Accounting (0452) · Oct/Nov 2016 · Examiner report

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/11
Paper 11

Key messages
Candidates should indicate if they have re-written answers in a different section so that examiners can trace
their answers.
Candidates are expected to use International Accounting Terminology.
When preparing ledger accounts labels such as BBD and BD should not be used. Ideally balance b/d or c/d
should be written. Labelling items is extremely important when preparing income statements or statements of
financial position. Abbreviations such as COGS for cost of goods sold or GP and NP for gross profit and
profit should be avoided.
General comments
The paper was well attempted by a number of candidates. Candidates generally completed the paper and
did not seem to be time pressured.
Comments on specific questions
Question 1
This question comprised ten multiple choice items. There were only a few instances where candidates made
no attempt at a particular answer.
Specific questions proved more challenging than others. They are discussed below.
(b)

Correction of error proved demanding for some candidates. Candidates should be encouraged to
start by writing the initial entry, write the correct entry and then look at what is required to resolve it.

(h)

Clearly many candidates found this question difficult. Further revision is required as to the
treatment of dividends in the statement of changes in equity.

(i)

Candidates need more clarity as to what is included in an income and expenditure account.
Subscriptions received rather than total subscriptions for the year were used by many candidates
and the cost of fixed assets deducted to extract the surplus for the year.

Question 2
(a)

Most candidates answered this correctly. However common incorrect answers were
prudence/matching/continuity. There were a small number who offered ‘going on concern’.

(b)

This was also answered well, although some candidates answers fell short of a complete answer
for example ‘to check the arithmetical accuracy’ without specifying the accuracy of what. This was
a more common answer than suggesting that it helps in the preparation of financial statements.

(c)

The majority of candidates were aware of the use of the suspense account.

(d)

Many candidates answered this question well. The most common errors seemed to be with sales
returns, discount received, provision for doubtful debts and bad debts. Some candidates reversed a
‘capital’.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(e)

There were some candidates who referred to reducing fraud as a reason to maintain different
sections of the ledger without saying how or saying ‘check for errors’ without qualification.

(f)

This was attempted in a variable number of ways. Many identified all the ledgers correctly.
However some candidates did not seem to understand the organisation of ledgers. Most
candidates did seem to be able to identify the location of the credit customer and credit supplier
accounts, but less clear was the use of the nominal ledger. Discount allowed seemed to be the
most challenging for many as the cash book was offered for the ledger. Some candidates confused
books of prime entry with ledgers.

(g) (i)

The vast majority of candidates did identify that this was to encourage purchasing in bulk, although
there were some who referred to customer loyalty or confused this with cash discount.

(ii)

Many candidates refer to ‘speedy’ or ‘quick payments’ rather than a ‘prompt/early’ payment.

(h)

This was generally correctly answered, although some candidates did not seem to realise that they
needed to choose between trade and cash discount and referred to only discount received or
discount allowed.

(i)

Many wholly correct answers with a small number offering ‘Karen’ instead of capital. In other cases
the debit entry for drawings was correct although the credit entry was sometimes give as ‘car parts’
or ‘inventory’. There was some misinterpretation of the requirements of the question as some
candidates entered ‘ticks’ in the boxes.

(j)

Generally very well attempted. Some candidates offered duality, prudence, consistency.

(k)

Most candidates did correctly identify two interested parties and on the whole candidates are
attempted to offer more precise reasons for their interest. The most common interested party
offered was the bank. Other common answers were the government and suppliers. Some
candidates included shareholders and auditors forgetting that Karen was a sole trader.

(l)

This was very poorly answered. Very few candidates made any mention of affecting business
decisions. There seemed to be some confusion with materiality and reliability, although many
mentioned timeliness of information without completing the definition.

Question 3
(a)

Very few candidates offered the full definition of an asset. Most candidates mentioned ‘something
the business owns’ but did not include ‘something owed to the business’.

(b)

There were some good answers for both types of asset. The most common being assets lasting
more than or less than twelve months. Many candidates could provide a reasonable definition of a
current asset (popular answers were ‘items for resale’ or ‘turned to cash quickly’), but there were
less proficient answers explaining a non-current asset. Candidates also gave an opposite definition
by inserting the word ‘not’.

