Accounting 0452/21 May/June 2022: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 2, May/June 2022. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Nakul is a trader. He buys and sells goods on credit. He buys most of his supplies from one supplier, Nadia, who allows Nakul a trade discount of 20%.
The following transactions took place in January 2022.
Jan 2 Paid $441 by cheque to Nadia, in full settlement of $450 owed to her at
1 January 2022.
12 Bought goods on credit from Nadia, list price $350
14 Returned faulty goods to Nadia, list price $80
18 Bought goods on credit from Nadia, list price $400
23 Sold goods on credit, $800
29 Bought goods on credit, $60, from Sophie
30 Returned goods to Sophie, $9
REQUIRED
(a) Prepare the purchases journal for January 2022.
Total the journal and indicate the ledger account to which the total would be posted.
Nakul
Purchases journal
Date Details $ $
[4]
(b) Prepare the purchases returns journal for January 2022.
Total the journal and indicate the ledger account to which the total would be posted.
Nakul
Purchases returns journal
Date Details $ $
[3]
(c) Prepare the account for Nadia, for January 2022, as it would appear in the books of Nakul.
Balance the account and bring down the balance on 1 February 2022.
Nakul
Nadia account
Date Details $ Date Details $
[6]
(d) Complete the table by placing a tick (3) to show where each item is shown on the statement of financial position.
Current liabilities Non-current liabilities
Trade payables
Bank overdraft
[2]
Nakul has a bank overdraft and would like to reduce it. He is considering paying his suppliers later than he currently does in order to help him reduce his bank overdraft.
REQUIRED
(e) Advise Nakul whether or not he should take longer to pay his suppliers. Justify your answer by providing two advantages and two disadvantages.
…… [5]
[Total: 20]
Mark scheme
1(a) Nakul 4
Purchases journal
Date Details $
2022
Jan 12 Nadia (350 – 70) 280 (1)
18 Nadia (400 – 80) 320 (1)
29 Sophie 60 (1)
31 Transfer to purchases account 660 (1)OF
1(b) Nakul 3
Purchases returns journal
Date Details $
2022
Jan 14 Nadia (80 – 16) 64 (1)
30 Sophie 9 (1)
31 Transfer to purchases returns account 73 (1)OF
1(c) Nakul 6
Nadia account
Date Details $ Date Details $
2022 2022
Jan 2 Bank (1) 441 Jan 1 Balance b/d (1) 450
Discount (1) 9 12 Purchases } (1) 280
14 Purchases returns (1) 64 18 Purchases } 320
31 Balance c/d 536 ____
1050 1050
Feb 1 Balance b/d (1)OF 536
1(d) 2
Current liabilities Non-current liabilities
Trade payables (1)
Bank overdraft (1)
1(e) Advantages 5
Would delay the outflow of cash/will reduce bank overdraft (1)
May reduce bank overdraft charges/interest (1)
Overdraft charges may be higher than cash discount offered by suppliers (1)
May currently be paying Nadia/suppliers quicker than is necessary (1)
Max (2)
Disadvantages
May lose the cash discount allowed by Nadia/suppliers (1)
Nadia/suppliers may charge interest on late payment (1)
Nadia/suppliers may stop supplying or reduce the amount they supply/may damage relationship with suppliers (1)
There may be better methods of improving cash flow (e.g. selling on cash terms) (1)
Max (2)
Accept other valid points
(1) for recommendation
Fatima is a sole trader. She prepares her financial statements to the end of March each year.
At 31 March 2022, Fatima’s ledger account balances included the following.
$
Revenue 79 400
Sales returns 3 970
Purchases 36 500
Rent and rates 9 000
Wages 10 100
General expenses 1 287
Insurance 1 800
Discount received 1 095
Inventory at 1 April 2021 3 000
Fixtures and equipment at cost 80 000
Fixtures and equipment – provision for depreciation 39 040
Trade receivables 6 400
Trade payables 4 995
Provision for doubtful debts 156
Cash drawings 8 580
Capital at 1 April 2021 59 000
The following information is also available.
