Accounting Sep 2020 Memo
Accounting Sep 2020 Memo
Accounting Sep 2020 Memo
PAST PAPER
NATIONAL
SENIOR CERTIFICATE
GRADE 12
SEPTEMBER 2020
ACCOUNTING P1
FINANCIAL REPORTING AND EVALUATION
MARKING GUIDELINE
MARKS: 150
MARKING PRINCIPLES:
1. Unless otherwise indicated in the marking guideline, penalties for foreign items are applied only if the
candidate is not losing marks elsewhere in the question for that item (no penalty for misplaced 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 the answer is incorrect, mark the workings provided.
4. If a pre-adjustment figure is shown as a final figure, allocate the part-mark for the working for that
figure (not the method mark for the answer). Note: If figures are stipulated in marking guideline for
components of workings, these do not carry the method mark for final answer as well.
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.
7. Where penalties are applied, the marks for that section of the question cannot be a final negative.
8. Where method marks are awarded for operation, the marker must inspect the reasonableness of the
answer.
9. 'Operation' means 'check operation'. 'One part correct' means 'operation and one part correct'.
Note: Check operation must be +, -, x, ÷, or as per marking guideline.
10. In calculations, do not award marks for workings if numerator and denominator are swapped – this
also applies to ratios.
11. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect
at least in part. Indicate with a .
12. Be aware of candidates who provide valid alternatives beyond the marking guideline. Note that one
comment could contain different aspects.
13. Codes: f = foreign item; p = placement/presentation.
1.1
1.1.1 D
1.1.2 A
1.1.3 B
1.1.4 C
4
1.2.1 Where, why and when is this audit report expected to be presented?
Any one valid answer
1.2.2 Provide TWO points why the independent auditors make reference
to pages 12–30 of the Annual Report.
Any two valid points
The financial statements are contained in those pages of the Annual
Report; other reports are also included in the Annual Report, which
were not prepared or inspected by them.
The auditors are responsible for a certain part of the report.
Directors are responsible for parts of the report as prepared by them. 4
1.2.3 Explain TWO points on the impact of this report on the company.
Any two valid points
TOTAL MARKS
15
TOTAL MARKS
30
TOTAL MARKS
30
4.1.2 True
4.1.3 False
3
Profit before tax 980 000 + 420 000 1 400 000 *
4.2.3 Calculate the following amounts for the Cash Flow Statement.
Dividends paid
Workings Answer
Total dividend for the year:
1 700 700 +162 000 –980 000 –1 239 200 = 356 500
four marks
210 000 + 356 500 – 130 900 435 600
One part correct
OR
one mark five marks
210 000 + 225 600
356 500 - 130 900 Interim dividend
Accept alternative arrangements for calculations such as signs reversed, brackets and/or
ledger accounts 7
937,9c *
11 161 200 X 100 One part correct
2
1 190 000 1 Accept 938 cents
TOTAL MARKS
40
LOCK LTD Although current ratio decreased from 2,1 : 1 to 1,9 : 1, the
acid test ratio remains fairly consistent at 1,3 : 1 compared to
1,4 : 1 the previous year.
DOWN LTD The acid test ratio is consistent at 1,5 : 1 whilst the current ratio
increased from 2,8 : 1 to 3,6 : 1.
DOWN LTD Dividend pay-out rate is 86% (60/70) in 2020 and 86% (62/72)
in 2019. Down Ltd has maintained the dividend pay-out rate at
86% 4
Provide TWO possible reasons why one company decided to change
their policy.
Any TWO reasons
5.3 Lock Ltd decided to increase their loans during the current financial
year, whilst Down Ltd decided to maintain their existing loans.
Comment on the decisions of both companies. Make reference to the
degree of risk and gearing.
LOCK LTD Debt/ equity ratio increased from 0,3 : 1 to 0,6 : 1
ROTCE increased from 12% to 15%
Although the business is now highly geared the loan is being
effectively used to improve profitability. Business is positively
geared so the decision was appropriate.
DOWN LTD Debt/ equity ratio remained constant at 0,4 : 1
ROTCE decreased from 13% to 11,7%
Although the business is low geared the loan is not being
effectively used as the business is negatively geared so it would
be wise to start paying back the loan, or improve strategies to
improve profitability. 8
5.4 A shareholder of Down Ltd is concerned about the drop in the market
price of the shares. Explain why they feel this way. Provide TWO points.
Any 2 valid points
This reflects the public demand for shares is low / public confidence in company
has decreased.
Shareholders want capital growth on their investment.
Directors will be judged on the performance of the shares.
The market price dropped below the net asset value. 4
5.5 M. Mtolo owns 576 000 shares in Down Ltd, which represents 48% of the
total issued shares. He wants to purchase another 25 000 shares.
5.5.1 Do a calculation to show how this would change his % shareholding
in the company.
576 000 + 25 000 576 000 ÷ 48%
601 000 ÷ 1 200 000 x 100 = 50,1% 5
Provide TWO reasons why you think he is specifically interested in
increasing his shareholding in Down Ltd.
5.5.2
TWO points
TOTAL MARKS
35
TOTAL: 150