures and documentation for the purchasing, receiving, recording of assets  acquired and the disposal of fixed assets.
  • Assets must be properly valued and must include the cost of installation.
  • Fixed assets acquired must be properly recorded in the fixed assets register.
  • Ongoing identification of fixed assets is done.
  • Missing/Damaged fixed assets are logged. Investigations must be carried out and reports  written out on the findings.
  • Profits and losses are properly recorded when assets are disposed of.
  • Fixed assets must be adequately insured.
  • Appointment of a fixed assets manager to take control over the fixed assets. 
  • There must be clear guidelines on the use of fixed assets – as a rule all assets must be used  for business purposes only. 

4 (4)

Internal control procedures for trading stock: 

  • Duties to be divided among the employees in the Accounting department so that the work of one  person serves as a check on another to prevent abuse and fraud. 
  • A senior person or appointed buyer is usually responsible for placing orders. 
  • Division of duties – the person responsible for ordering should not have access to creditors’  accounts, payments and stock movements.
  • When stock arrives, it must be checked against the delivery note.
  • The invoice must also be checked against the order note, and all calculations thereon must be  verified. 
  • Reports must be sent to management on obsolete, damaged and slow–moving stock.
  • Stock–taking must be completed so that stock losses can be determined.
  • Adequate security systems must be in place to monitor and control stock theft.
  • Invoices must be checked to creditors’ statements and reconciled so that differences can be  identified.
  • Payment properly authorised after creditors’ reconciliations are done. 

5. (4) 

Internal control procedures for accounts receivable (debtors): 

  • Duties to be divided among the employees in the Accounting department so that the work of one  person serves as a check on another to avoid the possibility of abuse and fraud.
  • Prospective debtors must complete relevant application forms.
  • The details provided on the application form must be verified by the debtors’ clerk.
  • Checks for possible blacklisting must be carried out. 
  • Screen debtors’ past performance by checking credit references. 
  • A certain credit limit is set based on the information on the application form and checking of all  relevant details. 
  • Credit terms must be clearly set out to prospective debtor. 
  • Continuous monitoring of limit of credit sales and timeous settlement of the amount due.
  • Statements to be sent out at month end (25th) to inform debtors of amount owed.
  • Offer discounts or charge interest to motivate debtors to settle debts promptly. 
  • Defaulting debtors must be contacted immediately to remind them of payment due, and also  establish reason for not settling timeously. 
  • Credit to debtors with amounts overdue must be stopped immediately.
  • Inform debtors with long overdue accounts that legal action will be taken to recover amounts  owing. 

6.    (4) 

Internal control procedures for cash collected 

  • Duties to be divided among the employees in the Accounting department so that the work of  one person serves as a check on another to avoid the possibility of abuse and fraud. 
  • All cash collected must be receipted. The cashier must hand over the cash collected to the  chief cashier. 
  • The chief cashier will prepare the deposit slip by verifying the amounts received through  additions of duplicate receipts and cash register tapes. 
  • All cash received must be deposited on a daily basis. Owner can make arrangements with  the bank to receive an SMS notification for all deposits made into his account. 
  • Reconciliation procedures must be carried out regularly to ensure all monies received is be ing deposited. 
  • Division of duties – this will avoid fraudulent activities by individuals. 


Signed: _________________________ (Internal Auditor) Date: ______________ 

 
 24

IMPORTANT NOTE TO TEACHERS: This test is NOT relevant to 2013 Grade 12 learners. The test includes  entries relating to the new CAPS curriculum to be implemented in 2014, with regard to shares of no par value and  the repurchase of shares. The test was adapted from a previous Grade 12 paper (QUESTION 4 of the 2009 NSC  backup paper).  

