0452/12/M/J/19 Question Paper – Accounting May/June 2019 Paper 12

All subjects

Download Open PDF

Cambridge Accounting (0452) question paper for paper 12, May/June 2019 — 0452/12/M/J/19, file 0452_s19_qp_12.pdf.

Loading the paper…

Text of this paper

www.dynamicpapers.com

Cambridge Assessment International Education
Cambridge International General Certificate of Secondary Education

* 4 0 7 9 0 0 4 7 7 0 *

0452/12

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) 169003/2
© 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) An invoice for the purchase of goods on credit, $980, was incorrectly recorded in the
purchases journal as $890.
Which type of error was made?
A

commission

complete reversal

original entry

principle

[1]

(b) Which accounts would appear in a purchases ledger?
1

carriage inwards

purchases

purchases returns

Sadie, a credit supplier

1, 2 and 3

2 and 3 only

2 only

4 only

[1]

(c) Bingwa purchased premises costing $85 000 in February 2018. Identical premises to those
owned by Bingwa were sold in April 2019 for $98 000. No adjustment was made in Bingwa’s
accounting records in April 2019.
Which accounting principle did Bingwa apply?
A

business entity

materiality

money measurement

realisation

[1]

0452/12/M/J/19

www.dynamicpapers.com

(d) Jason provided the following information.
non-current assets
inventory
insurance prepaid
trade payables
petty cash
rent receivable prepaid
bank overdraft
trade receivables

$
103 650
4 960
130
5 380
100
240
2 900
5 120

How much was Jason’s capital?
A

$105 440

$105 920

$105 960

$111 240

[1]

(e) On 1 February Ahmed purchased goods on credit from Zaffar. He returned these goods on
8 February.
How did Zaffar record the transaction of 8 February?
account debited

(f)

account credited

Ahmed

purchases returns

Ahmed

sales returns

purchases returns

Ahmed

sales returns

Ahmed

[1]

Athena is both a customer and a supplier of Heidi. Athena’s account in Heidi’s sales ledger
showed a debit balance of $340 and her account in Heidi’s purchases ledger showed a credit
balance of $260.
A contra between the two accounts was agreed.
Which entry would Heidi make in her sales ledger control account?
A

credit $80

credit $260

debit $80

debit $260

[1]
0452/12/M/J/19

[Turn over

www.dynamicpapers.com

(g) An advertising expenses account had a credit balance of $100 on 1 January 2018.
During the year ended 31 December 2018 advertising expenses paid totalled $2830.
This included $45 for the following financial year.
Which journal entry is required to transfer the advertising expenses to the income statement
on 31 December 2018?
debit
$
A

advertising expenses
income statement

2685

advertising expenses
income statement

2885

income statement
advertising expenses

2685

income statement
advertising expenses

2885

credit
$
2685
2885
2685
2885

[1]

(h) How is mark-up calculated?

(i)

cost of sales
gross profit

gross profit
cost of sales

gross profit
revenue

revenue
gross profit

[1]

On 1 May 2018 Ben’s capital was $47 600.
During the year ended 30 April 2019 he introduced his personal motor vehicle, $12 500, into
the business. His drawings during the year ended 30 April 2019 were $7500.
On 30 April 2019 Ben’s capital was $51 250.
What was Ben’s profit or loss for the year?
A

loss $1350

loss $8650

profit $1350

profit $8650

[1]

0452/12/M/J/19

5
(j)

www.dynamicpapers.com

Amber updated her cash book after receiving her bank statement. The updated cash book
balance was an overdraft of $250.
The bank statement did not include cheques not presented, $96, and amounts not credited,
$183.
What was the balance shown on the bank statement?
A

$163 credit

$163 debit

$337 credit

$337 debit

[1]
[Total: 10]

0452/12/M/J/19

[Turn over

6
2

www.dynamicpapers.com

Nabil owns a food store. He purchases goods on credit terms and sells on cash terms.
Nabil’s financial year ends on 31 March.
Nabil’s receipts and payments during the year ended 31 March 2019 included both capital and
revenue items.
REQUIRED
(a) State whether each of the following represents capital expenditure, revenue expenditure, a
capital receipt or a revenue receipt.
The first one has been completed as an example.
Payment of annual insurance premium

revenue expenditure

Purchases of goods for resale

Proceeds of sale of old shop fittings at book value

Cost of new shop fittings

Delivery charge on new shop fittings

Cash sales

Loan from bank

[6]

(b) Complete the table by stating the double entry needed to record each of the following
transactions which took place in March 2019.
transaction

account(s) debited
$

account(s) credited
$

Nabil transferred his private motor
vehicle, $18 000, to the business.
Purchased stationery, $44, on credit from
Tahir.
Paid office cash, $490, into the business
bank account.
Settled Vijay’s account of $200 by
bank transfer after deducting 2% cash
discount.
[9]

