Accounting 0452/12 October/November 2024: question paper and mark scheme

Question

A trader prepares financial statements each year. What do these help the trader to do? A calculate the amount owing to credit suppliers B calculate the cash drawings C check the bank statement balance D make decisions about the future

Question

A trader bought new fixtures. He paid half the purchase price in cash and agreed to pay the balance at a later date. How does this purchase affect the accounting equation? assets owner’s equity liabilities A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase

Question

Which account is not kept in the nominal ledger? A capital B cash C inventory D purchases

Question

On 15 February Kalou made the following entries in his accounts. debit $ credit $ bank 228 Droghba 240 discount allowed 12 Which transaction was being recorded? A Droghba paid Kalou by cheque after taking a cash discount. B Droghba paid Kalou by cheque after taking a trade discount. C Kalou paid Droghba by cheque after taking a cash discount. D Kalou paid Droghba by cheque after taking a trade discount.

Question

Ranjit is a credit customer of Balbir. In April the following activities took place. Balbir sold goods on credit to Ranjit. Ranjit advised Balbir that some of the goods were damaged. Balbir advised Ranjit of a reduction in the amount owing. Which documents were used to record these activities? A debit note, credit note and receipt B invoice, credit note and receipt C invoice, credit note and statement of account D invoice, debit note and credit note

Question

What is an advantage to a business of maintaining books of prime entry? A A trial balance can be extracted directly from books of prime entry. B Similar transactions are listed together in date order for reference. C There is no need to make double entries in the ledger. D Trade receivables and trade payables totals are readily available.

Question

Which items appear on the debit side of a trial balance? 1 amounts owed from credit customers 2 discount received from credit suppliers 3 drawings made by the owner 4 overdrawn balance at the bank A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4

Question

A trader had prepared her year-end financial statements. She later discovered that an adjustment to reduce the provision for doubtful debts by $100 had not been made. How did this error affect the trader’s statement of financial position? current assets capital $ $ A overstated 100 overstated 100 B overstated 100 understated 100 C understated 100 overstated 100 D understated 100 understated 100

Question

A trader’s draft income statement showed a profit for the year of $24 500. The following errors were later discovered. 1 No adjustment had been made for accrued income of $8000. 2 Carriage inwards of $250 had been recorded as carriage outwards. 3 An increase in provision for doubtful debts of $120 had been treated as an addition to the gross profit for the year. What was the corrected profit for the year? A $32 010 B $32 260 C $32 380 D $32 740

Question

The bank statement of a business had a credit balance of $2690 on 31 October. At that date cheques issued which had not been presented totalled $850. What was the bank balance in the cash book on 31 October? A $1840 credit B $1840 debit C $3540 credit D $3540 debit

Question

The bank column of a trader’s cash book showed an overdrawn balance of $1200. When the trader compared the cash book with the bank statement he found the following items were not included in the cash book. $ bank charges 100 credit transfer 400 direct debit 60 What was the balance brought down in the bank column of the cash book after it was updated? A $960 credit B $960 debit C $1640 credit D $1640 debit

Question

What is an advantage of preparing a monthly sales ledger control account? A It is necessary to prepare the income statement. B It helps to reduce the possibility of fraud . C It provides a check on the accuracy of trade payables’ accounts. D It shows the total of the cash sales and credit sales.

Question

A summary of Jim's cash book for the year included the following: $ total cheques paid to suppliers 3750 total discount received 65 Which entries are made in his purchases ledger control account? debit $ credit $ A bank 3750 discount received 65 B bank 3750 – – discount received 65 C – – bank 3750 discount received 65 D discount received 65 bank 3750

Question

Hamid owns a grocery store. He bought a motor vehicle, $2000, and fuel, $50. Both of these amounts were incorrectly debited to the purchases account. What was the effect of this error on the income statement for the year? gross profit motor vehicle expenses $ $ A overstated 2000 overstated 2050 B overstated 2050 overstated 50 C understated 2000 understated 2050 D understated 2050 understated 50

Question

Which statements are correct about depreciation? 1 It is a non-cash expense item. 2 It is an estimated amount. 3 It is the amount of money set aside to replace a non-current asset. 4 It is a gradual loss in the value of a current asset. A 1, 2 and 3 B 1 and 2 only C 2, 3 and 4 D 2 and 4 only

Question

A machine with an original cost of $10 000 had been depreciated for two years at the rate of 10% per annum using the straight-line method. It was then sold for cash with the loss on disposal amounting to $700. A replacement machine was bought on the same day for $12 400 cash. What was the net decrease in the cash balance? A $3700 B $5100 C $11 700 D $13 100

Question

Abdul is a trader. He rents out part of his warehouse to other businesses. Abdul is preparing his financial statements for the year ended 31 December. His rental income account shows that: rent received during the year totalled $2750 rental income transferred to the income statement was $3000 What does the closing balance on the rental income account represent? A accrued income B an accrued expense C an expense paid in advance D income received in advance

