SECONDARY SCHOOL IMPROVEMENT PROGRAMME (SSIP) 2016

1 SECONDARY SCHOOL IMPROVEMENT PROGRAMME (SSIP) 2016 GRADE 12 SUBJECT: ACCOUNTING TEACHERS NOTES SESSIONS 6 TO 8 (Page 1 of 10)

2 SESSION 6 TOPIC: FIXED ASSETS IMPORTANT ASPECTS TO BE CONSIDERED BY TEACHERS Learners should be given question papers from the beginning of the year. Question papers to be used frequently in class instead of only using textbooks Teach a section and assess learners using past exam papers so that they can become familiar with the exam questions. The most important is the marking of the assessment and the discussion with learners. The grade 11 curriculum must be thoroughly mediated so as to ensure that learners are thoroughly prepared for the sections that are continued in grade 12 The applications involved in valuing fixed assets and stock require regular practice and continual reinforcement at appropriate times These can be integrated into other Grade 12 topics such as Companies, Manufacturing and Projected Income Statements to eliminate the need to devote additional revision time to these topics Teachers should ensure that the opportunities are used to include these applications in class tasks and tests on a regular basis. Teachers must ensure that the procedures of calculating depreciation and drawing up asset disposal accounts and fixed asset notes are properly addressed by the end of Grade 11. Make use of short 5 minute tests to revise the basics of fixed assets, e.g. o o o o Steps to follow when a fixed asset is sold Format of the asset disposal account Calculation methods of depreciation at cost price or carrying value Determination of how many months depreciation must be calculated for when an asset is sold during the year or when an asset is bought during the year. DETERMINE THE TIME ALLOCATION TO A QUESTION: Show learners how to calculate the time spent when only a part of a question is done. Speed must be practiced to ensure completion of an exam paper can be achieved. The exam paper consists of 300 marks 180 minutes = 1,66 minutes per mark

3 So if 15 marks are allocated to complete Note 3: fixed assets, then 15 marks 1, 66 minutes = 9 minutes can be spent for completion. RECOMMENDED LESSON FORMAT TO TEACHER Verbal/ written pre-test on fixed assets: 5 minutes Class activity 1. Completed by teacher and learners: 30 minutes Discussions on fixed asset notes: 30 minutes Ensure that learners realised that the carrying value determined in the asset disposal account is the amount to record in the note to financial statements as disposals at carrying value. Draw a time line of one year on board or smart board when demonstrating the calculation of depreciation to ensure that learner realised that dates and for how many months an asset must be depreciated. It is recommended that when calculating depreciation to include 12/12 as part of the formula. That will make learners aware to take the months in consideration. It is imperative to demonstrate the calculations on the board. Learners can t follow without demonstrations. The asset registers can be asked in the exam and therefore spent time on the supplied notes on asset registers and the calculation of depreciation on cost price and carrying value. Make use of the asset register on cost price to demonstrate the scrap value of R1. And asset cannot be depreciated for less than the cost price and if not sold at the time of depreciation, the value of that fixed asset will not be less than R1. Class activity 2 and 3. Completed by teacher and learners: 20 minutes Activity 3 can be used as a post test: 5 minutes

4 SESSION 7 TOPIC: INVENTORY VALUATION IMPORTANT ASPECTS TO BE CONSIDERED BY TEACHERS AND RECOMMENDATIONS WHEN CONDUCTING THE CLASS Revision on the perpetual and periodic stock systems. Ensure learners know the format of: the two Trading accounts for the two stock methods How to determine the cost of sales when using the two stock methods Discuss the different methods of stock valuation: Specific identification, FIFO. Weighted average LIFO not covered in the curriculum. GAAP, IFRS and ethical issues Learners should be given question papers from the beginning of the year. Question papers to be used frequently in class instead of only using textbooks Teach a section and assess learners using past exam papers so that they can become familiar with the exam questions. The grade 11 curriculum on perpetual and periodic stock systems must be thoroughly mediated so as to ensure that learners are thoroughly prepared for the sections that are continued in grade 12 The applications involved in valuing of the closing stock at the end of the year when using FIFO or Weighted average or Specific identification methods and this requires regular practice and continual reinforcement during revision or consolidation lessons. Stock validations can be integrated into other Grade 12 topics such as analysis and interpretations in Companies, E.g. stock turnover rate stock holding period, etc. Teachers should ensure that the opportunities are used to include these applications in class tasks and tests on a regular basis.

