IGCSE Accounting all Paper 1s 2018-21

Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 6 3 6 9 2 5 2 6 1 1 * 0452/12 ACCOUNTING Paper 1 February/March 2018 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. DC (NH) 144914/1 © UCLES 2018 [Turn over 2 There are 10 parts to question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Harpreet is a credit customer of Suzanna. Harpreet’s account in Suzanna’s books shows a credit balance. How could the credit balance have arisen? A A cheque from Harpreet was dishonoured. B Harpreet has overpaid his account. C Interest was charged by Suzanna. D Suzanna offered a trade discount. [1] (b) The following is the subscriptions account of a club. Subscriptions account $ 2017 2017 Jan 1 Dec 31 2018 Jan 1 Balance b/d Income and expenditure Balance c/d 150 3000 50 3200 Balance b/d 60 Jan 1 Dec 31 2018 Jan 1 $ Balance b/d Bank Balance c/d 80 3060 60 3200 Balance b/d 50 Which statement is correct? A Subscriptions in advance at 1 January 2018 were $50. B Subscriptions in arrears at 1 January 2017 were $80. C Subscription income for the year was $3060. D Subscriptions received during the year were $3000. [1] (c) Why is it necessary for a manufacturing business to make an adjustment for work in progress in its manufacturing account? 1 2 3 to calculate what is needed to complete production to record all factory costs to show only the cost of goods completed A 1 and 2 B 1 only C 2 and 3 D 3 only © UCLES 2018 [1] 0452/12/F/M/18 3 (d) Narinder made a short-term loan to Seema. Narinder’s draft statement of financial position showed this loan as a current liability. What was the effect of this error? A current assets understated B current liabilities understated C non-current liabilities overstated D owner’s capital overstated [1] (e) On 1 February 2017 Katya’s fixtures and fittings had a net book value of $12 950. She purchased fixtures, $2250, during the year. Depreciation for the year ended 31 January 2018 was $4900. What was the net book value of fixtures and fittings on 31 January 2018? (f) A $5800 B $7150 C $10 300 D $15 600 [1] The accounts of a business are prepared on the basis that the business will continue to operate for the foreseeable future. Which accounting principle is being applied? A accruals (matching) B consistency C going concern D realisation [1] (g) Which term in club or society accounts means the same as capital? A accumulated fund B appropriation account C balance at bank D surplus for the year © UCLES 2018 [1] 0452/12/F/M/18 [Turn over 4 (h) A business provided the following information. revenue gross profit profit for the year $ 290 000 90 000 70 000 What was the mark-up? (i) A 24.14% B 31.03% C 35.00% D 45.00% [1] Financial statements must provide information in time for financial decisions to be made. Which accounting objective is being described? (j) A comparability B relevance C reliability D understandability [1] Which item would be recorded as a credit entry in a purchases ledger control account? A amounts paid to credit suppliers B contra with the sales ledger control account C discount received from credit suppliers D interest charged on late payment [1] [Total: 10] © UCLES 2018 0452/12/F/M/18 5 2 Kumar supplies goods to Simran on credit. Some documents were exchanged between them during August 2017. REQUIRED (a) Complete the table to name the person who issued each document. The first item has been completed as an example. document name of person issuing the document invoice Kumar debit note credit note statement of account cheque [4] (b) State the purpose of a debit note. ................................................................................................................................................... ...............................................................................................................................................[1] (c) State the book of prime (original) entry in which Kumar would record the credit note. ...............................................................................................................................................[1] (d) Name the ledger in which Kumar maintains Simran’s account. ...............................................................................................................................................[1] Simran is a regular customer. Kumar allows Simran a discount for buying in bulk. REQUIRED (e) Name the type of discount offered by Kumar. ...............................................................................................................................................[1] (f) State where Kumar would record this discount. ...............................................................................................................................................[1] © UCLES 2018 0452/12/F/M/18 [Turn over 6 The following are details of the credit notes issued by Kumar in December 2017. Date Credit note number Customer $ 2017 Dec 3 Sam C1015 295 12 Saira C1016 103 31 Total for December 398 REQUIRED (g) State where Kumar will post (i) the total of the credit notes for December .......................................................................................................................................[1] (ii) the individual credit notes .......................................................................................................................................[1] Kumar has received positive feedback about his customer service. No entry has been made in the accounting records to reflect this success. REQUIRED (h) Name and explain the accounting principle Kumar has applied. Name ........................................................................................................................................ Explanation ............................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (i) Complete the following to show the accounting equation. equals assets minus [2] © UCLES 2018 0452/12/F/M/18 7 (j) Complete the table by placing a tick ( ) to indicate how each item affects the owner’s capital. The first one has been completed as an example. item increase decrease capital introduced drawings profit for the year [2] [Total: 17] © UCLES 2018 0452/12/F/M/18 [Turn over 8 3 Nikita has a business with a financial year end of 31 January. On 1 February 2017 there was a credit balance of $140 on the electricity expense account. During the year ended 31 January 2018 the following payments were made relating to electricity. 2017 Mar 10 Jun 7 Sep 5 Dec 6 $ direct debit direct debit direct debit direct debit 210 130 185 205 The cost of electricity for the three months ended 28 February 2018 was estimated to be $330. REQUIRED (a) Prepare the electricity expense account for the year ended 31 January 2018. Balance the account and bring down the balance on 1 February 2018. Nikita Electricity expense account Date Details $ Date Details $ .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... [6] (b) State what the balance brought down on 1 February 2018 on the electricity expense account represents. ................................................................................................................................................... ...............................................................................................................................................[1] © UCLES 2018 0452/12/F/M/18 9 (c) Name the section of the statement of financial position on 31 January 2018 in which the balance on the electricity expense account was included. ...............................................................................................................................................[1] Nikita also rents out some premises. On 1 February 2017 the tenant owed $1250. The following amounts for rent were received during the year. $ 2017 May 10 Oct 14 cash cheque 2700 2800 On 31 January 2018 the tenant owed $1700. REQUIRED (d) Prepare the rent receivable account for the year ended 31 January 2018. Balance the account and bring down the balance on 1 February 2018. Nikita Rent receivable account Date Details $ Date Details $ .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... [6] (e) Name the section of the statement of financial position on 31 January 2018 in which the balance on the rent receivable account was included. ...............................................................................................................................................[1] © UCLES 2018 0452/12/F/M/18 [Turn over 10 (f) Insert the missing words and figures into the following extract from Nikita’s income statement for the year ended 31 January 2018. Nikita Income Statement for the year ended 31 January 2018 $ $ $ Revenue Less: returns 4 000 123 000 Cost of sales 8 000 Inventory at Purchases 76 000 Goods for own use 2 000 Carriage inwards 1 200 Less: Inventory at 11 000 [8] © UCLES 2018 0452/12/F/M/18 11 Nikita’s brother, Sunil, provided the following information about his business at 31 January 2018. Non-current assets Inventory Trade receivables Bank Trade payables Long-term loan $ 89 350 6 800 12 500 1 010 debit 15 200 8 000 REQUIRED (g) State what is measured by the current ratio. ................................................................................................................................................... ...............................................................................................................................................[1] (h) Calculate the current ratio for Sunil’s business at 31 January 2018. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (i) Suggest two reasons why Nikita cannot compare her current ratio with that of Sunil. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ...............................................................................................................................................[2] (j) Suggest two ways in which Nikita might improve her working capital position. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ...............................................................................................................................................[2] [Total: 30] © UCLES 2018 0452/12/F/M/18 [Turn over 12 4 Meena is a trader. On 31 December 2017 Meena’s cash book (bank columns) showed an overdrawn balance of $2450. The balance on the bank statement at the same date was $2623 debit. Meena checked the cash book against the bank statement and discovered the following differences. 1 Cash sales, $362, paid into the bank on 31 December, did not appear on the bank statement. 2 Interest charged by the bank, $20, had not been recorded in the cash book. 3 A cheque for $94 from a customer, Anjana, had been paid into the bank but had been returned as dishonoured. 4 The bank had received $140 by credit transfer from Rohan, a customer, which had been omitted from the cash book. 5 Cheques totalling $198, issued by Meena, had not been presented for payment. 6 The bank had paid a standing order, $35, to a supplier on 30 December by mistake. REQUIRED (a) Update Meena’s cash book (bank columns) at 31 December 2017. Bring down the updated balance on 1 January 2018. Meena Cash book (bank columns) Date Details $ Date Details $ .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... [5] © UCLES 2018 0452/12/F/M/18 13 (b) Prepare a bank reconciliation statement at 31 December 2017. Meena Bank Reconciliation Statement at 31 December 2017 $ $ ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... [6] (c) State the amount which will be shown as the bank balance in the statement of financial position at 31 December 2017 and the section in which it will be shown. Amount $ .................................................................................................................................. Section of statement of financial position .............................................................................[2] (d) State what is meant by a ‘dishonoured cheque’. Suggest two possible reasons why a cheque might be dishonoured. Meaning .................................................................................................................................... ................................................................................................................................................... Reasons ................................................................................................................................... 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ...............................................................................................................................................[3] © UCLES 2018 0452/12/F/M/18 [Turn over 14 Meena maintains a petty cash book using the imprest system. The amount of the imprest is $200. During the month of December Meena paid the following expenses from petty cash. Stationery Taxi fares Office tea and biscuits $ 18 5 4 REQUIRED (e) Explain the meaning of the ‘imprest system’. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (f) State the double entry to record the reimbursement to the petty cash imprest on 1 January 2018. debit entry $ credit entry $ [3] [Total: 21] © UCLES 2018 0452/12/F/M/18 15 5 Eli and Sumit are in partnership. Balances on the partners’ capital and current accounts on 1 November 2016 were: Eli Sumit capital account $ 50 000 40 000 current account $ 4 500 debit 1 800 debit REQUIRED (a) Explain why each partner has both a current and a capital account. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (b) State what the debit balance on Sumit’s current account on 1 November 2016 represents. ................................................................................................................................................... ...............................................................................................................................................[1] The partnership agreement includes the following terms. Annual salary to Eli Interest on capital Interest on drawings Share of profits/losses $7500 8% per annum 4% Eli 3: Sumit 2 Additional information 1 Profit for the year ended 31 October 2017 was $12 500. 2 Additional capital, $5000, was introduced by Sumit on 1 May 2017. 3 Drawings for the year were Eli, $5000, Sumit, $6500. REQUIRED (c) Suggest one reason why Eli and Sumit are charged interest on drawings. ................................................................................................................................................... ...............................................................................................................................................[1] © UCLES 2018 0452/12/F/M/18 [Turn over 16 (d) Prepare the partnership appropriation account for the year ended 31 October 2017. Eli and Sumit Appropriation Account for the year ended 31 October 2017 $ $ ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... ............................................................................................. ................... ................... [7] © UCLES 2018 0452/12/F/M/18 17 (e) Prepare an extract from the statement of financial position of Eli and Sumit at 31 October 2017 showing the partners’ capital accounts and full details of the partners’ current accounts. Eli and Sumit Extract from Statement of Financial Position at 31 October 2017 $ Eli $ Sumit $ Total ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... ...................................................................... ................... ................... ................... [10] [Total: 21] © UCLES 2018 0452/12/F/M/18 [Turn over 18 6 Sanjay, a trader, prepared his trial balance on 31 January 2018. The totals of the trial balance did not agree. Sanjay entered the difference, a credit balance of $1110, in a suspense account. The following errors were later discovered. 1 The wages account had been undercast by $270. 2 Rent received, $1000, had been correctly entered in the bank account but no other entry had been made. 3 Goods purchased on credit from Simon, $680, had been correctly entered in the purchases account but had been posted to the account of Simone. 4 No entry had been made for stationery, $35, paid in cash. 5 Motor vehicle repairs, $700, had been debited to the motor vehicles account. 6 Purchases returns, $190, had been correctly entered in the supplier’s account but had been debited to the sales returns account. REQUIRED (a) State two purposes of a trial balance. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ...............................................................................................................................................[2] (b) Name the type of error made in 3, 4 and 5. Error 3 ....................................................................................................................................... Error 4 ....................................................................................................................................... Error 5 ...................................................................................................................................[3] © UCLES 2018 0452/12/F/M/18 19 (c) Prepare the suspense account making the necessary entries to correct errors. Balance or total the account as required. Sanjay Suspense account Date Details $ Date Details $ .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... .......... .......................................... .......... [6] (d) State whether all errors in Sanjay’s accounts have been discovered. Give your reason. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] Question 6 (e) is on the next page. © UCLES 2018 0452/12/F/M/18 [Turn over 20 Sanjay’s draft profit for the year ended 31 January 2018 was $24 250 before any errors were corrected. REQUIRED (e) Complete the statement to show the corrected profit for the year ended 31 January 2018. If an error has no effect on profit place a tick ( ) in the ‘No Effect’ column. Statement of corrected profit for the year ended 31 January 2018 No Effect Increase $ Decrease $ $ 24 250 Draft profit Error 1 Error 2 Error 3 Error 4 Error 5 Error 6 Corrected profit [8] [Total: 21] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2018 0452/12/F/M/18 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 1 6 2 6 0 3 4 7 9 8 * 0452/11 ACCOUNTING Paper 1 May/June 2018 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 22 printed pages and 2 blank pages. DC (RCL (DF)) 148225/3 © UCLES 2018 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) For which accounts does the cash book act as a ledger account? bank cash discount allowed discount received A B C D [1] (b) Which statement about the division of the ledger is not correct? A Checking procedures can be introduced. B Fewer entries are needed in the sales and purchases accounts. C It is easier for reference and for locating accounts. D Work can be shared between two or more book-keepers. [1] (c) Which account may appear as a credit balance in a trial balance? A carriage outwards B discount received C drawings D inventory [1] (d) Insurance prepaid, $120, was treated as an accrual in the income statement. Which effect did this have on the profit for the year? A overstated $120 B overstated $240 C understated $120 D understated $240 [1] © UCLES 2018 0452/11/M/J/18 3 (e) What is the correcting journal entry? debit $ Ahmed Aktar Suspense 250 250 Ahmed Suspense Aktar 250 250 Aktar Ahmed Suspense 500 C Suspense Ahmed Aktar 500 D A B credit $ 500 500 250 250 250 250 [1] (f) Hassan sells two products, X and Y. He provided the following information on 31 December 2017. product number of units cost per unit $ net realisable value per unit $ X 520 2.00 2.20 Y 390 3.00 2.80 50 units of product Y were damaged and will have to be destroyed. A $1992 B $2132 C $2164 D $2314 [1] © UCLES 2018 0452/11/M/J/18 [Turn over 4 (g) What would not be included in a statement of changes in equity? A ordinary share dividend paid which relates to the previous year B ordinary share dividend proposed which relates to the current year C profit for the year D transfer to general reserve [1] (h) Beth and Carla are in partnership, sharing profits and losses 3:2. They provided the following information at 31 January 2018. $ Profit for the year Interest on capital: Beth Carla 4 000 3 000 Salary: Beth $ 42 000 7 000 10 000 What was the total A $15 000 B $25 200 C $29 000 D $39 200 [1] (i) Some members of a sports club had not paid their annual subscriptions at the end of the financial year. Where will these unpaid subscriptions be shown in the financial statements? receipts and payments account income and expenditure account statement of financial position A B C D [1] © UCLES 2018 0452/11/M/J/18 5 (j) On 1 April 2017 trade receivables owed $4250 and on 31 March 2018 they owed $3940. During the year $46 750 was received from trade receivables and they returned goods, $1130. What were the credit sales for the year? A $46 440 B $47 060 C $47 570 D $48 190 [1] [Total: 10] © UCLES 2018 0452/11/M/J/18 [Turn over 6 2 (a) Complete the following table indicating with a tick ( ) the section of a statement of financial position in which each item would appear. non-current assets current assets non-current liabilities current liabilities trade payables 5-year loan inventory loose tools bank overdraft rent receivable accrued [3] (b) (i) State one advantage of being a partner rather than a sole trader. .......................................................................................................................................[1] (ii) State one disadvantage of being a partner rather than a sole trader. .......................................................................................................................................[1] (c) Name three interested parties (other than the business owner) who may wish to look at the financial statements of a business. For each interested party state a reason for their interest. interested party reason for their interest [6] (d) State two causes of depreciation. 1 ................................................................................................................................................. 2 .............................................................................................................................................[2] © UCLES 2018 0452/11/M/J/18 7 (e) Complete the following table by writing either True or False against each statement about depreciation. True or False The depreciation is calculated on the cost price less residual value when the straight line (equal instalment) method is used. The percentage rate of depreciation decreases each year when the reducing (diminishing) balance method is used. The provision for depreciation of a non-current asset is deducted from the cost price in the statement of financial position. A provision for depreciation is a means of providing a fund to purchase a replacement non-current asset. [4] (f) Name one accounting objective. ...............................................................................................................................................[1] (g) Name the accounting principle described by each of the following statements. Accounting Principle The same accounting treatment is applied to similar items at all times. Accounting assumes that a business will continue to operate indefinitely. Transactions are expressed in monetary terms. Revenue is recognised as earned when ownership of goods passes to the customer. [4] [Total: 22] © UCLES 2018 0452/11/M/J/18 [Turn over 8 3 Amira owns an advertising agency. Her financial year ends on 30 April. On 1 April 2018 she decided to use a petty cash book with a monthly imprest of $80 which would be restored on the first day of each month. REQUIRED (a) State one reason for using a petty cash book. ................................................................................................................................................... ...............................................................................................................................................[1] (b) State one advantage of the imprest system of petty cash. ................................................................................................................................................... ...............................................................................................................................................[1] On 1 April 2018 Amira put $80 cash in the petty cash box. Her transactions for the month of April 2018 were as follows. April 4 Bought stamps $ 3 7 Purchased printing paper 8 11 Purchased ink cartridges 12 19 Paid window cleaner 10 22 Paid KK Limited, a trade payable 35 29 Purchased flowers for reception desk 7 REQUIRED (c) Balance the petty cash book and bring down the balance on 1 May 2018. [10] © UCLES 2018 0452/11/M/J/18 © UCLES 2018 0452/11/M/J/18 .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. 2018 April 1 Date 80 Total received $ ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... Cash Details $ $ .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. Postage Total paid .................. Amira Petty Cash Book .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. Computer supplies $ .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. General expenses $ .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. Ledger accounts $ 9 [Turn over 10 (d) Complete the following table to show the double entry to restore the petty cash imprest on 1 May 2018. debit $ credit $ [3] (e) Show the entry which would be made in the computer supplies account in April 2018. It is not necessary to close or balance the account. Amira Computer supplies account Date Details $ Date Details $ .......... ................................. .............. .......... ................................. .............. .......... ................................. .............. .......... ................................. .............. [1] Amira balanced her cash book on 30 April 2018. The bank column showed that she had $17 620 in the bank. On the same date the bank statement showed a different balance. REQUIRED (f) State two reasons for preparing a bank reconciliation statement. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] A comparison of the cash book and the bank statement revealed the following. $ 1 Items appearing only on the bank statement Bank charges Dishonoured cheque, Jabir Business rates paid by direct debit 2 Items appearing only in the cash book Cheque received from Shadya Cheque paid to Abasi 3 © UCLES 2018 28 153 95 Debit side of cash book was undercast 0452/11/M/J/18 824 1075 100 11 REQUIRED (g) Update the cash book of Amira. Bring down the updated balance on 1 May 2018. Amira Cash Book (bank columns only) Date Details $ Date Details $ 17 620 ............. ................................ ............. 2018 April 30 Balance b/d ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. [5] (h) Prepare a bank reconciliation statement for Amira at 30 April 2018 to determine the balance shown on the bank statement. Amira Bank Reconciliation Statement at 30 April 2018 $ ..................................................................................................................... ........................ ..................................................................................................................... ........................ ..................................................................................................................... ........................ ..................................................................................................................... ........................ ..................................................................................................................... ........................ ..................................................................................................................... ........................ ..................................................................................................................... ........................ ..................................................................................................................... ........................ [4] © UCLES 2018 0452/11/M/J/18 [Turn over 12 (i) State the bank balance which would appear in the statement of financial position on 30 April 2018. Name the section in which it would appear. Amount of bank balance $ ............................................. Section of statement of financial position ..............................................................................[2] (j) Suggest two possible reasons why the cheque from Jabir was dishonoured. 1 ................................................................................................................................................. 2 .............................................................................................................................................[2] [Total: 31] © UCLES 2018 0452/11/M/J/18 13 PLEASE TURN OVER © UCLES 2018 0452/11/M/J/18 [Turn over 14 4 Harry is a trader in farm machinery. He maintains a full set of accounting records. His financial year ends on 31 March. Harry made the following entries in his purchases journal and purchases returns journal in March 2018. Harry Purchases Journal 2018 March 15 24 31 $ $ AX Limited Goods Less Trade discount 3250 650 2600 FM Limited Goods Less Trade discount 1820 273 1547 Total for month 4147 Purchases Returns Journal 2018 March 17 28 31 $ $ AX Limited Goods Less Trade discount 450 90 360 FM Limited Goods Less Trade discount 200 30 170 Total for month 530 Harry made the following payments by cheque. 2018 March 4 30 AX Limited, $2425, in full settlement of the amount due on that date. FM Limited to settle the amount due on that date. No cash discount was received. REQUIRED (a) Enter the transactions for March in the following ledger accounts. Close the accounts on 31 March 2018 by balancing or by making a transfer to the income statement. Some entries have already been made in the accounts during the year. © UCLES 2018 0452/11/M/J/18 15 Harry AX Limited account Date Details $ Date Details ............ ................................ ............. 2018 Mar 1 ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. Details $ Balance b/d $ 2500 FM Limited account Date Details $ Date ............ ................................ ............. 2018 Mar 1 ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. Balance b/d 750 Purchases account Date Details $ Date Details $ 43 000 ............ ................................ ............. 2018 Feb 28 Total to date ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. © UCLES 2018 0452/11/M/J/18 [Turn over 16 Purchases returns account Date Details $ Date Details $ ............ ................................ ............. 2018 Feb 28 Total to date ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. ............ ................................ ............. 5020 [12] (b) (i) Suggest one reason why AX Limited allowed Harry trade discount on his purchases on 15 March 2018. ........................................................................................................................................... .......................................................................................................................................[1] (ii) Calculate the percentage of trade discount AX Limited allowed Harry on his purchases on 15 March 2018. ........................................................................................................................................... .......................................................................................................................................[1] (c) Name the following documents: (i) the document issued by AX Limited on 15 March 2018 .......................................................................................................................................[1] (ii) the document issued by Harry on 17 March 2018 .......................................................................................................................................[1] (iii) the document which AX Limited may issue on 31 March 2018 .......................................................................................................................................[1] [Total: 17] © UCLES 2018 0452/11/M/J/18 17 PLEASE TURN OVER © UCLES 2018 0452/11/M/J/18 [Turn over 18 5 He provided the following information at the end of his first year of trading. Purchases of raw materials Direct factory wages Indirect factory wages General factory expenses Carriage inwards Factory heat and light Factory insurance Inventory at 31 January 2018: raw materials work in progress finished goods $ 48 400 38 800 27 140 3 150 1 950 1 110 1 860 5 150 7 260 5 500 Factory machinery, $75 000, was purchased on 1 February 2017 and is to be depreciated by 20% per annum. REQUIRED (a) Define and give one example of each (i) Raw materials Definition ............................................................................................................................ ........................................................................................................................................... Example .........................................................................................................................[2] (ii) Work in progress Definition ............................................................................................................................ ........................................................................................................................................... Example .........................................................................................................................[2] (iii) Finished goods Definition ............................................................................................................................ ........................................................................................................................................... Example .........................................................................................................................[2] © UCLES 2018 0452/11/M/J/18 19 (b) Prepare the manufacturing account for the year ended 31 January 2018. Addae Manufacturing Account for the year ended 31 January 2018 $ $ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ [10] © UCLES 2018 0452/11/M/J/18 [Turn over 20 The cost of production was higher than Addae expected. REQUIRED (c) Suggest two ways in which the cost of production could be reduced apart from purchasing lower quality materials. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] After the preparation of the manufacturing account, Addae provided the following additional information. Revenue Cost of sales Administration and selling expenses $ 179 250 119 500 34 750 REQUIRED (d) Calculate the percentage of gross profit to revenue (gross profit margin). The calculation should be to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (e) Calculate the percentage of profit for the year to revenue (net profit margin). The calculation should be to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (f) Suggest two ways in which the percentage of profit for the year to revenue could be improved. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] [Total: 24] © UCLES 2018 0452/11/M/J/18 21 6 Mai is a trader. At the end of her financial year on 31 March 2018 she opened a suspense account with a debit balance of $650. REQUIRED (a) State two reasons why it was necessary for Mai to open a suspense account. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] Mai discovered that some errors had been made in her accounting records. REQUIRED (b) Complete the following table to show the entries required to correct each error. The first one has been completed as an example. entries required to correct the error error debit account 1 motor expenses, $150, debited to motor vehicles account 2 carriage inwards, $120, debited to carriage outwards account 3 sales journal overcast by $1000 4 wages, $460, debited to wages account as $640 motor expenses credit $ 150 account motor vehicles $ 150 [6] © UCLES 2018 0452/11/M/J/18 [Turn over 22 (c) State whether Give a reason for your answer. Have all the errors been discovered? ........................................................................................ Reason ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (d) Complete the statement to show the effect on the profit for the year of correcting errors 1–4. Where the error does not affect the profit write “no effect”. Mai Statement of corrected profit for the year ended 31 March 2018 $ 4150 Profit for the year before corrections Increase in profit $ Decrease in profit $ Error 1 .................... .................... Error 2 .................... .................... Error 3 .................... .................... Error 4 .................... .................... Corrected profit for the year [6] [Total: 16] © UCLES 2018 0452/11/M/J/18 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 2 1 6 5 4 5 5 0 0 6 * 0452/12 ACCOUNTING Paper 1 May/June 2018 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. DC (RCL (DF)) 144912/2 © UCLES 2018 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Jim supplies Debbie with goods on credit. Which business document might Debbie send to Jim? A credit note B debit note C invoice D statement of account [1] (b) What would be recorded in the general journal? A bad debt written off B cash sale of goods C credit sale of goods D returns outwards [1] (c) Which item is not included as part of the calculation of net realisable value when valuing inventory? A carriage inwards B cost of completing the goods C estimated receipts from sale of the goods D selling expenses [1] (d) How does a manufacturing business calculate the production cost of completed goods? A prime cost + factory overheads + opening work in progress – closing work in progress B prime cost + factory overheads – opening work in progress + closing work in progress C prime cost – factory overheads + opening work in progress – closing work in progress D prime cost – factory overheads – opening work in progress + closing work in progress © UCLES 2018 0452/12/M/J/18 [1] 3 (e) Anastasia purchased equipment, $28 000, on 1 January 2016. Her depreciation policy is to use the reducing (diminishing) balance method at the rate of 20% per annum. What was the net book value of the equipment on 31 December 2017? (f) A $10 080 B $11 200 C $16 800 D $17 920 [1] Which is an item of capital expenditure? A annual redecoration of offices B buildings insurance C legal fees on purchase of factory D repairs to machinery [1] (g) Where will interest on drawings be recorded? A B C D [1] (h) B Limited provided the following details at 30 April 2018. profit for the year ended 30 April 2018 ordinary share dividends paid transfer to general reserve retained earnings at 30 April 2018 $ 72 500 15 000 5 000 285 000 What were retained earnings at the beginning of the financial year? A $227 500 B $232 500 C $337 500 D $342 500 © UCLES 2018 [1] 0452/12/M/J/18 [Turn over 4 (i) (j) What does the going concern principle mean? A Non-current assets must be shown at expected sales value. B Revenue is recognised when ownership of goods passes to the customer. C The business will continue to operate for the foreseeable future. D The financial statements should always use the same accounting principles. [1] On 31 March 2018 Sasha had trade receivables of $95 000. She wrote off a bad debt, $750, and made a provision for doubtful debts of 2% of trade receivables. What was the figure for net trade receivables in the statement of financial position at 31 March 2018? A $92 350 B $92 365 C $93 115 D $94 250 [1] [Total: 10] © UCLES 2018 0452/12/M/J/18 5 2 Mary keeps a full set of accounting records including books of prime (original) entry. REQUIRED (a) State two reasons why Mary uses books of prime (original) entry. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] Mary banks all cash sales at the end of each week. Mary had the following transactions during November. 1 Sold goods, $220, for cash 2 Returned goods costing $440, bought on credit from Jane 3 Purchased a motor vehicle on credit, $12 400, including road tax of $300, from Speedy Motors 4 Received a cheque from Tan, a credit customer, in settlement of an invoice for $400 after deduction of 2% cash discount 5 Took goods for own use, $120 REQUIRED (b) Name the book of prime (original) entry where each of the transactions 1, 2 and 3 would be recorded. 1 ................................................................................................................................................. 2 ................................................................................................................................................. 3 .............................................................................................................................................[3] © UCLES 2018 0452/12/M/J/18 [Turn over 6 (c) Complete the following table to show how each transaction was recorded by Mary. The first one has been completed as an example. 