0452/12/O/N/10 Question Paper – Accounting Oct/Nov 2010 Paper 12

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Cambridge Accounting (0452) question paper for paper 12, Oct/Nov 2010 — 0452/12/O/N/10, file 0452_w10_qp_12.pdf.

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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education

*0535568012*

ACCOUNTING

0452/12
October/November 2010

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 a soft pencil for any diagrams or graphs.
Do not use staples, paper clips, highlighters, 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.

For Examiner's Use
1

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.

2
3
4
5
6
Total

This document consists of 19 printed pages and 1 blank pages.
IB10 11_0452_12/2RP
© UCLES 2010

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1

For
Examiner's
Use

There are 10 parts to question 1.
For each of the parts (a) to (j) below there are four possible answers A, B, C and D.
Choose the one you consider correct and place a tick () in the box to indicate the correct
answer.
(a) Why should a trader record all the financial information about her business?

to calculate her bank balance

to calculate her trade receivables (debtors)

to calculate her drawings

to calculate her profit

[1]

(b) Which entries are made in Xanthe’s ledger to record the payment by a customer of
money owing to Xanthe?

account to be debited

account to be credited

cash

creditor

cash

debtor

creditor

cash

debtor

cash

[1]

cash paid to Gideon debited to Gibson’s account

motor vehicles account omitted from the trial balance

purchase of fixtures for cash debited to the purchases account

no entry made for cash paid for stationery

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[1]

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3
(d) Maria maintains a provision for doubtful debts at 5% of the trade receivables (debtors)
at the end of each financial year.

For
Examiner's
Use

On 31 December 2008 the trade receivables (debtors) owed $25 000 and on
31 December 2009 the trade receivables (debtors) owed $20 000.
How much will appear in Maria’s income statement (profit and loss account) for the
year ended 31 December 2009?
A

$250 credit

$250 debit

$1000 credit

$1000 debit
[1]

(e) Karl’s trial balance for 31 December 2009 includes the following balances.
$
sales

3 200

inventory (stock) at 1 January 2009
purchases

200
1 800

expenses

800

Karl’s inventory (stock) at 31 December 2009 was $300.
What is Karl’s net profit for the year?
A

$400

$500

$700

$1500
[1]

(f) Which is not a current asset?

cash in hand

money owed by a customer

prepaid bill for electricity

unpaid invoice from a supplier

[1]

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(g) Which group contains only tangible fixed assets?

For
Examiner's
Use

bank, cash, trade receivables (debtors), inventory (stock)

bank, trade receivables (debtors), loan, prepaid expenses

equipment, goodwill, machinery, vehicles

equipment, machinery, premises, vehicles

[1]

(h) Joe and Paul are partners sharing profits in the ratio 3:2, after paying Paul an annual
salary of $15 000. For the year ended 31 March, the partnership’s net profit was
$55 000.
How much was credited to Paul’s current account for the year ended 31 March?
A

$15 000

$22 000

$31 000

$37 000
[1]

(i) A business provided the following information.
year 1

year 2

year 3

gross profit as a percentage of sales

37 %

net profit as a percentage of sales

12 %

10 %

What does this show?
A

control over expenses is getting better

control over expenses is getting worse

sales have reduced

sales have increased

[1]

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(j) The same accounting treatment should be applied to similar items at all times.

For
Examiner's
Use

Which accounting principle is being applied?
A

consistency

duality

money measurement

prudence

[1]
[Total: 10]

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2

(a) Name two business documents used to make entries in the accounting records of a
business.
(i)
(ii)

[2]

(b) In the table below, place a tick () under the correct heading to show whether the item
is income or expense.
Income

Expense

Bad debt recovered
Interest charged to customers
on overdue accounts
Discount allowed
[3]
(c) The total of the purchases journal is posted to the purchases account in the ledger. In
the table below, place a tick () to show whether this entry is a debit or a credit.
Debit

Credit

[1]
(d) Which accounting policy requires information to represent actual events and to be free
from error and bias?
[1]

(e) A cheque from Hipham was credited to Bipham’s account in the sales ledger. What
type of error has been made?
[1]

(f) Explain what is meant by a shareholder of a company having limited liability.

