Cambridge International Examinations Cambridge International General Certificate of Secondary Education

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1 * * Cambridge International Examinations Cambridge International General Certificate of Secondary Education ACCOUNTING 0452/11 Paper 1 October/November 2015 Candidates answer on the Question Paper. No Additional Materials are required. 1 hour 45 minutes READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. IB15 11_0452_11/2RP UCLES 2015 [Turn over

2 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Which business document would be sent by a customer to a supplier? A B C D credit note debit note invoice statement of account (b) An insurance account shows an amount paid for the year of 2000 and a prepayment at the end of the year of 400. Which entry appears in the insurance account to record the transfer to the income statement? A credit entry of 1600 B credit entry of 2400 C debit entry of 1600 D debit entry of 2400 (c) Where would a dishonoured cheque from a customer be recorded in the books of the supplier? A B C D credit side of the purchases ledger control account credit side of the sales ledger control account debit side of the purchases ledger control account debit side of the sales ledger control account UCLES /11/O/N/15

3 (d) Jamal treats purchases of loose tools as capital expenditure. On 1 July 2014 his loose tools were valued at On 1 September 2014 he bought new tools costing On 30 June 2015 he valued loose tools at Which amount for loose tools appeared in his income statement for the year ended 30 June 2015? A 100 B 1100 C 1200 D 2300 (e) The following account appeared in Andrew s ledger. Andrew Advertising account April Bank May Balance b/d April Income statement 2800 Balance c/d May Balance b/d 700 Which statement is correct? A Andrew earned 2800 from advertising during the year. B Andrew had prepaid 700 for advertising on 1 May C Andrew owed 700 for advertising on 1 May D Andrew paid 2800 for advertising during the year. UCLES /11/O/N/15 [Turn over

4 4 (f) Why does a partnership prepare an appropriation account? A to allocate profit for the year to each partner B C D to calculate interest on partners loans to ensure that drawings are accounted for to record dividends paid and proposed (g) During the accounting year a limited company had the following transactions. ordinary share dividend paid interest paid on short term bank loan interest paid on debentures (repayable in 2019) interest received on bank deposit Which amount appeared in the expenses in the income statement? A B C D (h) Why does a sports club prepare the trading account section of an income statement? A B C D it has paid staff as well as voluntary workers it operates a café to calculate subscriptions for the year to value the closing inventory UCLES /11/O/N/15

5 5 (i) The rent of a manufacturing business is split 60% factory, 10% offices and 30% showrooms. Business rent is a year and salesmen s salaries are a year. How much appears in the manufacturing account for these costs? A B C D (j) Financial statements must be free from error and bias. Which accounting policy is being applied? A B C D comparability relevance reliability understandability [Total: 10] UCLES /11/O/N/15 [Turn over

6 2 (a) State what is meant by a book of prime (original) entry. 6 (b) Name two of the books of prime (original) entry which a business may maintain. 1 2 [2] (c) Complete the following table using a tick ( ) to indicate whether each item is an asset, a liability or an expense. The first has been completed as an example. fixtures and fittings insurance asset liability expense bank overdraft cash trade payable wages accrued electricity increase in provision for doubtful debts unpaid commission receivable [4] UCLES /11/O/N/15

7 (d) Name the financial statement in which the following are recorded. (i) assets 7 (ii) expenses. Neel started a business on 1 June. The following transactions took place in June. 1 Opened a business bank account with 8000 of his own money. 2 Received a bank loan, Bought a delivery van, 5200, from A1 Motors on credit. 4 Bought inventory, 3700, paying by cheque. 5 Paid shop rent, 1000, by standing order. 6 Withdrew cash, 100, to start up an imprest system. REQUIRED (e) Complete the following table showing how these transactions were recorded. The first has been completed as an example. Debit entry Credit entry 1 Bank account 8000 Capital account [10] UCLES /11/O/N/15 [Turn over

8 (f) Calculate the balance on Neel s bank account after these transactions. 8 [3] [Total: 22] UCLES /11/O/N/15

9 9 3 (a) Name three types of inventory which might be held by a manufacturing business [3] (b) State how inventory should be valued. (c) State how Asrul, a retailer, records goods taken for his personal use. Account debited Account credited [2] (d) Name the accounting principle which Asrul is applying. (e) State one reason why Asrul prepares a bank reconciliation statement. (f) State what is meant by a bank statement. UCLES /11/O/N/15 [Turn over

10 10 (g) Give one example of each of the following. 1 An item in the cash book not in the bank statement 2 An item in the bank statement not in the cash book. [2] [Total: 11] UCLES /11/O/N/15