1 Account(s) debited $ Account(s) credited $ Cash 220 Sales 220 2 3 4 5 [10] (d) Calculate the bank balance at 30 November 2017. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[3] (e) Name the ledger in which Mary maintains: (i) .......................................................................................................................................[1] (ii) Motor vehicles account .......................................................................................................................................[1] [Total: 20] © UCLES 2018 0452/12/M/J/18 7 3 Kumu purchases goods for resale on both cash and credit terms. Kumu provided the following information for the year ended 30 April 2018. Trade payables 1 May 2017 Trade payables 30 April 2018 Discount allowed Discount received Interest charged by suppliers Credit purchases Cash purchases Sales ledger balances set off against purchases ledger balances $ 19 800 22 200 480 330 122 180 870 26 400 400 REQUIRED (a) Select the relevant items and prepare the purchases ledger control account for the year ended 30 April 2018. Insert the amount paid to credit suppliers. Kumu Purchases ledger control account Date Details $ Date Details $ .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. [8] (b) State the formula for calculating the trade payables payment period. ................................................................................................................................................... ...............................................................................................................................................[1] © UCLES 2018 0452/12/M/J/18 [Turn over 8 (c) Calculate the trade payables payment period for the year ended 30 April 2018. Round up your answer to the next whole day. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (d) Give a reason for your answer. Satisfied? ................................................................................................................................... Reason ...................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (e) State two problems Kumu may face if her trade payables payment period is unsatisfactory. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] Kumu provided the following information for the year ended 30 April 2018. Cost of sales Gross profit Inventory at 30 April 2018 $ 205 000 92 250 35 000 REQUIRED (f) Calculate the percentage mark-up Kumu has applied. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] © UCLES 2018 0452/12/M/J/18 9 (g) Calculate the value of inventory at 1 May 2017. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[3] (h) State the formula for the rate of inventory turnover. ................................................................................................................................................... ...............................................................................................................................................[1] (i) should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] [Total: 23] © UCLES 2018 0452/12/M/J/18 [Turn over 10 4 Chandra is a driving instructor. His pupils pay for their lessons in advance. REQUIRED (a) Complete the following sentences by selecting the correct word. The first sentence has been completed as an example. The correct word should be selected as shown in the example. 1 The motor vehicles account has a (debit/credit) balance in a trial balance. 2 A year end accrual is an amount (earned/owing) for an expense incurred in the (current/previous) financial period. It will be included in the statement of financial position as a current (asset/liability). 3 Accrued income is an amount (earned/owing) by the business which will be received in the (current/next) financial period. It will be included in the statement of financial position as a current (asset/liability). [6] Chandra started business on 1 February 2017. He charges $20 per lesson. Pupils must pay for 10 lessons in advance. Total receipts for lessons for the year ended 31 January 2018 amounted to $20 200. set of lessons paid for. Joe Adam Billy Number of lessons given 6 4 8 REQUIRED (b) Calculate the amount Chandra had received in advance for driving lesson fees at 31 January 2018. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[3] © UCLES 2018 0452/12/M/J/18 11 (c) Calculate the amount of driving lesson fee income which Chandra included in his income statement for the year ended 31 January 2018. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (d) ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] Chandra calculated a draft profit of $8760 for the year ended 31 January 2018. The following errors were later discovered. 1 Advertising expenses owing at the year-end had been overstated by $100. 2 Interest payable on a 6% bank loan of $10 000 had been omitted. The loan was taken on 1 February 2017. 4 Motor vehicle repairs, $210, had been recorded as motor insurance. REQUIRED (e) Complete the statement to show the corrected profit for the year ended 31 January 2018. If an error has no effect on profit place a tick ( ) in the No Effect column. Chandra Statement of corrected profit for the year ended 31 January 2018 No Effect Increase $ Draft profit Decrease $ $ 8760 Error 1 Error 2 Error 3 Error 4 Corrected profit © UCLES 2018 0452/12/M/J/18 [6] [Turn over 12 (f) Name the accounting principle being applied when correctly dealing with the transaction in error 3. Give a reason for your answer. Accounting principle .................................................................................................................. Reason ...................................................................................................................................... ...............................................................................................................................................[2] Chandra wishes to compare his business results with those of LQ Limited, a large chain of driving schools. REQUIRED (g) Suggest two reasons why Chandra may have difficulty comparing his business results with those of LQ Limited. 1 ................................................................................................................................................. ................................................................................................................................................... ................................................................................................................................................... 2 ................................................................................................................................................. ................................................................................................................................................... ...............................................................................................................................................[2] [Total: 23] © UCLES 2018 0452/12/M/J/18 13 PLEASE TURN OVER © UCLES 2018 0452/12/M/J/18 [Turn over 14 5 WB Sports Club has 250 members. The annual subscription is $20. The club provided the following information. Subscriptions received in advance on 1 April 2017 Subscriptions received during the year ended 31 March 2018 Subscriptions in arrears on 31 March 2018 $ 120 4740 140 REQUIRED (a) Prepare the subscriptions account for the year ended 31 March 2018. Balance the account and bring down the balance on 1 April 2018. WB Sports Club Subscriptions account Date Details $ Date Details $ .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. [5] © UCLES 2018 0452/12/M/J/18 15 WB Sports Club also provided the following information. On 1 April 2017 $ Balance at bank (as per cash book) 960 debit During the year ended 31 March 2018 Rent paid Entry fees received for gymnastics competition Cost of prizes for gymnastics competition General expenses Insurance paid Donations received Purchase of sports equipment 2000 900 220 682 430 350 2760 REQUIRED (b) Prepare the receipts and payments account for the year ended 31 March 2018. Balance the account and bring down the balance on 1 April 2018. WB Sports Club Receipts and Payments Account for the year ended 31 March 2018 Date Details $ Date Details $ .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. [10] © UCLES 2018 0452/12/M/J/18 [Turn over 16 WB Sports Club calculated a surplus for the year of $1568. The following additional information was provided at 31 March 2018. Accumulated fund at 1 April 2017 Sports equipment at valuation 31 March 2018 Rent paid in advance General expenses owing $ 15 563 15 760 500 127 REQUIRED (c) Prepare the statement of financial position of WB Sports Club at 31 March 2018. WB Sports Club Statement of Financial Position at 31 March 2018 $ $ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ [7] © UCLES 2018 0452/12/M/J/18 17 (d) State how the accumulated fund of WB Sports Club has arisen. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] [Total: 24] © UCLES 2018 0452/12/M/J/18 [Turn over 18 6 Siegfried is a sole trader who does not maintain a complete set of double entry records. He has provided the following information. Equipment at cost Inventory Trade receivables Trade payables Bank Bank overdraft Accrued expenses Prepaid rent Capital 1 January 2017 $ 18 000 2 415 1 930 1 210 – 835 – – 20 300 31 December 2017 $ 18 000 2 934 2 042 1 455 209 – 98 120 ? On 31 December 2017, Siegfried brought his own motor vehicle into the business, valued at $5500. He decided to write off trade receivables, $100, and to start depreciating equipment by 20% per annum. REQUIRED (a) ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[7] © UCLES 2018 0452/12/M/J/18 19 REQUIRED (b) Calculate the profit made by Siegfried for the year ended 31 December 2017. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[5] (c) State what is measured by the return on capital employed (ROCE). ................................................................................................................................................... ...............................................................................................................................................[1] (d) State the formula for the calculation of the ROCE. ................................................................................................................................................... ...............................................................................................................................................[1] (e) the opening capital in your calculation which should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] © UCLES 2018 0452/12/M/J/18 [Turn over 20 Siegfried knows that he sold the same number of units and had applied the same mark-up in the year ended 31 December 2017 as he did in the previous year, but made a lower profit for the year. REQUIRED (f) Suggest one reason why Siegfried made a lower profit for the year for the year ended 31 December 2017 than the previous year. ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[1] (g) State three benefits to Siegfried of maintaining a full set of double entry records. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ................................................................................................................................................... 3 ................................................................................................................................................. ...............................................................................................................................................[3] [Total: 20] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2018 0452/12/M/J/18 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 5 8 8 8 4 2 5 1 3 8 * 0452/13 ACCOUNTING Paper 1 May/June 2018 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. DC (SC) 162994 © UCLES 2018 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Jim supplies Debbie with goods on credit. Which business document might Debbie send to Jim? A credit note B debit note C invoice D statement of account [1] (b) What would be recorded in the general journal? A bad debt written off B cash sale of goods C credit sale of goods D returns outwards [1] (c) Which item is not included as part of the calculation of net realisable value when valuing inventory? A carriage inwards B cost of completing the goods C estimated receipts from sale of the goods D selling expenses [1] (d) How does a manufacturing business calculate the production cost of completed goods? A prime cost + factory overheads + opening work in progress – closing work in progress B prime cost + factory overheads – opening work in progress + closing work in progress C prime cost – factory overheads + opening work in progress – closing work in progress D prime cost – factory overheads – opening work in progress + closing work in progress © UCLES 2018 0452/13/M/J/18 [1] 3 (e) Anastasia purchased equipment, $28 000, on 1 January 2016. Her depreciation policy is to use the reducing (diminishing) balance method at the rate of 20% per annum. What was the net book value of the equipment on 31 December 2017? (f) A $10 080 B $11 200 C $16 800 D $17 920 [1] Which is an item of capital expenditure? A annual redecoration of offices B buildings insurance C legal fees on purchase of factory D repairs to machinery [1] (g) Where will interest on drawings be recorded? A B C D [1] (h) B Limited provided the following details at 30 April 2018. profit for the year ended 30 April 2018 ordinary share dividends paid transfer to general reserve retained earnings at 30 April 2018 $ 72 500 15 000 5 000 285 000 What were retained earnings at the beginning of the financial year? A $227 500 B $232 500 C $337 500 D $342 500 © UCLES 2018 [1] 0452/13/M/J/18 [Turn over 4 (i) (j) What does the going concern principle mean? A Non-current assets must be shown at expected sales value. B Revenue is recognised when ownership of goods passes to the customer. C The business will continue to operate for the foreseeable future. D The financial statements should always use the same accounting principles. [1] On 31 March 2018 Sasha had trade receivables of $95 000. She wrote off a bad debt, $750, and made a provision for doubtful debts of 2% of trade receivables. What was the figure for net trade receivables in the statement of financial position at 31 March 2018? A $92 350 B $92 365 C $93 115 D $94 250 [1] [Total: 10] © UCLES 2018 0452/13/M/J/18 5 2 Mary keeps a full set of accounting records including books of prime (original) entry. REQUIRED (a) State two reasons why Mary uses books of prime (original) entry. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] Mary banks all cash sales at the end of each week. Mary had the following transactions during November. 1 Sold goods, $220, for cash 2 Returned goods costing $440, bought on credit from Jane 3 Purchased a motor vehicle on credit, $12 400, including road tax of $300, from Speedy Motors 4 Received a cheque from Tan, a credit customer, in settlement of an invoice for $400 after deduction of 2% cash discount 5 Took goods for own use, $120 REQUIRED (b) Name the book of prime (original) entry where each of the transactions 1, 2 and 3 would be recorded. 1 ................................................................................................................................................. 2 ................................................................................................................................................. 3 .............................................................................................................................................[3] © UCLES 2018 0452/13/M/J/18 [Turn over 6 (c) Complete the following table to show how each transaction was recorded by Mary. The first one has been completed as an example. 1 Account(s) debited $ Account(s) credited $ Cash 220 Sales 220 2 3 4 5 [10] (d) Calculate the bank balance at 30 November 2017. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[3] (e) Name the ledger in which Mary maintains: (i) .......................................................................................................................................[1] (ii) Motor vehicles account .......................................................................................................................................[1] [Total: 20] © UCLES 2018 0452/13/M/J/18 7 3 Kumu purchases goods for resale on both cash and credit terms. Kumu provided the following information for the year ended 30 April 2018. Trade payables 1 May 2017 Trade payables 30 April 2018 Discount allowed Discount received Interest charged by suppliers Credit purchases Cash purchases Sales ledger balances set off against purchases ledger balances $ 19 800 22 200 480 330 122 180 870 26 400 400 REQUIRED (a) Select the relevant items and prepare the purchases ledger control account for the year ended 30 April 2018. Insert the amount paid to credit suppliers. Kumu Purchases ledger control account Date Details $ Date Details $ .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. [8] (b) State the formula for calculating the trade payables payment period. ................................................................................................................................................... ...............................................................................................................................................[1] © UCLES 2018 0452/13/M/J/18 [Turn over 8 (c) Calculate the trade payables payment period for the year ended 30 April 2018. Round up your answer to the next whole day. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (d) Give a reason for your answer. Satisfied? ................................................................................................................................... Reason ...................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (e) State two problems Kumu may face if her trade payables payment period is unsatisfactory. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ...............................................................................................................................................[2] Kumu provided the following information for the year ended 30 April 2018. Cost of sales Gross profit Inventory at 30 April 2018 $ 205 000 92 250 35 000 REQUIRED (f) Calculate the percentage mark-up Kumu has applied. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] © UCLES 2018 0452/13/M/J/18 9 (g) Calculate the value of inventory at 1 May 2017. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[3] (h) State the formula for the rate of inventory turnover. ................................................................................................................................................... ...............................................................................................................................................[1] (i) should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] [Total: 23] © UCLES 2018 0452/13/M/J/18 [Turn over 10 4 Chandra is a driving instructor. His pupils pay for their lessons in advance. REQUIRED (a) Complete the following sentences by selecting the correct word. The first sentence has been completed as an example. The correct word should be selected as shown in the example. 1 The motor vehicles account has a (debit/credit) balance in a trial balance. 2 A year end accrual is an amount (earned/owing) for an expense incurred in the (current/previous) financial period. It will be included in the statement of financial position as a current (asset/liability). 3 Accrued income is an amount (earned/owing) by the business which will be received in the (current/next) financial period. It will be included in the statement of financial position as a current (asset/liability). [6] Chandra started business on 1 February 2017. He charges $20 per lesson. Pupils must pay for 10 lessons in advance. Total receipts for lessons for the year ended 31 January 2018 amounted to $20 200. set of lessons paid for. Joe Adam Billy Number of lessons given 6 4 8 REQUIRED (b) Calculate the amount Chandra had received in advance for driving lesson fees at 31 January 2018. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[3] © UCLES 2018 0452/13/M/J/18 11 (c) Calculate the amount of driving lesson fee income which Chandra included in his income statement for the year ended 31 January 2018. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] (d) ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] Chandra calculated a draft profit of $8760 for the year ended 31 January 2018. The following errors were later discovered. 1 Advertising expenses owing at the year-end had been overstated by $100. 2 Interest payable on a 6% bank loan of $10 000 had been omitted. The loan was taken on 1 February 2017. 4 Motor vehicle repairs, $210, had been recorded as motor insurance. REQUIRED (e) Complete the statement to show the corrected profit for the year ended 31 January 2018. If an error has no effect on profit place a tick ( ) in the No Effect column. Chandra Statement of corrected profit for the year ended 31 January 2018 No Effect Increase $ Draft profit Decrease $ $ 8760 Error 1 Error 2 Error 3 Error 4 Corrected profit © UCLES 2018 0452/13/M/J/18 [6] [Turn over 12 (f) Name the accounting principle being applied when correctly dealing with the transaction in error 3. Give a reason for your answer. Accounting principle .................................................................................................................. Reason ...................................................................................................................................... ...............................................................................................................................................[2] Chandra wishes to compare his business results with those of LQ Limited, a large chain of driving schools. REQUIRED (g) Suggest two reasons why Chandra may have difficulty comparing his business results with those of LQ Limited. 1 ................................................................................................................................................. ................................................................................................................................................... ................................................................................................................................................... 2 ................................................................................................................................................. ................................................................................................................................................... ...............................................................................................................................................[2] [Total: 23] © UCLES 2018 0452/13/M/J/18 13 PLEASE TURN OVER © UCLES 2018 0452/13/M/J/18 [Turn over 14 5 WB Sports Club has 250 members. The annual subscription is $20. The club provided the following information. Subscriptions received in advance on 1 April 2017 Subscriptions received during the year ended 31 March 2018 Subscriptions in arrears on 31 March 2018 $ 120 4740 140 REQUIRED (a) Prepare the subscriptions account for the year ended 31 March 2018. Balance the account and bring down the balance on 1 April 2018. WB Sports Club Subscriptions account Date Details $ Date Details $ .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. [5] © UCLES 2018 0452/13/M/J/18 15 WB Sports Club also provided the following information. On 1 April 2017 $ Balance at bank (as per cash book) 960 debit During the year ended 31 March 2018 Rent paid Entry fees received for gymnastics competition Cost of prizes for gymnastics competition General expenses Insurance paid Donations received Purchase of sports equipment 2000 900 220 682 430 350 2760 REQUIRED (b) Prepare the receipts and payments account for the year ended 31 March 2018. Balance the account and bring down the balance on 1 April 2018. WB Sports Club Receipts and Payments Account for the year ended 31 March 2018 Date Details $ Date Details $ .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. .......... ...................................... .............. [10] © UCLES 2018 0452/13/M/J/18 [Turn over 16 WB Sports Club calculated a surplus for the year of $1568. The following additional information was provided at 31 March 2018. Accumulated fund at 1 April 2017 Sports equipment at valuation 31 March 2018 Rent paid in advance General expenses owing $ 15 563 15 760 500 127 REQUIRED (c) Prepare the statement of financial position of WB Sports Club at 31 March 2018. WB Sports Club Statement of Financial Position at 31 March 2018 $ $ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ [7] © UCLES 2018 0452/13/M/J/18 17 (d) State how the accumulated fund of WB Sports Club has arisen. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] [Total: 24] © UCLES 2018 0452/13/M/J/18 [Turn over 18 6 Siegfried is a sole trader who does not maintain a complete set of double entry records. He has provided the following information. Equipment at cost Inventory Trade receivables Trade payables Bank Bank overdraft Accrued expenses Prepaid rent Capital 1 January 2017 $ 18 000 2 415 1 930 1 210 – 835 – – 20 300 31 December 2017 $ 18 000 2 934 2 042 1 455 209 – 98 120 ? On 31 December 2017, Siegfried brought his own motor vehicle into the business, valued at $5500. He decided to write off trade receivables, $100, and to start depreciating equipment by 20% per annum. REQUIRED (a) ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[7] © UCLES 2018 0452/13/M/J/18 19 REQUIRED (b) Calculate the profit made by Siegfried for the year ended 31 December 2017. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[5] (c) State what is measured by the return on capital employed (ROCE). ................................................................................................................................................... ...............................................................................................................................................[1] (d) State the formula for the calculation of the ROCE. ................................................................................................................................................... ...............................................................................................................................................[1] (e) the opening capital in your calculation which should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] © UCLES 2018 0452/13/M/J/18 [Turn over 20 Siegfried knows that he sold the same number of units and had applied the same mark-up in the year ended 31 December 2017 as he did in the previous year, but made a lower profit for the year. REQUIRED (f) Suggest one reason why Siegfried made a lower profit for the year for the year ended 31 December 2017 than the previous year. ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[1] (g) State three benefits to Siegfried of maintaining a full set of double entry records. 1 ................................................................................................................................................. ................................................................................................................................................... 2 ................................................................................................................................................. ................................................................................................................................................... 3 ................................................................................................................................................. ...............................................................................................................................................[3] [Total: 20] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2018 0452/13/M/J/18 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 3 7 3 3 9 3 1 1 9 5 * 0452/11 ACCOUNTING Paper 1 October/November 2018 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. DC (SLM) 170897 © UCLES 2018 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Which task would an accountant perform? A drawing up a trial balance B entering transactions in the ledger C preparing financial statements D writing up the cash book [1] (b) Amina returned goods to Nadia. Which document did Amina issue? A credit note B debit note C invoice D statement of account [1] (c) Arissa purchased a motor vehicle costing $23 000 on 1 August 2016. She decided to depreciate the motor vehicle using the straight line (equal instalment) method at 20% per annum. Depreciation on the motor vehicle of $4600 was charged to the income statement for the year ended 31 July 2017. How much was charged to the income statement for the year ended 31 July 2018 for depreciation on the motor vehicle? A $3680 B $4600 C $8280 D $9200 © UCLES 2018 [1] 0452/11/O/N/18 3 (d) A trader provided the following information on 1 October 2018. Non-current assets Inventory Bank overdraft Trade receivables Trade payables Loan repayable 30 September 2020 $ 121 000 35 000 9 000 29 000 25 000 70 000 How much was the capital employed? A $30 000 B $81 000 C $151 000 D $185 000 [1] (e) Which is an intangible asset? (f) A goodwill B inventory C office fixtures D trade receivables [1] Mahendra designs computer systems. He provided the following information. Fees prepaid by clients at the start of the year Fees received from clients during the year Fees owing by clients at the end of the year $ 2 120 42 150 2 840 How much would be entered for fees in the income statement? A $37 190 B $41 430 C $42 870 D $47 110 © UCLES 2018 [1] 0452/11/O/N/18 [Turn over 4 (g) Amy and John are in partnership. Amy is entitled to an annual partnership salary of $9000. Profits and losses are shared 2:1. The profit for the year ended 31 August 2018 was $14 700. A $10 700 B $14 900 C $16 700 D $20 900 [1] (h) A sports club purchased sports equipment. Where will this be entered in the financial statements at the year end? receipts and payments account income and expenditure account statement of financial position A B C D [1] (i) How is cost of production calculated? A direct material + direct labour B direct material + direct labour + factory overheads C direct material + direct labour + factory overheads + increase in work in progress D direct material + direct labour + factory overheads – increase in work in progress © UCLES 2018 0452/11/O/N/18 [1] 5 (j) A business provided the following information. year 1 year 2 percentage of gross profit to revenue 30% 25% percentage of profit for the year to revenue 12% 8% The revenue was the same in both years. Which statements are correct? 1 Cost of sales was higher in year 2. 2 Cost of sales was lower in year 2. 3 Expenses were higher in year 2. 4 Expenses were lower in year 2. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4 [1] [Total: 10] © UCLES 2018 0452/11/O/N/18 [Turn over 6 2 (a) ................................................................................................................................................... ...............................................................................................................................................[1] (b) Complete the following table stating the double entry necessary to record each transaction in the ledger of Evie, who sells computers and computer accessories. transaction account to be debited account to be credited obtained loan from bank purchased office fixtures by cheque sold computer for cash took printer for personal use [8] (c) State one reason why a trial balance is prepared. ................................................................................................................................................... .............................................................................................................................................. [1] (d) Complete the following table, indicating with a tick ( ) where each account would appear in a trial balance. debit column credit column capital drawings provision for depreciation carriage inwards carriage outwards rent received stationery sales returns [4] © UCLES 2018 0452/11/O/N/18 7 (e) Give one example of each of the following errors which will not be revealed by a trial balance. Error of commission .................................................................................................................. ................................................................................................................................................... Error of omission ...................................................................................................................... ................................................................................................................................................... Compensating error .................................................................................................................. .............................................................................................................................................. [3] (f) Complete the following sentences. Money spent on purchasing or improving non-current assets is known as .............................. ………………………………………………… Money spent on the day-to-day running of a business is known as ……………………………… ………………………………………………… [2] (g) Complete the following table by placing a tick ( ) to indicate where each item will appear in the financial statements of Anwar, who owns a food store. Income Statement Statement of Financial Position purchase of motor vehicle charge for delivering motor vehicle insurance for motor vehicle fuel for motor vehicle [4] [Total: 23] © UCLES 2018 0452/11/O/N/18 [Turn over 8 3 Lefika is a trader. He maintains a three column cash book. Lefika had the following transactions in August 2018. August 5 Received a cheque from Tabia, $441, in settlement of her account less 2% cash discount 8 16 Received a cheque from Nyack, $282, in full settlement of his debt of $290 28 Cash sales, $243, of which $153 was paid directly into the bank 30 Received $250 cash from the disposal of a non-current asset 31 Lefika took cash, $200, for personal use 31 Paid all the cash into the bank except $20 REQUIRED (a) Balance the cash book and bring down the balances on 1 September 2018. [12] © UCLES 2018 0452/11/O/N/18 © UCLES 2018 …………………………… …………………………… …………………………… …………………………… ……… ……… ……… ……… …………………………… ……… …………………………… …………………………… ……… ……… …………………………… ……… …………………………… …………………………… ……… ……… …………………………… ……… b/d Balance Details 2018 Aug 1 Date 0452/11/O/N/18 ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Discount allowed $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… 30 Cash $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Bank $ ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… 2018 Aug 1 Date Lefika Cash Book b/d …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… Balance Details ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Discount received $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Cash $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… 1253 Bank $ 9 [Turn over 10 book with the bank statement and found that the bank had not recorded the transactions entered in the bank columns of the cash book on the following dates. August 8 16 28 31 REQUIRED (b) Prepare a bank reconciliation statement at 31 August 2018. Lefika Bank Reconciliation Statement at 31 August 2018 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [6] REQUIRED (c) State one advantage of dividing the ledger into these three sections. ................................................................................................................................................... .............................................................................................................................................. [1] (d) Name the ledger in which each of the following accounts would appear. (i) Nyack (a credit customer) account ........................................ ledger (ii) Purchases account ............................................................... ledger (iii) Discount received account .................................................... ledger (iv) Tebago (a credit supplier) account ........................................ ledger [4] [Total: 23] © UCLES 2018 0452/11/O/N/18 11 4 Ava operates a secretarial agency. Her financial year ends on 31 July. She provided the following information on 31 July 2018. 1 A cheque for $194 was received from Wilma, a credit customer, whose account had been written off in 2016. 2 Gary, a credit customer, paid one third of the amount he owed in cash. The balance is regarded as irrecoverable and should be written off. 3 The provision for doubtful debts should be increased by $150. 4 The discount allowed for July 2018 of $144 should be transferred to the discount allowed account. 5 The office equipment cost $16 000 and is being depreciated using the straight line (equal instalment) method at 20% per annum. No office equipment had been bought or sold during the year. REQUIRED (a) Close the accounts by balancing or by making a transfer to an appropriate account. Some entries have already been made in the accounts during the year. Ava Bad debts recovered account Date Details $ Date Details $ ……… …………………… ………. ……… …………………… ………… ……… …………………… ………. ……… …………………… ………… ……… …………………… ………. ……… …………………… ………… Date Details $ ………. …………………… ………… Bad debts account Date 2018 July 1 Details Total to date $ 218 ……… …………………… ………. ………. …………………… ………… ……… …………………… ………. ………. …………………… ………… ……… …………………… ………. ………. …………………… ………… © UCLES 2018 0452/11/O/N/18 [Turn over 12 Gary account Date 2018 July 1 Details $ Date Details $ 270 ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… Balance b/d Provision for doubtful debts account Date Details $ Date 2017 ……… ……………………… ……… Aug 1 Details Balance b/d $ 310 ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… Discount allowed account Date 2018 July 1 Details $ Date Details $ 1495 ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… © UCLES 2018 Total to date 0452/11/O/N/18 13 Provision for depreciation of office equipment account Date Details $ Date 2017 Aug 1 Details $ ………. …………………….. ……….. ………. …………………….. ……….. ……… …………………… ………… ………. …………………….. ……….. ……… …………………… ………… ………. …………………….. ……….. ……… …………………… ………… ………. …………………….. ……….. ……… …………………… ………… Balance b/d 9600 [14] (b) Name two accounting principles Ava is applying by maintaining a provision for doubtful debts. 1 ................................................................................................................................................ 2 ........................................................................................................................................... [2] Ava allows her trade receivables a credit period of 30 days. She provided the following information. Trade receivables collection period At 31 July 2017 32 days At 31 July 2018 28 days REQUIRED (c) ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [2] Ava is proposing to ask clients to pay cash instead of offering credit terms. (d) Suggest two effects of this proposal. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ .............................................................................................................................................. [2] [Total: 20] © UCLES 2018 0452/11/O/N/18 [Turn over 14 5 Khalid is a furniture wholesaler. His financial year ends on 30 September. All purchases and sales are made on credit terms. Khalid does not maintain a full set of accounting records but was able to provide the following information. $ On 1 October 2017 Inventory Trade receivables 3 100 4 620 During the year ended 30 September 2018 Cheques received from trade receivables Discount allowed Bad debts written off Total purchases 47 970 1 230 115 39 200 On 30 September 2018 Trade receivables 3 305 After the warehouse was closed on 30 September a fire broke out and a quantity of the inventory was destroyed. The undamaged inventory was valued at $1500. The profit mark-up is 25%. REQUIRED (a) Calculate the sales for the year ended 30 September 2018. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [6] © UCLES 2018 0452/11/O/N/18 15 (b) Prepare an income statement (trading account section) to calculate the value of the inventory which was destroyed. Khalid Income Statement (Trading Account section) for the year ended 30 September 2018 $ $ $ ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… [7] (c) (i) Calculate the rate of inventory turnover. The calculation should include the total inventory before the fire broke out on 30 September 2018. The calculation should be correct to two decimal places. