Accounting 0452/23 October/November 2024: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 2 Structured, October/November 2024. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Jenny runs a small trading business.
Jenny received her bank statement which showed a credit balance of $1367 on 29 February 2024.
On the same date her bank column in her cash book showed an overdrawn balance of $1933.
When comparing her bank statement and cash book she found that the following items appeared on her bank statement and not in her cash book:
February $
26 M Stores, a credit customer, had paid by bank transfer 1 900
26 Interest received 358
27 A cheque previously received from C Stores had been dishonoured 1 121
28 Bank charges 125
28 A direct debit for electricity had been taken 290
The following items appeared in her cash book but not on her bank statement
February $
23 A cheque paid to B Properties 1 025
27 A payment by credit transfer to pay for rent and insurance 2 300
28 A cheque received from a credit customer Y Traders was paid into the bank 792
Upon investigation, she discovered the following error:
A cheque made payable to D Sports $45 had been recorded in the bank column of her cash book. The cheque had been written from her personal account to pay for her gym membership.
REQUIRED:
(a) Update the bank column of Jenny’s cash book.
Balance the account and bring down the balance on 1 March 2024.
Jenny
Cash book – bank columns
Date Details $ Date Details $
[7]
(b) Prepare a bank reconciliation statement at 29 February 2024.
Start with the balance from Jenny’s bank statement.
Jenny
Bank reconciliation at 29 February 2024
$ $
[5]
(c) Suggest two advantages of preparing a bank reconciliation statement.
1 ……
2 ……
[2]
(d) Explain why a bank overdraft is shown as a debit balance on a bank statement.
…… [1]
Jenny is concerned about her bank overdraft and is considering adding additional capital into the business from her personal funds.
REQUIRED:
(e) Advise Jenny whether she should contribute additional capital to pay off her bank overdraft.
Justify your answer.
…… [5]
[Total: 20]
Question 2 is on page 6.
Mark scheme
1(a) Jenny 7
Cash Book – bank columns
Date Details $ Date Details $
2024 2024
Mar 1 M Stores (1) 1 900 Mar 1 Balance b/d (1) 1 933
Interest received (1) 358 C Stores (dis. chq) (1) 1 121
Drawings/Correction of Bank charges } 125
error (1) 45 Electricity } (1) 290
Balance c/d 1 166 _ ___
3 469 3 469
2024
Mar 1 Balance b/d (1)OF 1 166
1(b) Jenny 5
Bank reconciliation statement at 29 February 2024
$ $
Balance on bank statement 1 367 (1)
Amounts not yet credited
Cheque – Y Traders 792 (1)
2 159
Amounts not presented
Cheque – B Properties 1 025 (1)
Credit transfer – Rent and insurance 2 300 (1) 3 325
Balance in cash book (1 166) (1)OF
Alternative presentation
$ $
Balance in cash book (1 166) (1)OF
Amounts not presented
Cheque – B Properties 1 025 (1)
Credit transfer – Rent and insurance 2 300 (1) 3 325
2 159
Amounts not yet credited
Cheque – Y Traders (792) (1)
Balance on bank statement 1 367 (1)
1(c) An accurate bank balance is available 2
Errors on bank statement can be identified
Errors in the bank account can be identified
Assists with discovering fraud and embezzlement
Cheques not presented can be identified
Amounts not credited by the bank can be identified
Any stale (out of date) cheques can be identified
Any 2 advantages (1) each
1(d) It is an asset to the bank/it is money owed to the bank 1
1(e) Advantages 5
Improves bank balance/ improve liquidity
Money available to run the business/pay trade payables/business expenses
Reduces interest/bank charges from bank
Improves relationship with bank
Any other valid points
Max 3
Disadvantages
Lack of funds for own personal use
May not have sufficient personal funds available
May have to obtain a personal loan
Will lose interest on investments if they have to be withdrawn
More personal funds at risk
Accept other valid points
Max 3
Recommendation (1)
Ali and Sai are in partnership. Their financial year ends on 30 June. Their partnership agreement includes the following items.
Interest on capital is allowed at 6% per annum.
Interest on drawings is charged at 5%.
Sai is entitled to a partnership salary of $10 050 per annum.
Ali and Sai share residual profits and losses in the ratio 3:2.