1 Inventory at 31 March 2022 was $3120.
2 Fatima took goods for her own use from the business during the year ended 31 March 2022.
These goods cost $1300.
3 Depreciation on fixtures and equipment is to be charged at 20% per annum using the reducing balance method.
4 Accrued wages at 31 March 2022 were $800.
5 Rent includes a payment of $1500 for the 3 months from 1 March 2022 to 31 May 2022.
6 An irrecoverable trade receivable of $200 is to be written off.
7 The provision for doubtful debts is to be set at 3% of trade receivables.
REQUIRED
(a) Prepare Fatima’s income statement for the year ended 31 March 2022.
Fatima
Income Statement for the year ended 31 March 2022
$ $
[11]
(b) Prepare Fatima’s capital account for the year ended 31 March 2022. Balance the account and bring down the balance on 1 April 2022.
Fatima
Capital account
Date Details $ Date Details $
[4]
Fatima would like to expand the business. She thinks that additional finance of $20 000 would be required for the equipment which she would need. Fatima’s bank have offered to lend her $20 000, to be repaid after four years at interest of 6% per annum.
REQUIRED
(c) Advise Fatima whether or not to agree to the bank loan. Justify your answer.
…… [5]
[Total: 20]
Mark scheme
2(a) Fatima 11
Income Statement for the year ended 31 March 2022
$ $ $
Revenue 79 400
Less Returns 3 970
75 430 (1)
Less Cost of sales
Opening inventory 3 000
Purchases 36 500
Less goods for own use 1 300 (1) 35 200
38 200
Less Closing inventory 3 120 35 080 (1)OF
Gross profit 40 350 (1)OF
Add Discount received 1 095 (1)
41 445
Less Expenses
Rent and rates (9000 – [2/3 × 1500]) 8 000 (1)
Wages (10 100 + 800) 10 900 (1)
General expenses 1 287
Insurance 1 800
Irrecoverable debts 200 (1)
Provision for doubtful debts ([6400 – 200] × 3% = 186 – 156) 30 (1)
Depreciation of fixtures and equipment
([80 000 – 39 040] × 20%) 8 192 (1) 30 409
Profit for the year 11 036 (1) OF
2(b) Fatima 4
Capital account
Date Details $ Date Details $
2022 2021
March 31 Drawings (8580 (1) + 1300 (1)) 9 880 April 1 Balance b/d 59 000
Balance c/d 60 156 2022
__ ___ March 31 Profit for the year (1)OF 11 036
70 036 70 036
April 1 Balance b/d (1)OF 60 156
2(c) In favour of accepting bank loan: 5
Liability to bank ends after 4 years/do not have to repay until 4 years’ time (1)
The interest would only need to be paid for four years (1)
Repayment of interest and loan when due improves relationship with bank (1)
Other ways of raising finance may require commitment for a longer period of time (1)
May be the best way for sole trader with limited access to funds to obtain extra finance (1)
Max (2)
Against accepting bank loan:
Bank loan has to be repaid by set date in future (1)
Bank may require security/personal assets may be at risk (1)
May find it difficult to repay the loan in 4 years’ time (1)
Loan interest must be paid even if short of liquid funds (1)
There may be more appropriate ways of raising the finance (1)
Max (2)
Accept other valid points
(1) for recommendation
Jules is a hairdresser. He bought some new energy-saving hairdrying equipment, $1900, on credit from YZH Limited on 30 April 2022.
REQUIRED
(a) Prepare the journal entry to record the purchase of these hairdryers. A narrative is required.
Jules
Journal
Date Details Debit Credit
$ $
[3]
The new hairdryers will use less electricity than his old ones. There will be an additional insurance charge for the new hairdryers. The old hairdryers had been fully depreciated so that their net book value was nil.
REQUIRED
(b) Complete the table by placing a tick (3) to show whether these changes in expenses increase or decrease the profit.