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ...................................................................................................................................... [2] (ii) State what is measured by the rate of inventory turnover. ........................................................................................................................................... ........................................................................................................................................... ...................................................................................................................................... [1] © UCLES 2018 0452/11/O/N/18 [Turn over 16 Khalid decided that in future he would maintain a full set of double entry records and prepare control accounts at the end of each month. REQUIRED (d) Complete the table by using a tick ( ) to show where each of the following items would appear debit credit opening balance owed to credit suppliers credit purchases cheques paid to credit suppliers cash discount received contra between sales and purchases ledgers [5] [Total: 21] © UCLES 2018 0452/11/O/N/18 17 6 The financial year of FW Limited ends on 30 September. The following information is available. At 1 October 2017 Ordinary share capital of $1 shares 5% Debentures (repayable 2024) General reserve Retained earnings $ 100 000 140 000 115 000 117 000 On 30 September 2018 Issue of $1 ordinary shares Profit for the year Transfer to general reserve Payment of ordinary share dividend $ 50 000 28 000 15 000 19 000 REQUIRED (a) Prepare an extract from the statement of financial position at 30 September 2018 to show the equity and reserves and non-current liabilities. FW Limited Extract from Statement of Financial Position at 30 September 2018 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [7] © UCLES 2018 0452/11/O/N/18 [Turn over 18 (b) Define each of the following terms. i(i) Shareholders ........................................................................................................................................... .................................................................................................................................. ...................................................................................................................................... [1] (ii) Limited liability ........................................................................................................................................... .................................................................................................................................. ...................................................................................................................................... [1] (c) i(i) State one difference between ordinary shares and preference shares. ordinary shares preference shares …………………………………………. …………………………………………. …………………………………………. …………………………………………. [2] (ii) State two similarities between preference shares and debentures. 1 ........................................................................................................................................ ........................................................................................................................................... 2 ........................................................................................................................................ ...................................................................................................................................... [2] © UCLES 2018 0452/11/O/N/18 19 The directors of FW Limited want to raise $60 000 to purchase additional premises. The directors are considering two proposals: Proposal 1 Issuing 5% debentures (repayable 2030) Proposal 2 Issuing ordinary shares It is anticipated that the ordinary share dividend will be 6% per annum. REQUIRED (d) State how each proposal would affect the profit of FW Limited in the next financial year (if at all). Give a reason for your answer in each case. Proposal 1 Effect on profit ........................................................................................................................... Reason ..................................................................................................................................... .............................................................................................................................................. [2] Proposal 2 Effect on profit ........................................................................................................................... Reason ..................................................................................................................................... .............................................................................................................................................. [2] © UCLES 2018 0452/11/O/N/18 [Turn over 20 The following information was available on 30 September 2018. Inventory Trade receivables Trade payables Cash at bank Loan repayable on 1 January 2019 $ 42 000 34 000 35 000 36 000 30 000 REQUIRED (e) Calculate the current ratio. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [2] (f) Complete the table by placing a tick ( ) in the correct column to indicate the effect each would have on the current ratio. effect on current ratio increase decrease no effect use the bank balance to repay the loan purchase non-current assets on credit sell half the inventory at cost price to cash customers pay amount owed to trade payables by cheque [4] [Total: 23] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2018 0452/11/O/N/18 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 3 7 0 3 5 8 4 6 1 8 * 0452/12 ACCOUNTING Paper 1 October/November 2018 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 22 printed pages and 2 blank pages. DC (RCL/GO) 156837/3 © UCLES 2018 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Profit is only recorded in the financial statements when legal title passes between buyer and seller. Which accounting principle is being applied? A consistency B going concern C prudence D realisation [1] (b) David and Bashir are in partnership. David made a loan to the partnership. What is the double entry to record this transaction? account debited account credited A bank David capital B bank David loan C David loan David capital D David loan David current [1] (c) Which statement about debentures is not correct? A Debentures have a fixed rate of interest. B Debenture interest must be paid regardless of profit made. C Debentures are a non-current liability. D Debentures carry voting rights. © UCLES 2018 [1] 0452/12/O/N/18 3 (d) Marvin provided the following information. revenue for the year percentage of gross profit to revenue percentage of profit to revenue $ 10 000 40% 15% What were the expenses for the year? A $1500 B $2500 C $6000 D $8500 [1] (e) Matthias provided the following summary from his financial statements. $ 67 400 48 700 29 100 8 000 Non-current assets Current assets Non-current liabilities Current liabilities What was the capital employed? A $11 600 B $40 700 C $79 000 D $108 100 [1] (f) Which type of error has been made? A commission B compensating C original entry D principle © UCLES 2018 [1] 0452/12/O/N/18 [Turn over 4 (g) A A company can only issue a limited number of shares. B A company can only pay a fixed amount of dividends. C Shareholders are not at risk of losing personal possessions. D [1] (h) Pia sells two products, X and Y. She provided the following information about her inventory at the year end. Product Cost $ Selling price $ X 1750 1850 Y 1924 1858 What was the total value of inventory to be included in the financial statements? (i) (j) A $2608 B $2674 C $2708 D $2774 [1] What is the role of a book-keeper? A to advise on business plans B to analyse the profit or loss for the period C to maintain records of financial transactions D to prepare financial statements [1] Baljit paid rent, $2700, in advance for the three months ended 31 March 2018. He adjusted his financial statements for the year ended 31 January 2018 for rent prepaid. Which effect did this have on the total expenses for the year? A decrease by $900 B decrease by $1800 C increase by $900 D increase by $1800 [1] [Total: 10] © UCLES 2018 0452/12/O/N/18 5 2 Jennifer started in business on 1 June 2018 with the following assets and liabilities. Delivery van Fixtures and fittings Inventory Cash Loan from Amina $ 15 000 12 700 16 200 11 500 15 000 REQUIRED (a) is required. Jennifer Journal Date Debit $ Credit $ ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… ………… …………………………………………………………… ………… ………… [5] (b) State the purpose of a narrative in a journal entry. ................................................................................................................................................... .............................................................................................................................................. [1] (c) State two uses of the general journal in addition to the recording of opening entries of a business. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ .............................................................................................................................................. [2] © UCLES 2018 0452/12/O/N/18 [Turn over 6 capital of $30 000, of which he paid $25 000 into the business bank account. The table shows the account balances following transactions that have taken place. 1 October 2018 2 October 2018 3 October 2018 4 October 2018 $ $ $ $ 11 500 11 500 11 500 10 000 10 000 Assets Office equipment Motor vehicle Bank 25 000 25 000 25 000 25 000 Cash 15 000 13 500 13 500 12 500 10 000 10 000 30 000 29 000 Liabilities Payables Capital 30 000 30 000 REQUIRED (d) State for each date the transaction which has taken place. The first transaction has been completed as an example. 1 October 2018 John introduced capital of which some was banked and some kept in cash. ................................................................................................................................................... ................................................................................................................................................... 2 October 2018 ................................................................................................................................................... ................................................................................................................................................... 3 October 2018 ................................................................................................................................................... ................................................................................................................................................... 4 October 2018 ................................................................................................................................................... .............................................................................................................................................. [6] © UCLES 2018 0452/12/O/N/18 7 (e) State the accounting principle which John applied when recording all these transactions. .............................................................................................................................................. [1] (f) State the meaning of iii(i) assets ................................................................................................................................. ........................................................................................................................................... ii(ii) liabilities ............................................................................................................................. ........................................................................................................................................... (iii) capital ................................................................................................................................. ...................................................................................................................................... [3] (g) ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [2] [Total: 20] © UCLES 2018 0452/12/O/N/18 [Turn over 8 3 Saul prepared the following trial balance at 31 March 2018 which contains errors. Motor vehicle at net book value Revenue Purchases Inventory Bank overdraft Cash in hand Drawings Discount allowed Other operating expenses Wages and salaries Capital Difference $ 138 000 109 000 $ 180 230 1 5 100 113 900 111 500 16 500 11 720 9 350 116 500 188 250 135 000 160 700 188 250 REQUIRED (a) Prepare a corrected trial balance at 31 March 2018. Saul Corrected Trial Balance at 31 March 2018 Debit $ Credit $ Motor vehicle at net book value Revenue Purchases Inventory Bank overdraft Cash in hand Drawings Discount allowed Other operating expenses Wages and salaries Capital [7] © UCLES 2018 0452/12/O/N/18 9 From 1 April 2018, Saul decided to make sales and purchases on credit. He maintains a full set of accounting records and prepares control accounts at the end of each month. REQUIRED (b) ................................................................................................................................................... .............................................................................................................................................. [1] (c) Complete the table to name the book of prime (original) entry which Saul uses to obtain information when preparing his control accounts. The first one has been completed as an example. Book of prime (original) entry Purchases Purchases Journal Cash and cheques received from credit customers Bad debts written off Discount received from credit suppliers Sales returns Interest charged by credit suppliers [5] © UCLES 2018 0452/12/O/N/18 [Turn over 10 Saul provided the following information for the month ended 30 June 2018. 2018 June 1 30 July 1 © UCLES 2018 Sales ledger debit balances Sales ledger credit balances $ 16 420 390 Credit sales Sales returns Cash and cheques received from credit customers Bad debt written off Sales ledger balance set off against purchases ledger balance Discount allowed Interest charged to credit customers on overdue accounts 39 800 2 700 36 350 340 760 ? 175 Sales ledger debit balances Sales ledger credit balances 15 485 200 0452/12/O/N/18 11 REQUIRED (d) Prepare the sales ledger control account for the month of June 2018. Insert the figure for discount allowed. Balance the account and bring down the balances on 1 July 2018. Saul Sales ledger control account Date Details $ Date Details $ …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… …… ………………………… ………… [10] (e) State two benefits of maintaining a sales ledger control account. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ .............................................................................................................................................. [2] [Total: 25] © UCLES 2018 0452/12/O/N/18 [Turn over 12 4 Most businesses have receipts and payments which include both capital and revenue items. REQUIRED (a) Complete the table by inserting a tick ( ) to show how each item should be classified. The first one has been completed as an example. Capital expenditure Revenue expenditure Capital receipt Revenue receipt Motor vehicle repairs Legal fees on purchase of office building Purchase of goods for resale Insurance of plant and equipment Proceeds of sale of fixtures at net book value Discount received from supplier [5] Ahmed is a wholesaler. He provided the following draft income statement for the year ended 30 September 2018, which contains errors. Ahmed Draft Income Statement for the year ended 30 September 2018 $ Revenue Proceeds from sale of motor vehicle Opening inventory Purchases $ 75 000 52 600 77 600 58 500 52 200 60 700 5(7 300) Closing inventory Cost of sales Gross profit Expenses Profit for the year (53 400) 24 200 (12 900) 11 300 Additional information 1 Purchases included $15 000 for new plant and equipment. 2 The motor vehicle was sold at net book value. No entry had been made in the motor vehicles account. © UCLES 2018 0452/12/O/N/18 13 REQUIRED (b) Complete the following table by inserting a tick ( ) to show the effect of correcting the errors on each of the following items. Increase Decrease Plant and equipment Motor vehicle [2] (c) Complete the statement to calculate the corrected gross profit for the year ended 30 September 2018. Ahmed Statement of corrected gross profit for the year ended 30 September 2018 Increase $ Decrease $ $ Draft gross profit 24 200 Corrected gross profit [3] 1 April 2017: $ Office equipment: cost provision for depreciation 9000 3600 none in the year of sale. cost of $1500. Sales proceeds, $1100, were received by cheque. © UCLES 2018 0452/12/O/N/18 [Turn over 14 REQUIRED (d) Prepare the provision for depreciation account for office equipment for the year ended 31 March 2018. Balance the account and bring down the balance on 1 April 2018. Provision for depreciation account for office equipment Date Details $ Date Details $ ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… [5] (e) Prepare the office equipment disposal account. Office equipment disposal account Date Details $ Date Details $ ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… ……… ………………………… ………… [4] © UCLES 2018 0452/12/O/N/18 15 (f) office equipment. Extract from Statement of Financial Position at 31 March 2018 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [3] (g) Name the accounting principle applied when charging depreciation. .............................................................................................................................................. [1] [Total: 23] © UCLES 2018 0452/12/O/N/18 [Turn over 16 5 TP Limited manufactures toys. REQUIRED (a) Complete the table by inserting a tick ( ) to show how each type of manufacturing cost should be classified. The first one has been completed as an example. Direct material Direct labour Factory overhead Purchase of plastic toy parts Rent of factory Wages of machine operator Purchase of packaging Wages of supervisor [4] (b) State how prime cost is calculated. ................................................................................................................................................... .............................................................................................................................................. [2] TP Limited provided the following information. $ Inventory on 1 June 2017 Raw materials Work in progress Finished goods 1 18 000 1 15 750 1 27 200 For the year ended 31 May 2018 Purchases of raw material Factory wages Factory overheads Purchases of finished goods Revenue 323 000 198 000 125 000 1128 900 836 000 Inventory on 31 May 2018 Raw materials Work in progress Finished goods © UCLES 2018 122 100 11 6 820 130 100 0452/12/O/N/18 17 REQUIRED (c) Prepare the manufacturing account for the year ended 31 May 2018. TP Limited Manufacturing Account for the year ended 31 May 2018 $ $ ………………………………………………………………………… ………… ………… ………………………………………………………………………… ………… ………… ………………………………………………………………………… ………… ………… ………………………………………………………………………… ………… ………… ………………………………………………………………………… ………… ………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… ………………………………………………………………………… …………… …………… [6] © UCLES 2018 0452/12/O/N/18 [Turn over 18 (d) Prepare the income statement (trading account section) for the year ended 31 May 2018. TP Limited Income Statement (Trading Account section) for the year ended 31 May 2018 $ $ ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… ……………………………………………………………………… …………… …………… [4] (e) State two reasons why TP Limited purchases finished goods. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ...............................................................................................................................................[2] © UCLES 2018 0452/12/O/N/18 19 (f) Name the accounting principle applied when valuing inventory. .............................................................................................................................................. [1] for the previous year. REQUIRED (g) Suggest two reasons why the rate of inventory turnover is lower than the previous year. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ .............................................................................................................................................. [2] The directors of TP Limited compared their rate of inventory turnover with that of GH Limited, a bakery. GH Limited has a rate of inventory turnover of 53.41 times. REQUIRED (h) Suggest two reasons why GH Limited has a higher rate of inventory turnover than TP Limited. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ .............................................................................................................................................. [2] [Total: 23] © UCLES 2018 0452/12/O/N/18 [Turn over 20 6 CC Club provides sporting facilities and also runs a café for its members. The receipts and payments account for the year ended 30 September 2018 is as follows. CC Club Receipts and Payments Account for the year ended 30 September 2018 $ 2017 Oct 1 2018 Sep 30 Oct 1 Balance b/d 13 125 Subscriptions Receipts from café Competition entry fees 24 500 14 145 11 550 Balance b/d 43 320 13 350 $ 2018 Sep 30 Rent Purchases of food for café General expenses Purchase of sports equipment Wages of club staff Wages of café staff Competition prizes Balance c/d 14 000 12 300 16 870 17 600 16 900 11 800 1 1500 13 350 43 320 Additional information. 1 Café inventory 1 October 2017 30 September 2018 2 $ 200 185 Subscriptions in arrears 1 October 2017 30 September 2018 $ 750 650 3 Sports equipment was valued at $37 400 on 1 October 2017 and $36 750 on 30 September 2018. 4 At 30 September 2018, rent paid in advance was $500 and general expenses owing were $320. © UCLES 2018 0452/12/O/N/18 21 REQUIRED (a) Calculate the profit of the club café for the year ended 30 September 2018. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [4] (b) CC Club Income and Expenditure Account for the year ended 30 September 2018 $ $ ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… ……………………………………………………………………… ………… ………… © UCLES 2018 0452/12/O/N/18 [9] [Turn over 22 (c) State three differences between a receipts and payments account and an income and expenditure account. 1 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 3 ................................................................................................................................................ ................................................................................................................................................... .............................................................................................................................................. [3] CC Club wishes to improve the profit earned by the café. REQUIRED (d) Suggest three ways the club could improve its café profit. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... 3 ................................................................................................................................................ .............................................................................................................................................. [3] [Total: 19] © UCLES 2018 0452/12/O/N/18 23 BLANK PAGE © UCLES 2018 0452/12/O/N/18 24 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2018 0452/12/O/N/18 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 5 7 9 4 9 3 4 6 0 9 * 0452/13 ACCOUNTING Paper 1 October/November 2018 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. DC (RCL/GO) 156836/1 © UCLES 2018 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Which task would an accountant perform? A drawing up a trial balance B entering transactions in the ledger C preparing financial statements D writing up the cash book [1] (b) Amina returned goods to Nadia. Which document did Amina issue? A credit note B debit note C invoice D statement of account [1] (c) Arissa purchased a motor vehicle costing $23 000 on 1 August 2016. She decided to depreciate the motor vehicle using the straight line (equal instalment) method at 20% per annum. Depreciation on the motor vehicle of $4600 was charged to the income statement for the year ended 31 July 2017. How much was charged to the income statement for the year ended 31 July 2018 for depreciation on the motor vehicle? A $3680 B $4600 C $8280 D $9200 © UCLES 2018 [1] 0452/13/O/N/18 3 (d) A trader provided the following information on 1 October 2018. Non-current assets Inventory Bank overdraft Trade receivables Trade payables Loan repayable 30 September 2020 $ 121 000 35 000 9 000 29 000 25 000 70 000 How much was the capital employed? A $30 000 B $81 000 C $151 000 D $185 000 [1] (e) Which is an intangible asset? (f) A goodwill B inventory C office fixtures D trade receivables [1] Mahendra designs computer systems. He provided the following information. Fees prepaid by clients at the start of the year Fees received from clients during the year Fees owing by clients at the end of the year $ 2 120 42 150 2 840 How much would be entered for fees in the income statement? A $37 190 B $41 430 C $42 870 D $47 110 © UCLES 2018 [1] 0452/13/O/N/18 [Turn over 4 (g) Amy and John are in partnership. Amy is entitled to an annual partnership salary of $9000. Profits and losses are shared 2:1. The profit for the year ended 31 August 2018 was $14 700. A $10 700 B $14 900 C $16 700 D $20 900 [1] (h) A sports club purchased sports equipment. Where will this be entered in the financial statements at the year end? receipts and payments account income and expenditure account statement of financial position A B C D [1] (i) How is cost of production calculated? A direct material + direct labour B direct material + direct labour + factory overheads C direct material + direct labour + factory overheads + increase in work in progress D direct material + direct labour + factory overheads – increase in work in progress © UCLES 2018 0452/13/O/N/18 [1] 5 (j) A business provided the following information. year 1 year 2 percentage of gross profit to revenue 30% 25% percentage of profit for the year to revenue 12% 8% The revenue was the same in both years. Which statements are correct? 1 Cost of sales was higher in year 2. 2 Cost of sales was lower in year 2. 3 Expenses were higher in year 2. 4 Expenses were lower in year 2. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4 [1] [Total: 10] © UCLES 2018 0452/13/O/N/18 [Turn over 6 2 (a) ................................................................................................................................................... ...............................................................................................................................................[1] (b) Complete the following table stating the double entry necessary to record each transaction in the ledger of Evie, who sells computers and computer accessories. transaction account to be debited account to be credited obtained loan from bank purchased office fixtures by cheque sold computer for cash took printer for personal use [8] (c) State one reason why a trial balance is prepared. ................................................................................................................................................... .............................................................................................................................................. [1] (d) Complete the following table, indicating with a tick ( ) where each account would appear in a trial balance. debit column credit column capital drawings provision for depreciation carriage inwards carriage outwards rent received stationery sales returns [4] © UCLES 2018 0452/13/O/N/18 7 (e) Give one example of each of the following errors which will not be revealed by a trial balance. Error of commission .................................................................................................................. ................................................................................................................................................... Error of omission ...................................................................................................................... ................................................................................................................................................... Compensating error .................................................................................................................. .............................................................................................................................................. [3] (f) Complete the following sentences. Money spent on purchasing or improving non-current assets is known as .............................. ………………………………………………… Money spent on the day-to-day running of a business is known as ……………………………… ………………………………………………… [2] (g) Complete the following table by placing a tick ( ) to indicate where each item will appear in the financial statements of Anwar, who owns a food store. Income Statement Statement of Financial Position purchase of motor vehicle charge for delivering motor vehicle insurance for motor vehicle fuel for motor vehicle [4] [Total: 23] © UCLES 2018 0452/13/O/N/18 [Turn over 8 3 Lefika is a trader. He maintains a three column cash book. Lefika had the following transactions in August 2018. August 5 Received a cheque from Tabia, $441, in settlement of her account less 2% cash discount 8 16 Received a cheque from Nyack, $282, in full settlement of his debt of $290 28 Cash sales, $243, of which $153 was paid directly into the bank 30 Received $250 cash from the disposal of a non-current asset 31 Lefika took cash, $200, for personal use 31 Paid all the cash into the bank except $20 REQUIRED (a) Balance the cash book and bring down the balances on 1 September 2018. [12] © UCLES 2018 0452/13/O/N/18 © UCLES 2018 …………………………… …………………………… …………………………… …………………………… ……… ……… ……… ……… …………………………… ……… …………………………… …………………………… ……… ……… …………………………… ……… …………………………… …………………………… ……… ……… …………………………… ……… b/d Balance Details 2018 Aug 1 Date 0452/13/O/N/18 ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Discount allowed $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… 30 Cash $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Bank $ ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… 2018 Aug 1 Date Lefika Cash Book b/d …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… Balance Details ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Discount received $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Cash $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… 1253 Bank $ 9 [Turn over 10 book with the bank statement and found that the bank had not recorded the transactions entered in the bank columns of the cash book on the following dates. August 8 16 28 31 REQUIRED (b) Prepare a bank reconciliation statement at 31 August 2018. Lefika Bank Reconciliation Statement at 31 August 2018 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [6] REQUIRED (c) State one advantage of dividing the ledger into these three sections. ................................................................................................................................................... .............................................................................................................................................. [1] (d) Name the ledger in which each of the following accounts would appear. (i) Nyack (a credit customer) account ........................................ ledger (ii) Purchases account ............................................................... ledger (iii) Discount received account .................................................... ledger (iv) Tebago (a credit supplier) account ........................................ ledger [4] [Total: 23] © UCLES 2018 0452/13/O/N/18 11 4 Ava operates a secretarial agency. Her financial year ends on 31 July. She provided the following information on 31 July 2018. 1 A cheque for $194 was received from Wilma, a credit customer, whose account had been written off in 2016. 2 Gary, a credit customer, paid one third of the amount he owed in cash. The balance is regarded as irrecoverable and should be written off. 3 The provision for doubtful debts should be increased by $150. 4 The discount allowed for July 2018 of $144 should be transferred to the discount allowed account. 5 The office equipment cost $16 000 and is being depreciated using the straight line (equal instalment) method at 20% per annum. No office equipment had been bought or sold during the year. REQUIRED (a) Close the accounts by balancing or by making a transfer to an appropriate account. Some entries have already been made in the accounts during the year. Ava Bad debts recovered account Date Details $ Date Details $ ……… …………………… ………. ……… …………………… ………… ……… …………………… ………. ……… …………………… ………… ……… …………………… ………. ……… …………………… ………… Date Details $ ………. …………………… ………… Bad debts account Date 2018 July 1 Details Total to date $ 218 ……… …………………… ………. ………. …………………… ………… ……… …………………… ………. ………. …………………… ………… ……… …………………… ………. ………. …………………… ………… © UCLES 2018 0452/13/O/N/18 [Turn over 12 Gary account Date 2018 July 1 Details $ Date Details $ 270 ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… Balance b/d Provision for doubtful debts account Date Details $ Date 2017 ……… ……………………… ……… Aug 1 Details Balance b/d $ 310 ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… Discount allowed account Date 2018 July 1 Details $ Date Details $ 1495 ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… ……… ……………………… ……… ……… …………………… ………… © UCLES 2018 Total to date 0452/13/O/N/18 13 Provision for depreciation of office equipment account Date Details $ Date 2017 Aug 1 Details $ ………. …………………….. ……….. ………. …………………….. ……….. ……… …………………… ………… ………. …………………….. ……….. ……… …………………… ………… ………. …………………….. ……….. ……… …………………… ………… ………. …………………….. ……….. ……… …………………… ………… Balance b/d 9600 [14] (b) Name two accounting principles Ava is applying by maintaining a provision for doubtful debts. 1 ................................................................................................................................................ 2 ........................................................................................................................................... [2] Ava allows her trade receivables a credit period of 30 days. She provided the following information. Trade receivables collection period At 31 July 2017 32 days At 31 July 2018 28 days REQUIRED (c) ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [2] Ava is proposing to ask clients to pay cash instead of offering credit terms. (d) Suggest two effects of this proposal. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ .............................................................................................................................................. [2] [Total: 20] © UCLES 2018 0452/13/O/N/18 [Turn over 14 5 Khalid is a furniture wholesaler. His financial year ends on 30 September. All purchases and sales are made on credit terms. Khalid does not maintain a full set of accounting records but was able to provide the following information. $ On 1 October 2017 Inventory Trade receivables 3 100 4 620 During the year ended 30 September 2018 Cheques received from trade receivables Discount allowed Bad debts written off Total purchases 47 970 1 230 115 39 200 On 30 September 2018 Trade receivables 3 305 After the warehouse was closed on 30 September a fire broke out and a quantity of the inventory was destroyed. The undamaged inventory was valued at $1500. The profit mark-up is 25%. REQUIRED (a) Calculate the sales for the year ended 30 September 2018. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [6] © UCLES 2018 0452/13/O/N/18 15 (b) Prepare an income statement (trading account section) to calculate the value of the inventory which was destroyed. Khalid Income Statement (Trading Account section) for the year ended 30 September 2018 $ $ $ ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… ………………………………………………… ……………… ……………… ……………… [7] (c) (i) Calculate the rate of inventory turnover. The calculation should include the total inventory before the fire broke out on 30 September 2018. The calculation should be correct to two decimal places. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ...................................................................................................................................... [2] (ii) State what is measured by the rate of inventory turnover. ........................................................................................................................................... ........................................................................................................................................... ...................................................................................................................................... [1] © UCLES 2018 0452/13/O/N/18 [Turn over 16 Khalid decided that in future he would maintain a full set of double entry records and prepare control accounts at the end of each month. REQUIRED (d) Complete the table by using a tick ( ) to show where each of the following items would appear debit credit opening balance owed to credit suppliers credit purchases cheques paid to credit suppliers cash discount received contra between sales and purchases ledgers [5] [Total: 21] © UCLES 2018 0452/13/O/N/18 17 6 The financial year of FW Limited ends on 30 September. The following information is available. At 1 October 2017 Ordinary share capital of $1 shares 5% Debentures (repayable 2024) General reserve Retained earnings $ 100 000 140 000 115 000 117 000 On 30 September 2018 Issue of $1 ordinary shares Profit for the year Transfer to general reserve Payment of ordinary share dividend $ 50 000 28 000 15 000 19 000 REQUIRED (a) Prepare an extract from the statement of financial position at 30 September 2018 to show the equity and reserves and non-current liabilities. FW Limited Extract from Statement of Financial Position at 30 September 2018 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [7] © UCLES 2018 0452/13/O/N/18 [Turn over 18 (b) Define each of the following terms. i(i) Shareholders ........................................................................................................................................... .................................................................................................................................. ...................................................................................................................................... [1] (ii) Limited liability ........................................................................................................................................... .................................................................................................................................. ...................................................................................................................................... [1] (c) i(i) State one difference between ordinary shares and preference shares. ordinary shares preference shares …………………………………………. …………………………………………. …………………………………………. …………………………………………. [2] (ii) State two similarities between preference shares and debentures. 1 ........................................................................................................................................ ........................................................................................................................................... 2 ........................................................................................................................................ ...................................................................................................................................... [2] © UCLES 2018 0452/13/O/N/18 19 The directors of FW Limited want to raise $60 000 to purchase additional premises. The directors are considering two proposals: Proposal 1 Issuing 5% debentures (repayable 2030) Proposal 2 Issuing ordinary shares It is anticipated that the ordinary share dividend will be 6% per annum. REQUIRED (d) State how each proposal would affect the profit of FW Limited in the next financial year (if at all). Give a reason for your answer in each case. Proposal 1 Effect on profit ........................................................................................................................... Reason ..................................................................................................................................... .............................................................................................................................................. [2] Proposal 2 Effect on profit ........................................................................................................................... Reason ..................................................................................................................................... .............................................................................................................................................. [2] © UCLES 2018 0452/13/O/N/18 [Turn over 20 The following information was available on 30 September 2018. Inventory Trade receivables Trade payables Cash at bank Loan repayable on 1 January 2019 $ 42 000 34 000 35 000 36 000 30 000 REQUIRED (e) Calculate the current ratio. