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 $100.

4 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 2015 0452/11/O/N/15

 19

(c) Prepare journal entries to correct all four errors. Narratives are required.

Error Debit Credit

Details
number $ $

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

…………. …………………………………………. ……………… ………………

[13]

Question 6(d) is on the next page.

© UCLES 2015 0452/11/O/N/15 [Turn over

 20

(d) Prepare the suspense account, showing the original difference on the trial balance.

Leroy
Suspense account

Date Details $ Date Details $

2015 2015
Sept 30 ……………..…..………. …..…. Sept 30 ………....…………… …..…..

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

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

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

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

[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.

Increase Decrease
No Effect
$ $ $
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
www.cie.org.uk 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 2015 0452/11/O/N/15

 8

3 Sally Rickard is a trader. Despite having little knowledge of book-keeping, she decided to prepare
a trial balance at the end of her financial year on 31 October 2015. The trial balance she
prepared was as follows.

$ $
Revenue 160 400
Purchases 99 300
Wages 27 000
Motor expenses 1 600
General expenses 7 250
Premises at cost 80 000
Equipment and fixtures at cost 10 000
Motor vehicle at cost 13 930
Provision for depreciation of equipment and fixtures 1 050
Provision for depreciation of motor vehicle 5 750
Trade receivables 26 800
Provision for doubtful debts 670
Trade payables 8 150
Cash 350
Bank overdraft 4 810
Loan from AB Loans 10 000
Drawings 12 500
Capital (balancing figure) 186 440
328 000 328 000

Inventory 1 November 2014 $7100

Inventory 31 October 2015 $8300

In addition to the obvious errors in the trial balance, the following errors were also discovered.

1 General expenses paid in cash, $150, had not been recorded.

2 Motor expenses, $430, had been debited to the motor vehicles account.

3 A cheque, $260, received from a credit customer had been credited to the bank account and
debited to the customer’s account.

REQUIRED

(a) For each of the items 1-3 state the type of error that was made.

Error 1

Error 2

Error 3 [3]

© UCLES 2015 0452/23/O/N/15

 9

(b) Prepare a corrected trial balance at 31 October 2015.

Sally Rickard
Corrected Trial Balance at 31 October 2015

Debit Credit
$ $
Revenue
…………….. ……………..
Purchases
…………….. ……………..
Wages
…………….. ……………..
Motor expenses
…………….. ……………..
General expenses
…………….. ……………..
Premises at cost
…………….. ……………..
Equipment and fixtures at cost
…………….. ……………..
Motor vehicle at cost
…………….. ……………..
Provision for depreciation of equipment and fixtures
…………….. ……………..
Provision for depreciation of motor vehicle
…………….. ……………..
Trade receivables
…………….. ……………..
Provision for doubtful debts
…………….. ……………..
Trade payables
…………….. ……………..
Cash
…………….. ……………..
Bank overdraft
…………….. ……………..
Loan from AB Loans
…………….. ……………..
Drawings
…………….. ……………..
Capital
…………….. ……………..

…………………………….. …………….. ……………..

…………………………….. …………….. ……………..

[13]

© UCLES 2015 0452/23/O/N/15 [Turn over

 10

After the trial balance was corrected, Sally Rickard attempted to prepare an income statement to
calculate her profit for the year, but made some errors.

REQUIRED

(c) Complete the table, by placing a tick (9) in the appropriate column, to show how correcting
each of the following errors would affect the profit for the year.

Name the accounting principle being applied.

The first one has been completed as an example.

Effect on profit
Accounting principle
Increase Decrease

The depreciation charge had been

calculated at a lower rate than in 9 Consistency
previous years.

An amount owing by a credit customer

should have been written off.

General expenses included rates which

were prepaid until 31 December 2015.

Goods invoiced and despatched to a

customer were not recorded as the
customer did not receive them until
3 November 2015.

No record had been made of goods

taken for personal use.

