Accounting (0452) · Oct/Nov 2004 · Question paper 1

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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education

0452/01

ACCOUNTING
Paper 1 Multiple Choice

October/November 2004
1 hour
Additional Materials:

Multiple Choice Answer Sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST
Write in soft pencil.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Write your name, Centre number and candidate number on the answer sheet in the spaces provided
unless this has been done for you.
There are forty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C, and D.
Choose the one you consider correct and record your choice in soft pencil on the separate answer sheet.
Read the instructions on the answer sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
Calculators may be used.

This document consists of 12 printed pages.
IB04 11_0452_01/3RP
 UCLES 2004

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2
1

The owners of a business require a statement of the financial position of their business.
Which accounting statement will provide the necessary information?

2

A

Balance Sheet

B

Capital account

C

Cash book

D

Profit and Loss Account

The owner of a business requires a statement to show the trading results for a financial year.
Which accounting statement is used?

3

A

Balance Sheet

B

Capital account

C

Trading and Profit and Loss Account

D

Trial balance

After the preparation of the Profit and Loss Account, the following balances were included in the
books of the business.
$
equipment

17 600

creditors

3 200

debtors

5 900

bank overdraft

800

accrued expenses

600

stock

4 100

motor vehicles

2 500

What is the total of the assets?
A
4

$27 400

B

$30 100

C

$30 700

Which will give the cost of goods sold?
A

opening stock – purchases + closing stock

B

purchases + closing stock – opening stock

C

opening stock + purchases – closing stock

D

purchases – opening stock – closing stock

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D

$30 900

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Karl’s trial balance for 31 December 2003 includes the following balances.
$
sales

3 200

stock at 1 January 2003
purchases

200
1 800

expenses

800

Karl’s stock at 31 December 2003 was $300.
What is Karl’s net profit for the year?
A
6

$400

B

$500

C

$700

D

$1500

Miriam supplies goods on credit to Anna.
Applying the realisation principle, when does Miriam recognise the sales revenue?

7

A

When Anna acquires legal ownership of the goods.

B

When Anna orders the goods.

C

When Anna pays for the goods.

D

When Anna receives a statement from Miriam.

The same accounting treatment should be applied to similar items at all times.
Which accounting principle is being applied?

8

A

consistency

B

duality

C

money measurement

D

prudence

Unpaid rent is shown as a liability in a balance sheet.
Which accounting principle is this an example of?
A

consistency

B

duality

C

matching

D

prudence

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Raul is preparing his final accounts. What should he do to observe the principle of prudence?
A

include all foreseeable losses

B

include all foreseeable revenue

C

show expenses as low as possible

D

show prepayments as expenses

10 A business spends $100 000 on staff training. The $100 000 is entered as an expense in the
business accounts, but the increased value of staff to the business is not recorded.
Which accounting principle is being applied?
A

business entity

B

matching

C

money measurement

D

prudence

11 Which document is used by a supplier to notify a customer of goods supplied, goods returned
and payments received in a month?
A

credit note

B

debit note

C

invoice

D

statement

12 Which book of prime entry is also a ledger account?
A

cash book

B

journal

C

purchases journal

D

sales journal

13 Amir buys goods with a list price of $1500 from Zainab, who allows a trade discount of 20 %. A
cash discount of 5 % is also allowed if settlement is made within 30 days.
What amount will be entered in Amir’s purchases journal?
A

$1125

© UCLES 2004

B

$1140

C

$1200

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D

$1425

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14 Smith sold goods on credit to Green.
What entries will Green make to record this?
account debited

account credited

A

purchases

Smith

B

Smith

purchases

C

sales

Smith

D

Smith

sales

15 Carol purchased goods from Janet on credit for $5000.
Carol pays Janet by cheque after deducting cash discount of $125.
What are the ledger account entries in Janet’s books to record the payment?
account debited

$

account credited

$

A

bank
discount allowed

4 875 Carol
125

5 000

B

Carol

5 000 bank
discount allowed

4 875
125

C

bank
discount received

4 875 Carol
125

5 000

D

Carol

5 000 bank
discount received

4 875
125

16 How is the purchase of goods on credit recorded?
general ledger

purchases ledger

A

debit cash

credit purchases

B

credit cash

debit purchases

C

debit purchases

credit supplier

D

credit purchases

debit supplier

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17 At the end of the financial year a business has a bank overdraft.
How will this be shown in the trial balance and the Balance Sheet?
trial balance
debit
A

Balance Sheet

credit

asset



B

liability




C





D






18 Which will appear on the credit side of a trial balance?
A

interest paid

B

motor vehicles at cost

C

rent paid

D

sales

19 Which type of error is corrected using a suspense account?
A

complete reversal

B

omission

C

principle

D

single entry

20 A trader buys stationery for $1000 and pays by cheque. This is entered correctly in the bank
account but is credited in the stationery account.
What will be the correcting journal entry?
account debited