ACCOUNTING GRADE 12: TASK B(i) 

2014 CAPS VERSION  
FIRST TERM TEST 
FINANCIAL STATEMENTS OF A COMPANY
MARKING GUIDELINE 

1. (8)

Calculate the profit or loss on the disposal of the computer: 
 No part marks  
      ✔            ✔       ✔✔✔          ✔          ✔✔ 
66 000 – 16 500 – 4 950 – 2 400 = R42 150 
OR 
      ✔               ✔      ✔✔✔          ✔          ✔✔ 
66 000 – (16 500 + 4 950) – 2 400 = R42 150 
OR 

Cost price 

66 000 

Accu depr (16 500 ✔ + 4 950 ✔✔✔) 

21 450 

 

Carrying value 

44 550  

Disposal/Bank 

2 400 

Loss on sale of asset 

42 150 

✔✔


Asset disposal 
Equipment   ✔66 000   Accu depr (16 500✔ +4 950 ✔✔✔) 21 450
Ignore details here   Bank ✔ 2 400
    Loss on sale of asset ✔✔42 150 
   66 000    66 000 

2. (64 makrks)

  SIMPHIWE LTD

INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2012  

  Sales (8 160 000✔ – 18 600✔ – 28 800✔) ✔ 8 112 600
  Cost of sales (3 930 000✔ – 19 200✔) ✔ (3 910 800)
 9 Gross profit ✔                                                  Operation, COS must be deducted  🗹 4 201 800
  Other operating income                                                             Check operation  🗹 479 900 
   Fee income (314 250✔ – 2 250✔) ✔ 312 000
   Rent income (168 000✔– 24 000✔✔) ✔ 144 000
   Bad debts recovered ✔✔ 1 700
13

Trading stock surplus [1 440 000 – (1 398 600 + 19 200)]  

 One part correct

🗹✔✔ 22 200 
    4 681 700 
  Operating expenses                                                                            Operation 🗹 (3 224 700)
  Salaries and wages ✔ 486 000
  Discount allowed  ✔ 2 710
   Insurance ✔ 33 000
  Sundry expenses (117 750✔ – 9 600✔) ✔ 108 150
   Directors’ fees (870 000✔ + 870 000✔+ 435 000✔)  ✔ 2 175 000
  Audit fees ✔ 161 100
  Consumable stores (75 600✔ – 3 600✔) ✔ 72 000
  Provision for bad debts adjustment (5 410✔ – 4 320✔) ✔ 1 090
  Depreciation (4 950🗹 + 13 750✔✔+ 74 400✔✔+ 50 400✔✔) 
See 4.1.1 Operation, one part correct 
🗹 143 500  
28  Loss on sale of asset See 4.1.1 🗹🗹 42 150 
  Operating profit ✔                                    Operation, expenses must be deducted  🗹 1 547 000
   Interest income ✔ ✔ 7 500
   Profit before interest expense Operation 🗹 1 464 500
   Interest expense ✔ ✔✔ (54 000)
  Profit before tax                                           Operation, interest must be deducted 🗹 1 401 500
    Income Tax ✔                                                                 If = 30% of figure above 🗹🗹 (423 150)
 14

Net profit after tax ✔      Operation, tax and interest   expense must be deducted

  🗹 978 350 14 
  • Foreign items –1 each (max –2);
  • Ignore Trading Stock AND Provision for Bad Debts as foreign items
  • If interest income/interest expense in two places, treat as foreign item
  • If interest income/interest expense misplaced, –1 each time (–2 max) (Total marks = 64)

3. NOTES TO THE FINANCIAL STATEMENTS 
3.1 (13 )

ORDINARY SHARE CAPITAL

 

Authorised: 

 

600 000 ordinary shares ✔

 
   

Issued: 

 

✔400 000 shares in issue on 1 October 2011 (4 410 000–950 000) 

✔3 460 000

✔100 000 shares issued on 1 April 2009 at R9,50 each 

✔✔950 000

✔ 70 000 shares repurchased on 30 September 2012  (70 000✔ x R8,82✔)

✔✔(617 400) 

✔430 000 shares in issue on 30 September 2012 

🗹3 792 600

3.2 (15)

RETAINED INCOME

 

