Accounting 0452/22 October/November 2023: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 2, October/November 2023. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Seok buys and sells goods on credit. He has three credit customers and allows one of them,
Naomi, trade discount of 10%. All customers pay Seok by bank transfer.
The following balances were extracted from Seok’s sales ledger at 1 August 2023.
$
Naomi 450
Siena 155
Bwana 386
991
The following transactions took place in August 2023.
Aug 3 Sold goods on credit, to Naomi, list price $410
5 Sold goods on credit, $89, to Bwana
10 Naomi returned goods, list price $20
11 Naomi paid $423 in full settlement of the amount she owed at 1 August
19 Sold goods on credit, $180, to Bwana
22 Sold goods on credit, to Naomi, list price $230
27 Bwana returned goods, $19
29 Bwana paid $400
REQUIRED
(a) Prepare the sales journal for August 2023.
Total the journal and indicate the ledger account where the total would be posted.
Seok
Sales journal
Date Details $ $
[4]
(b) Prepare the sales returns journal for August 2023.
Total the journal and indicate the ledger account where the total would be posted.
Seok
Sales returns journal
Date Details $ $
[3]
(c) Prepare the account for Naomi for August 2023 as it would appear in the books of Seok.
Balance the account and bring down the balance at 1 September 2023.
Seok
Naomi account
Date Details $ Date Details $
[6]
On 31 August Seok decided to write off the amount owing by Siena as an irrecoverable debt.
REQUIRED
(d) Prepare Seok’s sales ledger control account for August 2023. Balance the account and bring down the balance at 1 September 2023.
Seok
Sales ledger control account
Date Details $ Date Details $
[7]
[Total: 20]
Mark scheme
1(a) Seok 4
Sales journal
Date Details $
2023
Aug 3 Naomi (410 – 41) 369 (1)
5 Bwana 89}
19 Bwana 180} (1)
22 Naomi (230 – 23) 207 (1)
___
31 Transfer to sales account 845 (1)OF
1(b) Seok 3
Sales returns journal
Date Details $
2023
Aug10 Naomi (20 – 2) 18 (1)
27 Bwana 19 (1)
31 Transfer to sales returns account 37 (1)OF
1(c) Seok 6
Naomi account
Date Details $ Date Details $
2023 2023
Aug 1 Balance b/d (1) 450 Aug 10 Sales returns (1) OF 18
3 Sales } 369 11 Bank (1) 423
22 Sales } (1)OF 207 Discount allowed (1) 27
31 Balance c/d 558
____
1026 1026
Sept 1 Balance b/d (1)OF 558
1(d) Seok 7
Sales ledger control account
Date Details $ Date Details $
2023 2023
Aug 1 Balance b/d (1) 991 Aug 31 Sales returns (1)OF 37
31 Sales (1)OF 845 Bank (423 + 400) (1) 823
Discount allowed (1) 27
Irrecoverable debts (1) 155
____ Balance c/d 794
1836 1836
Sept 1 Balance b/d (1)OF 794
Sara owns a clothing factory. She sells the clothing to a small number of local shops.
She allows 30 days credit.
At 30 September 2023, Sara’s ledger account balances included the following.
$
Inventory at 1 October 2022
Raw materials 4 875
Work in progress 8 125
Finished goods 12 890
Purchases of raw materials 56 400
Wages
Machine operators 43 300
Factory supervisor 25 000
Delivery vehicle driver 14 250
Rates and insurance 29 600
General factory expenses 9 650
Factory machinery – at cost 80 000
Factory machinery – provision for depreciation 35 000
Trade receivables 27 000
Cash at bank 1 050
Additional information
1. Inventory at 30 September 2023
Raw material 5 110
Work in progress 7 365
Finished goods 13 725
2. At 30 September 2023 general factory expenses of $335 were unpaid.
3. Insurance of $8000 had been paid for the year July 2023 to June 2024.
4. Rates and insurance are to be apportioned equally between the factory and the office.
5. Factory machinery is depreciated at 25% per annum using the reducing balance method.
REQUIRED
(a) Prepare Sara’s manufacturing account for the year ended 30 September 2023.
