Cambridge Assessment International Education

Cambridge International General Certificate of Secondary Education

* 1 8 0 0 2 8 5 7 5 2 *

ACCOUNTING 0452/21
Paper 2 May/June 2019
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 20 printed pages.

DC (CE) 161806/4
© UCLES 2019 [Turn over
 2

1 Sabelo is a trader. His financial year ends on 30 April.

He maintains a three column cash book and a petty cash book. The imprest amount is $120. All
payments under $90 are made from petty cash.

Sabelo had the following transactions in April 2019.

2019
April 1 Petty cash imprest restored from the business bank account

3 Paid Kenneth, a credit supplier, $58

8 Elijah, a credit customer, paid his account of $350 by bank transfer after deducting 2%
cash discount

11 Paid for taxi fare, $14

15 Bought stationery, $24

19 Paid for office expenses by cheque, $115

24 Paid for bus fare, $9

27 Paid Ziningi, a credit supplier, $585, by cheque, after deducting 2½% cash discount

28 Received a cheque for $100 from a tenant for rent

29 Cash sales, $820, of which $800 was paid directly into the bank

REQUIRED

(a) Record these transactions in the following books which appear on the next two pages.
Balance the books and bring down the balances on 1 May 2019.

(i) Petty cash book [9]

(ii) Three-column cash book [10]

© UCLES 2019 0452/21/M/J/19

 (i) Sabelo
Petty Cash Book

Total Date Details Total Travel Postage Ledger

© UCLES 2019
received paid and accounts
stationery
$ $ $ $ $
2019
18 April 1 Balance b/d ................... ................... ................... ...................

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[Turn over
 (ii) Sabelo
Cash Book

Date Details Discount Cash Bank Date Details Discount Cash Bank

© UCLES 2019
allowed received
2019 $ $ $ 2019 $ $ $

April 1 Balance b/d ............... 250 ............... April 1 Balance b/d ............... ............... 1119

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 5

Sabelo’s bank statement showed an overdraft of $1118 on 30 April 2019. He found that the bank
had not recorded the transactions entered in the bank column of the cash book on the following
dates.

April 19
27
28
29

The bank statement showed a debit of $240 for Sabelo’s home insurance which should have been
debited to his personal bank account.

REQUIRED

(b) Prepare a bank reconciliation statement at 30 April 2019.

Sabelo
Bank Reconciliation Statement at 30 April 2019

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(c) Advise Sabelo whether each of the following will affect his financial statements for the year
ended 30 April 2019.

Give reasons for your answers.

1 Received an order for goods to be supplied in May 2019.

Affecting the financial statements? (Yes or No) ............................................................[1]

Reason ..............................................................................................................................

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

2 Decided to close the business with effect from 31 May 2019.

Affecting the financial statements? (Yes or No) ............................................................[1]

Reason ..............................................................................................................................

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

[Total: 30]

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2 Jade is a customer of Adil. On 1 April 2019 Jade owed Adil $440. They exchanged the following
documents in April 2019.

2019
April 4 Cheque to settle account less 2½% cash discount

12 Invoice for goods, $560, less 25% trade discount

17 Debit note relating to some goods supplied on 12 April, list price $120

20 Credit note relating to some goods supplied on 12 April, list price $100

30 Statement of account

REQUIRED

(a) Name the person who issued each of the following documents.

In each case suggest one reason for the issue of that document.

(i) Debit note 17 April

Name of person issuing the document ..............................................................................

Reason for the issue of the document ..............................................................................

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

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

(ii) Credit note 20 April

Name of person issuing the document ..............................................................................

Reason for the issue of the document ..............................................................................

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

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

(iii) Statement of account 30 April

Name of person issuing the document ..............................................................................

Reason for the issue of the document ..............................................................................

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

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

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(b) Prepare the account of Adil as it would appear in the books of Jade for April 2019.
Balance the account and bring down the balance on 1 May 2019.

Jade
Adil account

Date Details $ Date Details $

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[6]

Jade’s year ends on 30 April. She provided the following information.

