Accounting 0452/12 October/November 2019: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 1, October/November 2019. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
(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 contra entry
2 discount received
3 interest on overdue account
4 purchases
A 1 and 2 only
B 1, 2 and 3
C 3 and 4
D 4 only
[1]
(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]
(h) A manufacturer provided the following information at the end of his financial year.
$ direct materials 314 000 direct labour 181 000 factory overheads 117 000 increase in work in progress 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]
PLEASE TURN OVER
Mark scheme
1(a) B 1
1(b) D 1
1(c) A 1
1(d) A 1
1(e) D 1
1(f) C 1
1(g) B 1
1(h) C 1
1(i) C 1
1(j) A 1
Glossary
1(b) A & B 200 – (45 + 194) = 39 C & D 45 + 200 – 194 = 51
1(f) A ½ × (93 000 – 15 000) B ½ × 93 000 C 15 000 + ½ × (93 000 – 15 000) D (½ × 93 000) + 15 000
1(h) A 314 + 181 – 117 – 32
B 314 + 181 – 117 + 32 C 314 + 181 + 117 – 32 D 314 + 181 + 117 + 32
1(j) A (60 units × 16) + (30 units × 7)
B (60 units × 19) + (30 units × 7)
C 90 units × 16
D 90 units × 19
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 Purchased stationery 21
9 Paid Omar, a credit supplier 57
14 Bought flowers for office 10
20 Paid taxi fare 9
26 Bought tea and coffee for office 7
30 Paid cleaner 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. [10]
Saleh – Petty Cash Book
Total Date Details Total Office Travel Cleaning Ledger
received paid expenses accounts
$ 2019 $ $ $ $ $
150 Aug 1 Bank …… …… …… …… ……
7
(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]
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 22
Credit transfer from Laila 190
Insurance premium paid by standing order 30
Items not recorded on the bank statement
Cheque paid to Kalifa 114
Cheque paid to Fatima 175
Cash sales 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 Details $ Date Details $
2019 2019
…… …… …… Sept 1 Balance b/d 944
[4]
(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]
Mark scheme
2(a) Saleh 10
Petty Cash Book
Total Total Office Ledger
Date Details Travel Cleaning
received paid expenses accounts
2019 $ $
$ $ $ $
150 Aug 1 Bank
4 Stationery 21 21
9 Omar 57 57
14 Flowers 10 10
20 Taxi fare 9 9
26 Tea and coffee 7 7
30 Cleaner 30 30
31 Balance c/d 134 38 9 30 57
16
150 150
2019
16 Sept 1 Balance b/d (1)OF
Totalling total columns (1)
Totalling analysis columns (1) OF
Dates (1)
2(b)(ii) $134 (1)OF 1
2(b)(ii) 2
debit credit
petty cash (1) cash/bank/cash book (1)
2(c) Saleh 2
Office expenses account
Date Details $ Date Details $
2019
Aug 31 Petty cash 38
(1)OF
Omar account
Date Details $ Date Details $
2019
Aug 31 Petty cash 57
(1)
2(d) Saleh 4
Cash Book (bank columns only)
Date Details $ Date Details $
2019 2019
Sept 1 Laila (1) 190 Sept 1 Balance b/d 944
Balance c/d 806 Bank charges (1) 22
___ Insurance (1) 30
996 996
2019
Sept 1 Balance b/d 806
(1)OF
2(e) Saleh 6
Bank Reconciliation Statement at 31 August 2019
Balance in cash book $
Cheques not yet presented (1) (Kalifa 114 + Fatima 175)
(806) (1)OF
Amounts not yet credited (1) 289 (1)
Balance on bank statement (517)
(363) (1)
(880) (1)OF
Alternative presentation
Saleh
Bank Reconciliation Statement at 31 August 2019
Balance on bank statement $
Amounts not yet credited (1)
(880) (1)OF
Cheques not yet presented (1) (Kalifa 114 + Fatima 175) 363 (1)
Balance in cash book (517)
(289) (1)
(806) (1)OF
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 book of prime (original) book of prime (original) person issuing entry used by Tumelo entry used by Azuel document invoice debit note credit note
[9]
The following incomplete document was prepared on 31 July 2019.
