Accounting (0452) · Feb/March 2021 · Examiner report

Cambridge International General Certificate of Secondary Education
0452 Accounting March 2021
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/12
Multiple Choice
Question
Number
1
2

C
C

Question
Number
21
22

3

A

23

D

4

D

24

A

5

D

25

B

6
7

B
D

26
27

D
D

8

A

28

D

9

A

29

C

10

B

30

C

11
12

B
C

31
32

C
B

13

A

33

B

14

D

34

C

15

D

35

A

16
17

C
B

18

B

19

A

20

B

Key

Key
A
D

Key messages
Candidates should be familiar with all the topics on the syllabus and possess a thorough knowledge and
understanding of accounting.
To have a clear understanding of what is required, it is important for candidates to read through each item
very carefully before selecting an option on the answer sheet.
General comments
Many candidates possessed a good understanding of double-entry bookkeeping and were able to select the
correct key to many items on the paper.

© 2021

Cambridge International General Certificate of Secondary Education
0452 Accounting March 2021
Principal Examiner Report for Teachers
Comments on specific questions
Question 4
The majority of candidates appreciated that the machinery account is debited with the cost of any machinery
purchased ($10 000 in this scenario). It was stated that $10 000 was paid immediately from the trader’s
personal bank account. This represents capital introduced so would be credited to the capital account. The
amount outstanding would be credited to the account of the supplier of the machinery. The Key was D.
Question 6
This question was designed to test understanding of both double entry and the use of different ledgers.
When goods are returned to a supplier they are debited to the supplier’s account and credited to the
purchases returns account. The purchases returns account is maintained in the general ledger and the
accounts of suppliers are maintained in the purchases ledger. The Key was B.
Question 8
It was expected that candidates would understand that any transaction which is not recorded in any other
book of prime entry is recorded in the general journal. Options B and C both involve a payment that would be
recorded in the cash book. Purchases on credit (option D) would be recorded the purchases journal. The Key
was A.
Question 9
When a petty cash book is maintained using the imprest system the amount received by the petty cashier to
restore the imprest is equal to the net amount spent. This ensures that the petty cashier always starts the
period with an amount equal to the imprest. In the scenario described the net amount spent equalled $90 so
the Key was A.
Question 12
A trader needed to make a contra entry between an account in the sales ledger and an account in the
purchases ledger. This involves debiting the account in the purchases ledger (to reduce the credit balance)
and crediting the account in the sales ledger (to reduce the debit balance). The amount to be transferred was
$100 which represented the lower of the two balances. There appeared to be some doubt about the entries
required.
Question 17
Using the data provided, candidates were required to determine the amount by which the total trade
receivables and the rate of provision for doubtful debts had changed by the end of a financial year. The total
trade receivables account showed a decrease of $8000 (the difference between the opening and closing
balances). The opening provision was $1200 which represented 4 per cent of the opening trade receivables.
The closing provision was $1100 which represented 5 per cent of the closing trade receivables. This meant
that the rate of the provision decreased by 1 per cent.
Question 19
Many candidates appeared to be unsure of the effects on the financial statements of a payment from a credit
customer after cash discount. The expenses in the income statement would increase by the amount of the
cash discount. In the statement of financial position, the total of the current assets would decrease. The trade
receivables would decrease by the total owed by the credit customer who had settled his/her account and
the cash would increase by the actual amount received. The Key was A.
Question 21
The profit for the year of a partnership was $14 100. After deducting Raj’s partnership salary of $3000 the
residual profit was divided $7400 for Raj and $3700 for Rohit. The salary and the profit share would be
credited to Raj’s current account. The credit balance on Raj’s current account at the start of the following
financial year would be $8600 (option A).

© 2021

Cambridge International General Certificate of Secondary Education
0452 Accounting March 2021
Principal Examiner Report for Teachers
Question 25
Approximately half of the candidates appeared to be unsure about what the entries in a subscriptions
account represented. A balance brought down on the debit side represents subscriptions owed to the club by
members and a balance carried down from the debit side to the credit side represents subscriptions prepaid
by members. The subscriptions for the year are transferred to the income and expenditure account and the
amount received from members is credited to the subscriptions account and debited to the bank account.
The Key was B.
Question 28
It was anticipated that most candidates would correctly calculate the profit for the year. This is found by
deducting the opening capital from the closing capital and adding back the trader’s drawings.
Question 29
Either an arithmetic calculation or a trade receivables account could be used to calculate the missing figure
of credit sales. The decrease in the amount due from trade receivables should have been deducted from the
total of the receipts, discount, and returns. In this scenario only the difference between the opening and
closing balances was given, not the individual amounts. If a candidate is doubtful how this should be treated
it is suggested that they insert figures for the opening and closing balances which have a difference of
$2000. For example, an opening balance of $62 000 and a closing balance of $60 000 could be used.
Question 31
Candidates were expected to understand what would cause an increase in the liquid (acid test) ratio.
Inventory is not included in the calculation of this ratio, so it is not directly affected by any changes to
inventory. If a trader decreases the provision for doubtful debts, the amount anticipated to be received from
trade receivables increases, which results in an increase in the liquid ratio.