11 4 (a) Explain what is meant by the term provision for doubtful debts. 11 On 1 May 2014 Samuel s provision for doubtful debts account showed a balance of 450. On 30 April 2015 his trade receivables amounted to This included a debt of 250 which had gone bad and should be written off. Samuel provides for doubtful debts at a rate of 4%. REQUIRED (b) Prepare Samuel s provision for doubtful debts account. Bring down the balance on 1 May Samuel Provision for doubtful debts account [2] Date Details Date Details [5] (c) State where the entry for doubtful debts will appear in the income statement. (d) Name the two accounting principles Samuel is applying by maintaining a provision for doubtful debts account. 1 2 [2] UCLES /11/O/N/15 [Turn over

12 12 (e) Name the two items in the statement of financial position which might be overstated if Samuel did not maintain a provision for doubtful debts account. 1 2 [2] [Total: 12] UCLES /11/O/N/15

13 13 5 Nzita is a sole trader. His statement of financial position at 31 January 2014 included the following balances. REQUIRED Trade receivables 700 Trade payables 400 Inventory Equipment at cost Provision for depreciation of equipment Prepaid rent 250 Bank debit (a) Calculate Nzita s capital at 31 January [6] UCLES /11/O/N/15 [Turn over

14 14 A summary of Nzita s bank statements showed the following for the year ended 31 January Further information is as follows. Receipts from customers Payments to suppliers Wages Rent Purchase of new equipment Sundry expenses Drawings Nzita depreciates his non-current assets at the rate of 10% per annum on the straight line basis. A full year s depreciation is provided in the year of purchase. 2 No non-current assets were disposed of during the year. 3 Proper books of account were not kept during the year but Nzita provided the following information at 31 January Trade receivables 900 Trade payables 650 Inventory 1400 Prepaid rent All sales and purchases were made on credit. UCLES /11/O/N/15

15 15 REQUIRED (b) Prepare the following accounts for the year ended 31 January 2015 to determine the sales and purchases for the year. Nzita Total trade receivables account Date Details Date Details Nzita Total trade payables account Date Details Date Details [8] UCLES /11/O/N/15 [Turn over

16 (c) Prepare Nzita s income statement for the year ended 31 January Nzita Income Statement for the year ended 31 January 2015 [9] UCLES /11/O/N/15

17 17 (d) Prepare an extract from Nzita s statement of financial position at 31 January 2015 showing the capital section. Nzita Statement of Financial Position (extract) at 31 January 2015 [4] (e) Calculate, to two decimal places, Nzita s gross profit margin for the year. [2] (f) Suggest two reasons why Nzita s gross profit margin was lower than in the previous year. 1 2 [2] [Total: 31] UCLES /11/O/N/15 [Turn over

18 18 6 (a) Complete the following sentences using the words capital current non-current overstated revenue understated. expenditure relates to the purchase of an asset which will last for more than 12 months.. expenditure relates to the day-to-day running costs of the business or the purchase of a. asset. A capital receipt arises when a. asset is sold. If an item of capital expenditure is wrongly recorded as revenue expenditure profit will be. If an item of revenue expenditure is wrongly recorded as capital expenditure profit will be. [6] Leroy prepared a trial balance on 30 September 2015 which failed to balance. He opened a suspense account. He then discovered the following errors. 1 Discount allowed, 30, had been posted to the credit side of the discount received account. 2 Receipt of cash, 85, from Yolanda, a credit customer, had been credited to the account of Joanie. 3 The total of the sales returns journal, 110, had been posted as An invoice totalling 1000 for computer equipment and supplies had included a charge of 150 for stationery. The total amount had been posted to the office equipment account. REQUIRED (b) State which two of these errors did not affect the balancing of the trial balance and in each case name the type of error which had occurred. Error Name Error Name [4] UCLES /11/O/N/15

19 (c) Prepare journal entries to correct all four errors. Narratives are required. 19 Error number Details Debit Credit [13] Question 6(d) is on the next page. UCLES /11/O/N/15 [Turn over

20 (d) Prepare the suspense account, showing the original difference on the trial balance. 20 Leroy Suspense account Date Details Date Details 2015 Sept Sept [3] Leroy had a draft profit for the year of 5170 before the errors were corrected. REQUIRED (e) Complete the following table to calculate the correct profit for the year. Where an error has no effect on profit, place a tick ( ) in the No Effect column. No Effect Increase Decrease Draft profit 5170 Error 1 Error 2 Error 3 Error 4 Corrected profit [8] [Total: 34] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. UCLES /11/O/N/15

