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Cambridge IGCSE™

ACCOUNTING 0452/11
Paper 1 Multiple Choice May/June 2020
1 hour 15 minutes

You must answer on the multiple choice answer sheet.

*9287386594*

You will need: Multiple choice answer sheet

Soft clean eraser
Soft pencil (type B or HB is recommended)

INSTRUCTIONS
• There are thirty-five questions on this paper. Answer all questions.
• For each question there are four possible answers A, B, C and D. Choose the one you consider correct
and record your choice in soft pencil on the multiple choice answer sheet.
• Follow the instructions on the multiple choice answer sheet.
• Write in soft pencil.
• Write your name, centre number and candidate number on the multiple choice answer sheet in the
spaces provided unless this has been done for you.
• Do not use correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 35.
• Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
• Any rough working should be done on this question paper.

This document has 12 pages. Blank pages are indicated.

IB20 06_0452_11/4RP
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1 Which statement is correct?

A Accounting involves measuring profits and losses.

B Accounting is the recording of financial transactions.
C Book-keeping involves communicating financial data.
D Book-keeping requires the use of ratio analysis.

2 The balances remaining on the books of a business after the preparation of the income statement
included the following.

loan from XY Finance 10 000

wages due 620
rent prepaid 240
trade receivables 3 300
trade payables 4 650
motor vehicles 8 000
provision for depreciation of motor vehicles 2 000

What was the total of the liabilities?

A $13 920 B $14 890 C $15 270 D $17 270

3 On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was
returned unpaid by the bank.

What entry would Nina make on 12 April?

account to be debited account to be credited

A irrecoverable debts bank

B irrecoverable debts Zaffar
C provision for doubtful debts Zaffar
D Zaffar bank

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4 Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520. The
following transactions took place during April.

April 2 Ann returned goods, $30, to Cindy.

14 Ann bought goods, $210, from Cindy, and paid in cash.

Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct?

A Ann owes Cindy $490.

B Ann owes Cindy $700.
C Cindy owes Ann $490.
D Cindy owes Ann $700.

5 Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo
keeps a full double entry system.

Where will Tumelo record the return of goods?

A cash book and sales ledger

B general ledger only
C general ledger and purchases ledger
D purchases ledger only

6 Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or
received the following documents in April.

April 7 invoice 360

12 cheque (after deducting $11 cash discount) 429
13 debit note 50
15 credit note 50

What was the closing balance on the statement of account on 30 April?

A $260 B $310 C $321 D $421

7 What is recorded in the sales journal?

A all money received from sales

B all sales transactions
C cash sales transactions
D credit sales transactions

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8 Which statement about a two-column cash book is correct?

A It is a ledger account for bank transactions only.

B It is a ledger account for cash transactions only.
C It is a book of prime entry.
D It records cash discounts.

9 Which statements about trade discount are correct?

1 It is debited to the supplier’s account.

2 It is only given if the invoice is paid within the period allowed by the supplier.
3 It is shown as a deduction from the price of the goods on an invoice.
4 It is used to encourage bulk buying.

A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4

10 Why is a trial balance prepared?

A to analyse the financial information

B to assist preparation of financial statements
C to control the costs of the business
D to evaluate the performance of the business

11 The income statement of a business showed a loss for the year of $16 000. On checking the
books the following errors were discovered.

1 No adjustment had been made for insurance prepaid, $480.

2 No entry had been made for bank charges, $620.

What was the correct loss for the year?

A $14 900 B $15 860 C $16 140 D $17 100

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12 Peter’s bank statement showed a debit balance of $600 on 1 April. The following transactions
took place in April.

total cheque deposits 7400

total cheque payments 6200
direct debit for insurance premium 180
credit transfer from customer 450

What was the bank statement balance on 30 April?

A $870 credit
B $870 debit
C $2070 credit
D $2070 debit

13 A sales ledger control account had a debit balance of $10 000.

It was found that a $2000 contra entry to the purchases ledger control account had been entered
on the wrong side of the sales ledger control account.

What was the correct debit balance on the sales ledger control account?

A $6000 B $8000 C $12 000 D $14 000

14 A business had a new extension to its workshop premises. It incurred the following expenditure.

building cost 65 000

legal fees 1 800
air conditioning system for the original workshop 2 300
air conditioning system for the new workshop extension 1 100
decorating the original workshop 1 400
decorating the new workshop extension 800

What was the total capital expenditure of the business?

A $67 900 B $70 200 C $71 000 D $72 400

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15 A non-current asset was depreciated at the end of the first year of ownership using the
straight-line method based on the following information.

cost $20 000

working life 4 years
residual value $4000

It was then found that the reducing balance method at 30% per annum should have been used.

What was the effect on the profit for the year of correcting this error?

A decrease by $2000
B increase by $2000
C decrease by $6000
D increase by $6000

16 A company’s financial year ended on 31 December 2019. On 1 December 2019 it paid rent,
$8000, for the four months ending 31 March 2020.

What was the opening balance on the rent account on 1 January 2020?

