Accounting (0452) · May/June 2004 · Question paper 1

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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education

0452/01

ACCOUNTING
Paper 1 Multiple Choice

May/June 2004
1 hour
Additional Materials:

Multiple Choice Answer Sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST
Write in soft pencil.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Write your name, Centre number and candidate number on the answer sheet in the spaces provided
unless this has been done for you.
There are forty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C, and D.
Choose the one you consider correct and record your choice in soft pencil on the separate answer sheet.
Read the instructions on the answer sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
Calculators may be used.

This document consists of 11 printed pages and 1 blank page.
IB04 06_0452_01/2RP
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Businesses use financial records to prepare final accounts.
Which record is used in the preparation of the Balance Sheet?

2

3

4

A

bank statement

B

cash book

C

purchases journal

D

sales journal

What is calculated in a Trading Account?
A

closing stock

B

gross profit

C

net profit

D

sales

Which is a current liability?
A

capital

B

creditors

C

debtors

D

stock

Which would appear in a Balance Sheet?
A

closing stock

B

cost of sales

C

opening stock

D

sales

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5

A business provides the following information.
$
sales

10 000

purchases

8 000

opening stock

1 000

closing stock

1 500

sales returns

200

purchases returns

300

What is the cost of sales?
A
6

$2000

B

$2100

C

$7200

D

$8200

Employees’ skills are not recorded in the books of account.
Which accounting principle is involved?

7

A

consistency

B

money measurement

C

prudence

D

realisation

A business decides to use the same depreciation method every year.
Which accounting principle is the business following?

8

A

consistency

B

duality

C

matching

D

prudence

A business charges $1500 to its Profit and Loss Account for electricity. This includes $200 for an
electricity bill that is outstanding at the year end.
Which accounting principle has been applied?
A

duality

B

matching

C

prudence

D

realisation

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A retailer’s capital is $40 000. The following payments are made from the business bank account.
$5000 for extension to the retailer’s shop
$2000 for purchase of television for retailer’s private house
How much is the retailer’s capital now?
A

B

$33 000

$35 000

C

$38 000

D

$45 000

10 A supplier overcharges a customer for goods supplied on credit.
Which document will the supplier issue to the customer?
A

credit note

B

debit note

C

sales invoice

D

statement

11 In which book of prime (original) entry is the sale of a fixed asset on credit recorded?
A

cash book

B

journal

C

sales journal

D

sales returns journal

12 Sam uses the imprest system of petty cash. The imprest amount is $300, which is restored at the
end of each month.
The following takes place in March.
receipts
$

payments
$

March 8 Postage stamps

50

10 Refreshments

62

11 Flowers

20

15 Stationery

17

20 Stamps sold to employees

10

27 Sam’s travelling expenses

135

How much will the petty cashier receive from the cashier on 1 April?
A

$274

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B

$284

C

$294

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D

$300

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13 Sara’s sales journal includes the following entry.

date

name

amount
$

April 1

Ali

350

To which accounts will this item be posted in Sara’s ledger?
account debited

account credited

A

Ali

cash

B

Ali

sales

C

cash

Ali

D

sales

Ali

14 The total of David’s purchases journal and purchase returns journal for April showed the
following.
$
purchases journal
purchase returns journal

10 000
900

How are these posted to David’s ledger?
purchases account

purchase returns
account

$

$

A

credit

10 000

debit

900

B

debit

10 000

credit

900

C

debit

10 900

D

–

–
credit

9100

15 Where are suppliers’ accounts found in a trader’s accounting records?
A

purchases journal

B

purchases ledger

C

sales journal

D

sales ledger

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16 Purchase of a new computer has been posted to the repairs account in error.
What type of error is this?
A

commission

B

complete reversal of entries

C

original entry

D

principle

17 Which is an error of omission?
A

No entry has been made for the purchase of stationery by cheque.

B

Purchase of stationery has been entered only in the cash book.

C

Purchase of stationery has been entered only in the stationery account.

D

The stationery account has been missed out of the trial balance.

18 When is a suspense account opened?
A

when a Balance Sheet fails to balance

B

when a trial balance fails to balance

C

when an error of omission is corrected

D

when an error of principle is corrected

19 Rent received, $100, has been debited to rent paid account and credited to cash account.
What is the correcting journal entry?
account debited

account credited
$

$

A

cash

100

rent received

100

B

cash

200

rent paid
rent received

100
100

C

rent received
rent paid

100
100

cash

200

D

rent paid

100

rent received

100

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20 A business receives a bank statement and updates its cash book.
Which item will increase the bank balance in the cash book?
A

bank charges

B

credit transfers received

C

interest charges

D

standing orders paid

21 The following information is available at the end of the month.
$
bank statement balance

7000 credit

cash book balance

6000 debit

unpresented cheques

1200

What is the value of receipts in the cash book which have not yet appeared on the bank
statement?
A

$200

B

$1000

C

$2200

D

$4800

22 It is important to match a business’s expenses to the appropriate accounting period.
Why is this?
A

The business needs to pay the correct amount of expenses.

