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ACCOUNTING

MEMORANDUM

SEPTEMBER 2019

NATIONAL
SENIOR CERTIFICATE

GRADE 12
MARKS: 300

MARKING PRINCIPLES:

1. Penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that
item. No double penalty applied.
2. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on
the figures for that item.
3. Full marks for correct answer. If answer incorrect, mark the workings provided.
4. If a pre-adjustment figure is shown as the final figure, award one mark. Not the method mark for the answer. Note:
if figures are stipulated in memo for components of workings, these do not carry the method for final answer.
5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If
no + or – sign or bracket is provided, assume that the figure is positive.
6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from
candidates.
7. This memorandum is not for public distribution, as certain items might imply incorrect treatment. The adjustments
made are due to nuances in a certain question.
8. Where penalties are applied, the marks for that section of the question cannot be a final negative.
9. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer
before awarding the mark.
10. Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation & one part correct’. Note: check
operation must be +,-,x,÷, or per candidates operation.
11. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect, indicate
with a . Note: do not award marks for workings if numerator and denominator are swapped-this also applies to
ratios.
12. Be aware of candidates who provide valid alternatives beyond the marking guideline.
13. Codes: f=foreign item; p=placement.

This memorandum consists of 17 pages

Accounting 2 Preparatory Exam 2019
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QUESTION 1
Choose the correct answer from the words provided within brackets.
Write only the answer, next to each number (1.1.1 – 1.1.4) in the
ANSWER BOOK.
1.1
1.1.1 Cash Receipts Journal 

1.1.2 Debit 

1.1.3 Credit note 

1.1.4 Discount allowed 

4

1.2.1 Bank Reconciliation Statement on 30 June 2019.

Debit Credit
Credit balance as per bank statement 11 300 11 300 
Credit outstanding deposit 8900 8 900 
Credit amount wrongly debited 8 000 8 000 
Debit outstanding cheques: No. 621 (3 200) 3 200 
No. 821 (600) 600 
No. 937 (2 400) 2 400 
Debit balance as per bank account 22 000 22 000
Operation one part correct for both totals 28 200 28 200
8

1.3.1 Briefly explain why the balance of the debtors control account should
correspond with the total of the list of debtors.
Any valid point 
The Debtors Control account is a summary of all the debtors’ accounts in the
Debtors Ledger. / Complete/compiled from the same source documents. 2

1.3.2 Calculate the correct closing balance of the debtors control account as
at 30 June 2019.

9000 two marks Operation one part correct

175 700 - 4 100 + 2 300+ 8 700 + 300 = 182 900  5

1.3.3 List of debtors of Birdswood Traders on 30 June 2019.

S. M Mazibuko 46 500 - 1 400 -1 400 2 800 two marks 43 700
T.G Nyembe 31 800 – 7 600 24 200
T.M Msweli 27 000 + 2 300 29 300
J.P Botha 63 200 – 2 700 60 500
P.S Pillay 8 600 + 7 600 + 8 700 + 300 25 200*
9000 two marks

*Operation one part correct 182 900* 14

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Accounting 3 Preparatory Exam 2019
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1.3.4 BIRDSWOOD TRADERS
• Does Birdswood Traders have effective control over their debtors?
Explain by quoting figures to motivate your answer.
Explanation  Figure 
60 000/187 500 x 100 = 32% of the debtors keep to the credit terms of 30
days.
OR
127 500/187 500 x 100 = 68% of the debtors exceed the payment period
of 30 days.
OR

Mazibuko, Botha and Pillay have exceeded their credit limits by R13 700,
R20 500 and R15 200 respectively. 3

• State TWO actions that Birdswood could take in order to encourage

debtors to settle their accounts according to the terms.
Any two relevant answer  

• Issue monthly statements

• Send reminders through text messages [SMS].
• Allow discounts to debtors who pay in time.
• Charge interest on overdue accounts.
4
• Stop selling to debtors until overdue accounts are settled.