© 2021

Cambridge International General Certificate of Secondary Education
0452 Accounting March 2021
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/22
Paper 22

Key messages
It is important that candidates read through each question very carefully before attempting an answer. This
will ensure that an important piece of data is not overlooked and that instructions can be followed precisely.
Marks will not be awarded for a factually correct statement which is not the answer to the question being
asked.
Calculations should be shown where appropriate. This enables some of the available marks to be awarded
even if the final answer is incorrect.
The spaces provided on the question paper should be adequate for candidates’ answers. Some candidates
found more space was required as they re-wrote part or all of their answer. Most of these candidates
correctly indicated that part or all of the answer was provided elsewhere on the question paper. A note
‘Please refer to Page…’ or ‘Continued on Page...’ ensures that this additional work is not overlooked when
the script is being marked.
Candidates should avoid the use of inappropriate abbreviations. For example, in financial statements, it is
not acceptable to use ‘COGS’ for ‘Cost of goods sold’ and ‘NP’ for ‘Profit for the year’. For example, in ledger
accounts, it is not acceptable to use ‘b/d’ or ‘bbd’ for ‘Balance’.
It is extremely important the candidates pay attention to their handwriting to ensure that all the words and
figures are legible.
General comments
All the questions on the examination paper were compulsory and covered a wide range of syllabus topics.
Most candidates attempted to answer all the questions and were familiar with the correct format of financial
statements.
Double entry bookkeeping forms the basis of all day-to-day records of a business. This means that it is very
important that candidates have a thorough understanding of double entry and the ability to apply this to
various scenarios. For each entry in a ledger account it is important to enter the date, details and amount.
The syllabus requires the inclusion of questions in which candidates are required to discuss a given scenario
and recommend a course of action. Candidates are advised to think very carefully before attempting these
questions and make a list of the points they want to include. It should then be possible to construct a
coherent response in which the points are made in a logical sequence (advantages/disadvantages, or
advantages of one course of action followed by advantages of another course of action) and a clear
recommendation is made. Those candidates who had only a limited understanding of detailed financial
statements and accounts were often able to apply logic to a given scenario and so able to earn reasonable
marks.

© 2021

Cambridge International General Certificate of Secondary Education
0452 Accounting March 2021
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a)

Using the information provided, candidates were required to write up a sales journal. Most
candidates correctly listed the three items of credit sales. A number of candidates incorrectly
included the irrelevant items of cash sales and sale of a non-current asset.
Candidates are reminded that a sales journal is a list of names of customers to whom credit sales
were made, the value of the sales and the dates on which the sales were made. A significant
number of candidates attempted to show entries which may appear in the general journal.
The question required candidates to total the journal and to indicate the ledger account to which
the total would be posted. Whilst most candidates totalled the journal, they omitted the date and did
not indicate that the total would be posted to the sales account.

(b)

A cash book had to be prepared from information provided. This is a standard type of question at
this level and candidates should have been able to earn high marks. Candidates are reminded that
only transactions involving receipts and payments (and any related cash discount) are entered in a
cash book. A large number of candidates incorrectly included credit sales, credit purchases and
purchases returns. The word(s) in the ‘details’ column should be the name of the account in which
the double entry will be made, so words such as ‘sale of office fittings’ were not acceptable.
Cash sales paid directly into the bank caused a few problems. This could have been debited
directly into the bank column or it could have been debited in the cash column and a contra made
to transfer the money into the bank. Both approaches were acceptable.
It was expected that candidates would be aware that the discount columns should be totalled, not
balanced. Candidates should have also been aware that it is not possible to have a credit balance
brought down in the cash column.

(c)

A ledger account of a credit supplier had to be prepared from information provided. This should
have been a straightforward question, but a number of candidates completely reversed the
account, or referred to sales and sales returns rather than purchases and purchases returns.
Sometimes dates were omitted. A payment was made in cash, so it was incorrect to use the word
‘Bank’ in the details column.
It was expected that candidates would understand that trade discount does not appear in the
ledger and only the net amounts of purchases and purchases returns are entered in the supplier’s
account. A large number of candidates either included the gross amounts or made separate entries
for the net amounts and the trade discount.

(d)

Candidates were required to complete a table to indicate the document a supplier would issue
when goods were returned. Most candidates gave a correct answer.

Question 2
(a)

A list of balances was provided and candidates were required to prepare the income statement of
Zamir, who provided legal services. Most candidates understood how the statement should be
presented, but some candidates incorrectly attempted to prepare a trial balance. The weaker
responses often included irrelevant items in the statement such as assets and liabilities.
The calculation of the rent and rates for the year proved to be difficult. The notes clearly stated that
the annual rent was $16 000 so this is the figure which should have appeared in the income
statement. The notes stated that rates of $6000 were paid during the year and that there was an
accrual of two months of rates, which amounted to $1260.
The calculation of the depreciation also caused some problems with many candidates not
deducting the cost of the equipment sold before calculating the 15 per cent annual depreciation.
The loss on disposal was $260. This represented $1540 (the total of the depreciation to date and
the proceeds of sale) minus the cost of the equipment of $1800.

