Accounting 0452/22 February/March 2021: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 2, February/March 2021. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Shilpa is a trader. The following transactions took place in January 2021.
January 2 Paid rent, $450, by direct debit
3 Bought goods on credit from Dilip, list price $120, subject to a trade discount of
25%
6 Sold goods on credit to Kabir, list price $200, subject to a trade discount of 20%
9 Sold surplus office fittings for $110 which was paid by credit transfer
10 Returned goods to Dilip, list price $20. These goods had been purchased on
3 January
11 Paid $50 to Dilip in cash
15 Cash sales, $85, were immediately paid into the bank
17 Paid office expenses, $30, by credit transfer
20 Sold goods on credit to Pari, $150
21 Kabir paid by cheque for the goods he purchased on 6 January, after deducting cash discount of 7½%
24 Pari paid $141, by cheque, in full settlement of the purchases made on 20 January
26 Sold goods on credit to Yash, $62, offering him a discount of 5% if he paid within
21 days
REQUIRED
(a) Prepare Shilpa’s sales journal for January 2021.
Total the journal and indicate the ledger account to which the total would be posted.
Shilpa
Sales journal
Date Details $ $
[4]
(b) Complete Shilpa’s cash book on the page opposite.
Balance the cash book and bring down the balances on 1 February 2021.
Shilpa
Cash Book
Date Details Discount Cash Bank Date Details Discount Cash Bank
allowed received
2021 $ $ $ 2021 $ $ $
Jan 1 Balance b/d …… 200 814 …… …… …… …… ……
3
[11]
(c) Prepare the ledger account of Dilip for January 2021. Balance the account and bring down the balance on 1 February 2021.
There was no balance on Dilip’s account on 1 January 2021.
Shilpa
Dilip account
Date Details $ Date Details $
[4]
(d) Complete the table by placing a tick (3) to indicate which document Dilip would send to
Shilpa for the return of goods on 10 January.
Debit note
Credit note
[1]
[Total: 20]
Mark scheme
1(a) Shilpa 4
Sales journal
Date Details $
2021
Jan 6 Kabir (200 – 40) 160 (1)
20 Pari 150 (1)
26 Yash 62 (1)
31 Transfer to sales account 372 (1) OF
1(b) Shilpa 11
Cash Book
Disc. Cash Bank Disc. Cash Bank
Alld Recd
2021 $ $ $ 2021 $ $ $
Jan 1 Balance b/d 200 814 Jan 2 Rent (1) 450
9 Disposal 11 Dilip (1) 50
of office fittings (1) 110 17 Office
15 Sales (1) 85 expenses (1) 30
21 Kabir (1) 12 148 31 Balance c/d 150 818
24 Pari (1) 9 ___ 141 ___ ____
21 200 1298 200 1298
Feb 1 Balance b/d (1)OF 150 818
(1)OF (1)OF
+ (1) dates
1(c) Shilpa 4
Dilip account
Date Details $ Date Details $
2021 2021
Jan 10 Purchases returns (1) 15 Jan 3 Purchases (1) 90
(20–5) (120 – 30)
11 Cash (1) 50
31 Balance c/d 25
90 90
Feb 1 Balance b/d (1)OF 25
1(d) 1
Debit note
Credit note (1)
Zamir is in business providing legal services. Zamir provided the following balances from his books of account at 31 December 2020.
$
Fee income 151 750
Rent and rates 26 000
Salaries 55 000
Stationery and advertising 6 450
Electricity 8 000
Bank charges 4 100
Office equipment – cost 60 000
Office equipment – provision for depreciation 22 500
Proceeds of disposal of office equipment 1 000
Bank overdraft 7 900
Trade receivables 15 600
Capital 57 000
Drawings 65 000
Additional information
1 The annual rent is $16 000. On 31 December 2020 rent was paid to cover the period from
1 January to 31 March 2021.
There was no accrual or prepayment of rent at 1 January 2020.
2 Rates of $6000 were paid during the year to 31 December 2020. This payment covered the period 1 January 2020 to 31 October 2020 only. From 1 November 2020 annual rates were
$7560.
3 Depreciation is to be charged on office equipment at 15% per annum using the straight-line method. No depreciation is charged in the year of disposal.
4 In February 2020 office equipment was sold for $1000. This equipment had been purchased for $1800 on 1 January 2018. The sales proceeds have been debited to the bank account and credited to the proceeds of disposal of office equipment account. No other entries have been made in respect of the disposal.
5 One of Zamir’s clients has become bankrupt. The client owed $1885. Zamir does not expect to recover this amount.
REQUIRED
(a) Prepare Zamir’s income statement for the year ended 31 December 2020.