$
For the year ended 30 April 2019
Credit sales 29 600
Cash sales 26 400
Credit purchases 30 300
Cash purchases 5 200

At 30 April 2019
Total trade receivables 2 800
Total trade payables 2 350

Jade allows her credit customers 28 days credit and is allowed 30 days credit by her credit
suppliers.

On 30 April 2018 Jade calculated that the trade receivables collection period was 29 days
and that the trade payables payment period was 35 days.

© UCLES 2019 0452/21/M/J/19

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REQUIRED

(c) Calculate the trade receivables collection period for the year ended 30 April 2019.
Round up your answer to the next whole day.

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

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

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

(d) Suggest one advantage to Jade of the change in the trade receivables collection period.

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

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

(e) Suggest one disadvantage to Jade of the change in the trade receivables collection period.

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

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

(f) Calculate the trade payables payment period for the year ended 30 April 2019.
Round up your answer to the next whole day.

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

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

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

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

(g) State whether the trade payables would be satisfied with the change in the trade payables
payment period. Give a reason for your answer.

Satisfied? ..........................................

Reason .....................................................................................................................................

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

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

[Total: 20]

© UCLES 2019 0452/21/M/J/19 [Turn over

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3 Min started a business selling office machinery on 1 January 2018. He did not maintain a full set of
accounting records.

All purchases and sales were made on credit terms. All payments were made through the bank
and all money received was banked.

Min was able to provide the following information.

$
On 1 January 2018
Capital deposited in business bank account 65 000

During the year ended 31 December 2018

Non-current assets purchased 64 000
Interest-free loan from parents 5 000
Credit sales 21 640
Amounts paid to credit suppliers 14 625
Cash discount received 375
Cash discount allowed 338
Returns to credit suppliers 2 140
Returns from credit customers 2 042
Bad debts written off 380

At 31 December 2018
Amount owed to credit suppliers 1 434
Amount owed by credit customers 1 980
Cash at bank 5 392

REQUIRED

(a) Calculate the credit purchases for the year ended 31 December 2018.

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

© UCLES 2019 0452/21/M/J/19

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(b) Calculate the amount received from credit customers during the year ended 31 December
2018.

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(c) Prepare the bank account for the year ended 31 December 2018. Insert the missing figure
which represents the expenses for the year.

Min
Bank account

Date Details $ Date Details $

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[7]

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Min has been advised to start maintaining double entry records and to prepare annual financial
statements.

REQUIRED

(d) State three advantages to Min of maintaining double entry records.

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

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

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

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

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

(e) (i) Suggest two reasons why Min’s bank manager may be interested in his financial
statements.

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

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

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

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

(ii) Suggest two reasons why Min’s credit suppliers may be interested in his financial
statements.

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

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

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

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

[Total: 25]

© UCLES 2019 0452/21/M/J/19

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PLEASE TURN OVER

© UCLES 2019 0452/21/M/J/19 [Turn over

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4 Liam and Mia are in partnership. Their financial year ends on 31 January. They share profits and
losses in the ratio 2 : 1.

The following information is available.

Liam Mia
$ $
Capital accounts at 1 February 2018 160 000 60 000
Current accounts at 1 February 2018 44 500 credit 2 140 debit

Drawings during the year ended 31 January 2019 19 100 8 500

On 1 August 2018 Liam transferred $14 000 from his current account to his capital account. On
the same date he transferred his personal motor vehicle, valued at $6000, to the business.

The following is an extract from the profit and loss appropriation account of Liam and Mia for the
year ended 31 January 2019.

Liam and Mia

Extract from Profit and Loss Appropriation Account
for the year ended 31 January 2019

$ $
Profit for the year 24 240
Interest on drawings Liam 955
Mia 425 1 380
25 620
Interest on capital Liam 10 200
Mia 3 600
13 800

Salary Mia 15 000 28 800

(3 180)

REQUIRED

(a) (i) Calculate the percentage rate of interest charged on drawings.

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

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

(ii) Calculate the percentage rate of interest allowed on capital.

