0452/21/M/J/11 Question Paper – Accounting May/June 2011 Paper 21

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Cambridge Accounting (0452) question paper for paper 21, May/June 2011 — 0452/21/M/J/11, file 0452_s11_qp_21.pdf.

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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education

*3819137169*

0452/21

ACCOUNTING

May/June 2011

Paper 2

1 hour 45 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.
You may use a soft pencil for any diagrams or graphs.
Do not use staples, paper clips, highlighters, glue or correction fluid.
DO NOT WRITE IN ANY BARCODES.
Answer all questions.
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.
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.

For Examiner's Use
1
2
3
4
5
6
Total

This document consists of 20 printed pages and 4 blank pages.
IB11 06_0452_21/5RP
© UCLES 2011

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1

Ian McDonald buys goods from Fiona Fraser. The following document was issued at the
end of April 2011.
STATEMENT OF ACCOUNT
Fiona Fraser
Unit 12 Newton Industrial Estate
Bradleyford
Ian McDonald
High Street
Seatown
Date

30 April 2011
Reference

Debit
$

Credit
$

Balance
$

2011
April 1
4

Balance
Interest charged

Cheque

Invoice 496

Credit note 202

100.00

2.00

102.00
102.00

250.00

0
250.00

20.00

230.00

The last amount shown in the balance column is the amount now due.
Terms: 2% cash discount if amount paid within 14 days of date of statement.

REQUIRED
(a) State the purpose of a statement of account.

[1]

(b) Name the person who issued the above statement of account.
[1]

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(c) Prepare the journal entry Ian McDonald would make to record the transaction on
4 April. A narrative is required.
Journal
Debit
$

For
Examiner's
Use

Credit
$

[3]
(d) Name the ledger accounts in which Ian McDonald would record each of the following
transactions.
Transaction

Account debited

Account credited

(i) 22 April Invoice 496
(ii) 27 April Credit note 202

[4]
(e) Name the books of prime (original) entry in which Fiona Fraser would record each of
the following transactions.
Transaction

Book of prime (original) entry

(i) 19 April Cheque
(ii) 22 April Invoice 496
(iii) 27 April Credit note 202

[3]

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(f) State one possible reason for the issue of the credit note on 27 April.

For
Examiner's
Use

[1]

(g) The amount outstanding was paid by cheque on 12 May. State how much would be
paid and give a reason for your answer.
Amount

Reason

[2]
[Total: 15]

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BLANK PAGE

Question 2 is on the next page.

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2

Paul Muyambo is a trader. His financial year ends on 31 January.
Paul Muyambo does not maintain a full set of accounting records, but was able to provide
the following information at 31 January 2011.
Assets and liabilities at 31 January 2011:
$
32 500
12 648
9 485
315
11 320
261
10 300
11 146

Machinery at book value
Inventory
Trade payables
Other payables
Trade receivables
Other receivables
Motor vehicle at valuation
Bank overdraft

The following adjustments are required on 31 January 2011:
1

The machinery should be depreciated by 25% on book value.

The motor vehicle should be revalued at $9100.

A provision for doubtful debts of 2½% of the trade receivables should be created.

0452/21/M/J/11

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REQUIRED
(a) Draw up a statement of affairs for Paul Muyambo at 31 January 2011 showing the
total capital at that date.

For
Examiner's
Use

Paul Muyambo
Statement of Affairs at 31 January 2011

[13]
© UCLES 2011

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On 1 February 2010 Paul Muyambo’s capital was $42 500.

For
Examiner's
Use

During the year ended 31 January 2011 Paul Muyambo made the following transactions:
1

Introduced an additional $3000 as capital.

Withdrew cash from bank, $5575, for personal use.

Took goods costing $1700 for personal use.

REQUIRED
(b) Using the capital you calculated in (a) and the information above, calculate Paul
Muyambo’s profit or loss for the year ended 31 January 2011.
Your answer may be in the form of a calculation or a ledger account.

[7]
[Total: 20]

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BLANK PAGE

Question 3 is on the next page.