[8]

[Total: 24]

© UCLES 2015 0452/23/O/N/15

 18

6 Akira, a trader in engine components, prepared his draft financial statements. He then found the
following errors.

1 A sale on credit, $3000, to Leonardo, was completely omitted from the books of account.

2 A receipt, $1500, from J Jones, a credit customer, was posted to the account of D Bones,
another credit customer.

3 Bank charges, $110, were entered in the cash book as $11.

4 A purchase of stationery, $35, was debited in the petty cash book and credited in the
stationery account.

5 The transfer of Akira’s private vehicle, value $2500, to the business had not been
recorded.

REQUIRED

(a) Complete the following table showing how the correction of each error affected the working
capital and the owner’s capital. Where a correction has no effect, write No Effect. The first
has been completed as an example.

error working capital owner’s capital

1 Increase $3000 Increase $3000

[8]

(b) Name the type of error in each of the errors 2 to 5.

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

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

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

Error 5 ..................................................
[4]

© UCLES 2016 0452/12/F/M/16

 19

(c) Prepare journal entries to correct each of the errors 2 to 5. Narratives are not required.

Akira
Journal

Error Details Debit Credit

number $ $

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

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

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

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

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

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

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

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

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

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

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

[8]

[Total: 20]

© UCLES 2016 0452/12/F/M/16

 16

6 Wasim is a trader. His financial year ends on 31 March.

The totals of his trial balance on 31 March 2016 did not agree. The difference was a shortage on
the debit side of $495. This was entered in a suspense account.

The following errors were later discovered.

1 The total of a page of the purchases account, $3842, had been carried forward as $3824.

2 A cheque received from DEC Limited, $150, had been credited to the account of DDE Limited.

3 The balance of the petty cash book, $100, had been omitted from the trial balance.

4 Repairs to motor vehicle, $283, had been debited to the motor vehicles account.

5 Purchase of fixtures, $2200, on credit from Office Supplies Company, had been debited to
Office Supplies Company and credited to fixtures account.

6 The total of the discount allowed column in the cash book, $250, had been credited to the
discount received account in the ledger.

7 The total of the analysis column for stationery in the petty cash book, $67, had not been
transferred to the stationery account in the ledger.

REQUIRED

(a) Prepare the suspense account. Start with the balance arising from the difference on the trial
balance. The account should be balanced or totalled as necessary.

Wasim
Suspense account

Date Details $ Date Details $

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

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

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

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

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

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

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

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

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

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

[7]

© UCLES 2016 0452/21/M/J/16

 17

(b) Prepare journal entries to correct two of the errors which do not require correcting by means
of the suspense account. Narratives are required.

Wasim
Journal

Error Debit Credit

number $ $

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

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

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

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

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

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

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

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

[6]

(c) Name the type of error made in Error 2.

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

Wasim prepared draft financial statements for the year.

REQUIRED

(d) Complete the following table by placing a tick (✓) in the correct column to indicate whether
the profit for the year would be affected by each of the errors.

The first one has been completed as an example.

affects profit for the does not affect the

error number
year profit for the year
1 ✓
2
3
4
5
6
7
[6]

[Total: 20]
© UCLES 2016 0452/21/M/J/16
 18

6 David is a trader. The totals of his trial balance prepared on 31 January 2016 did not balance. The
difference was entered in a suspense account and draft financial statements were prepared.

The following information was extracted from the draft income statement for the year ended
31 January 2016.

$
Cost of sales 59 600
Gross profit 15 800
Profit for the year 3 500

REQUIRED

(a) (i) Calculate the percentage of profit for the year to revenue.

The calculation should be correct to two decimal places. Show your workings.

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

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

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

(ii) Suggest two reasons why the percentage of profit for the year to revenue is lower than
the previous year.

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

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

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

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

The following errors were later discovered.

1 No record had been made of office expenses paid in cash, $114.

2 A page total in the sales journal, $45 400, had been incorrectly carried forward as $44 500.

3 Discount allowed, $300, was incorrectly recorded as discount received.

4 Sales returns, $814, had been correctly recorded in the customer’s account, but credited to
the purchases returns account.

5 The provision for doubtful debts of $120 should have been increased to $144.

© UCLES 2016 0452/22/M/J/16

 19

REQUIRED

(b) Prepare journal entries to correct errors 1 and 2. Narratives are required.