21 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * * ACCOUNTING 0452/12 Paper 1 October/November 2015 Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST 1 hour 45 minutes Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 20 printed pages. IB15 11_0452_12/FP UCLES 2015 [Turn over

22 2 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Which business document would be sent by a customer to a supplier? A B C D credit note debit note invoice statement of account (b) An insurance account shows an amount paid for the year of 2000 and a prepayment at the end of the year of 400. Which entry appears in the insurance account to record the transfer to the income statement? A credit entry of 1600 B credit entry of 2400 C debit entry of 1600 D debit entry of 2400 (c) Where would a dishonoured cheque from a customer be recorded in the books of the supplier? A B C D credit side of the purchases ledger control account credit side of the sales ledger control account debit side of the purchases ledger control account debit side of the sales ledger control account UCLES /12/O/N/15

23 (d) Jamal treats purchases of loose tools as capital expenditure. On 1 July 2014 his loose tools were valued at On 1 September 2014 he bought new tools costing On 30 June 2015 he valued loose tools at Which amount for loose tools appeared in his income statement for the year ended 30 June 2015? A 100 B 1100 C 1200 D 2300 (e) The following account appeared in Andrew s ledger. Andrew Advertising account April Bank May Balance b/d April Income statement 2800 Balance c/d May Balance b/d 700 Which statement is correct? A Andrew earned 2800 from advertising during the year. B Andrew had prepaid 700 for advertising on 1 May C Andrew owed 700 for advertising on 1 May D Andrew paid 2800 for advertising during the year. UCLES /12/O/N/15 [Turn over

24 4 (f) Why does a partnership prepare an appropriation account? A to allocate profit for the year to each partner B C D to calculate interest on partners loans to ensure that drawings are accounted for to record dividends paid and proposed (g) During the accounting year a limited company had the following transactions. ordinary share dividend paid interest paid on short term bank loan interest paid on debentures (repayable in 2019) interest received on bank deposit Which amount appeared in the expenses in the income statement? A B C D (h) Why does a sports club prepare the trading account section of an income statement? A B C D it has paid staff as well as voluntary workers it operates a café to calculate subscriptions for the year to value the closing inventory UCLES /12/O/N/15

25 5 (i) The rent of a manufacturing business is split 60% factory, 10% offices and 30% showrooms. Business rent is a year and salesmen s salaries are a year. How much appears in the manufacturing account for these costs? A B C D (j) Financial statements must be free from error and bias. Which accounting policy is being applied? A B C D comparability relevance reliability understandability [Total: 10] UCLES /12/O/N/15 [Turn over

26 2 (a) State what is meant by a book of prime (original) entry. 6 (b) Name two of the books of prime (original) entry which a business may maintain. 1 2 [2] (c) Complete the following table using a tick ( ) to indicate whether each item is an asset, a liability or an expense. The first has been completed as an example. fixtures and fittings insurance asset liability expense bank overdraft cash trade payable wages accrued electricity increase in provision for doubtful debts unpaid commission receivable [4] UCLES /12/O/N/15

27 (d) Name the financial statement in which the following are recorded. (i) assets 7 (ii) expenses. Neel started a business on 1 June. The following transactions took place in June. 1 Opened a business bank account with 8000 of his own money. 2 Received a bank loan, Bought a delivery van, 5200, from A1 Motors on credit. 4 Bought inventory, 3700, paying by cheque. 5 Paid shop rent, 1000, by standing order. 6 Withdrew cash, 100, to start up an imprest system. REQUIRED (e) Complete the following table showing how these transactions were recorded. The first has been completed as an example. Debit entry Credit entry 1 Bank account 8000 Capital account [10] UCLES /12/O/N/15 [Turn over

28 (f) Calculate the balance on Neel s bank account after these transactions. 8 [3] [Total: 22] UCLES /12/O/N/15

29 9 3 (a) Name three types of inventory which might be held by a manufacturing business [3] (b) State how inventory should be valued. (c) State how Asrul, a retailer, records goods taken for his personal use. Account debited Account credited [2] (d) Name the accounting principle which Asrul is applying. (e) State one reason why Asrul prepares a bank reconciliation statement. (f) State what is meant by a bank statement. UCLES /12/O/N/15 [Turn over

30 10 (g) Give one example of each of the following. 1 An item in the cash book not in the bank statement 2 An item in the bank statement not in the cash book. [2] [Total: 11] UCLES /12/O/N/15

