Accounting 0452/23 May/June 2019: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 2, May/June 2019. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Annabel is a wholesaler. She maintains a three column cash book.
The following transactions took place in April 2019.
April 8 Received a cheque from Ellie in full settlement of her account of $450 after deducting
2% cash discount
15 Paid Ed $468 by bank transfer to settle his account after deducting 2 12 % cash discount
21 Received a cheque from Caleb, $310
25 Withdrew cash from bank for business use, $200
27 Paid operating expenses in cash, $296
Annabel received her bank statement for April 2019.
The following items appeared on her bank statement but had not been recorded in her accounting records.
1 The cheque received from Caleb on 21 April had been dishonoured.
2 Carly, a credit customer, had paid $294 by credit transfer to settle her account of $300.
3 Bank charges for the month amounted to $82.
REQUIRED
(a) Complete Annabel’s cash book on the page opposite.
Balance the cash book and bring down the balances on 1 May 2019. [13]
Annabel
Cash Book
Date Details Discount Cash Bank Date Details Discount Cash Bank allowed received
2019 $ $ $ 2019 $ $ $
April 1 Balance b/d …… 150 …… April 1 Balance b/d …… …… 988
3
Annabel purchases goods on credit from Ed. They exchanged various business documents during
April 2019.
REQUIRED
(b) Name the person who issued each of the following documents.
document person issuing the document
invoice ……
debit note ……
credit note ……
statement of account ……
[4]
(c) Explain the difference between a debit note and a credit note.
……[4]
(d) State one purpose of issuing a statement of account.
……[1]
[Total: 22]
PLEASE TURN OVER
Mark scheme
1(a) Annabel 13
Cash Book
Date Details Disc. Cash Bank Date Details Disc. Cash Bank
2019 $00 $00 $00 2019 $00 $00 $00
April 1 Balance b/d 150 April 1 Balance b/d 988
8 Ellie (1) 9 441 15 Ed (1) 12 468
21 Caleb (1) 310 25 Cash (1) 200
25 Bank (1) 200 27 Operating expenses (1) 296
30 Carly (1) 6 294 30 Caleb (dis chq) (1) 310
Balance c/d 1 003 Bank charges (1) 82
Balance c/d 54
15 350 2 048 12 350 2 048
2019 2019
May 1 Balance b/d 54 May 1 Balance b/d 1003
(1)OF (1)OF
+ (1) totalling discount columns
+ (1) dates
1(b) 4
document person issuing the document
invoice Ed (1)
debit note Annabel (1)
credit note Ed (1)
statement of account Ed (1)
1(c) A debit note is sent by the customer to the supplier (1) to ask for a reduction in an invoice/when goods are returned (1) 4
A credit note is sent by the supplier to the customer (1) to notify of a reduction in an invoice/accept returns/accept request for
reduction in an invoice (1)
1(d) To notify the customer of the amount outstanding/to remind the customer of the amount due 1
To summarise the transactions for the month
To provide the customer with a copy of their account for checking purposes
Any 1 reason (1)
The financial year of the NS Musical Society ends on 31 January.
On 31 January 2019 it was confirmed that the treasurer had disappeared and had taken some money belonging to the NS Musical Society.
The new treasurer was able to provide the following information relating to the financial year ended
31 January 2019.
The Society has 60 members. The annual subscription is $50.
$
On 1 February 2018
Subscriptions accrued 100
Subscriptions prepaid 250
Bank overdraft 780
Musical instruments at book value 3600
During the year ended 31 January 2019
Payment of rates of premises covering 10 months to 30 November 2018 2000
Payment of insurance for 14 months to 31 March 2019 700
Receipts from sales of concert tickets 2560
Concert expenses paid 1610
Proceeds of sale of old musical instruments (book value $120) 100
Cost of musical instruments purchased 2100
(Half of this amount was paid immediately and the balance was payable in February 2019)
At 31 January 2019
Bank overdraft 2430
Subscriptions prepaid 200
Musical instruments are depreciated at 10% per annum based on the value of instruments owned at the end of each financial year.
REQUIRED
(a) Prepare the subscriptions account for the year ended 31 January 2019 to show the subscriptions received during the year.
Balance the account and bring down the balance on 1 February 2019.
NS Musical Society
Subscriptions account
Date Details $ Date Details $
[7]
(b) Prepare the receipts and payments account for the year ended 31 January 2019 to calculate the amount of money which is missing from Society funds.
Balance the account and bring down the balance on 1 February 2019.
NS Musical Society
Receipts and Payments Account for the year ended 31 January 2019
Date Details $ Date Details $
[11]
(c) Complete the following table to show the amount which would appear in the income and expenditure account for the year ended 31 January 2019 for each item.
