0452/M/J/19 Examiner Report – Accounting May/June 2019

Cambridge Accounting (0452) examiner report, May/June 2019 — 0452/M/J/19, file 0452_s19_er.pdf.

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Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/11
Paper 11

Key messages
Candidates should always have a guess at multiple choice questions and never offer ‘no response’.
As always, when preparing ledger accounts labels such as BBD and BD are unacceptable. Ideally balance
b/d or c/d should be written.
Labelling items is extremely important when preparing income statements or statements of financial position.
Again, abbreviations such as COGS for cost of goods sold or GP and NP for gross profit and profit are not
acceptable.
Candidates should always indicate where they may have re-written an answer in a different section of the
answer booklet or on additional pages.
General comments
The paper was well attempted by a number of candidates. The number of candidates not attempting
questions is reducing and candidates generally completed the paper. However, the main causes for
candidates not being awarded marks relates to the key messages above and will be commented on below.
The questions which were particularly well attempted were Question 3(c) where a large number of
candidates were awarded full marks. However, many candidates performed positively in Question 4(a) with
a large number of candidates confident in applying a mark up to a calculated cost of goods and then
extracting the figure for revenue. Marks lost on this question were mainly for not treating the accruals for
shop supplies correctly.
Comments on specific questions
Question 1
This question comprised ten multiple choice items. There were only a few instances where candidates made
no attempt at a particular answer. It is mentioned each time, but worth repeating, never leave an answer
blank in this type of question. A guess may be correct and gain a mark.
Specific questions caused more difficulty than others. They are discussed below.
(g)

This is a case where candidates must learn the features of each accounting objective.

(h)

Candidates sometimes seemed unsure as to whether the question concerned rent receivable or
rent payable

(j)

A question involving a calculation. The formula for calculating inventory turnover must be
thoroughly practised.

Question 2
(a)

A number of candidates achieved high marks for this question. However some candidates failed to
give the complete answer by omitting the word ‘journal’, merely stating ‘purchases returns’ or
‘general’. A number of candidates seemed confused with the contra entry and thought this occurred
in the cashbook.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
(b)

On the whole this was well answered. Some candidates found the contra entry challenging.
However, most candidates appreciated ‘no entry’ for the trade discount.

In general candidates understood the terms. In some cases it was not made clear that the debt
would never be paid, stating the debt remained unpaid at the end of the period.

(ii)

Again very positive responses to this question. Weaker candidates did not make it clear that the
debt had been written off.

(iii)

Many candidates gave an excellent answer in saying it was an ‘estimate’ of debts that could
become unpaid. Some candidates thought it was an amount of money set aside for bad debts
rather than a ‘provision’.

(d)

A number of candidates did extremely well with both parts of this question. However, sometimes
marks were lost due to the incorrect narrative for the payment from Ben i.e. bank. Some candidates
failed to make the transfer from Ben’s account to the bad debts account. Most candidates did close
the account taking the balance to the income statement. A small number of candidates carried
down a balance to the following year.

(e)

Some candidates achieved high marks for this question. Some candidates, having calculated the
correct figures completely, then reversed the entries. A number of candidates did not calculate the
required 3 per cent and entered the opening and closing trade receivables. Some candidates
correctly calculated $384 but then entered this as the amount to transfer to the income statement,
which resulted in a closing balance of $789. Weaker candidates included the cash received and/or
the bad debt.

Question 3
(a)

Many candidates provided two valid reasons for preparing a trail balance. Some candidates lost
marks by not being precise enough. Common answers referred to finding errors, preventing fraud
or accuracy of the ledgers.

(b)

On the whole, whilst candidates could correctly name three types of error that are not revealed in
the trial balance they were less able to give examples with many just explaining the type of error.
Where examples were provided many only gave one side of an entry. The most positive responses
came in the example of an error of commission naming errors in posting to suppliers’ accounts.

(c)

Many candidates scored highly in this question. The most frequent error was in selecting the
correct inventory for the trial balance and commonly the closing entry was entered which led to a
suspense account. Other common errors were the reversing of the rent payable and the
commission receivable.

(d)

Well prepared candidates scored well with this question. Some candidates were not able to
distinguish between capital and revenue expenditure. The delivery charge was the most common
incorrectly identified and even when the type of expenditure was correct the reason for that
classification was commonly too vague. Reasons for fuel and insurance being revenue expenditure
were also not precise enough at times.