Expense Increase Decrease in profit in profit
Heat and light
Depreciation
Insurance
[3]
Jules has discovered the following five errors in his accounting records for the year ended
30 April 2022.
1 The total for general expenses, $28, in the petty cash book for April 2022 has not been posted to the general ledger.
2 A direct debit to Isaac, a supplier, $195 had been recorded as $159 in the account for Isaac.
3 A payment by credit transfer for wages, $144, has not been recorded in the accounting records.
4 The discount received total for January 2022, $38, had been debited to the discount received account.
5 The account for rent and the account for commission receivable had both been overcast by
$200.
REQUIRED
(c) Prepare the journal entries required to correct these five errors. Narratives are not required.
Jules
Journal
Error Details Debit Credit number $ $
[10]
(d) Prepare the suspense account. Include the original difference on the trial balance as a balancing figure.
Jules
Suspense account
Date Details $ Date Details $
[4]
[Total: 20]
Mark scheme
3(a) Jules 3
Journal
Date Details Debit Credit
$ $
2022
April 30 Equipment 1900 (1)
YZH Limited 1900 (1)
Purchase of hairdressing equipment on credit from YZH Limited (1)
3(b) 3
Increase Decrease
in profit in profit
Heat and light (1)
Depreciation (1)
Insurance (1)
3(c) Jules 10
Journal
Error Details Debit Credit
number $ $
1 General expenses 28 (1)
Suspense 28 (1)
2 Isaac 36 (1)
Suspense 36 (1)
3 Wages 144 (1)
Bank 144 (1)
4 Suspense 76 (1)
Discount received 76 (1)
5 Commission receivable 200 (1)
Rent 200 (1)
3(d) Jules 4
Suspense account
Date Details $ Date Details $
2022 2022
April 30 Discount received (1) 76 April 30 Difference on trial balance (1)OF 12
General expenses (1) 28
__ Isaac (1) 36
76 76
Ekua is a trader who sells household furnishings. She has provided the following information.
$
At 30 April 2022:
Inventory 14 650
Trade receivables 12 700
Bank overdraft 5 375
Trade payables 7 125
For the year to 30 April 2022:
Revenue 112 300
Purchases 72 250
Expenses 19 820
All sales and purchases are on credit.
Inventory at 1 May 2021 was valued at $12 800.
REQUIRED
(a) Complete the following tables.
Gross margin workings answer (to two decimal places)
Profit margin workings answer (to two decimal places)
Rate of inventory turnover (times) workings answer (to two decimal places)
Current ratio workings answer (to two decimal places)
Liquid (acid test) ratio workings answer (to two decimal places)
[11]
One of Ekua’s suppliers has offered to sell her a large quantity of inventory at a reduced price.
Ekua is considering accepting this offer and increasing her expenditure on advertising in order to sell more inventory.
REQUIRED
(b) Advise Ekua whether she should purchase the additional inventory. Justify your answer by providing two advantages and two disadvantages.
…… [5]
(c) Explain the meaning and importance of the principle of consistency in the preparation of financial statements.
…… [2]
(d) State two non-financial factors which may affect Ekua’s trading results.