Item $
Concert ……
Rates ……
Insurance ……
Depreciation of musical instruments ……
Sale of musical instruments ……
[6]
Workings
A member of the committee of the NS Musical Society has expressed concern about the bank overdraft and has proposed that the annual subscription should be increased by $10.
REQUIRED
(d) Discuss the implications of increasing the annual subscription by $10.
……[3]
[Total: 27]
Mark scheme
2(a) NS Musical Society 7
Subscriptions account
Date Details $00 Date Details $00
2018 2018
Feb 1 Balance b/d (1) 100 Feb 1 Balance b/d (1) 250
2019 2019
Jan 31 Income and Jan 31 *Bank/Cash (1)
expenditure (1) 3 000 (1) 3 050
Balance c/d 200
3 300 3 300
2019
Feb 1 Balance b/d (1) 200
+ (1) dates
2(b) NS Musical Society 11
Receipts and Payments Account for the year ended 31 January 2019
Date Details $00 Date Details $00
2019 2018
Jan 31 Subscriptions (1)OF 3 050 Feb 1 Balance b/d (1) 780
Concert tickets (1) 2 560 2019
Disposal of non-current Jan 31 Rates (1) 2 000
assets (1) 100
Balance c/d 2 430 Insurance (1) 700
Concert expenses (1) 1 610
Musical Instruments (1) 1 050
*Missing amount (1)
(1) 2 000
8 140 8 140
2019
Feb 1 Balance b/d 2 340
+ (1) dates
2(c) 6
Item $00
Concert 950 (1)
Insurance 2 400 (1)
Rates 600 (1)
Depreciation of musical 558 (1)OF
instruments
10% × (3600 + 2100 – 120(1))
Sale of musical instrument 20 (1)
2(d) The total amount receivable from members each year would increase by $600 3
The annual surplus for the year would increase by $600
This total receipts would increase by $600 per annum if all the members paid their subscription in full each year
This would reduce the overdraft by $600
The existing overdraft would have only been $430 if the theft had not occurred
Membership may fall if the annual subscription is increased
Or other suitable comments
Any 3 comments (1) each
Jamal opened a toy factory on 1 March 2018.
On that date he purchased the following non-current assets.
$
Premises 100 000
Factory machinery 44 000
Loose tools for factory 1 650
Office fixtures and fittings 15 450
Jamal decided on the following depreciation policy.
1 No depreciation would be charged on premises.
2 Factory machinery and office fixtures and fittings would be depreciated by 20% per annum using the straight line (equal instalment) method of depreciation.
3 Loose tools would be revalued at the end of each financial year.
Jamal provided the following information.
$
For the year ended 28 February 2019
Purchases of raw materials 45 680
Purchases of finished goods 12 400
Purchase returns of raw materials 1 030
Carriage on raw materials 3 240
Direct factory wages 29 750
Indirect factory wages 18 750
Office and sales staff wages 25 360
Operating expenses 8 250
Insurance (for 16 months to 30 June 2019) 3 200
Sales returns 2 250
Revenue ?
At 28 February 2019
Inventory of raw materials 4 150
Inventory of work in progress 3 310
Inventory of finished goods 8 900
Loose tools at valuation 1 320
Direct factory wages accrued 3 040
Operating expenses accrued 550
The operating expenses and the insurance are to be apportioned 75% to the factory and 25% to the office.
Jamal’s mark-up is 25%.
REQUIRED
(a) Prepare the manufacturing account for the year ended 28 February 2019.
Jamal
Manufacturing Account for the year ended 28 February 2019
$ $
[15]
(b) Prepare the income statement (trading section) for the year ended 28 February 2019 to show the revenue, cost of sales and gross profit for the year.
Jamal
Income Statement (Trading section) for the year ended 28 February 2019
$ $
[7]
After the preparation of the financial statements for the year ended 28 February 2019 it was discovered that some errors had been made.
REQUIRED
(c) Complete the following table to indicate the effect of each of the errors.
The first one has been completed as an example.