Ali and Sai have provided the following information:
Ali Sai
$ $
Drawings for the year ended 30 June 2024 11 000 16 000
Capital at 1 July 2023 60 000 40 000
Current account at 1 July 2023 1800 debit 250 credit
Profit for the year before interest on loan was $42 700.
Ali provided a loan to the partnership of $10 000 at an interest rate of 5% per annum. The interest
payment for the year ended 30 June 2024 has been made. The partnership has no other loans.
REQUIRED:
(a) Prepare the profit and loss appropriation account on page 7 for the year ended 30 June 2024.
Ali and Sai
Profit and loss appropriation account for the year ended 30 June 2024
$ $
[8]
(b) Prepare the capital and current accounts for Sai for the year ended 30 June 2024 and bring down the balances on 1 July 2024.
Sai
Capital account for the year ended 30 June 2024
Date Details $ Date Details $
Sai
Current account for the year ended 30 June 2024
Date Details $ Date Details $
[8]
(c) State two disadvantages of operating as a partnership.
…… [2]
(d) Prepare the journal entry to record the payment of interest on the loan provided by Ali. A narrative is not required.
Ali & Sai
Journal
Details Debit Credit
$ $
[2]
[Total: 20]
Mark scheme
2(a) Ali & Sai 8
Profit and loss appropriation account for the year ended 30 June 2024
$ $
Profit for the year (42 700 (1) – 500 (1)) 42 200
Add Interest on drawings Ali 550 (1)
Sai 800 (1) 1 350
43 550
Less Interest on capital Ali 3 600 (1)
Sai 2 400 (1)
6 000
Salary Sai 10 050 (1) 16 050
Residual profit 27 500
Profit share Ali 16 500 }(1)OF
Sai 11 000 27 500
2(b) Sai 8
Capital account
Date Details $ Date Details $
2024 2023
June 30 Balance c/d 40 000 July 1 Balance b/d 40 000
40 000 40 000
2024
July 1 Balance b/d (1) 40 000
Sai
Current account
Date Details $ Date Details $
2024 2023
June 30 Drawings (1) 16 000 July 1 Balance b/d (1) 250
Interest on drawings (1)OF 800 2024
Balance c/d 6 900 June 30 Interest on capital (1)OF 2 400
Salary (1) 10 050
_ ____ Profit share (1)OF 11 000
23 700 23 700
2024
July 1 Balance b/d (1)OF 6 900
2(c) Profits have to be shared among the partners 2
Decisions must be recognised by all partners
Decisions may take longer to put into effect
One partner’s actions on behalf of the business are binding on all partners
Disagreements can occur
All partners are responsible for the debts of the business
Accept other valid advantages
Any 2 disadvantages (1) each
2(d) Ali and Sai 2
Journal
Date Details Debit Credit
$ $
Interest on loan (1) 500
Bank (1) 500
Natalie prepared her trial balance at the end of the year 31 March 2024. The totals did not agree and she had to open a suspense account. The debit side of the trial balance was $357 higher than the credit side.
Natalie later discovered the following errors.
1 A bank transfer, $420, received from a credit customer Sarah had been correctly recorded in the bank but no other entry had been made.
2 Natalie contributed a personal vehicle to the business valued at $7000. This had been debited to the capital account and credited to the vehicle maintenance account.
3 Purchases of $270 had been correctly entered in the suppliers account but had been debited as $207 in the purchases account.
4 No entry had been made for general expenses, $126, paid by bank transfer.
5 Cash drawings of $200 had been debited to the cash account and credited to the drawings account.
REQUIRED:
(a) Prepare the journal entries on page 11 required to correct errors 1 to 5. Narratives are not
required.
Natalie
Journal
Error Details Debit Credit number $ $
[10]
(b) Prepare the suspense account at 31 March 2024.
Natalie
Suspense Account
Date Details $ Date Details $
[3]
(c) Complete the table by identifying the type of errors that occurred in errors 4 and 5.
Error Error type
Number
Error 4
Error 5
[2]
(d) Complete the table below by placing a tick (3) in the appropriate column to indicate the effect
on the profit for the year after correcting each of the errors.
