FEBRUARY 2022

GRADE 12
SUBJECT : ACCOUNTING

CODE : ACCN

TASK : CONTROLLED TEST 1

TIME : 1 HOUR

MARKS : 100

DATE 16 MARCH 2022

QUESTION PAPER

This paper consists of 7 pages

 INSTRUCTIONS AND INFORMATION
Read the following instructions and be sure to follow them carefully

1 The following paper consists of 7 pages

2 A special ANSWER BOOK consisting of 6 pages is provided in which to answer all

the questions.

3 Answer ALL questions.

4 Workings must be shown in brackets in order to earn part marks.

5 Non-programmable calculators may be used.

6 You may use black pen to answer the question.

7 Marks will be deducted for missing details and foreign entries.

8 Use the information in the table below as guide when answering the question paper
Try NOT to deviate from it.

QUESTION 1: 47 Marks, 28 Minutes

The topic of this question is: Content:

● Income statememt
● Internal Control
● Audit report
Financial Statement and audit report
 Question 2: 53 Marks, 32

● Concepts
Financial Statement
● Retained Income
● Balance sheet

QUESTION 1 (45 Marks: 28 Minutes)

INCOME STATEMENT AND AUDIT REPORT
KGABO LTD
The information relates to Kgabo Limited for the financial year ended 28 February 2022.
REQUIRED

1.1 Prepare the income statement (Statement of comprehensive (41)

income) for the year ended 28 February 2022.
1.2 Explain Two internal control measures which must be used by (2)
management to avoid the problems associated with Trading stock

INFORMATION

A EXTRACT FROM THE PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2022

Balance sheet account

Loan: Platinum Bank 300 000
Fixed assets at carrying value 475 000
Fixed deposit: Silver Bank 593 000
Creditors control 48 750
Debtors Control 93 000
Trading stock 525 000
 Bank 21 250
SARS (income tax) 250 000
Provision for Bad debts 6 025
Consumable stores on hand (Packing Materials) 410
Nominal accounts
Sales 437 250
Cost of sales ?
Debtors allowances 10 250
Directors fees 275 500
Audit fees 94 200
Salaries and contributions 240 800
Rent income 33 900
Interest on fixed deposit 40 000
Insurance 7 350
Bad debts 3 350
Packing materials 2 200
Depreciations ?
Ordinary share dividends 170 000

B The business prices its goods at a mark-up of 50% on cost. Trade discount of R180 000
was allowed on invoices to certain customers.

C Goods sold on credit for R37 500 was not recorded

D A debtor B. Zulu with an outstanding balance of R21 000 has left the country. His account
must be written off

E The provision for bad debts must be adjusted to 5% of the outstanding debtors.

F The rent income was increased by 10% from 1 November 2021.

The tenant has not paid the rent for February 2022.
G No entries have been made for stock stolen at the beginning of January 2022. The
insurance company has informed KGABO LIMITED that they have transferred R16 000 in to
the business bank account in respect of the insurance claim. Kgabo Limited has to bear the
stock loss of 20%

H The loan statement received from Platinum Bank on 28 February 2022 revealed the
following.

1 March 2021 R362 500

Repayment of R5 000 per month, including interest R60 000
Interest capitalised ?
Balance on 28 February 2022 R 324 000

I The auditors are owed a further R9 800 for audit fees for this financial year.

J The company had two directors on equal pay from 1 March 2021. A third director was
appointed on 1 September 2021 on the same fee structure. This director’s fee for February
2022 was not yet paid.

K An employee was omitted from the salaries Journal for February 2022.
His details are as follows:

Gross salary ?
Deductions
PAYE 1530
Pension Fund 500
Medical aid fund 420
Net salary 65% of the gross salary
Employee contribution
Pension fund R2 for every R1 deducted
Medical aid fund Rand for Rand basis

L The bookkeeper forgot to reverse the packing materials at the beginning of the financial
period.
M After taking all adjustments in to account, the correct net profit after tax is R490 000. The
income tax rate is 30% of the net profit before tax.
1.3 AUDIT REPORT

You are provided with an extract of the audit report from the independent
auditor of Ukrane Limited.