Error effect on effect on effect on cost of gross profit profit for the production year
Returns of finished goods to the supplier, $1 200, were omitted no effect understated understated
Operating expenses accrued were
$850 not $550 …… …… ……
Salesman’s commission, $1 850, had been included in indirect factory wages …… …… ……
[6]
[Total: 28]
PLEASE TURN OVER
Mark scheme
3(a) Jamal 15
Manufacturing Account for the year ended 28 February 2019
$00 $00
Cost of materials consumed
Purchases of raw materials 45 680
Less Purchases returns 1 030 (1) 44 650
Carriage on raw materials 3 240 (1)
47 890
Closing inventory of raw materials 4 150
43 740 (1)
Direct wages 29 750 (1) + 3040 (1) 32 790
Prime cost 76 530 (1)OF
Factory overheads
Indirect factory wages 18 750
Operating expenses (8250 + 550) (1) × 75% (1) 6 600
Insurance (3200 – 800) (1) × 75% (1) 1 800
Depreciation – factory machinery 8 800 (1)
loose tools 330 (1) 36 280
112 810 (1)OF
Closing work in progress 3 310 (1)
Cost of production 109 500 (1)OF
3(b) Jamal 7
Income Statement (Trading section) for the year ended 28 February 2019
$00 $00
Revenue 143 500 (1)OF
Less Sales returns 2 250 (1) 141 250
Cost of sales
Cost of production 109 500 (1)OF
Purchases of finished goods 12 400 (1)
121 900
Closing inventory of finished goods 8 900 (1) 113 000 (1)OF
Gross profit 28 250 (1)OF
3(c) 6
effect on cost of effect on gross effect on profit
Error
production profit for the year
Returns of finished goods to the
supplier, $1 200, had not been no effect understated understated
recorded
Operating expenses accrued
understated (1) overstated (1) overstated (1)
were $850 not $550
Salesman’s commission, $1 850,
had been included in indirect overstated (1) understated (1) no effect (1)
factory wages
Shen is a retailer of men’s clothes. His financial year ends on 31 January.
The annual rates of Shen’s shop are $960. On 1 February 2018 Shen owed rates, $240. He paid rates by bank transfer on the following dates.
$
2018
March 31 640
October 31 720
Shen receives a commission from Wang, who owns a shoe shop, on goods purchased by Shen’s customers.
Shen provided the following information.
$
2018
February 1 Commission outstanding 210
March 1 Commission received by bank transfer 210
August 31 Commission received in cash 95
2019
January 31 Commission outstanding 114
REQUIRED
(a) Prepare the following accounts in the ledger of Shen for the year ended 31 January 2019.
Balance the accounts and bring down the balances on 1 February 2019.
Shen
Rates account
Date Details $ Date Details $
Commission receivable account
Date Details $ Date Details $
[9]
Shen’s rate of inventory turnover for the year ended 31 January 2018 was 11.50 times.
He provided the following information for the year ended 31 January 2019.
$
Revenue 25 850
Gross profit 5 150
Inventory 1 February 2018 1 890
Inventory 31 January 2019 2 040
REQUIRED
(b) Calculate the rate of inventory turnover for the year ended 31 January 2019. The calculation should be correct to two decimal places.
……[3]
(c) State whether Shen would be satisfied with the change in the rate of inventory turnover. Give a reason for your answer.
Satisfied? ……
Reason ……
……[2]
(d) Suggest two ways in which Shen could improve the rate of inventory turnover.
1 ……
2 ……
……[2]
(e) Suggest two reasons why Shen always values his inventory at the lower of cost and net realisable value.
1 ……
2 ……
……[2]
After the preparation of the income statement for the year ended 31 January 2019 Shen discovered that the inventory at 31 January 2019 had been overstated.
REQUIRED
(f) Complete the table by placing a tick (✓) in the correct column to indicate whether each item would be overstated or understated as a result of the error.
The first one has been completed as an example.
overstated understated current assets at 31 January 2019 ✓ gross profit for the year ended 31 January 2019 capital at 31 January 2019 cost of sales for the year ending 31 January 2020 profit for the year ending 31 January 2020
[4]
[Total: 22]
Mark scheme
4(a) Shen 9
Rates account
Date Details $00 Date Details $00
2018 2018
Mar 31 Bank 640 Feb 1 Balance b/d (1) 240
} (1)
Oct 31 Bank 720 2019
Jan 31 Income statement (1) 960
Balance c/d 160
1 360 1 360
2019
Feb 1 Balance b/d (1)OF 160
Commission receivable account
Date Details $00 Date Details $00
2018 2018
Feb 1 Balance b/d (1) 210 Mar 1 Bank 210
}(1)
Aug 31 Cash 95
2019 2019
Jan 31 Income statement 209 Jan 31 Balance c/d 114
(1)OF 419 419
2019
Feb 1 Balance b/d (1)OF 114
+ (1) dates
4(b) (25 850 − 5150) 20 700 (1) 3
= = 10.53 times (1)
(1890 + 2040) / 2 1965 (1)
4(c) If answer to 4(b) is below 11.50 times 2
Unsatisfied (1)
Goods are not being sold as quickly as in the previous year/lower sales/increased inventory (1)
If answer to 4(b) is above 11.50 times
Satisfied (1)
Goods are being sold more quickly than in the previous year/increased sales/decreased inventory (1)
4(d) Increase sales activity/higher sales 2
Reduce level of inventory
Or other suitable point
Any 2 points (1) each
4(e) To apply the principle of prudence 2
To ensure that the profit for the year is not overstated
To ensure that the inventory/current assets are not overstated
To apply the principle of consistency
To apply the principle of accruals (matching)
Any 2 reasons (1) each
4(f) 4
overstated understated
current assets at 31 January 2019 9
gross profit for the year ended 31
9 (1)
January 2019
capital at 31 January 2019 9 (1)
cost of sales for the year ending 31
9 (1)
January 2020
profit for the year ending 31 January
9 (1)
2020
Myra is a trader. Her financial year ends on 31 December.