Balance at beginning of year 

✔812 650

Add: Net profit after tax ✔                See Inc Stmt 

🗹978 350

Less: Shares repurchased ✔ (70 000✔ x R2,38✔) 

✔✔(166 600)

Less: Dividends ✔                                 Operation 

🗹(674 000)

Interim ✔264 000
Final  (500 000✔ x 82c✔)  ✔410 000 
   
Balance at end of year                           Operation  🗹1 117 000 

TOTAL FOR SECTION: 100 MARKS

NOTE TO TEACHERS: This task is relevant to Grade 12 learners in 2013 and from 2014 (i.e. relevant to CAPS  as well). You may adapt the material to cater for more than 50 marks, but you should ensure that the final mark  is reduced to 50 marks as per CAPS. Teachers may allow learners to refer to textbooks in completing this task.  ALSO PROVIDE LEARNERS WITH THE RESOURCE MATERIAL FOR THIS TASK (SEPARATE DOCUMENT). 

ACCOUNTING GRADE 12: TASK C 
SECOND TERM PROJECT 
PUBLISHED FINANCIAL STATEMENTS OF A COMPANY
MARKING GUIDELINE 

You are provided with a summary of the published financial statements of FAMOUS BRANDS LIMITED for the  year ended 29 February 2012. 
REQUIRED 
Study the information provided. Answer the questions which follow. As this task is intended as a project, you may  use your textbook as a resource. 
You are also provided with the following financial indicators for the 2011 financial year:
Current ratio = 1,4 : 1                                                Acid–test ratio = 1,1 : 1                                             Dividend pay-out rate = 64%
Debt-equity ratio = 0,2 :1                                          Net asset value per share = R7,44                           % Return on shareholders’ equity = 33,9%
EPS = 242 cents                                                       DPS = 155 cents 
Part–marks may be awarded for partial or incomplete answers. 
1. General information: 
1.1 (2)

Refer to Page 1 of the source material for the icons of the well-known brands  that comprise Famous Brands Ltd. Name FOUR of these brands and describe  the product or service in which each brand specialises.  

All items correct = 2 marks; partly correct = 1; incorrect = 0 
Any four brands from the information provided e.g. 

  Brand   Description of speciality product or service  
 1 Wimpy  Fast foods sold to the public  
 2 Debonairs Pizza, with delivery service
 3 Mugg and Bean Coffee shop with meals 
 4 Steers Steaks, with other meals 

1.2  (3)

Give the names of the persons who fill the following positions: Chairman of  the Board of Directors, Chief Executive Officer, Group Financial Director and  Company Secretary. Briefly explain the work done by each of them. 
All items correct = 3 marks; mostly correct = 2; poor = 1; incorrect = 0 

Position Name   Work done 
Chairman P Halamandaris He chairs the meetings of the  Board of Directors. 
CEO KA Hedderwick He runs the company on a daily basis; ensures that board decisions are carried out. 
Group financial director SJ Aldridge  He is in charge of the Accounting  department, finances and internal  audits. 
Company  secretary JG Pyle He ensures that all legal  procedures are complied with. 

1.3     (3) 

Who are the independent auditors of Famous Brands Limited, and how much  were they paid for their services? Their report is not provided in this summary,  but there is a reference to it in Note 3. Briefly explain what this audit report  would contain.  
All items correct = 3 marks; mostly correct = 2; poor = 1; incorrect = 0 

Independent auditors   RSM Betty and Dickson (Johannesburg) 
Audit fees paid   R3 053 000  
Details of audit report  Unqualified. The report contains a description of  the duties of the directors and auditors, and the  compliance with IFRS and the Companies Act. The  audit opinion is that the financial statements fairly present the financial results.  