Question 4
(a)

Many candidates tackled this question very well gaining full marks. Some candidates did not seem
to realise that there was only information provided to prepare an income statement up to gross
profit. It was common to see purchases left unadjusted and the opening and closing amounts owed
treated as expenditure. However, many that did use the adjustments to purchases did so
incorrectly. Many candidates could apply the 25 per cent mark up to their calculated cost of sales
and subsequently extracted revenue. Weaker responses calculated a revenue figure lower than
cost of sales even though a profit figure was calculated.

(b)

There were some very good attempts at this question though very few candidates gained full
marks. The treatment of the insurance caused some confusion as only a small number of
candidates recognised that it would affect all three statements. The most common error was the

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
inclusion of the purchase of sport equipment for $3500 in the statement of financial position. Many
candidates lost marks by including items in more than one statement when this was not applicable.
(c)

Well prepared candidates gave two very relevant ways to reduce the overdraft, the most common
being ‘increase subscription’ and ‘reduce expenses’. Some candidates suggested ‘more
fundraising activities’ to reduce the overdraft despite being asked for alternatives to this method.
Many suggested ‘increase profit’ without identifying a means of doing so. Some candidates
suggested ways which were not relative to a club (for example, reduce drawings or introduce more
capital).

Question 5
(a)

This question was handled very well in the majority of cases. Many candidates achieved full marks
and other high scoring candidates lost marks not through incorrect calculations but by incorrect
labelling of items. It was fairly common to see revenue for fees and lack of detail for the
depreciation of non-current assets.
Common errors among weaker responses included incorrectly adjusting the fees and commission
in the income. Whilst the calculation of depreciation of office fixtures was often correct, the
depreciation of the motor vehicle was often seen as $3500 ($17500 @ 20 per cent) or $6300 was
entered as an expense on its own. The calculation for rent and rates was clearly problematic for
many candidates and candidates must be encouraged to show all their workings to have the
opportunity of gaining marks. The adjustment for personal use was often carried out on the $7750
or having calculated a figure for rent and rates charged 25 per cent to the income statement. Some
candidates lost the mark for profit/loss by labelling it surplus/deficit.
Weaker responses presented the figures in the form of a trial balance or statement of financial
position.

(b)

Some responses failed to include the personal rent and rates in the drawings. However, the
majority closed the drawings account and transferred the balance to the debit of the capital
account. Generally most candidates treated the profit/loss from (a) correctly and subsequently
brought down the balance to the following year.

(c)

Sometimes when candidates could identify three relevant considerations, these were not
developed. Although the information provided related to a bank loan, many candidates gave nonfinancial suggestions for example location or labour supply.

Question 6
(a)

This question was generally well attempted by the majority of candidates.

(b)

Some candidates performed very well with this question and were awarded high marks. However,
a common error was with the treatment of the interim dividend. Some candidates made the
adjustments on the share capital rather than on the retained earnings. Candidates must also be
encouraged when presenting the table that calculations are checked horizontally and vertically.

(c)

Many candidates included the final dividend for 2017 ($8000) in the numerator so it was common
to find an answer of 7 per cent. Weaker responses used various combinations for the denominator,
such as equity.

(d) and (e) Generally these questions were answered well with many candidates confident in the features of
both preference shares and debentures. Many candidates, however, stated that both categories
receive a fixed percentage of the profit each year rather than a fixed dividend rate or a fixed
interest rate.
(e)

Some candidates could identify the effect on non-current liabilities and working capital but
struggled with the effect on equity and profit. A small number of candidates, despite being given the
example, placed ticks in each of the boxes rather than identifying the amounts.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/12
Paper 12

Key messages
As always, it is essential to lay down a good grounding in the principles of double entry including the use of
journals and ledgers. Other general points to make include the importance of clear narratives and that in
journal entries and ledger accounts it is the account name that is rewarded and not the action being
performed. If candidates answer elsewhere in the paper they should clearly indicate this and state the page
where the alternative attempt is. Clear handwriting is important and instead of overwriting on an error it is
better to cross out and attempt elsewhere. Workings are essential on this paper. Multiple choice answers
should be annotated in the boxes provided and not next to the actual letter.
General comments
All the questions on the paper were compulsory and covered various topics on the syllabus. Overall, the
paper was well attempted by a number of candidates. There were as always some exceptional scripts where
candidates had clearly been well-prepared.
Comments on specific questions
Question 1
(c)

This question concerned the valuation of premises and the correct answer was money
measurement. Realisation is linked to selling goods rather than non-current assets. Just because
identical premises were sold for a certain amount does not mean that this is going to happen to
another business.

