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New Era Accounting Grade 12 Learners Book ePDF - eBOOK. ISBN Author(s): Aboobaker; D Woodroffe; P Singh; T Hall. Availability : Available. NEW ERA ACCOUNTING GR 12 (LEARNERS BOOK) (CAPS). ANON. ISBN: Estimated delivery within business day. R New Era Accounting Grade 12 Learner Book available to download online at takealot. com. Many ways to pay. Eligible for Cash on Delivery. Hassle-Free Exchanges.
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Click here to learn more. The perfect aid to support learners and teachers. Introducing New Era's latest Addition. Long-term loans are placed under Non-Current Liabilities. Long-term loans are those that are repaid over periods longer than one year. It will take another five years to repay the loan. Reduce Non-Current liabilities i. Loan by R48 ; Increase Current liabilities i. Current portion of loan by R48 This is because only part of the loan has to be repaid within the next year.
A post-dated cheque PDC is one which is dated for some time in the future. The bank will not transfer the funds to the recipient until that date.
A business would issue post-dated cheques to satisfy a recipient that he is about to be paid, yet it gives time to the payer to ensure that there are sufficient funds to cover the amount to be paid.
Which major item in the financial statements is affected by post-dated cheques? Explain how it is affected by the post-dated cheques.
The major item in the financial statements affected by post-dated cheques is the Bank account. It is affected by the entry that is put through when the PDC is made out bank is reduced although effectively there will not be a transfer of funds out of the bank account until the due date of the PDC.
This is because the funds are not yet paid bank should not be decreased, therefore add the amount back. Also, the amount is technically still owed therefore Creditors must increase. In brackets. To allow readers to compare and assess trends.
Gross profit: Profit on downloading and selling goods. Operating profit: Profit in running the business through its mainline of operation.
Net profit: The final profit after taking into account all income and expenses including interest. It is not related to the running of the business — it is a sharing of the profit earned with the government. They are not operating items — they are financing or investing activities. They are material items and need to be reflected separately in detail.
Concept of materiality — so as not to clutter up the Balance Sheet with less important items. Fixed assets are arguably the most valuable asset. Also abuse can appear here as depreciation is a very subjective uncertain calculation. Changes in assets will affect the income-earning performance of a company; hence this is an important note to the financial statements.
Explain where these parts are placed, and explain why this is so. Long-term part under Non-current liabilities. Current part to be repaid in the next year: Show under Current liabilities. Under Cash and cash equivalents. To reflect their degree of liquidity, i. Why is this so? Interim dividends have affected Bank — they have been paid already.
Final dividends are a deduction from Retained income, and they are still owed. It depends whether or not the provisional tax payments exceed the tax due for the year. If the provisional payments exceed the amount due, SARS is a debtor. If the provisional payments are less than the tax for the year, then SARS is a creditor.
Financial statements 3. Explain briefly. The return on shareholders' equity is The business has paid out dividends of R66 from its net profit after tax of R This has resulted in an increase in the retained income. The current ratio is 2. Financial statements Note to Teachers: If your learners require reinforcement of adjusting entries, you can require them to draw up the financial statements from the Pre-Adjustment Trial Balance and adjustments as per Task 2.
Learners can then check their figures to the final accounts and Post-Closing Trial Balance which they have already prepared under Task 2. If you are satisfied that this is not necessary, learners may simply prepare the financial statements from the final accounts and Post-Closing Trial Balance which they have already prepared.
Income tax — SARS: Various answers possible. The current assets are more than double the current liabilities which means that liquidity should not be a problem. Learners could add their own comments — Teacher to assess validity of comments. Extend a bright class by asking them how much each shareholder would get per share if the company closed down and sold its assets at the values in the books R They could then query why the directors issued shares to the new shareholders at only cents per share when there is such a high retained income, which makes the value of each share more than 1 cents they have paid about half of what the share is worth.
The price of the share on the JSE is currently cents on 30 June In your opinion, how much could they raise from this issue and what should they do with the proceeds? Possible responses: It appears to be under-valued on the JSE. The directors should ascertain the reason for the low price on the JSE and try to rectify this, e. They could use the proceeds to expand the business or reduce the loan thereby reducing interest. What price would you be prepared to pay for her shares?
What questions would you ask before deciding to download the shares? Value of the company is R2 , and it will have existing goodwill which is not valued but could reasonably be R This makes the shares worth R2 , which is R Questions to be asked: What is a reasonable value for the goodwill? Will Celia be prepared to accept R What are the prospects for the future? Learners may come up with their own opinions. Valuing shares is very subjective.
Is this business likely to experience a liquidity problem in the near future? The business is very liquid. There is a lot of cash on hand. Current assets are 3.
Even if stock is not sold, debtors and cash exceed Current liabilities. Debtors appear to be fine. Few bad debts. Total owing by debtors is within reason, but there is a sizeable amount owing to creditors — as they have not been paid, it has improved the cash situation. No liquidity problems expected. Income tax [ — ] Income receivable 72 3 8 84 6. This means that they are not reinvesting much of their profit, which means that the company is not growing significantly.
The dividends per share are cents per share, which is not bad in comparison to the value of the shares according to the average issue price R One of these employees owns shares in this company. Is there any item she should query at the AGM?