© 2021

Cambridge International General Certificate of Secondary Education
0452 Accounting March 2021
Principal Examiner Report for Teachers
Where calculations were shown it was possible to earn some of the available marks for these
items.
(b)

Candidates were required to prepare the assets section of a statement of financial position. This
proved to be very difficult for the majority of candidates.
The non-current assets were usually presented in columns, but the majority of candidates did not
insert column headings so there was no indication of what the three figures represented. A large
number of candidates incorrectly used the figures for cost and depreciation from the list in the
question and did not make any adjustment for the disposal of the equipment or the depreciation for
the year.
In the current assets, most candidates correctly deducted the irrecoverable debt from the trade
receivables but did not include the other receivables (the prepaid rent).

(c)

Two reasons why a trader required a bank overdraft were required. A number of candidates earned
the two marks available. Most provided standard generic answers such as payment of short-term
debts. It was rare to find a candidate relating their answers specifically to Zamir.

(d)

Candidates were required to advise Zamir on whether he should offer an employee an increase in
salary or offer a partnership. Most candidates were able to earn at least half of the available marks.
Some candidates did not make a recommendation of which option Zamir should select.
A large number of candidates forfeited marks as they concentrated on the advantages and
disadvantages of a partnership instead of answering the question being asked.

Question 3
(a)

This proved to be very problematic. Many candidates understood that a suspense account is used
to balance a trial balance but were unable to expand this statement. A large number of candidates
simply repeated the question.

(b)

Journal entries were required to correct five errors. Many candidates earned high marks.
A number of candidates incorrectly identified the sales journal and the purchases journal as the
accounts required to correct error number 3.
Error number 5 proved somewhat problematic. Many candidates correctly credited the bank
charges account but then made a debit entry in the bank interest received account. These
candidates did not appreciate that the bank interest was received and that to correct the error, an
entry was also required in the suspense account.

(c)

Most candidates correctly identified the compensating error and the error of omission.

(d)

Candidates were required to complete a table indicating the effect of five errors on the gross profit
and the profit for the year. This caused problems for many candidates. Some did not appreciate
that amounts of money were required in the understated/overstated columns. Many correctly
identified the effect on one of the profits but were not able to identify the effect on the other profit.

(e)

It was expected that candidates would appreciate that unidentified errors could result in a balance
remaining on the suspense account.

Question 4
(a)

The calculation of three ratios was correctly carried out by most candidates. A few did not indicate
that the answer to the first one represented a percentage and that the answer to the last one
represented a ratio. A small number did not round up the trade receivables turnover to the next
whole day.

© 2021

Cambridge International General Certificate of Secondary Education
0452 Accounting March 2021
Principal Examiner Report for Teachers
(b) (i)

(ii)

A comparison of the trade receivables turnover of two businesses was required. Responses were
often limited to repeating the answer to the calculation in (a) and the information in the question
relating to the other business and stating that one was higher than the other. Such statements were
not regarded as adequate as they did not explain which business had the better ratio or offer
suggestions as to why this difference had occurred.
Two problems of inter-firm comparison relating to trade receivables turnover were required. Many
candidates concentrated on the problems of inter-firm comparison in very general terms and did
not relate their answers to the scenario. A large number correctly identified the use of different
policies but then incorrectly used an example of depreciation methods.

(c)

Candidates were required to advise a trader on whether to make cash sales only (with a trade
discount to regular customers) or to continue selling on credit terms. Most candidates were able to
earn at least half of the available marks. Many candidates correctly explained the consequences of
trading in cash only. Some candidates did not make a recommendation of which option the trader
should select.

(d) (i)

Two reasons why employees would be interested in the financial statements of their employer had
to be stated. Many candidates offered acceptable responses.

(ii)

Many candidates earned the two available marks by identifying two users of accounting statements
(excluding the owner and her employees).

Question 5
(a)

The cost of a trader’s closing inventory had to be calculated. A number of candidates earned the
two available marks. A common error was to omit the carriage inwards.

(b)

The trading section of an income statement had to be prepared. Common errors included
•
Sales (revenue) included as $39 000 instead of $150 000
•
Gross margin not applied or incorrectly calculated
•
Figure for cost of sales shown without any identifying label
•
Carriage inwards omitted or incorrectly treated
•
No entry made for the ‘missing’ figure representing cost of goods taken for personal use
•
Closing inventory (own figure from Part (a)) omitted or incorrectly treated
•
Inclusion of irrelevant items such as opening inventory

(c)

Candidates were required to advise a trader on whether she should start to keep a full set of
accounting records. Most candidates were able to offer suitable advantages and disadvantages
and earned at least half of the available marks. A clear recommendation was made by most
candidates.

(d)

A table had to be completed to indicate the book of prime entry which a trader would use in three
situations. This task was generally well done.

(e)

A table had to be completed to identify two accounting objectives. Many responses were correct.

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