TOTAL MARKS

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Accounting 4 Preparatory Exam 2019
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QUESTION 2

2.1.1 Production Cost Statement on 28 February 2019

Direct Materials Cost (1 770 000 – 10 000) 1 760 000 
Direct Labour Cost Balancing figure 1 475 000 
Prime Cost Operation 3 235 000 
Factory Overhead Cost (327 000 + 10 000) 337 000 
Total Cost of Production Operation 3 572 000 
Work-in Process at the beginning of the year 37 600 
3 609 600
Work-in Process at the end of the year (84 600) 
Cost of Production of Finished Good 3 525 000 
(315 000 + 3 337 000 – 127 000 ) Operation one part correct 15

2.1.2 Calculate the Net profit

Sales 6 390 000
Cost of sales (3 337 000) 
Selling and distribution cost (603 000) 
Administration cost (810 000) 
Net profit Operation one part correct 1 640 000
OR
6 390 000 – 3 337 000 – 603 000 – 810 000 = 1 640 000
5

2.2.1 Calculate the break-even point for the year ended 28 February 2019.
348 500 two marks
246 000 + 102 500
150 – 70
80 three marks

4 356 or 4 357 units Operation one part correct

6

2.2.2 Should the business be satisfied with the number of units that are
currently produced? Explain.
Any one explanation Figure
Compare BEP with units produce and sold
see 2.2.1
They are producing 4 100 and the break-even is 4 356/4 357 units.
OR
Produce 256/257 units less than what is required to break-even. 3

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Accounting 5 Preparatory Exam 2019
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2.2.3 Despite the fact that there was an increase in the price of direct
material, the direct material cost per unit decreased from R32 to R27.
Give TWO valid reasons for the decrease.

Any two valid points  

• Better training of workers resulted to less wastage.
• Raw material obtained at a cheaper price.
• Greater care or efficiency in the use of raw material resulted to less
wastage.
• Tighter control over use of raw material.
Award one mark for the following response
• Training of workers.
• Less wastage.
4

2.2.4 Despite the fact that there was no increase in wages during the year,
the direct labour cost per unit increased from R20 to R28. Give a valid
reason for the increase.
Any valid point 
• More overtime
• Decrease in productivity, working slower, demotivated or lazy workers
• Poor supervision of workers.
• Unproductive workers due to power cuts
2

TOTAL MARKS

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Accounting 6 Preparatory Exam 2019
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QUESTION3
3.1
3.1.1 Shareholders 
3.1.2 Directors 
3.1.3 External Auditor  do not accept auditor 3

3.2 Net profit before tax 1 449 200

Directors fees (625 000 – 25 000) (600 000) 
Packing material (12 000 x 80/20 ) (48 000) 
Bad debts (1 200 - 480) (720) 
Rent income (177 600 – 26 400) 151 200 
Salaries 55 820 
Operating profit before interest expense 1 007 500 
Interest expense (157 500) 
Net profit before tax Operation one part correct 850 000 
Income tax (255 000) 
Net profit after tax Operation 595 000  19
Accept brackets instead of – If no sign, assume + Positive/negative effect & figure must
be correct Foreign entries -1 (max -2)

3.3.1 Trade and other receivables

Trade debtors ( 44 800 – 1 200 + 1 000) 44 600 
Provision for bad debts (1 700) 
Net trade debtors Operation one part correct 42 900 
Prepaid expense (Directors fees) See 3.2 25 000 
SARS Income tax ( 267 000 – 255 000) See 3.2 12 000 
Operation one part correct 79 900  11

3.3.2 Retained income

Balance at the beginning (130 000 + 79 000) 209 000 
Buy-back of shares (20 000 X 3.95) (79 000) 
Net profit after tax See 3.2 595 000 
Dividends Operation one part correct (190 820) 
Paid / interim 55 820 
Final/ recommended (180 000 X 0.75) 135 000 
Balance at the end of the year Operation 534 180  13

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Accounting 7 Preparatory Exam 2019
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3.4 Balance Sheet (Statement of Financial Position) on 28 February 2019.
Asset
Non current assets TA – CA 2 607 300 3
Tangible assets Balancing figure 1 907 300
Fixed deposit 700 000

Current assets Operation 185 800 7

Inventory (92 400 + 12 000) 104 400
Trade and other receivables See 3.3.1 79 900
Cash and cash equivalent 1 500
Total assets (Total equity + liabilities = Total asset 2 793 100

Equity and liabilities

Shareholders’ equity operation 1 443 180 3
Ordinary share capital 909 000
Retained income see 3.3.2 534 180