1.4 (3 )

How many directors does the company have, how many of them are executive  directors, and how many of them are non-executive directors? Briefly explain  the difference in the roles of these two types of director. 
All items correct = 3 marks; mostly correct = 2; poor = 1; incorrect = 0 

Number of directors  Total = 9; Executive = 3;  

Non-executive = 6 

 Difference in roles  Executive directors have full-time jobs in the  company.
Non-executive directors attend board  meetings to make policy decisions on how the  company is to be organised and run. 

2. 

(2)

Why did the directors decide to show the graphs of the Earnings per Share and Total  Revenue at the top of the page? Briefly explain what these graphs reflect about the  company for the past five years. 
Expected response: Correct answer = 2 marks; part correct = 1; incorrect = 0 
These two graphs represent the overall progress of the company. They reflect a steady improvement  in Earnings per share (which is a vital indicator of profits accruing to the shareholders) and  Revenue (Income, including sales), which affects all activities and results of the company. 

3. (6)

Refer to the Commentary by the directors, particularly the Overview and the Financial  results. What did the directors say about the changing habits of their customers, and how  did the directors respond to these changes? 
Expected response: Excellent answer = 2 marks; good/satisfactory = 1; incorrect = 0 
The number of customers increased, but their number of visits decreased by 10%. The directors  opened another 146 restaurants (reaching their target of 2 000) and opened a new business,  Creative Coffees (this business specialises in providing a service to a potential group of customers  visiting hospitals). They also do surveys of customers to ensure that they get feedback on the  quality of their services. 

Briefly explain the major challenges that the company has faced in the current financial  year.  
Expected response: Correct answer = 1 mark; incorrect = 0 
New trends; aggressive price cutting and marketing/promotions by competitors to increase  market–share; changes in the sizes of portions served; menu changes. 

The Operational Review states that the company was involved in three main areas:  Franchising, Manufacturing and Logistics. Explain what is meant by each of these  activities, with specific reference to the work that the company does.  
Excellent answer = 2 marks; good/satisfactory = 1; incorrect = 0 

Franchising  Famous Brands Ltd enters into contracts with individual entrepreneurs  who accept the conditions and high standards expected of the brand.  The individuals run the restaurants and pay franchise fees to the  company.  
Manufacturing Famous Brands Ltd manufactures some of the products that they  supply to the restaurants.  
 Logistics Logistics relates to the storage and delivery of the products needed by  the restaurants. 
The company does not operate only in South Africa. Provide evidence from the information  to prove this point. 

Expected response: Correct answer = 1 mark; incorrect = 0 
The operational review mentions international franchising. The Income Statement reflects foreign  currency transaction differences and Note 4 reflects foreign exchange losses. 

4. (4)

Identify the following figures from the financial statements. Also state where you found  each figure i.e. in the Income Statement (IS), Balance Sheet (BS) or Cash Flow Statement  (CFS). 
All workings correct = 4 marks; one or two errors = 3; half correct = 2; poor = 1; incorrect = 0

  Where found  IS, BS or CFS  Amount Rand  
Gross profit  IS 922 967 000
Operating profit IS   412 656 000
Net profit before tax  IS  402 004 000
Taxation expense IS  133 950 000 
Taxation paid CFS  131 719 000
Amount owed to SARS at year-end BS  12 716 000
Dividends paid CFS  159 165 000
Expansion of fixed assets CFS  45 793 000
Replacement of fixed assets CFS 9 776 000
Fixed assets at year-end BS 155 739 000
Repayment of loans CFS 65 634 000
Current portion of loans BS 69 936 000
Long-term portion of loans BS 52 216 000
Stock on hand BS 119 987 000 

5. (4)

Refer to Page 1 of the source material for the six highlighted indicators. Provide  workings for the following calculations:
All workings correct = 4 marks; one or two errors = 3; half correct = 2; poor = 1; incorrect = 0 
% increase in revenue 
       277 579     ×    100 = 14,8% 
  1 878 036               1 

% increase in operating profit 
   54 203    × 100 = 15,1% 
 358 453         1 

% increase in headline earnings per share (use basic HEPS) 
   36   ×  100 = 14,9% 
  242         1 