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3

Omar and Fatima Aziz are in partnership, trading as Aziz Stores. Their financial year ends
on 31 March.
On 1 April 2010 the balances on the partners’ capital and current accounts were:

Omar Aziz
Fatima Aziz

Capital account
$
60 000
40 000

Current account
$
215 debit
1945 credit

Aziz Stores made a profit for each of the years ended 31 March 2009 and 31 March 2010.
REQUIRED
(a) On 1 April 2009 there was a credit balance on the current account of Omar Aziz.
Explain what may have caused this balance to change to a debit balance on
1 April 2010.

[2]
During the year ended 31 March 2011 the partners made the following drawings.
$
2900
9600

Omar Aziz
Fatima Aziz

Omar and Fatima Aziz prepared the following profit and loss appropriation account for the
year ended 31 March 2011.
$
Profit for the year
Interest charged on drawings

Omar Aziz
Fatima Aziz

87
288

Interest allowed on capital

Omar Aziz
Fatima Aziz

Partner’s salary

Fatima Aziz

2 400
1 600
4 000
12 000

Share of profit/loss

Omar Aziz
Fatima Aziz

(1 230)
(820)

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$
13 575
375
13 950

16 000
(2 050)
(2 050)

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REQUIRED
(b) Prepare the partners’ current accounts as they would appear in the ledger for the year
ended 31 March 2011.

For
Examiner's
Use

Where traditional “T” accounts are used they should be balanced and the balances
brought down on 1 April 2011.
Where three column running balance accounts are used the balance column should be
up-dated after each entry.

[11]

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(c) Prepare an extract from the balance sheet of Aziz Stores at 31 March 2011 to show the
capital and current account balances of each partner and the total funds provided by
the partners. It is not necessary to show full details of the current accounts.

Aziz Stores
Extract from Balance Sheet at 31 March 2011
Omar Aziz

Fatima Aziz

Total

[5]

(d) State one advantage of maintaining both a capital account and a current account for
each partner.

[2]

(e) Instead of operating Aziz Stores as a partnership, Omar Aziz has suggested that they
should form a limited company.
Explain one reason why this may be of personal benefit to Omar and Fatima Aziz.

[2]
[Total: 22]

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4

The accounts maintained by clubs and societies often use different terms to those used by
businesses.

For
Examiner's
Use

REQUIRED
(a) Complete the following table to name the equivalent term used by a club or society
which does not operate any trading activities.
Business

Club or society

(i) Income statement
(ii) Profit for the year
(iii) Capital

[3]
The Muara Swimming Club was formed some years ago. It has 60 members who each pay
an annual subscription of $90.
On 1 March 2010 the Muara Swimming Club had a balance at bank of $3450.
The treasurer provided the following information relating to the year ended 28 February 2011.
All receipts were paid into the bank and all payments were made by cheque.
$
Subscriptions received from members
for the year ended 28 February 2010
for the year ended 28 February 2011
for the year ending 29 February 2012
Proceeds of sale of old equipment
Purchase of new equipment
Receipts from swimming competition
Expenses of swimming competition
Rent of premises
General expenses
Insurance
Loan from Swim-for-all

270
5400
180

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5850
890
1200
780
645
1690
732
496
1000

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REQUIRED
(b) Prepare the receipts and payments account of the Muara Swimming Club for the year
ended 28 February 2011.
Balance the account and bring down the balance on 1 March 2011.
Muara Swimming Club
Receipts and Payments Account for the year ended 28 February 2011

[12]

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(c) Prepare the subscriptions account as it would appear in the ledger of the Muara
Swimming Club for the year ended 28 February 2011.

For
Examiner's
Use

Show the amount transferred to the income and expenditure account.
Where a traditional “T” account is used it should be balanced and the balance brought
down on 1 March 2011.
Where a three column running balance account is used the balance column should be
up-dated after each entry.
Muara Swimming Club
Subscriptions account

[8]

[Total: 23]

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5

Leo Yang runs a gym and fitness centre. His financial year ends on 31 October. He
employs a book-keeper to maintain his accounting records.
Leo Yang rents part of his premises to another business. The following account appeared in
Leo Yang’s ledger.

