Cambridge International Examinations

Cambridge International General Certificate of Secondary Education

* 1 2 2 7 4 7 0 3 9 3 *

ACCOUNTING 0452/11
Paper 1 May/June 2017
1 hour 45 minutes
Candidates answer on the Question Paper.
No Additional Materials are required.

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 19 printed pages and 1 blank page.

DC (RCL (KM)) 133686/4

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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) The total of the discount received column of the cash book, $80, was posted in error to the
credit side of the discount allowed account.

Which entries correct this error?

debit account(s) $ credit account(s) $

A discount allowed 80 discount received 80

B discount allowed 80 discount received 160

suspense 80

C discount allowed 160 discount received 80

suspense 80

D discount received 80 discount allowed 80

[1]

(b) Which account or statement provides a summary of transactions involving trade receivables?

A bank reconciliation statement

B provision for doubtful debts account

C sales ledger control account

D statement of financial position

[1]

(c) Why does a trader compare his cash book with his bank statement?

to check for errors in the cash to ensure the cash book is

book up to date

A no no

B no yes

C yes no

D yes yes

[1]

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(d) Asma bought a motor vehicle for $10 000. She depreciated it at the rate of 10% per annum on
cost, calculated monthly.

After 18 months she sold the motor vehicle for $9200.

What was the profit on disposal?

A $200

B $650

C $700

D $1200
[1]

(e) At the start of the year Basil had paid $4500 rent in advance. During the year he paid rent,
$12 000. At the year end he owed $1500.

What was Basil’s annual expense for rent?

A $9 000

B $12 000

C $15 000

D $18 000
[1]

(f) A and B were in partnership. Their current accounts for the year were as follows.

A B A B
$ $ $ $
drawings 7 500 2 500 balance b/d 10 200 12 000
balance c/d 11 700 17 500 interest on capital 2 000 1 000
share of profit 7 000 7 000
19 200 20 000 19 200 20 000
balance b/d 11 700 17 500

What was the profit for the year?

A $7 000

B $14 000

C $17 000

D $27 000
[1]

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(g) Who benefits from a company’s limited liability?

A its credit customers

B its credit suppliers

C its debenture holders

D its shareholders
[1]

(h) The work in progress of a manufacturing business increased during the year.

Which effect does this have?

on cost of production on gross profit

A decrease increase

B decrease no effect

C increase decrease

D increase no effect

[1]

(i) What is meant by mark-up?

A gross profit measured as a percentage of cost of sales

B gross profit measured as a percentage of revenue

C profit for the year measured as a percentage of expenses

D profit for the year measured as a percentage of revenue

[1]

(j) Why would a bank manager look at a trader’s financial statements?

A to calculate how fast trade payables were being paid

B to check if the trader would be able to repay a loan

C to find out if customers will receive continuous supplies

D to know if inventory levels are too high

[1]

[Total: 10]

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2 (a) State the accounting equation.

...............................................................................................................................................[1]

(b) State what is meant by the following terms.

Asset ..........................................................................................................................................

...................................................................................................................................................

Liability .......................................................................................................................................

...................................................................................................................................................

Inventory ....................................................................................................................................

...............................................................................................................................................[3]

(c) Name the accounting principle applied when using the double entry system of book-keeping.

...............................................................................................................................................[1]

(d) State the double entry needed to record each of the following in the books of Taha, a trader.

debit account credit account

Taha receives a cheque
from Michael, a credit
customer

Taha writes off a debt

owed by Zoe

[4]

(e) Name the division of Taha’s ledger in which Michael’s account appears.

...............................................................................................................................................[1]

(f) Complete the following table, indicating with a tick (✓) if each statement about an increase
in a provision for doubtful debts is true or false. The first one has been completed as an
example.

true false
it will increase the total of the non-current assets ✓
it will increase the total of current assets
it will decrease cash and bank
it will require a credit entry in the provision for
doubtful debts account
it will have no effect on profit for the year
[4]

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Andy sells furniture on credit. Fred is a credit customer.

REQUIRED

(g) Complete the following invoice.

Andy
Factory Street Invoice no 1001
Toptown
Fred
Shop Road
Toptown 22 May 2017

Quantity Details Unit price Amount

$

20 Standard chair $50 ……….

10 Luxury chair ………. ……….

1750
10% trade discount
……….