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [2] (f) Complete the table by placing a tick ( ) in the correct column to indicate the effect each would have on the current ratio. effect on current ratio increase decrease no effect use the bank balance to repay the loan purchase non-current assets on credit sell half the inventory at cost price to cash customers pay amount owed to trade payables by cheque [4] [Total: 23] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2018 0452/13/O/N/18 Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education * 9 0 5 3 7 2 3 0 2 9 * 0452/12 ACCOUNTING Paper 1 February/March 2019 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. DC (RW) 160949/4 © UCLES 2019 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Faraz buys and sells new and used motor vehicles. He purchased a used motor vehicle from Tahir for $7000 which he paid for by cheque. How would Faraz record this transaction? account debited account credited A motor vehicles bank B motor vehicles Tahir C purchases bank D purchases Tahir [1] (b) Kala had the following assets and liabilities on 1 February 2019. Assets Liabilities Non-current assets Inventory Trade receivables $ 48 000 14 000 16 500 $ 78 500 Trade payables Bank overdraft 17 000 9 100 26 100 On 2 February she paid Suki, a credit supplier, $1950 by cheque, after deducting a cash discount of $50. A $50 400 B $50 450 C $52 350 D $52 450 © UCLES 2019 [1] 0452/12/F/M/19 3 (c) Which tasks would be carried out by a book-keeper? 1 analysing business results 2 maintaining a cash book 3 preparing financial statements 4 writing up ledger accounts A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4 [1] (d) Zara provided the following information for the year ended 31 December 2018. $ Amount owing by credit customers 1 January 2018 2 250 31 December 2018 1 500 Cheques paid by credit customers 14 220 Discount allowed to credit customers 80 Goods returned by credit customers 2 150 How much were the credit sales for the year? A $11 400 B $12 900 C $15 700 D $17 200 [1] (e) Which statement about a bank reconciliation statement is correct? A It includes items recorded by the trader not yet recorded by the bank. B C It is sent by the bank to the trader at regular intervals. D © UCLES 2019 [1] 0452/12/F/M/19 [Turn over 4 (f) A trader provided the following information for his financial year. $ Revenue for the year 60 000 Inventory at the start of the year 6 000 Purchases for the year 44 000 The mark-up is 25%. What was the value of the inventory at the end of the year? A $2000 B $5000 C $12 000 D $15 000 [1] (g) Which accounting objective is this statement describing? A comparability B reliability C relevance D understandability [1] (h) A trader provided the following information. Cost of sales Gross profit Expenses $ 48 000 32 000 17 000 What was the profit for the year as a percentage of revenue? A 15.46% B 18.75% C 30.61% D 35.42% © UCLES 2019 [1] 0452/12/F/M/19 5 (i) (j) A delaying payment to credit suppliers B obtaining a short-term bank loan C selling inventory at cost price D selling non-current assets [1] Which accounting principle requires profit to be recognised as earned when the legal ownership of goods passes to the purchaser? A going concern B money measurement C prudence D realisation [1] [Total: 10] © UCLES 2019 0452/12/F/M/19 [Turn over 6 2 Gurdeep divides his ledger into three sections – nominal (general) ledger, sales ledger and purchases ledger. He prepares monthly control accounts for his sales and purchases ledgers. REQUIRED (a) State one advantage of dividing the ledger into these three sections. ................................................................................................................................................... ............................................................................................................................................. [1] (b) Give two 1 ................................................................ 2 ................................................................ [2] (c) Complete the table by placing a tick ( ) in the correct column to indicate where each item debit credit no entry opening balance owed to credit suppliers credit purchases cash purchases cash refund received from a credit supplier cash discount received from credit suppliers trade discount received from credit suppliers interest charged on an overdue account contra entry to sales ledger control account [8] © UCLES 2019 0452/12/F/M/19 7 (d) Sasha. A narrative is required. Gurdeep Journal Debit $ Credit $ ......................................................................... ........................ ........................ ......................................................................... ........................ ........................ ......................................................................... ........................ ........................ ......................................................................... ........................ ........................ [3] (e) ................................................................................................................................................... ............................................................................................................................................. [1] (f) Name two accounting principles Gurdeep is applying by maintaining a provision for doubtful debts. 1 ................................................................ 2 ................................................................ [2] (g) Suggest two 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (h) Name two other 1 ................................................................................................................................................ 2 .......................................................................................................................................... [2] [Total: 21] © UCLES 2019 0452/12/F/M/19 [Turn over 8 3 Sarah maintains a petty cash book using the imprest system. The imprest amount is $250 and this is restored from the bank account on the first day of each month. REQUIRED (a) State two advantages of the imprest system of petty cash. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] Sarah had $38 in the petty cash box on 1 January 2019. The following transactions took place in January 2019. January 1 6 8 13 18 21 24 Restored petty cash to the imprest amount Cleaner repaid overpayment made in December Paid Eva, a credit supplier Purchase of refreshments for office Paid Olivia, a credit supplier Paid for taxi fare Cost of flowers for office $ ? 10 62 9 43 14 10 REQUIRED (b) Balance the petty cash book and bring down the balance on 1 February 2019. [11] © UCLES 2019 0452/12/F/M/19 © UCLES 2019 ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... Date Total received $ 0452/12/F/M/19 .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... Details ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... Total paid $ Sarah Petty Cash Book ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... Office expenses $ ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... $ $ ................... Cleaning Travel ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... ................... Ledger accounts $ 9 [Turn over 10 (c) Show the entries which would be made in the cleaning account in January 2019. It is not necessary to total or balance the account. Sarah Cleaning account Date Details $ Date Details $ .......... .................................. .......... .......... .................................. .......... .......... .................................. .......... .......... .................................. .......... .......... .................................. .......... .......... .................................. .......... [2] (d) State how the double entry would be completed for the items recorded in the ledger accounts column of the petty cash book. ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (e) (i) State the amount which would be received on 1 February when the petty cash is restored to the imprest amount. ..................................................................................................................................... [1] (ii) State the double entry which would be made on 1 February for restoring the imprest amount. debit credit .......................................... .......................................... [2] [Total: 20] © UCLES 2019 0452/12/F/M/19 11 PLEASE TURN OVER © UCLES 2019 0452/12/F/M/19 [Turn over 12 4 The W Athletics Club had the following assets and liabilities on 1 March 2018. Balance at bank Equipment at valuation Subscriptions accrued Accumulated fund Loan Subscriptions prepaid $ 4105 4500 550 6880 2000 275 The treasurer prepared the following receipts and payments account for the year ended 28 February 2019. W Athletics Club Receipts and Payments Account for the year ended 28 February 2019 Opening bank balance Subscriptions received $ 4 105 5 940 Repayment of loan Loan interest Equipment purchased General expenses Rent and insurance Net cost of competitions Closing bank balance 10 045 $ 2 000 100 1 650 890 4 280 310 815 10 045 The following additional information is available at 28 February 2019. Insurance prepaid General expenses accrued Subscriptions prepaid Equipment at valuation $ 240 30 165 5900 REQUIRED (a) Calculate the subscriptions for the year ended 28 February 2019. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [5] © UCLES 2019 0452/12/F/M/19 13 (b) Prepare the income and expenditure account for the year ended 28 February 2019. W Athletics Club Income and Expenditure Account for the year ended 28 February 2019 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [9] (c) (i) List two items included in the receipts and payments account which should not appear in the income and expenditure account. 1 .................................................................................................... 2 .................................................................................................... (ii) [2] List two items included in the income and expenditure account which should not appear in the receipts and payments account. 1 .................................................................................................... 2 .................................................................................................... [2] (d) State the amount of subscriptions that should be included in the statement of financial position at 28 February 2019. State whether it is an asset or a liability. Amount ......................................................... Asset or liability ............................................. [2] (e) State the amount of the accumulated fund that should appear in the statement of financial position at 28 February 2019. ............................................................................................................................................. [1] [Total: 21] © UCLES 2019 0452/12/F/M/19 [Turn over 14 5 Hari is a manufacturer of food for farm animals. REQUIRED (a) State the meaning of the following terms used in the financial statements of a manufacturing business. (i) Prime cost ........................................................................................................................................... ..................................................................................................................................... [1] (ii) Cost of production ........................................................................................................................................... ..................................................................................................................................... [1] (iii) Work in progress ........................................................................................................................................... ..................................................................................................................................... [1] He provided the following information for the year ended 31 December 2018. Purchases of raw materials Carriage on raw materials Factory wages – direct indirect Factory rent, rates and insurance Factory machinery at cost Provision for depreciation of factory machinery 1 January 2018 Factory loose tools at valuation 1 January 2018 $ 142 500 1 680 86 250 42 570 14 000 95 000 34 200 7 140 Additional information 1 The inventory of raw materials at 1 January 2018 was $13 500 which was $700 lower than the inventory of raw materials on 31 December 2018. 2 The inventory of work in progress at 1 January 2018 was $15 100 which was $900 higher than the inventory of work in progress at 31 December 2018. 3 At 31 December 2018 factory insurance prepaid amounted to $690 and factory rent, $1500, was accrued. 4 The factory machinery is being depreciated at 20% per annum using the reducing (diminishing) balance method. 5 The factory loose tools were valued at $6310 on 31 December 2018. © UCLES 2019 0452/12/F/M/19 15 REQUIRED (b) Prepare the manufacturing account for the year ended 31 December 2018. Hari Manufacturing Account for the year ended 31 December 2018 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ........................................................................................................................................... [13] © UCLES 2019 0452/12/F/M/19 [Turn over 16 The following information is available. Inventory of finished goods on 1 January 2018 Inventory of finished goods on 31 December 2018 Cost of goods sold for the year ended 31 December 2018 $ 24 000 22 200 302 800 REQUIRED (c) Calculate the rate of inventory turnover of finished goods. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (d) (i) Complete the following sentence. Hari should always value his inventory at the lower of ...................................................... and ...................................................... (ii) [1] Name one accounting principle Hari is applying by valuing his inventory on this basis. ..................................................................................................................................... [1] (e) Complete the table by placing a tick ( ) in the correct column to indicate the effect of Hari overvaluing his inventory of raw materials at 31 December 2018. The first one has been completed as an example. overstated understated Cost of materials consumed for the year ended 31 December 2018 Cost of production for the year ended 31 December 2018 Gross profit for the year ended 31 December 2018 Current assets at 31 December 2018 Profit for the year ending 31 December 2019 [4] © UCLES 2019 0452/12/F/M/19 17 (f) Suggest two ways in which Hari could increase his gross profit. 1 ................................................................................................................................................ 2 .......................................................................................................................................... [2] [Total: 26] © UCLES 2019 0452/12/F/M/19 [Turn over 18 6 The financial year of B Limited ends on 31 December. The company obtained its long-term finance from the issue of 5% debentures, 6% preference shares and ordinary shares. REQUIRED (a) State the meaning of the following terms used in connection with limited companies. (i) Called-up share capital ........................................................................................................................................... ..................................................................................................................................... [1] (ii) Paid-up share capital ........................................................................................................................................... ..................................................................................................................................... [1] (iii) Limited liability ........................................................................................................................................... ..................................................................................................................................... [1] (b) Complete the table by placing a tick ( ) in the correct column to select the source of long-term finance to which each statement relates. The first one has been completed as an example. debentures preference shares ordinary shares The holders receive dividend before ordinary share dividend. They are a long-term loan. The holders are entitled to vote at the annual general meeting. The holders receive a variable rate of dividend. The holders receive a fixed rate of dividend. If the company is wound up the holders are repaid after all other investors. [5] © UCLES 2019 0452/12/F/M/19 19 (c) State two similarities between debentures and preference shares. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (d) Complete the table by placing tick(s) ( ) in the correct columns to indicate where each of the following would be included in the financial statements of B Limited at 31 December 2018. The first one has been completed as an example. Income statement Statement of changes in equity Statement of financial position No entry Half year interest on debentures paid on 1 July 2018 Half-year interest on debentures owing on 31 December 2018 Payment of interim ordinary share dividend on 1 July 2018 Payment of final ordinary share dividend for the year ended 31 December 2017 Proposed ordinary share dividend at 31 December 2018 Creation of general reserve [7] The directors of B Limited are hoping to expand the business and have estimated that $30 000 will be required. One director has proposed that the bank should be asked to provide overdraft facilities up to $30 000. Another director has proposed making a further issue of 5% debentures. REQUIRED (e) Suggest two reasons why the proposal to ask for overdraft facilities should not be accepted. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] © UCLES 2019 0452/12/F/M/19 [Turn over 20 (f) Complete the table to indicate how each value would change if an issue of 5% debentures was made on 1 January 2019. Where there is no effect place a tick ( The first one has been completed as an example. increase $ total of current assets at 1 January 2019 decrease $ no effect 30 000 total equity at 1 January 2019 total of non-current liabilities at 1 January 2019 total profit for the year ending 31 December 2019 [3] [Total: 22] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge. © UCLES 2019 0452/12/F/M/19 Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education * 0 9 5 1 5 2 9 2 3 0 * 0452/11 ACCOUNTING Paper 1 May/June 2019 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 22 printed pages and 2 blank pages. DC (ST) 169004/1 © UCLES 2019 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) The employees of a business are highly skilled but this is not recorded in the financial statements of the business. Which accounting principle is being applied? A going concern B money measurement C prudence D realisation [1] (b) Khalid started a business on 1 April 2018 with a capital of $90 000. He provided the following information on 31 March 2019. non-current assets current assets current liabilities drawings during the year $ 75 000 32 000 24 000 19 000 What was the profit or loss for the year ended 31 March 2019? A $12 000 loss B $12 000 profit C $26 000 loss D $26 000 profit [1] (c) How is cost of production calculated? A direct materials + direct labour + direct expenses B direct materials + direct labour + direct expenses + factory overheads C direct materials + direct labour + direct expenses + factory overheads + decrease in work in progress D direct materials + direct labour + direct expenses + factory overheads – decrease in work in progress [1] © UCLES 2019 0452/11/M/J/19 3 (d) Lisa returned goods previously purchased from Tara. How did Tara record this? account debited account credited A Lisa purchases returns B Lisa sales returns C purchases returns Lisa D sales returns Lisa [1] (e) When preparing his financial statements for the year ended 30 April 2019 Tebogo recorded his opening inventory of $6400 as $4600 in error. What was the effect of this error? effect on gross profit for the year overstated understated effect on profit for the year overstated understated effect on capital at 30 April 2019 overstated understated A B C D [1] (f) Amrik started a business on 1 January 2017 and purchased a machine costing $18 000. He decided to depreciate the machine at 20% per annum using the reducing (diminishing) balance method. No depreciation was to be charged in the year of disposal. The machine was sold for $13 300 on 1 July 2018. What was the profit or loss on the sale of the machine? A loss $1100 B loss $4700 C profit $1780 D profit $2500 [1] © UCLES 2019 0452/11/M/J/19 [Turn over 4 (g) ‘Financial information must be free from errors and bias.’ To which accounting objective does this refer? A comparability B relevance C reliability D understandability [1] (h) Amelia rented premises to a tenant. At the end of Amelia’s financial year the tenant had paid 2 months’ rent in advance. Which entries would Amelia make in her ledger? A credit the rent payable account and carry down as a debit balance B debit the rent payable account and carry down as a credit balance C credit the rent receivable account and carry down as a debit balance D debit the rent receivable account and carry down as a credit balance [1] (i) John paid Tahir, a credit supplier, $200 by cheque. This was credited to the account of Tarek, another credit supplier. Which journal entry corrects this error? debit $ 400 A suspense Tahir Tarek B Tahir Tarek 200 C Tahir Tarek suspense 200 200 Tarek Tahir 200 D credit $ 200 200 200 400 200 [1] © UCLES 2019 0452/11/M/J/19 5 (j) A business provided the following information. opening inventory closing inventory purchases revenue $ 36 000 24 000 360 000 480 000 What was the rate of inventory turnover? A 12.0 times B 12.4 times C 15.5 times D 16.0 times [1] [Total: 10] © UCLES 2019 0452/11/M/J/19 [Turn over 6 2 Olivia is a trader. Sales and purchases are made on both cash and credit terms. Olivia maintains a full set of accounting records and prepares control accounts at the end of each month. REQUIRED (a) Name the book of prime (original) entry which Olivia would use to obtain the following information when preparing her control accounts. book of prime (original) entry returns to credit suppliers cheques received from credit customers contra entry bad debts written off [4] (b) Complete the table by placing a tick ( ) in the correct column to indicate where each item would appear in Olivia’s sales ledger control account. If the item does not appear place a tick ( ) in the ‘no entry’ column. debit credit no entry credit sales cash sales cash refund to credit customer cash discount allowed by credit suppliers contra entry trade discount allowed to credit customers interest charged on credit customer’s overdue account [7] (c) State the meaning of the following terms. (i) Bad debt ........................................................................................................................................... ..................................................................................................................................... [1] (ii) Bad debt recovered ........................................................................................................................................... ..................................................................................................................................... [1] © UCLES 2019 0452/11/M/J/19 7 (iii) Provision for doubtful debts ........................................................................................................................................... ..................................................................................................................................... [1] Olivia’s financial year ends on 30 April. On 30 April 2019 Olivia received $200 in cash from Ben, a credit customer, in final settlement of the amount he owed. The balance of Ben’s account was written off as irrecoverable. REQUIRED (d) Complete the following accounts in Olivia’s ledger for the year ended 30 April 2019. Show any necessary year-end transfer. Olivia Ben account Date 2019 Jan 2 Details Sales $ Date 2019 Details $ 360 ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. Bad debts account Date 2019 Details $ Date 2019 Details $ 384 ............. ................................. .............. April 30 Total to date ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. ............. ................................. .............. [4] © UCLES 2019 0452/11/M/J/19 [Turn over 8 Olivia maintains a provision for doubtful debts of 3% of the trade receivables at the end of each financial year. On 30 April 2018 the trade receivables amounted to $13 500. On 30 April 2019 the trade receivables amounted to $12 800 after writing off Ben’s account. REQUIRED (e) Prepare the provision for doubtful debts account for the year ended 30 April 2019. Balance the account and bring down the balance on 1 May 2019. Olivia Provision for doubtful debts account Date Details $ Date Details $ ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. ............ ................................ ............. ............. ................................ ............. [4] [Total: 22] © UCLES 2019 0452/11/M/J/19 9 3 Kadar is a food wholesaler. He maintains a full set of accounting records and prepares a trial balance at the end of each financial year. REQUIRED (a) State two reasons why a trial balance is prepared. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... [2] (b) Name three types of error which are not revealed by a trial balance. Give an example of each. 1 Type of error ............................................. Example ............................................................................................................................ ........................................................................................................................................... ........................................................................................................................................... 2 Type of error ............................................. Example ............................................................................................................................ ........................................................................................................................................... ........................................................................................................................................... 3 Type of error ............................................. Example ............................................................................................................................ ........................................................................................................................................... ........................................................................................................................................... [6] © UCLES 2019 0452/11/M/J/19 [Turn over 10 Kadar provided the following information at the end of his financial year on 31 March 2019. Revenue Purchases Sales returns Carriage outwards Fixtures and fittings (at cost) Provision for depreciation of fixtures and fittings Motor vehicle (at cost) Discount allowed Discount received Trade payables Trade receivables Operating expenses Rent payable Commission receivable Bank overdraft Capital Inventory 1 April 2018 Inventory 31 March 2019 © UCLES 2019 0452/11/M/J/19 $ 146 000 137 300 1 400 2 970 45 000 18 000 16 850 190 230 14 600 12 900 17 190 5 200 2 000 5 170 65 000 12 000 10 950 11 (c) Prepare the trial balance of Kadar at 31 March 2019. Kadar Trial Balance at 31 March 2019 Debit $ Credit $ Revenue ........................ ........................ Purchases ........................ ........................ Sales returns ........................ ........................ Carriage outwards ........................ ........................ Fixtures and fittings (at cost) ........................ ........................ Provision for depreciation of fixtures and fittings ........................ ........................ Motor vehicle (at cost) ........................ ........................ Discount allowed ........................ ........................ Discount received ........................ ........................ Trade payables ........................ ........................ Trade receivables ........................ ........................ Operating expenses ........................ ........................ Rent payable ........................ ........................ Commission receivable ........................ ........................ Bank overdraft ........................ ........................ Capital ........................ ........................ Inventory ........................ ........................ ………………………… ........................ ........................ ........................ ........................ [9] © UCLES 2019 0452/11/M/J/19 [Turn over 12 Kadar purchased the motor vehicle on 30 March 2019. He entered the total amount paid in the motor vehicle account. The total paid consisted of the following. $ 16 000 420 350 80 16 850 cost of motor vehicle 1 year’s insurance delivery charge fuel REQUIRED (d) State whether each cost is capital expenditure or revenue expenditure. Give a reason for your answers. The first item has been completed as an example. cost cost of motor vehicle type of expenditure capital reason This is the cost of purchasing a non-current asset which will be kept for over 12 months 1 year’s insurance delivery charge fuel [6] [Total: 23] © UCLES 2019 0452/11/M/J/19 13 4 The YK Club was formed some years ago. In addition to providing sporting facilities for members, the club also has a shop selling sports clothing. The following information was available for the year ended 31 January 2019. $ On 1 February 2018 Shop inventory Amount owing for shop supplies 896 420 For the year ended 31 January 2019 Payments for shop supplies 4150 On 31 January 2019 Shop inventory Amount owing for shop supplies 960 470 All goods are marked up by 25%. REQUIRED (a) Prepare the shop income statement for the year ended 31 January 2019 showing the revenue for the year. YK Club Shop Income Statement for the year ended 31 January 2019 $ $ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ .......................................................................................... ........................ ........................ [5] © UCLES 2019 0452/11/M/J/19 [Turn over 14 (b) Complete the table to indicate how the following items would be recorded in the financial statements of the YK Club for the year ended 31 January 2019. Some items may appear in more than one financial statement. The first one has been completed as an example. balance at bank on 1 February 2018 $ receipts and payments account $ 460 460 insurance paid on 1 February 2018 for 18 months to 31 July 2019 1080 purchase of new sports equipment by cheque on 31 December 2018 3500 subscriptions received in January 2019 for the year ending 31 January 2020 350 accumulated depreciation of sports equipment at 31 January 2019 850 cost of sports equipment at 31 January 2019 profit from club shop for the year ended 31 January 2019 (calculated in (a)) bank overdraft on 31 January 2019 income and expenditure account $ statement of financial position $ 8500 ? 1250 [11] The treasurer is concerned that the overdraft of the YK Club is increasing each year. He has recommended that the club should hold fund-raising activities to reduce the club’s bank overdraft. REQUIRED (c) Suggest two other ways in which the bank overdraft of the club could be reduced. 1 ................................................................................................................................................ 2 ................................................................................................................................................ [2] [Total: 18] © UCLES 2019 0452/11/M/J/19 15 PLEASE TURN OVER © UCLES 2019 0452/11/M/J/19 [Turn over 16 5 Krishna has a secretarial agency. Her financial year ends on 30 April. She provided the following information for the year ended 30 April 2019. Fees received from clients Wages Operating expenses Rent and rates Motor expenses Commission receivable Office fixtures and equipment at valuation 1 May 2018 Motor vehicle at cost Provision for depreciation of motor vehicle $ 35 270 24 300 4 260 7 750 720 1 820 18 900 17 500 6 300 Additional information 1 At 30 April 2019 Clients owed fees totalling $2150. Commission receivable accrued amounted to $60. Rent, $1200, was accrued. Rates prepaid amounted to $550. 2 Krishna lives in an apartment above the business premises. One quarter of the rent and rates relates to Krishna’s apartment. 3 The office fixtures and equipment were valued at $17 320 on 30 April 2019. No office fixtures and equipment were purchased or sold during the year. 4 The motor vehicle is to be depreciated at 20% per annum using the reducing (diminishing) balance method. © UCLES 2019 0452/11/M/J/19 17 REQUIRED (a) Prepare Krishna’s income statement for the year ended 30 April 2019. Krishna Income Statement for the year ended 30 April 2019 $ $ ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... [13] © UCLES 2019 0452/11/M/J/19 [Turn over 18 (b) Complete the following accounts in Krishna’s ledger for the year ended 30 April 2019. Close the accounts by balancing or by making an appropriate year-end transfer. Krishna Drawings account Date 2019 April 30 Total cash drawings ............. Details $ Date Details $ 9 150 ............. .................................... .............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. Details $ Capital account Date Details $ ............. .................................... .............. Date 2018 May 1 ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. Balance b/d 38 000 [5] © UCLES 2019 0452/11/M/J/19 19 Krishna is considering purchasing business premises costing $80 000. She could invest a further $40 000 as capital. The remaining $40 000 would have to come from a 6% bank loan repayable after 5 years. REQUIRED (c) Explain three factors Krishna should consider when making a decision about purchasing these business premises. 1 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 3 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... [6] [Total: 24] © UCLES 2019 0452/11/M/J/19 [Turn over 20 6 ML Limited was formed some years ago. The company’s share capital consists entirely of ordinary shares. REQUIRED (a) Complete the table by placing a tick ( ) in the correct column to indicate whether each statement is true or false. The first one has been completed as an example. True False The reward given to ordinary shareholders for investing in the company is known as a dividend. The amount of issued shares for which payment has been received by the company from shareholders is known as paid-up share capital. Ordinary shareholders receive a fixed percentage of the profit each year. In the event of the company being wound up the ordinary shares are the last to be repaid. Ordinary shareholders are personally liable for the debts of the company. Any ordinary share dividend paid during the financial year is entered in the statement of changes of equity irrespective of the year to which it relates. [5] The financial year of ML Limited ends on 31 December. The following information is available. $ At 1 January 2018 Ordinary share capital Retained earnings General reserve 200 000 16 500 8 000 Dividends paid during the year ended 31 December 2018 Final dividend for the year ended 31 December 2017 Interim dividend for the year ended 31 December 2018 Profit for the year ended 31 December 2018 8 000 6 000 28 000 On 31 December 2018 it was decided to make a transfer to general reserve of $3000. © UCLES 2019 0452/11/M/J/19 21 REQUIRED (b) Prepare a statement of changes in equity for the year ended 31 December 2018. ML Limited Statement of Changes in Equity for the year ended 31 December 2018 Ordinary share capital $ Retained earnings General reserve Total $ $ $ On 1 January 2018 ....................... ....................... ....................... ....................... Profit for the year ....................... ....................... ....................... ....................... Dividend paid – final ....................... ....................... ....................... ....................... interim ....................... ....................... ....................... ....................... Transfer to general reserve ....................... ....................... ....................... ....................... On 31 December 2018 ....................... ....................... ....................... ....................... [6] (c) Calculate the percentage (%) total ordinary share dividend for the year ended 31 December 2018. ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] The directors of ML Limited want to expand the company and need to raise $100 000. They are considering issuing either 6% preference shares or 5% debentures. REQUIRED (d) State three features of preference shares. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... 3 ................................................................................................................................................ ................................................................................................................................................... [3] © UCLES 2019 0452/11/M/J/19 [Turn over 22 (e) State three features of debentures. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... 3 ................................................................................................................................................ ................................................................................................................................................... [3] (f) Complete the table to indicate the effect of raising the funds from an issue of 5% debentures on 1 January 2019. Where there is no effect place a tick ( ) in the ‘no effect’ column. The first one has been completed as an example. increase $ effect on balance at bank decrease $ no effect 100 000 effect on non-current liabilities effect on working capital effect on equity at 1 January 2019 effect on annual profits [4] [Total: 23] © UCLES 2019 0452/11/M/J/19 Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education * 4 0 7 9 0 0 4 7 7 0 * 0452/12 ACCOUNTING Paper 1 May/June 2019 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 22 printed pages and 2 blank pages. DC (ST) 169003/2 © UCLES 2019 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) An invoice for the purchase of goods on credit, $980, was incorrectly recorded in the purchases journal as $890. Which type of error was made? A commission B complete reversal C original entry D principle [1] (b) Which accounts would appear in a purchases ledger? 