Non current liabilities 780 000 3

Loan (1 140 000 – 360 000) 780 000

Current liabilities operation 569 920 13

Trade and other payables
(43 000 + 26 400 + 1 000+ 3 000 73 400
See 3.2
Current portion of loan see NCL 360 000
Shareholders for dividends see 3.3.2 135 000
Bank overdraft (5 000 – 480– 3 000) 1 520
or (- 5000 + 480 + 3 000)

Total equity and liabilities operation 2 793 100 29

TOTAL MARKS

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Accounting 8 Preparatory Exam 2019
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QUESTION 4

4.1 Choose a term from COLUMN B that matches the description in

COLUMN A. Write only the letter (A–D) next to the question number
4.1.1 D 
4.1.2 C 
4.1.3 B  3

4.2.1 Notes to the Financial Statements

Calculations Answer
2 A. 1 900 000 – 1 100 000 800 000 
no part marks

B. Vehicle 1 One mark

7 500 000 x 20/100 = 100 000 but only 49 999

Vehicle 2 185 624 

One part correct
437 500 x 20/100 x 9/12 65 625

Vehicle 3
4 350 000 x 20/100 70 000 
C. See B
437 500 – (87 500 + 65 625) 284 375 
153 125 two marks
One part correct

3 D. 16
300 000 – 120 000 = 180 000  – 81 000  99 000 
One part correct

4.2.2 Ordinary share capital

Authorised 2 000 000 shares
Issue
800 000 Shares issued at the beginning @ R7 5 600 000
200 000 shares issued during the year @ R9.80 1 960 000
(120 000) Buy-back of shares at R7.56 (907 200)
880 000 Shares issued at the end operation 6 652 800 6
4.2.3 Calculations of figures to appear in the Cash Flow Statement
• Calculations Answers
Dividends paid
+ 230 000 + 514 000 – 290 000
224 000 two marks Operation one part correct 454 000 
– 230 000 – 514 000 + 290 000 choose the line 4
• Tax paid
+ 243 000 – 28 000 – 45 000
Operation one part correct 170 000 
– 243 000 + 28 000 + 45 000 choose the line 4

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Accounting 9 Preparatory Exam 2019
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4.2.4 Cash flow from financing activities

Proceeds on shares issued 1 960 000 
Buy back of shares (120 000 X 10 ) (1 200 000) 
Changes in loan 340 000 

Operation one part correct 1 100 000  5

4.2.5 The directors have taken significant decisions which will be reflected
in the Cash Flow Statement. Identify TWO of these major decisions and
quote figures. In each case give one consequence of the decision to
the business.
Any two valid decisions and consequences Consequence marked with a decision
Decision  Figure  Consequences
Proceed on shares issued by To finance the purchases of fixed assets
R1 960 000 and to finance the repurchased shares.
Purchases of fixed assets by Productivity will increased and the business
R 1 270 000 will have more fixed assets
Buy-back of shares by To reduce the dividends and shareholders’
R 1 200 000 equity. Improve NAV/EPS.

4.2.6 Percentage Operating Profit on Sales

952 000  X 100

3 400 000  1

= 28%  operation one part correct 3

4.2.7 Briefly explain ONE consequence that might be faced by directors and
ONE consequence for majority shareholder.
Any valid point  
Directors
• Directors might lose their job.
• Lose customer or investors because of the fraud/tarnished image.
• Directors might lose trust from minority shareholders.
Majority shareholder
• Shares will lose value in JSE.
• Business can be liquidated. 4

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Accounting 10 Preparatory Exam 2019
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4.3.1 Your friend is of the opinion that the liquidity position of Westland Ltd.
is better than that of Northwood Ltd. Quote TWO financial indicators
(with figures) to support her opinion.

Quote TWO financial indicators.

Candidate must compare both companies
Any two financial indicators   Figures for both companies   Explanation  

• Current ratio of Northwood Ltd is 3,6 : 1 and Westland Ltd. is 2,4 : 1

• Acid-test ratio of Northwood Ltd is 0,6 :1 and Westland Ltd. is 1,2 : 1
• The stock turnover rate of Northwood Ltd. is 4 times and Westland Ltd. is
8 times

Explanation
• Westlands Ltd. has a better current ratio and is able to cover current
liabilities whereas Northwood Ltd’s. ratio is too high – funds tied up in stock
(current assets)/not used profitably
• Westlands Ltd. has a better Acid-Test Ratio than Northwood Ltd.
Northwood Ltd. has too much stock on hand which resulted in the poor
Acid-Test Ratio
6
• Westlands Ltd. is selling its stock faster (8 times) during the year as
compared to Northwood Ltd. (4 times).

