0452/11/M/J/19 Question Paper – Accounting May/June 2019 Paper 11

All subjects

Download Open PDF

Cambridge Accounting (0452) question paper for paper 11, May/June 2019 — 0452/11/M/J/19, file 0452_s19_qp_11.pdf.

Loading the paper…

Text of this paper

www.dynamicpapers.com

Cambridge Assessment International Education
Cambridge International General Certificate of Secondary Education

* 0 9 5 1 5 2 9 2 3 0 *

0452/11

ACCOUNTING

May/June 2019

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.
You may use an HB pencil for any diagrams or graphs.
Do not use staples, paper clips, 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.

This document consists of 22 printed pages and 2 blank pages.
DC (ST) 169004/1
© UCLES 2019

[Turn over

www.dynamicpapers.com

There are 10 parts to Question 1.
For each of the parts (a) to (j) there are four possible answers, A, B, C and D.
Choose the one you consider correct and place a tick (3) in the box to indicate the correct answer.
1

(a) The employees of a business are highly skilled but this is not recorded in the financial
statements of the business.
Which accounting principle is being applied?
A

going concern

money measurement

prudence

realisation

[1]

(b) Khalid started a business on 1 April 2018 with a capital of $90 000.
He provided the following information on 31 March 2019.
non-current assets
current assets
current liabilities
drawings during the year

$
75 000
32 000
24 000
19 000

What was the profit or loss for the year ended 31 March 2019?
A

$12 000 loss

$12 000 profit

$26 000 loss

$26 000 profit

[1]

direct materials + direct labour + direct expenses

direct materials + direct labour + direct expenses + factory overheads

direct materials + direct labour + direct expenses + factory overheads
+ decrease in work in progress

direct materials + direct labour + direct expenses + factory overheads
– decrease in work in progress

0452/11/M/J/19

[1]

www.dynamicpapers.com

3
(d) Lisa returned goods previously purchased from Tara.
How did Tara record this?
account debited

account credited

Lisa

purchases returns

Lisa

sales returns

purchases returns

Lisa

sales returns

Lisa
[1]

(e) When preparing his financial statements for the year ended 30 April 2019 Tebogo recorded
his opening inventory of $6400 as $4600 in error.
What was the effect of this error?
effect on gross profit for
the year
overstated
A

understated

effect on profit for the
year
overstated

overstated

understated

effect on capital at
30 April 2019

understated

3
3

3
[1]

(f)

Amrik started a business on 1 January 2017 and purchased a machine costing $18 000.
He decided to depreciate the machine at 20% per annum using the reducing (diminishing)
balance method. No depreciation was to be charged in the year of disposal.
The machine was sold for $13 300 on 1 July 2018.
What was the profit or loss on the sale of the machine?
A

loss $1100

loss $4700

profit $1780

profit $2500

[1]

0452/11/M/J/19

[Turn over

www.dynamicpapers.com

(g) ‘Financial information must be free from errors and bias.’
To which accounting objective does this refer?
A

comparability

relevance

reliability

understandability

[1]

(h) Amelia rented premises to a tenant. At the end of Amelia’s financial year the tenant had paid
2 months’ rent in advance.
Which entries would Amelia make in her ledger?

(i)

credit the rent payable account and carry down as a debit balance

debit the rent payable account and carry down as a credit balance

credit the rent receivable account and carry down as a debit balance

debit the rent receivable account and carry down as a credit balance

[1]

John paid Tahir, a credit supplier, $200 by cheque. This was credited to the account of Tarek,
another credit supplier.
Which journal entry corrects this error?
debit
$
A

suspense
Tahir
Tarek

400

Tahir
Tarek

200

Tahir
Tarek
suspense

200
200

Tarek
Tahir

200

credit
$
200
200
200

400
200
[1]

0452/11/M/J/19

5
(j)

www.dynamicpapers.com

A business provided the following information.
opening inventory
closing inventory
purchases
revenue

$
36 000
24 000
360 000
480 000

What was the rate of inventory turnover?
A

12.0 times

12.4 times

15.5 times

16.0 times

[1]
[Total: 10]

0452/11/M/J/19

[Turn over

6
2

www.dynamicpapers.com

Olivia is a trader. Sales and purchases are made on both cash and credit terms. Olivia maintains
a full set of accounting records and prepares control accounts at the end of each month.
REQUIRED
(a) Name the book of prime (original) entry which Olivia would use to obtain the following
information when preparing her control accounts.
book of prime (original) entry
returns to credit suppliers
cheques received from credit customers
contra entry
bad debts written off
[4]
(b) Complete the table by placing a tick (3) in the correct column to indicate where each item
would appear in Olivia’s sales ledger control account.
If the item does not appear place a tick (3) in the ‘no entry’ column.
debit

credit

no entry

credit sales
cash sales
cash refund to credit customer
cash discount allowed by credit suppliers
contra entry
trade discount allowed to credit customers
interest charged on credit customer’s overdue account
[7]
(c) State the meaning of the following terms.
(i)

Bad debt

[1]

(ii)

