Grade 12 Accounting: Core Notes and Concepts Review

Practice review flashcards covering key topics from the Grade 12 Accounting Study Pack, including financial statements, audit reports, cost accounting, reconciliations, budgeting, inventory valuation, and VAT.

What are the total marks and allocated writing time for each of the two Grade 12 Accounting examination papers?

Each paper carries $150$ marks and has an allocated time of $2$ hours.

Which GAAP principle dictates the separate disclosure of significant items, such as interest expense, in financial reporting?

The materiality principle.

What are the three types of external audit opinions that independent auditors can issue on published financial statements?

Unqualified opinion (a 'clean' audit with no issues found), qualified opinion (issues were found that affect credibility), and disclaimer of opinion (auditors decline to issue an opinion because information is too flawed to meet IFRS standards).

What formula is used to calculate the break-even point (BEP) in manufacturing and cost accounting?

$$\text{Break-even point} = \frac{\text{Total fixed costs}}{\text{Selling price per unit} - \text{Variable costs per unit}}$$

How do the First-In-First-Out (FIFO) and Weighted-Average inventory valuation methods differ?

FIFO assumes that the oldest stock purchased is sold first, valuing closing inventory at the most recent purchase prices. The Weighted-Average method divides total cost of goods available for sale by total units available to value all units at an average cost price.

What are the three core sections that classify cash flows in the Cash Flow Statement?

Cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities.

According to the financial indicator guide, what Debt-to-Equity ratio ranges represent low risk versus high risk?

Low risk (high creditworthiness) ranges from $0{,}1 : 1$ to $0{,}4 : 1$, whereas high risk (low creditworthiness) ranges from $0{,}5 : 1$ to $1 : 1$.

At the standard VAT rate of $15\%$, what calculation is used to determine the VAT amount when given a VAT-inclusive total?

$$\text{VAT amount} = \text{Total (inclusive)} \times \frac{15}{115}$$

Which non-cash items are excluded from the Cash Budget?

Depreciation, bad debts, discount allowed, and discount received.

In bank reconciliation, how is a favourable balance represented in the business's General Ledger Bank Account versus on the Bank Statement?

A favourable balance is reflected as a debit balance ($\text{Dr}$) in the business's Bank Account ledger, but as a credit balance ($\text{Cr}$) on the Bank Statement.