4.3.2 Northwood Ltd. paid off a large portion of its loan during the financial
year. Quote TWO financial indicators with relevant figures to show why
this was not a good decision taken by the directors.

Financial indicators and figures  

Valid comment 

Relevant financial indicators:

Debt: equity is 0,2 : 1

ROTCE: is 18,4%

Comment
The company is at low risk. Therefore there was no need to pay a large
portion of the loan.
It is also positively geared. The ROTCE (18,4%) is higher than the interest
6
rate of 10,5%.

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Accounting 11 Preparatory Exam 2019
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4.3.3 Will the shareholders be satisfied with the price at which the new
shares were issued for both companies? Explain. Quote relevant
financial indicators and figures for each company.

Northwood Ltd. Westland Ltd.

Yes/No NO YES
They sold the shares at 260 They sold the shares at 290
cents under the market price cents above the market price
Relevant (450 cents compared to 710 (1200 cents compared to 910
indicator cents). cents).
and
comment Selling price is also 85 cents Selling price is also 80 cents
less than the NAV of 535 more than the NAV of 1 120
Explanation cents. cents.
  Existing shareholders are Existing shareholders and
Figures being disadvantaged directors should be happy to
 
(260 x 189 000= R491 000). raise additional income
Must indicate MP & Could have raised more (280 x 189 000= R529 200).
NAV
money if they increased the 4
price

4.3.4 Your friend owns 30 000 shares in each of the companies.

Northwood Ltd. Westland Ltd.
Calculate the
dividends that he 30 000 x R2,30 30 000 x R2,45
earned from each = R69 000  =R73 500 
company.
DPS 245 cents
Compare and EPS 285 cents
DPS 230 cents
comment on the Distributes 86% 
EPS 350 cents
dividend pay-out (245/285) of earnings.
Distributes 66% 
policies of the two
(230/350) of earnings.
companies. OR
OR
Provide
Northwood Ltd. decided to Westland Ltd. decide to
calculations in
retain 34% of its EPS. retain only 14% of its
your explanation.
EPS.
Northwood Ltd. appears to
Explain ONE Westland Ltd. appears
have plans for growth
reason for the to keep shareholders
(better long-term benefits)
dividend pay-out satisfied by giving them
/ equalisation of dividends
of each company. good dividends.  8
over time. 

TOTAL MARKS

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Accounting 12 Preparatory Exam 2019
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QUESTION 5

5.1.1 Calculate the closing stock for memory stick using weighted average
method.
12 000 + 56 640 – 3 400 – 1 440 + 1 675
100 + 420 –25 – 10
five marks
65 475
485
four marks

R135 nine marks x 51= R6 885 Operation one part correct Multiplied by 51 for a method mark 10

5.1.2 Themba Zondi suspects that memory sticks are being stolen. Show
calculations to support his suspicions.

(420 + 100) – (25 +10) – 427  – 51 =7  Operation one part correct
5

5.1.3 Calculate the stock holding period in days for memory sticks.
See 5.1.1 One mark One mark
½ (12 000  + 6 885 ) x 365 OR ½ (100 + 51) X 365
58 590  1 427 One mark 1
See 5.1.1
59 days  Operation one part correct 64,5 days One method mark
4

5.1.4 Suggest TWO (separate) internal control measures that Themba

Zondi can introduce to prevent the stock losses.

Any valid point  

• Improve or step-up security measures.
• Train security personnel.
• Conduct regular checks at exit point.
• Rotate and divide duties / responsibility among staff.
• Conduct regular stock counts and inspection of stock register. 2

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Accounting 13 Preparatory Exam 2019
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5.2.1 Calculate VAT payables to or receivable from SARS in respect of
calculators. Note that sales include VAT while purchases do not
include VAT. Round off your calculations to nearest rand.
VAT Inclusive VAT Exclusive VAT
Purchases 1 515 000 227 250
Returns to suppliers 84 000  (12 600) 
Sales 2 306 900  (300 900) 
Returns by debtors 19 550  2 550 
Payables  Operation one part correct (83 700)  8

5.2.2 Themba Zondi intends to deliberately reduce the sales amount when
completing the VAT returns so as to reduce the amount of VAT
payable to SARS.

What advice you provide to the owner regarding his intentions?

Provide ONE point of advice.

