Accounting (0452) · Oct/Nov 2008 · Question paper 1
Cambridge Accounting (0452) question paper for paper 1, Oct/Nov 2008 — 0452/1/O/N/08, file 0452_w08_qp_1.pdf.
Text of this paper
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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education
0452/01
ACCOUNTING
Paper 1 Multiple Choice
October/November 2008
1 hour
Additional Materials:
*3780858949*
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.
IB08 11_0452_01/RP
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2
1
A business has the following assets and liabilities.
$
buildings
30 000
plant and machinery
10 000
creditors
5 000
debtors
7 000
prepayments
100
bank overdraft
8 000
What is the capital?
A
2
B
$29 900
$33 900
C
$34 100
D
$49 900
A business purchases a motor vehicle on credit.
What is the effect of this?
3
4
A
It increases fixed assets.
B
It increases owner’s capital.
C
It reduces net profit.
D
It reduces the bank balance.
Why is a balance sheet prepared?
A
to show debtors and creditors at a certain date
B
to show how much profit a business made
C
to show the financial position of a business at a certain date
D
to show the total debits equal the total credits
A sole trader makes a gross profit in a financial year.
Where is this shown in his final accounts?
trading account
A
profit and loss account
B
C
D
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balance sheet
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3
5
Anna provides the following information.
$
sales
40 000
cost of sales
25 000
net profit
7 000
What are Anna’s expenses?
A
6
$8000
B
$15 000
C
$18 000
D
$22 000
Each financial transaction has two opposite accounting entries.
Which accounting principle is being described?
7
8
A
business entity
B
duality
C
going concern
D
money measurement
Which is not shown in a business’s final accounts?
A
cost of staff training courses
B
improved knowledge of staff
C
increase in sales staff bonuses
D
staff holiday pay
Revenue is recognised as being earned when ownership of goods passes to the customer.
Which accounting principle is being described?
9
A
duality
B
matching
C
prudence
D
realisation
What is the meaning of the consistency principle?
A
Accounts should provide for all accruals and prepayments.
B
All businesses in the same industry should account for items in the same way.
C
Businesses should not normally change the way in which they treat items.
D
Losses should be provided for as soon as they are foreseen.
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10 A customer who bought goods on credit returns some of them to the supplier.
Which document will the customer send to the supplier?
A
credit note
B
debit note
C
invoice
D
statement
11 A credit note for $600 issued to a customer has been entered as an invoice for goods sold. The
balance on the customer’s account after this entry is $14 200.
What is the correct balance on the customer’s account?
A
B
$13 000
$13 600
C
D
$14 800
$15 400
12 Tony paid a cheque for $3250 to James in full settlement of a debt for $3400.
How will James record this transaction?
debit
$
credit
$
A
bank
discount allowed
3250 Tony
150
3400
B
Tony
3400 bank
discount allowed
3250
150
C
bank
discount received
3250 Tony
150
3400
D
Tony
3400 bank
discount received
3250
150
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13 A business buys a computer on credit from Alpha Computers for $1000.
Which journal entry will record this?
dr
$
A
B
C
D
cr
$
Alpha Computers
computer equipment
1000
computer equipment
Alpha Computers
1000
computer equipment
purchases
1000
purchases
computer equipment
1000
1000
1000
1000
1000
14 Fred keeps a petty cash book on the imprest system with an imprest of $200. The book is
balanced monthly and the imprest is restored on the first day of the following month.
Fred’s petty cash expenses for June totalled $175.
Which entries record restoration of the imprest on 1 July?
debit
$
credit
$
A
cash book
175
petty cash book
175
B
petty cash book
175
cash book
175
C
cash book
200
petty cash book
200
D
petty cash book
200
cash book
200
15 On 1 September a trader purchased on credit goods with a list price of $1000. He was given a
trade discount of 20 % and was allowed a cash discount of 5 % provided the account was paid in
30 days.
How much would the trader pay to the supplier on 28 September?
A
$750
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B
$760
C
$800
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D
$950
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16 Amy is a trader. She withdrew cash from the business bank account for personal use.
How will this transaction be recorded?
account to be
debited
account to be
credited
A
bank
cash
B
cash
bank
C
bank
drawings
D
drawings
bank
17 Where should the total of the purchases returns journal be posted?
A
credit side of the cash book
B
credit side of the purchases returns account
C
debit side of the purchases returns account
D
debit side of the trading account
18 Which entry records a sale of goods on credit to Tahir?
nominal ledger
sales ledger
A
debit
cash account
credit
sales account
B
credit
sales account
debit
cash account
C
credit
sales account
debit
Tahir account
D
debit
Tahir account
credit
sales account
19 Why is a trial balance prepared?
A
to calculate net profit
B
to check the amount of the owner’s capital
C
to check the arithmetical accuracy of the double entry
D
to find out how much is owed to creditors
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20 How would the totals of the discount allowed and discount received accounts be recorded in a
trial balance?
debit
credit
A
discount allowed
discount received
B
discount received
discount allowed
C
discount allowed
discount received
D
–
–
–
–
discount allowed
discount received
21 The cost of a new motor vehicle is debited to the motor vehicle expenses account.
Which type of error is this?