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

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

© UCLES 2019 0452/21/M/J/19

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(b) Complete the current accounts of the partners for the year ended 31 January 2019.
Balance the accounts and bring down the balances on 1 February 2019.

Liam and Mia

Current accounts

Date Details Liam Mia Date Details Liam Mia

$ $ $ $
2018 2018
Feb 1 Balance b/d ............. 2 140 Feb 1 Balance b/d 44 500 .............

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[9]

© UCLES 2019 0452/21/M/J/19 [Turn over

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Liam and Mia provided the following information at 31 January 2019.

$
Inventory 38 440
Trade payables 36 250
Trade receivables 42 060
Bank overdraft 14 150

REQUIRED

(c) Calculate the current ratio. The calculation should be correct to two decimal places.

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

(d) Calculate the quick (acid test) ratio. The calculation should be correct to two decimal places.

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

Liam and Mia would like to improve the liquidity of their business.

Liam has suggested that both the current ratio and the quick (acid test) ratio could be improved if
they introduce extra capital.

REQUIRED

(e) (i) Suggest one other way in which they could increase both the current ratio and the quick
(acid test) ratio.

Give a reason for your answer.

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

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

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

© UCLES 2019 0452/21/M/J/19

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(ii) State why selling inventory at cost price would increase the quick (acid test) ratio but
would not affect the current ratio.

Give a reason for your answer.

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

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

Liam and Mia are considering inviting their brother, Darren, to become a partner in the business.

REQUIRED

(f) Suggest four factors they should consider before inviting Darren to become a partner.

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

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

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

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4 ................................................................................................................................................

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

[Total: 23]

PLEASE TURN OVER FOR QUESTION 5.

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
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.

© UCLES 2019 0452/21/M/J/19 [Turn over

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5 Nadia is a trader. She has a limited knowledge of book-keeping, but attempted to prepare a set of
draft financial statements at the end of her first year of trading.

She prepared the following draft statement of financial position, which contains errors.

Nadia
Draft Statement of Financial Position at 31 March 2019

$
Premises at cost 31 000
Other non-current assets at cost 9 600
Inventory 3 170
Trade receivables 3 000
Cash 200
Drawings 10 350
57 320
Less Bank overdraft 1 410
55 910

Trade payables 2 680

Capital at 1 April 2018 50 000
Draft profit for the year 3 330
56 010
Less Suspense account 100
55 910

The following errors were later discovered.

1 No entries had been made for bank charges, $21.

2 Cash sales, $100, had been debited to the cash book and credited to the account of Zahoor,
a credit customer.

3 The purchases returns were overstated by $10.

4 The inventory at 31 March 2019 was overstated by $199.

5 A provision for doubtful debts of 2% of trade receivables should have been created.

6 Expenses, $90, paid in cash had been credited in the cash book but no other entry had been
made.

7 The draft income statement had been charged with insurance, $2800, which was for a period
of 14 months.

8 The non-current assets (excluding premises) should have been depreciated by 10% on cost.

© UCLES 2019 0452/21/M/J/19

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REQUIRED

(a) Prepare journal entries to correct errors 1 and 2. Narratives are not required.

Nadia
Journal

Details Debit Credit

$ $

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[4]

(b) Complete the following statement to show the effect on the profit for the year of correcting
errors 1–8. Calculate the corrected profit for the year.

Nadia
Statement of corrected profit for the year ended 31 March 2019
$
Draft profit for the year before corrections 3330

Increase Decrease
in profit in profit
$ $
Error 1 .......... ..........

Error 2 .......... ..........

Error 3 .......... ..........

Error 4 .......... ..........

Error 5 .......... ..........

Error 6 .......... ..........

Error 7 .......... ..........

Error 8 ..........
_____ ..........
_____

_____ _____ _____

Corrected profit for the year _____

[9]
© UCLES 2019 0452/21/M/J/19 [Turn over
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(c) Prepare a corrected statement of financial position at 31 March 2019.

Nadia
Corrected Statement of Financial Position at 31 March 2019

$ $ $

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[9]

[Total: 22]
© UCLES 2019 0452/21/M/J/19