(f)

A contra occurs when a business is both a customer and a supplier. It is the smallest amount owed
between the two businesses which is used as the off-set and in this case it was credit $260. The
remaining $80 will need settling by bank or cash.

(g)

The key to this question is that the income statement needs to show what should have been paid
for advertising expenses and not the actual payment. The account began with a credit balance of
$100 so an accrual owed at the start of the year which needed subtracting from the actual amount
paid of $2830. There was then a prepayment of $45 which needed subtracting too as it is for the
next financial year which left the amount $2685.

(j)

In this question it was important to focus on the fact that it was the bank statement which did not
include the cheques not presented and the amounts not credited, and not the cash book. So
starting with an overdraft of $250 the $96 is added and then the $183 is subtracted to give an
overdraft of $337 and because it is from the point of view of the bank it is $337 debit.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
Question 2
(a)

Most candidates gained some marks on this question. Stronger responses frequently gained 5 or 6
marks. Some responses incorrectly thought the cost of delivery for new shop fittings was a revenue
expense. Weaker candidates frequently confused expenditure and receipts. The most common
errors were identifying the bank loan as a revenue receipt and the delivery charges on shop fittings
as revenue expenditure.

(b)

Again, most candidates gained some marks on this, with stronger responses gaining between 6
and 9 marks. Common errors included referring to purchases rather than stationery, referring to
Nabil rather than capital, reference to business bank or office cash instead of bank and cash and
confusion in respect of the bank transfer such as incorrect amounts, reversal or use of discount
allowed instead of discount received.

(c)

Almost all candidates gained marks on this question. Stronger responses frequently gained 6
marks, illustrating a clear understanding of double entry. Weaker responses were still able to pick
up some marks. Common errors were to show bank overdraft and bank loan as a debit rather than
credit.

Question 3
(a)

Weaker responses did not know to use the account names and instead described the transaction.
Other common errors included reference to dishonoured cheque instead of bank, reference to
purchases rather than sales, complete reversal and including a balance c/d when it was stated that
the balance should be treated as a bad debt.

(b)

Some issues included using the narrative bad debt instead of Safiya and using transfer to income
statement which is the action rather than the account name of income statement. Some candidates
simply closed the account with the $674 and because it was labelled income statement they were
able to gain 1 mark.

Stronger responses gained marks here while others did not, and some did not respond at all. Some
candidates gave long and vague descriptions and discussed the changes in the provision rather
than the balances. The wrong accounts were sometimes identified with trade receivables and
income statement often being stated, and then debit and credit were sometimes the wrong way
round.

(ii)

Stronger responses usually gained two marks from concise answers such as the $130 represents a
decrease in provision which will be transferred to the income statement as income. Common faults
included thinking the provision had increased and that it represented an expense or reference to
bad debts. The question was specifically about the scenario so candidates need to make sure they
carefully read what is asked of them rather than providing generic answers.

(e)

Many candidates gave a general definition of the accruals concept without reference to the
question. Stronger responses gained two marks. It is important that the candidates link the
principles to the question asked rather than just state the general definition.

(f)

This was generally well answered with the majority of candidates gaining 2 marks. Sometimes
trade discounts were confused with cash discounts. Some candidates thought that money was
being lent rather than goods being supplied on credit. A few candidates answered it from the other
way with how Hamila could prevent having bad debts herself.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
Question 4
(a)

There was a wide range of marks awarded here and stronger responses frequently gained 5
marks. A mark was lost if the candidate labelled the loss as a profit or gave no label other than
income statement particularly if they had produced a ledger account. It is good practice to complete
such an answer using a ledger account but then the final answer needs extracting with a profit or
loss label alongside. Some candidates used the straight line method instead of reducing balance.
Others continued to depreciate into the 3rd year. It is important that all workings are shown in such
answers.

(b)

In journal entries it is important for candidates to remember that it is the account name which is
debited or credited and not the action. Common errors included using the purchases account
instead of office equipment account and naming it the ‘new’ office equipment account. An example
of a concise and appropriate narrative would be ‘purchase of office equipment on credit’. Many
candidates omitted the ‘on credit’ part which was needed for the mark. Some did not even attempt
the narrative.

Able candidates usually gained 2 marks with few gaining 1 mark as they either knew the process or
got it entirely wrong sometimes by using a percentage instead.

(ii)

Some responses included the wrong starting figures for the cost of asset and gained no mark.

(d)

Stronger answers referred to correct accounts and had a precise narrative for example,
depreciation on office equipment transferred to the income statement. There was often a reversal
of entries or incorrect figures used. Marks were often lost for not including ‘office equipment’ in the
account name and in the narrative. For the debit entry sometimes the action was given rather than
the account. The credit entry needed provision at the start which was often missed. It is also
important not to just state depreciation but to link it to the relevant non-current asset.