Zamir
Income Statement for the year ended 31 December 2020
$ $
[10]
(b) Prepare the assets section of Zamir’s statement of financial position at 31 December 2020.
Zamir
Statement of Financial Position (assets section) at 31 December 2020
$ $ $
[3]
(c) Suggest two possible reasons why Zamir required a bank overdraft.
1 ……
2 ……
[2]
Zamir employs Sharif, who is another lawyer. Sharif also keeps the books of account for the business. Zamir would like to ensure that Sharif does not leave to start work for a rival legal business.
REQUIRED
(d) Advise Zamir whether he should offer Sharif an increase in salary or invite him to become a partner in the business. Justify your answer with two advantages of each course of action.
…… [5]
[Total: 20]
Mark scheme
2(a) Zamir 10
Income Statement for the year ended 31 December 2020
$ $
Fee income 151 750
Less Expenses
*Rent and rates
(26 000 – 4 000 (1) + 1 260 (1)) 23 260
Salaries 55 000 }
Stationery and advertising 6 450 } (1)
Electricity 8 000 }
Bank charges 4 100 } (1)
Irrecoverable debts 1 885 (1)
Loss on disposal of office equipment
(1 000 – (1 260) (1) 260 (1)OF
Depreciation of office equipment
(60 000 – 1 800 = 58 200 × 15% (1) 8 730 (1)OF 107 685
Profit for the year 44 065 (1)OF
* Rent and rates alternative calculation
rent 4 000 × 4 16 000 (1)
rates 6 000 + (2/12 × 7 560) 7 260 (1)
23 260
2(b) Zamir 3
Statement of Financial Position (assets section) at 31 December 2020
$ $ $
Assets
Non-current Assets Cost Accumulated Net book
depreciation value
*Office equipment 58 200 (1) 30 690 (1)OF 27 510 OF
Current Assets
Trade receivables (15 600 – 1 885) 13 715 } (1)
Other receivables 4 000 }
17 715
Total assets 45 225
* workings: cost 60 000 – 1800 = 58 200
acc dep (22 500 – 540) = 21 960 + 8730 OF = 30 690 OF
2(c) High level of drawings (1) 2
High level of trade receivables/trade receivables slow to settle debts (1)
Expenses not controlled efficiently (1)
To meet short-term debts when they fall due (1)
To improve cash flow/liquidity (1)
To be able to take advantage of business opportunities as they arise (1)
To purchase additional non-current assets/expand the business (1)
Accept other valid answers
Max (2)
2(d) Salary increase – advantages 5
Sharif would only be entitled to his salary and not a share of the profit (1)
Zamir would not need to consult Sharif before making decisions (1)
Disagreements about decisions etc. would not arise (1)
Sharif’s motivation and commitment may improve (1)
No changes would be required to the (legal) structure of the business (1)
Accept other valid points
Max (2)
Partnership offer – advantages
Sharif may be required to introduce capital (1)
The risks/losses and responsibilities would be shared (1)
The decision-making would be shared (1)
Sharif’s salary as an employee would not need to be paid (1)
Sharif may be more committed (1)
Accept other valid points
Max (2)
Recommendation (1)
Rachel prepared her trial balance at 31 January. The total of the debit side was more than the total of the credit side. Rachel entered the difference in a suspense account.
(a) Explain how the use of a suspense account allows a draft statement of financial position to be prepared.
…… [2]
Rachel later discovered the following errors.
1 A repair to the premises, $220, had been debited to the premises account.
2 The purchase of a motor vehicle, $3400, on credit from Neil’s Wheels, had not been recorded in the accounting records.
3 Both the sales journal and the purchases journal had been overcast by $100.
4 Returns inwards, $19, had not been recorded in the returns inwards account.
5 Bank interest received, $25, had been debited to the bank charges account. The entry in the bank account had been correctly made.
REQUIRED
(b) Prepare the journal entries to correct errors 1–5. Narratives are not required.
Rachel
Journal
Error Details Debit Credit number $ $
[11]
(c) State the number of the error which is
(i) a compensating error
…… [1]
(ii) an error of omission
…… [1]
(d) Complete the table to indicate the effect of each error on gross profit and on profit for the year. The first one has been completed as an example.
Gross Profit Profit for the year
Error number No effect Understated Overstated No effect Understated Overstated
$ $ $ $
1 3 220
2
3
4
5
[4]
(e) State why a balance may remain on the suspense account after errors 1–5 have been corrected.