Azuel
West Street
Somecity
Tumelo
North Avenue
Anytown 31 July 2019
Date Reference Debit Credit Balance
$ $ $
2019
July 1 Balance due 300
14 Goods 470 ?
18 Returns 190 ?
27 Payment 294 ?
Discount 6 ?
REQUIRED
(b) (i) State the name of the document.
…… [1]
(ii) Name the person who issued the document.
…… [1]
(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]
Mark scheme
3(a) 9
document name of person issuing book of prime (original) entry used book of prime (original entry)
document by Tumelo used by Azuel
invoice Azuel purchases (journal) sales (journal)
debit note Tumelo no entry no entry
credit note Azuel purchases returns (journal) sales returns (journal)
3(b)(i) Statement (of account) 1
3(b)(ii) Azuel 1
3(b)(iii) To remind Tumelo of the amount due 1
To provide a summary of the transactions for the month
To enable Tumelo to compare his records and check for errors
Or other relevant reason
Any one reason
3(b)(iv) Tumelo 1
3(b)(v) 6_ _ × 100 = 2% 1
(294 + 6) 1
3(b)(vi) (300 + 470 – 190 – 294 – 6) = 280 1
3(b)(vii) No transaction has taken place/the statement is a summary of the transactions for the month which are already recorded/not 1
part of double entry
3(c) Work can be shared amongst several people 2
Easier for reference as the same types of account are kept together
Easier to introduce checking procedures
Reduces the possibility of fraud
Helps in locating errors
Or other suitable advantage. Any two advantages (1) each
3(d) 5
account ledger
Tumelo, a credit customer sales
sales returns nominal (general)
Lerato, a credit supplier purchases
purchases nominal (general)
carriage inwards nominal (general)
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]
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]
(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.
effect on profit for the effect on current year ended assets at item omitted 30 September 2019 30 September 2019
$ $
bad debts overstated 326 overstated 326
bad debt recovered
adjustment to provision for doubtful debts
[4]
[Total: 19]
Mark scheme
4(a) Gary 3
General Journal
Date Details Debit Credit
$ $
2019 Bad debts 326 (1)
Aug 1 Ed 326 (1)
Account written off as irrecoverable (1)
4(b) 3
Account debited Account credited
$ $
cash 180 (1) bad debts recovered 440 (1
(office) equipment 260
[Alternatively accept re-instatement of debt and then entries from Sally account to cash and office equipment accounts]
4(c) Gary 5
Provision for doubtful debts account
Date Details $ Date Details $
2019 2018
Sept 30 Balance c/d 950 Oct 1 Balance b/d 910
2019
Sept 30 Income
__ statement _40
950 950
2019
Oct 1 Balance b/d 950
Dates (1)
4(d) If the provision for doubtful debts is not maintained – 4
Not applying principle of prudence
The trade receivables (current assets) will be overstated
Profit for the year will not be realistic
Not applying the principle of accruals (matching)
Sales for which he is unlikely to be paid will not be regarded as an expense of the year in which those sales were made
Not applying the principle of consistency
Should continue to follow the practice of maintaining a provision unless there is a good reason not to do so
Or other valid reasons
Any four reasons (1) each
4(e) 4
effect on profit for the year ended effect on current assets at
item omitted 30 September 2019 30 September 2019
$ $
bad debts overstated 326 overstated 326
bad debt recovered understated 440 (1) understated 180 (1)
adjustment to provision for doubtful debts overstated 40 (1) overstated 40 (1)
OF OF
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]
(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 no entry statement of changes in equity 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]
Mark scheme
5(a) A limited liability company is a legal entity which has a separate identity from its shareholders (1) whose liability for the 2
company’s debts is limited to the amount they agree to pay for their shares (1)
5(b) Possibility of raising more capital than a partnership business 2
May be easier to obtain loans than a partnership business/ability to expand the business
There is continuity of existence
Or other benefits.