1 carriage inwards 2 purchases 3 purchases returns 4 Sadie, a credit supplier A 1, 2 and 3 B 2 and 3 only C 2 only D 4 only [1] (c) Bingwa purchased premises costing $85 000 in February 2018. Identical premises to those owned by Bingwa were sold in April 2019 for $98 000. No adjustment was made in Bingwa’s accounting records in April 2019. Which accounting principle did Bingwa apply? A business entity B materiality C money measurement D realisation © UCLES 2019 [1] 0452/12/M/J/19 3 (d) Jason provided the following information. non-current assets inventory insurance prepaid trade payables petty cash rent receivable prepaid bank overdraft trade receivables $ 103 650 4 960 130 5 380 100 240 2 900 5 120 How much was Jason’s capital? A $105 440 B $105 920 C $105 960 D $111 240 [1] (e) On 1 February Ahmed purchased goods on credit from Zaffar. He returned these goods on 8 February. How did Zaffar record the transaction of 8 February? account debited (f) account credited A Ahmed purchases returns B Ahmed sales returns C purchases returns Ahmed D sales returns Ahmed [1] Athena is both a customer and a supplier of Heidi. Athena’s account in Heidi’s sales ledger showed a debit balance of $340 and her account in Heidi’s purchases ledger showed a credit balance of $260. A contra between the two accounts was agreed. Which entry would Heidi make in her sales ledger control account? A credit $80 B credit $260 C debit $80 D debit $260 © UCLES 2019 [1] 0452/12/M/J/19 [Turn over 4 (g) An advertising expenses account had a credit balance of $100 on 1 January 2018. During the year ended 31 December 2018 advertising expenses paid totalled $2830. This included $45 for the following financial year. Which journal entry is required to transfer the advertising expenses to the income statement on 31 December 2018? debit $ A advertising expenses income statement 2685 B advertising expenses income statement 2885 C income statement advertising expenses 2685 D income statement advertising expenses 2885 credit $ 2685 2885 2685 2885 [1] (h) How is mark-up calculated? (i) A cost of sales gross profit B gross profit cost of sales C gross profit revenue D revenue gross profit [1] On 1 May 2018 Ben’s capital was $47 600. During the year ended 30 April 2019 he introduced his personal motor vehicle, $12 500, into the business. His drawings during the year ended 30 April 2019 were $7500. On 30 April 2019 Ben’s capital was $51 250. What was Ben’s profit or loss for the year? A loss $1350 B loss $8650 C profit $1350 D profit $8650 © UCLES 2019 [1] 0452/12/M/J/19 5 (j) Amber updated her cash book after receiving her bank statement. The updated cash book balance was an overdraft of $250. The bank statement did not include cheques not presented, $96, and amounts not credited, $183. What was the balance shown on the bank statement? A $163 credit B $163 debit C $337 credit D $337 debit [1] [Total: 10] © UCLES 2019 0452/12/M/J/19 [Turn over 6 2 Nabil owns a food store. He purchases goods on credit terms and sells on cash terms. Nabil’s financial year ends on 31 March. Nabil’s receipts and payments during the year ended 31 March 2019 included both capital and revenue items. REQUIRED (a) State whether each of the following represents capital expenditure, revenue expenditure, a capital receipt or a revenue receipt. The first one has been completed as an example. Payment of annual insurance premium revenue expenditure Purchases of goods for resale .................................................. Proceeds of sale of old shop fittings at book value .................................................. Cost of new shop fittings .................................................. Delivery charge on new shop fittings .................................................. Cash sales .................................................. Loan from bank .................................................. [6] (b) Complete the table by stating the double entry needed to record each of the following transactions which took place in March 2019. transaction account(s) debited $ account(s) credited $ Nabil transferred his private motor vehicle, $18 000, to the business. Purchased stationery, $44, on credit from Tahir. Paid office cash, $490, into the business bank account. Settled Vijay’s account of $200 by bank transfer after deducting 2% cash discount. [9] © UCLES 2019 0452/12/M/J/19 7 Nabil prepares a trial balance at the end of each financial year. REQUIRED (c) Complete the table by placing a tick ( ) in the correct column to indicate where the balance of each of the accounts would appear in Nabil’s trial balance on 31 March 2019. The first one has been completed as an example. debit column credit column rent and rates capital motor vehicle at cost motor expenses purchases returns discount received Tarek, a credit supplier insurance bank overdraft operating expenses 5-year bank loan drawings carriage outwards [6] [Total: 21] © UCLES 2019 0452/12/M/J/19 [Turn over 8 3 Hamila is a trader. Her financial year ends on 28 February. All goods are bought and sold on credit terms. Hamila provided the following information for February 2019. 2019 February 1 Safiya, a credit customer, owed $320 12 Safiya paid the balance due on 1 February by cheque 16 Safiya purchased goods on credit, list price $250, less 20% trade discount 18 The bank returned Safiya’s cheque because of insufficient funds in the account 24 Safiya paid $400 in cash 27 The balance of Safiya’s account was written off as irrecoverable REQUIRED (a) Prepare the account of Safiya as it would appear in Hamila’s ledger for the month of February 2019. Hamila Safiya account Date 2019 Details $ Date 2019 Details $ ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. [6] © UCLES 2019 0452/12/M/J/19 9 (b) Complete the bad debts account in Hamila’s ledger for the month of February 2019. Close the account by making an appropriate year-end transfer. Hamila Bad debts account Date 2019 Feb 27 Details Total to date $ Date 2019 Details $ 674 ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. [2] Hamila maintains a provision for doubtful debts. The following account appeared in Hamila’s ledger. Hamila Provision for doubtful debts account Date 2019 Feb 28 Details Income statement Balance c/d $ 130 Date 2018 Mar 1 Details Balance b/d 1370 1500 $ 1500 1500 REQUIRED (c) (i) Explain the following entries in the provision for doubtful debts account. Name the account in which the double entry would be made for each item. State whether the account would be debited or credited. 1 March 2018 Balance b/d Explanation ....................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... Name of account ............................................................................................................... Debit or credit ....................................... © UCLES 2019 0452/12/M/J/19 [Turn over 10 28 February 2019 Balance c/d Explanation ....................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... Name of account ............................................................................................................... Debit or credit ....................................... [4] (ii) Explain the following entry in the provision for doubtful debts account. 28 February 2019 Income statement ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] (d) Explain how Hamila is applying the principle of prudence by maintaining a provision for doubtful debts. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (e) Explain how Hamila is applying the principle of accruals (matching) by maintaining a provision for doubtful debts. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (f) Suggest two ways in which Hamila could reduce the possibility of bad debts. 1 ................................................................................................................................................ 2 ................................................................................................................................................ [2] [Total: 20] © UCLES 2019 0452/12/M/J/19 11 PLEASE TURN OVER © UCLES 2019 0452/12/M/J/19 [Turn over 12 4 Sam’s financial year ends on 31 December. On 1 November 2017 he sold old office equipment for $1900. The equipment had been purchased on 1 April 2015 for $4000 and had been depreciated using the reducing (diminishing) balance method at 20% per annum. A full year’s depreciation was charged in the year of purchase, but no depreciation was to be charged in the year of disposal. REQUIRED (a) Calculate the profit or loss on disposal of the office equipment. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [5] On 1 January 2018 Sam purchased new office equipment costing $8000 on credit from C Limited. (b) Prepare a journal entry to record this purchase. A narrative is required. Sam General Journal Date Details Debit $ Credit $ ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... 2018 [3] © UCLES 2019 0452/12/M/J/19 13 The new office equipment was expected to be used for 5 years and have a residual value of $2000. Sam was undecided about which method of depreciation to use for the new office equipment. REQUIRED (c) (i) Calculate the annual depreciation on the new office equipment using the straight-line (equal instalment) method. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] (ii) Calculate the depreciation for the first year on the new office equipment using the reducing (diminishing) balance method at 20% per annum. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [1] Sam decided to use the reducing (diminishing) balance method of depreciation. REQUIRED (d) Prepare a journal entry to record the transfer to the income statement of the depreciation on office equipment for the year ended 31 December 2018. A narrative is required. Sam General Journal Date Details Debit $ Credit $ ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... 2018 [3] © UCLES 2019 0452/12/M/J/19 [Turn over 14 Sam’s book-keeper started to maintain a petty cash book on 1 April 2019. On that date $150 was placed in the petty cash box. This was to be the monthly imprest which was to be restored on the first day of each month. At the end of April 2019 Sam discovered that only a few entries had been made in the petty cash book for the month. The following information about the petty cash transactions for April 2019 is available. 2019 April $ 11 Received refund from cleaner for overpayment in March 5 18 Paid Kelly, a credit supplier 35 21 Bought printer paper 23 30 Paid cleaner 56 REQUIRED (e) Complete the entries for the transactions on 3 April and 6 April in the petty cash book on the page opposite. Enter the transactions for 11 April to 30 April in the petty cash book. Balance the petty cash book on 30 April and bring down the balance on 1 May 2019. Show the restoration of the imprest on 1 May 2019. [10] [Total: 24] The petty cash book is printed on the next page © UCLES 2019 0452/12/M/J/19 © UCLES 2019 .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. 6 .................. .................. 3 April 1 2019 Date .................. 150 Total received $ 0452/12/M/J/19 ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... Parcel post Taxi fare Cash Details .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. 3 12 .................. Total paid $ Sam – Petty Cash Book .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. Office expenses $ .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. $ $ .................. Cleaning Travel .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. Ledger accounts $ 15 [Turn over 16 5 Mostafa and Salma are partners in a wholesale business. Their financial year ends on 30 April. When they started the business they drew up a partnership agreement. The terms of the agreement included the following. interest to be allowed on capital at 5% per annum interest to be charged on drawings at 6% Mostafa to be entitled to an annual salary of $12 000 residual profits and losses to be shared in the ratio of 3 : 2. The partners provided the following information. At 1 May 2018 Capital account Current account Mostafa $ 45 000 3 250 credit Salma $ 25 000 1 920 debit On 1 February 2019 the partners agreed that Mostafa’s salary should be increased to $15 000 per annum. For the year ended 30 April 2019 Drawings Mostafa $ 10 000 Salma $ 8 000 The profit for the year ended 30 April 2019 was $14 820. REQUIRED (a) Suggest one reason why interest on capital was included in the partnership agreement. ................................................................................................................................................... ............................................................................................................................................. [1] (b) Suggest one reason why interest on drawings was included in the partnership agreement. ................................................................................................................................................... ............................................................................................................................................. [1] (c) Suggest one reason why a salary for Mostafa was included in the partnership agreement. ................................................................................................................................................... ............................................................................................................................................. [1] © UCLES 2019 0452/12/M/J/19 17 (d) Prepare the profit and loss appropriation account for the year ended 30 April 2019. Mostafa and Salma Profit and Loss Appropriation Account for the year ended 30 April 2019 $ $ ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... [8] © UCLES 2019 0452/12/M/J/19 [Turn over 18 (e) Complete the current account of Mostafa for the year ended 30 April 2019. Balance the account and bring down the balance on 1 May 2019. Mostafa and Salma Mostafa Current account Date Details $ ............. .................................... .............. Date 2018 May 1 ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. Details Balance b/d $ 3 250 [5] [Total: 16] © UCLES 2019 0452/12/M/J/19 19 6 S Limited was formed on 1 May 2018. On that date the company issued ordinary shares and 5% debentures. At the end of the financial year on 30 April 2019 the following financial statements were prepared: Income statement Statement of changes in equity Statement of financial position REQUIRED (a) Name the financial statement in which each of the following items would appear. Some items may appear in more than one statement. If the item does not appear in any of the financial statements write ‘No entry’. The first one has been completed as an example. financial statement Wages accrued at 30 April 2019 Income statement Statement of financial position Ordinary share capital Creation of general reserve Payment of interim ordinary share dividend on 31 October 2018 Proposed ordinary share dividend at 30 April 2019 Debenture interest accrued on 30 April 2019 [8] © UCLES 2019 0452/12/M/J/19 [Turn over 20 The directors of S Limited wish to raise funds for expansion. They are undecided whether to issue additional ordinary shares or additional 5% debentures. REQUIRED (b) Complete the table by placing a tick ( ) in the correct column to indicate whether each statement is true or false. The first one has been completed as an example. true false debenture holders receive interest debenture holders receive a variable rate of interest debentures are usually included in the non-current liabilities section of the statement of financial position debentures have a prior claim in the event of the company being wound up debenture holders are entitled to vote at the annual general meeting debentures are often secured on the non-current assets of the company [5] (c) Suggest two ways in which the ordinary shareholders may be affected if the directors decide to raise funds from an issue of debentures. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... [2] The directors of S Limited are concerned about the working capital of the company at the end of the first year of trading. The following information is available at 30 April 2019. Inventory Trade payables Trade receivables Bank overdraft © UCLES 2019 0452/12/M/J/19 $ 27 400 28 700 25 200 10 800 21 REQUIRED (d) Calculate the current ratio. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (e) Calculate the quick ratio. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (f) Explain why the quick ratio is more reliable than the current ratio as an indicator of liquidity. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (g) Complete the table by placing a tick ( ) in the correct column to show how each of the following would affect the working capital of S Limited. increase decrease no effect issue additional debentures pay operating expenses by cheque sell goods for cash instead of on credit delay paying credit suppliers sell unused non-current assets reduce credit period for credit customers [6] © UCLES 2019 0452/12/M/J/19 [Turn over 22 (h) Suggest two problems the directors of S Limited may encounter if the working capital is inadequate. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... [2] [Total: 29] © UCLES 2019 0452/12/M/J/19 Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education * 6 6 9 7 8 8 3 5 6 9 * 0452/13 ACCOUNTING Paper 1 May/June 2019 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 22 printed pages and 2 blank pages. DC (MM) 181611 © UCLES 2019 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) An invoice for the purchase of goods on credit, $980, was incorrectly recorded in the purchases journal as $890. Which type of error was made? A commission B complete reversal C original entry D principle [1] (b) Which accounts would appear in a purchases ledger? 1 carriage inwards 2 purchases 3 purchases returns 4 Sadie, a credit supplier A 1, 2 and 3 B 2 and 3 only C 2 only D 4 only [1] (c) Bingwa purchased premises costing $85 000 in February 2018. Identical premises to those owned by Bingwa were sold in April 2019 for $98 000. No adjustment was made in Bingwa’s accounting records in April 2019. Which accounting principle did Bingwa apply? A business entity B materiality C money measurement D realisation © UCLES 2019 [1] 0452/13/M/J/19 3 (d) Jason provided the following information. non-current assets inventory insurance prepaid trade payables petty cash rent receivable prepaid bank overdraft trade receivables $ 103 650 4 960 130 5 380 100 240 2 900 5 120 How much was Jason’s capital? A $105 440 B $105 920 C $105 960 D $111 240 [1] (e) On 1 February Ahmed purchased goods on credit from Zaffar. He returned these goods on 8 February. How did Zaffar record the transaction of 8 February? account debited (f) account credited A Ahmed purchases returns B Ahmed sales returns C purchases returns Ahmed D sales returns Ahmed [1] Athena is both a customer and a supplier of Heidi. Athena’s account in Heidi’s sales ledger showed a debit balance of $340 and her account in Heidi’s purchases ledger showed a credit balance of $260. A contra between the two accounts was agreed. Which entry would Heidi make in her sales ledger control account? A credit $80 B credit $260 C debit $80 D debit $260 © UCLES 2019 [1] 0452/13/M/J/19 [Turn over 4 (g) An advertising expenses account had a credit balance of $100 on 1 January 2018. During the year ended 31 December 2018 advertising expenses paid totalled $2830. This included $45 for the following financial year. Which journal entry is required to transfer the advertising expenses to the income statement on 31 December 2018? debit $ A advertising expenses income statement 2685 B advertising expenses income statement 2885 C income statement advertising expenses 2685 D income statement advertising expenses 2885 credit $ 2685 2885 2685 2885 [1] (h) How is mark-up calculated? (i) A cost of sales gross profit B gross profit cost of sales C gross profit revenue D revenue gross profit [1] On 1 May 2018 Ben’s capital was $47 600. During the year ended 30 April 2019 he introduced his personal motor vehicle, $12 500, into the business. His drawings during the year ended 30 April 2019 were $7500. On 30 April 2019 Ben’s capital was $51 250. What was Ben’s profit or loss for the year? A loss $1350 B loss $8650 C profit $1350 D profit $8650 © UCLES 2019 [1] 0452/13/M/J/19 5 (j) Amber updated her cash book after receiving her bank statement. The updated cash book balance was an overdraft of $250. The bank statement did not include cheques not presented, $96, and amounts not credited, $183. What was the balance shown on the bank statement? A $163 credit B $163 debit C $337 credit D $337 debit [1] [Total: 10] © UCLES 2019 0452/13/M/J/19 [Turn over 6 2 Nabil owns a food store. He purchases goods on credit terms and sells on cash terms. Nabil’s financial year ends on 31 March. Nabil’s receipts and payments during the year ended 31 March 2019 included both capital and revenue items. REQUIRED (a) State whether each of the following represents capital expenditure, revenue expenditure, a capital receipt or a revenue receipt. The first one has been completed as an example. Payment of annual insurance premium revenue expenditure Purchases of goods for resale .................................................. Proceeds of sale of old shop fittings at book value .................................................. Cost of new shop fittings .................................................. Delivery charge on new shop fittings .................................................. Cash sales .................................................. Loan from bank .................................................. [6] (b) Complete the table by stating the double entry needed to record each of the following transactions which took place in March 2019. transaction account(s) debited $ account(s) credited $ Nabil transferred his private motor vehicle, $18 000, to the business. Purchased stationery, $44, on credit from Tahir. Paid office cash, $490, into the business bank account. Settled Vijay’s account of $200 by bank transfer after deducting 2% cash discount. [9] © UCLES 2019 0452/13/M/J/19 7 Nabil prepares a trial balance at the end of each financial year. REQUIRED (c) Complete the table by placing a tick ( ) in the correct column to indicate where the balance of each of the accounts would appear in Nabil’s trial balance on 31 March 2019. The first one has been completed as an example. debit column credit column rent and rates capital motor vehicle at cost motor expenses purchases returns discount received Tarek, a credit supplier insurance bank overdraft operating expenses 5-year bank loan drawings carriage outwards [6] [Total: 21] © UCLES 2019 0452/13/M/J/19 [Turn over 8 3 Hamila is a trader. Her financial year ends on 28 February. All goods are bought and sold on credit terms. Hamila provided the following information for February 2019. 2019 February 1 Safiya, a credit customer, owed $320 12 Safiya paid the balance due on 1 February by cheque 16 Safiya purchased goods on credit, list price $250, less 20% trade discount 18 The bank returned Safiya’s cheque because of insufficient funds in the account 24 Safiya paid $400 in cash 27 The balance of Safiya’s account was written off as irrecoverable REQUIRED (a) Prepare the account of Safiya as it would appear in Hamila’s ledger for the month of February 2019. Hamila Safiya account Date 2019 Details $ Date 2019 Details $ ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. [6] © UCLES 2019 0452/13/M/J/19 9 (b) Complete the bad debts account in Hamila’s ledger for the month of February 2019. Close the account by making an appropriate year-end transfer. Hamila Bad debts account Date 2019 Feb 27 Details Total to date $ Date 2019 Details $ 674 ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. [2] Hamila maintains a provision for doubtful debts. The following account appeared in Hamila’s ledger. Hamila Provision for doubtful debts account Date 2019 Feb 28 Details Income statement Balance c/d $ 130 Date 2018 Mar 1 Details Balance b/d 1370 1500 $ 1500 1500 REQUIRED (c) (i) Explain the following entries in the provision for doubtful debts account. Name the account in which the double entry would be made for each item. State whether the account would be debited or credited. 1 March 2018 Balance b/d Explanation ....................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... Name of account ............................................................................................................... Debit or credit ....................................... © UCLES 2019 0452/13/M/J/19 [Turn over 10 28 February 2019 Balance c/d Explanation ....................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... Name of account ............................................................................................................... Debit or credit ....................................... [4] (ii) Explain the following entry in the provision for doubtful debts account. 28 February 2019 Income statement ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] (d) Explain how Hamila is applying the principle of prudence by maintaining a provision for doubtful debts. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (e) Explain how Hamila is applying the principle of accruals (matching) by maintaining a provision for doubtful debts. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (f) Suggest two ways in which Hamila could reduce the possibility of bad debts. 1 ................................................................................................................................................ 2 ................................................................................................................................................ [2] [Total: 20] © UCLES 2019 0452/13/M/J/19 11 PLEASE TURN OVER © UCLES 2019 0452/13/M/J/19 [Turn over 12 4 Sam’s financial year ends on 31 December. On 1 November 2017 he sold old office equipment for $1900. The equipment had been purchased on 1 April 2015 for $4000 and had been depreciated using the reducing (diminishing) balance method at 20% per annum. A full year’s depreciation was charged in the year of purchase, but no depreciation was to be charged in the year of disposal. REQUIRED (a) Calculate the profit or loss on disposal of the office equipment. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [5] On 1 January 2018 Sam purchased new office equipment costing $8000 on credit from C Limited. (b) Prepare a journal entry to record this purchase. A narrative is required. Sam General Journal Date Details Debit $ Credit $ ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... 2018 [3] © UCLES 2019 0452/13/M/J/19 13 The new office equipment was expected to be used for 5 years and have a residual value of $2000. Sam was undecided about which method of depreciation to use for the new office equipment. REQUIRED (c) (i) Calculate the annual depreciation on the new office equipment using the straight-line (equal instalment) method. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] (ii) Calculate the depreciation for the first year on the new office equipment using the reducing (diminishing) balance method at 20% per annum. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [1] Sam decided to use the reducing (diminishing) balance method of depreciation. REQUIRED (d) Prepare a journal entry to record the transfer to the income statement of the depreciation on office equipment for the year ended 31 December 2018. A narrative is required. Sam General Journal Date Details Debit $ Credit $ ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... ............ ....................................................... ...................... ...................... 2018 [3] © UCLES 2019 0452/13/M/J/19 [Turn over 14 Sam’s book-keeper started to maintain a petty cash book on 1 April 2019. On that date $150 was placed in the petty cash box. This was to be the monthly imprest which was to be restored on the first day of each month. At the end of April 2019 Sam discovered that only a few entries had been made in the petty cash book for the month. The following information about the petty cash transactions for April 2019 is available. 2019 April $ 11 Received refund from cleaner for overpayment in March 5 18 Paid Kelly, a credit supplier 35 21 Bought printer paper 23 30 Paid cleaner 56 REQUIRED (e) Complete the entries for the transactions on 3 April and 6 April in the petty cash book on the page opposite. Enter the transactions for 11 April to 30 April in the petty cash book. Balance the petty cash book on 30 April and bring down the balance on 1 May 2019. Show the restoration of the imprest on 1 May 2019. [10] [Total: 24] The petty cash book is printed on the next page © UCLES 2019 0452/13/M/J/19 © UCLES 2019 .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. 6 .................. .................. 3 April 1 2019 Date .................. 150 Total received $ 0452/13/M/J/19 ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... ....................................................... Parcel post Taxi fare Cash Details .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. 3 12 .................. Total paid $ Sam – Petty Cash Book .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. Office expenses $ .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. $ $ .................. Cleaning Travel .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. Ledger accounts $ 15 [Turn over 16 5 Mostafa and Salma are partners in a wholesale business. Their financial year ends on 30 April. When they started the business they drew up a partnership agreement. The terms of the agreement included the following. interest to be allowed on capital at 5% per annum interest to be charged on drawings at 6% Mostafa to be entitled to an annual salary of $12 000 residual profits and losses to be shared in the ratio of 3 : 2. The partners provided the following information. At 1 May 2018 Capital account Current account Mostafa $ 45 000 3 250 credit Salma $ 25 000 1 920 debit On 1 February 2019 the partners agreed that Mostafa’s salary should be increased to $15 000 per annum. For the year ended 30 April 2019 Drawings Mostafa $ 10 000 Salma $ 8 000 The profit for the year ended 30 April 2019 was $14 820. REQUIRED (a) Suggest one reason why interest on capital was included in the partnership agreement. ................................................................................................................................................... ............................................................................................................................................. [1] (b) Suggest one reason why interest on drawings was included in the partnership agreement. ................................................................................................................................................... ............................................................................................................................................. [1] (c) Suggest one reason why a salary for Mostafa was included in the partnership agreement. ................................................................................................................................................... ............................................................................................................................................. [1] © UCLES 2019 0452/13/M/J/19 17 (d) Prepare the profit and loss appropriation account for the year ended 30 April 2019. Mostafa and Salma Profit and Loss Appropriation Account for the year ended 30 April 2019 $ $ ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... [8] © UCLES 2019 0452/13/M/J/19 [Turn over 18 (e) Complete the current account of Mostafa for the year ended 30 April 2019. Balance the account and bring down the balance on 1 May 2019. Mostafa and Salma Mostafa Current account Date Details $ ............. .................................... .............. Date 2018 May 1 ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. ............. .................................... .............. Details Balance b/d $ 3 250 [5] [Total: 16] © UCLES 2019 0452/13/M/J/19 19 6 S Limited was formed on 1 May 2018. On that date the company issued ordinary shares and 5% debentures. At the end of the financial year on 30 April 2019 the following financial statements were prepared: Income statement Statement of changes in equity Statement of financial position REQUIRED (a) Name the financial statement in which each of the following items would appear. Some items may appear in more than one statement. If the item does not appear in any of the financial statements write ‘No entry’. The first one has been completed as an example. financial statement Wages accrued at 30 April 2019 Income statement Statement of financial position Ordinary share capital Creation of general reserve Payment of interim ordinary share dividend on 31 October 2018 Proposed ordinary share dividend at 30 April 2019 Debenture interest accrued on 30 April 2019 [8] © UCLES 2019 0452/13/M/J/19 [Turn over 20 The directors of S Limited wish to raise funds for expansion. They are undecided whether to issue additional ordinary shares or additional 5% debentures. REQUIRED (b) Complete the table by placing a tick ( ) in the correct column to indicate whether each statement is true or false. The first one has been completed as an example. true false debenture holders receive interest debenture holders receive a variable rate of interest debentures are usually included in the non-current liabilities section of the statement of financial position debentures have a prior claim in the event of the company being wound up debenture holders are entitled to vote at the annual general meeting debentures are often secured on the non-current assets of the company [5] (c) Suggest two ways in which the ordinary shareholders may be affected if the directors decide to raise funds from an issue of debentures. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... [2] The directors of S Limited are concerned about the working capital of the company at the end of the first year of trading. The following information is available at 30 April 2019. Inventory Trade payables Trade receivables Bank overdraft © UCLES 2019 0452/13/M/J/19 $ 27 400 28 700 25 200 10 800 21 REQUIRED (d) Calculate the current ratio. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (e) Calculate the quick ratio. The calculation should be correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (f) Explain why the quick ratio is more reliable than the current ratio as an indicator of liquidity. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (g) Complete the table by placing a tick ( ) in the correct column to show how each of the following would affect the working capital of S Limited. increase decrease no effect issue additional debentures pay operating expenses by cheque sell goods for cash instead of on credit delay paying credit suppliers sell unused non-current assets reduce credit period for credit customers [6] © UCLES 2019 0452/13/M/J/19 [Turn over 22 (h) Suggest two problems the directors of S Limited may encounter if the working capital is inadequate. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... [2] [Total: 29] © UCLES 2019 0452/13/M/J/19 Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education * 9 3 8 0 7 3 6 1 9 7 * 0452/11 ACCOUNTING Paper 1 October/November 2019 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 23 printed pages and 1 blank page. DC (CJ) 188378 © UCLES 2019 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Insurance paid by a business included $400 relating to the owner’s private house. This amount was not included in the income statement. Which accounting principle was applied? A accruals (matching) B business entity C duality D prudence [1] (b) The following account appeared in Jacob’s ledger. Cindy account Date 2019 Aug 16 29 31 Details Returns Bank Discount Balance c/d $ 110 441 9 280 840 Date 2019 Aug 1 14 Details Balance b/d Purchases $ 450 390 840 Which statement is correct? A Cindy paid Jacob $441 by cheque on 29 August. B Cindy purchased goods, $390, on credit from Jacob on 14 August. C Jacob allowed Cindy $9 cash discount on 29 August. D Jacob owed Cindy $450 on 1 August. [1] (c) What is not a requirement of the accounting objective of reliability? A information must be available in time for decisions to be made B information must be free from bias C information must be free from errors D information must be prepared with suitable caution applied to any judgement © UCLES 2019 0452/11/O/N/19 [1] 3 (d) On 2 September Tumelo purchased goods on credit, list price $4200, less trade discount of 20% and a cash discount of 2% if the invoice was paid within 30 days. On 5 September Tumelo returned one-third of the goods to the supplier. Which amount did Tumelo enter in his purchases returns journal? A $1092 B $1120 C $1372 D $1400 [1] (e) Which statements about debentures are correct? (f) 1 Debentures carry a fixed rate of interest. 2 Debentures do not carry voting rights. 3 Debenture holders are members of the company. 4 Debenture interest depends on the profit of the company. A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4 [1] The totals of a trial balance did not agree. Which error caused this? A A cheque paid to Hong for $500 had been credited to the account of Heng. B An invoice for goods purchased, $50, was entered in the purchases journal as $500. C Goods sold on credit to Gemma, $500, were debited to the account of Gina. D Rent paid by cheque, $500, was debited to the rent receivable account. © UCLES 2019 0452/11/O/N/19 [1] [Turn over 4 (g) Sally provided the following information at the end of her financial year. $ Revenue 44 000 Opening inventory 3 000 Closing inventory 1 000 Purchases 32 000 Expenses 6 000 What was Sally’s percentage of gross profit to revenue (gross profit margin)? A 9.09% B 11.76% C 22.73% D 29.41% [1] (h) A food retailer purchased a computer and debited the cost to the purchases account. What was the effect on the profit for the year and the non-current assets? non-current assets overstated understated overstated understated A B C D (i) [1] Hassan’s trial balance did not balance and a suspense account was opened. It was found that the total of the discount received column in the cash book, $173, had been debited to the discount allowed account in the ledger. Which journal entry corrects this error? details A B C D © UCLES 2019 debit $ discount allowed discount received suspense discount received suspense suspense discount allowed suspense discount allowed discount received credit $ 173 173 346 173 173 173 173 346 173 173 0452/11/O/N/19 [1] 5 (j) Beketele’s financial year ends on 31 December. On 1 January 2015 she purchased a machine costing $18 000. The machine was depreciated by 15% per annum using the straight line (equal instalment) method. The machine was sold on 1 January 2019. What was the book value of the machine on the date of sale? A $4500 B $7200 C $10 800 D $13 500 [1] [Total: 10] © UCLES 2019 0452/11/O/N/19 [Turn over 6 2 Aisha is a retailer. She buys goods on credit from Kadir, a wholesaler. They exchanged several documents during September 2019. The following incomplete document was issued on 18 September 2019. Credit Note Kadir 123 West View Some City Aisha 14 Straight Row Anywhere Quantity 70 18 September 2019 Description Unit price $ Suits assorted sizes Amount $ 4130 (i) .......... Less 20% Trade discount (ii) .......... (iii) .......... Reason for issue: Correcting overcharge on goods supplied on 4 September 2019 REQUIRED (a) Insert the missing figures in (i) – (iii) in the above document. [3] (b) Name the person who issued the above document. ....................................................... [1] (c) Suggest one reason why a credit note may be issued other than correcting an overcharge. ................................................................................................................................................... ............................................................................................................................................. [1] (d) State why it was necessary to deduct trade discount on the credit note. ................................................................................................................................................... ............................................................................................................................................. [1] (e) Name the book of prime (original) entry in which each trader would record the credit note. book of prime (original) entry used by Aisha book of prime (original) entry used by Kadir ................................................. ................................................. [2] © UCLES 2019 0452/11/O/N/19 7 On 1 September 2019 Aisha owed Kadir $3400. During September 2019 Aisha and Kadir exchanged the following documents (in addition to the credit note). September 4 Invoice for goods, $8960 13 Debit note, $3540, claiming overcharge for goods supplied on 4 September 27 Cheque to settle balance outstanding on 1 September less 2% cash discount 30 Statement of account showing a closing balance of $5656 REQUIRED (f) Name the book of prime (original) entry in which Aisha would record these documents. If the document is not recorded in a book of prime (original) entry, write ‘no entry’. document book of prime (original) entry used by Aisha invoice ……………………………………………….. debit note ………………………………………………. cheque ………………………………………………… statement of account ………………………………………………. [4] © UCLES 2019 0452/11/O/N/19 [Turn over 8 (g) Prepare the account of Kadir as it would appear in the ledger of Aisha for the month of September 2019. Balance the account and bring down the balance on 1 October 2019. Aisha Kadir account Date Details $ Date Details $ 2019 2019 ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. [7] (h) State the name of the ledger in which Aisha would maintain Kadir’s account. ............................................................................................................................................. [1] [Total: 20] © UCLES 2019 0452/11/O/N/19 9 3 Timothy is a trader who buys and sells on both cash and credit terms. He maintains a full set of accounting records and prepares monthly control accounts. REQUIRED (a) State two advantages to Timothy of preparing monthly control accounts. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (b) Name the book of prime (original) entry which Timothy would use to obtain the following information when preparing his purchases ledger control account. book of prime (original) entry purchases returns contra entry discount received interest charged on overdue account [4] (c) State the meaning of a contra entry in connection with control accounts. State why Timothy made a contra entry. Meaning .................................................................................................................................... ................................................................................................................................................... Reason ..................................................................................................................................... ............................................................................................................................................. [2] (d) State two reasons why it is possible for Timothy to have a debit balance on his purchases ledger control account. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] © UCLES 2019 0452/11/O/N/19 [Turn over 10 Timothy provided the following information for October 2019. $ On 1 October Debit balance on sales ledger control account Credit balance on sales ledger control account 6530 110 Totals for the month of October Credit sales Cash sales Receipts from credit customers Discount allowed to credit customers Discount received from credit suppliers Returns by credit customers Bad debts written off Increase in provision for doubtful debts Contra entry Interest charged on a credit customer’s overdue account 7860 3850 5782 118 246 285 260 170 300 15 On 1 November Debit balance on sales ledger control account Credit balance on sales ledger control account © UCLES 2019 0452/11/O/N/19 ? 80 11 REQUIRED (e) Select the relevant figures and prepare the sales ledger control account for the month of October 2019. Balance the account and bring down the balances on 1 November 2019. Timothy Sales ledger control account Date Details 2019 Oct 1 Balance b/d $ 6530 Date 2019 Oct 1 Balance b/d Details $ 110 ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ……...... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ……...... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ............ .............................. ……...... [9] [Total: 19] © UCLES 2019 0452/11/O/N/19 [Turn over 12 Question 4 is on the next page. © UCLES 2019 0452/11/O/N/19 13 4 Abiola started a business on 1 September 2017. On that date she opened a business bank account with a capital of $40 000 and a loan of $10 000. On the same day she purchased inventory, $6600, and fixtures and fittings, $11 750, paying by bank transfer. REQUIRED (a) Prepare a journal entry, to include all the above information, to open the books of the business on 1 September 2017. A narrative is required. Abiola General Journal Date 2017 Details Debit $ Credit $ Sept 1 ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... [5] (b) State why it is useful to show a narrative as part of a journal entry. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] © UCLES 2019 0452/11/O/N/19 [Turn over 14 The following transactions took place on 1 March 2018. 1 Abiola transferred her private motor vehicle to the business at a valuation of $12 000. 2 Abiola took goods, $450, from the business for personal use. REQUIRED (c) Prepare journal entries to record the transactions of 1 March 2018. Narratives are not required. Abiola General Journal 1 2 Date 2018 Details Debit $ Credit $ Mar 1 ………………………………………….. .................... .................... .............. ………………………………………….. .................... .................... .............. ………………………………………….. .................... .................... Mar 1 ………………………………………….. .................... .................... .............. ………………………………………….. .................... .................... .............. …………………………………………. .................... .................... [4] Abiola rents premises at an annual rent of $6000, payable on the first of each month. She provided the following information. $ 2018 September 1 Rent payable accrued 500 The following amounts of rent were paid by bank transfer. © UCLES 2019 2018 September 2 3000 2019 February August 3000 1500 3 6 0452/11/O/N/19 15 REQUIRED (d) Prepare the rent payable account in the ledger of Abiola for the year ended 31 August 2019. Balance the account and bring down the balance on 1 September 2019. Abiola Rent payable account Date Details $ Date Details $ ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. [5] (e) Explain how the accounting principle of accruals (matching) was applied in the preparation of the rent payable account. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] © UCLES 2019 0452/11/O/N/19 [Turn over 16 Abiola receives commission from another trader when Abiola’s customers purchase goods from his shop. Abiola provided the following information. $ 2018 September 1 Commission receivable outstanding 350 The following amounts of commission were received by bank transfer. 2018 September 30 350 2019 January April July 425 395 470 31 30 31 On 31 August 2019 commission receivable outstanding amounted to $310. REQUIRED (f) Prepare the commission receivable account in the ledger of Abiola for the year ended 31 August 2019. Balance the account and bring down the balance on 1 September 2019. Abiola Commission receivable account Date Details $ Date Details $ ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. [5] [Total: 23] © UCLES 2019 0452/11/O/N/19 17 5 The KW Sports Club has 50 members. The annual subscription is $85. The financial year ends on 30 September. The treasurer prepares a full set of financial statements at the end of each financial year. On 1 October 2018 subscriptions had been prepaid by 14 members. On 30 September 2019 subscriptions had been prepaid by 10 members and 22 members had not paid their subscription for the year. REQUIRED (a) State the meaning of the word ‘subscriptions’ in connection with clubs and societies. ................................................................................................................................................... ............................................................................................................................................. [1] (b) Calculate the subscriptions received during the year ended 30 September 2019. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [5] (c) Discuss the possible effects on the bank account and the income and expenditure account of KW Sports Club if the annual subscription was increased to $105. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [4] © UCLES 2019 0452/11/O/N/19 [Turn over 18 (d) State four ways in which an income and expenditure account differs from a receipts and payments account. 1 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 3 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 4 ................................................................................................................................................ ................................................................................................................................................... ............................................................................................................................................. [4] The income and expenditure account for the year ended 30 September 2019 showed a deficit. After the preparation of the account it was found that several errors had been made. REQUIRED (e) Complete the table by placing a tick ( ) in the correct column to indicate the effect of each error on the deficit for the year. If the error does not affect the deficit place a tick ( ) in the column headed ‘no effect’. error overstated understated no effect the total of the income from a sports competition was understated no entry had been made for bank charges proceeds of sale of club equipment were included in the income no adjustment was made of club shop wages accrued at the year-end shop rent was charged to the income and expenditure account instead of the shop income statement [5] [Total: 19] © UCLES 2019 0452/11/O/N/19 19 PLEASE TURN OVER © UCLES 2019 0452/11/O/N/19 [Turn over 20 6 Amrit runs a secretarial agency. His financial year ends on 31 July. He prepared the following trial balance on 31 July 2019. $ Fees from clients Premises (at cost) Office equipment (at cost) Provision for depreciation of office equipment Capital Drawings 5% Loan (repayable 1 February 2020) Trade receivables Provision for doubtful debts Bad debts Insurance Wages Operating expenses Rent receivable Bank $ 58 800 90 000 16 000 3 200 85 000 11 500 15 000 4 650 100 80 2 100 38 000 6 500 168 830 3 000 3 730 168 830 The following information is available. 1 The insurance covers a period of 14 months to 30 September 2019. 2 At 31 July 2019 wages, $1500, were accrued and one year’s loan interest was outstanding. 3 A debt of $150 should be written off as irrecoverable. 4 The provision for doubtful debts should be maintained at 3% of the remaining trade receivables. 5 The office equipment is to be depreciated at 20% per annum using the reducing (diminishing) balance method. © UCLES 2019 0452/11/O/N/19 21 REQUIRED (a) Prepare the income statement for the year ended 31 July 2019. Amrit Income Statement for the year ended 31 July 2019 $ $ ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... [14] © UCLES 2019 0452/11/O/N/19 [Turn over 22 Amrit is considering several proposals to try to increase his working capital. REQUIRED (b) Complete the table by placing a tick ( ) in the correct column to indicate how each proposal would affect Amrit’s working capital. increase decrease no effect extend the loan for a further 2 years ask the bank to extend the overdraft facility [3] (c) Suggest two possible reasons why Amrit’s return on capital employed (ROCE) was higher on 31 July 2019 than it was on 31 July 2018. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] On 1 August 2019 Amrit decided to admit his sister, Neena, to the business as a partner. The partnership agreement provided for the following: interest on capital of 4% per annum interest on drawings of 3% Amrit to be entitled to a partnership salary of $6000 per annum profits and losses to be shared Amrit 60% and Neena 40%. Amrit made an adjustment to his capital so that it equalled $80 000. Neena invested $60 000. It was estimated that the profit for the first year of trading would be $15 500. It was estimated that the partners’ drawings during the first year of trading would be Amrit $7000 and Neena $5000. © UCLES 2019 0452/11/O/N/19 23 REQUIRED (d) State two advantages to Amrit of being a partner rather than a sole trader. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (e) State two disadvantages to Amrit of being a partner rather than a sole trader. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (f) Complete the estimated profit and loss appropriation account for the year ending 31 July 2020. Amrit and Neena Estimated Profit and Loss Appropriation Account for the year ending 31 July 2020 $ Interest on drawings Amrit $ 15 500 ....................... ....................... Neena ....................... ....................... ....................... ....................... Interest on capital Amrit ....................... ....................... Neena ....................... ....................... ....................... ....................... Partnership salary Amrit ....................... ....................... ....................... ....................... ....................... ....................... Neena ....................... ....................... [6] [Total: 29] © UCLES 2019 0452/11/O/N/19 Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education * 2 5 6 9 4 5 5 5 3 1 * 0452/12 ACCOUNTING Paper 1 October/November 2019 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 21 printed pages and 3 blank pages. DC (SC) 169006/2 © UCLES 2019 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Which group contains only assets? A accrued wages, inventory, trade payables B cash, machinery, rent receivable accrued C bank loan, drawings, office fixtures and fittings D bank overdraft, prepaid insurance, trade receivables [1] (b) On 1 January 2018 Jennie, a food retailer, had stationery valued at $45. During the year she purchased stationery, $200. On 31 December 2018 she transferred $194 from the stationery account to the income statement. What was the balance of the stationery account on 1 January 2019? A $39 credit B $39 debit C $51 credit D $51 debit [1] (c) Which items may appear on the debit side of a purchases ledger control account? 1 2 3 4 contra entry discount received interest on overdue account purchases A 1 and 2 only B 1, 2 and 3 C 3 and 4 D 4 only [1] © UCLES 2019 0452/12/O/N/19 3 (d) A trader always depreciates his motor vehicles using the reducing (diminishing) balance method. Which accounting principle is he applying? A consistency B duality C going concern D realisation [1] (e) Which ratio can only be calculated using information from both the income statement and the statement of financial position? A margin B mark-up C rate of inventory turnover D return on capital employed [1] (f) Asim and Bakari are in partnership. Their partnership agreement provides for an annual salary of $15 000 for Bakari and the balance of the profit to be shared equally. The profit for the year was $93 000. What was Bakari’s total income from the business? A $39 000 B $46 500 C $54 000 D $61 500 [1] (g) Which error does not affect the balancing of a trial balance? A Cash received from Smith was debited to Smythe’s account. B Motor vehicle expenses were debited to the motor vehicles account. C One page of the sales journal was overcast. D Purchases returns were omitted from the purchases ledger. [1] © UCLES 2019 0452/12/O/N/19 [Turn over 4 (h) A manufacturer provided the following information at the end of his financial year. direct materials direct labour factory overheads increase in work in progress $ 314 000 181 000 117 000 32 000 What was the cost of production? A $346 000 B $410 000 C $580 000 D $644 000 [1] (i) Jamal did not maintain double entry records during his first year of trading. Which item is not required in order to calculate his credit sales using a total trade receivables account? A bad debts B discount allowed C provision for doubtful debts D receipts from credit customers [1] (j) During her first year of trading Daraja purchased 1000 units of inventory at $16 each. She sold 910 units at $19 each. Of the inventory remaining at the end of her financial year 30 units were damaged and valued at $7 each. What was the value of Daraja’s inventory at the end of the financial year? A $1170 B $1350 C $1440 D $1710 [1] [Total: 10] © UCLES 2019 0452/12/O/N/19 5 PLEASE TURN OVER © UCLES 2019 0452/12/O/N/19 [Turn over 6 2 Saleh started to maintain a petty cash book on 1 August 2019. He decided to use the imprest system, with the monthly imprest of $150 which would be restored on the first day of each month. Saleh’s transactions for the month of August 2019 included the following. August 4 9 14 20 26 30 Purchased stationery Paid Omar, a credit supplier Bought flowers for office Paid taxi fare Bought tea and coffee for office Paid cleaner $ 21 57 10 9 7 30 REQUIRED (a) Enter the transactions in Saleh’s petty cash book on the page opposite. Balance the petty cash book and bring down the balance on 1 September 2019. © UCLES 2019 0452/12/O/N/19 [10] © UCLES 2019 .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... 1 .................... Aug 2019 Date .................... 150 Total received $ 0452/12/O/N/19 .................................................... .................................................... .................................................... .................................................... .................................................... .................................................... .................................................... .................................................... .................................................... .................................................... .................................................... .................................................... Bank Details .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... Total paid $ Office expenses $ .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... Saleh – Petty Cash Book .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... $ Travel .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... $ Cleaning .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... Ledger accounts $ 7 [Turn over 8 (b) (i) State the amount which was received on 1 September 2019 when the petty cash was restored to the imprest amount. ..................................................................................................................................... [1] (ii) State the double entry for restoring the imprest amount. debit credit [2] (c) Show the entries which were made in the following accounts on 31 August 2019. It is not necessary to total or balance the accounts. Saleh Office expenses account Date Details $ Date Details $ ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. Omar account Date Details $ Date Details $ ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. [2] © UCLES 2019 0452/12/O/N/19 9 Saleh balanced his cash book on 31 August 2019 and compared the balance on the bank column with his bank statement. The following differences were found. $ Items not recorded in the cash book Bank charges Credit transfer from Laila Insurance premium paid by standing order 22 190 30 Items not recorded on the bank statement Cheque paid to Kalifa Cheque paid to Fatima Cash sales 114 175 363 REQUIRED (d) Update the bank columns of the cash book. Bring down the new balance on 1 September 2019. Saleh Cash Book (bank columns only) Date 2019 Details $ Date 2019 ............. ............................ ............. Sept 1 Balance b/d 944 ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. Details $ [4] © UCLES 2019 0452/12/O/N/19 [Turn over 10 (e) Prepare a bank reconciliation statement at 31 August 2019 to show the balance on the bank statement on that date. Saleh Bank Reconciliation Statement at 31 August 2019 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [6] [Total: 25] © UCLES 2019 0452/12/O/N/19 11 3 Tumelo is a trader. He buys goods on credit from Azuel. The traders exchanged various documents in July 2019. REQUIRED (a) Complete the table by naming the person who issued each document. Name the book of prime (original) entry in which each document would be recorded by each trader. If a document is not entered in a book of prime (original) entry, write ‘No entry’. document name of person issuing document book of prime (original) entry used by Tumelo book of prime (original) entry used by Azuel invoice debit note credit note [9] The following incomplete document was prepared on 31 July 2019. Azuel West Street Somecity Tumelo North Avenue Anytown Date 31 July 2019 Reference 2019 July 1 14 18 27 Debit $ Balance due Goods Returns Payment Discount Credit $ Balance $ 190 294 6 300 ? ? ? ? 470 REQUIRED (b) (i) State the name of the document. ..................................................................................................................................... [1] (ii) Name the person who issued the document. ..................................................................................................................................... [1] © UCLES 2019 0452/12/O/N/19 [Turn over 12 (iii) State one reason for the issue of the document. ........................................................................................................................................... ..................................................................................................................................... [1] (iv) Name the person who owed the opening balance of $300. ..................................................................................................................................... [1] (v) Calculate the percentage of the discount on 27 July 2019. ........................................................................................................................................... ..................................................................................................................................... [1] (vi) Calculate the balance due on 31 July 2019. ........................................................................................................................................... ..................................................................................................................................... [1] (vii) State why this document was not used as a source document by either Tumelo or Azuel. ........................................................................................................................................... ..................................................................................................................................... [1] Azuel divides his ledger into three – the sales ledger, the purchases ledger and the nominal (general) ledger. (c) State two advantages of dividing the ledger into these three sections. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (d) Complete the table by naming the ledger in which Azuel would maintain each of the following accounts. account ledger Tumelo, a credit customer sales returns Lerato, a credit supplier purchases carriage inwards [5] [Total: 23] © UCLES 2019 0452/12/O/N/19 13 4 Gary is a manufacturer of kitchen equipment. His financial year ends on 30 September. On 1 August 2019 Ed, a credit customer, was declared bankrupt and the balance of his account of $326 was written off as irrecoverable. No other debts were written off during the year. REQUIRED (a) Prepare a journal entry to write off the amount owed by Ed. A narrative is required. Gary General Journal Date Details Debit $ Credit $ .............. ....................................................... ...................... ...................... .............. ....................................................... ...................... ...................... .............. ....................................................... ...................... ...................... .............. ....................................................... ...................... ...................... 2019 [3] On 1 June 2018 the account of Sally, a credit customer who owed $440, was written off as irrecoverable. On 4 September 2019 Sally settled her account with $180 in cash and a computer valued at $260. REQUIRED (b) State how Gary would record the transaction on 4 September 2019. account debited account credited $ $ ..................................... ........ ..................................... ........ ..................................... ........ ..................................... ........ [3] © UCLES 2019 0452/12/O/N/19 [Turn over 14 Gary maintains a provision for doubtful debts of 2½% of the trade receivables at the end of each financial year. He provided the following information. Trade receivables at 30 September 2018 owed $36 400 Trade receivables at 30 September 2019 owed $38 000 (c) Prepare the provision for doubtful debts account for the year ended 30 September 2019. Balance the account and bring down the balance on 1 October 2019. Gary Provision for doubtful debts account Date Details $ Date Details $ ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. ............. ............................ ............. [5] Gary wishes to increase his profit for the year. He has decided to stop maintaining a provision for doubtful debts. REQUIRED (d) Explain why Gary should continue to maintain a provision for doubtful debts. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [4] © UCLES 2019 0452/12/O/N/19 15 (e) Complete the table to indicate the effect of omitting to record the bad debt, the bad debt recovered and the adjustment to the provision for doubtful debts. The first one has been completed as an example. item omitted effect on profit for the year ended 30 September 2019 effect on current assets at 30 September 2019 $ bad debts overstated 326 $ overstated 326 bad debt recovered adjustment to provision for doubtful debts [4] [Total: 19] © UCLES 2019 0452/12/O/N/19 [Turn over 16 5 Oliver and Amy are in partnership. They are considering converting the business to a limited liability company. REQUIRED (a) Explain the term ‘limited liability company’. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (b) State two benefits (excluding limited liability) to Oliver and Amy of forming a limited liability company. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (c) State the meaning of the following terms. (i) called-up share capital ........................................................................................................................................... ..................................................................................................................................... [1] (ii) paid-up share capital ........................................................................................................................................... ..................................................................................................................................... [1] If Oliver and Amy decide to form a limited liability company they plan to raise funds from an issue of ordinary shares and an issue of debentures. (d) State two features of ordinary shares. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] © UCLES 2019 0452/12/O/N/19 17 (e) State two features of debentures. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] Oliver and Amy understand that a statement of changes in equity has to be prepared in addition to an annual income statement. (f) Complete the table by placing a tick ( ) in the correct column to indicate whether each item appears in a limited company’s income statement or statement of changes in equity. If the item does not appear in these financial statements place a tick ( ) in the ‘no entry’ column. income statement statement of changes in equity no entry issue of 5% debentures during the year debenture interest relating to the current year paid during the year final ordinary share dividend relating to the previous financial year paid during the current year interim ordinary share dividend paid for the current year proposed ordinary share dividend for the current year [5] [Total: 15] © UCLES 2019 0452/12/O/N/19 [Turn over 18 6 Pavita is a food wholesaler. Her financial year ends on 30 September. She provided the following information on 30 September 2019 after the calculation of her gross profit. Gross profit Non-current assets at cost Premises Fixtures and fittings Motor vehicle Provisions for depreciation of non-current assets Fixtures and fittings Motor vehicle Wages Rates and insurance Trade receivables Trade payables Drawings Capital at 1 October 2018 Operating expenses Motor expenses Discount received Inventory at 30 September 2019 Bank $ 40 780 96 000 12 000 14 400 4 800 6 300 27 120 1 700 8 940 10 280 2 980 112 000 3 195 1 155 970 8 870 1 230 credit Additional information 1 At 30 September 2019 wages accrued amounted to $980. 2 The rates and insurance includes $900 for insurance for 15 months to 31 December 2019. 3 Pavita’s cash drawings, $1000, have been debited to the wages account in error. 4 $190 owing by a credit customer should be written off as irrecoverable. 5 The fixtures and fittings are to be depreciated using the straight line (equal instalment) method at 20% per annum. 6 The motor vehicle is to be depreciated using the reducing (diminishing) balance method at 25% per annum. © UCLES 2019 0452/12/O/N/19 19 (a) Prepare the income statement for the year ended 30 September 2019. Pavita Income Statement for the year ended 30 September 2019 $ $ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ ............................................................................... ........................ ........................ [12] © UCLES 2019 0452/12/O/N/19 [Turn over 20 (b) Calculate Pavita’s working capital at 30 September 2019. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [3] (c) Suggest two ways in which Pavita could increase her working capital. 1 ................................................................................................................................................ 2 .......................................................................................................................................... [2] (d) Calculate the current ratio correct to two decimal places. ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] Pavita provided the following additional information for the year ended 30 September 2019. $ 120 000 88 100 Credit sales Credit purchases She allows her credit customers 21 days credit and is allowed 30 days credit by her credit suppliers. REQUIRED (e) State the formula for the calculation of the trade receivables collection period. ................................................................................................................................................... ............................................................................................................................................. [1] © UCLES 2019 0452/12/O/N/19 21 (f) Calculate the trade receivables collection period for the year ended 30 September 2019. Round up your answer to the next whole day. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (g) Suggest one way in which Pavita could improve the trade receivables collection period. ................................................................................................................................................... ............................................................................................................................................. [1] (h) State the formula for the calculation of the trade payables payment period. ................................................................................................................................................... ............................................................................................................................................. [1] (i) Calculate the trade payables payment period for the year ended 30 September 2019. Round up your answer to the next whole day. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] (j) State whether the trade payables would be satisfied with the payment period. Give a reason for your answer. Satisfied? ...................................... Reason ..................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] [Total: 28] © UCLES 2019 0452/12/O/N/19 Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education * 7 3 7 9 5 0 3 4 4 5 * 0452/13 ACCOUNTING Paper 1 October/November 2019 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 23 printed pages and 1 blank page. DC (LK) 169008/3 © UCLES 2019 [Turn over 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Insurance paid by a business included $400 relating to the owner’s private house. This amount was not included in the income statement. Which accounting principle was applied? A accruals (matching) B business entity C duality D prudence [1] (b) The following account appeared in Jacob’s ledger. Cindy account Date 2019 Aug 16 29 31 Details Returns Bank Discount Balance c/d $ 110 441 9 280 840 Date 2019 Aug 1 14 Details Balance b/d Purchases $ 450 390 840 Which statement is correct? A Cindy paid Jacob $441 by cheque on 29 August. B Cindy purchased goods, $390, on credit from Jacob on 14 August. C Jacob allowed Cindy $9 cash discount on 29 August. D Jacob owed Cindy $450 on 1 August. [1] (c) What is not a requirement of the accounting objective of reliability? A information must be available in time for decisions to be made B information must be free from bias C information must be free from errors D information must be prepared with suitable caution applied to any judgement © UCLES 2019 0452/13/O/N/19 [1] 3 (d) On 2 September Tumelo purchased goods on credit, list price $4200, less trade discount of 20% and a cash discount of 2% if the invoice was paid within 30 days. On 5 September Tumelo returned one-third of the goods to the supplier. Which amount did Tumelo enter in his purchases returns journal? A $1092 B $1120 C $1372 D $1400 [1] (e) Which statements about debentures are correct? (f) 1 Debentures carry a fixed rate of interest. 2 Debentures do not carry voting rights. 3 Debenture holders are members of the company. 4 Debenture interest depends on the profit of the company. A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4 [1] The totals of a trial balance did not agree. Which error caused this? A A cheque paid to Hong for $500 had been credited to the account of Heng. B An invoice for goods purchased, $50, was entered in the purchases journal as $500. C Goods sold on credit to Gemma, $500, were debited to the account of Gina. D Rent paid by cheque, $500, was debited to the rent receivable account. © UCLES 2019 0452/13/O/N/19 [1] [Turn over 4 (g) Sally provided the following information at the end of her financial year. $ Revenue 44 000 Opening inventory 3 000 Closing inventory 1 000 Purchases 32 000 Expenses 6 000 What was Sally’s percentage of gross profit to revenue (gross profit margin)? A 9.09% B 11.76% C 22.73% D 29.41% [1] (h) A food retailer purchased a computer and debited the cost to the purchases account. What was the effect on the profit for the year and the non-current assets? non-current assets overstated understated overstated understated A B C D (i) [1] Hassan’s trial balance did not balance and a suspense account was opened. It was found that the total of the discount received column in the cash book, $173, had been debited to the discount allowed account in the ledger. Which journal entry corrects this error? details A B C D © UCLES 2019 debit $ discount allowed discount received suspense discount received suspense suspense discount allowed suspense discount allowed discount received credit $ 173 173 346 173 173 173 173 346 173 173 0452/13/O/N/19 [1] 5 (j) Beketele’s financial year ends on 31 December. On 1 January 2015 she purchased a machine costing $18 000. The machine was depreciated by 15% per annum using the straight line (equal instalment) method. The machine was sold on 1 January 2019. What was the book value of the machine on the date of sale? A $4500 B $7200 C $10 800 D $13 500 [1] [Total: 10] © UCLES 2019 0452/13/O/N/19 [Turn over 6 2 Aisha is a retailer. She buys goods on credit from Kadir, a wholesaler. They exchanged several documents during September 2019. The following incomplete document was issued on 18 September 2019. Credit Note Kadir 123 West View Some City Aisha 14 Straight Row Anywhere Quantity 70 18 September 2019 Description Unit price $ Suits assorted sizes Amount $ 4130 (i) .......... Less 20% Trade discount (ii) .......... (iii) .......... Reason for issue: Correcting overcharge on goods supplied on 4 September 2019 REQUIRED (a) Insert the missing figures in (i) – (iii) in the above document. [3] (b) Name the person who issued the above document. ....................................................... [1] (c) Suggest one reason why a credit note may be issued other than correcting an overcharge. ................................................................................................................................................... ............................................................................................................................................. [1] (d) State why it was necessary to deduct trade discount on the credit note. ................................................................................................................................................... ............................................................................................................................................. [1] (e) Name the book of prime (original) entry in which each trader would record the credit note. book of prime (original) entry used by Aisha book of prime (original) entry used by Kadir ................................................. ................................................. [2] © UCLES 2019 0452/13/O/N/19 7 On 1 September 2019 Aisha owed Kadir $3400. During September 2019 Aisha and Kadir exchanged the following documents (in addition to the credit note). September 4 Invoice for goods, $8960 13 Debit note, $3540, claiming overcharge for goods supplied on 4 September 27 Cheque to settle balance outstanding on 1 September less 2% cash discount 30 Statement of account showing a closing balance of $5656 REQUIRED (f) Name the book of prime (original) entry in which Aisha would record these documents. If the document is not recorded in a book of prime (original) entry, write ‘no entry’. document book of prime (original) entry used by Aisha invoice ……………………………………………….. debit note ………………………………………………. cheque ………………………………………………… statement of account ………………………………………………. [4] © UCLES 2019 0452/13/O/N/19 [Turn over 8 (g) Prepare the account of Kadir as it would appear in the ledger of Aisha for the month of September 2019. Balance the account and bring down the balance on 1 October 2019. Aisha Kadir account Date Details $ Date Details $ 2019 2019 ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. [7] (h) State the name of the ledger in which Aisha would maintain Kadir’s account. ............................................................................................................................................. [1] [Total: 20] © UCLES 2019 0452/13/O/N/19 9 3 Timothy is a trader who buys and sells on both cash and credit terms. He maintains a full set of accounting records and prepares monthly control accounts. REQUIRED (a) State two advantages to Timothy of preparing monthly control accounts. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (b) Name the book of prime (original) entry which Timothy would use to obtain the following information when preparing his purchases ledger control account. book of prime (original) entry purchases returns contra entry discount received interest charged on overdue account [4] (c) State the meaning of a contra entry in connection with control accounts. State why Timothy made a contra entry. Meaning .................................................................................................................................... ................................................................................................................................................... Reason ..................................................................................................................................... ............................................................................................................................................. [2] (d) State two reasons why it is possible for Timothy to have a debit balance on his purchases ledger control account. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] © UCLES 2019 0452/13/O/N/19 [Turn over 10 Timothy provided the following information for October 2019. $ On 1 October Debit balance on sales ledger control account Credit balance on sales ledger control account 6530 110 Totals for the month of October Credit sales Cash sales Receipts from credit customers Discount allowed to credit customers Discount received from credit suppliers Returns by credit customers Bad debts written off Increase in provision for doubtful debts Contra entry Interest charged on a credit customer’s overdue account 7860 3850 5782 118 246 285 260 170 300 15 On 1 November Debit balance on sales ledger control account Credit balance on sales ledger control account © UCLES 2019 0452/13/O/N/19 ? 80 11 REQUIRED (e) Select the relevant figures and prepare the sales ledger control account for the month of October 2019. Balance the account and bring down the balances on 1 November 2019. Timothy Sales ledger control account Date Details 2019 Oct 1 Balance b/d $ 6530 Date 2019 Oct 1 Balance b/d Details $ 110 ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ……...... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ……...... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ........... .............................. ….......... ........... .............................. ........... ............ .............................. ……...... [9] [Total: 19] © UCLES 2019 0452/13/O/N/19 [Turn over 12 Question 4 is on the next page. © UCLES 2019 0452/13/O/N/19 13 4 Abiola started a business on 1 September 2017. On that date she opened a business bank account with a capital of $40 000 and a loan of $10 000. On the same day she purchased inventory, $6600, and fixtures and fittings, $11 750, paying by bank transfer. REQUIRED (a) Prepare a journal entry, to include all the above information, to open the books of the business on 1 September 2017. A narrative is required. Abiola General Journal Date 2017 Details Debit $ Credit $ Sept 1 ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... .............. ............................................................ ..................... ..................... [5] (b) State why it is useful to show a narrative as part of a journal entry. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] © UCLES 2019 0452/13/O/N/19 [Turn over 14 The following transactions took place on 1 March 2018. 1 Abiola transferred her private motor vehicle to the business at a valuation of $12 000. 2 Abiola took goods, $450, from the business for personal use. REQUIRED (c) Prepare journal entries to record the transactions of 1 March 2018. Narratives are not required. Abiola General Journal 1 2 Date 2018 Details Debit $ Credit $ Mar 1 ………………………………………….. .................... .................... .............. ………………………………………….. .................... .................... .............. ………………………………………….. .................... .................... Mar 1 ………………………………………….. .................... .................... .............. ………………………………………….. .................... .................... .............. …………………………………………. .................... .................... [4] Abiola rents premises at an annual rent of $6000, payable on the first of each month. She provided the following information. $ 2018 September 1 Rent payable accrued 500 The following amounts of rent were paid by bank transfer. © UCLES 2019 2018 September 2 3000 2019 February August 3000 1500 3 6 0452/13/O/N/19 15 REQUIRED (d) Prepare the rent payable account in the ledger of Abiola for the year ended 31 August 2019. Balance the account and bring down the balance on 1 September 2019. Abiola Rent payable account Date Details $ Date Details $ ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. [5] (e) Explain how the accounting principle of accruals (matching) was applied in the preparation of the rent payable account. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [2] © UCLES 2019 0452/13/O/N/19 [Turn over 16 Abiola receives commission from another trader when Abiola’s customers purchase goods from his shop. Abiola provided the following information. $ 2018 September 1 Commission receivable outstanding 350 The following amounts of commission were received by bank transfer. 2018 September 30 350 2019 January April July 425 395 470 31 30 31 On 31 August 2019 commission receivable outstanding amounted to $310. REQUIRED (f) Prepare the commission receivable account in the ledger of Abiola for the year ended 31 August 2019. Balance the account and bring down the balance on 1 September 2019. Abiola Commission receivable account Date Details $ Date Details $ ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. ........... ............................... ............. [5] [Total: 23] © UCLES 2019 0452/13/O/N/19 17 5 The KW Sports Club has 50 members. The annual subscription is $85. The financial year ends on 30 September. The treasurer prepares a full set of financial statements at the end of each financial year. On 1 October 2018 subscriptions had been prepaid by 14 members. On 30 September 2019 subscriptions had been prepaid by 10 members and 22 members had not paid their subscription for the year. REQUIRED (a) State the meaning of the word ‘subscriptions’ in connection with clubs and societies. ................................................................................................................................................... ............................................................................................................................................. [1] (b) Calculate the subscriptions received during the year ended 30 September 2019. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [5] (c) Discuss the possible effects on the bank account and the income and expenditure account of KW Sports Club if the annual subscription was increased to $105. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [4] © UCLES 2019 0452/13/O/N/19 [Turn over 18 (d) State four ways in which an income and expenditure account differs from a receipts and payments account. 1 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 3 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... 4 ................................................................................................................................................ ................................................................................................................................................... ............................................................................................................................................. [4] The income and expenditure account for the year ended 30 September 2019 showed a deficit. After the preparation of the account it was found that several errors had been made. REQUIRED (e) Complete the table by placing a tick ( ) in the correct column to indicate the effect of each error on the deficit for the year. If the error does not affect the deficit place a tick ( ) in the column headed ‘no effect’. error overstated understated no effect the total of the income from a sports competition was understated no entry had been made for bank charges proceeds of sale of club equipment were included in the income no adjustment was made of club shop wages accrued at the year-end shop rent was charged to the income and expenditure account instead of the shop income statement [5] [Total: 19] © UCLES 2019 0452/13/O/N/19 19 PLEASE TURN OVER © UCLES 2019 0452/13/O/N/19 [Turn over 20 6 Amrit runs a secretarial agency. His financial year ends on 31 July. He prepared the following trial balance on 31 July 2019. $ Fees from clients Premises (at cost) Office equipment (at cost) Provision for depreciation of office equipment Capital Drawings 5% Loan (repayable 1 February 2020) Trade receivables Provision for doubtful debts Bad debts Insurance Wages Operating expenses Rent receivable Bank $ 58 800 90 000 16 000 3 200 85 000 11 500 15 000 4 650 100 80 2 100 38 000 6 500 168 830 3 000 3 730 168 830 The following information is available. 1 The insurance covers a period of 14 months to 30 September 2019. 2 At 31 July 2019 wages, $1500, were accrued and one year’s loan interest was outstanding. 3 A debt of $150 should be written off as irrecoverable. 4 The provision for doubtful debts should be maintained at 3% of the remaining trade receivables. 5 The office equipment is to be depreciated at 20% per annum using the reducing (diminishing) balance method. © UCLES 2019 0452/13/O/N/19 21 REQUIRED (a) Prepare the income statement for the year ended 31 July 2019. Amrit Income Statement for the year ended 31 July 2019 $ $ ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... ................................................................................. ......................... ......................... [14] © UCLES 2019 0452/13/O/N/19 [Turn over 22 Amrit is considering several proposals to try to increase his working capital. REQUIRED (b) Complete the table by placing a tick ( ) in the correct column to indicate how each proposal would affect Amrit’s working capital. increase decrease no effect extend the loan for a further 2 years ask the bank to extend the overdraft facility [3] (c) Suggest two possible reasons why Amrit’s return on capital employed (ROCE) was higher on 31 July 2019 than it was on 31 July 2018. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] On 1 August 2019 Amrit decided to admit his sister, Neena, to the business as a partner. The partnership agreement provided for the following: interest on capital of 4% per annum interest on drawings of 3% Amrit to be entitled to a partnership salary of $6000 per annum profits and losses to be shared Amrit 60% and Neena 40%. Amrit made an adjustment to his capital so that it equalled $80 000. Neena invested $60 000. It was estimated that the profit for the first year of trading would be $15 500. It was estimated that the partners’ drawings during the first year of trading would be Amrit $7000 and Neena $5000. © UCLES 2019 0452/13/O/N/19 23 REQUIRED (d) State two advantages to Amrit of being a partner rather than a sole trader. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (e) State two disadvantages to Amrit of being a partner rather than a sole trader. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ............................................................................................................................................. [2] (f) Complete the estimated profit and loss appropriation account for the year ending 31 July 2020. Amrit and Neena Estimated Profit and Loss Appropriation Account for the year ending 31 July 2020 $ Interest on drawings Amrit $ 15 500 ....................... ....................... Neena ....................... ....................... ....................... ....................... Interest on capital Amrit ....................... ....................... Neena ....................... ....................... ....................... ....................... Partnership salary Amrit ....................... ....................... ....................... ....................... ....................... ....................... Neena ....................... ....................... [6] [Total: 29] © UCLES 2019 0452/13/O/N/19 Cambridge IGCSE™ ACCOUNTING 0452/12 Paper 1 Multiple Choice February/March 2020 1 hour 15 minutes You must answer on the multiple choice answer sheet. *4741387681* You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS • There are thirty-five questions on this paper. Answer all questions. • For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet. • Follow the instructions on the multiple choice answer sheet. • Write in soft pencil. • Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you. • Do not use correction fluid. • Do not write on any bar codes. • You may use a calculator. INFORMATION • The total mark for this paper is 35. • Each correct answer will score one mark. A mark will not be deducted for a wrong answer. • Any rough working should be done on this question paper. This document has 12 pages. Blank pages are indicated. IB20 03_0452_12/2RP © UCLES 2020 [Turn over 2 1 2 Which task would be carried out by a book-keeper but not an accountant? A comparing one year’s results with those of previous years B interpreting the accounting records C preparing financial statements D recording transactions in the ledgers and cash book A business provided the following information on 1 February 2019. $ non-current assets 75 000 current assets 40 000 current liabilities 25 000 The business made a profit of $10 000 for the year ended 31 January 2020. The owner did not make any drawings during the year. What was the capital on 31 January 2020? A 3 $35 000 B $50 000 C $70 000 D $100 000 Dilip is a manufacturer. He purchased a machine on credit from Sachin. How did Dilip record this? account to be debited account to be credited A machinery Sachin B purchases Sachin C Sachin machinery D Sachin purchases © UCLES 2020 0452/12/F/M/20 3 4 Mui owns a household appliance store. He took home a washing machine for his personal use. Mui recorded this transaction as follows. account debited account credited drawings sales Did Mui make the correct entries to record this transaction? 5 debit entry credit entry A no no B no yes C yes no D yes yes The following account appeared in the books of Abdul. Hanif account 2020 Jan 18 31 $ 2020 returns 100 Jan 1 bank 392 4 discount balance c / d $ balance b / d 400 purchases 250 8 150 650 650 Which statement is correct? 6 A On 1 January Abdul owed Hanif $400. B On 4 January Hanif purchased goods, $250, from Abdul. C On 31 January Abdul allowed Hanif $8 trade discount. D On 31 January Hanif owed Abdul $150. Which business document contains details of purchases, returns and payments occurring during a trading period? A credit note B debit note C invoice D statement of account © UCLES 2020 0452/12/F/M/20 [Turn over 4 7 Rashida sells goods on credit and allows her customers a trade discount. Which statements are correct? A 8 1 A debit entry is made in the customer’s account in the sales ledger for the net value of the goods sold. 2 The date of sale, name of the customer, cost price and trade discount are entered in the sales journal. 3 The trade discount is debited to the customer’s account and credited to the discount allowed account. 1 and 2 B 1 and 3 C 2 only D 2 and 3 The totals of a trial balance agreed but it was found that the purchase of office equipment had been debited to office expenses account. Which type of error has been made? 9 A commission B compensating C original entry D principle On 31 January, Somraj’s bank statement showed a credit balance of $740. Comparing the bank statement with the cash book he found the following. $ bank charges not recorded in the cash book cheque paid but not presented to the bank 30 150 Somraj updated his cash book as required. What was the updated cash book balance on 31 January? A $590 B $620 C $860 D $890 10 When Mark started a car repair business, he purchased premises and equipment. Two years later he spent $5000 on building an extension, $600 on new equipment and $750 on repainting the original premises. By how much will the non-current assets increase because of these transactions? A $5000 © UCLES 2020 B $5600 C $5750 0452/12/F/M/20 D $6350 5 11 A farmer sold a piece of land at market value. How should the proceeds of this sale be treated? A as a capital receipt B as a revenue receipt C as capital expenditure D as revenue expenditure 12 Why should a trader provide for the depreciation of a non-current asset? A 1 to match the cost against the revenue of the years which benefit from the use of the asset 2 to provide a cash fund to enable the asset to be replaced at the end of its useful life 3 to recognise that most non-current assets lose value with the passage of time 4 to spread the cost of the asset over its expected working life to avoid overstating profit 1 and 2 only B 1, 3 and 4 C 2 and 3 only D 2, 3 and 4 13 Equipment costing $20 000 was purchased on 1 January 2019. It has a useful working life of 5 years and a residual value of $3000. Depreciation using the straight-line method was included in the income statement for the year ended 31 December 2019. It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year ended 31 December 2019 of this error? A $2000 overstated B $2000 understated C $2600 overstated D $2600 understated © UCLES 2020 0452/12/F/M/20 [Turn over 6 14 A business provided the following information about two expenses. 1 January 2019 $ amount paid during year ended 31 December 2019 $ 31 December 2019 $ electricity 240 accrued 1500 360 accrued insurance 180 prepaid 1200 220 prepaid Which amounts will be charged to the income statement for the year ended 31 December 2019? electricity $ insurance $ A 900 800 B 1380 1240 C 1620 1160 D 2100 1600 15 Anjum rents part of her premises to Ajay for $6120 per annum. At the beginning of the year Ajay had paid two months rent in advance. At the end of the year Ajay had paid three months rent in advance. How much rent was received from Ajay during the year? A $3570 B $5610 C $6630 D $8670 16 A business maintains a provision for doubtful debts of 5% of trade receivables. The balance on the provision for doubtful debts account on 31 December 2018 was $2700. On 31 December 2019 the trade receivables amounted to $50 000. How will the provision for doubtful debts be recorded on 31 December 2019? provision for doubtful debts account $ income statement $ A credit 200 added to gross profit 200 B credit 200 deducted from gross profit 200 C debit 200 added to gross profit 200 D debit 200 deducted from gross profit 200 © UCLES 2020 0452/12/F/M/20 7 17 At the end of the financial year Cindy valued her inventory at cost. This valuation incorrectly included damaged goods costing $300. Cindy estimated these goods could be sold for $100. What is the effect of correcting the inventory valuation? gross profit profit for the year current assets A decreases by $200 decreases by $200 decrease by $200 B decreases by $300 decreases by $300 decrease by $300 C increases by $100 increases by $100 decrease by $100 D increases by $200 increases by $200 decrease by $200 18 Hassan had the following assets on 31 January 2020. $ premises 12 000 inventory 500 balance at bank 360 goodwill 3 000 cash 120 There were no liabilities on 31 January 2020. Which entries will be made in Hassan’s statement of financial position on 31 January 2020? intangible assets $ non-current assets $ current assets $ capital $ A nil 12 000 980 12 980 B nil 15 000 480 15 480 C 3000 12 000 980 15 980 D 3000 15 000 480 18 480 19 AB Stores had the following transactions. 1 The owner invested a further $20 000 capital. 2 $2000 was paid to trade payables. 3 A long-term loan of $5000 was repaid. By how much would the working capital increase after these transactions? A $13 000 © UCLES 2020 B $15 000 C $20 000 0452/12/F/M/20 D $27 000 [Turn over 8 20 The balances in the books of a business included the following. $ goodwill 10 000 premises 25 000 trade receivables 9 500 trade payables 6 000 inventory 15 000 cash at bank 500 debit long-term loan 5 000 What was the capital employed? A $50 000 B $54 000 C $60 000 D $65 000 21 What is a disadvantage of operating a business as a partnership? A Partners may not agree on how to run the business. B Partners may not have the same skills. C The financial statements must be published. D The risks and responsibilities are shared. 22 What does not affect the total equity of a limited company? A issue of ordinary shares B ordinary share dividend paid C profit for the year D transfer from retained earnings to general reserve 23 What is called-up share capital? A the amount received by the company for issued shares B the amount requested from shareholders by the company C the value of shares the company could issue D the value of shares actually issued by the company © UCLES 2020 0452/12/F/M/20 9 24 A limited company provided the following information. $ issued share capital (50 000 ordinary shares of $1 each) 50 000 profit for the year ended 31 December 2019 13 000 transfer to general reserve on 31 December 2019 6 000 interim ordinary share dividend paid during the year 3 000 On 31 December 2019 it was decided to use the remaining profit to pay a final ordinary share dividend. What percentage final dividend would the ordinary shareholders receive? A 8% B 14% C 20% D 26% 25 A cricket club set up a snack bar on 1 January 2019. The following information is available. $ for the year ended 31 December 2019 receipts from sales of snacks 3250 cost of purchases of snacks 2500 wages of snack bar assistant 250 at 31 December 2019 cost of snacks unsold 520 What was the profit made by the snack bar? A $500 © UCLES 2020 B $750 C $1020 0452/12/F/M/20 D $1270 [Turn over 10 26 A social club had the following assets and liabilities. $ non-current assets 6550 cafe expenses owing 25 subscriptions owing by members 50 balance at bank 500 debit owing to credit suppliers 300 cafe inventory 500 What was the accumulated fund? A $6275 B $6325 27 A manufacturing business 30 November 2019 C provided $7175 the following D $7275 information for the year ended $ factory supervisor’s salary factory power 25 000 5 000 machinery depreciation 11 000 machinery operators’ wages 29 000 raw materials consumed 82 000 What was the total of the direct costs? A $111 000 B $116 000 C $127 000 D $152 000 28 What would be included in the statement of financial position of a manufacturing business but not a wholesale business? A cash B office equipment C trade receivables D work in progress 29 The average inventory of a business was $40 000. The rate of inventory turnover was 5 times a year. Mark-up was 20%. What was the revenue for the year? A $160 000 © UCLES 2020 B $200 000 C $240 000 0452/12/F/M/20 D $250 000 11 30 Sumit does not maintain a full set of accounting records. What does Sumit not need to calculate his credit sales? A customer’s dishonoured cheque B discounts allowed C discounts received D returns from credit customers 31 Jake had current liabilities of trade payables and had current assets of inventory, trade receivables and cash at bank. Which measure would improve his current ratio? A buying additional inventory and paying in cash B decreasing drawings C revaluing non-current assets D selling inventory on credit rather than for cash 32 Flo and Mo are traders selling similar goods at similar prices. They provided the following information. Flo Mo gross margin 50% 40% profit margin 10% 8% Which trader has better control of cost of sales and expenses? costs of sales expenses A Flo Flo B Flo Mo C Mo Flo D Mo Mo 33 Which is an application of the materiality principle? A always using the straight-line method when depreciating assets B buying raw materials on credit rather than paying immediately C charging the cost of light bulbs and batteries to operating expenses D recording goods sold only when its legal title passes to the buyer © UCLES 2020 0452/12/F/M/20 [Turn over 12 34 Which accounting principle states that revenue should not be recorded before it is earned? A consistency B matching C money measurement D realisation 35 Which accounting objective requires that financial statements are free from bias and errors? A comparability B relevance C reliability D understandability Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge. © UCLES 2020 0452/12/F/M/20 Cambridge IGCSE™ ACCOUNTING 0452/11 Paper 1 Multiple Choice May/June 2020 1 hour 15 minutes You must answer on the multiple choice answer sheet. *9287386594* You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS • There are thirty-five questions on this paper. Answer all questions. • For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet. • Follow the instructions on the multiple choice answer sheet. • Write in soft pencil. • Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you. • Do not use correction fluid. • Do not write on any bar codes. • You may use a calculator. INFORMATION • The total mark for this paper is 35. • Each correct answer will score one mark. A mark will not be deducted for a wrong answer. • Any rough working should be done on this question paper. This document has 12 pages. Blank pages are indicated. IB20 06_0452_11/4RP © UCLES 2020 [Turn over 2 1 2 Which statement is correct? A Accounting involves measuring profits and losses. B Accounting is the recording of financial transactions. C Book-keeping involves communicating financial data. D Book-keeping requires the use of ratio analysis. The balances remaining on the books of a business after the preparation of the income statement included the following. $ loan from XY Finance 10 000 wages due 620 rent prepaid 240 trade receivables 3 300 trade payables 4 650 motor vehicles 8 000 provision for depreciation of motor vehicles 2 000 What was the total of the liabilities? A 3 $13 920 B $14 890 C $15 270 D $17 270 On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was returned unpaid by the bank. What entry would Nina make on 12 April? account to be debited account to be credited A irrecoverable debts bank B irrecoverable debts Zaffar C provision for doubtful debts Zaffar D Zaffar bank © UCLES 2020 0452/11/M/J/20 3 4 Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520. The following transactions took place during April. April 2 14 Ann returned goods, $30, to Cindy. Ann bought goods, $210, from Cindy, and paid in cash. Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct? 5 A Ann owes Cindy $490. B Ann owes Cindy $700. C Cindy owes Ann $490. D Cindy owes Ann $700. Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo keeps a full double entry system. Where will Tumelo record the return of goods? 6 A cash book and sales ledger B general ledger only C general ledger and purchases ledger D purchases ledger only Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or received the following documents in April. $ April 7 invoice 360 12 cheque (after deducting $11 cash discount) 429 13 debit note 50 15 credit note 50 What was the closing balance on the statement of account on 30 April? A 7 $260 B $310 C $321 D $421 What is recorded in the sales journal? A all money received from sales B all sales transactions C cash sales transactions D credit sales transactions © UCLES 2020 0452/11/M/J/20 [Turn over 4 8 9 Which statement about a two-column cash book is correct? A It is a ledger account for bank transactions only. B It is a ledger account for cash transactions only. C It is a book of prime entry. D It records cash discounts. Which statements about trade discount are correct? A 1 It is debited to the supplier’s account. 2 It is only given if the invoice is paid within the period allowed by the supplier. 3 It is shown as a deduction from the price of the goods on an invoice. 4 It is used to encourage bulk buying. 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4 10 Why is a trial balance prepared? A to analyse the financial information B to assist preparation of financial statements C to control the costs of the business D to evaluate the performance of the business 11 The income statement of a business showed a loss for the year of $16 000. On checking the books the following errors were discovered. 1 No adjustment had been made for insurance prepaid, $480. 2 No entry had been made for bank charges, $620. What was the correct loss for the year? A $14 900 © UCLES 2020 B $15 860 C $16 140 0452/11/M/J/20 D $17 100 5 12 Peter’s bank statement showed a debit balance of $600 on 1 April. The following transactions took place in April. $ total cheque deposits 7400 total cheque payments 6200 direct debit for insurance premium 180 credit transfer from customer 450 What was the bank statement balance on 30 April? A $870 credit B $870 debit C $2070 credit D $2070 debit 13 A sales ledger control account had a debit balance of $10 000. It was found that a $2000 contra entry to the purchases ledger control account had been entered on the wrong side of the sales ledger control account. What was the correct debit balance on the sales ledger control account? A $6000 B $8000 C $12 000 D $14 000 14 A business had a new extension to its workshop premises. It incurred the following expenditure. $ building cost 65 000 legal fees 1 800 air conditioning system for the original workshop 2 300 air conditioning system for the new workshop extension 1 100 decorating the original workshop 1 400 decorating the new workshop extension 800 What was the total capital expenditure of the business? A $67 900 © UCLES 2020 B $70 200 C $71 000 0452/11/M/J/20 D $72 400 [Turn over 6 15 A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information. cost $20 000 working life 4 years residual value $4000 It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year of correcting this error? A decrease by $2000 B increase by $2000 C decrease by $6000 D increase by $6000 16 A company’s financial year ended on 31 December 2019. On 1 December 2019 it paid rent, $8000, for the four months ending 31 March 2020. What was the opening balance on the rent account on 1 January 2020? A $2000 credit B $2000 debit C $6000 credit D $6000 debit 17 Alice’s financial year ends on 31 December. The balances on her books on 1 January 2020 included the following. $ commission receivable 250 debit rent receivable 500 credit What do these balances represent? commission receivable rent receivable A income outstanding income outstanding B income outstanding income prepaid C income prepaid income outstanding D income prepaid income prepaid © UCLES 2020 0452/11/M/J/20 7 18 Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by $250. Which journal entry records an increase in the provision for doubtful debts? debit $ A B C D credit customer income statement 250 income statement credit customer 250 income statement provision for doubtful debts 250 provision for doubtful debts income statement 250 credit $ 250 250 250 250 19 Which items are deducted from the gross profit when calculating the profit for the year? A 1 balance on the provision for doubtful debts account 2 carriage paid on goods supplied to customers 3 drawings made by the owner during the year 4 wages paid to employees during the year 1, 2 and 3 B 1 and 4 C 2 and 3 only D 2 and 4 20 On 31 December 2019 John had net assets of $2000 and capital of $2000. On 1 January 2020, goods costing $140 were sold on credit for $220. What was the effect of this transaction on the statement of financial position? net assets capital $ $ A 80 decrease 80 decrease B 80 increase 80 increase C 220 decrease 220 decrease D 220 increase 220 increase © UCLES 2020 0452/11/M/J/20 [Turn over 8 21 At the end of his financial year, Raminder made an adjustment for rent owed by a tenant. How did this affect Raminder’s financial statements? profit for the year current assets A decrease decrease B decrease increase C increase decrease D increase increase 22 The owner of a business took goods for his own use but forgot to make an entry in the accounts. What was the effect of this error? profit for the year capital employed A overstated no effect B overstated understated C understated no effect D understated overstated 23 Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership agreement. They provided the following information. Rajid capital introduced 1 January 2019 Sunil $40 000 $20 000 $5 000 $3 500 50% 50% during the year ended 31 December 2019 drawings share of work They decided to draw up a partnership agreement for future years. Which item would be most beneficial to Rajid in 2020? A interest on capital B interest on drawings C limit on annual drawings D partnership salaries © UCLES 2020 0452/11/M/J/20 9 24 Harry and Jane are in partnership. The following information relates to Harry for the financial year. $ salary 8000 drawings 2800 share of profit 4600 The opening credit balance on Harry’s current account was $28 200. What was the closing balance on his current account? A $30 000 B $38 000 C $40 800 D $43 600 25 Which item is shown in the income statement of a company and statement of changes in equity? A interest on debentures accrued B ordinary share dividend paid C profit for the year D transfer to general reserve 26 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000. Which transactions caused this? capital introduced $ drawings $ A 1000 8200 B 1200 6000 C 2000 8800 D 2200 4600 © UCLES 2020 0452/11/M/J/20 [Turn over 10 27 Ahmed provided the following information. $ trade receivables at 1 January 2019 15 000 for the year ended 31 December 2019: credit sales 85 000 cash sales 12 000 cheques received from trade receivables 65 000 irrecoverable debts 2 000 By how much had the trade receivables increased by the end of the financial year? A $18 000 B $30 000 C $33 000 D $45 000 28 Gordon provided the following information for the year. revenue $90 000 opening inventory $8 000 closing inventory $2 000 mark up 50% Gordon took goods, $7000, for his own use. What were the purchases? A $43 000 B $47 000 C $54 000 D $61 000 29 A trader provided the following information. $ for the year ended 31 March 2020 revenue 250 000 purchases: cash 125 000 credit 115 000 at March 2020 trade payables 9 765 What was the trade payables turnover? A 14 days © UCLES 2020 B 15 days C 29 days 0452/11/M/J/20 D 31 days 11 30 On 1 January 2019 current assets totalled $16 000 and the current ratio was 2 : 1. On 31 December 2019 the current liabilities had increased by 50% and the current ratio was 1.5 : 1. What was the value of the current assets on 31 December 2019? A $16 000 B $18 000 C $32 000 D $36 000 31 A company provided the following information about its liquid (acid test) ratio. Year 1 1.2 : 1 Year 2 1.4 : 1 Year 3 1.6 : 1 Which would explain the changes in the ratio? A Inventory is increasing. B Other payables are decreasing. C Trade payables are increasing. D Trade receivables are decreasing. 32 Which user of accounting statements is interested in past performance and taking remedial action where necessary? A government B investors C managers D suppliers 33 Rashid’s financial year ends on 31 December. He paid rent on 1 February, 1 May, 1 August and 1 November. An adjustment was made in the income statement for rent prepaid. Which accounting principle was applied? A duality B matching C money measurement D prudence © UCLES 2020 0452/11/M/J/20 [Turn over 12 34 Which statement describes the going concern principle? A Accounting methods must be used consistently from one accounting period to the next. B It is assumed that the business will continue to operate for the foreseeable future. C Revenue is earned when legal title to goods passes from the seller to the buyer. D The business is treated as being completely separate from the owner of the business. 35 Brad purchased a machine for $1000 on 1 January 2019. The machine was expected to last for four years and have no residual value. On 31 December 2019 the same machine cost $1200 to purchase. At which value should the machine be included in the statement of financial position on 31 December 2019? A current cost with no depreciation B current cost with one year’s depreciation C original purchase price with no depreciation D original purchase price with one year’s depreciation Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge. © UCLES 2020 0452/11/M/J/20 Cambridge IGCSE™ ACCOUNTING 0452/12 Paper 1 Multiple Choice May/June 2020 1 hour 15 minutes You must answer on the multiple choice answer sheet. *3976346872* You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS • There are thirty-five questions on this paper. Answer all questions. • For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet. • Follow the instructions on the multiple choice answer sheet. • Write in soft pencil. • Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you. • Do not use correction fluid. • Do not write on any bar codes. • You may use a calculator. INFORMATION • The total mark for this paper is 35. • Each correct answer will score one mark. A mark will not be deducted for a wrong answer. • Any rough working should be done on this question paper. This document has 12 pages. Blank pages are indicated. IB20 06_0452_12/3RP © UCLES 2020 [Turn over 2 1 Which are examples of book-keeping? A 2 3 1 entering details of a cheque received from a customer in a cash book 2 entering details of goods purchased on credit in a purchases journal 3 producing an income statement to calculate the profit for the year 4 recording details of credit sales in the account of a credit customer 1, 2 and 3 B 1, 2 and 4 C 1 and 2 only D 3 and 4 How does a trader use the information provided by financial statements? A to calculate the amount of cash drawings taken B to calculate the amount that is owed by trade receivables C to check the balance shown on a bank statement D to compare the business performance over a number of years A trader bought new fixtures. He paid half of the purchase price in cash and agreed to pay the balance in two months’ time. How does this purchase affect the accounting equation? 4 assets owner’s equity liabilities A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was returned unpaid by the bank. What entry would Nina make on 12 April? account to be debited account to be credited A irrecoverable debts bank B irrecoverable debts Zaffar C provision for doubtful debts Zaffar D Zaffar bank © UCLES 2020 0452/12/M/J/20 3 5 Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520. The following transactions took place during April. April 2 14 Ann returned goods, $30, to Cindy. Ann bought goods, $210, from Cindy, and paid in cash. Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct? 6 A Ann owes Cindy $490. B Ann owes Cindy $700. C Cindy owes Ann $490. D Cindy owes Ann $700. Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo keeps a full double entry system. Where will Tumelo record the return of goods? 7 A cash book and sales ledger B general ledger only C general ledger and purchases ledger D purchases ledger only Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or received the following documents in April. $ April 7 invoice 360 12 cheque (after deducting $11 cash discount) 429 13 debit note 50 15 credit note 50 What was the closing balance on the statement of account on 30 April? A $260 © UCLES 2020 B $310 C $321 0452/12/M/J/20 D $421 [Turn over 4 8 A business sold goods with a list price of $50 each. The terms of trade were: trade discount for more than 20 items bought 10% cash discount if customer pays within 30 days 4% How much was received in full settlement from a customer who bought 25 items and paid after 35 days? A 9 $900 B $1075 C $1125 D $1200 Paul rents premises from John and pays the rent by credit transfer. How would John record this? account debited account credited A bank rent receivable B cash rent receivable C rent receivable bank D rent receivable cash 10 Sita discovers that $1000 received from the sale of fixtures had been entered in the sales account. Which journal entry corrected this error? debit $ A bank disposal of fixtures 1000 B bank fixtures 1000 C sales disposal of fixtures 1000 D sales fixtures 1000 © UCLES 2020 credit $ 1000 1000 1000 1000 0452/12/M/J/20 5 11 The totals of a trial balance did not agree and $200 was debited to a suspense account. On checking the books it was found that two errors had been made. 1 A sales invoice for $700 had been recorded in the sales journal as $770. 2 The sales journal had been totalled incorrectly. What was the error made in totalling the sales journal? A overcast by $130 B overcast by $200 C undercast by $130 D undercast by $200 12 The income statement of a business showed a loss for the year of $16 000. On checking the books the following errors were discovered. 1 No adjustment had been made for insurance prepaid, $480. 2 No entry had been made for bank charges, $620. What was the correct loss for the year? A $14 900 B $15 860 C $16 140 D $17 100 13 What would result in a cash book balance being lower than the balance showing on a bank statement? A A cheque received from a customer was not recorded in the bank statement. B A customer’s cheque dishonoured by the bank appeared only on the bank statement. C Payment by a customer directly into the bank was not recorded in the cash book. D Payment of insurance by standing order was not recorded in the cash book. 14 Thembi is preparing her sales ledger control account. She needs to know: 1 The total for goods which have been returned by credit customers. 2 The amount owed by credit customers which have been written off as irrecoverable. Where can she obtain this information? goods returned irrecoverable debts A purchase returns account irrecoverable debts account B purchase returns journal general journal C sales returns account irrecoverable debts account D sales returns journal general journal © UCLES 2020 0452/12/M/J/20 [Turn over 6 15 The following payments were made when a new machine was purchased. $ cost of the machine 32 000 charge for delivering the machine 1 800 insurance of the machine 2 000 wages of employees installing the machine 1 300 How much was the capital expenditure? A $32 000 B $33 300 C $35 100 D $37 100 16 A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information. cost $20 000 working life 4 years residual value $4000 It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year of correcting this error? A decrease by $2000 B increase by $2000 C decrease by $6000 D increase by $6000 17 Elzevir purchased a motor vehicle costing $8000 on 1 January 2018. It is depreciated at 40% on the reducing balance basis. Which journal entry records the depreciation for the year ended 31 December 2019? debit A B C D © UCLES 2020 income statement provision for depreciation of motor vehicles 1920 income statement provision for depreciation of motor vehicles 3200 provision for depreciation of motor vehicles motor vehicles 1920 provision for depreciation of motor vehicles motor vehicles 3200 0452/12/M/J/20 credit 1920 3200 1920 3200 7 18 Alice’s financial year ends on 31 December. The balances on her books on 1 January 2020 included the following. $ commission receivable 250 debit rent receivable 500 credit What do these balances represent? commission receivable rent receivable A income outstanding income outstanding B income outstanding income prepaid C income prepaid income outstanding D income prepaid income prepaid 19 Annual rental income due from Kumar, a tenant, is $3600. At the start of the year Kumar had prepaid rent of $900. At the end of the year he owed two months’ rent. How much rent was received from Kumar during the year? A $2100 B $3300 C $3900 D $5100 20 Joel’s inventory on 31 December 2019 was valued at $4800. It was discovered that: 1 Goods, cost $100, had not been included. 