David
Journal

Debit Credit
$ $

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

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

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

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

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

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

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

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

[6]

(c) Complete the following statement to show the effect on the profit for the year of correcting
errors 1–5. Calculate the corrected profit for the year.

The first correction has been completed as an example.

David
Statement of corrected profit for the year ended 31 January 2016

$
Profit for the year before corrections 3500
Increase Decrease
in profit in profit
$ $
Error 1 114

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

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

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

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

_____ _____ _____
Corrected profit for the year _____
[9]
[Total: 19]
© UCLES 2016 0452/22/M/J/16
 12

4 Hamza is a trader who does not maintain a full set of accounting records. His financial year ends
on 31 August.

In December 2015 it was discovered that some errors had been made in the financial statements
for the year ended 31 August 2015.

REQUIRED

(a) Complete the following table to indicate the effect of correcting each error on the profit for
the year.

The first one has been completed as an example.

Effect on profit of correcting error

increase decrease
$ $
Purchases returns, $2000, had not
been recorded. 2000
Wages owing at 31 August 2015, $450,
were not recorded.
Discount allowed, $115, had been
recorded as discount received.
The provision for doubtful debts, $950,
should have been adjusted to 2½% of
trade receivables, who owed $36 000.
Inventory at 1 September 2014 had
been valued at net realisable value,
$16 700, instead of at cost, $15 300.
[8]

Hamza had no record of the purchases for the year ended 31 August 2016, but the following
information was available.

$
Inventory 1 September 2015 14 100
Inventory 31 August 2016 13 700
Revenue 385 500
Returns from customers 7 500
Carriage inwards 2 100
General expenses 3 910
Wages and salaries 21 500
Rates and insurance 5 320
Depreciation of non-current assets 5 660

Mark-up on cost 20%

© UCLES 2016 0452/23/O/N/16

 13

REQUIRED

(b) Prepare the income statement for the year ended 31 August 2016 showing the purchases for
the year.

Hamza
Income Statement for the year ended 31 August 2016

$ $

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[14]

[Total: 22]

© UCLES 2016 0452/23/O/N/16 [Turn over

 20

6 Amina is a trader. Her financial year ends on 31 December.

The totals of her trial balance on 31 December 2016 did not agree. Amina entered the difference
in a suspense account and prepared draft financial statements.

The following errors were later discovered.

1 One page of the sales journal had been undercast by $1000.

2 Repairs to office equipment, $484, had been treated as capital expenditure.

3 The total of the sales returns journal, $960, had been credited to the purchases returns
account in the ledger.

4 The bank balance, $1500, had been treated as a bank overdraft in the trial balance.

5 A credit note received from AK Stores for $210 had been correctly entered in the purchases
returns journal but had been credited to the account of the supplier as $120.

REQUIRED

(a) Prepare the journal entries to correct errors 3–5. Narratives are not required.

Amina
Journal

Debit Credit
$ $

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

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

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

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

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

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

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

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

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

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

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

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

[7]

© UCLES 2017 0452/22/F/M/17

 21

(b) Complete the following table to show the effect, if any, that correcting each error would have
on the draft profit. Where an error has no effect on profit, place a (ü) in the No Effect column.

Effect on draft profit for the year of correcting the error

Error
Increase Decrease No Effect
$ $
1
2
3
4
5

[7]

[Total: 14]

© UCLES 2017 0452/22/F/M/17

 18

5 Heng is a wholesaler. He maintains a full set of double entry accounting records.

REQUIRED

(a) Name the accounting principle Heng is applying in his accounting records.

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

Heng’s financial year ends on 31 December. He opened a suspense account on

31 December 2016 and entered a debit balance of $430.

REQUIRED

(b) State two reasons why it was necessary for Heng to open a suspense account.

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

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

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

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

Heng discovered that the following errors had been made in his accounting records.

1 Repairs to office equipment, $281, had been correctly entered in the cash book, but had been
entered in the office equipment account.

2 A sales invoice issued to AB Stores had been overcast by $100.

3 The balance of the petty cash book, $150, had not been entered in the trial balance.

4 General expenses, $1120, had been correctly entered in the cash book, but had been entered
in the general expenses account as $1210.