Sara
Manufacturing Account for the year ended 30 September 2023
$ $
[11]
(b) Prepare the current assets section of Sara’s statement of financial position at
30 September 2023.
Sara
Statement of financial position (current assets section) at 30 September 2023
$ $
[3]
Sara’s factory supervisor is very efficient at running the factory.
REQUIRED
(c) State which accounting principle Sara is complying with by not recording any value for this efficiency in her financial statements.
…… [1]
Sara has now been asked to supply a local drama school with theatrical costumes. The drama school would place an order with Sara each month and would require 60 days credit.
REQUIRED
(d) Advise Sara whether she should start supplying the drama school with costumes. Justify your answer by providing advantages and disadvantages of supplying the costumes.
…… [5]
[Total: 20]
Mark scheme
2(a) Sara 11
Manufacturing Account for the year ended 30 September 2023
$ $
Cost of material consumed
Opening inventory of raw material 4 875
Purchases of raw material 56 400
61 275
Less Closing inventory of raw material 5 110
56 165 (1)
Direct wages 43 300 (1)
Prime cost 99 465 (1)OF
Factory overheads
Wages of factory supervisor 25 000 (1)
Rates and insurance (29 600 – 6 000) /2 11 800 (2) (1)OF
General factory expenses (9 650 + 335) 9 985 (1)
Depreciation of factory machinery
(80 000 – 35 000=) 45 000 x 25% 11 250 (1) 58 035
157 500 (1)OF
Add opening work-in-progress 8 125*
165 625
Less closing work-in-progress 7 365 *(1) for both W in P
Cost of production 158 260 (1)OF
2(b) Sara 3
Statement of financial position (Current assets section) at 30 September 2023
Current Assets $
Inventory – Raw materials 5 110 }
– Work-in-progress 7 365 } (1)
– Finished goods 13 725 }
26 200
Trade receivables 27 000}
Other receivables 6 000}
Cash at bank 1 050}(1)
60 250(1)OF
2(c) Money measurement (1) 1
2(d) Advantages of supplying drama school 5
Will increase sales / revenue (1)
May increase profit (1)
The extra work will provide security/continuity of workload (1)
If successful, potential to supply other schools, theatre groups, etc. (1)
Accept other valid points
Max 3
Disadvantages of supplying drama school
There would be extra administration or may incur additional costs / wages / costs of production (1)
More manufacturing and/or storage capacity may be required (1)
May not have capacity to supply both existing customers and drama group (1)
Allowing 60 days credit will adversely affect liquidity (1)
Accept other valid points
Max 3
Recommendation (1)
Lionel started trading on 1 July 2022. He paid $15 000 of his own personal money into the business bank account. He did not keep full accounting records but has supplied the following information at 30 June 2023.
1. Cash sales of $90 000 were made and paid into the bank. No other money was received.
Lionel marks up his goods by 50%.
2. Payments from the bank:
$
Purchase of motor vehicle (van) 8 000
Payments to credit suppliers 55 000
Wages 8 060
General expenses 1 140
Rent and insurance 5 585
Motor expenses 4 992
Cash drawn from bank 14 600
3. Purchases returns amounted to $3000.
4. Inventory at 30 June 2023 was valued at $4175.
5. One third of the motor expenses paid were for Lionel’s private car.
6. A full year’s depreciation at 25% is to be charged on the van using the reducing balance method.
7. Lionel withdrew $1000 each month from the business cash, for personal use. The remaining cash drawn from the bank was used to pay wages.
REQUIRED
(a) Prepare Lionel’s income statement for the year ended 30 June 2023.
Lionel
Income Statement for the year ended 30 June 2023
$ $
[9]
(b) Prepare Lionel’s capital account for the year ended 30 June 2023. Balance the account and bring down the balance at 1 July 2023.
Lionel
Capital account
Date Details $ Date Details $
[5]
(c) State one reason why Lionel should keep double-entry bookkeeping records.
…… [1]
Lionel currently makes cash sales only. He would like to start selling on credit and is considering whether to offer a 10% trade discount to regular customers or a 3% discount for payment within
21 days.
REQUIRED
(d) Advise Lionel whether he should offer the 10% trade discount or the 3% cash discount.