(e)

Stronger responses frequently gained 9 or 10 marks and weaker responses gained 0–3 marks.
Reasons for loss of marks included: omission of entries in particular the taxi fare and parcel post
which needed placing in the relevant analysis columns, poor narratives such as refund rather than
cleaner refund, omitting cash/bank in order to restore the imprest amount, not totalling total
columns or analysis columns, confusing balance b/d and c/d and reference to imprest rather than
cash or bank. Sometimes the cleaner refund was shown as a negative figure in the payments
section which was not rewarded. There were some errors when calculating the balance c/d and
then the top up amount required. It is important to name trade payables such as Kelly in this case
and not just refer to trade payables. Also there is a need to be precise about the actual purchase
involved as some stated printer instead of printer paper.

Question 5
(a)

This was generally answered well and candidates understood the rationale behind interest on
capital. For 5(a), (b) and (c) some wrote ‘to avoid disagreement’ for all three which was not
rewarded.

(b)

Again, the majority of candidates were well aware that excessive drawings could cause problems
to a partnership so was to be avoided.

(c)

The most common error here was for candidates to state it was because Mostafa had contributed
more capital. This is rewarded by earning more interest on capital whereas a salary is for additional
work commitments or to compensate for leaving a salaried position to start the partnership.

(d)

Stronger responses gained 8 marks and weaker responses gained fewer marks usually due to an
incorrect format and the inclusion of the capital account balances or drawings. The most common
error concerned Mostafa’s salary as there was a change during the accounting year which needed
adjusting. Other errors included: calculating profit or loss shares without starting with the profit for
the year, deducting interest on drawings instead of adding and then adding interest on capital or
salary instead of deducting. The final appropriation of profit for the year must be labelled as either
share of profit or loss depending on the answer and not as both.

(e)

Candidates seemed familiar with the entries for a current account and complete reversals were
rare with many candidates gaining at least 4 marks. However, marks were lost for: lack of dates

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
particularly the year 2019, inclusion of entries related to Salma which meant that the balance b/d
own figure was lost and showing a share of loss as a negative on the credit side. It was pleasing to
see that most candidates did bring down the balance on 1 May 2019.
Question 6
(a)

Most candidates gained some marks with stronger responses gaining 6–8 marks. Most candidates
identified the correct statements for recording debenture interest. It was pleasing to see that
candidates did not just list all 3 options in each box.

(b)

A range of marks was awarded here with the stronger responses often gaining 4 or 5 marks.

(c)

Answers included: less dividends likely due to the interest being paid to debenture holders or that
they may be received later. Incorrect answers thought that debenture holders had voting rights or
control. Some thought that shareholders received interest or shares rather than dividends as their
reward for investing.

(d) and (e) Candidates answered these questions reasonably well. Marks were lost because of the following:
incorrect figures used and/or incorrect rounding. Candidates must round according to the
instructions in the question which in this case was to 2 decimal places.
(f)

Some weaker responses repeated the question in their answer or discussed what the current ratio
included rather than what the quick ratio didn’t. The key aspect was that the acid test ratio does not
include inventory and then for the 2nd mark why that is. Just stating that inventory is not very liquid
was insufficient and candidates needed to explain that it takes time to find a buyer and then collect
the money.

(g)

Most candidates gained some marks and stronger responses usually gained 4–6 marks.

(h)

This was generally well answered however, some candidates lost a mark because their answers
were too similar. For example, not being able to pay 2 examples of day to day expenses. A few
candidates tried to link their answer to profit which was incorrect as working capital is not
necessarily a reflection of profitability.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/12
Paper 13

(f)

(g)

(j)

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
Question 2
(a)

(b)

(c)

Question 3
(a)

(b)

(ii)

(e)

(f)

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
Question 4
(a)

(b)

Able candidates usually gained 2 marks with few gaining 1 mark as they either knew the process or
got it entirely wrong sometimes by using a percentage instead.

(ii)

Some responses included the wrong starting figures for the cost of asset and gained no mark.

(d)

(e)

Question 5
(a)

This was generally answered well and candidates understood the rationale behind interest on
capital. For 5(a), (b) and (c) some wrote ‘to avoid disagreement’ for all three which was not
rewarded.

(b)

Again, the majority of candidates were well aware that excessive drawings could cause problems
to a partnership so was to be avoided.