(c)

This was a correctly answered by the vast majority of candidates.

(d)

Similar problems to part (b) were encountered here although many candidates did seem to
appreciate the need to state the length of duration of the liability and referred to an appropriate
timescale.

(e) (i)(ii) Most candidates offered good suggestions although some were not specific to a bakery. However
items suggested were appropriate, for example, premises, motor vehicle and fixtures and fittings.
Part (ii) was also well answered although some candidates referred to generic items such as raw
materials/ work in progress.
(f) (i)
(ii)

Many candidates gave wholly correct answers to one decimal place as required.
This question proved challenging for many candidates. Many were not able to use the method they
correctly applied in (i) to identify the missing figure. There were many combinations of assets and
liabilities used sometimes resulting in a negative figure. Candidates should be encouraged to apply
a ‘reasonableness’ test on the suitability of their answer.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(g)

Many candidates understood the bank balance went from positive to negative but reasons offered
were poor, many just relaying the information. Some candidates merely stated ‘took an overdraft’ or
equivalent, without identifying reasons why this may have come about. Some candidates offered
‘purchasing non-current assets’ as a reason. Candidates should be encouraged to use the
information provided in the question, for example, trade receivable increased significantly indicating
some lack of credit control. Many candidates offered ‘paying trade payables’ as a reason but trade
payables decreased indicating that she may have paid them early. Using the information on
inventory from (f)(ii) candidates could also see that much more inventory had been purchased.

Question 4
(a)

There were many good attempts at this question where candidates understood that they were
being given the opening and closing balances, a purchase during the year and were required to
extract the disposal. Many were accurate in using dates.

(b)

Many candidates provided accurate answers. However, other candidates offered various
combinations of calculations. It was common to see $360 (depreciation on the acquisition) or
$2080 (depreciation on the opening balance $17 200 and $360).

(c)

Answers to this question were poor. A number of candidates did not attempt it and there was
frequent reversal of the entries. Many did not seem to understand the impact of the transfer to the
income statement using the figure calculated in (b) and where it was recognised many stated
‘depreciation’ and not ‘income statement’. Only a small number of candidates recognised the
transfer of the depreciation on the disposal. Many omitted this entry.

(d)

This was answered almost completely correctly.

(e)

Only a small number of candidates identified that the purchase had no effect on capital.

(f)

The majority of candidates answered this question correctly.

Question 5
(a)

Relatively few candidates could explain the meaning of a direct cost, although they seemed to be
generally aware that it was to do with production and manufacturing but did not state that it was
related to a product or unit. Generally meanings given were too vague.

(b)

Appropriate answers, relevant to a clothing manufacturer were given by many candidates. However
there were references to sewing machines as a direct cost and many answers were too vague
such as just labour/wages. Some candidates offered two types of material or just raw materials.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(c)

The most common answer was supervisor’s salary which clearly indicates candidates know the
difference between direct and indirect cost.

(d) (i)

There were many good attempts at this question. Most candidates recognised the elements of the
cost of production. The most common error was to add rather than deduct the increase in the work
in progress. Where information is given in this form, candidates should be encouraged to practice
examples using an opening and closing figure for work in progress to understand the effect on
production costs.

(ii)

This question was generally answered very well. Occasionally the drawings were omitted however
everything else treated correctly. However there were some poor attempts where candidates were
confused between a manufacturing account and income statement and attempted to add
production costs to revenue. Other candidates did not bring forward production costs from (i).

(e)

There were good suggestions why Mistry Clothing purchased finished goods.

(f)

Many candidates gained full credit. Recognition of calculating to two decimal places was observed
by most candidates. Some candidates reversed the numerator and denominator and a small
number used revenue for cost of sales.

(g)

Many candidates offered two good reasons for the fall in inventory turnover. The most common
answers were ‘lower sales activity’ and ‘increased inventory’. Some candidates semed to be
confused with increased/decreased sales activity with selling prices and revenue.

Question 6
(a)

Most candidates were well prepared on the appropriate entries in a cash book. However few
gained full credit as the entry for capital proved challenging. It was omitted, wrongly labelled as
capital or as ‘balance b/d’. Few recognised the need for an entry for each partner. Most candidates
correctly calculated the discount received from Bertie and some then entered this in the cash book.
The sales of $7900 were often entered as bank/cash and there were many inclusions of the sale to
Charlie of $500. Wages and rent were generally correctly applied.

