Accounting (0452) · May/June 2016 · Mark scheme 12

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Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

ACCOUNTING

0452/12
May/June 2016

Paper 1
MARK SCHEME
Maximum Mark: 120

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.
Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.
Cambridge will not enter into discussions about these mark schemes.
Cambridge is publishing the mark schemes for the May/June 2016 series for most Cambridge IGCSE®,
Cambridge International A and AS Level components and some Cambridge O Level components.

® IGCSE is the registered trademark of Cambridge International Examinations.

This document consists of 10 printed pages.
© UCLES 2016

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Page 2
1

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

Paper
12

(a) A
(b) B
(c) D
(d) B
(e) A
(f) C
(g) B
(h) A
(i) D
(j) C

2

[10]

(a) Assets – liabilities = capital (1)

[1]

Or suitable alternative
(b)
account debited

account credited

drawings (1)

cash (1)
[2]

(c) Decreased (1)

[1]

(d) Goods for own use
Private expenses paid by business
Business asset taken over by owner
Any one (1) mark

[1]

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Page 3

Mark Scheme
Cambridge IGCSE – May/June 2016

(e) Capital employed = owner’s capital + non-current liabilities (1)

Syllabus
0452

Paper
12
[1]

OR
Capital employed = assets less current liabilities (1)
(f) The recording of all financial transactions in the books of account (1)

[1]

(g) Any one of:

[1]

To avoid multiple entries in the ledger
Different books of prime entry can be maintained by different people
Acts as an aid for posting to the ledger by analysing a transaction into debit and credit entry
Helps to reduce the amount of detail in the ledger as only totals are posted to the ledger
Provides evidence of transactions since they are recorded from source documents
Helps in the auditing/tracking process/facilitates cross referencing
Easy reference to source of transaction
Helps in gathering and summarising of accounting information
Groups together similar types of transactions in one book in date order
(h)
book of prime (original) entry

source document

cash book

cheque counterfoil

sales journal

sales invoice (1)

sales returns journal

credit note issued(1)

purchases journal

purchase invoice (1)

petty cash book

voucher (1)
[4]

(i) Any correct answer for (1) mark

[1]

E.g. depreciation, bad debt, creation of/increase in/decrease in provision for doubtful debts,
correction of error, purchase/sale of non-current asset on credit, drawings of goods etc.
(j) Duality / dual aspect (1)

[1]
[Total: 14]

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Page 4
3

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

Paper
12

(a) A statement comprised of revenues and expenses (1) for a specific period (1)

[2]

(b) To know if he has made a profit/has an adequate return on his investment (1)

[1]

(c)
User

Reason

credit supplier

to check on likelihood of being paid

manager

to see efficiency and progress of the business

bank/lender

to check on suitability for loan

government

to use in tax calculation

OR other suitable user
(1) mark for any suitable user plus related reason for (1) mark
(d) To check the arithmetical accuracy of the double entry (1)

[2]
[1]

OR
As a basis for the preparation of the financial statements (1)
(e)
debit side
machinery

bank overdraft
inventory

capital
purchases

discount received

(f)

credit side

carriage outwards

trade receivables

Any two correct answers = 1 mark

[4]

(i) Machinery }
Inventory}
Trade receivables}
all 3 correct for (2) marks, any 2 correct for (1) mark

[2]

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Page 5

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

Paper
12

(ii) Bank overdraft (1)

[3]

(g) Suspense (1)

[1]

(h) Any two for 2 marks:

[4]

Omission (1) transaction totally omitted from the books (1)
Commission (1) transaction posted to wrong account of right class (1)
Principle (1) transaction posted to account of wrong class (1)
Original entry (1) transaction incorrectly recorded in book of prime entry (1)
Reversal (1) debit entry posted on credit side and vice versa (1)
Compensating (1) errors cancel one another out (1)
[Total: 18]
4

(a)
$
Year 1

10 000 × 0.25

2500

(1)

Year 2

7500 × 0.25

1875

(1)

4375

(1)

Total

[3]
(b)
Virginia
Motor vehicle account
2015

$

2015

$

Jan 1

Balance b/d 10 000

(1)

May 28

Disposal

10 000

May 28

Bank

(1)

Dec 31

Balance c/d

17 000

17 000
27 000

2016
Jan 1

Balance b/d 17 000

(1)

27 000
(1of)

Provision for depreciation of motor vehicle account
2015

$

May 28

Disposal

4375

Dec 31

Balance c/d

4250

2015
(1of)

$

Jan 1

Balance b/d

4375

(1of)

Dec 31

Income
statement

4250

(1)

8625

8625
2016
Jan 1

Balance b/d

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4250

(1of)

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Page 6

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

Paper
12

Motor vehicle disposal account
2015
May 28

$
Motor vehicle

May 28
10 000

Dec 31

2015

Income
statement (1)