(c)

(d)

(e)

Candidates seemed familiar with the entries for a current account and complete reversals were
rare with many candidates gaining at least 4 marks. However, marks were lost for: lack of dates

(b)

A range of marks was awarded here with the stronger responses often gaining 4 or 5 marks.

(c)

(g)

Most candidates gained some marks and stronger responses usually gained 4–6 marks.

(h)

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/21
Paper 21

Key messages
Candidates should read through each question very carefully before attempting an answer. This ensures that
an important piece of information is not overlooked and that instructions are followed precisely. A factually
correct statement, which is not the answer to the question being asked, cannot be awarded marks.
Where appropriate, candidates are advised to provide supporting calculations. This ensures that some of the
available marks may be earned even though the final answer may be incorrect.
The spaces provided on the question paper for candidates’ answers should be adequate. Sometimes it may
be necessary for a candidate to cross out all or part of their answer and provide another answer elsewhere
on the question paper. It is very important that candidates indicate that this has been done. A note ‘Please
refer to Page ’ or ‘Continued on page ’ would ensure that this additional work is not overlooked when the
script is being marked.
Candidates should avoid the use of inappropriate abbreviations such as ‘b/d’ and ‘BDD’ for ‘balance’ in
ledger accounts and ‘PDD’ for ‘provision or doubtful debts’ in a statement of financial position.
General comments
All the questions on the paper were compulsory and covered a wide range of syllabus topics. Most
candidates attempted to answer all questions.
The written answers produced in some of the narrative questions were vague and lacked clarity.
All the day to day records of a business are based on double entry bookkeeping. Candidates must have a
good knowledge of double entry and must be able to apply this to the various scenarios. When preparing
ledger accounts it is important for candidates to pay attention to the words entered in the details column and
dates as well as the amounts.
Comments on specific questions
Question 1
(a) (i)

(ii)

Candidates were required to record transactions in a petty cash book. Many candidates earned
high marks. Common errors were:
•
omission of the restoration of the imprest at the beginning of the month
•
inclusion of cash book items
•
incorrect wording in the details column such as ‘bought stationery’
•
not entering the payments in both the total paid and the appropriate analysis column
A three column cash book had to be completed. Once again, many candidates earned good marks.
Common errors were:
•
omission of the restoration of the petty cash imprest
•
incorrect calculation of the cash discount allowed and received
•
inclusion of petty cash book items
•
incorrect wording in the details columns such as ‘tenant’ in lieu of ‘rent receivable’
•
not appreciating that the cash column cannot have a credit balance

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
(b)

Using information provided and the balance of the cash book prepared in part (a), candidates were
required to prepare a bank reconciliation statement. This presented a challenge to many
candidates. The overdrawn bank balance in the cash book and the overdraft shown on the bank
statement were frequently shown as positive balances. Incorrect labelling and treatment of the
amounts not credited and the cheques not presented also resulted in marks being forfeited. A few
candidates incorrectly presented the statement in the form of a ledger account, which was not
acceptable.

Candidates were required to state, giving a reason, whether the financial statements would be
affected by the receipt of an order for goods to be supplied in the following financial year. Applying
the accounting principle of realisation, this would not be included in the current year’s financial
statements. Only a very few candidates were able to provide satisfactory answers.

Candidates were required to state, giving a reason whether the financial statements would be
affected by a decision to close the business one month after the end of the financial year. Applying
the accounting principle of going concern, this would be taken into consideration. Only a very few
candidates were able to provide satisfactory answers.

Question 2
(a)

Data was provided about documents exchanged by two traders. Candidates were required to name
the person issuing three of these documents and to state the reason for the issue of each of these
documents. Many candidates were able to correctly name the sender of each document, though a
few answers incorrectly referred to ‘supplier’ and ‘customer’. Many candidates were also able to
provide an acceptable reason for the issue of each document. A few incorrectly referred to ‘ask for
an allowance’ for the debit note and ‘grant an allowance’ for the credit note with no mention that the
allowance was for goods returned. Some candidates understood that a statement of account
shows the transactions between the two traders, but they did not link this to a particular month and
some even referred to the transactions for the year.

(b)

Using the data at the beginning of the question, candidates were required to prepare the account of
the supplier in the ledger of the customer. There were many wholly correct responses. Common
errors were:
•
entering the purchases and the returns at the list price
•
including extraneous items such as the debit note
•
using incorrect details such as document names instead of the account where the double
entry is made
•
reversing the account
•
including completely unrelated data provided in the next section of the question

(c)

The trade receivables collection period had to be calculated. There were many correct answers. A
number of candidates did not multiply by 365, some did not round up the answer to the next whole
day and some did not include the word ‘days’ in their answer.