31 4 (a) Explain what is meant by the term provision for doubtful debts. 11 On 1 May 2014 Samuel s provision for doubtful debts account showed a balance of 450. On 30 April 2015 his trade receivables amounted to This included a debt of 250 which had gone bad and should be written off. Samuel provides for doubtful debts at a rate of 4%. REQUIRED (b) Prepare Samuel s provision for doubtful debts account. Bring down the balance on 1 May Samuel Provision for doubtful debts account [2] Date Details Date Details [5] (c) State where the entry for doubtful debts will appear in the income statement. (d) Name the two accounting principles Samuel is applying by maintaining a provision for doubtful debts account. 1 2 [2] UCLES /12/O/N/15 [Turn over

32 12 (e) Name the two items in the statement of financial position which might be overstated if Samuel did not maintain a provision for doubtful debts account. 1 2 [2] [Total: 12] UCLES /12/O/N/15

33 13 5 Nzita is a sole trader. His statement of financial position at 31 January 2014 included the following balances. REQUIRED Trade receivables 700 Trade payables 400 Inventory Equipment at cost Provision for depreciation of equipment Prepaid rent 250 Bank debit (a) Calculate Nzita s capital at 31 January [6] UCLES /12/O/N/15 [Turn over

34 14 A summary of Nzita s bank statements showed the following for the year ended 31 January Further information is as follows. Receipts from customers Payments to suppliers Wages Rent Purchase of new equipment Sundry expenses Drawings Nzita depreciates his non-current assets at the rate of 10% per annum on the straight line basis. A full year s depreciation is provided in the year of purchase. 2 No non-current assets were disposed of during the year. 3 Proper books of account were not kept during the year but Nzita provided the following information at 31 January Trade receivables 900 Trade payables 650 Inventory 1400 Prepaid rent All sales and purchases were made on credit. UCLES /12/O/N/15

35 15 REQUIRED (b) Prepare the following accounts for the year ended 31 January 2015 to determine the sales and purchases for the year. Nzita Total trade receivables account Date Details Date Details Nzita Total trade payables account Date Details Date Details [8] UCLES /12/O/N/15 [Turn over

36 (c) Prepare Nzita s income statement for the year ended 31 January Nzita Income Statement for the year ended 31 January 2015 [9] UCLES /12/O/N/15

37 17 (d) Prepare an extract from Nzita s statement of financial position at 31 January 2015 showing the capital section. Nzita Statement of Financial Position (extract) at 31 January 2015 [4] (e) Calculate, to two decimal places, Nzita s gross profit margin for the year. [2] (f) Suggest two reasons why Nzita s gross profit margin was lower than in the previous year. 1 2 [2] [Total: 31] UCLES /12/O/N/15 [Turn over

38 18 6 (a) Complete the following sentences using the words capital current non-current overstated revenue understated. expenditure relates to the purchase of an asset which will last for more than 12 months.. expenditure relates to the day-to-day running costs of the business or the purchase of a. asset. A capital receipt arises when a. asset is sold. If an item of capital expenditure is wrongly recorded as revenue expenditure profit will be. If an item of revenue expenditure is wrongly recorded as capital expenditure profit will be. [6] Leroy prepared a trial balance on 30 September 2015 which failed to balance. He opened a suspense account. He then discovered the following errors. 1 Discount allowed, 30, had been posted to the credit side of the discount received account. 2 Receipt of cash, 85, from Yolanda, a credit customer, had been credited to the account of Joanie. 3 The total of the sales returns journal, 110, had been posted as An invoice totalling 1000 for computer equipment and supplies had included a charge of 150 for stationery. The total amount had been posted to the office equipment account. REQUIRED (b) State which two of these errors did not affect the balancing of the trial balance and in each case name the type of error which had occurred. Error Name Error Name [4] UCLES /12/O/N/15

39 (c) Prepare journal entries to correct all four errors. Narratives are required. 19 Error number Details Debit Credit [13] Question 6(d) is on the next page. UCLES /12/O/N/15 [Turn over

40 (d) Prepare the suspense account, showing the original difference on the trial balance. 20 Leroy Suspense account Date Details Date Details 2015 Sept Sept [3] Leroy had a draft profit for the year of 5170 before the errors were corrected. REQUIRED (e) Complete the following table to calculate the correct profit for the year. Where an error has no effect on profit, place a tick ( ) in the No Effect column. No Effect Increase Decrease Draft profit 5170 Error 1 Error 2 Error 3 Error 4 Corrected profit [8] [Total: 34] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. UCLES /12/O/N/15

41 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * * ACCOUNTING 0452/13 Paper 1 October/November 2015 Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST 1 hour 45 minutes Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 22 printed pages and 2 blank pages. IB15 11_0452_13/5RP UCLES 2015 [Turn over

