Accounting (0452) · May/June 2003 · Question paper 2

Centre Number

Candidate Number

Name

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CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education

0452/02

ACCOUNTING
Paper 2

May/June 2003
1 hour 30 minutes
Candidates answer on the Question Paper.
No Additional Materials are required.

READ THESE INSTRUCTIONS FIRST
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen in the spaces provided on the Question Paper.
You may use a soft pencil for rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
You may use a calculator.
Where layouts are to be completed, you may not need all the lines for your answer.
The businesses mentioned in this Question Paper are fictitious.

For Examiner’s Use

1
If you have been given a label, look at the
details. If any details are incorrect or
missing, please fill in your correct details
in the space given at the top of this page.
Stick your personal label here, if
provided.

2
3
4
5
Total

This document consists of 12 printed pages.
BR S37614/3
© CIE 2003

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1

For
Examiner’s
Use

(a) State one example of a current liability.
[1]
(b) State the effect on net profit if opening stock is overvalued.
[1]
(c) State one purpose for which the Journal may be used.
[1]
(d) For each of the three items place one tick (✓) in the correct box to show where it
appears in a partnership’s final accounts.
Profit and Loss
Account
1

Interest on partners’ drawings

2

Interest on a loan from a partner

3

Interest on partners’ capitals

Profit and Loss
Appropriation Account

[3]
(e) Cherie owns a clothing store
For each of the three items shown below, place one tick (✓) in the correct box.
Revenue
expenditure
1

Sales assistant’s wages

2

New showroom fittings

3

Cost of installing the new fittings

Capital
expenditure

[3]
(f)

Complete the following sentence.
“A debit balance on a ledger account is either an or an ”
[2]

0452/02/M/J/03

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3
(g) A business paid $20 000 for a new machine on 1 January 2001. Depreciation was
charged on the machine at the rate of 30% using the reducing balance method.

For
Examiner’s
Use

Calculate the machine’s net book value on 31 December 2002.
Show your workings.

[4]
(h) In which section of a Balance Sheet does rent received in advance appear?
[1]
(i)

Name the system of petty cash in which the petty cashier begins each new accounting
period with the same amount of petty cash.
[1]

(j)

A sale on credit to Smith was entered on the debit side of Smythe’s account in the
seller’s ledger.
Name this type of error.
[1]

(k) Charlie bought an existing business for $200 000. The value of the business as shown
by the Balance Sheet was $175 000.
Suggest one reason why Charlie was prepared to pay more for the business than the
value of its net assets.

[1]

0452/02/M/J/03

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2

Danbi Wyske runs her business from rented premises. The following balances were
extracted from her books on 30 April 2003.

Stock 1 May 2002
Sales
Purchases
Debtors
Creditors
Electricity paid
General expenses
Cash at bank
Drawings
Rent and insurance paid
Equipment at cost
Provision for depreciation of equipment
Capital

$
4 000
80 000
62 000
10 000
9 000
3 000
7 000
5 000
8 000
6 000
45 000
16 000
?

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(a) Using the columns below, prepare Danbi’s trial balance as at 30 April 2003, showing her
Capital account balance.

For
Examiner’s
Use

Danbi Wyske
Trial Balance as at 30 April 2003
Dr
$

Cr
$

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[14]

(b) Name the ledger account to which a difference on a trial balance may be posted.
[1]

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3

Andy Mann owns a general store. His Trading and Profit and Loss Account for the year
ended 31 March 2003 is shown below. Some words and figures are missing.
(a) In each of the boxes (i) to (vi) enter the missing word(s) or figure.
Andy Mann
Trading and Profit and Loss Account for the year ended 31 March 2003
$
Sales
Less Cost of goods sold
Opening stock
Purchases
Less (ii)

$

$
200 000

(i)
120 000
2 000
––––––

118 000
––––––
130 000
10 000
––––––

Less (iii)

Gross Profit
Add Rent received
Discount (v)

120 000
––––––
80 000
(iv)
3 000
––––––
88 000

Less Wages
Insurance
General expenses
Depreciation

12 000
3 000
28 000
(vi)

Net Profit

58 000
––––––
30 000
––––––
[6]

(b) Calculate Andy’s net profit as a percentage of his sales for the year. Show your
workings.

[2]

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3

(c) On 31 March 2003 Andy’s capital was $200 000. He also had a long-term loan from his
bank of $50 000.

For
Examiner’s
Use

Calculate Andy’s net profit as a percentage of the capital employed in his business.
Show your workings.

[3]
(d) Give two reasons why it is important for Andy to know his net profit as a percentage of
the capital employed.

[4]

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4

Karl is a sole trader who keeps full double entry accounting records including Sales,
Purchases and Nominal Ledgers.
On 1 April 2003, balances in Karl’s books included the following.
$
Debit balances brought forward from 31 March 2003
Cash
Bank
Debtor’s accounts (in the Sales Ledger)
M Fynne
J Bildt
Creditor’s accounts (in the Purchases Ledger)
S Ghalli
T Daktyl

200
2500
200
1500
615
830

Karl’s transactions for the month of April 2003 included the following.
April 4
6
8
10
14
17
21
25
28
30

M Fynne paid the amount he owed by cheque after deducting
cash discount of $10.
Cash was withdrawn from bank for office use
Paid S Ghalli by cheque after deducting cash discount of $15.
Paid wages in cash.
J Bildt paid the amount he owed by cheque, deducting cash
discount, $40.
Cash was withdrawn from bank for office use.
Paid T Daktyl by cheque after deducting cash discount of $30.
Paid wages in cash.
Cash sales.
Cash was paid into bank.

300
250

400
350
800
500

(a) Enter the above transactions in Karl’s cash book on the page opposite (the cash and
bank balances on 1 April 2003 have been entered for you).
Balance the cash and bank accounts at 30 April 2003 and bring down the balances on
1 May 2003.
[21]

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1

Balances b/d

$

2003

April

Discount

Date

200

$

Cash

2500

$

Bank

April

2003

Date

Cash Book

Karl

$

Discount
$

Cash

$

Bank

9

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4

(b) Total the discounts columns in the cash book.
Make the entries required in the discounts accounts on 30 April 2003 in Karl’s nominal
ledger below.
Karl
Nominal Ledger
Discounts Allowed account

Discounts Received account

[4]

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5

Carrie Okie, a sole trader, does not keep full accounting records but supplied the following
information about her business.

Fixed assets
Current assets
Current liabilities

At 1 April 2002
$
50 000
20 000
15 000

For
Examiner’s
Use

At 31 March 2003
$
75 000
30 000
20 000

(a) Prepare a Balance Sheet for Carrie as at 1 April 2002.
Balance Sheet as at 1 April 2002

[4]

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You have the following additional information.
(1) Carrie’s drawings for the year ended 31 March 2003 were $10 000.
(2) Fixed assets at 31 March 2003 are to be depreciated by 20%.
(b) Use the above information to prepare a Balance Sheet for Carrie as at 31 March 2003,
showing her profit or loss for the year ended on that date.
Balance Sheet as at 31 March 2003

[10]
(c) Explain how Carrie observes the accounting principle of prudence by providing for the
depreciation of her fixed assets.

[2]

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