(b) (i)

Relatively few candidates gained full credit here, the common error being the omission of the
closing inventory. Some used the payment to Bertie ($3880) for the cost of sales. A small number
of candidates used sales of $7900 after the deduction of the cash withheld.

(ii)

(c)

This question was well attempted. The addition of the discount received included was dealt with
correctly. The common errors were including rent for three months and a whole year of
depreciation on the delivery vehicle and fixtures and fittings.
A statement of financial position for a partnership provided candidates with the opportunity to
demonstrate their knowledge of the construction of a statement of financial position and how it is
applied to a partnership. The non-current assets were on the whole executed accurately with the
application of the own figure for depreciation from (b)(ii). Many candidates did not use headings
‘Cost’ and ‘Accumulated depreciation’. On the current assets the main omissions were the ‘other
receivables’ and ‘inventory’. Most candidates recognised there was a figure necessary for ‘bank’
and on the whole realised this was from (a). It was common to see a bank figure of $10 000 or
$7900. Some candidates arrived at an overdrawn figure in (a) but showed this as a current asset.
The capital section seemed to be difficult for many candidates. Only the capital, $5000, for each
partner was shown in the capital accounts and the introduction of the fixed assets were either
omitted or shown as part of the current account. Many candidates, however, applied the correct
profit sharing ratio from their profit calculated in (b)(ii) but many labelled this as ‘profit’ rather than
current account on the statement. Many candidates showed only a total for capital and profit as if
for a sole trader.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/12
Paper 12

Key messages
Candidates should indicate if they have re-written answers in a different section so that examiners can trace
their answers.
Candidates are expected to use International Accounting Terminology.
When preparing ledger accounts labels such as BBD and BD should not be used. Ideally balance b/d or c/d
should be written. Labelling items is extremely important when preparing income statements or statements of
financial position. Abbreviations such as COGS for cost of goods sold or GP and NP for gross profit and
profit should be avoided.
General comments
The paper was well attempted by a number of candidates. Candidates generally completed the paper and
did not seem to be time pressured.
Comments on specific questions
Question 1
This question comprised ten multiple choice items. There were only a few instances where candidates made
no attempt at a particular answer.
Specific questions proved more challenging than others. They are discussed below.
(b)

Correction of error proved demanding for some candidates. Candidates should be encouraged to
start by writing the initial entry, write the correct entry and then look at what is required to resolve it.

(h)

Clearly many candidates found this question difficult. Further revision is required as to the
treatment of dividends in the statement of changes in equity.

(i)

Candidates need more clarity as to what is included in an income and expenditure account.
Subscriptions received rather than total subscriptions for the year were used by many candidates
and the cost of fixed assets deducted to extract the surplus for the year.

Question 2
(a)

Most candidates answered this correctly. However common incorrect answers were
prudence/matching/continuity. There were a small number who offered ‘going on concern’.

(b)

This was also answered well, although some candidates answers fell short of a complete answer
for example ‘to check the arithmetical accuracy’ without specifying the accuracy of what. This was
a more common answer than suggesting that it helps in the preparation of financial statements.

(c)

The majority of candidates were aware of the use of the suspense account.

(d)

Many candidates answered this question well. The most common errors seemed to be with sales
returns, discount received, provision for doubtful debts and bad debts. Some candidates reversed a
‘capital’.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(e)

There were some candidates who referred to reducing fraud as a reason to maintain different
sections of the ledger without saying how or saying ‘check for errors’ without qualification.

(f)

This was attempted in a variable number of ways. Many identified all the ledgers correctly.
However some candidates did not seem to understand the organisation of ledgers. Most
candidates did seem to be able to identify the location of the credit customer and credit supplier
accounts, but less clear was the use of the nominal ledger. Discount allowed seemed to be the
most challenging for many as the cash book was offered for the ledger. Some candidates confused
books of prime entry with ledgers.

(g) (i)

The vast majority of candidates did identify that this was to encourage purchasing in bulk, although
there were some who referred to customer loyalty or confused this with cash discount.