5 The total of the discount allowed column in the cash book, $1024, had not been transferred to
the discount allowed account in the ledger.

6 A cheque, $2060, paid to AK Suppliers, had been debited in the cash book (which had a
positive balance) and credited to the account of AK Suppliers.

7 The total of the purchases returns account, $454, had not been entered in the trial balance.

© UCLES 2017 0452/22/M/J/17

 19

REQUIRED

(c) Prepare the suspense account in Heng’s ledger to show the required entries.
The account should be balanced or totalled as necessary.

Heng
Suspense account

Date Details $ Date Details $

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

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

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

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

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

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

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

[6]
(d) State whether all the errors in Heng’s books have been discovered.

Give a reason for your answer.

Have all errors been discovered? .......................................

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

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

(e) Complete the table to show the effect of each of the errors. Where an error has no effect,
write ‘No effect’.

The first one has been completed as an example.

Error Profit for the year Non-current assets Current assets Current liabilities
$ $ $ $
1 281 overstated 281 overstated No effect No effect
2
3
4
5
6
7
[10]

[Total: 21]
© UCLES 2017 0452/22/M/J/17
 12

5 Satish has a financial year end of 30 June. On 30 June 2017 he prepared the following trial
balance.

Satish
Trial Balance at 30 June 2017

Debit Credit
$ $
Revenue 53 030
Purchases 33 200
Fixtures and fittings 12 000
Provision for depreciation
on fixtures and fittings 3 000
Trade receivables 3 100
Trade payables 1 900
Inventory at 1 July 2016 4 450
Rent 6 000
Wages 2 800
Other operating expenses 4 180
Drawings 10 900
Capital 14 200
Bank 600

76 630 72 730

Additional information

1 Satish calculated a draft gross profit for the year ended 30 June 2017 of $20 000. This
calculation used a valuation of closing inventory of $4620.

2 Depreciation for the year, $1500, had yet to be provided.

The books of account contained errors and the totals of the trial balance did not agree. Satish
therefore opened a suspense account, and then discovered the following errors.

1 A sale on credit, $400, had been completely omitted from the books.

2 Closing inventory included $550 for inventory which had been damaged and now had no
value, but this had not been written off.

3 The purchases journal for June had been undercast by $100.

4 Capital introduced of $2000 had been correctly entered in the cash book but debited in the
drawings account.

© UCLES 2017 0452/11/O/N/17

 13

REQUIRED

(a) Prepare the suspense account, showing the opening balance and the entries correcting the
errors.

Satish
Suspense account

Date Details $ Date Details $

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

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

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

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

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

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

[4]

(b) (i) Complete the following statement to calculate the correct gross profit for the year. Where
an error has no effect on gross profit, place a tick (3) in the No Effect column.

Satish
Statement of correction of gross profit for the year ended 30 June 2017

No Effect Increase Decrease

$ $ $
Draft gross profit 20 000
Error 1
Error 2
Error 3
Error 4

Corrected gross profit

[8]

© UCLES 2017 0452/11/O/N/17 [Turn over

 14

(ii) Calculate the profit for the year ended 30 June 2017.

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

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

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

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

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

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

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

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

© UCLES 2017 0452/11/O/N/17

 15

(c) Prepare Satish’s statement of financial position at 30 June 2017.

Satish
Statement of financial position at 30 June 2017

$ $ $

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[10]

[Total: 27]

© UCLES 2017 0452/11/O/N/17 [Turn over

 18

6 Sanjay, a trader, prepared his trial balance on 31 January 2018. The totals of the trial balance did
not agree. Sanjay entered the difference, a credit balance of $1110, in a suspense account. The
following errors were later discovered.

1 The wages account had been undercast by $270.

2 Rent received, $1000, had been correctly entered in the bank account but no other entry had
been made.

3 Goods purchased on credit from Simon, $680, had been correctly entered in the purchases
account but had been posted to the account of Simone.

4 No entry had been made for stationery, $35, paid in cash.

5 Motor vehicle repairs, $700, had been debited to the motor vehicles account.

6 Purchases returns, $190, had been correctly entered in the supplier’s account but had been
debited to the sales returns account.