Myra provided the following information.
$
For the year ended 31 December 2018
Sales (all on credit) 118 000
Purchases (all on credit) 94 000
Cost of sales 94 350
Profit for the year before interest 14 100
Profit for the year after interest 9 900
At 31 December 2018
Non-current assets at book value 266 000
Inventory 8 500
Trade receivables 7 250
Bank overdraft 4 150
Trade payables 6 600
Myra allows her credit customers 14 days credit. The trade receivables collection period calculated at 31 December 2017 was 18 days.
Myra is allowed 28 days credit by her credit suppliers. The trade payables payment period calculated at 31 December 2017 was 30 days.
REQUIRED
(a) (i) Calculate the trade receivables collection period for the year ended 31 December 2018.
Round up your answer to the next whole day.
……[2]
(ii) Suggest two ways in which the trade receivables collection period may be improved.
1 ……
2 ……
……[2]
(b) (i) Calculate the trade payables payment period for the year ended 31 December 2018.
Round up your answer to the next whole day.
……[2]
(ii) Suggest two ways in which the change in the trade payables payment period may affect
Myra.
1 ……
2 ……
……[2]
(c) Calculate the following to two decimal places.
(i) Percentage of gross profit to revenue (gross profit margin)
……[2]
(ii) Profit for the year to revenue (net profit margin)
……[2]
(iii) Return on capital employed (ROCE)
……[2]
Myra’s brother, Raj, also has a business.
After he prepared his draft financial statements for the year ended 31 March 2019 the following errors were discovered.
1 The total cost of an advertising campaign, $900, which covered a period of 15 months to
30 June 2019, had been charged to the income statement.
2 Discount allowed, $1200, had been recorded as discount received.
3 Depreciation on office equipment for the year ended 31 March 2019 had been calculated at
10% per annum using the reducing (diminishing) balance method instead of the straight line
(equal instalment) method. On 1 April 2018 the cost of the office equipment was $15 000 and the accumulated depreciation was $3000.
REQUIRED
(d) Complete the following statement to show the effect on the draft profit for the year of correcting errors 1–3. Calculate the corrected profit for the year.
Raj
Statement of corrected profit for the year ended 31 March 2019
$
Draft profit for the year before corrections 8550
Increase Decrease in profit in profit
$ $
Error 1 …… ……
Error 2 …… ……
Error 3 ……
Corrected profit for the year ……
[7]
[Total: 21]
Mark scheme
5(a)(i) 7250 365 2
× } (1) whole formula = 22.43 = 23 days (1)
118 000 1
5(a)(ii) Improve credit control 2
Issue invoices and statements promptly
Offer cash discount for prompt payment
Charge interest on overdue accounts
Refuse further supplies until outstanding balance is paid
Invoice discounting and debt factoring
Any two methods (1) each
5(b)(i) 6600 365 2
× } (1) whole formula = 25.63 = 26 days(1)
94 000 1
5(b)(ii) If answer to 5(b)(i) is less than 30 days 2
Is deprived of the use of the money within the business earlier than previously
Relationship with trade payables may be improved
May be entitled to cash discount
Will avoid being charged interest on overdue accounts
If answer to 5(b)(i) is more than 30 days
Has use of money for a longer period
Relationship with trade payables may deteriorate
Will lose cash discount
May be charged interest on overdue accounts
Any 2 points (1) each
5(c)(i) (118 000 − 94 350) 100 23 650 100 2
× = × } whole formula (1) = 20.04% (1)
118 000 1 118 000 1
5(c)(ii) 9900 100 2
× } whole formula (1) = 8.39% (1)
118 000 1
5(c)(iii) 14100 100 2
Either × = 5.20% (1)
271000 (1) 1
9900 100
Or × = 3.65% (1)
271000 (1) 1
5(d) Raj 7
Statement of corrected profit for the year ended 31 March 2019
$00
Draft profit for the year before corrections 8 550
Increase Decrease
in profit in profit
$00 $00
Error 1 180 (2)*
Error 2 2 400 (2)*
Error 3 300 (2)*
180 2 700 2 520
Corrected profit for the year 6 030 (1)OF
* (1) for position and (1) for amount
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Accounting 0452/23 for May/June 2019 is out of 120 marks, with 1 hour 45 minutes to answer it, across 5 questions.
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