[2]

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(g) Sasha has a shop which sells fashion clothing.

For
Examiner's
Use

She bought 50 dresses for $13.00 each and paid total carriage inwards of $50.00.
She sold 30 dresses for $20.00 each.
The price at which she can sell the dresses has now fallen to $13.50 each.
At what amount will Sasha value the remaining dresses in her balance sheet?

[3]

(h) Tamara keeps her petty cash on the imprest system with an imprest of $150. She paid
expenses in the month of October of $80.50.
(i) What was the amount of petty cash remaining at 31 October?

(ii) How much cash was transferred to restore the imprest at 1 November?
[4]

(i)

Kishu’s business had inventory (stock) on 1 July 2009 of $6000 and on 30 June 2010
of $9000. His cost of goods sold for the year ended 30 June 2010 was $45 000.
Calculate his rate of inventory (stock) turnover. Show all your workings.

[4]
[Total: 21]

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3

Ottoman compared his cash book with the statement from his bank at 30 September 2010
and found the balance shown on the bank statement did not agree with the balance in the
bank column of his cash book.
REQUIRED
(a) Give two reasons why the balance shown in a cash book might not agree with the
balance shown on a bank statement at the same date.
(i)

(ii)
[4]

On 30 September 2010 the balance on Ottoman’s cash book (bank column) was $850 Dr.
The balance shown on his bank statement was $1660.
The cash book was checked against the bank statement and the following differences were
found.
1

Cheques totalling $250 issued to creditors had not been presented for payment.

Rent received of $800 paid directly into the bank on 30 September did not appear
in the cash book.

Bank charges of $60 were shown on the bank statement but had not been entered
in the cash book.

Cash sales recorded as $1200 were shown on the bank statement correctly as
$1500.

A cheque received from Hans for $480 and deposited at the bank on
28 September has been entered in the cash book but has not yet been shown on
the bank statement.

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REQUIRED
(b) Make any additional entries which are required in Ottoman’s cash book. Balance the
cash book at 30 September 2010 and find the adjusted balance carried down.

For
Examiner's
Use

Ottoman - Cash Book (bank columns)
Date

Detail

Dr
$

Date

Detail

Cr
$

[8]
(c) Prepare a bank reconciliation statement to reconcile the adjusted cash book balance
with the bank statement balance at 30 September 2010.
Ottoman
Bank Reconciliation Statement at 30 September 2010

[7]

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(d) (i) Name the heading under which bank will be shown in Ottoman’s balance sheet on
30 September 2010.

(ii) State the amount which will be entered for bank in Ottoman’s balance sheet on
30 September 2010.
[4]
[Total: 23]

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4

Sam Sumo received a statement of his account with the Eastern Commercial Company at
30 September 2010.

For
Examiner's
Use

REQUIRED
(a) Give one purpose of sending a statement of account to a customer.

[2]

Sam’s statement was as follows.

EASTERN COMMERCIAL COMPANY
STATEMENT OF ACCOUNT

Sam Sumo

Date

30 September 2010

Detail

Dr
$

Cr
$

Balance
$

400.00

7 Sales – invoice 301

56.50

456.50

12 Sales – invoice 330

217.00

673.50

Sept 1 Balance b/f

19 Sales returns – credit note 29
28 Bank – Sam Sumo

16.50

657.00

392.00

265.00
265.00

30 Balance c/f
Terms: 2% discount for settlement within 21 days.

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REQUIRED
(b) (i) State why Sam paid $392 on 28 September when the balance brought forward on
1 September was $400.

[1]
(ii) State whether this payment was for the correct amount. Give a reason for your
answer.