(d)

Following on from part (c), one advantage to the trader of the change in the trade receivables
collection period was required. Many candidates correctly referred to the possibility of charging
interest and not having to allow cash discount. A few incorrectly referred to the long credit period
attracting customers.

(e)

Following on from part (c), one disadvantage to the trader of the change in the trade receivables
collection period was required. Most candidates correctly commented on the adverse effect on
cash flow.

(f)

The trade payables payment period had to be calculated. There were many correct answers. Once
again, a number of candidates did not multiply by 365, some did not round up the answer to the
next whole day and some did not include the word ‘days’ in their answer.

(g)

Following on from part (f), candidates were required to state, giving a reason, whether the trade
payables would be satisfied with the change in the payment period. As the period had reduced, the
trade payables would be satisfied with the change. Some candidates misunderstood the question
and answered from the viewpoint of the customer not the trade payable.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
Question 3
(a)

Data was provided in connection with a sole trader who had not maintained full double entry
records and candidates were required to calculate the credit purchases for the year. Answers in the
form of an arithmetic calculation or a total trade payables account were equally acceptable. Many
candidates successfully calculated the correct figure. Common errors were:
•
including the purchase of non-current assets
•
including sales returns and cash discount allowed
•
incorrect treatment of some of the items especially the closing amount owed to the trade
payables

(b)

Candidates were required to calculate the amount received from credit customers during the year.
Answers in the form of an arithmetic calculation or a total trade receivables account were equally
acceptable. Once again, many candidates successfully calculated the correct figure. Common
errors were:
•
including purchases returns and cash discount received
•
incorrect treatment of some of the items especially the closing amount owed by trade
receivables
•
omission of bad debts

(c)

Using the data provided and part (b), candidates had to prepare a bank account. The missing
figure for expenses for the year had to be inserted. There was a wide variation in the marks
earned. Some were wholly correct, but common errors included:
•
inclusion of extraneous items such as bad debts and returns
•
incorrect details such as ‘interest’ in lieu of ‘loan’ and ‘sales’ in lieu of ‘trade receivables’
•
entering the closing balance on the debit side and describing it as ‘cash’
•
not appreciating that the amount paid for expenses must appear on the credit side

(d)

Three advantages of maintaining double entry records had to be stated. There was a wide range of
responses. Many candidates correctly mentioned that the preparation of financial statements would
be easier and the possibility of fraud would be reduced. Some incorrectly believed that the records
would automatically be error-free.

(e) (i)

The reasons for the interest of the bank manager in the financial statements of a business were
generally answered satisfactorily. Many correctly made reference to the ability to repay the
loan/overdraft, ability to pay the interest and the security available.

(ii)

Most candidates earned at least one of the available two marks. Acceptable reasons why the credit
suppliers would be interested in the financial statements included checking the financial position,
the likelihood of being paid and setting the credit limit.

Question 4
(a) (i)

(ii)

Using data provided and a partnership’s appropriation account, the rate of interest on drawings had
to be calculated. There were many correct responses. A common error was to reverse the
numeration and the denominator.
A similar calculation was required to calculate the rate of interest on capital. Once again, there
were many correct responses. A common incorrect answer was 6.375 per cent. Candidates who
produced this figure had not appreciated that Liam had transferred $20 000 to his capital account
during the year. The interest on his capital was based on six months on $160 000 and six months
on $180 000.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
(b)

The current accounts of two partners had to be completed using the data provided at the start of
the question. Some candidates earned high marks. Common errors were:
•
omission of the transfer to Liam’s capital account
•
inclusion of extraneous items such as the motor vehicle
•
omission of the shares of loss
•
recording the shares of loss on the credit side
•
not considering the opening balances when calculating the closing balances
•
omission of dates

(c)/(d)

The current ratio and the quick (acid test) ratio had to be calculated. There were many wholly
correct answers. The most common error was not displaying the answers correct to two decimal
places.

(e) (i)

Candidates were required to suggest, giving a reason, one way in which both the current ratio and
the quick (acid test) ratio could be increased. Some correctly suggested obtaining a long term loan
or selling non-current assets. Incorrect answers included comments about increasing sales, and
reducing costs.

(ii)

An explanation was required why selling inventory at cost price would increase the quick (acid test)
ratio but would not affect the current ratio. This proved to be very difficult for many learners. A
typical incorrect response described how inventory should be valued at the lower of cost and net
realisable value. If inventory is sold at cost the inventory decreases and the bank overdraft
decreases by the same amount. Only the change in the bank affects the liquid assets.