Error Effect on profit
Number decrease increase no effect
Error 1
Error 2
Error 3
Error 4
Error 5
[5]
[Total: 20]
Mark scheme
3(a) Natalie 10
Journal
Error Details Debit Credit
number $ $
1 Suspense (1) 420
Sarah (1) 420
2 Motor vehicles {(1) 7 000
Vehicle maintenance { 7 000
Capital (1) 14 000
3 Purchases (1) 63
Suspense (1) 63
4 General expenses (1) 126
Bank (1) 126
5 Drawings (1) 400
Cash (1) 400
3(b) Natalie 3
Suspense account
Date Details $ Date Details $
2024 2024
Mar 31 Sarah (1) 420 Mar 31 Difference on trial
balance (1) 357
___ Purchases (1) 63
420 420
3(c) 2
Error Error type
Number
Error 4 Omission (1)
Error 5 Complete reversal (1)
3(d) 5
Error Effect on profit
Number
decrease increase no effect
Error 1 Π(1)
Error 2 Π(1)
Error 3 Π(1)
Error 4 Π (1)
Error 5 Π(1)
A company has a fleet of delivery vehicles. Information from their statement of financial position at
31 December 2022 shows that the vehicles originally cost $440 000 with accumulated depreciation of $270 000.
The business purchased two additional vehicles costing a total of $70 000 on 1 April 2023 on credit from L Autos.
On 30 November 2023, the business sold one of its vehicles. The vehicle had originally cost
$28 000 with accumulated depreciation of $16 800. The vehicle was sold for $10 500 to a local garage who paid by bank transfer.
The business provides for depreciation using the straight-line method at a rate of 20% per annum.
A full year’s depreciation is charged in the year of purchase.
No depreciation is charged in the year of disposal.
REQUIRED:
(a) Calculate the depreciation charge for the year ended 31 December 2023.
…… [2]
(b) Prepare the company’s ledger accounts for the delivery vehicles, provision for depreciation and disposal of delivery vehicles for the year ended 31 December 2023.
Balance the accounts and bring down the balances on 1 January 2024.
Delivery vehicles account
Date Details $ Date Details $
Provision for depreciation of delivery vehicles account
Date Details $ Date Details $
Disposal of delivery vehicles account
Date Details $ Date Details $
[10]
After talking to his accountant, the owner of the company is considering changing the method of depreciation for his delivery vehicles to the reducing balance method but maintaining the rate of depreciation at 20% per annum.
REQUIRED:
(c) Advise the owner of the company whether he should pursue this course of action. Justify your answer by providing two advantages and two disadvantages of changing the method of depreciation to the reducing balance method.
…… [5]
(d) Complete the following table by placing a tick (3) in the appropriate column to indicate the most suitable method of depreciation for each of the non-current assets.
Non-current asset Straight-line Revaluation No depreciation
Land
Fixtures & fittings
Loose tools
[3]
[Total: 20]
Mark scheme
4(a) $ $ 2
Cost of vehicles at start 440 000
Add Cost of new vehicles 70 000 510 000
Less Cost of vehicle sold 28 000
Cost of vehicles held at year end 482 000 (1)
Depreciation for the year = 482 000 × 20% = 96 400 (1)OF
4(b) Delivery vehicles account 10
Date Details $ Date Details $
2023 2023
Jan 1 Balance b/d 440 000 Nov 30 Disposal (1) 28 000
Apr 1 L Autos (1) 70 000 Dec 31 Balance c/d 482 000
510 000 510 000
2024
Jan 1 Balance b/d ***OF 482 000
Provision for depreciation of delivery vehicles account
Date Details $ Date Details $
2023 2023
Nov 30 Disposal (1) 16 800 Jan 1 Balance b/d 270 000
Dec 31 Balance c/d 349 600 Dec 31 Income statement (1)OF 96 400
366 400 366 400
2024
Jan 1 Balance b/d ***(1)OF boths 349 600
Disposal of delivery vehicle account
Date Details $ Date Details $
2023 2023
Nov 30 Delivery vehicles (1) 28 000 Nov 30 Prov. for depreciation (1) 16 800
Bank (1) 10 500
_____ Dec 31 Income statement (1)OF 700
28 000 28 000
(1) dates
4(c) Advantages 5
Application of the matching principle
Vehicles would be valued at a more realistic/accurate figure
May reflect the estimate of loss in value for vehicles more accurately/ depreciation may be more accurate
Appropriate for vehicles as they lose more value/greater benefits are gained in the early years
Total depreciation/annual depreciation charge will be lower
Accept other valid points
Max 2
Disadvantages
More difficult to calculate depreciation /need to recalculate depreciation each year
The depreciation charge is higher in the early years
Changing methods is against the consistency principle
Changing methods makes comparisons between years more difficult
Non-current asset may be overvalued
Accept other valid points
Max 2
Recommendation (1)
4(d) 3
Non-current asset Straight line Revaluation No
depreciation
Land Π (1)
Fixtures & fittings Π(1)
Loose tools Π (1)
The following information was provided by G Limited, a manufacturing company, for the year ended 31 March 2024.