42 2 There are 10 parts to Question 1. For each of the parts (a) to (j) there are four possible answers A, B, C and D. Choose the one you consider correct and place a tick ( ) in the box to indicate the correct answer. 1 (a) Which statement describes the purpose of a trial balance? A B C D It checks the arithmetical accuracy of the double entry. It ensures the ledger accounts contain no errors. It indicates areas where errors have arisen. It prevents errors from occurring. (b) A statement of financial position showed the following. Non-current assets Non-current liabilities Current assets Current liabilities What was the owner s capital? A B C D UCLES /13/O/N/15

43 3 (c) A receipt of 800 from Jamal, a credit customer, was recorded as a receipt of 880 in the account of James. Which entries are needed to correct this error? Account(s) debited Account(s) credited A Jamal Suspense B Jamal 880 James Suspense C James Suspense D James 880 Jamal Suspense James Jamal (d) What is true about a bank reconciliation statement? A It forms part of the double entry system. B It is a statement prepared by the bank. C D It is prepared to look for errors in the cash book and the bank statement. It reconciles the opening and closing cash book balances. UCLES /13/O/N/15 [Turn over

44 4 (e) Jane maintains a provision for doubtful debts at 5% of her trade receivables. The following account appeared in her ledger. Jane Provision for doubtful debts account June Income statement 50 1 July Balance b/d 600 Balance c/d July Balance b/d 550 Which statement is correct? A Bad debts recovered during the year amounted to 50. B Bad debts written off during the year amounted to 50. C D Total trade receivables decreased during the year. Total trade receivables increased during the year. (f) An item of inventory has an original cost of 18 and a replacement cost of 13. The costs of packing and delivery when the item is sold will amount to 3. It is expected to be sold for 20. At which value should it be included in the financial statements? A 13 B 16 C 17 D 18 UCLES /13/O/N/15

45 5 (g) On 1 January 2014 Lionel had a debit balance on his current account of During the year the following were recorded in his current account. Interest on capital Interest on drawings 840 Share of residual profit Drawings What was the balance on Lionel s current account on 1 January 2015? A B C D 2060 credit 3740 credit 6060 credit 7740 credit (h) Which statement about debentures is correct? A B C D They carry a fixed rate of dividend. They carry a fixed rate of interest. They carry a variable rate of dividend. They carry a variable rate of interest. (i) The activities of the Wilhelm Archery club include the running of an equipment shop. On 1 January the accumulated fund of the club amounted to and on 31 December What does this increase mean? A The non-current assets increased by B There was a surplus for the year of C There was a trading profit from the shop of D The subscriptions received amounted to UCLES /13/O/N/15 [Turn over

46 6 (j) A manufacturing business provided the following information about its first year of trading. Purchases of raw materials Closing inventory of raw materials Purchases of finished goods Closing inventory of finished goods Factory direct wages Supervisor s salary Depreciation of machinery What was the prime cost? A B C D [Total: 10] UCLES /13/O/N/15

47 2 (a) State the purpose of each of the following business documents. debit note 7 credit note statement of account [3] (b) State one reason why a trader s ledger might be divided into different sections. (c) Complete the following table, naming the ledger in which each account appears. The first one has been completed as an example. Account Delivery van Ledger Nominal/general Sales Susan, a credit customer Carriage inwards Drawings Adam, a credit supplier [5] (d) Name the section of a statement of financial position in which inventory is recorded. (e) State how Ivy would record the purchase of goods for resale on credit from Alice. Account debited Account credited [2] UCLES /13/O/N/15 [Turn over

48 8 (f) Indicate with a tick ( ) in which account cash discount is recorded in the books of both Ivy and Alice. Discount allowed Discount received in the books of Ivy in the books of Alice [2] (g) Name the business document issued by Alice on which the cash discount is recorded. [Total: 15] UCLES /13/O/N/15

49 9 3 (a) Give two examples of items which might appear as non-current assets in the statement of financial position of a manufacturing business. 1 2 [2] (b) Explain how a non-current asset differs from a current asset. [2] (c) Give one example of a capital receipt. (d) Complete the following table using a tick ( ) to indicate if each item is capital or revenue expenditure. Purchase of inventory Purchase of stationery Legal fees on purchase of land Capital expenditure Revenue expenditure Construction costs of factory [4] (e) Name the account which is opened when a non-current asset is sold. (f) Name the accounting principle applied when the same rate of depreciation is maintained each year. (g) State one limitation of financial statements. [Total: 12] UCLES /13/O/N/15 [Turn over