(ii)

Many candidates refer to ‘speedy’ or ‘quick payments’ rather than a ‘prompt/early’ payment.

(h)

This was generally correctly answered, although some candidates did not seem to realise that they
needed to choose between trade and cash discount and referred to only discount received or
discount allowed.

(i)

Many wholly correct answers with a small number offering ‘Karen’ instead of capital. In other cases
the debit entry for drawings was correct although the credit entry was sometimes give as ‘car parts’
or ‘inventory’. There was some misinterpretation of the requirements of the question as some
candidates entered ‘ticks’ in the boxes.

(j)

Generally very well attempted. Some candidates offered duality, prudence, consistency.

(k)

Most candidates did correctly identify two interested parties and on the whole candidates are
attempted to offer more precise reasons for their interest. The most common interested party
offered was the bank. Other common answers were the government and suppliers. Some
candidates included shareholders and auditors forgetting that Karen was a sole trader.

(l)

This was very poorly answered. Very few candidates made any mention of affecting business
decisions. There seemed to be some confusion with materiality and reliability, although many
mentioned timeliness of information without completing the definition.

Question 3
(a)

Very few candidates offered the full definition of an asset. Most candidates mentioned ‘something
the business owns’ but did not include ‘something owed to the business’.

(b)

There were some good answers for both types of asset. The most common being assets lasting
more than or less than twelve months. Many candidates could provide a reasonable definition of a
current asset (popular answers were ‘items for resale’ or ‘turned to cash quickly’), but there were
less proficient answers explaining a non-current asset. Candidates also gave an opposite definition
by inserting the word ‘not’.

(c)

This was a correctly answered by the vast majority of candidates.

(d)

Similar problems to part (b) were encountered here although many candidates did seem to
appreciate the need to state the length of duration of the liability and referred to an appropriate
timescale.

(e) (i)(ii) Most candidates offered good suggestions although some were not specific to a bakery. However
items suggested were appropriate, for example, premises, motor vehicle and fixtures and fittings.
Part (ii) was also well answered although some candidates referred to generic items such as raw
materials/ work in progress.
(f) (i)
(ii)

Many candidates gave wholly correct answers to one decimal place as required.
This question proved challenging for many candidates. Many were not able to use the method they
correctly applied in (i) to identify the missing figure. There were many combinations of assets and
liabilities used sometimes resulting in a negative figure. Candidates should be encouraged to apply
a ‘reasonableness’ test on the suitability of their answer.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(g)

Many candidates understood the bank balance went from positive to negative but reasons offered
were poor, many just relaying the information. Some candidates merely stated ‘took an overdraft’ or
equivalent, without identifying reasons why this may have come about. Some candidates offered
‘purchasing non-current assets’ as a reason. Candidates should be encouraged to use the
information provided in the question, for example, trade receivable increased significantly indicating
some lack of credit control. Many candidates offered ‘paying trade payables’ as a reason but trade
payables decreased indicating that she may have paid them early. Using the information on
inventory from (f)(ii) candidates could also see that much more inventory had been purchased.

Question 4
(a)

There were many good attempts at this question where candidates understood that they were
being given the opening and closing balances, a purchase during the year and were required to
extract the disposal. Many were accurate in using dates.

(b)

Many candidates provided accurate answers. However, other candidates offered various
combinations of calculations. It was common to see $360 (depreciation on the acquisition) or
$2080 (depreciation on the opening balance $17 200 and $360).

(c)

Answers to this question were poor. A number of candidates did not attempt it and there was
frequent reversal of the entries. Many did not seem to understand the impact of the transfer to the
income statement using the figure calculated in (b) and where it was recognised many stated
‘depreciation’ and not ‘income statement’. Only a small number of candidates recognised the
transfer of the depreciation on the disposal. Many omitted this entry.

(d)

This was answered almost completely correctly.

(e)

Only a small number of candidates identified that the purchase had no effect on capital.

(f)

The majority of candidates answered this question correctly.

Question 5
(a)

Relatively few candidates could explain the meaning of a direct cost, although they seemed to be
generally aware that it was to do with production and manufacturing but did not state that it was
related to a product or unit. Generally meanings given were too vague.