% increase in dividends per share 
   45  × 100 = 29,0% 
 155       1 

6. (4)

Calculate the following financial indicators for 2012. Refer to the bottom of the Income  Statement for the number of shares.
All workings correct = 4 marks; one or two errors = 3; half correct = 2; poor = 1; incorrect = 0

  Workings  Answer  
Current ratio  361 865 000 : 274 175 000 1,3 : 1 
Acid–test ratio 241 878 000 : 274 175 000 0,9 : 1 
Headline earnings per share (use  weighted average number of shares)       R267 438 000         ×   100    
96 102 435 shares              1  
278 cents 
 % return on average equity   R268 054 000    ×  100 
 R774 482 000           1 
34,5% 
Net asset value per share (use  number of issued shares)        R840 370 000     × 100 
 96 192 435 shares        1 
873 cents 
Debt/equity ratio 106 624 000 : 840 370 000 0.1 : 1 
% return on average capital employed       R402 004 000 + R 10652 000      × 100  
½ (R946 994 000 + R885 626 000)        1  
45,0% 

7. (3)

Comment on the liquidity position of the company. Quote TWO financial indicators to  support your opinion. 
Expected response: Excellent answer = 3 marks; good = 2; poor = 1; incorrect = 0 
The current ratio remained approximately the same for the past two years at 1,3 : 1 and 1,4 : 1.  The acid-test ratio has decreased slightly from 1,1 : 1 to 0,9:1. 
Although the current ratio is quite low, it is appropriate for this type of business – the company has  obviously operated efficiently with these ratios in past years, stock has to be kept at low levels  because of the nature of the food industry, and sales to customers will generally be for cash or by  way of credit card. 

8. (3)

Comment on whether the company tends to retain or distribute its profits. Provide evidence  to support your opinion. Briefly explain how this could affect the share price on the JSE. 
Expected response: Excellent answer = 3 marks; good = 2; poor = 1; incorrect = 0
The dividends pay–out rate for 2012 was 200/278 = 72% 
The dividends pay–out rate for 2011 was 155/242 = 64% 
The company appears to distribute most of its earnings to the shareholders.  
The willingness to distribute dividends could increase the share price on the JSE because it will  make the shares more attractive to shareholders who are looking for instant returns. However, if  shareholders are looking for capital growth in the value of the shares, this could depress the price  as it affects the retained income, which affects the net asset value. 

9. (3)

Comment on the gearing of the company. Should the company repay loans or take out  more loans? Provide evidence to support your opinion. 
Expected response: Excellent answer = 3 marks; good = 2; poor = 1; incorrect = 0 
The debt/equity ratio has decreased from 0,2 : 1 to 0,1 : 1, which indicates that the gearing  and degree of financial risk has decreased. However, the % return on total capital employed  is very high at 45%, which indicates that the company is very efficient, while interest rates are  much lower (currently approx 10–12%), so loans can be productively used to gear up returns  even more. 

10. (3)

The share price of the company on the JSE in February 2012 was R53,00. The price  increased to R79,00 in February 2013. Comment on whether or not you feel the  company’s shares are fairly valued. Provide evidence to support your opinion.  
Expected response: Excellent answer = 3 marks; good = 2; poor = 1; incorrect = 0 
The net asset value is only R8,73, while the share price was at R53,00 at that time. This  indicates that there is considerable demand from the public for the company’s shares – the  track record of the company obviously indicates that investment in the company’s shares is a  sustainable and profitable one.  
Also, the assets might be undervalued (possibly due to the application of conservative  accounting principles) which could have depressed the NAV. 