On average, the six full-time employees are earning R8 p. This should be a reasonable salary for a shop assistant. There might be a concern that the two directors are earning on average R each for a directorship position. We cannot assess this level without information about how much time the directors are spending at the business. Furthermore, the profit after tax of only R is not very good, based on sales of over R5m, so their decisions might not be as effective as they should be.
Provide three items. Explain, quoting figures to support your answer. Learners may provide a variety of opinions. Advise them to focus on major items, e. Stock levels are very high at R1 — it might not be easy to sell all this stock quickly.
Vehicles are very high — cost price R1 — these vehicles might not be necessary and the depreciation is very high, affecting profits negatively by R Periodic inventory system 3. Bogus Deferred income Shareholders for dividends 16 4 2 19 5 8 55 3. Dividends are very low 11 cents per share. Must try to increase profits by being more efficient. This is a small business. They might not be able to afford the cost of implementing a perpetual inventory system. However, this could lead to less internal control if the owner does not keep personal control.
Various opinions on this are possible. Income Statement, Ethics and control Note to Teachers: This Task has been specifically designed to demonstrate unethical business practice and poor internal control. Although the first two parts in preparing the parts of the financial statements should be done independently by learners, it is advisable for them to collaborate in sharing ideas for the 3rd and 4th part of this Task.
Be alert to other valid responses from learners. Make a list of the complaints that he would have had. Quote information from the question to support your opinions. Installation fees are very high too, R2 Installation should be free. They cannot expect the customers to do it themselves. The company has a monopoly over air-conditioners in this area.
They are likely to cause customers to secure their air-conditioners from another town, or a competitor is likely to open in the area. This is not wise procurement policy. The returns are high see Debtors allowances of R and it is unacceptable that they are downloading obsolete stock from their relative and that this stock cannot even be sold for its cost price.
Staff training is only R1 Also they are adding to the cash flow problems by paying fees to themselves in advance. They should be paid monthly for specific months.
The directors should ensure that internal control is good at all times. Any stock leaving the storeroom must be recorded and accounted for at all times.
Lack of control over deliveries into the business is a major problem too.
It is improper for a director to lend a company car to his son. The loss as a result of the crash should have been borne by the director himself, and not the company. These expensive vehicles have caused a R depreciation loss to the company. The property should have been sold on the open market and would have attracted a considerably higher selling price. In any case, it is not good policy to sell off fixed assets to solve cash flow problems.
If operating activities are improved, the cash flow will rectify itself. This is an airconditioning company in the Cape. There appears to be no valid reason why an overseas trip by a director would benefit the company. Additional valid comments are also acceptable.
What other strategy could he have used? If Ernie Grype is not happy, he must leave, but before doing so, he should have taken a stand on the poor corporate governance strategies being adopted by the directors. The directors are the major shareholders and they are running the company poorly and not in terms of the King Code.
This is affecting the returns and the rights of the minority shareholders. The auditors should also be querying many of these expenses and possibly refusing to offer an audit opinion. The directors could be reported to the Commissioner of CIPRO formerly Registrar and they could face criminal charges if their actions are in contravention of the Companies Act. Refer to the Modules on corporate governance and internal control for further scenarios.
The purpose of placing this Task in this Module is to integrate ethical and internal control matters in the module involving preparation of financial statements to encourage learners to adopt a questioning and critically analysis approach at all times.
This will negatively affect the reputation of the company. The employment process must follow its due course, and the CEO must consider possibly advising his son not to apply for the job as this could affect inter-personal relationships in the company and lead to allegations of favouritism.
It appears that this is fraudulent. The company should have procedures set down for handling these matters. If fraud has occurred, the director in question will have to repay the amount and will probably have to face disciplinary sanction as well. This proposal will be extremely damaging to the water systems. After a while the culprits will be detected and the company will then have to bear the negative consequences in terms of the law, e. RPL should not compromise on the best ways of destroying such stock.
These processes are available. The cost will have to be paid. If they have not been able to counter the risks faced by the company, they do not deserve an increase.
The stance taken by the one director who does not want an increase is admirable. He must not bow down to the threats of the other directors. They are the ones who should be accountable. The establishment of a Remunerations Committee which reviews the earnings of the directors is a good idea to solve such problems, because it takes away the need for individual directors to take a certain stance on the matter.
The directors will be held liable should users suffer as a result of incorrect information on the labels. The company will probably suffer irreparable damage from which it cannot recover. It is prohibited by the Companies Act. The director in question is in a privileged position due to his employment in the company.
He cannot use information for his own benefit if it has not been made known to the other stakeholders and the general public. The computer company will now expect some sort of favour in awarding the tender to supply all the computers to RPL. The director should not have accepted the laptop.
He must declare the problem to the board of directors and rectify the matter as soon as possible. To give an indication of the quality of the cash flows into and out of the company.
To provide the users of financial statements with information of cash generated or utilised by operations, investing activities and financing activities during a particular year. The running of the main purpose of the business. Operating activities comprise the income-earning operations of a company.
These relate to the downloading and selling of stock, payment to creditors, payment by debtors, payment of expenses and income earned, tax and dividends. The raising of funds to finance the infrastructure of the company.
Financing activities are those activities which are necessary to fund the infrastructure of a company, i. The use of the funds in earning income.
Investing activities involve the actual establishment of the infrastructure of a company so that it is able to earn income, e. For each transaction, indicate whether it will be classified as an operating, financing or investing activity, e.
Goods sold for cash — Operating activity. Basic format of a Cash Flow Statement 3. Should the directors be satisfied with this?