Question

What is the journal entry required to close the irrecoverable debts account at the year end? account to be debited account to be credited A income statement irrecoverable debts B irrecoverable debts income statement C irrecoverable debts trade receivables D trade receivables irrecoverable debts

Question

After preparing draft financial statements at the end of her first year of trading, Lucy discovered two errors. 1 Damaged inventory had been valued at its cost price of $340. It was expected to sell for $180. 2 100 items which had been expected to sell for $12 each had been valued at their cost price of $7 each. Carriage inwards of $1 for each item had not been included in the cost. What was the effect of these errors on the gross profit? A overstated $60 B overstated $240 C understated $60 D understated $240

Question

Which items would appear in the income statement for an accountancy business? gross profit profit for the year surplus A ✓ ✓ ✗ B ✓ ✗ ✓ C ✗ ✓ ✗ D ✗ ✗ ✓

Question

A business provided the following information. $ long-term loan 20 000 trade receivables 12 000 trade payables 9 700 bank overdraft 2 000 prepaid insurance 400 accrued wages 1 000 rental income prepaid 500 What was the total of the current liabilities? A $13 200 B $15 400 C $31 200 D $32 700

Question

What is an advantage to a trader of forming a partnership? A continuity of existence B decision making is quicker C profits are shared D risks are shared

Question

Which items should be entered in the appropriation account of a partnership? interest on interest on partners’ partners’ partners’ drawings drawings loans A ✓ B ✓ ✓ C ✓ ✓ D ✓ ✓

Question

X Limited provided the following information. $ ordinary share capital 300 000 general reserve 50 000 retained earnings 35 000 8% debenture 60 000 What was the total of the equity? A $335 000 B $350 000 C $385 000 D $445 000

Question

Which item is shown in the income statement and in the statement of changes in equity of a limited company? A accrued interest on debentures B ordinary share dividend paid C profit for the year D transfer to general reserve

Question

The Daylee Sports Club was formed in January. During its first year the club purchased equipment costing $5000, paying by cheque. Which of the club’s financial statements are affected by the purchase of this equipment? receipts and income and statement of payments expenditure financial account account position A ✓ ✓ B ✓ ✓ C ✓ ✓ D ✓

Question

The following ledger account appeared in the books of a club for the year ended 31 December. Subscriptions account $ $ Jan 1 Balance b / d 2 000 Dec 31 Bank 29 000 Dec 31 Income and expenditure 24 000 Balance c / d 3 000 …… 29 000 29 000 Which statement is correct? A Subscriptions prepaid on 1 January amounted to $2000. B Subscriptions prepaid on 31 December amounted to $3000. C Subscriptions received during the year ended 31 December amounted to $24 000. D Subscriptions relating to the year ended 31 December amounted to $29 000.

Question

After a manufacturing account had been completed it was discovered that wages paid to factory cleaners had not been included. Which items in the manufacturing account would change after this error was corrected? 1 direct wages 2 indirect wages 3 prime cost 4 production cost A 1 and 2 B 1, 3 and 4 C 2 and 4 D 3 and 4 only

Question

W Limited manufactures motorbikes. The following information relates to the first year in business. $ purchases of motorbike parts 40 000 wages of factory workers 25 000 production overheads 8 000 inventory of motorbike parts at the year end 3 000 inventory of partly finished motorbikes at the year end 7 000 What was the cost of production of the motorbikes completed during the year? A $63 000 B $65 000 C $70 000 D $77 000

Question

Anya did not keep a full set of double entry records but provided the following information. $ At 1 February 2022 capital 10 000 At 31 January 2023 bank overdraft 1 500 equipment 20 000 inventory 2 000 trade receivables 15 000 trade payables 10 500 Anya’s drawings during the year ended 31 January 2023 were $8500. What was her profit for the year ended 31 January 2023? A $23 500 B $25 000 C $26 500 D $29 500

Question

A jewellery retailer marks up his goods by 100%. He provided the following information. $ revenue 68 200 discount received 1 080 profit for the year 18 395 What was the total of his expenses? A $14 625 B $16 785 C $48 725 D $50 885

Question

Omar had an increase in his gross profit margin. What could have caused this? A a decrease in the selling price of his goods B an increase in the quantity of goods purchased C a decrease in the purchase price of his goods D an increase in the quantity of goods sold

Question

Who would be interested in the value of non-current assets which a business has available as security? A bank manager B credit customers C employees and trade unions D government departments

Question

Which accounting principle is the accounting equation based on? A duality B going concern C materiality D realisation

Question

Which qualitative factor requires that financial information is provided in a timely manner so that it can be used for decision making? A comparability B relevance C reliability D understandability