[3]

On 19 October 2010 Sam deducted the discount offered from the balance on the statement
dated 30 September 2010 and paid the net amount which he considered was due.
REQUIRED
(c) (i) Calculate the amount Sam deducted from the balance due at 30 September. Show
your workings.

[3]
(ii) State the net amount which Sam paid on 19 October.

[3]

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(d) Show the entries in the Eastern Commercial Company’s accounts for the month of
September to record each of the transactions shown in the statement of account on
page 11.

For
Examiner's
Use

Balance Sam Sumo’s account at 30 September.
Sam Sumo account

Sales account

Sales returns account

Cash book – bank columns

[10]

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(e) Sam wishes to take advantage each month of the discount terms offered by the Eastern
Commercial Company.
Explain how Sam can ensure he obtains the discount each month.

[2]
[Total: 24]

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5

Martina started a business on 1 October 2008 printing designs on T-shirts and bought a
printing machine for $3200.

For
Examiner's
Use

She decided to depreciate the printing machine on the straight line basis over 5 years and
expected the machine to have a scrap value of $700 after that time.
REQUIRED
(a) State one reason for charging depreciation on non-current (fixed) assets in an income
statement (profit and loss account).

[2]

(b) Calculate the depreciation charged in Martina’s income statement (profit and loss
account) for each of the two years ended 30 September 2009 and 2010.
Show all your workings.
(i) year ended 30 September 2009

(ii) year ended 30 September 2010

[6]

(c) Complete the following extract from Martina’s balance sheet at 30 September 2010.
Martina
Balance Sheet at 30 September 2010 (extract)
Cost
$

Provision for Net book
depreciation
value
$
$

Non-current (fixed) assets

[4]

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A new and quicker method of electronic T-shirt printing became available on 1 October
2010 using a machine costing only $1500.
Martina bought the new machine on 15 October 2010 and sold the existing machine for
scrap for $400.
REQUIRED
(d) Prepare the Disposal of non-current (fixed) assets account in Martina’s ledger to show
the scrapping of the old machine and the amount to be transferred to the income
statement (profit and loss account).
Disposal of machinery account

[5]

Martina expects the new machine to have a useful life of five years and to have no scrap
value after that time. However, she does not wish to show a loss on disposal if she has to
scrap the machine after three years.
REQUIRED
(e) Suggest which method and rate of depreciation Martina should use to depreciate the new
machine.
Give reasons for your answer.

[3]
[Total: 20]

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6

Ricardo has a business selling spare parts for cars. He lost many of his financial records in
a flood but has been able to provide the following information.

Non-current (fixed) assets
Current assets
Current liabilities

1 November 2009
$
12 000

31 October 2010
$
14 000

110 000

95 500

26 000

24 000

For
Examiner's
Use

Additional information:
1 Ricardo introduced additional capital of $50 000 on 1 January 2010.
2 He took drawings of $7500 each month.
3 He decided to increase the provision for doubtful debts by $1500 on
31 October 2010.
REQUIRED
(a) Prepare Ricardo’s statement of affairs on 1 November 2009 showing his total capital at
that date.
Ricardo – Statement of Affairs at 1 November 2009

[6]

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(b) Prepare Ricardo’s statement of affairs on 31 October 2010 showing his total capital at
that date.
Ricardo – Statement of Affairs at 31 October 2010

[6]

(c) Prepare Ricardo’s capital account for the year ended 31 October 2010. Show his net
profit for the year and the balance carried down.
Ricardo – Capital account

[6]

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19
Ricardo has decided to take a 5-year business loan from the bank. The money will be paid
in to his business bank account.
REQUIRED
(d) In the table below, place a tick () under the correct heading to show the effect which
taking the loan will have on each of the following items.
Increase

Decrease

No change

Current assets
Long term liabilities
Revenue (sales)
Working capital
[4]
[Total: 22]

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Accounting (0452) · Oct/Nov 2010 · Question paper 12

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