$

account credited

$

A

suspense

1000

stationery

1000

B

stationery

1000

suspense

1000

C

stationery

2000

suspense

2000

D

suspense

2000

stationery

2000

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21 A trader has received a bank statement and brought his cash book up to date.
Which item will be included in the trader’s bank reconciliation statement?
A

bank charges

B

bank interest

C

direct debits

D

unpresented cheques

22 The bank balance in John’s cash book shows $100 less than the balance shown on the bank
statement.
What could have caused this?
A

cheque not yet credited by the bank

B

cheque not yet presented to the bank

C

interest charged by the bank not yet entered in the cash book

D

standing order paid by the bank not yet entered in the cash book

23 In a given accounting period, why should costs be matched with revenues?
A

so that profit may be calculated

B

so that the trial balance will balance

C

to calculate the amount owed to trade creditors

D

to calculate the bank balance

24 Jonah lets part of his business premises at a monthly rent of $120.
On 1 April 2003 the tenant owed one month’s rent. During the year ended 31 March 2004, the
tenant paid rent of $1800.
How much should be credited to Jonah’s Profit and Loss Account for the year ended 31 March
2004?
A

$1440

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B

$1680

C

$1800

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D

$1920

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25 Abdul is a trader in office furniture. He buys furniture on credit from Farad for use in his own
business.
How will Abdul record this transaction?
account debited

account credited

A

purchases

Farad

B

Farad

purchases

C

office furniture

Farad

D

Farad

office furniture

26 On the last day of its financial year a business bought a machine. This was debited in the
purchases account instead of the machinery account.
How does this error affect the business's final accounts?
net profit
too high
A

machinery in Balance Sheet
too low

too high

B

C

D

too low

27 A business bought a machine for $10 000. The machine had a life of five years and the estimated
residual value was $2000. Depreciation was calculated annually using the straight line method.
What was the machine’s value at the end of year three?
A

$2000

B

$3200

C

$4000

D

$5200

28 A machine cost $20 000 and has a current book value of $12 000. The year’s depreciation is then
calculated using the reducing balance method at 30 %.
What is the depreciation for the year?
A

$2400

B

$3600

C

$6000

29 How is the closing capital of a sole trader calculated?
A

opening capital – net loss + drawings

B

opening capital + net profit – drawings

C

opening capital + net profit + drawings

D

opening capital + net loss – drawings

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D

$9 600

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30 A sole trader provides the following information.

$
total assets

100 000

liabilities other than bank

24 000

capital

60 000

There is also a loan from the bank.
What is the amount of this loan?
A

$16 000

B

$36 000

C

$76 000

D

$84 000

D

$131 200

31 A trader has the following assets and liabilities.
$
premises

100 000

equipment

20 000

stock

4 000

bank overdraft

1 800

debtors

3 000

creditors

2 400

What is the trader’s capital?
A

$121 600

B

$122 800

C

$126 400

32 Which item would appear in a partnership Profit and Loss Account?
A

interest on loans from partners

B

interest on partners' capital

C

interest on partners' drawings

D

partners' salaries

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33 Maria and Theresa are partners. They share the profits and losses Maria 34 and Theresa 41 .
The Appropriation Account for the year ended 30 April 2004 shows the following.
$
net loss

2400

partner’s salary - Theresa

2000

How much will be debited to Theresa’s current account as her share of the loss for the year?
A

$100

B

$600

C

$1100

D

$1400

34 On 1 October, Joe was owed $1230 by his trade debtors. During October his sales to customers
on credit were $3400. On 31 October the trade debtors owed $820.
How much did Joe receive from his trade debtors during October?
A

$2580

B

$2990

C

$3810

D

$4630

35 Which should be shown as a fixed asset in a Balance Sheet?
A

creditors

B

debtors

C

premises

D

stock

36 A business’s gross profit is $250 000 which is 25 % of sales. The expenses are $75 000.
What is the net profit as a percentage of sales?
A

7.5 %

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B

17.5 %

C

30 %

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D

70 %

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37 The table shows a business’s working capital.
$
stocks

40 000

debtors

30 000

bank

20 000

cash

10 000
100 000

less creditors

40 000
60 000

What is the current ratio?
A

1.5 : 1

B

C

1.67 : 1

1.75 : 1

D

2.5 : 1

D

$85 000

38 A trader provides the following information.
gross profit

$35 000

expenses

$18 000

net profit

20 % of sales

What is the cost of sales?
A

$17 000

B

$50 000

C

$52 000

39 What does the gross profit percentage of a business measure?
A

efficiency

B

liquidity

C

profitability

D

solvency

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40 Two businesses, X and Y, are of a similar size and are in the same industry.
They provide the following information.
X

Y

%

%

gross profit as a percentage of sales

27

30

net profit as a percentage of sales

14

11

What does this show?
A

X controlled expenses better than Y

B

Y controlled expenses better than X

C

X’s sales were greater than Y's

D

Y’s sales were greater than X's

University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department
of the University of Cambridge.

© UCLES 2004

0452/01/O/N/04