REQUIRED

(a) State two purposes of a trial balance.

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

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

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

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

(b) Name the type of error made in 3, 4 and 5.

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

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

Error 5 ...................................................................................................................................[3]

© UCLES 2018 0452/12/F/M/18

 19

(c) Prepare the suspense account making the necessary entries to correct errors. Balance or
total the account as required.

Sanjay
Suspense account

Date Details $ Date Details $

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

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

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

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

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

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

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

[6]

(d) State whether all errors in Sanjay’s accounts have been discovered. Give your reason.

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

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

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

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

Question 6 (e) is on the next page.

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 20

Sanjay’s draft profit for the year ended 31 January 2018 was $24 250 before any errors were
corrected.

REQUIRED

(e) Complete the statement to show the corrected profit for the year ended 31 January 2018. If
an error has no effect on profit place a tick (3) in the ‘No Effect’ column.

Statement of corrected profit for the year ended 31 January 2018

Increase Decrease
No Effect
$ $ $
24 250
Draft profit

Error 1
Error 2
Error 3
Error 4
Error 5
Error 6

Corrected profit
[8]

[Total: 21]

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 www.cie.org.uk 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 2018 0452/12/F/M/18

 21

6 Mai is a trader. At the end of her financial year on 31 March 2018 she opened a suspense account
with a debit balance of $650.

REQUIRED

(a) State two reasons why it was necessary for Mai to open a suspense account.

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

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

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

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

Mai discovered that some errors had been made in her accounting records.

REQUIRED

(b) Complete the following table to show the entries required to correct each error.

The first one has been completed as an example.

entries required to correct the error

error debit credit
account $ account $

1 motor expenses, $150,

debited to motor vehicles motor expenses 150 motor vehicles 150
account

2 carriage inwards, $120,

debited to carriage
outwards account

3 sales journal overcast by

$1000

4 wages, $460, debited to

wages account as $640

[6]

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 22

(c) State whether all the errors in Mai’s books have been discovered.
Give a reason for your answer.

Have all the errors been discovered? ........................................................................................

Reason

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

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

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

(d) Complete the statement to show the effect on the profit for the year of correcting errors 1–4.
Where the error does not affect the profit write “no effect”.

Mai
Statement of corrected profit for the year ended 31 March 2018
$
Profit for the year before corrections 4150

Increase Decrease
in profit in profit
$ $

Error 1 .................... ....................

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

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

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

Corrected profit for the year

[6]

[Total: 16]

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 10

4 Chandra is a driving instructor. His pupils pay for their lessons in advance.

REQUIRED

(a) Complete the following sentences by selecting the correct word.

The first sentence has been completed as an example. The correct word should be selected
as shown in the example.

1 The motor vehicles account has a (debit/credit) balance in a trial balance.

2 A year end accrual is an amount (earned/owing) for an expense incurred in the

(current/previous) financial period. It will be included in the statement of financial
position as a current (asset/liability).

3 Accrued income is an amount (earned/owing) by the business which will be

received in the (current/next) financial period. It will be included in the statement of
financial position as a current (asset/liability).

[6]

Chandra started business on 1 February 2017. He charges $20 per lesson. Pupils must pay for
10 lessons in advance.

Total receipts for lessons for the year ended 31 January 2018 amounted to $20 200.

On 31 January 2018, Chandra’s records showed that the following pupils had not received the full
set of lessons paid for.

Number of
lessons given
Joe 6
Adam 4
Billy 8

REQUIRED

(b) Calculate the amount Chandra had received in advance for driving lesson fees at
31 January 2018.

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

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

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

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

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

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 11

(c) Calculate the amount of driving lesson fee income which Chandra included in his income
statement for the year ended 31 January 2018.

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

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

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

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

(d) Explain why Chandra’s income earned is not the same as the total receipts for lessons.

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

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

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

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

Chandra calculated a draft profit of $8760 for the year ended 31 January 2018. The following
errors were later discovered.

