QUESTION 1

1.1  Comparability:  prepared according to the same accounting rules that all
other businesses use and understand 

 Verifiability:  backed by factual documents and information in case

someone wants to perform a check. 

 Timeline:  prepared soon after the end of the financial period while the
information still applies. 

 Understandability:  people with general accounting business knowledge

can understand the information.  (8)

1.2. Assets: resources under the control of the entity

1
Liabilities: obligations of the enterprise arising from the past events, settlement
1.2. of which is expected to result in an outflow from the enterprise 
2
Equity: the residual interest in the assets of the entity after deducting all the
liabilities 
1.2.
3 Income: increase in economic benefits during the accounting period 

Expenses: decrease in economic benefit during the accounting period  (10)

1.2.
4

1.2.
5
1.3. Share certificate 
1
1.3. Dividends 
2
1.3. Authorised 
3
1.3. Share premium 
4
1.3. Ordinary 
5
1.3. Prospectus 
6
1.3. Retained income 
7
1.3. Non-current Assets  (8)
8

1.4  Private companies 

 Public companies 
 Personal liability companies 
 State-owned companies/enterprises  (4)
[30]

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QUESTION 2

2.1.1 Property, Plant and Equipment

Land &
buildings Vehicles Equipment Total
Carrying value at the beginning 5 194 000 8 034 000 2 146 000 15 374 000
Cost 5 194 000 14 286 000 2 519 000 21 999 000
Accumulated depreciation -  (6 252 000)  (373 000)  (6 625 000)
Additions 400 000 2 916 000 464 000 3 780 000
Revaluation 155 000 155 000
Disposals at carrying value  (128 000)  (5 000)  133 000
Carrying value at the end 5 749 000 8 836 000 2 323 000 16 908 000
Cost 5 749 000 16 221 000 2 741 000 24 711 000
Accumulated depreciation -  (7 385 000)  (418 000)  (7 803 000)
(28)
2.1.2 Investments
Listed:
246 000 ordinary shares in Tau Ltd at R3 each (Market valuation,
R1 600 000)   738 000

Unlisted:
115 00 preference shares in Buffalo (Pty) Ltd at R4 each
(Directors’ valuation, R990 000)   460 000

Other:
Fixed deposit at Big 5 Bank  95 000
1 293 000
(5)
2.1.3 Share Capital

Authorised: R

360 000 Ordinary shares of R13 each   4 680 000

38 000,32% Non-participating preference shares of R20  760 000
each 

Issued:
360 000 Ordinary shares of R13 each   2 834 000
25 000,32% Non-participating preference shares of R20  500 000
each 

Share premium  650 000

3 984 000 (9)

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2.1.4 R45 302 000 – 17 000 – R25 199 000 = R20 086 000  (3)

2.1.5 R45 302 000 – R22 218 000 – R1 681 000 = R21 403 000  (3)

2.1.6 R1 160 000 – R586 000 = R574 000  (2)

2.1.7 R22 218 000 – R1650 000 – R5022 000 – R574 000 = R122 000 

OR

R500 000 x 11.32/100 = R56 600

218 000 x 0.30 = R65 400
= R122 000  (4)

