Accounting (0452) · May/June 2017 · Question paper 11
Cambridge Accounting (0452) question paper for paper 11, May/June 2017 — 0452/11/M/J/17, file 0452_s17_qp_11.pdf.
Text of this paper
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Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
* 1 2 2 7 4 7 0 3 9 3 *
0452/11
ACCOUNTING
May/June 2017
Paper 1
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.
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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.
This document consists of 19 printed pages and 1 blank page.
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2
There are 10 parts to Question 1.
For each of the parts (a) to (j) below there are four possible answers, A, B, C and D. Choose the one
you consider correct and place a tick (✓) in the box to indicate the correct answer.
1
(a) The total of the discount received column of the cash book, $80, was posted in error to the
credit side of the discount allowed account.
Which entries correct this error?
debit account(s)
$
credit account(s)
$
A
discount allowed
80
discount received
80
B
discount allowed
suspense
80
80
discount received
160
C
discount allowed
160
discount received
suspense
80
80
D
discount received
80
discount allowed
80
[1]
(b) Which account or statement provides a summary of transactions involving trade receivables?
A
bank reconciliation statement
B
provision for doubtful debts account
C
sales ledger control account
D
statement of financial position
[1]
(c) Why does a trader compare his cash book with his bank statement?
to check for errors in the cash
book
to ensure the cash book is
up to date
A
no
no
B
no
yes
C
yes
no
D
yes
yes
[1]
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(d) Asma bought a motor vehicle for $10 000. She depreciated it at the rate of 10% per annum on
cost, calculated monthly.
After 18 months she sold the motor vehicle for $9200.
What was the profit on disposal?
A
$200
B
$650
C
$700
D
$1200
[1]
(e) At the start of the year Basil had paid $4500 rent in advance. During the year he paid rent,
$12 000. At the year end he owed $1500.
What was Basil’s annual expense for rent?
(f)
A
$9 000
B
$12 000
C
$15 000
D
$18 000
[1]
A and B were in partnership. Their current accounts for the year were as follows.
drawings
balance c/d
A
$
7 500
11 700
B
$
2 500
17 500
19 200
20 000
balance b/d
interest on capital
share of profit
balance b/d
A
$
10 200
2 000
7 000
19 200
11 700
B
$
12 000
1 000
7 000
20 000
17 500
What was the profit for the year?
A
$7 000
B
$14 000
C
$17 000
D
$27 000
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4
(g) Who benefits from a company’s limited liability?
A
its credit customers
B
its credit suppliers
C
its debenture holders
D
its shareholders
[1]
(h) The work in progress of a manufacturing business increased during the year.
Which effect does this have?
on cost of production
on gross profit
A
decrease
increase
B
decrease
no effect
C
increase
decrease
D
increase
no effect
[1]
(i)
(j)
What is meant by mark-up?
A
gross profit measured as a percentage of cost of sales
B
gross profit measured as a percentage of revenue
C
profit for the year measured as a percentage of expenses
D
profit for the year measured as a percentage of revenue
[1]
Why would a bank manager look at a trader’s financial statements?
A
to calculate how fast trade payables were being paid
B
to check if the trader would be able to repay a loan
C
to find out if customers will receive continuous supplies
D
to know if inventory levels are too high
[1]
[Total: 10]
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(a) State the accounting equation.
[1]
(b) State what is meant by the following terms.
Asset
Liability
Inventory
[3]
(c) Name the accounting principle applied when using the double entry system of book-keeping.
[1]
(d) State the double entry needed to record each of the following in the books of Taha, a trader.
debit account
credit account
Taha receives a cheque
from Michael, a credit
customer
Taha writes off a debt
owed by Zoe
[4]
(e) Name the division of Taha’s ledger in which Michael’s account appears.
[1]
(f)
Complete the following table, indicating with a tick (✓) if each statement about an increase
in a provision for doubtful debts is true or false. The first one has been completed as an
example.
true
it will increase the total of the non-current assets
false
✓
it will increase the total of current assets
it will decrease cash and bank
it will require a credit entry in the provision for
doubtful debts account
it will have no effect on profit for the year
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[4]
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6
Andy sells furniture on credit. Fred is a credit customer.
REQUIRED
(g) Complete the following invoice.
Andy
Factory Street
Toptown
Invoice no 1001
Fred
Shop Road
Toptown
Quantity
22 May 2017
Details
20
Standard chair
10
Luxury chair
Unit price
Amount
$
$50
1750
10% trade discount
[5]
(h) State which value from the invoice is recorded in Fred’s account.
$
(i)
[1]
Name the document Andy issues if Fred returns any chairs.
[1]
(j)
State the difference between Andy’s business and a service business.
[2]
[Total: 23]
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Question 3 is on the next page.
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3
Zameer has a financial year end of 28 February.
He extracted the following ledger balances from his books of account on 21 February 2017.
$
67 210 debit
6 600 debit
Purchases
Rent payable
REQUIRED
(a) State why the purchases account has a debit balance.
[1]
Zameer’s purchases journal for the week ended 28 February 2017 was as follows:
Zameer
Purchases Journal
Date
Name
$
Feb 22
25
27
Qasim
Farid
Qasim
500
270
190
960
Zameer’s cash book recorded a payment, $1800, made on 25 February by credit transfer. This
payment was for rent for the three months ending 30 April 2017.
REQUIRED
(b) Name the type of book of which the cash book and the purchases journal are examples.
[1]
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(c) Prepare the following ledger accounts in the books of Zameer. Balance the accounts and
where necessary show any balance brought down on 1 March 2017.