…… [1]
[Total: 20]
Mark scheme
3(a) The suspense account balance is entered on the trial balance (1) 2
This means that there are equal debits and credits on the trial balance/the trial balance will balance (1)
3(b) Rachel 11
Journal
Error Details Debit Credit
number $ $
Premises repairs 220 (1)
1
Premises 220 (1)
Motor vehicles 3400 (1)
2
Neil’s Wheels 3400 (1)
Sales 100 (1)
3
Purchases 100 (1)
Sales returns 19 (1)
4
Suspense 19 (1)
Suspense 50 (1)
5 Bank interest received 25 (1)
Bank charges 25 (1)
3(c)(i) Error 3 (1). 1
3(c)(ii) Error 2 (1). 1
3(d) 4
Gross Profit Profit for the year
Error
number
No effect Understated Overstated No effect Understated Overstated
$ $ $ $
1 220
2 (1)
3 (1)
4 19 19 (1)
5 50 (1)
3(e) The accounting records may contain other errors which have not yet been found (1) 1
Chaaya provided the following information.
$
For the year to 31 December 2020
Credit sales 114 400
Credit purchases 63 110
Gross profit 51 480
At 31 December 2020
Inventory 2 850
Trade receivables 15 400
Trade payables 7 430
Bank overdraft 6 190
REQUIRED
(a) Complete the following table.
ratio working answer gross margin
trade receivables turnover days
(round up to next whole day)
current ratio
(correct to two decimal places)
[6]
Chaaya is comparing her ratios with those of Sara, her main competitor. Based on Sara’s most recent financial statements, her trade receivables turnover is 28 days.
REQUIRED
(b) (i) Compare Chaaya’s trade receivables turnover with Sara’s trade receivables turnover.
…… [3]
(ii) State two problems with the inter-firm comparison in 4(b)(i).
1 ……
2 ……
[2]
Chaaya is considering stopping selling on credit and instead selling on a cash only basis. Chaaya would offer a trade discount of 12% to regular customers in order to maintain a good relationship with customers.
REQUIRED
(c) Advise Chaaya whether she should start to make cash sales only and offer the trade discount.
Justify your answer by providing two advantages and two disadvantages.
…… [5]
(d) (i) State two reasons why Chaaya’s employees would be interested in her financial statements.
1 ……
2 ……
[2]
(ii) State two types of users of Chaaya’s financial statements, other than Chaaya and her employees.
1 ……
2 ……
[2]
[Total: 20]
Mark scheme
4(a) 6
ratio working answer
51 480 100
gross margin × (1) whole formula 45% (1)
114 400 1
trade receivables 15 400 365
turnover (days) × (1) whole formula 50 days (1)
114 400 1
(round up to next whole day)
current ratio 2 850 + 15 400 18 250
= (1) whole formula 1.34:1 (1)
(correct to two decimal places) 7 430 + 6 190 13 620
4(b)(i) If Chaaya’s trade receivables turnover (in answer to (a)) is greater than Sara’s (Sara’s was 28 days) 3
Chaaya’s trade receivables turnover is slower than Sara’s (1)
Chaaya may be allowing her credit customers longer to pay (1)
Chaaya’s credit customers may not be paying within a stated credit period (1)
Chaaya’s credit control policy may not be efficient (1)
This may be causing Chaaya to have more cash flow problems than Sara (1)
This may result in Chaaya having more irrecoverable debts than Sara (1)
Accept other valid points
Max (3)
If Chaaya’s trade receivables turnover (in answer to (a)) is less than Sara’s (Sara’s was 28 days)
Chaaya’s trade receivables turnover is faster than Sara’s (1)
Chaaya may be allowing her credit customers less time to pay (1)
Chaaya’s customers may be paying within a stated credit period (1)
Chaaya is less likely to have irrecoverable debts than Sara (1)
Chaaya’s credit control policy is more efficient than Sara’s (1)
This may be causing Chaaya to have fewer cash flow problems than Sara (1)
Accept other valid points
Max (3)
4(b)(ii) Chaaya and Sara may allow different credit periods (1) 2
Chaaya and Sara may use different accounting policies (1)
Chaaya and Sara may have different year-ends (1)
The figures relate to one year only. It would be more meaningful to look at trends (1)
Accept other valid points
Max (2)
4(c) Advantages 5
Cash would be received quicker (1)
The bank overdraft may be reduced (1)
Overdraft interest may be reduced (1)
There would be no irrecoverable debts (1)
There would be fewer administration costs (1)
Accept other valid points
Max (2)
Disadvantages
May lose customers who prefer to buy on credit / damage relationship with customers (1)
Less profit due to trade discount/reduction in selling price/reduction in sales(revenue) (1)
If sales are usually one-off rather than regular, the trade discount may have little effect (1)
Increased risk of fraud or theft/ increased security measures required (1)
Accept other valid points
Max (2)
Recommendation (1)
4(d)(i) If the business has sufficient profitability/liquidity to continue to offer them employment (1) 2
Whether Chaaya could afford to pay them an increase in wages (1)
4(d)(ii) Bank manager (1) 2
Trade payables (1)
Customers (1)
Government departments/tax office (1)
Potential buyers of Chaaya’s business/potential partner (1)
Investors/potential investors (1)
Accept other valid answers
Max (2)
Maira opened a shop on 1 January 2020.