Bad debt recovered

[1]

0452/11/M/J/19

www.dynamicpapers.com

7
(iii)

Provision for doubtful debts

[1]

Olivia’s financial year ends on 30 April.
On 30 April 2019 Olivia received $200 in cash from Ben, a credit customer, in final settlement of
the amount he owed. The balance of Ben’s account was written off as irrecoverable.
REQUIRED
(d) Complete the following accounts in Olivia’s ledger for the year ended 30 April 2019. Show
any necessary year-end transfer.
Olivia
Ben account
Date
2019
Jan 2

Details
Sales

Date
2019

Details

360

Bad debts account
Date
2019

Details

Date
2019

Details

384

April 30

Total to date

[4]

0452/11/M/J/19

[Turn over

www.dynamicpapers.com

Olivia maintains a provision for doubtful debts of 3% of the trade receivables at the end of each
financial year.
On 30 April 2018 the trade receivables amounted to $13 500.
On 30 April 2019 the trade receivables amounted to $12 800 after writing off Ben’s account.
REQUIRED
(e) Prepare the provision for doubtful debts account for the year ended 30 April 2019. Balance
the account and bring down the balance on 1 May 2019.
Olivia
Provision for doubtful debts account
Date

Details

Date

Details

[4]
[Total: 22]

0452/11/M/J/19

9
3

www.dynamicpapers.com

Kadar is a food wholesaler. He maintains a full set of accounting records and prepares a trial
balance at the end of each financial year.
REQUIRED
(a) State two reasons why a trial balance is prepared.
1

[2]
(b) Name three types of error which are not revealed by a trial balance.
Give an example of each.
1

Type of error
Example

[6]

0452/11/M/J/19

[Turn over

www.dynamicpapers.com

Kadar provided the following information at the end of his financial year on 31 March 2019.
Revenue
Purchases
Sales returns
Carriage outwards
Fixtures and fittings (at cost)
Provision for depreciation of fixtures and fittings
Motor vehicle (at cost)
Discount allowed
Discount received
Trade payables
Trade receivables
Operating expenses
Rent payable
Commission receivable
Bank overdraft
Capital
Inventory 1 April 2018
Inventory 31 March 2019

0452/11/M/J/19

$
146 000
137 300
1 400
2 970
45 000
18 000
16 850
190
230
14 600
12 900
17 190
5 200
2 000
5 170
65 000
12 000
10 950

www.dynamicpapers.com

Credit
$

Revenue

Purchases

Sales returns

Carriage outwards

Fixtures and fittings (at cost)

Provision for depreciation of fixtures and fittings

Motor vehicle (at cost)

Discount allowed

Discount received

Trade payables

Trade receivables

Operating expenses

Rent payable

Commission receivable

Bank overdraft

Capital

Inventory

[9]

0452/11/M/J/19

[Turn over

www.dynamicpapers.com

Kadar purchased the motor vehicle on 30 March 2019. He entered the total amount paid in the
motor vehicle account. The total paid consisted of the following.
$
16 000
420
350
80
16 850

cost of motor vehicle
1 year’s insurance
delivery charge
fuel
REQUIRED

(d) State whether each cost is capital expenditure or revenue expenditure.
Give a reason for your answers.
The first item has been completed as an example.
cost
cost of motor vehicle

type of expenditure
capital

reason
This is the cost of purchasing a non-current
asset which will be kept for over 12 months

1 year’s insurance

delivery charge

fuel

[6]
[Total: 23]

0452/11/M/J/19

13
4

www.dynamicpapers.com

The YK Club was formed some years ago. In addition to providing sporting facilities for members,
the club also has a shop selling sports clothing.
The following information was available for the year ended 31 January 2019.
On 1 February 2018
Shop inventory
Amount owing for shop supplies

$
896
420

For the year ended 31 January 2019
Payments for shop supplies

4150

On 31 January 2019
Shop inventory
Amount owing for shop supplies

960
470

All goods are marked up by 25%.
REQUIRED
(a) Prepare the shop income statement for the year ended 31 January 2019 showing the revenue
for the year.
YK Club
Shop Income Statement for the year ended 31 January 2019
$

[5]

0452/11/M/J/19

[Turn over

www.dynamicpapers.com

(b) Complete the table to indicate how the following items would be recorded in the financial
statements of the YK Club for the year ended 31 January 2019.
Some items may appear in more than one financial statement.
The first one has been completed as an example.

balance at bank on 1 February 2018

receipts and
payments
account
$

460

insurance paid on 1 February 2018 for
18 months to 31 July 2019

1080

purchase of new sports equipment by
cheque on 31 December 2018

3500

subscriptions received in January 2019
for the year ending 31 January 2020

350

accumulated depreciation of sports
equipment at 31 January 2019

850

cost of sports equipment at
31 January 2019
profit from club shop for the year ended
31 January 2019 (calculated in (a))
bank overdraft on 31 January 2019

income and
expenditure
account
$

statement
of financial
position
$

8500
?
1250
[11]