Justify your answer.
…… [5]
[Total: 20]
Mark scheme
3(a) Lionel 9
Income Statement for the year ended 30 June 2023
$ $
Revenue 90 000 (1)
Cost of sales
Purchases 67 175 (1)OF
Less Purchases returns 3 000
64 175 (1)OF
Less Closing inventory 4 175 60 000
Gross profit 30 000 (1)
Less Expenses
Wages (8 060 + 2 600) 10 660 (1)
Motor expenses (4 992 × 2/3) 3 328 (1)
General expenses 1 140)
Rent and insurance 5 585)(1)
Depreciation of motor vehicles/van (25% × 8 000) 2 000 (1) 22 713
Profit for the year 7 287 (1)OF
3(b) Lionel 5
Capital account
Date Details $ Date Details $
2023 2022
June 30 Drawings July 1 Bank (1) 15 000
(12 000 (1) + 1 664 (1)) 13 664 2023
Balance c/d 8 623 June 30 Profit for the year (1)OF 7 287
_____ _____
22 287 22 287
July 1 Balance b/d (1)OF 8 623
3(c) Full details are available about the assets, liabilities, revenues and expenses of the business (1) 1
The preparation of financial statements is relatively straightforward (1)
The profit or loss for the year is more likely to be reliable and accurate / the financial statements are more likely to be
reliable and accurate (1)
More informed decision-making is possible (1)
A greater degree of control over business activities can be exercised (1)
The possibility of fraud is reduced (1)
Comparisons with the results of previous years and with other businesses are possible (1)
Detailed records are available for reference purposes (1)
Information required by a bank or other lender is readily available (1)
3(d) Allowing Trade discount 5
May encourage customers to purchase regularly / place repeat orders (1)
If successful may increase revenue and gross profit OR If unsuccessful may decrease revenue and gross profit (1)
Need to record which customers qualify for discount / record discount on invoices (1)
One-off customers may feel they are being overcharged (1)
Accept other valid points
Max (3)
Allowing Cash discount
Some credit customers will pay more quickly or encourage prompt payment (1)
Less money will be received (1)
Will reduce profit / net profit for the year (1)
3% may not be enough to encourage early payment (1)
May reduce risk of irrecoverable debts (1)
Accept other valid points
Max (3)
Recommendation (1)
Rachel is a trader.
The totals of Rachel’s trial balance prepared on 30 September 2023 did not agree and the difference was placed in a suspense account.
Rachel later discovered the errors shown in the following table.
REQUIRED
(a) 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 Credit
Account $ Account $
A payment for rent, $350, had been Rent
350 Wages 350 debited to the wages account. payable
The sales journal for September had …… …… …… ……
been overcast by $90.
Sales returns, $110, had been …… …… …… ……
recorded as purchases returns.
A payment for office expenses, $18, …… …… …… ……
had been recorded in the office expenses account as $81. …… …… …… ……
A petty cash book payment, $29, to …… …… …… ……
Cole, a supplier, had been recorded in the column for motor expenses. …… …… …… ……
[9]
(b) Prepare the suspense account. Include the balancing figure as the original difference on the trial balance.
Rachel
Suspense account
Date Details $ Date Details $
[5]
Rachel’s draft profit before the errors were discovered was $18 243.
REQUIRED
(c) Calculate Rachel’s profit for the year ended 30 September 2023 after the errors in the table have been corrected.
…… [5]
(d) State why financial statements may still be reliable even if errors are present.
…… [1]
[Total: 20]
Mark scheme
4(a) 9
Entries required to correct the error
Debit Credit
Error Account $ Account $
A payment for rent, $350, had been Rent payable 350 Wages 350
debited to the wages account.
The sales journal for September had been
overcast by $90. Sales 90 (1) Suspense 90 (1)
Sales returns, $110, had been recorded as
purchases returns.
Purchases returns 110 (1) Suspense 220 (1)
A payment for office expenses, $18, had Sales returns 110 (1)
been recorded in the office expenses
account as $81.
Suspense 63 (1) Office expenses 63 (1)
A petty cash book payment, $29, to Cole, a
supplier, had been recorded in the column
for motor expenses.
