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NATIONAL SENIOR CERTIFICATE EXAMINATION

MAY 2024

ACCOUNTING: PAPER II

EXAMINATION NUMBER

Time: 2 hours 100 marks

PLEASE READ THE FOLLOWING INSTRUCTIONS CAREFULLY

1. This question paper consists of 12 pages, an Information Booklet of 7 pages (i–vii)

and a Formula Sheet of 1 page (i). Please check that your question paper is
complete.

2. Read the questions carefully.

3. Answer the questions in the space provided.

4. It is in your own interest to write legibly and to present your work neatly.

5. You may not use red or green ink. You may use a pencil, but please use a soft,
dark pencil.

6. All calculations should be rounded off to two decimal places.

7. The allocation of marks and appropriate time to be spent on each question are as
follows:

Possible Actual Marker Moderator

marks marks signature signature

Question 1: Budgets
35
(42 minutes)

Question 2: Company Analysis

40
(48 minutes)

Question 3: Reconciliations
25
(30 minutes)

TOTAL 100

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NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER II – MAY Page 2 of 12

QUESTION 1 BUDGETS [35 marks; 42 minutes]

Refer to the information relating to La Meme (Pty) Ltd.

1.1 Debtor's Collection

Determine the debtor's collection policy by calculating all relevant percentages.

Show your workings.

Same month as the sale:

Discount:

(6)
One month after the sale:

(2)
Two months after the sale:
Not required to be calculated.
Bad debts:

(2)

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1.2 Provide TWO suggestions how La Meme (Pty) Ltd can reduce their bad debts.

(2)

1.3 Use the additional information supplied to complete the extract of the Cash Budget
and the extract of the Projected Statement of Comprehensive Income for the period
1 September 2024 to 30 November 2024.

Note: Transactions that indicate a payment or expense must be bracketed.

Salaries have been entered for you.

Projected Statement of
Cash Budget
Comprehensive Income
Sep 2024 Oct 2024 Nov 2024 Sep 2024 Oct 2024 Nov 2024
R R R R R R

Salaries (300 000) (300 000) (327 000) (300 000) (300 000) (327 000)

Delivery
vehicle

Depreciation

Rent income

(7)

1.4 Refer to the salaries line provided in Question 1.3 above. Workers received a 9%
salary increase which is higher than inflation. Yet, on a survey sent out to staff, they
indicated that staff morale (how your employees feel about their work environment
and their role in it) is very low and they feel there should be more benefits. From
extract C it is clear that increasing medical aid and pension fund contributions are
not a feasible option at this stage.

Suggest TWO other ways staff morale could be improved whilst not having a major
financial impact on La Meme (Pty) Ltd.

(2)

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1.5 Based on information C, the chief operating officer has expressed her concern about
the present cash situation and has suggested that the company applies for a long-
term loan of R200 000 in December 2024.

According to her research, the company will qualify for a loan from ABSA at 15% p.a.
if the interest is not capitalised or a loan from FNB at 14% p.a. if the interest is
capitalised.

1.5.1 Which GAAP principle dictates that interest on loan be shown as a separate
line item in the Statement of Comprehensive Income, even if it is capitalised?

(1)

1.5.2 Explain the importance of showing it as a separate line item.

(1)

1.5.3 Which of the two loans would you advise the company to take?
Provide TWO well-explained reasons for your choice.

 Absa (15%, non-capitalised)  FNB (14%, capitalised)

(2)

1.5.4 Based on the information provided, supply TWO reasons why taking out a
long-term loan in December 2024 would not be a sound financial decision.

(2)

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1.6 The company plans to issue 120 000 additional shares in January 2025 in order to
expand the business by adding an online store to their offering.

1.6.1 Suggest to the directors a well thought through price they should issue these
shares at. Support your answer with a suitable calculation and explanation.