(b)

Appropriate answers, relevant to a clothing manufacturer were given by many candidates. However
there were references to sewing machines as a direct cost and many answers were too vague
such as just labour/wages. Some candidates offered two types of material or just raw materials.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(c)

The most common answer was supervisor’s salary which clearly indicates candidates know the
difference between direct and indirect cost.

(d) (i)

There were many good attempts at this question. Most candidates recognised the elements of the
cost of production. The most common error was to add rather than deduct the increase in the work
in progress. Where information is given in this form, candidates should be encouraged to practice
examples using an opening and closing figure for work in progress to understand the effect on
production costs.

(ii)

This question was generally answered very well. Occasionally the drawings were omitted however
everything else treated correctly. However there were some poor attempts where candidates were
confused between a manufacturing account and income statement and attempted to add
production costs to revenue. Other candidates did not bring forward production costs from (i).

(e)

There were good suggestions why Mistry Clothing purchased finished goods.

(f)

Many candidates gained full credit. Recognition of calculating to two decimal places was observed
by most candidates. Some candidates reversed the numerator and denominator and a small
number used revenue for cost of sales.

(g)

Many candidates offered two good reasons for the fall in inventory turnover. The most common
answers were ‘lower sales activity’ and ‘increased inventory’. Some candidates semed to be
confused with increased/decreased sales activity with selling prices and revenue.

Question 6
(a)

Most candidates were well prepared on the appropriate entries in a cash book. However few
gained full credit as the entry for capital proved challenging. It was omitted, wrongly labelled as
capital or as ‘balance b/d’. Few recognised the need for an entry for each partner. Most candidates
correctly calculated the discount received from Bertie and some then entered this in the cash book.
The sales of $7900 were often entered as bank/cash and there were many inclusions of the sale to
Charlie of $500. Wages and rent were generally correctly applied.

(b) (i)

Relatively few candidates gained full credit here, the common error being the omission of the
closing inventory. Some used the payment to Bertie ($3880) for the cost of sales. A small number
of candidates used sales of $7900 after the deduction of the cash withheld.

(ii)

(c)

This question was well attempted. The addition of the discount received included was dealt with
correctly. The common errors were including rent for three months and a whole year of
depreciation on the delivery vehicle and fixtures and fittings.
A statement of financial position for a partnership provided candidates with the opportunity to
demonstrate their knowledge of the construction of a statement of financial position and how it is
applied to a partnership. The non-current assets were on the whole executed accurately with the
application of the own figure for depreciation from (b)(ii). Many candidates did not use headings
‘Cost’ and ‘Accumulated depreciation’. On the current assets the main omissions were the ‘other
receivables’ and ‘inventory’. Most candidates recognised there was a figure necessary for ‘bank’
and on the whole realised this was from (a). It was common to see a bank figure of $10 000 or
$7900. Some candidates arrived at an overdrawn figure in (a) but showed this as a current asset.
The capital section seemed to be difficult for many candidates. Only the capital, $5000, for each
partner was shown in the capital accounts and the introduction of the fixed assets were either
omitted or shown as part of the current account. Many candidates, however, applied the correct
profit sharing ratio from their profit calculated in (b)(ii) but many labelled this as ‘profit’ rather than
current account on the statement. Many candidates showed only a total for capital and profit as if
for a sole trader.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/13
Written

Key Messages
It is important to have appropriate narratives in ledger accounts which link to the other ledger account
involved and not to describe the action taking place. Abbreviations should be avoided. Do not merge entries
together in ledger accounts for example, debit bank balances for 3(c).
Candidates should indicate if they have re-written answers in a different section so that examiners can trace
their answers.
It is expected that candidates will use International Accounting Terminology.
General Comments
All the questions were compulsory and covered various topics on the syllabus.
Overall, the paper was well attempted by a number of candidates. There were some exceptional scripts
where candidates had clearly been well prepared.
Comments on Specific Questions
Question 1
Generally (a), (b), (c), (d), (h), (i), (j), were well answered. Candidates found parts (e), (f) and (g)
challenging.
(e)

Statement 2 that capital employed equals owner’s capital less non-current liabilities is incorrect.
Statements 1 and 3 are correct. Therefore the correct answer is option B.