B

To calculate the correct profit or loss for the period.

C

To calculate unpaid expenses for the period.

D

Unpaid expenses cannot be carried forward to next year.

23 A business's financial year ends on 30 September. On 1 July 2003 $200 was paid for insurance
for six months to 31 December.
What is the correct entry in the Balance Sheet on 30 September 2003?
A

an accrual of $100

B

a prepayment of $100

C

an accrual of $200

D

a prepayment of $200

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24 Tara paid $35 to Zaki for rebuilding a damaged wall at her factory.
To which account will Tara post this?
A

improvement to buildings

B

land and buildings

C

purchases

D

repairs and maintenance

25 The following is a list of a builder’s expenditure for the year.
$
motor vehicle

10 000

purchases

25 000

wages

20 000

rent of offices

6 000

machinery

7 000

petrol

3 000

What is the amount of capital expenditure?
A

$10 000

B

$17 000

C

$54 000

D

$71 000

26 A sole trader has omitted depreciation from his final accounts.
What are the effects on the Balance Sheet?
fixed assets

net profit

A

overstated

overstated

B

overstated

understated

C

understated

overstated

D

understated

understated

27 An office machine cost $8500 and is estimated to have a useful life of four years. Its scrap value
at the end of this time is estimated at $1000.
What is the annual charge for depreciation using the straight-line method?
A

$1000

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B

$1875

C

$2125

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D

$2375

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28 What appears in both the Profit and Loss Account and the Balance Sheet of a sole trader?
A

bank balance

B

creditors

C

net profit

D

sales

29 A sole trader depreciates his motor vehicles at 25 % per annum on a reducing balance basis.
The vehicles cost $16 000 at 1 January Year 1.
What is the depreciation for Year 2?
A

B

$3000

$4000

C

$7000

D

$8000

30 The following information is extracted from the rent account of a business.
$
owing at 1 January 2003

400

rent paid in year ended 31 December 2003

1700

rent paid in advance at 31 December 2003

250

How much rent was payable for the year ended 31 December 2003?
A

$1050

B

$1550

C

$1850

D

$2350

31 Where is interest on partners’ capital shown in the partnership final accounts?
A

Appropriation Account

B

Cash Book

C

Profit and Loss Account

D

Trading Account

32 Mary and Jane are in partnership sharing profits and losses in the proportions Mary
They have agreed that Mary will receive an annual salary of $9000.

2
3

, Jane

1
3

.

Net profit for the year was $24 000.
What is Jane’s share of the profit for the year?
A

$5000

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B

$8000

C

$10 000

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D

$16 000

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33 A business provides the following information.
$
capital 1 January 2003

60 000

drawings during the year

40 000

capital introduced during the year

10 000

capital 31 December 2003

80 000

What is the profit for the year?
A

$10 000

B

$20 000

C

$50 000

D

$70 000

34 A business has not kept full accounting records.
Which formula is used to calculate the credit sales?
A

amounts received + closing debtors + discounts allowed – opening debtors

B

closing debtors – amounts received + opening debtors + discounts allowed

C

amounts received + closing debtors – opening debtors

D

closing debtors – amounts received + opening debtors

35 How is working capital calculated?
A

current assets – current liabilities

B

fixed assets – current liabilities

C

owners capital – current liabilities

D

total assets – current liabilities

36 Which is a measure of profitability?
A

current ratio

B

quick ratio

C

rate of stock turnover

D

return on capital employed

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37 The balance sheet of a business includes the following.

$
debtors

10 000

creditors

14 000

bank overdraft

6 000

stock

15 000

What is the quick ratio?
A

0.50 : 1

B

0.71 : 1

C

1.14 : 1

D

1.25 : 1

38 Which shows how well a business controls its expenses?
A

current ratio

B

percentage of gross profit to sales

C

percentage of net profit to sales

D

rate of stock turnover

39 How is the profit as a percentage of the capital employed calculated?
A

gross profit
x 100 %
assets

B

net profit
x 100 %
assets

C

gross profit
x 100 %
capital

D

net profit
x 100 %
capital

40 The quick ratio of Eric is 1.3 : 1, the quick ratio of Ken is 0.4 : 1.
What does a comparison of these ratios show?
A

Eric controls his overhead expenses better than Ken

B

Eric's cost of sales is lower then Ken's

C

Ken has a lower return on capital employed than Eric

D

Ken has less liquidity than Eric

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University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES) which is itself a department of
the University of Cambridge.

0452/01/M/J/04