50 10 4 Esme provided the following information. At 1 January 2014 Trade payables Trade receivables For the year ended 31 December 2014 Sales (all credit) Sales returns Purchases (all credit) Purchases returns Receipts from credit customers Payments to credit suppliers Refund to credit customer 450 Discount allowed Discount received 850 Bad debt written off 300 Additional information at 31 December Esme owed 100 to a supplier who also owed 180 to Esme. It was agreed to record this as a setoff in the control accounts. 2 Esme owed 50 to a credit customer who had overpaid. UCLES /13/O/N/15

51 11 REQUIRED (a) Prepare the sales ledger control account and the purchases ledger control account for the year. Balance the accounts and bring down the balances on 1 January Esme Sales ledger control account Date Details Date Details UCLES /13/O/N/15 [Turn over

52 12 Purchases ledger control account Date Details Date Details [18] (b) State one reason why Esme maintains a sales ledger control account. (c) State why the discount allowed was given. [Total: 20] UCLES /13/O/N/15

53 13 Question 5 is on the next page. UCLES /13/O/N/15 [Turn over

54 14 5 Elliott started a business selling machinery on 1 May He opened a business bank account with of his own money and transferred his own vehicle to be retained and used in the business at a valuation of He provided the following summary of the transactions in the first month of trading. Paid 3000 by standing order for three months rent. Bought 6 machines at 300 each and 8 machines at 400 each, paying by credit transfer. Sold 5 of the cheaper machines for 450 each in cash. Sold 6 of the more expensive machines for 700 each receiving the funds by cheque. Withdrew 3600 from the bank as drawings. Paid sundry expenses, 150, in cash. Paid cash, 2000, into the bank. Used, but did not pay for, electricity, 80. REQUIRED (a) Prepare Elliott s cash book for May Balance the cash book and bring down the balances on 1 June The cash book is on the opposite page. [11] UCLES /13/O/N/15

55 15 Date Details Cash Bank Elliott Cash book Date Details Cash Bank UCLES /13/O/N/15 [Turn over

56 16 (b) Calculate the following for May Cost of sales Expenses Profit for the month [9] UCLES /13/O/N/15

57 (c) Prepare Elliott s statement of financial position at the end of the first month of trading. 17 Elliott Statement of Financial Position at 31 May (d) Suggest one reason, based on your answer to (c), why Elliott might face financial difficulties in the future. [9] [Total: 30] UCLES /13/O/N/15 [Turn over

58 18 BLANK PAGE UCLES /13/O/N/15

59 6 On 1 January 2014 General Stores Limited had fixtures and fittings which had cost On 1 March 2014 it paid by cheque for new fixtures and fittings, , and sold old fixtures and fittings with an original cost of There was no profit or loss on this disposal. General Stores Limited provides for depreciation on fixtures and fittings at a rate of 30% per annum on the straight-line basis. It provides a full year s depreciation in the year of purchase and none in the year of disposal. REQUIRED (a) Prepare the fixtures and fittings account for the year ended 31 December Balance the account and bring down the balance on 1 January General Stores Limited Fixtures and fittings account Date Details Date Details [5] (b) Calculate the depreciation charge for the year ended 31 December [2] UCLES /13/O/N/15 [Turn over

60 The company provided the following additional information for the year ended 31 December Revenue Purchases Sales assistants wages Office salaries Rent Other operating expenses Dividend paid Interest paid Transfer to general reserve Inventory values were as follows. 1 January December UCLES /13/O/N/15

61 21 REQUIRED (c) Prepare the income statement for the year ended 31 December General Stores Limited Income Statement for the year ended 31 December [10] UCLES /13/O/N/15 [Turn over

62 22 (d) Complete the following statement of changes in equity for the year ended 31 December General Stores Limited Statement of Changes in Equity for the year ended 31 December 2014 Details Share capital General reserve Retained earnings Total On 1 January Profit for the year Dividend paid Transfer to general reserve On 31 December [5] (e) Calculate to two decimal places the net profit margin. [2] (f) Explain why the ratio for General Stores Limited is lower than that of the neighbouring shop. [6] UCLES /13/O/N/15

63 23 (g) Suggest three ways in which General Stores Limited might improve its net profit margin [3] [Total: 33] UCLES /13/O/N/15

64 24 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. UCLES /13/O/N/15

65 Cambridge International Examinations Cambridge International General Certificate of Secondary Education * * ACCOUNTING 0452/21 Paper 2 October/November 2015 Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST 1 hour 45 minutes Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 18 printed pages and 2 blank pages. IB15 11_0452_21/2RP UCLES 2015 [Turn over