……….
[5]

(h) State which value from the invoice is recorded in Fred’s account.

$……..…
[1]

(i) Name the document Andy issues if Fred returns any chairs.

...............................................................................................................................................[1]

(j) State the difference between Andy’s business and a service business.

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[2]

[Total: 23]

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Question 3 is on the next page.

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3 Zameer has a financial year end of 28 February.

He extracted the following ledger balances from his books of account on 21 February 2017.

$
Purchases 67 210 debit
Rent payable 6 600 debit

REQUIRED

(a) State why the purchases account has a debit balance.

...............................................................................................................................................[1]

Zameer’s purchases journal for the week ended 28 February 2017 was as follows:

Zameer
Purchases Journal

Date Name $
Feb 22 Qasim 500
25 Farid 270
27 Qasim 190
960

Zameer’s cash book recorded a payment, $1800, made on 25 February by credit transfer. This
payment was for rent for the three months ending 30 April 2017.

REQUIRED

(b) Name the type of book of which the cash book and the purchases journal are examples.

...............................................................................................................................................[1]

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(c) Prepare the following ledger accounts in the books of Zameer. Balance the accounts and
where necessary show any balance brought down on 1 March 2017.

Zameer
Purchases account

Date Details $ Date Details $

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

Rent payable account

Date Details $ Date Details $

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

............. ...................................... ............. ............. ...................................... .............

[8]

(d) State whether Zameer’s payments were capital expenditure or revenue expenditure.

Purchases……………….

Rent……………………… [2]

(e) (i) Give one example of a revenue receipt.

...................................................................................................................................................

(ii) Give one example of a capital receipt.

...............................................................................................................................................[2]

[Total: 14]

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4 Elil is a trader dealing in clocks.

REQUIRED

(a) State how inventory should be valued in the financial statements.

...............................................................................................................................................[1]

Elil buys clocks for $24 each. The following information is available about Elil’s business:

1 Elil had inventory of 100 clocks on 1 January 2016.

2 During the year he bought 2000 clocks.

3 During the year he sold 50 clocks at a promotional price of $40 each. All other sales were
made at a selling price of $60 each.

4 He had inventory of 180 clocks on 31 December 2016.

5 All sales were made on a credit basis.

REQUIRED

(b) Calculate the value of Elil’s sales for the year ended 31 December 2016.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[4]

(c) Calculate Elil’s gross profit for the year ended 31 December 2016.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[5]

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Elil provided the following additional information.

1 Trade receivables were $7900 on 1 January 2016.
2 During the year bad debts, $200, were written off.
3 Trade receivables were $9100 on 31 December 2016.

REQUIRED

(d) Calculate the amount Elil received from his trade receivables during the year ended
31 December 2016.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[5]

(e) State two reasons why the amount you calculated in (d) was not included in the income
statement.

1 .................................................................................................................................................

...................................................................................................................................................

2 .................................................................................................................................................

...............................................................................................................................................[2]

Elil is considering making future payments to suppliers earlier in order to receive discount.

REQUIRED

(f) Name the type of discount Elil would receive.

...............................................................................................................................................[1]

(g) Complete the table below indicating with a tick (✓) the effect of the receipt of the discount on
each item.

increase decrease no effect

gross profit
profit for the year
working capital
[3]
[Total: 21]
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5 JW Limited extracted the following balances from its books of account on 30 April 2017, after the
gross profit had been calculated.

$
Gross profit 63 000

Distribution costs 24 000

Administrative expenses 16 000

Interim dividend paid 6 000

Debenture interest 3 000

Ordinary shares of $1 each 100 000

General reserve 50 000

Retained earnings ?

Equipment at cost 260 000

Provision for depreciation of

equipment 65 000

Inventory 33 000

Trade receivables 14 000

Bank 6 800 credit

Trade payables 17 500

10% Debentures (repayable 2025) 30 000

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REQUIRED

(a) Prepare the trial balance at 30 April 2017. Insert a value for retained earnings.

JW Limited
Trial Balance at 30 April 2017

Debit Credit
$ $

Gross profit .......................................... ..........................................

Distribution costs .......................................... ..........................................

Administrative expenses .......................................... ..........................................

Interim dividend paid .......................................... ..........................................

Debenture interest .......................................... ..........................................