1 585

(1)

$
Provision for
depreciation

4 375

(1of)

Cash

7 210

(1)

(1of)

11 585

11 585

+(1) for dates
[14]
(c) Statement of financial position (1)

[2]

Non-current assets (1)
(d) The cost of the non-current asset and the revenues arising from its use are matched (1) in an
accounting period (1)
[2]
OR
The cost of the non-current asset is spread (1) over its useful life (1)
(e) Prudence (1)

[1]

(f) Small items of equipment e.g. loose tools (1)

[1]
[Total: 23]

5

(a) Separate legal identity from its owner (1)
Limited liability (1)
Can issue shares to raise capital (1)
May find it easier to obtain loans/issue debentures (1)
Continuity (1)

[max 3]

Other reasonable answers acceptable
(b)
definition

term

the value of shares which a company
has requested from its shareholders

called up capital (1)

the value of shares for which the
company has received cash

paid up capital (1)
[2]

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Page 7

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

Paper
12

(c)
AC Industries Limited
Statement of Changes in Equity for the year ended 31 March 2016
Share
capital
$

Details

On 1 April 2015
Share issue

General
reserve
$

Retained
earnings
$

Total
$

100 000

20 000

36 800

156 800 (1)

10 000

10 000 (1)

Profit for the year

19 300

19 300 (1)

Dividend paid

(7 000)

(7 000) (1)

Transfer to general reserve

5 000

(5 000)

– (1)

25 000

44 100

On 31 March 2016

110 000

179 100 (1of)
[6]

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Page 8

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

Paper
12

(d)
AC Industries Limited
Statement of Financial Position at 31 March 2016
$
Non-current assets

189 800

(1of)

Current assets
Inventory
Trade receivables

17 800

(1)

8 000

(1)

25 800
Total assets

215 600

Equity and reserves (1)
Ordinary share capital

110 000

}

General reserve

25 000

}(1of)

Retained earnings

44 100

}

179 100

(1of)

Non-current liabilities (1)
Bankloan

15 000

(1)

Trade payables

19 000

(1)

Bank overdraft

2 500

(1)

Current liabilities

21 500
Total liabilities

215 600

Accept alternative presentation
(e) To reduce the overdraft
To fund an increase in inventory
To purchase new non-current assets
Growth/expansion
Any reasonable answer for (1) mark

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[10]
[1]

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Page 9

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

(f) Quick (acid test) ratio (1)

Paper
12
[4]

8 000 (1)
= 0.37: 1 (1of)
21 500 (1of)
(g) Liquidity is poor (1)
Both ratios appear low (1)
There is insufficient cash to meet current liabilities as they fall due (1)
Current assets do exceed current liabilities (1)
There is already a bank overdraft (1)
Too high a proportion of current assets is made up of inventory (1)
Trade payables are much higher than trade receivables (1)
Overdraft facilities could be withdrawn at any time (1)
Relationship with credit suppliers could be damaged (1)

[Max 4]

Award OF for comments linked to (d) and (f)
[Total: 30]
6

(a)
$
Opening balance

6 100

(1)

Receipts (10 100 + 3550)

13 650

(1)

Payments (2800 + 3920 + 2400 + 2750 + 1880)

(13 750)

(1)

6 000

Closing balance

(1of)
[4]

(b)
Cambridge Club
Subscriptions account
2015
Apr 1
2016
Mar
31

$
Balance b/d

200

2016
(1)

Mar
31

$
Bank
Balance c/d

Income and
expenditure
account

Balance b/d

(1)

100

(1of)
10 000
10 200

2016
Apr 1

10 100

100

10 200
(1)

+( 1) for dates

[5]

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Page 10

Mark Scheme
Cambridge IGCSE – May/June 2016

Syllabus
0452

Paper
12

(c)
Cambridge Club
Calculation of shop profit for the year ended 31 March 2016
$

$

Sales

3 550 (1)

Opening inventory

710 *

Purchases 2800 (1)– 350 (1) + 510 (1)

2 960
3 670

Closing inventory

560 *(1)
both

Profit

3 110
440 (1of)

Accept alternative formats

[6]

(d)
Cambridge Club
Income and Expenditure Account for the year ended 31 March 2016
$
Subscriptions

$
10 000 (1of)

Shop profit

440 (1of)
10 440

Less: expenditure
Rent paid for sports ground

2 400 (1)

Wages of football coach

2 750 (1)

Other operating expenses

1 880 (1)

Depreciation on equipment
( 3600 + 3920 – 5920 )

1 600 (2)

8 630
1 810 (1of)

Surplus

[8]
(e) Increase the selling price (1)
Buy cheaper goods (1)
Other valid points acceptable

[max 2]

[Total: 25]

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