0452/12/M/J/19

www.dynamicpapers.com

Nabil prepares a trial balance at the end of each financial year.
REQUIRED
(c) Complete the table by placing a tick (3) in the correct column to indicate where the balance of
each of the accounts would appear in Nabil’s trial balance on 31 March 2019.
The first one has been completed as an example.
debit
column
rent and rates

credit
column

capital
motor vehicle at cost
motor expenses
purchases returns
discount received
Tarek, a credit supplier
insurance
bank overdraft
operating expenses
5-year bank loan
drawings
carriage outwards
[6]
[Total: 21]

0452/12/M/J/19

[Turn over

www.dynamicpapers.com

8
3

Hamila is a trader. Her financial year ends on 28 February. All goods are bought and sold on credit
terms.
Hamila provided the following information for February 2019.
2019
February

Safiya, a credit customer, owed $320

Safiya paid the balance due on 1 February by cheque

Safiya purchased goods on credit, list price $250, less 20% trade discount

The bank returned Safiya’s cheque because of insufficient funds in the account

Safiya paid $400 in cash

The balance of Safiya’s account was written off as irrecoverable

REQUIRED
(a) Prepare the account of Safiya as it would appear in Hamila’s ledger for the month of
February 2019.
Hamila
Safiya account
Date
2019

Details

Date
2019

Details

[6]

0452/12/M/J/19

www.dynamicpapers.com

(b) Complete the bad debts account in Hamila’s ledger for the month of February 2019.
Close the account by making an appropriate year-end transfer.
Hamila
Bad debts account
Date
2019
Feb 27

Details
Total to date

Date
2019

Details

674

[2]

Hamila maintains a provision for doubtful debts. The following account appeared in Hamila’s
ledger.
Hamila
Provision for doubtful debts account
Date
2019
Feb 28

Details
Income statement
Balance c/d

$
130

Date
2018
Mar 1

Details
Balance b/d

1370
1500

$
1500
1500

REQUIRED
(c) (i)

Explain the following entries in the provision for doubtful debts account.
Name the account in which the double entry would be made for each item.
State whether the account would be debited or credited.
1 March 2018 Balance b/d
Explanation

Name of account
Debit or credit

0452/12/M/J/19

[Turn over

www.dynamicpapers.com

28 February 2019 Balance c/d
Explanation

Name of account
Debit or credit
(ii)

[4]

Explain the following entry in the provision for doubtful debts account.
28 February 2019 Income statement

[2]

(d) Explain how Hamila is applying the principle of prudence by maintaining a provision for
doubtful debts.

[2]
(e) Explain how Hamila is applying the principle of accruals (matching) by maintaining a provision
for doubtful debts.

[2]
(f)

Suggest two ways in which Hamila could reduce the possibility of bad debts.
1
2
[2]
[Total: 20]

0452/12/M/J/19

www.dynamicpapers.com

PLEASE TURN OVER

0452/12/M/J/19

[Turn over

12
4

www.dynamicpapers.com

Sam’s financial year ends on 31 December.
On 1 November 2017 he sold old office equipment for $1900.
The equipment had been purchased on 1 April 2015 for $4000 and had been depreciated using
the reducing (diminishing) balance method at 20% per annum. A full year’s depreciation was
charged in the year of purchase, but no depreciation was to be charged in the year of disposal.
REQUIRED
(a) Calculate the profit or loss on disposal of the office equipment.

[5]
On 1 January 2018 Sam purchased new office equipment costing $8000 on credit from C Limited.
(b) Prepare a journal entry to record this purchase.
A narrative is required.
Sam
General Journal
Date

Details

Debit
$

Credit
$

2018

[3]

0452/12/M/J/19

www.dynamicpapers.com

The new office equipment was expected to be used for 5 years and have a residual value of
$2000.
Sam was undecided about which method of depreciation to use for the new office equipment.
REQUIRED
(c) (i)

Calculate the annual depreciation on the new office equipment using the straight-line
(equal instalment) method.

[2]

(ii)

Calculate the depreciation for the first year on the new office equipment using the
reducing (diminishing) balance method at 20% per annum.

[1]

Sam decided to use the reducing (diminishing) balance method of depreciation.
REQUIRED
(d) Prepare a journal entry to record the transfer to the income statement of the depreciation on
office equipment for the year ended 31 December 2018.
A narrative is required.
Sam
General Journal
Date

Details

Debit
$

Credit
$

2018

[3]
© UCLES 2019

0452/12/M/J/19

[Turn over

www.dynamicpapers.com

Sam’s book-keeper started to maintain a petty cash book on 1 April 2019. On that date $150 was
placed in the petty cash box. This was to be the monthly imprest which was to be restored on the
first day of each month.
At the end of April 2019 Sam discovered that only a few entries had been made in the petty cash
book for the month.
The following information about the petty cash transactions for April 2019 is available.
2019
April

$
11

Received refund from cleaner for overpayment in March

Paid Kelly, a credit supplier

Bought printer paper

Paid cleaner

REQUIRED
(e) Complete the entries for the transactions on 3 April and 6 April in the petty cash book on the
page opposite.
Enter the transactions for 11 April to 30 April in the petty cash book.
Balance the petty cash book on 30 April and bring down the balance on 1 May 2019.
Show the restoration of the imprest on 1 May 2019.