Ordinary shares of $1 each .......................................... ..........................................

General reserve .......................................... ..........................................

Retained earnings .......................................... ..........................................

Equipment at cost .......................................... ..........................................

Provision for depreciation of

.......................................... ..........................................
equipment

Inventory .......................................... ..........................................

Trade receivables .......................................... ..........................................

Bank .......................................... ..........................................

Trade payables .......................................... ..........................................

10% Debentures (repayable

.......................................... ..........................................
2025)
_____________________ _____________________

.......................................... ..........................................
_____________________ _____________________
[9]

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(b) Calculate the profit for the year. The depreciation charge for the year was $13 000.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[4]

The directors of the company transferred $10 000 to general reserve on 30 April 2017.

REQUIRED

(c) Prepare the statement of changes in equity for the year ended 30 April 2017.

JW Limited
Statement of Changes in Equity for the year ended 30 April 2017

Details Share General Retained Total

capital reserve earnings
$ $ $ $

On 1 May 2016 ................ ................ ................ ................

....................................... ................ ................ ................ ................

....................................... ................ ................ ................ ................

....................................... ................ ................ ................ ................

On 30 April 2017 ................ ................ ................ ................

[8]

(d) Calculate to two decimal places the return on capital employed (ROCE) for the year ended
30 April 2017. (Use closing capital employed.)

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[4]
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(e) Suggest two reasons why JW Limited’s return on capital employed (ROCE) is lower than the
industry average.

1 .................................................................................................................................................

...................................................................................................................................................

2 .................................................................................................................................................

...............................................................................................................................................[2]

(f) Suggest three ways in which JW Limited could increase its return on capital employed
(ROCE).

1 .................................................................................................................................................

...................................................................................................................................................

2 .................................................................................................................................................

...................................................................................................................................................

3 .................................................................................................................................................

...............................................................................................................................................[3]

[Total: 30]

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6 Hi-Jump is a sports club which also runs a shop for the use of members only. It provided the
following information.

Hi-Jump
Subscriptions account

Date Details $ Date Details $

2016 2016
Jan 1 Balance b/d 1160 Jan 1 Balance b/d 280
Dec 31 Income and expenditure 52 905 Dec 31 Bank 52 950
account Bad debts 250
Balance c/d 395 Balance c/d 980

54 460 54 460

2017 2017
Jan 1 Balance b/d 980 Jan 1 Balance b/d 395

REQUIRED

(a) State what the balance of $395 on 1 January 2017 represents.

...............................................................................................................................................[1]

The receipts and payments account of the club was as follows:

Hi-Jump
Receipts and Payments Account for the year ended 31 December 2016

$ $
Balance b/d 6 100 Shop purchases 15 240
Subscriptions received 52 950 Rent 12 000
Shop sales 13 610 Club expenses 34 200
New club equipment 5 100
Balance c/d 6 120
72 660 72 660

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The following additional information was also available.

1 at 1 January 2016 at 31 December 2016

$ $
Shop inventory 440 710
Club equipment at valuation 17 100 19 900

2 10% of the rent is allocated to the shop.

3 All shop sales and all shop purchases are made on a cash basis.

REQUIRED

(b) Complete the following table to show the values of the current assets and current liabilities
which would appear in the statement of financial position of the club on 31 December 2016.

Current assets $

………………………………………… .............................

………………………………………… .............................

………………………………………… .............................

………………………………………… .............................
Current liabilities $

………………………………………… .............................

………………………………………… .............................

………………………………………… .............................

………………………………………… .............................
[4]

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(c) Calculate the loss made by the shop in the year ended 31 December 2016.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[4]

(d) Prepare the club’s income and expenditure account for the year ended 31 December 2016.

Hi-Jump
Income and Expenditure Account for the year ended 31 December 2016

$ $
........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

........................................................................... ........................ ........................

[9]

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(e) Suggest two reasons why the managing committee continues to run the shop despite it
making a loss.

1 .................................................................................................................................................

...................................................................................................................................................

2 .................................................................................................................................................

...............................................................................................................................................[2]

(f) Explain how the financial statements of the club would be affected if the managing committee
decided not to charge the shop with its share of the rent.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...............................................................................................................................................[2]

[Total: 22]

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© UCLES 2017 0452/11/M/J/17