(f)

Four factors that should be considered before admitting a new partner (the brother of the existing
partners) had to be suggested. Some candidates listed generic points (such as finding out about
this person’s character) and did not relate them to the actual scenario where the potential partner
was a close relative. Correct suggestions referred to the profit shares, division of work and capital
to be introduced by the new partner.

Question 5
(a)

A draft statement of financial position was provided together with a list of errors which were
subsequently discovered. Journal entries were required to correct two of the errors. Those
candidates with a good knowledge of double entry were able to prepare two correct journal entries.
Common errors included using terms such as ‘bank overdraft’ rather than the name of the account
in which the entry would be made.

(b)

A statement of corrected profit had to be completed. Most candidates were able to earn some of
the available marks. Common errors were:
•
overlooking the $100 error in trade receivables account when calculating the provision for
doubtful debts
•
reducing the profit by insurance, $2800, instead of increasing the profit by the insurance
prepayment, $400
•
depreciating all the non-current assets (ignoring the statement about premises not being
depreciated)
•
not taking the draft profit, $3330, into consideration when calculating the corrected profit for
the year

(c)

Candidates were required to prepare a corrected statement of financial position. Many candidates
did not seem familiar with the correct form of presentation for a statement of financial position and
did not attempt to divide the assets and liabilities into appropriate sections. Common errors were:
•
not including column headings when the non-current assets were displayed in three column
format
•
not showing the correct wording for the provision for doubtful debts
•
not deducting the provision for doubtful debts from the trade receivables to show the net
amount
•
omission of the other receivables (prepaid insurance)
•
not adjusting the bank overdraft for the bank charges

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/22
Paper 22

Key messages
Candidates should read through a question very carefully before attempting an answer. This ensures that an
important piece of information is not overlooked and that instructions are followed precisely. A factually
correct statement, which is not the answer to the question being asked, cannot be awarded credit.
Where appropriate, candidates are advised to provide supporting calculations. This ensures that some credit
may be earned even though the final answer may be incorrect.
The spaces provided on the question paper for candidates’ answers should be adequate. Sometimes it may
be necessary for a candidate to cross out all or part of their answer and provide another answer elsewhere
on the question paper. It is very important that candidates indicate that this has been done. A note ‘Please
refer to Page ’ or ‘Continued on page ’ would ensure that this additional work is not overlooked when the
script is being marked.
Candidates should avoid the use of inappropriate abbreviations such as ‘b/d’ for ‘balance’ in ledger accounts
and ‘COS’ for ‘cost of sales’ in a trading account.
General comments
All the questions on the paper were compulsory and covered a wide range of syllabus topics. Most
candidates attempted to answer all questions and were familiar with the correct format of financial
statements.
The written answers produced in some of the narrative questions were vague and lacked clarity.
All the day to day records of a business are based on double entry bookkeeping. Candidates must have a
good knowledge of double entry and must be able to apply this to the various scenarios. It is important for
candidates to focus their attention on the words entered in the details column and dates as well as the
amounts.
Comments on specific questions
Question 1
(a)

Candidates were provided with a list of transactions and asked to complete a cash book.
Most students understood how to prepare a cash book. Common errors were:
•
•
•
•

(b)

incorrect calculations of the discount allowed/received and the net amounts.
incorrect narratives for some of the entries e.g. ‘dishonoured cheque’ rather than ‘Caleb’.
missing or incorrect dates.
opening balances omitted when adding up the bank column and consequently the closing
balances were incorrect.

This was well answered with most candidates correctly identifying the person who would issue the
four business documents.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
(c)

The better-prepared candidates were able to correctly explain the difference between a debit note
and a credit note. There were a variety of answers that were not fully developed. Some candidates
simply stated that a debit note was issued by the purchaser and a credit note was issued by the
supplier, without making reference to the receiver, or the reason for the issue of these documents.
Other answers incorrectly concentrated on the different treatment of the documents in the books of
account.

(d)

Many candidates were able to state one purpose of issuing a statement of account. However,
some answers lacked clarity and did not mention a time period when referring to summarising the
customer’s transactions. There were a few candidates who confused the statement of account with
a bank statement.