66 2 1 Shahid Ayub is a trader who maintains a full set of accounting records including a three column cash book. On 1 August 2015 Shahid Ayub had the following balances in his cash book: Cash 50 Bank overdraft 7150 Shahid Ayub s transactions for August 2015 included the following. August 9 A cheque received in July for 362 from El Nil Supply Company was dishonoured by the bank REQUIRED 18 Paid 54 by cheque for fuel of private motor vehicle 24 Received a cheque from Mariam Soliman to settle her debt of 520, less 2½% cash discount 30 Cash sales, Paid all the remaining cash into the bank except 100 (a) Complete Shahid Ayub s cash book on the page opposite. Balance the cash book and bring down the balances on 1 September [9] UCLES /21/O/N/15

67 3 UCLES /21/O/N/15 [Turn over Shahid Ayub - Cash Book Bank Cash Discount received Details Date Bank Cash Discount allowed Details Date

68 The following incomplete statement of account was available on 31 August STATEMENT OF ACCOUNT Shahid Ayub 44 Narrow Lane, Anytown Mariam Soliman The Avenue Weston 31 August 2015 Date 2015 August Balance due Goods Returns Payment Discount Reference Debit 340 Credit Balance ??? REQUIRED (b) (i) Calculate the balance due on 31 August. (ii) State the name of the trader who owes the balance at 31 August. (c) State the business document and the book of prime (original) entry Shahid Ayub would use to record the following transactions which appear on the statement of account. Transaction August 9 Goods 13 Returns 24 Payment Document Book of prime (original) entry [6] UCLES /21/O/N/15

69 5 (d) Prepare the account of Shahid Ayub as it would appear in the ledger of Mariam Soliman. Balance the account and bring down the balance on 1 September Mariam Soliman Shahid Ayub account Date Details Date Details [6] [Total: 23] UCLES /21/O/N/15 [Turn over

70 2 Grace Zindi runs a secretarial agency. Her financial year ends on 31 July. She provided the following information on 31 July Capital 1 August Cash drawings Fees from clients Wages Rates and insurance General expenses 990 Heat and light 710 Commission receivable Motor vehicles at cost 1 August Provision for depreciation of motor vehicles 1 August Office equipment at valuation 1 August Additional information 1 At 31 July 2015 Insurance prepaid amounted to 300 Commission receivable of 250 was outstanding Fees from clients of 3400 was outstanding. 2 Grace Zindi lives in a flat above the business premises. One quarter of the rates and insurance relate to the flat. 3 On 31 July 2015 Grace Zindi decided to create a provision for doubtful debts of 1% of the amount owed by clients. 4 The motor vehicles are being depreciated by 20% per annum on the reducing (diminishing) balance method. 5 The office equipment was valued at on 31 July Additional office equipment costing 6900 was purchased during the year. No office equipment was disposed of during the year. UCLES /21/O/N/15

71 7 REQUIRED (a) Prepare Grace Zindi s income statement for the year ended 31 July Grace Zindi Income Statement for the year ended 31 July 2015 [16] UCLES /21/O/N/15 [Turn over

72 (b) Prepare the capital account for Grace Zindi for the year ended 31 July Balance the account and bring down the balance on 1 August Grace Zindi Capital account Date Details Date Details [6] (c) State the meaning of the accruals (matching) principle. Give one example of how this principle was applied in the preparation of the income statement in (a). Meaning Example [2] (d) State the meaning of the business entity principle. Give one example of how this principle was applied in the preparation of the income statement in (a). Meaning Example [2] [Total: 26] UCLES /21/O/N/15

73 3 (a) State two causes of depreciation of non-current assets [2] (b) Explain the straight line method of depreciation. [2] (c) Explain the reducing (diminishing) balance method of depreciation. [2] (d) Explain how charging depreciation is an example of the application of the principle of prudence. [2] (e) Name one other accounting principle which is applied when charging depreciation. UCLES /21/O/N/15 [Turn over

74 10 On 1 October 2013 Natasha Salim started a business altering and mending clothes. On that date she purchased a machine, 4000, paying by cheque. On 1 January 2014 she purchased another machine, 6000, on credit from ABC Machines. She decided to depreciate the machines using the reducing (diminishing) balance method at 20% per annum. A whole year s depreciation was to be charged in the year of purchase, but no depreciation in the year of sale. On 1 February 2015 Natasha Salim decided that the machine purchased on 1 October 2013 was no longer required. She sold it for 2100, cash. REQUIRED (f) Prepare the following accounts in the ledger of Natasha Salim for each of the two years ended 30 September 2014 and 30 September Balance the accounts and bring down the balances on 1 October 2014 and 1 October Natasha Salim Machinery account Date Details Date Details UCLES /21/O/N/15