Teachers must ensure that the procedures of valuing of stock using the perpetual and periodic stock systems are properly addressed by the end of Grade 11. 5 Make use of short 5 minute tests to revise the basics of stock validation, e.g. Format of Trading account using the periodic system and perpetual. Calculation of FIFO, weighted average and specific identification methods Calculation methods for unit price, value of closing stock, cost of sales and gross profit, formula of stock turnover rate and stock holding period. RECOMMENDED LESSON FORMAT Verbal/ written pre-test on perpetual and periodic calculations of cost of sales and gross profit: 5 minutes Class activity 1. Completed by teacher and learners: 40 minutes Discussions on stock validation methods and calculations: 40 minutes Ensure that the different calculation methods are mediated and demonstrated during the lesson. E.g. opening stock + purchases + carriage on purchases + custom duties minus closing stock = cost of sales or calculate the value of stock sold at cost price. The same as with gross profit. Sales minus cost of sales= gross profit or opening stock + purchases + carriage on purchases + custom duties minus closing stock sales = gross profit. Examples and the solutions are supplied as part of teaching time. The alternative calculation methods were given to cater for all learning styles of learners. Don t just read it let learners physically do it. Only then will understanding take place. The COMPARISON of cost of sales and gross profit when using FIFO and weighted average must be discussed. When using FIFO the gross profit and value of closing stock will usually be higher than when weighted average method is used. This question if often required in the exams. Ensure that you speak with confidence and with clarity. Make use of the questions to discuss internal control and ethics. All the exam questions do require the knowledge thereof and the solutions do supplied ample answers for discussions. Class activity 2. Learners to complete and to finish for homework Sections of activity 2 can be used as a post test: 5 minutes

SESSION 8 6 TOPIC: RECONCILIATIONS IMPORTANT CONCEPTS TO CONCENTRATE ON: Bank Reconciliation Creditors Reconciliation Debtors reconciliation Bank Statement Creditors Control account Debtors Control account Bank reconciliation statement Creditors List Debtors List Cash journals Creditors Statement Age analysis Bank charges Source documents; Source documents: Stop orders/ debit orders Payments: cheques Receive money: receipts Internet payments Purchases: invoices Sell on credit; invoices Overcast/ under cast Returns: debit notes Returns: credit notes Analysis and interpretations of accounts Analysis and interpretations of statements IMPORTANT ASPECTS TO BE CONSIDERED BY TEACHERS Grade 11 content under CAPS includes the reconciliation of a Creditors Ledger account to the statement of account received from a creditor Grade 12 content stipulates analysis and interpretation of Creditors Reconciliations. As 20% of any examination paper may include relevant content from a previous Grade, preparation applications in respect of Creditors Reconciliations are examinable in Grade 12. Similar reasoning applies to Bank and Debtors Reconciliations Revision on all possible differences between the Bank and the cash journals. Revision and memorisation of the format of the Debtors Control account and Creditors Control account so that learners will be able to relate to the completion of Reconciliations of the control accounts and the lists of debtors Reconciliations of the control accounts and the lists of creditors Creditors reconciliation with the statement of account Learners should be given question papers from the beginning of the year. Question papers to be used frequently in class instead of only using textbooks Teach a section and assess learners using past exam papers so that they can become familiar with the exam questions. This can also be done during afternoon lessons with progressed learners.