Rent receivable account
$
2009
Nov 1 Balance b/d
2010
Oct 31 Income statement
Balance c/d

100
2500
50
2650

$
2009
Nov 2 Bank
2010
April 1 Bank

1350
1300
2650

2010
Nov 1 Balance b/d

For candidates who are not familiar with the layout of the account shown above an
alternative presentation is provided.

2009
Nov 1 Balance
2 Bank
2010
April 1 Bank
Oct 31 Income statement

Rent receivable account
Debit
Credit
$
$
100
1350
1300
2500

Balance
$
100 Dr
1250 Dr
2550 Cr
50 Cr

REQUIRED
(a) Explain the following entries in the above account.
State where the double entry for each transaction would have been made.
(i) Balance 1 November 2009
Explanation

Double Entry

[3]

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(ii) Bank 2 November 2009

For
Examiner's
Use

Explanation

Double Entry

[3]

(iii) Income statement 31 October 2010
Explanation

Double Entry

[3]

(b) Explain the significance of the $50 shown at the end of the account.

[2]

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After the book-keeper had prepared a trial balance on 30 April 2011 Leo Yang decided to
draft a set of financial statements for the six months ended 30 April 2011.
The draft financial statements, containing errors, are shown below.
Income Statement
$
Fees for the period
Sale of all old equipment at book value
Loan from Sports-aid
Less Purchase of new equipment
General expenses
Profit for six months

16 800
8 500

$
14 000
9 200
10 000
33 200
25 300
7 900

Balance Sheet
$
45 000
1 380
1 200
5 210
110
52 900

Premises at cost
Trade receivables
Rent received
Balance at bank
Purchase of stationery
Loan interest paid
Capital (balancing figure)

200
52 700
52 900

REQUIRED
(c) (i) State the difference between capital expenditure and revenue expenditure.

[2]
(ii) State the difference between capital receipts and revenue receipts.

[2]

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(d) Calculate the corrected profit of Leo Yang for the six months ended 30 April 2011.

For
Examiner's
Use

Leo Yang
Statement of corrected profit for the six months ended 30 April 2011

[7]
[Total: 22]

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6

Anna D’Souza is a trader. She buys and sells on both cash and credit terms.
Anna D’Souza allows her credit customers 21 days credit and her credit suppliers allow her
30 days credit.
The following information is available.
For the year ended 31 March 2011

Cash
Credit

Purchases

Sales

8 700
42 500

11 400
52 800

At 31 March 2011
Trade receivables
Trade payables
Inventory
Bank overdraft

$
4100
5300
3800
2900

REQUIRED
(a) Calculate the payment period for trade payables. Your answer should be rounded up to
the next whole day.
Show your workings.

[2]

(b) State and explain whether Anna D’Souza’s credit suppliers will regard the payment
period as satisfactory.
Will they be satisfied?
Explanation

[3]

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(c) Calculate the collection period for trade receivables. Your answer should be rounded
up to the next whole day.
Show your workings.

For
Examiner's
Use

[2]

(d) The collection period for trade receivables for the year ended 31 March 2010 was
24 days.
State and explain whether the change in the collection period is an advantage or a
disadvantage to Anna D’Souza.
Advantage or disadvantage?
Explanation

[3]

(e) Explain two ways in which Anna D’Souza could improve the collection period for trade
receivables.

(i)

(ii)
[2]

(f) Calculate the current ratio. The calculation should be correct to two decimal places.
Show your workings.

[2]

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(g) State and explain whether Anna D’Souza will be satisfied with the ratio you calculated
in (f).
Will she be satisfied?
Explanation

[2]

(h) Explain two ways in which Anna D’Souza could increase her current ratio.

(i)

(ii)
[2]

[Total: 18]

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BLANK PAGE

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BLANK PAGE

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.
University of 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.

0452/21/M/J/11

Accounting (0452) · May/June 2011 · Question paper 21

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