[10]
[Total: 24]

The petty cash book is printed on the next page

0452/12/M/J/19

Details

0452/12/M/J/19

Parcel post

Taxi fare

Cash

April 1

2019

Date

150

Total
received
$

Total
paid
$

Sam – Petty Cash Book

Office
expenses
$

Cleaning

Travel

Ledger
accounts
$

www.dynamicpapers.com

[Turn over

16
5

www.dynamicpapers.com

Mostafa and Salma are partners in a wholesale business. Their financial year ends on 30 April.
When they started the business they drew up a partnership agreement. The terms of the agreement
included the following.
interest to be allowed on capital at 5% per annum
interest to be charged on drawings at 6%
Mostafa to be entitled to an annual salary of $12 000
residual profits and losses to be shared in the ratio of 3 : 2.
The partners provided the following information.
At 1 May 2018
Capital account
Current account

Mostafa
$
45 000
3 250 credit

Salma
$
25 000
1 920 debit

On 1 February 2019 the partners agreed that Mostafa’s salary should be increased to $15 000 per
annum.
For the year ended 30 April 2019

Drawings

Mostafa
$
10 000

Salma
$
8 000

The profit for the year ended 30 April 2019 was $14 820.
REQUIRED
(a) Suggest one reason why interest on capital was included in the partnership agreement.

[1]
(b) Suggest one reason why interest on drawings was included in the partnership agreement.

[1]
(c) Suggest one reason why a salary for Mostafa was included in the partnership agreement.

[1]

0452/12/M/J/19

www.dynamicpapers.com

(d) Prepare the profit and loss appropriation account for the year ended 30 April 2019.
Mostafa and Salma
Profit and Loss Appropriation Account for the year ended 30 April 2019
$

[8]

0452/12/M/J/19

[Turn over

www.dynamicpapers.com

(e) Complete the current account of Mostafa for the year ended 30 April 2019. Balance the
account and bring down the balance on 1 May 2019.
Mostafa and Salma
Mostafa Current account
Date

Details

Date
2018
May 1

Details
Balance b/d

$
3 250

[5]
[Total: 16]

0452/12/M/J/19

19
6

www.dynamicpapers.com

S Limited was formed on 1 May 2018. On that date the company issued ordinary shares and 5%
debentures.
At the end of the financial year on 30 April 2019 the following financial statements were prepared:
Income statement
Statement of changes in equity
Statement of financial position
REQUIRED
(a) Name the financial statement in which each of the following items would appear.
Some items may appear in more than one statement.
If the item does not appear in any of the financial statements write ‘No entry’.
The first one has been completed as an example.
financial statement
Income statement
Statement of financial position

Wages accrued at 30 April 2019

Ordinary share capital

Creation of general reserve

Payment of interim ordinary share dividend
on 31 October 2018

Proposed ordinary share dividend at
30 April 2019

Debenture interest accrued on 30 April 2019

[8]

0452/12/M/J/19

[Turn over

www.dynamicpapers.com

The directors of S Limited wish to raise funds for expansion. They are undecided whether to issue
additional ordinary shares or additional 5% debentures.
REQUIRED
(b) 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
debenture holders receive interest

false

debenture holders receive a variable rate of interest
debentures are usually included in the non-current
liabilities section of the statement of financial position
debentures have a prior claim in the event of the
company being wound up
debenture holders are entitled to vote at the annual
general meeting
debentures are often secured on the non-current
assets of the company
[5]
(c) Suggest two ways in which the ordinary shareholders may be affected if the directors decide
to raise funds from an issue of debentures.
1

[2]
The directors of S Limited are concerned about the working capital of the company at the end of
the first year of trading.
The following information is available at 30 April 2019.
Inventory
Trade payables
Trade receivables
Bank overdraft

0452/12/M/J/19

$
27 400
28 700
25 200
10 800

www.dynamicpapers.com

REQUIRED
(d) Calculate the current ratio.
The calculation should be correct to two decimal places.

[2]
(e) Calculate the quick ratio.
The calculation should be correct to two decimal places.

[2]
(f)

Explain why the quick ratio is more reliable than the current ratio as an indicator of liquidity.

[2]

(g) Complete the table by placing a tick (3) in the correct column to show how each of the
following would affect the working capital of S Limited.
increase

decrease

no effect

issue additional debentures
pay operating expenses by cheque
sell goods for cash instead of on credit
delay paying credit suppliers
sell unused non-current assets
reduce credit period for credit customers
[6]

0452/12/M/J/19

[Turn over

www.dynamicpapers.com

(h) Suggest two problems the directors of S Limited may encounter if the working capital is
inadequate.
1

[2]
[Total: 29]

0452/12/M/J/19

23
BLANK PAGE

0452/12/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.

0452/12/M/J/19

Accounting (0452) · May/June 2019 · Question paper 12

Popular subjects

Exam info

Help