The Grade 11 curriculum on reconciliations must be thoroughly mediated so as to ensure that learners are thoroughly prepared for the sections that are continued in Grade 12 where analysis and interpretation is required. Teachers should ensure that the opportunities are used to include these applications in class tasks and tests on a regular basis. Teachers must ensure that the procedures of reconciliations are properly addressed in Grade 10 on debtors reconciliation with list and creditors reconciliations by the end of Grade 11. 7 Make use of short 5 minute tests to revise the basics of reconciliations, e.g. Format of debtors control account and creditors control accounts The 16 possible differences between the bank and cash journals. Divide the 16 differences in three for assessment. See the given summary. The possible differences in Debtors and creditors reconciliations The reasons for debtors age analysis. RECOMMENDED LESSON FORMAT Verbal/ written pre-test on possible differences between bank and cash journals, debtors and Debtors list: 5 minutes. Question 1: Completed by teacher and learners: 40 minutes Discussions on the summary of reconciliations supplied: 40 minutes Ensure toe familiarise yourself with all the possible differences between the bank and the cash journals and creditors with the statement or list.. Study the supplied summary for bank reconciliation and creditors reconciliation. Take ownership thereof prior to teaching. Question 2: Learners to complete and to finish for homework and revised during the next session. Question 3: Due to the volume of work under the topic, reconciliations, is it recommended that reconciliations to be completed during the next session 9 in conjunction with the topic VAT.

Summary of all the possible differences between the Bank statement and the Cash Journals. Revise all the differences learnt in grade 11 so that proper analysis and interpretations can be achieved that is part of the Grade 12 curriculum. CASH RECEIPTS JOURNAL - MAY Possible differences Doc no Details Bank R Details 1 The ABSA Bank charged the following: Tax levy R10 Total b/d Service fees R20 BS 2 ABSA 50 50 Interest on current acc. Cash deposit fee R30 Interest R40 BS 3 E Baloyi 800 800 Rent Income 2 The bank statement showed interest received on current account, 120 10 Shezi Stat (cancel stale cheque issued) 255 12a PNA(cancel lost cheque issued) 244 14 Investec(overstated-258 250=8) CASH PAYMENTS JOURNAL -MAY Doc Details Bank R Details R50 100 100 Stationery 3 A tenant, E Baloyi, paid his rent directly into the bank account, R800. 500 500 Printing 4 The bank statement showed a stop order, R367, in favour of Santam for a payment on an insurance premium. 8 8 Rent Expense 5 The following cheques do not appear on the bank statement no. 67, R200 and no. 69, R300. 6 The deposit made on the last day of month does not appear on the bank statement, R9000 7 Unpaid cheque, R170 this cheque was received from P Pillay in settlement of his account of R183 and deposited on 24 May 2002. It was dishonoured because of Total b/d 8 Unpaid cheque, R157 this cheque was received from a tenant, B Bud and BS 1 ABSA(10+20+30) 60 60 Bank charges deposited inadvertently on 21 May 2014 It was dishonoured because it was dated21 July 2014 BS 1 ABSA 40 40 Interest on overdraft 9 The business issued a post-dated cheque no. 303 to a Factory to secure the popular stock to be delivered, R6 000. Dated 25 BS 4 SANTAM 367 367 Insurance 10 Cheque no 120 was issued to Shezi Stat on 20 November 2013 for Stationery, R100. BS 7 P Pillay (RD) 170 170 Debtors Control 11 Unpaid cheque, R160 this cheque was received from a debtor, BS 8 P Nyathi (RD) 157 157 Rent Income BS 11 J Nel ((RD) 160 160 Debtors Control July J. Nel and deposited 12inadvertently on 25 May 201314. It was dishonoured beca14use it was dated 25 May 2013 15. 365 12b PNA 500 500 Printing 12 Cheque 16no. 255, R500 was lost by PNA and they asked for a 253 13 Makro (understated 664-646=18) new cheque. Cheque no 255 to be cancelled and replaced by 18 18 Trading Stock Cheque 365 The cheque was a payment for Printing made a. cancel lost cheque in CRJ 8 BANK RECONCILIATION STATEMENT- MAY DR CR b. issue new cheque in CPJ Dr or Cr Balance as per bank statement unfavourable favourable c. Record new cheque as debit outstanding cheque in the BRS. 6 Credit late deposit 9 000 13 Cheque no 253 on Bank Statement showed and amount of R664, while the amount in the CPJ was R646. It was a payment Debit Outstanding Cheques to Makro for goods. 6 5 No. 67 14 Cheque no 244 on Bank Statement showed and amount of R250, while the amount in the CPJ was R258. No. 69 300 It was a payment to Investec for rent 9 No. 303 (post-dated) 15 Cheque no.2 230, R1500, on the Bank Statement was a cheque drawn by another client, ZITHA Stores, debited to 12c No. 365 (new cheque) our account 15 Credit cheque wrongly debited 1 500 5