She provided the following trading information.
Gross margin: 40%
Purchase price: $70 per unit
Carriage inwards: $2 per unit
Inventory: 130 units at 31 December 2020
REQUIRED
(a) Calculate the cost of Maira’s inventory at 31 December 2020.
…… [2]
Maira has not kept a full set of accounting records, but provided the following information.
1 All sales were made on cash terms. The sales for the first year were:
for the first two months: $10 800 each month for the next eight months: $12 000 each month for the last two months: $16 200 each month
2 During the year Maira purchased 1400 units. Carriage was paid on these units.
3 Maira took goods from the business during the year ended 31 December 2020. No record was kept of these drawings.
REQUIRED
(b) Prepare Maira’s income statement (trading section) for the year ended 31 December 2020.
Maira
Income Statement (trading section) for the year ended 31 December 2020
$ $
[8]
Maira has been too busy to keep a full set of accounting records. However, she is now considering using double-entry book-keeping for her business.
(c) Advise Maira on whether or not she should start to keep a full set of accounting records.
Justify your answer with two advantages and two disadvantages.
…… [5]
(d) Place a tick (3) in the correct column to indicate to Maira the book of prime entry in which each of the following should be recorded.
Cash book Purchases journal Purchases returns journal
Discount received from a supplier for prompt payment
Credit note received from a supplier
Direct debit paid to a supplier
[3]
(e) Complete the table by placing a tick (3) in the correct column to indicate to Maira the accounting objective which is described in each statement.
Comparability Relevance Reliability
Maira’s financial statements should be free from significant errors.
Maira’s financial statements should be provided in time for her to use them when making decisions about her shop.
[2]
[Total: 20]
Mark scheme
5(a) (70 + 2) (1) × 130 = 9360 (1)OF 2
5(b) Maira 8
Income Statement (trading section) for the year ended 31 December 2020
$ $
Revenue 150 000 (1)
Cost of sales
Purchases (1 400 × 70) 98 000 (1)
Carriage inwards (1400 × 2) 2 800 (1)
100 800
Less Goods taken for own use 1 440 (2)CF/(1)OF
99 360
Less Closing inventory 9 360 (1)OF from (a)
90 000 (1)OF
Gross profit 60 000 (1)OF (40% × revenue)
Revenue
2 × 10 800 = 21 600
8 × 12 000 = 96 000
2 × 16 200 = 32 400
150 000
5(c) Advantages 5
Maira would have all the necessary figures e.g. balances of individual ledger accounts (1)
If the business grows, it will be more difficult to prepare financial statements from incomplete records (1)
Detailed records would be available for future reference (1)
More accurate comparisons year-on-year/with other businesses is possible (1)
More informed decision making will be possible (1)
The government/tax office may require an adequate amount of accounting records (1)
If Maira wishes to sell the business, a potential buyer may wish to see full accounting records (1)
Lenders/potential lenders can be provided with adequate information (1)
Maira should be able to prepare financial statements more easily (1)
Maira should be able to prepare financial statements more accurately (1)
Assist in location of errors/checking procedures, e.g. control accounts may be used (1)
The possibility of fraud would be minimised (1)
Accept other valid points
Max (2)
Disadvantages
Maira’s financial statements may be prepared from incomplete records (1)
Maira is busy so she may not have time for book-keeping (1)
It may take Maira time to learn double-entry book-keeping (1)
Any spare time which Maira can find may be better spent on e.g. marketing (1)
If Maira pays a book-keeper to write up her books, the cost of this will reduce her profits (1)
Accept other valid points
Max (2)
Recommendation (1)
5(d) 3
Cash book Purchases Purchases
journal returns journal
Discount received from a
(1)
supplier for prompt payment
Credit note received from a
(1)
supplier
Direct debit paid to a supplier (1)
5(e) 2
Comparability Relevance Reliability
Maira’s inventory valuation should be free
(1)
from significant errors.
Maira’s financial statements should be
provided in time for her to use them when (1)
making decisions about her shop.
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Accounting 0452/22 for February/March 2021 is out of 100 marks, with 1 hour 45 minutes to answer it, across 5 questions.
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