(f)

The key word in the question was the total amount credited. Candidates needed to adjust the profit
for the year for the interest on capital, $60 000 – $6000 = $54 000 and then divide by two to
calculate Jamila’s share, $27 000 and then add the $4000 interest on capital to gain $31 000 which
is option D.

(g)

The question required candidates to determine by how much did total equity increase during the
year. The transfer to general reserve needs ignoring as this has no overall impact as it is a
movement within the statement of changes of equity.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
Question 2
(a)

Many wholly correct answers were there. Where errors were made it tended to be on items two and
three.

(b)

Majority of candidates gave correct answers with loans and trade payables being the most popular.

(c)

For the credit entry the word provision was often missing. Some candidates referred to the bank or
a non-current asset. The debit entry needed to be the income statement and not the depreciation
expense account which many wrote.

(d)

Answers tended to concentrate on there being fewer entries in the ledger, sharing the work load
and easy reference. Some candidates incorrectly suggested that these books would reduce errors
and fraud and provide totals of the amounts owing or owed. Some answers were more suitable for
the trial balance with ‘help in preparing financial statements’ as a common answer.

(e)

While some candidates answered this question well, common error was referring to ledgers instead
of books of prime entry. Source documents were not always described specifically, for example,
invoice rather than sales invoice or purchase invoice.

(f)

This was answered reasonably well. Some candidates incorrectly assumed that the service
business was in the public sector with references to helping the public or that a service business is
a club providing facilities for its members.

(g)

Many candidates found it challenging to distinguish between the accounts of service businesses
and trading businesses.

(h)

This was generally well answered. Some candidates used incorrect wording, for example,
monetary measurement instead of money measurement.

Question 3
(a)

This was generally answered well. Some candidates calculated rent for 8 months or split the year
incorrectly.

(b)

The majority of candidates appreciated that this represented an accrual although some related it to
a trade supplier or an overdraft. The most common error was to identify the figure as a
prepayment. A few appeared to misunderstand the question and provided a variety of figures.

(c)

There were varied answers here. Some weak responses completely reversed the account.
Common errors included; incorrect dates, omission of income statement entry, adding all bank
entries together rather than showing them separately and using the narrative rent instead of bank.
Another common error was not bringing down $13 600 from 3(a) or using a different figure even if
3(a) was correct. The figure was sometimes completely ignored.

(d)

Many candidates did not make adjustments to the sales and sales returns for the trade discount.
Many candidates simply used the gross figures. Some showed the trade discount as a separate
item within the account. Even those candidates who correctly used the net figures for sales did not
adjust the returns for the trade discount.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(e)

This question was generally answered incorrectly. This question required a thorough understanding
of the book-keeping system. Precise wording was required and not just purchases ledger control
account and sales ledger control account.

(f)

A correct answer was usually provided here but some candidates did answer with unfinished goods
or manufacturing account.

(g)

Most candidates answered this question well. The most common error was associating carriage
inwards with the income statement only. Whilst this is possible it is more likely to be found on the
manufacturing account.

Question 4
(a)

This was well answered with additional capital, sharing losses and sharing work load being popular
correct responses.

(b)

Many candidates correctly stated that it would avoid disagreements in the future. A number did not
appear to fully appreciate what the question was asking and they suggested items which should be
included in an agreement.

(c)

Most candidates answered well on this question. Interest on capital and interest on drawings were
popular responses.

(d)

Most candidates correctly indicated bank as a credit entry. Many stated drawings for the debit entry
but did not specify Rajiv’s drawings.

(e)

Most candidates did not answer this question correctly. Common errors were; repeating the entries
for 4(d) or debit current account and credit drawings. It was necessary to be specific in this
question with reference to Rajiv on both entries.

(f)

There were varied answers on this question. Common errors included; entering fees as a debit
entry, entering provision for depreciation as a debit entry, entering drawings as credit entries and
showing the $900 on Friedrich’s current account as a negative credit balance. Most candidates did
attempt to calculate the missing figure.

Question 5
(a)

Some candidates answered well on this question. A significant number of weaker responses
included the extraneous item of cash sales.

(b)

Once again performance of candidates varied on this question. Some candidates incorrectly
labelled the discount received as income statement. Some struggled which side to place the
balance carried down which was a given figure.