Any two benefits (1) each
5(c)(i) Called-up share capital is the amount which a company has requested from its shareholders 1
5(c)(ii) Paid-up share capital is that part of the called-up share capital for which a company has actually received money from its 1
shareholders
5(d) Ordinary shareholders are members of the company 2
Carry voting rights
Ordinary share dividend is a share of the profits
Ordinary share dividend is variable
Ordinary share dividend is paid after any dividend on preference shares/interest on debentures
Ordinary shareholders are repaid last/after preference shareholders in the event of a winding-up
Or other valid answers
Any two features (1) each
5(e) Are (long-term) loans/lenders 2
Debenture holders are not members of the company
Do not carry voting rights
Carry a fixed rate of interest
Interest is not dependent on the profit of the company
Are often secured on the assets of the company
Debenture holders are repaid before shareholders in a winding-up
The debentures rank before ordinary and preference shares in the event of the business winding up.
Or other valid answers
Any two features (1) each
5(f) 5
income statement of no entry
statement changes in
equity
issue of 5% debentures during the year 9(1)
debenture interest relating to the current year paid during the year 9(1)
final ordinary share dividend relating to the previous financial year 9(1)
paid during the current year
interim ordinary share dividend paid for the current year 9(1)
proposed ordinary share dividend for the current year 9(1)
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 40 780
Non-current assets at cost
Premises 96 000
Fixtures and fittings 12 000
Motor vehicle 14 400
Provisions for depreciation of non-current assets
Fixtures and fittings 4 800
Motor vehicle 6 300
Wages 27 120
Rates and insurance 1 700
Trade receivables 8 940
Trade payables 10 280
Drawings 2 980
Capital at 1 October 2018 112 000
Operating expenses 3 195
Motor expenses 1 155
Discount received 970
Inventory at 30 September 2019 8 870
Bank 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.
(a) Prepare the income statement for the year ended 30 September 2019.
Pavita
Income Statement for the year ended 30 September 2019
$ $
[12]
(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.
$
Credit sales 120 000
Credit purchases 88 100
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]
(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]
Mark scheme
6(a) 12
Pavita
Income Statement for the year ended 30 September 2019
$ $
Gross profit 40 780 (1)
Discount received 970 (1)
41 750
Wages (27 120 (1) + 980 (1) – 1000) (1) 27 100
Rates and insurance (1700 (1) – 180) (1) 1520
Operating expenses 3195}(1)
Motor expenses 1155}
Bad debts 190 (1)
Depreciation Fixtures and fittings (20% × 12 000) 2400 (1)
Motor vehicle (20% × (14 400 – 6300)) 2025 (1) 37 585
Profit for the year 4165 (1)OF
6(b) current assets inventory 8870 3
trade receivables (8940 – 190) 8750
other receivables 180 17 800 (1)
current liabilities trade payables 10 280
other payables 980
bank overdraft 1230 12 490 (1)
working capital 5310 (1)OF
6(c) Introduce further capital in cash/admit a partner 2
Obtain a long term loan
Sell any surplus non-current assets
Increase profit/reduce expenses/increase selling price
Reduce drawings
Increase other income
Or other acceptable points
Any 2 points (1) each
6(d) 17 800 : 12 490 whole formula (1) OF 2
1.43 : 1 (1) OF
6(e) trade receivables × 365 (1) whole formula 1
credit sales 1
6(f) 8750 × 365 (1) whole formula = 27 days (1) 2
120 000 1
6(g) Give cash discount for prompt/speedy payment 1
Charge interest on overdue accounts
Improve credit control/issue invoice or statements promptly
Refuse further supplies until outstanding balance paid
Invoice discounting and debt factoring
Any 1 point (1)
6(h) trade payables × 365 (1) whole formula 1
credit purchases 1
6(i) 10 280 × 365 (1) whole formula = 43 days (1) 2
88 100 1
6(j) Unsatisfied (1) OF 2
Pavita is paying her accounts 13 days after the period of credit allowed (1) OF
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