2.2 Statement of Financial Position/Balance Sheet  (2)

2.3 Public company  (2)
2.4 By issuing shares to the public  (2)

2.5 By way of dividend  (2)

2.6 R1 227 000 + R5 022 000 = R6 249 000  (2)

2.7 Authorised Share Capital 
Issued Share Capital  (2)
[66]

QUESTION 3

SEPITSI CC
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 INCOME STATEMENT FOR THE YEAR ENDED 30 APRIL 2017
Sales [915 000 – 12 000]  903 000
Less: Cost of sales  (450 000)
Gross profit  453 000
Add: Other income 23 800
Rent income [14 400 – 1 200]  13 200
Rent income: Sephadi 3 000
Commission income [6 675 + 625]  7 300
Bad debts recovered  300
Gross operating income 476 800
Less: Expenses (328 100)
Packing material [6 750 – 660]  6 090
Salaries and wages 214 500
Bad debts [2 550 + 850]  3 400
Telephone  3 750
Sundry expenses [47 700 – 570)  47 130
Donations expense  900
Trading stock deficit [93 750 - 900 – 2 700 – 88  1 200
950]
Depreciation  2 760
Provision for bad debts adjustment  370
Salary: Lawson  48 000
Operating profit 146 700
Interest income [1 200 + 150 + 5 760] 7 110
Profit before interest expense and tax 155 810
Interest expense [28 500 + 2 850 +1 005]  (32 355)
Net profit before tax 123 455
Tax expense  (46 500) (30)
Net income for the year 76 955

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3.2 PWV LIMITED
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2017

Ordinary share Share Revaluation General Retained Total

capital premium surplus reserves income
Balances: 1 March 2016  2 800 000  525 000  135 000  300 000  3 760 000

Total comprehensive income  725 000  165 000  890 000

Dividends  (175 000) (175 000)

Transfers done  45 000  (45 000) -

Preliminary expenses written off (55 000)  (55 000)

Balances: 28 February 2017 2 800 000 470 000 725 000  180 000  245 000  4 420 000

(16)
[46]

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QUESTION 4

4. X-PERIA LTD
1 STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2017
CASH FLOW FROM OPERATING ACTIVITIES 331 440
Cash received from customers 7 184 370
Cash paid to suppliers and employees (6 681 339)
Cash generated from operations  503 031
Interest received  21 350
Interest paid  (17 750)
Tax paid (48 000 + 60 000)  (147 181)
Dividends paid (150 000 + 90 000)  (28 010)
CASH FLOW FROM INVESTING ACTIVITIES (1 190 150)
Additions to land and buildings  (750 000)
Additions to vehicles  (491 300)
Additions to equipment (264 800 x 65%)  (172 120)
Replacement of equipment (264 800 x 35%)  (92 680)
Proceeds from sale of assets(85 950 + 30 000)  115 950
Proceeds from investment  200 000
CASH FROM FINANCING ACTIVITIES 827 540
Proceeds from issue of shares  550 000
Long term loans received  277 540
Net increase cash  (31 170)
Cash and cash equivalents: Beginning of year 14 650
Cash and cash equivalents: End of year (1 620)
4. Cash received from customers (18)
2 Sales 7 231 400
Increase in debtors  (47 030)
7 184 370
Reconciliation of profit before tax and cash generated from operations (3)
4. Net profit before taxation 706 081
3 Depreciation  230 810
Loss on disposal of non-current assets  31 250
Profit on disposal of non-current assets  (11 750)
Interest received/income  (21 350)
Interest paid/expense  17 750
Profit before changes in working capital 952 791
Changes in working capital (450 030)
Increase in debtors  (47 030)
Increase in inventories  (561 180)
Increase in creditors  158 180 (11)
502 761 [32
]
QUESTION 5

5.1.1 G (1)
5.1.2 C (1)
5.1.3 F (1)

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5.1.4 H (1)
5.1.5 B (1)
5.1.6 E (1)
5.1.7 I (1)
(7)

5.2 INTERNAL AUDIT EXTERNAL AUDIT

Audit is carried out by an employee of the Audit is carried out by professional
business  practitioner acting as an independent
practitioner 
Primary aim is to meet the needs of Primary aim is to meet the needs of third
management   parties for reliable financial data 
Work is primarily divided according to Work is primarily divided in relation to
business functions and the nature of statement of financial position and
management responsibilities  statement of comprehensive income 
The auditor is directly involved in tracing The auditor is mainly concerned with tracing
and preventing fraud  and preventing fraud which affects the
financial statements 
The auditor must be independent of the The auditor must be independent of
treasurer and chief accountant but management in deed and in attitude
subordinate to another level of
management
The overview of the business activities is The investigation of supporting data to
on-going financial statements is periodical
(16)

5.3 Qualified opinion  (1)

Unqualified opinion  (1)
5.3. Disclaimer/Withholding opinion  (1)
[26]

TOTAL: 200

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