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Grade 10 to 12

TEACHER DEVELOPMENT

Subject: Accounting Balance Sheet

Presented by

Mrs Maritha van Niekerk

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BALANCE SHEET / STATEMENT OF FINANCIAL POSITION

  • Learners need to know the format.
  • They must be able to complete the Balance Sheet using various techniques (e.g. From top to bottom, bottom way up, like a puzzle etc.)
  • They must be able to use Financial Indicators to complete the Statement.

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BALANCE SHEET PROGRESSION FROM GRADE 10-12

Grade 10

    • Capital-owner
    • Drawings

Grade 11

    • Capital-partners
    • Current account

Grade 12

    • Ordinary share capital
    • Retained Income

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Statement of Financial Position on 29 February 2024

LONG TERM/ MORE THAN 12 MONTHS

SHORT TERM/ LESS THAN 12 MONTHS

LONG TERM/ MORE THAN 12 MONTHS

SHORT TERM/ LESS THAN 12 MONTHS

TE+TL=TA

TA = TE+TL

ORDER OF LIQUIDITY

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Memorise the format

Always START WITH the pre -adjustment figures in the balance sheet.

Always show workings in brackets to earn part marks.

Ratios are important when a balance sheet is tested.

Current ratio is 1,8:1. The figure of the current liabilities were R100 000 then the missing figure of the current assets must be R100 000 x 1,8 = R180 000/ The figure of current assets is R180 000, then current liabilities will be R180 000÷1,8 = R100 000

Acid test ratio can be used to calculate the stock figure

Net asset value can be used to calculate shareholders equity. Use NAV x number of shares= shareholder’s equity (not shareholder’s capital)

Debt equity ratio can be used to calculate either the shareholders’ equity or the loan figure.

Total Capital Employed = Shareholders equity + Long term liabilities.

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RATIOS IN BALANCE SHEET:

  • Current ratio
    • If Current Liabilities are known, x to determine the Current Assets
    • If Current Assets is known, ÷ to determine the Current Liabilities

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100 000

180 000

100 000 x 1,8=

X 1,8

The current ratio is 1,8:1

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180 000

​

100 000

 

 

180 000 ÷ 1,8=

The current ratio is 1,8:1

÷ 1,8

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  • Acid Test ratio (Calculate difference between current and acid test ratio), then…
    • If Current Liabilities is known, x to determine the Inventory
    • If Inventory is known, ÷ to determine the Current Liabilities

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Acid-test ratio

1,2 : 1

Net asset value per share (NAV)

540 cents

EXAMPLE EXTRACTED FROM NOVEMBER 2021 NSC

QUESTION 1: STATEMENT OF FINANCIAL POSITION (55 marks; 45 minutes)

JIMO LIMITED

The information relates to the financial year ended 30 June 2021.

The business sells formal clothing for men and women.

REQUIRED:

Refer to Information A–H.

Statement of Financial Position (Balance Sheet) (33)

INFORMATION:

The following financial indicators were calculated on 30 June 2021:

​

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(8 700 000 – 4 860 000) ÷ 1,2

÷ 1,2

The acid test ratio is 1,2:1

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  • Debt-equity ratio
    • If Shareholders equity is known, x to determine the Non-Current Liabilities
    • If Non-Current Liabilities is known, ÷ to determine the Shareholders equity
    • Non-current liabilities : Shareholders' equity

Long term loan

Ordinary Share Capital

+ Retained Income

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1200 000

1200 000 x 0,5=

600 000

 

 

 

The Debt Equity ratio is 0,5:1

x 0,5

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1200 000

600 000 ÷ 0,5=

600 000

 

 

 

The Debt Equity ratio is 0,5:1

÷ 0,5

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  • Net Asset Value
    • NAV X number of shares = SHAREHOLDER’S EQUITY

 

Shareholders' equity x 100 � Number of issued shares 1

Ordinary Share capital + retained income

 

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EXAMPLE:

  • The Net Asset Value per share was accurately calculated at 450c per share.
  • On the last day of the financial year, 1 300 000 shares are in issue

 

EQUITY AND LIABILITIES

ORDINARY SHAREHOLDERS' EQUITY �

Ordinary share capital

 

Retained Income

 

NON-CURRENT LIABILITIES

 

Loan

 

CURRENT LIABILITIES

Trade and other payables

 

Current portion of loan

 

Shareholders for dividends

 

Bank overdraft

 

 

 

TOTAL EQUITY AND LIABILITIES

 

1300 000 x 450c =

5850 000

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  • Total Capital employed = Shareholders Equity + Non-Current Liability (Long term loan) (ROTCE)
  • If Total capital Employed is provided and one of the two components is known, then the other component can be determined.

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Example:

  • The loan from AB Bank amounted to R1 700 000 on the last day of the financial year. R350 000 will be repaid within the next financial year.
  • Total capital employed, after all adjustments were taken into account, was R18 500 000.

 

EQUITY AND LIABILITIES

ORDINARY SHAREHOLDERS' EQUITY �

Ordinary share capital

 

Retained Income

 

NON-CURRENT LIABILITIES

 

Loan: AB Bank

CURRENT LIABILITIES

Trade and other payables

 

Current portion of loan

 

Shareholders for dividends

 

Bank overdraft

 

 

 

TOTAL EQUITY AND LIABILITIES

 

(1 700 000 – 350 000)

1 350 000

17 150 000

(18 500 000 – 1350 000)

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Final Dividends

Provisional tax paid

Interim dividends

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