A
commission
B
complete reversal
C
original entry
D
principle
22 Rent received, $100, has been debited to rent paid account and credited to cash account.
What is the correcting entry?
account to be debited
$
account to be credited
$
A
cash
100
rent received
100
B
cash
200
rent paid
rent received
100
100
C
rent paid
rent received
100
100
cash
200
D
rent paid
100
rent received
100
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23 What is true about a bank reconciliation statement?
prepared by the
bank
prepared by the
trader
part of double entry
book-keeping
A
no
yes
yes
B
yes
no
yes
C
yes
no
no
D
no
yes
no
24 The following information relates to a business on 31 October.
$
bank account balance in cash book
1600 debit
unpresented cheques
680
amount not yet credited by bank
560
What is the balance on the bank statement at 31 October?
A
B
$360
C
$1480
D
$1720
$2840
25 At the end of Zara’s financial year her tenant owed one month’s rent.
How will this be shown in Zara’s final accounts?
profit and loss account
expense
A
D
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asset
B
C
revenue
balance sheet
liability
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9
26 The following information is taken from the electricity account of a business.
$
owing on 1 January 2007
500
paid during the year
4500
owing on 31 December 2007
600
How much should be charged to the profit and loss account for the year ended
31 December 2007?
A
$4400
B
$4500
C
$4600
D
$5600
27 A trader provides the following information.
$
purchase cost of premises
100 000
legal fees on purchase of premises
4 000
cost of extension to premises
15 000
How much is recorded in the premises account?
A
$100 000
B
$104 000
C
$115 000
D
$119 000
28 A machine costing $10 000 has an estimated life of 4 years. It is to be depreciated at 40 % per
annum using the reducing balance method.
What is the charge for depreciation in the second year?
A
$2400
B
$2500
C
$4000
D
$6400
29 In connection with stock valuation, what is meant by ‘net realisable value’?
A
selling price
B
selling price minus estimated profit
C
selling price minus estimated trade discount
D
selling price minus selling expenses
30 What is net profit?
A
income less cost of sales
B
income less expenses
C
purchases less cost of sales
D
purchases less expenses
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31 What does not appear in a profit and loss account?
A
carriage inwards
B
carriage outwards
C
discount allowed
D
discount received
32 At the end of her financial year a trader has prepaid insurance by $40.
What adjustments should the trader make in preparing her final accounts?
$
$
A
decrease expenses
40
increase current assets
40
B
decrease expenses
40
increase current liabilities
40
C
increase expenses
40
increase current assets
40
D
increase expenses
40
increase current liabilities
40
33 Which should be entered in the appropriation account of a partnership?
interest on
partners’ capital
A
B
C
interest on
partners’ loans
partners’
drawings
D
34 A trader supplies the following information.
$
capital at start of the year
30 000
capital at end of the year
50 000
drawings during the year
12 000
additional capital introduced during the year
18 000
What is the net profit for the year?
A
$10 000
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B
$14 000
C
$20 000
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D
$26 000
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11
35 Elizabeth started a business on 1 January but did not maintain any accounting records.
Which will not be included in a calculation to find credit sales for her first year of trading?
A
amount owing by debtors at year end
B
bad debts written off during the year
C
cheques received from credit customers during the year
D
goods returned to suppliers during the year
36 A business provides the following information.
$
motor vehicles
80 000
goodwill
50 000
premises
200 000
stock
15 000
equipment
10 000
What is the total of tangible fixed assets?
A
$280 000
B
$290 000
C
$340 000
D
$355 000
37 Which is a current liability of a cleaning business?
A
amounts owing by customers
B
cash at bank
C
stock of cleaning materials
D
unpaid staff wages
38 Which transaction affects the amount of working capital?
A
cash paid into bank
B
cash paid to a creditor
C
purchase of premises on credit
D
purchase of stock on credit
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39 A trader provides the following information at the end of her financial year.
$
fixed assets
80 000
current assets
20 000
current liabilities
10 000
return on capital employed (ROCE) 15 %
What was her net profit for the year?
A
$10 500
B
$12 000
C
$13 500
D
$15 000
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.
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0452/01/O/N/08