Cole 29 (1) Motor expenses 29 (1)
4(b) Rachel 5
Suspense account
Date Details $ Date Details $
2023 2023
Sep 30 Difference on trial Sept 30 Sales (1) 90
balance (1)OF 247 Purchases returns (1) 110
Office expenses (1) 63 Sales returns (1) 110
310 310
4(c) $ $ 5
Draft profit 18 243
Add:
Office expenses 63 (1)
Motor expenses 29 (1) 92
18 335
Less:
Sales 90 (1)
Purchases returns 110 }
Sales returns 110 }(1) (310)
Corrected profit 18 025 (1)OF
4(d) Financial statements can still be reliable if errors are present provided those errors are not material or significant (1) 1
Nala is a retailer who sells toys and games. All sales are on a cash basis and all purchases are on credit.
She has provided the following information.
$
At 31 August 2023:
Inventory 6 265
Cash at bank 992
Trade payables 4 880
Capital 125 000
For the year to 31 August 2023:
Revenue 98 420
Purchases 78 130
Expenses 11 325
Inventory at 1 September 2022 was valued at $6175.
REQUIRED
(a) Complete the following table.
Ratio Working Answer (to 2 decimal places )
Gross margin
Profit margin
Return on capital employed (ROCE)
Rate of inventory turnover (times)
Liquid (acid test) ratio
[11]
Nala increased her advertising expenses over the year to 31 August 2023 and sells at a lower price than her nearest competitor. This has resulted in Nala selling her inventory faster than her nearest competitor. Nala and her nearest competitor buy inventory at the same prices. Nala is pleased with her results.
REQUIRED
(b) Explain why Nala should not be entirely pleased with her results.
…… [3]
Nala is planning to expand her business and to take out a bank loan to finance the expansion. The loan would be repayable after five years.
REQUIRED
(c) Advise Nala whether she should obtain a bank loan to expand the business. Justify your answer by providing two points for and two points against obtaining the bank loan to expand the business.
…… [5]
(d) State why Nala’s bank manager would be interested in her financial statements if she requests the loan.
…… [1]
[Total: 20]
Mark scheme
5(a) Gross margin 11
98 420 − ( 6 175 + 78 130 − 6 265 ) 20 380
= = (1) × 100 = 20.71% (1)OF
98 420 98 420
Profit margin
=
( 20 380 − 11325) = 9 055
(1)OF x 100 = 9.20% (1)OF
98 420 98 420
Return on capital employed
9 055 OF
= × 100 = 7.24% (1)OF
125 000 (1)
Rate of inventory turnover
=
( 6 175 + 78 130 − 6 265)(1) = 78 040 = 12.55 times
(1)OF
( 6 175 + 6 265) / 2 (1) 6 220
Liquid ratio
= 992/4 880 (1) = 0.20:1 (1)OF
5(b) The gross profit margin will be lower than her competitor’s (1) 3
Reduction in gross profit margin may result in a lower gross profit OR increase in sales my result in a higher gross
profit (1)
The profit for the year or profit margin will reduce because of the increase in (advertising) expenses OR the profit for
the year may increase because of the increase in gross profit / increase in sales from extra advertising (1)
Selling her inventory faster does not mean her sales will be more than her competitor (1)
Needs to sell more inventory to significantly increase profit (1)
Accept other valid points
Max (3)
5(c) For obtaining a bank loan 5
If business expands profit may increase (1)
Once the loan is paid off, there will be no further liability to the bank (1)
5 years before loan is due allows time for repayment (1)
Accept other valid points
Max (2)
Against obtaining a bank loan
Interest will have to be paid on the loan (1)
Loan interest will reduce profit for the year (1)
The bank may require security (1)
Assets may be at risk if unable to repay loan (1)
The loan will have to be repaid (1)
Bank may not be prepared to offer a loan (1)
Accept other valid points
Max (2)
Recommendation (1)
5(d) Assess whether loan can be repaid (1) 1
Assess whether loan interest can be paid (1)
Assess security available for the loan (1)
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Accounting 0452/22 for October/November 2023 is out of 100 marks, with 1 hour 45 minutes to answer it, across 5 questions.
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