Question 2
(a)

The question provided candidates with information relating to a musical society. They were asked
to prepare the subscriptions account showing the subscriptions received during the year and to
balance the account. This question provided good differentiation with the well-prepared candidates
achieving full marks. Some weaker responses included all items of expenditure in the account
treating it more as a ‘receipts and payments’ account. Other common errors included:
•
•
•
•

(b)

opening balances incorrectly labelled as ‘accrued’ and ‘prepaid’ and/or on the wrong side of
the account
the transfer to the income and expenditure account wrongly labelled as ‘income statement’
accounts not balanced as required in the question
incorrect or missing dates

Candidates were required to prepare the receipts and payments account relating to a musical
society and to calculate the amount of money that was missing from the society’s funds.
Some candidates earned full marks in this section. But a common problem was the completion of
the detail column in the account; candidates frequently provided a description of the transaction
rather than the account name of the corresponding double entry e.g. ‘payment of rates’ rather than
‘rates’. Other errors included:
•
•
•
•
•

(c)

extraneous items included in the account such as depreciation of musical instruments
no opening or closing balances – many candidates did not associate the bank balances
provided in the question as being the opening and closing balances on the receipts and
payments account
items for rates and insurance wrongly adjusted for accruals and prepayments
including the full amount for musical instruments when only 50 per cent of the total was
actually paid in the current financial year
missing funds not identified, candidates adjusted the balance carried down and did not realise
that the difference on the account related to the missing funds.

The candidates were provided with a list of items that would appear in the income and expenditure
account. They were asked to show the amounts against each item that would be shown in the
account. The question required some simple calculations. The depreciation figure was a little more
complex. However, very few candidates achieved full marks. Common errors included:
•
•
•
•

not calculating the profit from the sale of concert tickets.
rates and insurance not adjusted for accruals and prepayments
no workings shown for the depreciation calculation so no calculation marks could be awarded
candidate included the actual money received for the musical instruments rather than the ‘loss’
on sale.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
(d)

Candidates were asked to discuss the implications of increasing the musical society’s annual
subscriptions.
There was quite a lot of repetition of ideas in the answers. Some candidates wrote about sales,
profit and/or capital increasing not recognising that these were not valid items relating to a society.
Others concentrated on members being displeased with the increase without mentioning the effect
on the overdraft even though the question specifically referred to it.

Question 3
(a)

Using information provided candidates were required to prepare a manufacturing account. There
was some evidence to suggest that not all candidates were confident in producing a manufacturing
account as their presentation resembled an income statement or an income statement with an
attempt at a manufacturing account where the cost of sales would be.
However, most candidates made a reasonable attempt. Some common issues included:
•
•
•
•
•
•
•
•

(b)

This followed on from 3(a) as candidates were required to prepare the trading section of the
income statement relating to the toy factory. Candidates were told that the mark up was 25 per cent
and they had to apply this to their cost of sales to calculate the gross profit and revenue figures.
This was answered well and candidates were able to gain own figure marks having correctly
identified the cost of production from the previous section. Some candidates lost valuable time by
also preparing the profit and loss section of the income statement which was not required.
Common errors included:
•
•
•
•
•

(c)

the net figure for purchases was not shown
‘cost of raw materials consumed’ was not labelled
extraneous items included in the prime cost section, notably ‘operating expenses’
extraneous items included in the factory overheads, notably ‘depreciation on the office fixtures
and fittings’
depreciation for the factory machinery and loose tools omitted from the factory overheads
the depreciation on loose tools incorrectly labelled as ‘revaluation’
the closing work in progress shown as a minus figure amongst the factory overhead expenses
‘cost of production’ not labelled

cost of production omitted from the cost of sales calculation
closing inventory of finished goods deducted before cost of production.
incorrect calculation for gross profit
gross profit unlabelled or incorrectly labelled as GP
net figure for revenue not shown

Candidates had to complete a table to indicate the effect of three errors on the cost of production,
gross profit and net profit. The better-prepared candidates were able to achieve full marks.

Question 4
(a)

This section asked candidates to prepare a rates account and commission receivable account. The
better-prepared candidates were able to gain full marks. Most candidates correctly entered the
bank/cash transactions. Common errors included:
•
•
•
•
•
•

account entries fully reversed
dates and years missing or incorrect
opening and closing balances were incorrectly labelled as ‘accrued’ or ‘prepaid’
annual rates included as the opening balance in the rates account rather than ‘income
statement’
commission receivable transactions included in the rates accounts
no entry for the amount of commission receivable for the year that would be transferred to the
income.

Cambridge International General Certificate of Secondary Education
0452 Accounting June 2019
Principal Examiner Report for Teachers
(b)

Most candidates made a good attempt at calculating the rate of inventory turnover. The most
common mistake was to use the revenue figure rather than cost of sales figure as the numerator.

(c)

Accounting (0452) · May/June 2019 · Examiner report

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