$
Purchases:
Raw materials 68 000
Finished goods 32 413
Wages:
Factory operatives 183 700
Factory supervisors 47 200
Administration salaries 34 925
Factory machinery at cost 247 000
Provision for depreciation of factory machinery 51 500
Factory general expenses 20 250
Rates & insurance 7 100
Administration expenses 5 470
Carriage on purchases of finished goods 2 180
Royalties 3 240
1 April 2023 31 March 2024
$ $
Inventory:
Raw materials 18 200 19 280
Work in progress 23 400 22 650
Finished goods 6 820 9 350
Additional information
1 Factory machinery is to be depreciated at 15% per annum using the reducing balance method.
2 On 31 March 2024 rates, $620, were owing.
3 Rates and insurance are to be apportioned 60% to the factory and 40% to the office.
REQUIRED
(a) Prepare the manufacturing account for the year ended 31 March 2024.
G Limited
Manufacturing account for the year ended 31 March 2024
$ $
[10]
G Limited apply a standard rate of mark-up of 35%.
REQUIRED:
(b) Prepare the trading section of the income statement of G Limited for the year ended
31 March 2024.
G Limited
Income Statement (Trading section) for the year ended 31 March 2024
$ $
[5]
G Limited make all sales on credit and have supplied the following information:
Trade receivables turnover Irrecoverable debts
(days) $
At 31 March 2024 38 32 060
At 1 April 2023 29 19 200
The directors of G Limited are worried about the level of debts from credit customers and are considering employing a consultant to review their credit control policy and implement any changes. They would provide training to the existing staff in the new procedures.
The consultant would charge a fee of $14 000 for their services.
REQUIRED:
(c) Advise G Limited whether to employ the consultant to review their credit control policy. Justify your answer with two advantages and two disadvantages.
…… [5]
[Total: 20]
Mark scheme
5(a) G Limited 10
Manufacturing account for the year ended 31 March 2024
$ $
Cost of materials consumed
Opening inventory of raw materials 18 200
Purchases of raw materials 68 000
86 200
Less Closing inventory of raw materials 19 280
66 920 (1)
Direct wages 183 700 (1)
Royalties 3 240 (1)
Prime cost 253 860 (1)OF
Factory overheads
Wages of factory supervisor 47 200 }(1)
Factory general expenses 20 250 }
Factory rates and insurance
(7 100 + 620) × 60% 4 632 (1)
Depreciation of factory machinery
(247 000 – 51 500) × 15% 29 325 (1) 101 407
355 267 (1)OF
Add Opening work in progress 23 400 *
378 667
Less Closing work in progress 22 650 * (1) both W in P
Cost of production 356 017 (1)OF
5(b) G Limited 5
Income Statement (Trading section) for the year ended 31 March 2024
$ $ $
Revenue 523 908 (1)OF
Less Cost of sales
Opening inventory finished goods 6 820
Cost of production 356 017 (1)OF
Purchases of finished goods 32 413 } (1)
Carriage inwards on finished goods 2 180 } 34 593
397 430
Less Closing inventory of finished goods 9 350 388 080 (1)OF
Gross Profit 135 828 (1)OF
5(c) Advantages 5
Better trained staff
Improved debt collection period/reduce trade receivables turnover/money received from credit customers more
quickly/improved cash flow
Improved credit control
Risk of irrecoverable debts reduced
Only have to pay fee once but benefits should continue
Accept other valid points
Max 2
Disadvantages
Fee charged by consultant/cannot afford the fee
May damage relationship with customers
May be reduction in sales
New procedures are not guaranteed to generate improvements
No time to train staff
Additional costs may be incurred
Accept other valid points
Max 2
Recommendation (1)
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Accounting 0452/23 for October/November 2024 is out of 100 marks, with 1 hour 45 minutes to answer it, across 5 questions.
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