2 Goods, cost $170, had been included at net realisable value $210. What was the effect of the incorrect inventory valuation on Joel’s financial statements at 31 December 2019? profit for the year $ inventory $ equity A overstated 40 understated 40 nil B overstated 60 understated 60 nil C understated 40 understated 40 understated 40 D understated 60 understated 60 understated 60 © UCLES 2020 0452/12/M/J/20 $ [Turn over 8 21 The owner of a business took goods for his own use but forgot to make an entry in the accounts. What was the effect of this error? profit for the year capital employed A overstated no effect B overstated understated C understated no effect D understated overstated 22 Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership agreement. They provided the following information. Rajid capital introduced 1 January 2019 Sunil $40 000 $20 000 $5 000 $3 500 50% 50% during the year ended 31 December 2019 drawings share of work They decided to draw up a partnership agreement for future years. Which item would be most beneficial to Rajid in 2020? A interest on capital B interest on drawings C limit on annual drawings D partnership salaries 23 Harry and Jane are in partnership. The following information relates to Harry for the financial year. $ salary 8000 drawings 2800 share of profit 4600 The opening credit balance on Harry’s current account was $28 200. What was the closing balance on his current account? A $30 000 © UCLES 2020 B $38 000 C $40 800 0452/12/M/J/20 D $43 600 9 24 The statement of financial position of X Limited at 31 December 2018 included the following: $ ordinary share capital 40 000 general reserve 8 000 retained earnings 65 000 8% debentures (repayable 2025) 30 000 Profit for the year ended 31 December 2019 was $42 000 and dividends paid totalled $10 000. What was the total equity on 31 December 2019? A $137 000 B $145 000 C $155 000 D $175 000 25 Which is a feature of debentures? A are a long-term liability of a company B carry a fixed rate of dividend C carry voting rights D on liquidation are paid back after shareholders 26 Which cost is part of the prime cost for a manufacturing business? A carriage inwards B carriage outwards C factory rent D factory supervisor’s salary 27 A manufacturing business provided the following information. $ prime cost 236 000 factory overheads 42 000 opening work in progress 8 000 closing work in progress 6 000 What was the factory cost of production? A $234 000 © UCLES 2020 B $238 000 C $276 000 0452/12/M/J/20 D $280 000 [Turn over 10 28 A trader provided the following information. $ trade receivables at start of the year 5 000 trade receivables at end of the year 8 500 cash received from trade receivables 34 700 irrecoverable debts written off 200 discount allowed 185 What was the amount of the credit sales? A $38 200 B $38 385 C $38 400 D $38 585 29 Gordon provided the following information for the year. revenue $90 000 opening inventory $8 000 closing inventory $2 000 mark up 50% Gordon took goods, $7000, for his own use. What were the purchases? A $43 000 B $47 000 C $54 000 D $61 000 30 Sabelo’s liquid (acid test) ratio was higher on 1 January 2019 than it was on 31 December 2019. What could have caused this? A bank overdraft decreased B inventory decreased C other payables decreased D trade receivables decreased © UCLES 2020 0452/12/M/J/20 11 31 The following ratios have been calculated for a trader. profit margin return on capital employed (ROCE) year 1 year 2 15% 20% 9% 6% What explains these changes? A Drawings have increased by more than profit for the year. B Gross profit has increased but profit for the year has decreased. C Profit for the year has increased and capital has been introduced. D Profit for the year has increased and a long-term loan has been repaid. 32 Which external parties would be interested in the accounting ratios of a business? A government B investors C managers D tax authorities 33 At the end of the financial year, a company did not account for the unused stationary valued at $50. Which accounting principle did the company apply? A matching B materiality C money measurement D prudence 34 A trader wrote off the balance on a credit customer’s account as irrecoverable. Which accounting principle was applied? A business entity B consistency C money measurement D prudence © UCLES 2020 0452/12/M/J/20 [Turn over 12 35 A limited company applied the accounting objective of comparability in preparing its financial statements. What is the effect of this on the interested parties? A They can be sure that information in the financial statements is up to date. B They can identify similarities with the financial statements of other businesses. C They can understand the financial statements easily. D They can use the financial statements in decision-making. Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge. © UCLES 2020 0452/12/M/J/20 Cambridge IGCSE™ ACCOUNTING 0452/13 Paper 1 Multiple Choice May/June 2020 1 hour 15 minutes You must answer on the multiple choice answer sheet. *4322546424* You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS • There are thirty-five questions on this paper. Answer all questions. • For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet. • Follow the instructions on the multiple choice answer sheet. • Write in soft pencil. • Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you. • Do not use correction fluid. • Do not write on any bar codes. • You may use a calculator. INFORMATION • The total mark for this paper is 35. • Each correct answer will score one mark. A mark will not be deducted for a wrong answer. • Any rough working should be done on this question paper. This document has 12 pages. Blank pages are indicated. IB20 06_0452_13/FP © UCLES 2020 [Turn over 2 1 Which are examples of book-keeping? A 2 3 1 entering details of a cheque received from a customer in a cash book 2 entering details of goods purchased on credit in a purchases journal 3 producing an income statement to calculate the profit for the year 4 recording details of credit sales in the account of a credit customer 1, 2 and 3 B 1, 2 and 4 C 1 and 2 only D 3 and 4 How does a trader use the information provided by financial statements? A to calculate the amount of cash drawings taken B to calculate the amount that is owed by trade receivables C to check the balance shown on a bank statement D to compare the business performance over a number of years A trader bought new fixtures. He paid half of the purchase price in cash and agreed to pay the balance in two months’ time. How does this purchase affect the accounting equation? 4 assets owner’s equity liabilities A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was returned unpaid by the bank. What entry would Nina make on 12 April? account to be debited account to be credited A irrecoverable debts bank B irrecoverable debts Zaffar C provision for doubtful debts Zaffar D Zaffar bank © UCLES 2020 0452/13/M/J/20 3 5 Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520. The following transactions took place during April. April 2 14 Ann returned goods, $30, to Cindy. Ann bought goods, $210, from Cindy, and paid in cash. Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct? 6 A Ann owes Cindy $490. B Ann owes Cindy $700. C Cindy owes Ann $490. D Cindy owes Ann $700. Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo keeps a full double entry system. Where will Tumelo record the return of goods? 7 A cash book and sales ledger B general ledger only C general ledger and purchases ledger D purchases ledger only Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or received the following documents in April. $ April 7 invoice 360 12 cheque (after deducting $11 cash discount) 429 13 debit note 50 15 credit note 50 What was the closing balance on the statement of account on 30 April? A $260 © UCLES 2020 B $310 C $321 0452/13/M/J/20 D $421 [Turn over 4 8 A business sold goods with a list price of $50 each. The terms of trade were: trade discount for more than 20 items bought 10% cash discount if customer pays within 30 days 4% How much was received in full settlement from a customer who bought 25 items and paid after 35 days? A 9 $900 B $1075 C $1125 D $1200 Paul rents premises from John and pays the rent by credit transfer. How would John record this? account debited account credited A bank rent receivable B cash rent receivable C rent receivable bank D rent receivable cash 10 Sita discovers that $1000 received from the sale of fixtures had been entered in the sales account. Which journal entry corrected this error? debit $ A bank disposal of fixtures 1000 B bank fixtures 1000 C sales disposal of fixtures 1000 D sales fixtures 1000 © UCLES 2020 credit $ 1000 1000 1000 1000 0452/13/M/J/20 5 11 The totals of a trial balance did not agree and $200 was debited to a suspense account. On checking the books it was found that two errors had been made. 1 A sales invoice for $700 had been recorded in the sales journal as $770. 2 The sales journal had been totalled incorrectly. What was the error made in totalling the sales journal? A overcast by $130 B overcast by $200 C undercast by $130 D undercast by $200 12 The income statement of a business showed a loss for the year of $16 000. On checking the books the following errors were discovered. 1 No adjustment had been made for insurance prepaid, $480. 2 No entry had been made for bank charges, $620. What was the correct loss for the year? A $14 900 B $15 860 C $16 140 D $17 100 13 What would result in a cash book balance being lower than the balance showing on a bank statement? A A cheque received from a customer was not recorded in the bank statement. B A customer’s cheque dishonoured by the bank appeared only on the bank statement. C Payment by a customer directly into the bank was not recorded in the cash book. D Payment of insurance by standing order was not recorded in the cash book. 14 Thembi is preparing her sales ledger control account. She needs to know: 1 The total for goods which have been returned by credit customers. 2 The amount owed by credit customers which have been written off as irrecoverable. Where can she obtain this information? goods returned irrecoverable debts A purchase returns account irrecoverable debts account B purchase returns journal general journal C sales returns account irrecoverable debts account D sales returns journal general journal © UCLES 2020 0452/13/M/J/20 [Turn over 6 15 The following payments were made when a new machine was purchased. $ cost of the machine 32 000 charge for delivering the machine 1 800 insurance of the machine 2 000 wages of employees installing the machine 1 300 How much was the capital expenditure? A $32 000 B $33 300 C $35 100 D $37 100 16 A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information. cost $20 000 working life 4 years residual value $4000 It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year of correcting this error? A decrease by $2000 B increase by $2000 C decrease by $6000 D increase by $6000 17 Elzevir purchased a motor vehicle costing $8000 on 1 January 2018. It is depreciated at 40% on the reducing balance basis. Which journal entry records the depreciation for the year ended 31 December 2019? debit A B C D © UCLES 2020 income statement provision for depreciation of motor vehicles 1920 income statement provision for depreciation of motor vehicles 3200 provision for depreciation of motor vehicles motor vehicles 1920 provision for depreciation of motor vehicles motor vehicles 3200 0452/13/M/J/20 credit 1920 3200 1920 3200 7 18 Alice’s financial year ends on 31 December. The balances on her books on 1 January 2020 included the following. $ commission receivable 250 debit rent receivable 500 credit What do these balances represent? commission receivable rent receivable A income outstanding income outstanding B income outstanding income prepaid C income prepaid income outstanding D income prepaid income prepaid 19 Annual rental income due from Kumar, a tenant, is $3600. At the start of the year Kumar had prepaid rent of $900. At the end of the year he owed two months’ rent. How much rent was received from Kumar during the year? A $2100 B $3300 C $3900 D $5100 20 Joel’s inventory on 31 December 2019 was valued at $4800. It was discovered that: 1 Goods, cost $100, had not been included. 2 Goods, cost $170, had been included at net realisable value $210. What was the effect of the incorrect inventory valuation on Joel’s financial statements at 31 December 2019? profit for the year $ inventory $ equity A overstated 40 understated 40 nil B overstated 60 understated 60 nil C understated 40 understated 40 understated 40 D understated 60 understated 60 understated 60 © UCLES 2020 0452/13/M/J/20 $ [Turn over 8 21 The owner of a business took goods for his own use but forgot to make an entry in the accounts. What was the effect of this error? profit for the year capital employed A overstated no effect B overstated understated C understated no effect D understated overstated 22 Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership agreement. They provided the following information. Rajid capital introduced 1 January 2019 Sunil $40 000 $20 000 $5 000 $3 500 50% 50% during the year ended 31 December 2019 drawings share of work They decided to draw up a partnership agreement for future years. Which item would be most beneficial to Rajid in 2020? A interest on capital B interest on drawings C limit on annual drawings D partnership salaries 23 Harry and Jane are in partnership. The following information relates to Harry for the financial year. $ salary 8000 drawings 2800 share of profit 4600 The opening credit balance on Harry’s current account was $28 200. What was the closing balance on his current account? A $30 000 © UCLES 2020 B $38 000 C $40 800 0452/13/M/J/20 D $43 600 9 24 The statement of financial position of X Limited at 31 December 2018 included the following: $ ordinary share capital 40 000 general reserve 8 000 retained earnings 65 000 8% debentures (repayable 2025) 30 000 Profit for the year ended 31 December 2019 was $42 000 and dividends paid totalled $10 000. What was the total equity on 31 December 2019? A $137 000 B $145 000 C $155 000 D $175 000 25 Which is a feature of debentures? A are a long-term liability of a company B carry a fixed rate of dividend C carry voting rights D on liquidation are paid back after shareholders 26 Which cost is part of the prime cost for a manufacturing business? A carriage inwards B carriage outwards C factory rent D factory supervisor’s salary 27 A manufacturing business provided the following information. $ prime cost 236 000 factory overheads 42 000 opening work in progress 8 000 closing work in progress 6 000 What was the factory cost of production? A $234 000 © UCLES 2020 B $238 000 C $276 000 0452/13/M/J/20 D $280 000 [Turn over 10 28 A trader provided the following information. $ trade receivables at start of the year 5 000 trade receivables at end of the year 8 500 cash received from trade receivables 34 700 irrecoverable debts written off 200 discount allowed 185 What was the amount of the credit sales? A $38 200 B $38 385 C $38 400 D $38 585 29 Gordon provided the following information for the year. revenue $90 000 opening inventory $8 000 closing inventory $2 000 mark up 50% Gordon took goods, $7000, for his own use. What were the purchases? A $43 000 B $47 000 C $54 000 D $61 000 30 Sabelo’s liquid (acid test) ratio was higher on 1 January 2019 than it was on 31 December 2019. What could have caused this? A bank overdraft decreased B inventory decreased C other payables decreased D trade receivables decreased © UCLES 2020 0452/13/M/J/20 11 31 The following ratios have been calculated for a trader. profit margin return on capital employed (ROCE) year 1 year 2 15% 20% 9% 6% What explains these changes? A Drawings have increased by more than profit for the year. B Gross profit has increased but profit for the year has decreased. C Profit for the year has increased and capital has been introduced. D Profit for the year has increased and a long-term loan has been repaid. 32 Which external parties would be interested in the accounting ratios of a business? A government B investors C managers D tax authorities 33 At the end of the financial year, a company did not account for the unused stationary valued at $50. Which accounting principle did the company apply? A matching B materiality C money measurement D prudence 34 A trader wrote off the balance on a credit customer’s account as irrecoverable. Which accounting principle was applied? A business entity B consistency C money measurement D prudence © UCLES 2020 0452/13/M/J/20 [Turn over 12 35 A limited company applied the accounting objective of comparability in preparing its financial statements. What is the effect of this on the interested parties? A They can be sure that information in the financial statements is up to date. B They can identify similarities with the financial statements of other businesses. C They can understand the financial statements easily. D They can use the financial statements in decision-making. Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge. © UCLES 2020 0452/13/M/J/20 *3830955640* Cambridge IGCSE™ ACCOUNTING 0452/12 Paper 1 Multiple Choice October/November 2020 1 hour 15 minutes You must answer on the multiple choice answer sheet. *1786308326* You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS • There are thirty-five questions on this paper. Answer all questions. • For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet. • Follow the instructions on the multiple choice answer sheet. • Write in soft pencil. • Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you. • Do not use correction fluid. • Do not write on any bar codes. • You may use a calculator. INFORMATION • The total mark for this paper is 35. • Each correct answer will score one mark. A mark will not be deducted for a wrong answer. • Any rough working should be done on this question paper. This document has 12 pages. Blank pages are indicated. IB20 11_0452_12/3RP © UCLES 2020 [Turn over 2 1 A trader prepares financial statements each year. What do these assist the trader to do? 2 3 A calculate the amount owing to credit suppliers B calculate the cash drawings C check the bank statement balance D make decisions about the future What is not an example of a book-keeping entry? A an entry made in the bank column of the cash book for a cheque received B cost of goods purchased on credit entered in the supplier’s account C expenses paid during the year entered in the income statement D goods returned by a customer entered in the sales returns journal The following balances appeared in Hussein's books. $ fixtures 6000 inventory 3300 trade receivables 3000 trade payables 4500 other receivables 500 other payables 300 loan to Imran 1000 bank overdraft 1400 What was the total of the liabilities? A 4 $4800 B $6200 C $6400 What does the owner’s equity consist of? A the amount of money in the business bank account B the amount owed by the business to the owner C the total of the assets owned by the business D the total of the current assets less the current liabilities © UCLES 2020 0452/12/O/N/20 D $7200 3 5 Which entries did Sally make to record the following transaction? Rashid, a credit customer, returned damaged goods. 6 account to be debited account to be credited A purchase returns Rashid B Rashid purchase returns C sales returns Rashid D Rashid sales returns The following account appeared in the books of Mary. Paul account $ April 1 balance b/d 14 sales $ 90 April 21 returns 150 30 bank discount balance c/d 240 25 88 2 125 240 Which statement is correct? 7 A On 1 April Paul owed Mary $90. B On 14 April Paul sold goods, $150, to Mary. C On 21 April Mary returned goods, $25, to Paul. D On 30 April Mary owed Paul $125. In which sections of Zamir’s ledger would the following accounts be maintained? 1 the sales account 2 the account of Harjit, a trade receivable sales account Harjit account A nominal (general) ledger purchases ledger B nominal (general) ledger sales ledger C purchases ledger sales ledger D sales ledger purchases ledger © UCLES 2020 0452/12/O/N/20 [Turn over 4 8 Sue allows 2% cash discount to credit customers who settle their account within 28 days. Jane purchased goods, list price $200, on 10 September. She returned these goods on 15 September. Which entry would Sue make on 15 September? 9 A purchases returns journal $196 B purchases returns journal $200 C sales returns journal $196 D sales returns journal $200 A transaction was posted to the wrong account of the same class. Which type of error was made? A commission B original entry C principle D reversal 10 Motor vehicle expenses, $50, were incorrectly debited to the motor vehicles account. Which journal entry corrects this error? debit $ A B C D © UCLES 2020 motor vehicle expenses motor vehicles 50 motor vehicles motor vehicle expenses 50 motor vehicles expenses motor vehicles suspense 50 50 suspense motor vehicles expenses motor vehicles credit $ 50 50 100 100 50 50 0452/12/O/N/20 5 11 Kate calculated her draft profit for the year at $28 400. She later discovered the following errors. 1 Rent prepaid by Kate was understated by $1000. 2 Closing inventory was understated by $1500. What was the correct profit for the year? A $25 900 B $27 900 C $28 900 D $30 900 12 A trader’s bank statement showed a credit balance of $2940. The following items had not been entered in the cash book. $ bank interest received credit transfer 70 280 What was the debit balance in the cash book before it was updated? A $2590 B $2730 C $3150 D $3290 13 What is a purpose of preparing a sales ledger control account? A to identify irrecoverable debts B to make fraud more difficult C to provide the total owed to trade payables D to show the total of cash and credit sales 14 George is preparing his purchases ledger control account. Which information would he obtain from his general journal? A contra entries with the sales ledger B goods returned to credit suppliers C irrecoverable debts written off D refunds received from credit suppliers © UCLES 2020 0452/12/O/N/20 [Turn over 6 15 A trader debited the cost of repairing office equipment to the office equipment account. How did this error affect the financial statements? profit for the year non-current assets A overstated overstated B overstated understated C understated overstated D understated understated 16 Rashid provided the following information at 31 December. $ machinery at cost 52 000 provision for depreciation of machinery 23 000 Depreciation for the year is calculated at 20% on cost. After the statement of financial position was prepared it was found that the machinery repairs costing $2000 had been debited to the machinery account. What is the correct balance on the provision for the depreciation of machinery account? A $21 000 B $22 600 C $23 400 D $25 000 17 A machine which cost $32 000 was sold for $14 000. The total depreciation at the date of disposal was $15 000. What was the profit or loss on disposal? A $3000 profit B $3000 loss C $18 000 profit D $18 000 loss © UCLES 2020 0452/12/O/N/20 7 18 Beena maintains a provision for doubtful debts of 3% of the trade receivables at the end of each financial year. On 1 September 2019 the provision for doubtful debts was $900. On 31 August 2020 the trade receivables amounted to $42 800. Which journal entry did Beena make on 31 August 2020? debit $ A B C D income statement provision for doubtful debts 384 income statement provision for doubtful debts 1284 credit $ 384 1284 provision for doubtful debts income statement 384 provision for doubtful debts income statement 1284 384 1284 19 Nirmal sells two products, product G and product H. The following information is available about his inventory at the end of the financial year. number of units product cost price per unit net realisable value per unit G 1000 $2.00 $2.50 H 800 $1.50 $1.20 It was found that 100 units of product G were damaged and were unsaleable. What was the total value of Nirmal’s inventory? A $2760 B $3000 C $3260 D $3460 20 What is not a service business? A hairdressing salon B accountant’s practice C supermarket D computer repair shop © UCLES 2020 0452/12/O/N/20 [Turn over 8 21 The financial year of Peter ends on 30 September. On 1 August 2020 Peter received rent $1000. This covered the period from 1 July to 30 November 2020. Which entry will be made in Peter’s statement of financial position on 30 September 2020? A current asset $400 B current asset $500 C current liability $400 D current liability $500 22 In addition to a share of the profit a partner receives interest on capital, a salary and is charged interest on drawings. How are these recorded in the ledger accounts of the partner? interest on capital salary interest on drawings A credit capital account credit current account debit capital account B credit current account debit capital account credit current account C credit current account credit current account debit current account D debit current account debit current account credit current account 23 A sports club provided the following information. $ subscriptions for the year 26 800 profit on sale of refreshments 4 200 depreciation 1 500 rent and insurance 12 600 wages 3 200 What was the total income for the year? A $15 800 © UCLES 2020 B $17 300 C $22 600 0452/12/O/N/20 D $31 000 9 24 A club was formed on 1 July 2019. During the year ended 30 June 2020 subscriptions received from members totalled $2500. This included $120 paid in advance for the next financial year. Subscriptions outstanding on 30 June 2020 amounted to $280. How much was recorded for subscriptions in the income and expenditure account for the year ended 30 June 2020? A $2100 B $2500 C $2660 D $2780 25 Anthony does not keep a full set of accounting records. He knows his opening and closing cash balances and wishes to calculate his cash sales. Which item does Anthony not need in order to calculate his cash sales? A cash banked B cash discount C cash drawings D cash expenses 26 A trader has not maintained a full set of accounting records. How can she calculate the credit sales for the year? A receipts from credit customers + closing trade receivables – discount allowed – opening trade receivables B receipts from credit customers – closing trade receivables + discount allowed + opening trade receivables C receipts from credit customers – closing trade receivables – discount allowed + opening trade receivables D receipts from credit customers + closing trade receivables + discount allowed – opening trade receivables 27 A trader made the following forecasts for the business for the next financial year. average inventory $80 000 rate of inventory turnover 6 times mark-up 25% What are the forecast sales for the next financial year? A $360 000 © UCLES 2020 B $480 000 C $576 000 0452/12/O/N/20 D $600 000 [Turn over 10 28 A company provided the following information about its current ratio. year 1 2.3 : 1 year 2 2.4 : 1 year 3 2.5 : 1 What would explain the changes in the ratio? A Inventory is decreasing. B Other payables are increasing. C Other receivables are increasing. D Trade receivables are decreasing. 29 A trader wants to improve his gross margin. How can this be done? A Reduce administrative expenses. B Reduce depreciation of equipment. C Reduce rate of cash discount allowed. D Reduce rate of trade discount allowed. 30 Meesha provided the following information for her first year of trading. $ sales (1000 units at $10 each) 10 000 cost of sales (1000 units at $4.50 each) 4 500 gross profit 5 500 In her second year of trading, Meesha reduced the selling price and sold 1500 units. Her gross profit decreased by $250. There was no change in the cost per unit. What was the total value of sales in the second year of trading? A $9750 © UCLES 2020 B $10 250 C $12 000 0452/12/O/N/20 D $12 500 11 31 AB Limited and CD Limited both started business on 1 January 2019 with an ordinary share capital of $100 000. Neither company had any debentures or loans. Both companies had the same profit in 2019. Only AB Limited paid a dividend. The return on capital employed (ROCE) was calculated using closing capital employed. Which statement about AB Limited’s ROCE is correct when compared to that of CD Limited? A It is higher because the dividend reduced retained earnings. B It is lower because the dividend reduced capital employed. C It is lower because the dividend reduced the profit for the year. D It is the same as that of CD Limited. 32 Which interested party uses the financial statements of a business to assess current performance and plan for future activities? A banks B employees C government D managers 33 The special skills of the employees are not recorded in the financial statements of a business. Which accounting principle is being applied? A historic cost B materiality C money measurement D realisation 34 How can a business comply with the accounting principle of prudence? assets losses A avoid overstating avoid overstating B avoid overstating avoid understating C avoid understating avoid overstating D avoid understating avoid understating © UCLES 2020 0452/12/O/N/20 [Turn over 12 35 What is not an aim of international accounting standards? A to ensure accounting standards in different countries agree B to establish an organisation to set standards in every country C to make it easier to compare companies’ financial statements D to reduce the variety of accounting practices worldwide Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge. © UCLES 2020 0452/12/O/N/20 Cambridge IGCSE™ ACCOUNTING 0452/13 Paper 1 Multiple Choice October/November 2020 1 hour 15 minutes You must answer on the multiple choice answer sheet. *3825567397* You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS • There are thirty-five questions on this paper. Answer all questions. • For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet. • Follow the instructions on the multiple choice answer sheet. • Write in soft pencil. • Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you. • Do not use correction fluid. • Do not write on any bar codes. • You may use a calculator. INFORMATION • The total mark for this paper is 35. • Each correct answer will score one mark. A mark will not be deducted for a wrong answer. • Any rough working should be done on this question paper. This document has 16 pages. Blank pages are indicated. IB20 11_0452_13/2RP © UCLES 2020 [Turn over 2 1 A trader prepares financial statements each year. What do these assist the trader to do? 2 A calculate the amount owing to credit suppliers B calculate the cash drawings C check the bank statement balance D make decisions about the future The following balances appeared in Hussein's books. $ fixtures 6000 inventory 3300 trade receivables 3000 trade payables 4500 other receivables 500 other payables 300 loan to Imran 1000 bank overdraft 1400 What was the total of the liabilities? A $4800 © UCLES 2020 B $6200 C $6400 0452/13/O/N/20 D $7200 3 3 The following account appeared in the books of Mary. Paul account $ April 1 balance b/d 14 sales 90 $ April 21 returns 150 30 bank 25 88 discount balance c/d 240 2 125 240 Which statement is correct? 4 5 A On 1 April Paul owed Mary $90. B On 14 April Paul sold goods, $150, to Mary. C On 21 April Mary returned goods, $25, to Paul. D On 30 April Mary owed Paul $125. Which business document is used to update the cash book for standing order payments? A bank statement B cheque counterfoil C paying-in slip D receipt On 1 March 2020 the bank column of a cash book had a credit balance of $290. During March cheques totalling $580 were received and cheques totalling $610 were paid to suppliers. Bank charges of $12 incurred in February were also entered in the cash book. What was the balance of the bank column in the cash book on 1 April 2020? A $248 credit B $248 debit C $332 credit D $332 debit © UCLES 2020 0452/13/O/N/20 [Turn over 4 6 Ziningi prepared a trial balance. The total of the debit column was $225 750 and the total of the credit column was $225 250. What could explain the difference? 7 A Bank overdraft, $250, was recorded as a debit balance. B Inventory, $500, was included as a debit balance. C Purchases returns, $250, were included as a credit balance. D Sales returns, $250, were included as a debit balance. Rent received from a tenant was debited to the rent receivable account and credited to the cash book. Which type of error has been made? 8 A commission B compensating C complete reversal D principle A computer system purchased from Ace Computers for $1430 had been incorrectly recorded as $1340 and was entered in the stationery account instead of the office equipment account. Which journal entry corrects this error? debit $ A B C D Ace computers stationery office equipment 90 1340 Ace computers stationery office equipment 90 1340 office equipment Ace computers stationery 1340 office equipment Ace computers stationery 1430 © UCLES 2020 credit $ 1340 1430 90 1340 90 1340 0452/13/O/N/20 5 9 Kate calculated her draft profit for the year at $28 400. She later discovered the following errors. 1 Rent prepaid by Kate was understated by $1000. 2 Closing inventory was understated by $1500. What was the correct profit for the year? A $25 900 B $27 900 C $28 900 D $30 900 10 What would not be included in a sales ledger control account? A cash sales recorded in the cash book B cheques received from credit customers recorded in the cash book C goods sold on credit recorded in the sales journal D irrecoverable debts written off recorded in the journal 11 A trader debited the cost of repairing office equipment to the office equipment account. How did this error affect the financial statements? profit for the year non-current assets A overstated overstated B overstated understated C understated overstated D understated understated 12 A trader uses the reducing balance method of depreciation. What effect will this have over the life of the non-current asset? A depreciation charged evenly over the years B more depreciation charged in the early years C more depreciation charged in the later years D the non-current asset being revalued each year © UCLES 2020 0452/13/O/N/20 [Turn over 6 13 Rashid provided the following information at 31 December. $ machinery at cost 52 000 provision for depreciation of machinery 23 000 Depreciation for the year is calculated at 20% on cost. After the statement of financial position was prepared it was found that the machinery repairs costing $2000 had been debited to the machinery account. What is the correct balance on the provision for the depreciation of machinery account? A $21 000 B $22 600 C $23 400 D $25 000 14 At the end of his financial year on 31 August 2020 a trader had prepaid insurance. How will this appear in the insurance account and the statement of financial position at 31 August 2020? insurance account statement of financial position A credit balance carried down current asset B credit balance carried down current liability C debit balance carried down current asset D debit balance carried down current liability © UCLES 2020 0452/13/O/N/20 7 15 Hayley’s financial year ends on 30 September 2020. She provided the following information. $ on 1 October 2019 rent receivable accrued 480 during the year ended 30 September 2020 rent received 6800 On 30 September 2020 rent received in advance 720 Which journal entry would be made on 30 September 2020? debit $ A B C D income statement rent receivable 5600 income statement rent receivable 6560 rent receivable income statement 5600 rent receivable income statement 6560 credit $ 5600 6560 5600 6560 16 The balances in the books of Jason on 1 July 2019 included the following. $ trade receivables provision for doubtful debts 64 200 1 284 Trade receivables at 30 June 2020 were $58 500, of which $500 should be written off as irrecoverable. Jason wants to maintain his provision for doubtful debts at 2% of trade receivables. What was the change in the provision for doubtful debts at 30 June 2020? A $114 decrease B $124 decrease C $376 increase D $386 increase © UCLES 2020 0452/13/O/N/20 [Turn over 8 17 Nirmal sells two products, product G and product H. The following information is available about his inventory at the end of the financial year. number of units product cost price per unit net realisable value per unit G 1000 $2.00 $2.50 H 800 $1.50 $1.20 It was found that 100 units of product G were damaged and were unsaleable. What was the total value of Nirmal’s inventory? A $2760 B $3000 C $3260 D $3460 18 Which items will not be shown in an income statement prepared for a service business? A 1 cost of sales 2 gross profit 3 profit for the year 4 wages paid to employees 1 only B 1 and 2 C 2 and 4 D 3 and 4 19 A trader provided the following information. $ capital at 1 October 2019 52 000 motor vehicle given to the business by the trader 3 500 personal expenses paid out of business bank account 1 500 cash drawings made during the year 500 What was the capital at 30 September 2020? A $46 500 © UCLES 2020 B $50 000 C $53 500 0452/13/O/N/20 D $55 000 9 20 John and Mark are in partnership. Profits and losses are shared in the ratio 3 : 2. John is entitled to an annual salary of $12 000. The profit for the year ended 31 August 2020 was $52 000. How much would be credited to the partners’ current accounts on 31 August 2020? John’s current account $ Mark’s current account $ A 24 000 16 000 B 26 000 26 000 C 31 200 20 800 D 36 000 16 000 21 A partnership maintains both current and capital accounts for each partner. An inexperienced book-keeper prepared the following account which contains errors. Owen capital account $ balance c / d $ 135 000 balance b / d 100 000 loan made to partnership interest on capital 135 000 30 000 5 000 135 000 What should appear as the closing balance on Owen’s capital account? A $75 000 B $100 000 C $105 000 D $130 000 22 Z Limited provided the following information. $ 5% debentures 50 000 general reserve 25 000 issued ordinary share capital 300 000 retained earnings 75 000 short-term bank loan 10 000 What was the equity? A $325 000 © UCLES 2020 B $400 000 C $450 000 0452/13/O/N/20 D $460 000 [Turn over 10 23 Which statement about preference shares is not correct? A Preference shareholders do not have voting rights. B Preference shareholders receive a fixed dividend. C Preference shareholders have a prior claim before ordinary shareholders in the event of liquidation. D Preference shareholders receive their dividend after the ordinary shareholders have been paid. 24 A sports club was formed on 1 September 2019. What may appear in the receipts and payments account for the year ended 31 August 2020? A closing bank balance B closing inventory of club shop C depreciation of sports equipment D subscriptions in arrears 25 A manufacturing company provided the following information. $ cost of raw materials 186 000 direct wages 75 000 machinery depreciation 45 000 factory supervisor’s salary 32 000 factory rent 24 000 machinery repairs 18 000 What was the prime cost of manufacturing? A $186 000 © UCLES 2020 B $261 000 C $293 000 0452/13/O/N/20 D $380 000 11 26 A manufacturer’s work in progress at the start of the year was valued at $850. At the end of the year it was valued at $10 200. What was the effect of this increase on the cost of production and the cost of sales? cost of production cost of sales A decrease decrease B decrease increase C increase decrease D increase increase 27 A trader made the following forecasts for the business for the next financial year. average inventory $80 000 rate of inventory turnover 6 times mark-up 25% What are the forecast sales for the next financial year? A $360 000 B $480 000 C $576 000 D $600 000 28 Kim’s trade payables turnover increased. What could have caused this? A Kim’s customers took longer to pay their accounts. B Kim’s credit purchases increased. C Kim’s sales revenue increased. D Kim took longer to pay her credit suppliers. © UCLES 2020 0452/13/O/N/20 [Turn over 12 29 A company provided the following information about its rate of inventory turnover. year 1 24 times year 2 25 times year 3 27 times What would explain the changes in the ratio? A cost of sales is decreasing B inventory is increasing C sales volume is increasing D selling price is increasing 30 A company provided the following information about its current ratio. year 1 2.3 : 1 year 2 2.4 : 1 year 3 2.5 : 1 What would explain the changes in the ratio? A Inventory is decreasing. B Other payables are increasing. C Other receivables are increasing. D Trade receivables are decreasing. 31 A trader wants to improve his gross margin. How can this be done? A Reduce administrative expenses. B Reduce depreciation of equipment. C Reduce rate of cash discount allowed. D Reduce rate of trade discount allowed. © UCLES 2020 0452/13/O/N/20 13 32 Zak has depreciated his machinery at the rate of 20% per annum using the straight-line method. At 31 December 2018 the statement of financial position included: $ machinery at cost 30 000 depreciation to date 12 000 18 000 On 31 December 2019 Zak was considering calculating the annual depreciation at 20% per annum on the net book value of the machinery. Which statement is correct? A depreciation would be $3600 applying the consistency principle B depreciation would be $3600 applying the prudence principle C depreciation would be $6000 applying the consistency principle D depreciation would be $6000 applying the prudence principle 33 The financial statements of a business are prepared on the basis that it will continue to operate for many years into the future. Which accounting principle is being applied? A business entity B going concern C money measurement D realisation 34 When Marina opened a business she purchased a stapler for the office. She recorded this as office expenses rather than as office equipment. Which accounting principle did Marina apply? A consistency B historic cost C materiality D prudence © UCLES 2020 0452/13/O/N/20 [Turn over 14 35 What is not an aim of international accounting standards? A to ensure accounting standards in different countries agree B to establish an organisation to set standards in every country C to make it easier to compare companies’ financial statements D to reduce the variety of accounting practices worldwide © UCLES 2020 0452/13/O/N/20 *6889339018* *0300798858* *4973334389* *8476545783*

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