1 ……
2 ……
[2]
[Total: 20]
Mark scheme
4(a) Gross margin 11
112300 − (12800 + 72 250 − 14 650) 41900 }(1)
= × 100 = 37.31% (1)OF
112300 112300 }
Profit margin
(41900 OF − 19 820) 22080 } OF (1)
= × 100 = 19.66% (1)OF
112300 112300 }
Rate of inventory turnover
(12800 + 72250 − 14 650) 70 400 (1)
= = 5.13 times (1)OF
(12800 + 14 650) / 2 13 725 (1)
Current ratio
(14 650 + 12 700) : (7125 + 5375) = 27 350 : 12 500 (1) whole formula = 2.19 : 1 (1)OF
Liquid ratio
12 700 : (7125 + 5375) = 12 700 : 12 500 (1) whole formula = 1.02 : 1 (1)OF
4(b) Advantages 5
May be able to increase sales/gain more customers by reducing selling price (1)
OR May be able to increase sales/gain more customers by extra advertising (1)
Profit may increase if sales increase (1)
The gross margin may improve (1)
Can respond to increase in demand (1)
The inventory should not lose value (1)
Max (2)
Disadvantages
Expenses increase/profit decreases due to the increased advertising costs (1)
Demand for that particular type of inventory may decrease (1)
Inventory may deteriorate over time (1)
Goods may be of inferior quality (1)
Already has a large amount of inventory (1)
May increase storage costs (1)
May require an increased bank overdraft/reduce liquidity/decrease liquid ratio (1)
Advertising does not guarantee increase in sales (1)
Max (2)
Accept other valid points
(1) for recommendation
4(c) Either Accounting methods must be used consistently from one accounting period to the next (1) 2
Or Accounting methods should not be changed unless there is a good reason for doing so (1)
Either This means that accurate comparisons can be made from year to year (1)
Or The profit of a particular year will not be distorted (1)
Max (2)
Accept other valid points
4(d) Business reputation/goodwill (1) 2
Reliability of workforce/skills of workforce/ staff morale/working conditions (1)
Actions of competitors (1)
Government decisions (1)
Location of business (1)
Max (2)
Accept other valid points
The Sew and Soup Club offers membership to people who are interested in sharing sewing and knitting patterns. It runs a refreshment café for members. The club had the following assets and liabilities at 31 December.
2020 2021
$ $
Subscriptions in advance 2 260 1 745
Subscriptions in arrears 1 820 2 115
Inventory of refreshments 1 070 1 130
Rent paid in advance 500 500
Trade payables for refreshment supplies 1 940 1 580
Bank balance 4 628 7 743
The following totals are for the year ended 31 December 2021.
$
Receipts
Subscriptions received (all by cheque) 13 900
Cash sales from refreshments 17 650
Payments
Rent 6 000
Wages 7 000
Other expenses 5 000
Trade payables for refreshment supplies 10 435
REQUIRED
(a) (i) Prepare the subscriptions account for the year ended 31 December 2021. Balance the account and bring down the balances on 1 January 2022.
Sew and Soup Club
Subscriptions account
Date Details $ Date Details $
[6]
(ii) Explain whether the treasurer should be satisfied with the amount of cash received from member subscriptions during the year ended 31 December 2021.
…… [3]
(b) Calculate the profit on refreshments for the year ended 31 December 2021.
$ $
[7]
(c) Prepare the current assets section of the club’s statement of financial position at
31 December 2021.
Sew and Soup Club
Statement of financial position (extract) at 31 December 2021
$ $
Current Assets
[4]
[Total: 20]
Mark scheme
5(a)(i) Sew and Soup Club 6
Subscriptions account
Date Details $ Date Details $
2021 2021
Jan 1 Balance b/d 1 820 Jan 1 Balance b/d (1)* 2 260
Dec 31 Income and expenditure account (1)OF 14 710 Dec 31 Bank (1) 13 900
Balance c/d 1 745 Balance c/d 2 115
18 275 18 275
2022 2022
Jan 1 Balance b/d (1) 2 115 Jan 1 Balance b/d (1) 1 745
* (1) for both the opening balances
+ (1) dates
5(a)(ii) The amount received was less that the subscriptions due for the year (1) 3
Subscriptions in advance have decreased (1)
Subscriptions in arrears have increased (1)
Max (2)
Accept other valid points
The treasurer should not be pleased with this situation (1)
5(b) Calculation of profit on refreshments 7
$ $
Revenue 17 650 (1)
Less Cost of sales
Opening inventory 1 070 (1)
Purchases (1 580 (1) + 10 435 (1) – 1 940 (1)) 10 075
11 145
Closing inventory 1 130 (1) 10 015
Profit on refreshments 7 635 (1)OF
Alternative forms of presentation acceptable
5(c) Sew and Soup Club 4
Statement of financial position (extract) at 31 December 2022
Current assets $
Inventory 1 130 (1)
Other receivables (500 (1) + 2115 (1)) 2 615
Bank 7 743
11 488 (1)OF
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