Any valid point 

• It is illegal to reduce the sales amount/ change the price.
• It is unethical to manipulate the sales figures.
• It is a criminal offence 2

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Accounting 14 Preparatory Exam 2019
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5.3 PROBLEM SOLVING

You are provided with information relating to Leno Stores. They sell tents,
chairs and tables for cash only. The owner is concerned that the figures
provided reflect poor internal control and decision-making.

Identify ONE problem for each product. Quote figures. In EACH case, give
advice on how to solve the problem.
Product Problem    Advice
Figures      
Comparison figures not
necessary

Improve physical security

Stolen tents 20 which leads to
Regular stock counts
loss of income of R30 000
Tents Check points at doors.

Division of duties (banking)

Missing money Documentation
Total sales: R1 984 400 but Request bank notification for
only R1 800 000 banked transactions (sms, whatsapp,
Chairs (R184 400) cash missing emails).

Reduce the selling price to

Too much stock on hand 250
increase sales
whilst sales is only 500 for the
More effective advertising
year.
Consider discontinuing the
250/500 = 5 months; Slow
product
Tables movement of goods
Purchase these goods according
only 67% of available stock
to order.
sold i.e. 500/750
9

TOTAL MARKS

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Accounting 15 Preparatory Exam 2019
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QUESTION 6

6.1 List TWO items on the Projected Income Statement provided, that
would not appear on a cash budget.

Any two valid points  

Cost of sales
Discount received
Depreciation
Trading stock deficit
2

6.2 A. Advertising

132 000 X 2%

= R 2 640 Operation one part correct

2

B. Net profit after tax

17 625  – 585  – 5 112  = R11 928  Operation one part correct

6.3 Calculate the cost of sales for May 2019. Refer to information C and H.

51 000  X 100
80
= 63 750  Operation one part correct

6.4 Creditor’s payment schedules.

Month Credit purchases July August September
May 51 000 48 960 - -
June 55 000 52 800 -
July 49 200  If 96% of July 47 232 4

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Accounting 16 Preparatory Exam 2019
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6.5.1 The percentage increase in wage that the cleaners will receive in
September 2019.
176 one mark
(3 376 – 3 200)  x 100
3 200 
= 5.5%  Operation one part correct
3

6.5.2 The monthly salary due to the sales manager in September 2019.

(17 100 – 300) / 2 = (8 400  + 300 ) X 108 

100
= 9 396  Operation one part correct
OR 8 700 x 1.08 = 9 396
Two marks One mark One method mark 4

6.5.3 The total credit sales expected in September 2019.

(99 000 x 160%)  x 75% = 118 800  Operation one part correct
OR
132 000 x 120% = 158 400 x 75% = 118 800
One mark One mark One method mark

OR
3 168/2% = 158 400 x 75% = 118 800
One mark One mark One method mark 3

6.5.4 The loan balance on 1 August 2019.

(585 x 1 200 ) = 78 000  Operation one part correct

9
OR
585 x 12 = 7020 X 100/ 9 = 78 000
One mark One mark One method mark 3

6.6 Refer to the actual figures for Depreciation and Trading stock deficit
for July 2019. In each case, provide a reason for the difference with the
budgeted figures.
Any valid point 
Depreciation:
• Purchases of a new asset.
• Calculation error.
Trading stock deficit
• Unanticipated stock loss.
• Random stock take revealed stock shortage.
• Damaged goods noted and taken into account. 2

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Accounting 17 Preparatory Exam 2019
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6.7 Refer to the actual figures for July 2019. Comment on any TWO
expenses (excluding items mentioned in QUESTION 6.6) that were not
well controlled by the business. In each case, quote the relevant figures
and give ONE suggestion on how this expense can be more effectively
managed.

EXPENSE COMMENT( WITH FIGURE) SUGGESTION

Any two: Comment and figure Suggestion  each

each
No mark for
expenses
Maintenance Over budget / underspent. Adjust budget or use the
(4 000 – 1 650) money wisely to maintain the
assets. This could extend the
lifespan and productivity of the
assets.
Telephone Overspent / under Control / usage or check for
budgeted (2 000 – 4 280) misuse. Budget correctly if
over 50% found to be necessary.
Advertising Underspent / over Spend money allocated. Look
budgeted (2 400 – 1 968) at different forms of advertising
may result in better sales /
profit 6

TOTAL MARKS

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