The treasurer is concerned that the overdraft of the YK Club is increasing each year. He has
recommended that the club should hold fund-raising activities to reduce the club’s bank overdraft.
REQUIRED
(c) Suggest two other ways in which the bank overdraft of the club could be reduced.
1
2
[2]
[Total: 18]

0452/11/M/J/19

www.dynamicpapers.com

PLEASE TURN OVER

0452/11/M/J/19

[Turn over

16
5

www.dynamicpapers.com

Krishna has a secretarial agency. Her financial year ends on 30 April.
She provided the following information for the year ended 30 April 2019.
Fees received from clients
Wages
Operating expenses
Rent and rates
Motor expenses
Commission receivable
Office fixtures and equipment at valuation 1 May 2018
Motor vehicle at cost
Provision for depreciation of motor vehicle

$
35 270
24 300
4 260
7 750
720
1 820
18 900
17 500
6 300

Additional information
1

At 30 April 2019
Clients owed fees totalling $2150.
Commission receivable accrued amounted to $60.
Rent, $1200, was accrued.
Rates prepaid amounted to $550.

Krishna lives in an apartment above the business premises. One quarter of the rent and rates
relates to Krishna’s apartment.

The office fixtures and equipment were valued at $17 320 on 30 April 2019.
No office fixtures and equipment were purchased or sold during the year.

The motor vehicle is to be depreciated at 20% per annum using the reducing (diminishing)
balance method.

0452/11/M/J/19

www.dynamicpapers.com

REQUIRED
(a) Prepare Krishna’s income statement for the year ended 30 April 2019.
Krishna
Income Statement for the year ended 30 April 2019
$

[13]

0452/11/M/J/19

[Turn over

www.dynamicpapers.com

(b) Complete the following accounts in Krishna’s ledger for the year ended 30 April 2019.
Close the accounts by balancing or by making an appropriate year-end transfer.
Krishna
Drawings account
Date
2019
April 30

Total cash drawings

Details

Date

Details

9 150

Details

Capital account
Date

Details

Date
2018
May 1

Balance b/d

38 000

[5]

0452/11/M/J/19

www.dynamicpapers.com

Krishna is considering purchasing business premises costing $80 000. She could invest a further
$40 000 as capital. The remaining $40 000 would have to come from a 6% bank loan repayable
after 5 years.
REQUIRED
(c) Explain three factors Krishna should consider when making a decision about purchasing
these business premises.
1

[6]
[Total: 24]

0452/11/M/J/19

[Turn over

20
6

www.dynamicpapers.com

ML Limited was formed some years ago. The company’s share capital consists entirely of ordinary
shares.
REQUIRED
(a) Complete the table by placing a tick (3) in the correct column to indicate whether each
statement is true or false.
The first one has been completed as an example.
True
The reward given to ordinary shareholders for investing in the
company is known as a dividend.

False

The amount of issued shares for which payment has been received
by the company from shareholders is known as paid-up share
capital.
Ordinary shareholders receive a fixed percentage of the profit each
year.
In the event of the company being wound up the ordinary shares
are the last to be repaid.
Ordinary shareholders are personally liable for the debts of the
company.
Any ordinary share dividend paid during the financial year is
entered in the statement of changes of equity irrespective of the
year to which it relates.
[5]
The financial year of ML Limited ends on 31 December. The following information is available.
$

At 1 January 2018
Ordinary share capital
Retained earnings
General reserve

200 000
16 500
8 000

Dividends paid during the year ended 31 December 2018
Final dividend for the year ended 31 December 2017
Interim dividend for the year ended 31 December 2018
Profit for the year ended 31 December 2018

8 000
6 000
28 000

On 31 December 2018 it was decided to make a transfer to general reserve of $3000.

0452/11/M/J/19

www.dynamicpapers.com

21
REQUIRED

(b) Prepare a statement of changes in equity for the year ended 31 December 2018.
ML Limited
Statement of Changes in Equity for the year ended 31 December 2018
Ordinary
share
capital
$

Retained
earnings

General
reserve

Total

On 1 January 2018

Profit for the year

Dividend paid – final

interim

Transfer to general reserve

On 31 December 2018

[6]

[2]
The directors of ML Limited want to expand the company and need to raise $100 000. They are
considering issuing either 6% preference shares or 5% debentures.
REQUIRED
(d) State three features of preference shares.
1

0452/11/M/J/19

[Turn over

www.dynamicpapers.com

(e) State three features of debentures.
1

[3]
(f)

Complete the table to indicate the effect of raising the funds from an issue of 5% debentures
on 1 January 2019.
Where there is no effect place a tick (3) in the ‘no effect’ column.
The first one has been completed as an example.
increase
$
effect on balance at bank

decrease
$

no effect

100 000

effect on non-current liabilities
effect on working capital
effect on equity at 1 January 2019
effect on annual profits
[4]
[Total: 23]

0452/11/M/J/19

23
BLANK PAGE

0452/11/M/J/19

www.dynamicpapers.com

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.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.

0452/11/M/J/19

Accounting (0452) · May/June 2019 · Question paper 11

Popular subjects

Exam info

Help