REQUIRED

1.3.1 Did Ukrane Limited receive a/an qualifies/unqualified/disclaimer of (2)

opinion audit report? Explain Quote relevant information from the audit
report to motivate your answer.

EXTRACT FROM THE AUDIT REPORT

Opinion

In our opinion the consolidated and separate financial statements present

fairly , in all material respects , the consolidated and separate financial
position of Ukrane Ltd as at 28 February 2022, and its consolidated and
separate financial performance and its consolidated and separate cash
flows for the year then ended in accordance with international Financial
Reporting Standards and the requirements of the Companies Act of South
Africa.

PMD
Chartered Accountants (SA)
Registered Accountants and Auditors
 45

QUESTION 2: BALANCE SHEET AND CORPORATE GOVERNANCE (55 marks; 32 minutes)

2.1. CONCEPTS

Indicate whether the following statements are TRUE or FALSE. Write only 'true'
or 'false' next to the question numbers (4.1.1 to 4.1.5) in the ANSWER BOOK

2.1.1 A fixed deposit maturing within the next 12 months will be shown as cash and cash
equivalent in the Balance Sheet.
2.1.2 Earnings per share are calculated using the net profit before tax.

2.1.3 Net current assets are also referred to as net working capital.

(3 x 1) (3)

2.2. MODISE LTD

The information below relates to Modise Ltd. The financial year ended on 28
February 2022.

REQUIRED:

2.2. Prepare the Retained Income Note to Balance Sheet on

1 the 28 February 2022.
(1
 2)

2.2. Complete the Balance Son 28 February workings.

2
2022. Show ALL (3
8)

2.2. The directors want to give R500 000 to a local School. Give ONE
3 reason why companies take such decisions.
(4
)

INFORMATION:

A. Extract of balances on 28 February 2022:

R

Ordinary share capital 13 650

000
Retained income (1 March 2021) 567
000
Fixed assets at carrying value ?
Fixed deposit: Peoples Bank ?
Loan from director 630
000
Debtors' control 554
000
Provision for bad debts (1 March 2021) 31
300
Bank (favourable) ?
Trading stock 1 015
000
Consumable stores on hand 25
000
Creditors' control ?
Expenses prepaid 19
240
SARS: Income tax (provisional tax payments) 900
000
CONTROL TEST 1 ACCOUNTING QUESTION PAPER

B. Share capital:

● The authorized share capital of Modise Ltd is 6 500 000

ordinary shares.

● On 20 February 2022, 250 000 shares were repurchased at

25 cents above the average share price. This has been
recorded.

● On 28 February 2022, the ordinary share capital comprised

4 550 000 ordinary shares.

C. Dividends:

● Interim dividends of R672 000 were paid on 28 August 2021.

● A final dividend of 36 cents per share was declared

on 28 February 2022. All shares (including the shares
repurchased on 20 February 2022) qualify for final
dividends.

D. Net profit before tax:

● After taking all relevant information into account, the net

profit before tax was accurately calculated to be R3 400
000.

● Income tax at 27% of the net profit must be taken into account.

E. Fixed deposit:

The interest on the fixed deposit was R48 000. The fixed
deposit was invested on 1 May 2021 at 8% p.a.

F. Loan from director:

● The interest-free loan was received on 1 September 2019.

● This loan is to be repaid over six years in equal monthly

instalments. The first repayment was made on 30
September 2019. All payments have been made to date.

G. Provision for bad debts:

The provision for bad debts must be adjusted to 6% of the

outstanding debtors.

H. The current ratio calculated after all adjustments was 1,5

CONTROL TEST 1 ACCOUNTING QUESTION PAPER

55