1 Advertising expenses owing at the year-end had been overstated by $100.

2 Interest payable on a 6% bank loan of $10 000 had been omitted. The loan was taken on
1 February 2017.

3 Cost of petrol, $89, for Chandra’s personal use had been recorded as a business expense.

4 Motor vehicle repairs, $210, had been recorded as motor insurance.

REQUIRED

(e) Complete the statement to show the corrected profit for the year ended 31 January 2018. If
an error has no effect on profit place a tick (✓) in the No Effect column.

Chandra
Statement of corrected profit for the year ended 31 January 2018

No Effect Increase Decrease

$ $ $

Draft profit 8760

Error 1

Error 2

Error 3

Error 4

Corrected profit
[6]
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 12

(f) Name the accounting principle being applied when correctly dealing with the transaction in
error 3. Give a reason for your answer.

Accounting principle ..................................................................................................................

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

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

Chandra wishes to compare his business results with those of LQ Limited, a large chain of driving
schools.

REQUIRED

(g) Suggest two reasons why Chandra may have difficulty comparing his business results with
those of LQ Limited.

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

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

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

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

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

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

[Total: 23]

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 14

4 Jai’s financial year ends on 31 December. He has little knowledge of book-keeping but decided to
prepare a trial balance on 31 December 2018.

The trial balance he prepared, which contains errors, was as follows.

$ $
Revenue 196 000
Purchases 116 500
Inventory 1 January 2018 9 410
Purchases returns 4 500
Premises at cost 110 500
Fixtures and fittings at cost 12 000
Motor vehicle at cost 16 190
Provision for depreciation of fixtures and fittings 4 320
Provision for depreciation of motor vehicle 7 000
Bank overdraft 1 180
Trade receivables 18 000
Trade payables 9 383
Office expenses 16 121
Discount received 2 100
Discount allowed 1 900
Drawings 3 100
Capital 1 January 2018 79 100
296 891 310 413

In addition to the obvious errors in the trial balance the following errors were also discovered.

Error 1 Repairs to motor vehicle, $190, had been debited to the motor vehicle account.

Error 2 No entry had been made for bank charges, $34.

Error 3 A debt of $100 should have been written off as irrecoverable.

© UCLES 2019 0452/22/F/M/19

 15

REQUIRED

(a) Prepare a corrected trial balance at 31 December 2018. If the trial balance does not balance
insert a balancing figure in a suspense account.

Jai
Corrected Trial Balance at 31 December 2018

Debit Credit
$ $

Revenue ........................ ........................

Purchases ........................ ........................

Inventory 1 January 2018 ........................ ........................

Purchases returns ........................ ........................

Premises at cost ........................ ........................

Fixtures and fittings at cost ........................ ........................

Motor vehicle at cost ........................ ........................

Provision for depreciation of fixtures and fittings ........................ ........................

Provision for depreciation of motor vehicle ........................ ........................

Bank overdraft ........................ ........................

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

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

Office expenses ........................ ........................

Discount received ........................ ........................

Discount allowed ........................ ........................

Drawings ........................ ........................

Capital 1 January 2018 ........................ ........................

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

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

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

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

........................ ........................
[13]
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 16

After the trial balance had been corrected draft financial statements were prepared.

Additional errors were then discovered.

REQUIRED

(b) Complete the table to show the entries required to correct each error.

The first one has been completed as an example.

Entry required to correct the error

Error Debit Credit
Account $ Account $
Error 4 The total of the office expenses
column, in the petty cash book, Office
$21, had not been transferred to expenses 21 Suspense 21
the ledger

Error 5 Discount allowed to Meena, $9,

had not been entered in her
ledger account .................... ...... .................... ......

Error 6 A monthly total of the purchases

returns journal, $490, had been
transferred to the purchases .................... ...... .................... ......
returns account as $940

Error 7 Cash sales, $300, had been

correctly entered in the cash
book but debited to the account .................... ...... .................... ......
of K Limited
.................... ...... .................... ......
[7]

(c) Complete the table by placing a tick (✓) in the correct columns to indicate the effect of errors
4–7 on the profit for the year and on the assets.

effect on the profit for the year effect on assets

error
overstated understated no effect overstated understated no effect
Error 4
Error 5
Error 6
Error 7
[8]

[Total: 28]

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 18

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.