Calculation:

Your suggested issue price:

Reasoning for your suggested issue price:

(5)

1.6.2 Based on their research, running the online store would add at least R17 000
per month to their expenses.

Based on the same research they expect their online sales to be as follows:

January 2025 February 2025 March 2025

R160 000 R214 000 R280 000

Provide ONE advantage and TWO disadvantages of expanding online based

on the information provided.

Advantage:
•

Disadvantages:
•

(3)

35

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QUESTION 2 COMPANY ANALYSIS [40 marks; 48 minutes]

This question consists of two parts, namely Part A and Part B that are related.

PART A

Refer to the information of Northam Platinum Holdings Limited for this part of the
question.

Use information A to answer Questions 2.1–2.4.

2.1 Calculate the mark-up percentage achieved in 2022.

(2)

2.2 Calculate the gross profit on sales (profit margin) percentage achieved in 2022.

(2)

2.3 Refer to Questions 2.1 and 2.2.

Explain what each ratio calculates.

• Mark-up:

• Gross profit on sales:

(2)

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2.4 Using the information from the '% Change' column, analyse the changes and then
explain why management should be concerned with these results.

(3)

Refer to information B to answer Question 2.5.

2.5 Why is it important for a listed company like Northam Platinum Holdings Limited to
include information like extract B ('Our environmental impact') as part of their financial
reports?

(2)

Use information C to answer Questions 2.6–2.7.

2.6 Assuming cash and cash equivalents at the end of the 2022 financial year was
R1 175 million, calculate the cash and cash equivalent figure at the beginning of the
2022 financial year.

(4)

2.7 Give ONE possible item that could be listed under changes in working capital in
cash flow from operating activities as an inflow of cash.

(2)

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Use information D to answer Questions 2.8–2.12.

2.8 Calculate the Return on Average Shareholder's Equity for 2022.

(3)

2.9 Critically analyse, quoting figures/ratios/percentages to support your answer, the

returns and distributions and retained profits for 2022.

Returns to shareholders:

(2)
Distributions and retained profits:

(3)

2.10 Explain why your analysis in Question 2.9 would upset you as a shareholder.

(2)

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2.11 Analyse the risk and gearing for 2022.

(4)

2.12 Should the company need additional funding for expansion, discuss TWO reasons
why taking out an additional loan is the better choice and TWO options why issuing
further shares would not be the better choice.

Why taking out an additional loan is the better choice:

•

Why issuing further shares is not the better choice:

•

(4)

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NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER II – MAY Page 10 of 12

PART B

Use information E to answer Question 2.13.

2.13 Using the comparative information provided, choose the company you would rather
invest in and discuss FIVE reasons for your choice. Use figures to substantiate your
reasoning.

Northam Platinum Holdings Ltd Royal Bafokeng Platinum Ltd

(5)

40

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QUESTION 3 RECONCILIATIONS [25 marks; 30 minutes]

Refer to the information relating to Gas Monkey Garage.

This question consists of two parts, Part A and Part B.

Part A – Debtors

3.1 It is clear the age analysis on the statement received from Harley Davidson SA is
incorrect.

Prepare the correct age analysis on 31 May 2024. Show all your workings so part-
marks may be awarded.

60+ days 30+ days Current

Do not total
(9)

Part B – Creditors

3.2 Complete the Creditor's Reconciliation for May 2024 using the table below.

Creditor's
Details and calculations Creditor's Ledger
Reconciliation
Balance
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Do not total
(10)

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3.3 Refer to the discrepancy marked (g) – the online banking payment.

3.3.1 Why should management be concerned that this was only discovered when
the bookkeeper mentioned it?

(2)

3.3.2 What first accounting entry should be recorded for this transaction?

(1)

3.3.3 Suggest TWO control measures the internal auditor should implement so this
does not happen again in future.

(2)

3.3.4 In order to prevent this from occurring again, the auditor advised the business
to check their bank statements carefully each month.

List ONE reason why it is important to consult the bank statement received
each month.

(1)

25

Total: 100 marks

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