11. (4)

Should the shareholders be satisfied with the percentage return, earnings and dividends  for the 2012 financial year? Explain. Provide evidence to support your opinion.  
Expected response: Excellent answer = 4 marks; good = 3 or 2; poor = 1; incorrect = 0 
The % return has increased from 33,9% to 34,5% and this significantly exceeds the returns on  alternative investments. 
The EPS improved from 242 cents to 278 cents. 
The DPS improved from 155 cents to 200 cents. 
However, for new shareholders, if they have to buy shares at R79,00 each, then earning a  R2,00 EPS amounts to only 5% of the share price in 2012, and only 3,5% of the 2013 share  price. It would be interesting to check the 2013 NAV to the share price in Feb 2013, when the  2013 financial statements are published. 

12. (3)

What do the directors say about the prospects for the future? Would this influence you  in buying shares in Famous Brands Limited? 
Expected response: Excellent answer = 3 marks; good = 2; poor = 1; incorrect = 0 
The directors have pointed out the challenges, i.e. whether customers will have sufficient  disposable income to spend on luxuries like ‘eating out’ after paying for all their home  expenses, which have gone up significantly e.g. electricity, fuel and food. The directors also  explain the strategies they will use in looking for new opportunities, reducing costs and finding  new markets. This creates a favourable impression for future investors. Learner must express  an opinion on how this would influence him/her. 

TOTAL: 50 marks

NOTE TO TEACHERS: This task is relevant to Grade 12 learners in 2013 and from 2014 (i.e. relevant to CAPS  as well). Teachers may choose to increase the marks on specific items and mark the case study out of 75 or 100  marks, as long as the final weighting is as per CAPS (reduced to 10 marks).  

ACCOUNTING GRADE 12: TASK D 

THIRD TERM ASSESSMENT TASK  
CASE STUDY: CASH BUDGET AND DEBTORS 

MARKING GUIDELINE

 1. (2) 

What would you say to Bennie regarding the mistakes he thinks his wife made in compiling  the budget with regard to the depreciation and the contribution of a new delivery vehicle? 
These are not mistakes. Both are non-cash items which do not affect the bank balances, so they  must not be in a Cash Budget. üü 

2. Debtors’ Collection Schedule for December 2012 and January 2013 ✔✔✔✔ (4)
All figures correct = 4 marks; Most correct = 3; Some correct = 2; Few correct = 1; None correct = 0  

MONTH 

CREDIT SALES 

DECEMBER 2012 

JANUARY 2013

October 

241 200 

84 420

 

November 

290 880 

145 440 

101 808

December 

320 400 

30 438 

160 200

January 

223 200 

 

21 204

Cash from debtors 

260 298 

283 212

3. (4)

Calculate % increase in budgeted salaries and wages in January 2013.  
 4 080  ×   100 = 6% ✔🗹 any one part correct i.e. 4080 or 68 000 
68 000        1 

Calculate % decrease in amount budgeted for commission income in Janu ary 2013 

 3 600  ×  100 = 15% ✔🗹 any one part correct i.e. either 3 600 or 24 000
24 000       1

4. (2)

Calculate the total finance charges incurred in the purchase of the vehicle. 
(9 000 x 12) 
46 000 + 216 000 – 196 000 = R66 000 ✔🗹 any one part correct 

5. (4)

Effect on the budget: 
Cost of repairs = 37 500 – (75% x 8 000) = 31 500 ✔🗹 any one part correct
TWO points that Mtini would mention to Bekker: 
Any two valid points, e.g. 

  • This was irresponsible as insurance terms had been violated.✔✔
  • The repairs should be debited to drawings as this is a personal expense.✔✔ 

6. (3)

Calculation of rent income for December 2012 
15 950 x 100/110 = R14 500 ✔🗹 any one part correct 

Suitable explanation: 
Any one valid explanation, e.g. ✔ 

  • The tenant paid the February rent in advance.
  • Additional unused property was rented out at the same rate. 