Zameer
Purchases account
Date
Details
$
Date
Details
$
Rent payable account
Date
Details
$
Date
Details
$
[8]
(d) State whether Zameer’s payments were capital expenditure or revenue expenditure.
Purchases
Rent
(e) (i)
[2]
Give one example of a revenue receipt.
(ii)
Give one example of a capital receipt.
[2]
[Total: 14]
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Elil is a trader dealing in clocks.
REQUIRED
(a) State how inventory should be valued in the financial statements.
[1]
Elil buys clocks for $24 each. The following information is available about Elil’s business:
1
Elil had inventory of 100 clocks on 1 January 2016.
2
During the year he bought 2000 clocks.
3
During the year he sold 50 clocks at a promotional price of $40 each. All other sales were
made at a selling price of $60 each.
4
He had inventory of 180 clocks on 31 December 2016.
5
All sales were made on a credit basis.
REQUIRED
(b) Calculate the value of Elil’s sales for the year ended 31 December 2016.
[4]
(c) Calculate Elil’s gross profit for the year ended 31 December 2016.
[5]
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Elil provided the following additional information.
1
Trade receivables were $7900 on 1 January 2016.
2
During the year bad debts, $200, were written off.
3
Trade receivables were $9100 on 31 December 2016.
REQUIRED
(d) Calculate the amount Elil received from his trade receivables during the year ended
31 December 2016.
[5]
(e) State two reasons why the amount you calculated in (d) was not included in the income
statement.
1
2
[2]
Elil is considering making future payments to suppliers earlier in order to receive discount.
REQUIRED
(f)
Name the type of discount Elil would receive.
[1]
(g) Complete the table below indicating with a tick (✓) the effect of the receipt of the discount on
each item.
increase
decrease
no effect
gross profit
profit for the year
working capital
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[3]
[Total: 21]
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5
JW Limited extracted the following balances from its books of account on 30 April 2017, after the
gross profit had been calculated.
$
Gross profit
63 000
Distribution costs
24 000
Administrative expenses
16 000
Interim dividend paid
6 000
Debenture interest
3 000
Ordinary shares of $1 each
General reserve
Retained earnings
Equipment at cost
100 000
50 000
?
260 000
Provision for depreciation of
equipment
65 000
Inventory
33 000
Trade receivables
14 000
Bank
6 800 credit
Trade payables
17 500
10% Debentures (repayable 2025)
30 000
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REQUIRED
(a) Prepare the trial balance at 30 April 2017. Insert a value for retained earnings.
JW Limited
Trial Balance at 30 April 2017
Debit
Credit
$
$
Gross profit
Distribution costs
Administrative expenses
Interim dividend paid
Debenture interest
Ordinary shares of $1 each
General reserve
Retained earnings
Equipment at cost
Provision for depreciation of
equipment
Inventory
Trade receivables
Bank
Trade payables
10% Debentures (repayable
2025)
[9]
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(b) Calculate the profit for the year. The depreciation charge for the year was $13 000.
[4]
The directors of the company transferred $10 000 to general reserve on 30 April 2017.
REQUIRED
(c) Prepare the statement of changes in equity for the year ended 30 April 2017.
JW Limited
Statement of Changes in Equity for the year ended 30 April 2017
Details
Share
capital
$
General
reserve
$
Retained
earnings
$
Total
On 1 May 2016
On 30 April 2017
$
[8]
(d) Calculate to two decimal places the return on capital employed (ROCE) for the year ended
30 April 2017. (Use closing capital employed.)
[4]
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(e) Suggest two reasons why JW Limited’s return on capital employed (ROCE) is lower than the
industry average.
1
2
[2]
(f)
Suggest three ways in which JW Limited could increase its return on capital employed
(ROCE).
1
2
3
[3]
[Total: 30]
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6
Hi-Jump is a sports club which also runs a shop for the use of members only. It provided the
following information.
Hi-Jump
Subscriptions account
Date
2016
Jan 1
Dec 31
Details
$
Date
Balance b/d
Income and expenditure
account
Balance c/d
1160
52 905
2016
Jan 1
Dec 31
395
Details
Balance b/d
Bank
Bad debts
Balance c/d
54 460
2017
Jan 1
Balance b/d
980
$
280
52 950
250
980
54 460
2017
Jan 1
Balance b/d
395
REQUIRED
(a) State what the balance of $395 on 1 January 2017 represents.
[1]
The receipts and payments account of the club was as follows:
Hi-Jump
Receipts and Payments Account for the year ended 31 December 2016
$
Balance b/d
Subscriptions received
Shop sales
6 100
52 950
13 610
72 660
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$
Shop purchases
Rent
Club expenses
New club equipment
Balance c/d
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15 240
12 000
34 200
5 100
6 120
72 660
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The following additional information was also available.
1
Shop inventory
Club equipment at valuation
at 1 January 2016
$
440
17 100
at 31 December 2016
$
710
19 900
2
10% of the rent is allocated to the shop.
3
All shop sales and all shop purchases are made on a cash basis.
REQUIRED
(b) Complete the following table to show the values of the current assets and current liabilities
which would appear in the statement of financial position of the club on 31 December 2016.
Current assets
$
Current liabilities
$
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(c) Calculate the loss made by the shop in the year ended 31 December 2016.
[4]
(d) Prepare the club’s income and expenditure account for the year ended 31 December 2016.
Hi-Jump
Income and Expenditure Account for the year ended 31 December 2016
$
$
[9]
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(e) Suggest two reasons why the managing committee continues to run the shop despite it
making a loss.
1
2
[2]
(f)
Explain how the financial statements of the club would be affected if the managing committee
decided not to charge the shop with its share of the rent.
[2]
[Total: 22]
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