75 11 Provision for depreciation of machinery account Date Details Date Details [12] (g) Calculate the profit or loss on the disposal of the machine on 1 February [4] [Total: 25] UCLES /21/O/N/15 [Turn over

76 12 4 Moses and Tobias Iyambo are in partnership. Their financial year ends on 31 October. They share profits and losses equally. A capital and a current account are maintained for each partner. Despite having little accounting knowledge, Tobias prepared the following statement of financial position on 31 October Statement of Financial Position 31 October 2015 Premises at cost Fixtures and equipment at book value 1 September Inventory Trade receivables Bank Drawings M Iyambo T Iyambo Trade payables Provision for doubtful debts 130 Capital account 1 September 2014 M Iyambo T Iyambo Current account 1 September 2014 M Iyambo Debit T Iyambo Credit Balance The following matters were then discovered. 1 The income statement included adjustments for the following which should have been included in the statement of financial position: Depreciation for the year on fixtures and equipment 3100 Expenses accrued Bank charges, 70, had been correctly recorded in the income statement but had not been entered in the cash book. 3 Cash in hand, 500, had not been included in the statement of financial position. 4 Profit for the year was REQUIRED (a) Prepare a corrected statement of financial position at 31 October 2015 showing the different types of assets and liabilities, and the capital and current accounts of each partner. The calculation of the current account balances may be shown within the statement of financial position or as separate calculations in the space provided. UCLES /21/O/N/15

77 13 Moses and Tobias Corrected Statement of Financial Position at 31 October 2015 UCLES /21/O/N/15 [Turn over

78 14 You may use the space below for your workings. (b) State two items which Moses and Tobias Iyambo could have included in their partnership agreement in addition to profit-sharing ratios. 1 [16] 2 [2] (c) State two ways in which Moses and Tobias Iyambo could obtain long-term funds to finance expansion of the business. 1 2 [2] (d) Complete the following table by placing a tick ( ) in the correct column to show how each of the following transactions would affect the working capital of Moses and Tobias Iyambo. Increase Decrease No effect Selling surplus equipment Delay paying credit suppliers Paying surplus cash into bank Writing off a bad debt [4] [Total: 24] UCLES /21/O/N/15

79 15 5 Kelbrook Limited provided the following information. 1 The issued share capital consists of ordinary shares of 0.50 each. 2 On 1 October 2014: General reserve 4000 Retained earnings The profit for the year ended 30 September 2015 was of this was transferred to the general reserve. An interim dividend of 4500 was paid during the year. No dividends were proposed at the end of the year. REQUIRED (a) Prepare the equity and reserves section of the statement of financial position at 30 September Kelbrook Limited Extract from Statement of Financial Position at 30 September 2015 [5] Question 5(b) is on the next page. UCLES /21/O/N/15 [Turn over

80 Kelbrook Limited provided the following information at 30 September Non-current assets at book value Bank overdraft Inventory Trade receivables Trade payables Other payables REQUIRED (b) Complete the following table. Current ratio Workings Answer to two decimal places Quick ratio Workings Answer to two decimal places Return on capital employed (ROCE) Workings Answer to two decimal places [6] UCLES /21/O/N/15

81 17 The ratios calculated at 30 September 2014 were: Current ratio 2.51 : 1 Quick ratio 1.57 : 1 Return on capital employed (ROCE) 12.55% REQUIRED (c) Comment on the change in the current ratio. [2] (d) Suggest one reason for the change in the quick ratio. (e) Suggest two ways to improve the return on capital employed (ROCE). 1 2 [2] Question 5(f) is on the next page. UCLES /21/O/N/15 [Turn over

82 18 Kelbrook Limited provided the following information for the year ended 30 September Credit sales Cash sales Credit customers are allowed 60 days credit. REQUIRED (f) (i) Calculate the collection period for trade receivables. Round up your answer to the next whole day. (ii) Comment on the collection period for trade receivables. [2] [2] Kelbrook Limited is allowed 30 days credit by their credit suppliers. For the year ended 30 September 2015 the payment period was 52 days. REQUIRED (g) Comment on the payment period for trade payables. [2] [Total: 22] UCLES /21/O/N/15

83 19 BLANK PAGE UCLES /21/O/N/15

84 20 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. UCLES /21/O/N/15