7. (4)

Calculate the budgeted payments to creditors in January 2013. 
December total sales = 801 000  
Cost of sales: 801 000 x 100/180 = 445 000  
Credit purchases: 222 500  
Paid in January = 222 500 – 22 250 = R200 250 ✔🗹 

Mtini feels that the business need not buy any goods for cash, and that all goods should  be bought on credit. In your opinion, will this improve the business Cash Budget? Explain. 
Yes. This will mean that the R222 500 to be paid for cash sales in December will then be paid in  January, which will improve the cash balance at the end of December by this amount. When the  amount is paid in January they will also earn a R22 250 discount as well. There is also a similar  effect in the following month. ✔✔ 

8.  (3)

Explain the difference between interest capitalised and interest not capitalised.  
Interest that is capitalised is added to the loan. Monthly repayments include the repayment of the  loan and interest. Interest that is not capitalised is paid separately. ✔ 

Calculate the amount of the loan repaid on 31 December 2012. 

500 ÷ 0,15 x 12 = R40 000 ✔✔ 

9. (4)

Use the Cash Budget to identify the missing figures, totals and balances designated  A–D. You are NOT required to identify other missing figures. 
All figures correct = 4 marks; Mostly correct = 3; Some correct = 2; Few correct = 1; None  correct = 0  

 A  B
(118 902)✔  (80 872)✔  19 290✔    119 395✔

10. (12)

Calculation of the average debtors’ collection period (in days): 
 530 000 ✔ 
 ½ (535 225 + 764 775)      x      365 = 80 days 🗹 
         2 400 000 ✔ 
The percentage of debtors who are complying with the credit terms (as indicated in the  Debtors Age Analysis): 
(R156 725 + R234 250) ÷ R764 775 x 100 = 51,1% ✔✔ 
Brief comment on the two calculations above: 
It is unacceptable that the debtors are taking so long to pay and that only half of them are  complying with the credit terms. ✔ 
Details of the main mistakes that the business is making with regard to debtors. Also  provide the names of specific debtors to illustrate these main problems and suggest a  solution for each mistake. 

MISTAKES ✔✔ 

DEFAULTING  DEBTOR(S) ✔✔

 
SOLUTION ✔✔ 
Exceeding the credit limit    Minaj, Britney, Hannah  Do not continue supplying these debtors; reduce their credit limits; give incentives for  cash purchases. 
Taking longer than the credit term  Britney, Jemson, Drake, Wayne  Charge interest on overdue accounts; settlement discounts to encourage early settlement of accounts.

11. Consider the actual and budgeted figures for Advertising, Telephone and Advertising. (Note  that Mtini has not drawn any funds as yet.) Comment on each item, and offer ONE point of  advice in each case.  (6)

 

Comment ✔✔✔ 

Advice ✔✔✔

Advertising 

The expense is the same as  budgeted. This appears to be  well planned. However, when  one looks at the monthly sales,  it shows that advertising is not  effective.

They should consider increasing the  advertising budget. Can be strategically linked  to sales. The business must look at trends/ codes played at different seasons and budget  accordingly.

Telephone 

Always overspending/under  budgeted 

Need extra control, investigate whether there  is a need to increase (calling debtors etc.) or if  it is being abused.

Insurance 

This is R6 000 under-budget  each month.

They should consider whether they are still  adequately covered or whether they have  genuinely negotiated a better rate. This might  be false economy if the insurance company  fails to pay out for legitimate claims. 

12. (3)

Bennie has made two significant decisions by taking out a new loan and admitting a partner  to the business. What would you say to Bennie about these decisions and the effect on the  cash flow of the business? 
✔✔✔ Any valid response Excellent answer = 3 marks; Good = 2; Satisfactory/Poor = 1;  Incorrect = 0 
Expected response: 
Although he has used these strategies to convert his large overdraft into a positive balance, he  should rather have looked at the real reasons for the shortcomings, e.g. credit sales now account  for 52% (2,4m/4,6m) of total sales and debtors are not well controlled. He now has extra interest  to pay, even though the interest rate is better, as the loan raised is larger than the one cancelled.  Also he has to share profits with another partner now – when he starts to take drawings, the cash  situation will get worse. 

TOTAL MARKS FOR THE TASKS: 50

Last modified on Monday, 16 August 2021 08:23