A $2000 credit
B $2000 debit
C $6000 credit
D $6000 debit

17 Alice’s financial year ends on 31 December.

The balances on her books on 1 January 2020 included the following.

commission receivable 250 debit

rent receivable 500 credit

What do these balances represent?

commission receivable rent receivable

A income outstanding income outstanding

B income outstanding income prepaid
C income prepaid income outstanding
D income prepaid income prepaid

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18 Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase
his provision for doubtful debts by $250.

Which journal entry records an increase in the provision for doubtful debts?

debit credit
$ $
A credit customer 250
income statement 250
B income statement 250
credit customer 250
C income statement 250
provision for doubtful debts 250
D provision for doubtful debts 250
income statement 250

19 Which items are deducted from the gross profit when calculating the profit for the year?

1 balance on the provision for doubtful debts account

2 carriage paid on goods supplied to customers
3 drawings made by the owner during the year
4 wages paid to employees during the year

A 1, 2 and 3 B 1 and 4 C 2 and 3 only D 2 and 4

20 On 31 December 2019 John had net assets of $2000 and capital of $2000.

On 1 January 2020, goods costing $140 were sold on credit for $220.

What was the effect of this transaction on the statement of financial position?

net assets capital

$ $
A 80 decrease 80 decrease
B 80 increase 80 increase
C 220 decrease 220 decrease
D 220 increase 220 increase

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21 At the end of his financial year, Raminder made an adjustment for rent owed by a tenant.

How did this affect Raminder’s financial statements?

profit for
current assets
the year

A decrease decrease
B decrease increase
C increase decrease
D increase increase

22 The owner of a business took goods for his own use but forgot to make an entry in the accounts.

What was the effect of this error?

profit for the year capital employed

A overstated no effect
B overstated understated
C understated no effect
D understated overstated

23 Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership
agreement.

They provided the following information.

Rajid Sunil

capital introduced 1 January 2019 $40 000 $20 000

during the year ended 31 December 2019
drawings $5 000 $3 500
share of work 50% 50%

They decided to draw up a partnership agreement for future years.

Which item would be most beneficial to Rajid in 2020?

A interest on capital
B interest on drawings
C limit on annual drawings
D partnership salaries

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24 Harry and Jane are in partnership. The following information relates to Harry for the financial
year.

salary 8000
drawings 2800
share of profit 4600

The opening credit balance on Harry’s current account was $28 200.

What was the closing balance on his current account?

A $30 000 B $38 000 C $40 800 D $43 600

25 Which item is shown in the income statement of a company and statement of changes in equity?

A interest on debentures accrued

B ordinary share dividend paid
C profit for the year
D transfer to general reserve

26 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000.

Which transactions caused this?

capital introduced drawings

$ $

A 1000 8200
B 1200 6000
C 2000 8800
D 2200 4600

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27 Ahmed provided the following information.

trade receivables at 1 January 2019 15 000

for the year ended 31 December 2019:
credit sales 85 000
cash sales 12 000
cheques received from trade receivables 65 000
irrecoverable debts 2 000

By how much had the trade receivables increased by the end of the financial year?

A $18 000 B $30 000 C $33 000 D $45 000

28 Gordon provided the following information for the year.

revenue $90 000

opening inventory $8 000
closing inventory $2 000
mark up 50%

Gordon took goods, $7000, for his own use.

What were the purchases?

A $43 000 B $47 000 C $54 000 D $61 000

29 A trader provided the following information.

for the year ended 31 March 2020

revenue 250 000
purchases: cash 125 000
credit 115 000
at March 2020
trade payables 9 765

What was the trade payables turnover?

A 14 days B 15 days C 29 days D 31 days

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30 On 1 January 2019 current assets totalled $16 000 and the current ratio was 2 : 1.

On 31 December 2019 the current liabilities had increased by 50% and the current ratio was
1.5 : 1.

What was the value of the current assets on 31 December 2019?

A $16 000 B $18 000 C $32 000 D $36 000

31 A company provided the following information about its liquid (acid test) ratio.

Year 1 1.2 : 1
Year 2 1.4 : 1
Year 3 1.6 : 1

Which would explain the changes in the ratio?

A Inventory is increasing.
B Other payables are decreasing.
C Trade payables are increasing.
D Trade receivables are decreasing.

32 Which user of accounting statements is interested in past performance and taking remedial action
where necessary?

A government
B investors
C managers
D suppliers

33 Rashid’s financial year ends on 31 December. He paid rent on 1 February, 1 May, 1 August and
1 November.

An adjustment was made in the income statement for rent prepaid.

Which accounting principle was applied?

A duality
B matching
C money measurement
D prudence

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34 Which statement describes the going concern principle?

A Accounting methods must be used consistently from one accounting period to the next.
B It is assumed that the business will continue to operate for the foreseeable future.
C Revenue is earned when legal title to goods passes from the seller to the buyer.
D The business is treated as being completely separate from the owner of the business.

35 Brad purchased a machine for $1000 on 1 January 2019. The machine was expected to last for
four years and have no residual value. On 31 December 2019 the same machine cost $1200 to
purchase.

At which value should the machine be included in the statement of financial position on
31 December 2019?

A current cost with no depreciation

B current cost with one year’s depreciation
C original purchase price with no depreciation
D original purchase price with one year’s depreciation

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