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 19

REQUIRED

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

Nadia
Journal

Details Debit Credit

$ $

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

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

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

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

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

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

[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
 20

(c) Prepare a corrected statement of financial position at 31 March 2019.

Nadia
Corrected Statement of Financial Position at 31 March 2019

$ $ $

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[9]

[Total: 22]
© UCLES 2019 0452/21/M/J/19
 16

5 Sabir’s financial year ends on 30 September. The totals of the trial balance prepared on
30 September 2019 did not balance and Sabir opened a suspense account with a debit entry of
$7000.

Sabir used the trial balance to prepare draft financial statements for the year ended 30 September
2019.

After the preparation of these draft financial statements five errors were discovered.

REQUIRED

(a) Complete the table to show the entries required to correct each error.
The first one has been completed as an example.

Entry required to correct the error

Debit Credit
Error
account $ account $

1 The total of the sales returns journal, sales 990 suspense 1980
$990, had been posted to the credit of
the sales account. sales returns 990

2 A bad debt written off, $65, had been

credited to the account of Nadia
instead of the account of Nadira. ........................ ............ ........................ ............

3 No entry had been made for goods,

cost price $150, withdrawn by Sabir for
personal use. ........................ ............ ........................ ............

4 The opening inventory, $4100, had not

been entered in the trial balance. ........................ ............ ........................ ..........

5 The total of the discount allowed

column in the cash book, $430,
had been posted to the credit of the
discount received account as $340. ........................ ............ ........................ ............

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

[9]

(b) State whether all the errors in Sabir’s books have been discovered.

Give a reason for your answer.

Have all the errors been discovered? ..................................

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

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

© UCLES 2019 0452/22/O/N/19

 17

(c) Complete the following statement to show the effect on the draft profit for the year of
correcting errors 1–5.
Calculate the corrected profit for the year.

If the error does not affect the profit place a tick (3) in the ‘No effect on profit’ column.

Sabir
Statement of corrected profit for the year ended 30 September 2019

Draft profit for the year before corrections $31 400

No effect Increase Decrease

on profit in profit in profit

Error 1 ......... $ ......... $.........

Error 2 ......... $......... $.........

Error 3 ......... $......... $.........

Error 4 ......... $......... $.........

Error 5 ......... $......... $.........

______ ______

$______ $______ ______

Corrected profit for the year $______

[9]

[Total: 20]

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 14

4 Arjun is a sole trader.

Arjun prepared a trial balance on 31 January 2020. The totals of the debit and credit sides differed.
This difference was placed in a suspense account.

Arjun later discovered the following errors.

1 The total of the discount received column in the cash book for January, $135, had been
credited to the commission receivable account.

2 $200 received from the sale of fittings (net book value $150) had been correctly debited but
had been credited to the fixtures and fittings account.

3 Cash drawings, $40, had been correctly debited but had been credited to the purchases
account.

4 The total of the analysis column for cleaning in the petty cash book, $73, had been transferred
to both the cleaning account and the office expenses account.

5 The purchase of equipment, $575, had been credited to the equipment repairs account. The
bank account had been correctly credited.

6 No entries had been made for a cheque payment for office expenses, $90.

7 A cheque, $69, paid to Simone had been posted to the account of Simon.

© UCLES 2020 0452/22/F/M/20

 15

REQUIRED

(a) Prepare journal entries to correct errors 1, 2 and 3.

Narratives are required.

Arjun
Journal

Error Details Debit Credit

number $ $

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[9]

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 16

(b) Prepare the suspense account. Include the original difference on the trial balance, as a
balancing figure.

Arjun
Suspense account

Date Details $ Date Details $

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

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

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

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

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

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

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

[4]

(c) Complete the following table by placing a tick (ü) in the correct column to indicate how each
of the errors would affect Arjun's capital.

The first one has been completed as an example.

Ignore depreciation of non-current assets.

Error number Increases Decreases No effect

capital capital on capital
3 ü
4
5
6
7
[4]

© UCLES 2020 0452/22/F/M/20

 17

(d) State three advantages to Arjun of operating as a sole trader.

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

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

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

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

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

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

[Total: 20]

© UCLES 2020 0452/22/F/M/20 [Turn over