9 16 Debit deposit wrongly credited 2 000 16 The deposit on the 15 May 2014, R2000, showed on the Bank Statement was a deposit made by the owner into Dr or Credit balance as per Bank account favourable unfavourable his own bank account and the Bank has erroneously recorded the deposit in his business Bank account TOTAL TOTAL CREDITORS RECONCILIATION WITH STATEMENT OF ACCOUNT Summary of all the possible differences between the Creditors list/ Creditors ledger account and the Statement of account from the Creditor. Revise all the differences learnt in grade 11 so that proper analysis and interpretations can be achieved that forms part of the Grade 12 curriculum. Statement of account from Mpho Wholesalers: Possible differences Debtor: MapulaTraders Date no Details Debit + Credit - Balance 1 Errors: over cast or under cast Balance 2 000 Invoice 125 of R1500 was recorded incorrect by Invoice 125 1 500 3 500 Receipt 60 1 600 1 900 Mapula Traders as R1 000 x Invoice 180 2 000 3 900 2 Incorrect client Credit note 33 400 3 500 Invoice 180 for R2 000 was not for Mapula Traders Receipt 71 500 3 000 but for Mapule Stores x Invoice 199 800 2 200 Creditors Ledger account in CL of Mapula Traders Creditor: Mpho Wholesalers Date The reconciliation statement is a continuation of the statement received from the creditor Details Debit - Credit + Balance 3 Recorded on the credit side instead of debit side, or the other way around Invoice 199 of R800 on the Statement was recorded on the credit column instead of the debit column 4 Disagreements Mpho wholesaler did not allow the discount of R100 Because they did not receive the payment within 14 days as agreed. Cancel the discount. 5 Late/outstanding transactions: Balance 2 000 Invoice 210 and Receipt 144 will only appear on the. x Invoice 125 1 000 3 000 following statement for June Cheque 100 1 600 1 400 Debit note 16 400 1 000 ADVICE: Cheque 120 500 500 a Make sure that you know the Debtors control account and the x Cheque 120( discount) 100 400 Creditors control account to establish which side to correct. Invoice 199 800 1 200 b. Know the source documents involved between them:? Invoice 210 2500 3 700 Payments: cheque versa receipts Returns: debit notes versa credit notes? Cheque 144 1 500 2 200 c Statement of account is like the Debtors Control account, increase on the debit side and decrease on the credit side 1 Correction Invoice 125 500 2 700 DR + DEBTORS CONTROL ACCOUNT - CR (1500-1000=500) Balance b/d -Bank and discount CRJ (receipt) 4 Cancel the discount (100 2 800 +Sales DJ (invoice) -Debtors allow DAJ (credit note) +Bank(RD) CPJ +Charged interest G J -Cancel discount GJ

10 CREDITORS RECONCILIATION STATEMENT- MAY DR + CR - Closing balance on the statement of account from Mpho Wholesalers Balance on 31 May 2016 (dr.) 2 200 d. Creditors ledger account in Creditors Ledger/ or Creditors List is 2 Incorrect client: cancel Invoice 180 (2 000) the same as the Creditors Control account DR - CREDITORS CONTROL ACCOUNT + CR 3 Correction: Invoice 199[800+800] 1600 -Bank and discount CPJ(cheque) +Balance b/d 5 Outstanding Invoice 210 2 500 -Sundry allow CAJ (debit note) +Purchases CJ (invoice) 5 Outstanding payment cheque 144 (1 500) -Cancel discount GJ + interest charged GJ = New Balance of recon statement (same) 2 800 = Balance of the creditors account 2 800