(c)

Some candidates answered this question well. There was a wide range of styles of presentation of
layout. A common error was to provide an incorrect figure for depreciation. Some candidates found
it difficult to determine the missing figures and so just showed the assets and liabilities sections. If
they did attempt the capital section they often just showed the opening capital and subtracted the
drawings. Candidates often mistakenly placed the bank overdraft as a non-current liability rather
than a current liability.

(d)

Stronger responses recognised not only that drawings were excessive but that they need to be
reduced to prevent financial problems in the future. Some candidates misread the question as they
commented on accounting principles and more specifically business entity. Correct responses were
sometimes restricted to stating that drawings were too high and stronger responses made
comparisons between the amount of drawings, profit for the year and capital.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
Question 6
(a)

The main error in the income statement was the inclusion of extraneous items such as
subscriptions and club expenses, mainly the rent. Many did not make adjustments for purchases
for the opening and closing amounts owing. There was incorrect labelling for the loss for the year
which some candidates using deficit instead.

(b)

There were wide variations in candidate performance. Common errors included; incorrect
calculation of subscriptions, addition of shop sales as income, inclusion of shop wages in
expenses, inclusion of club equipment at cost, incomplete labelling of depreciation of club
equipment, incorrect calculation of depreciation and poor labelling of deficit.

(c)

Again, there were wide variations in candidate performance. Many candidates did not seem to
know the formula for mark-up. Common errors were using the profit for the year as numerator and
then the sales as denominator and rounding to one decimal place or to the nearest whole number.

(d)

Candidates found this question to be most challenging. Whilst most candidates attempted this
question, a significant number left it blank. The common errors were not using their own cost of
sales from 6(a) and using the sales figure instead of $6700. Commission was generally correctly
calculated and computer costs included.

(e)

Most candidates were able to suggest two acceptable ways in which the financial position could be
improved. Common errors included referring to increasing capital or general comments about
increasing sales or decreasing purchases.

(f)

Stronger responses stated that members were not owners or had not invested in the business, but
few then stated they were not entitled to a return on investment. Common errors were; reference to
not being shareholders, reference to non-profit organisation but nothing else.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/21
Paper 21

Key messages
All the questions on this structured paper were compulsory. The paper covered a wide range of syllabus
topics.
Candidates should read through a question very carefully before attempting an answer. This ensures that an
important piece of information is not overlooked and that instructions are followed precisely. For example, to
get full credit candidates were expected to follow an instruction to calculate the percentage of gross profit to
revenue correct to two decimal places. A factually correct statement which is not the answer to the question
being asked cannot be awarded credit. For example, stating the formula for the gross profit percentage is not
an acceptable answer to a question asking for reasons for the change in the ratio. Where a question requires
candidate to provide a set number of points this instruction must be followed.
Where appropriate, candidates are advised to provide supporting calculations. This ensures that at least
some credit may be earned even though the final answer may be incorrect.
The spaces provided on the question paper for candidates’ answers should be adequate. Sometimes it may
be necessary for a candidate to cross out all or part of their answer and provide another answer elsewhere
on the question paper. It is very important that candidates indicate that this has been done. A note ‘Please
refer to Page«..’ or ‘Continued on page«..’ would ensure that this additional work is not overlooked when
the script is being marked.
Candidates should avoid the use of inappropriate abbreviations such as ‘bbd’ for ‘balance’ in ledger accounts
or ‘TR’ for ‘Trade Receivables’ and ‘PDD’ for ‘Provision for Doubtful debts’ in financial statements.
Candidates are expected to be familiar with International Accounting Terminology and avoid the use of ‘old’
terminology such as ‘stock’ and ‘net profit’ etc.
General comments
It is important that candidates present accounting statements in the correct format and that appropriate
descriptions are used in both financial statements and in ledger accounts. The written answers produced in
some of the narrative questions were vague and lacked clarity. Accounting is a subject in which precision is
extremely important.
All the day to day records of a business are based on double entry book-keeping. Candidates must have a
good knowledge of double entry and must be able to apply this to the various scenarios. In addition to the
actual entries in the account, attention must be paid to the words entered in the details column and to the
dates.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a)

Candidates were required to name the source of information for four items appearing in a sales
ledger control account. Most candidates correctly identified the books for items one and three.
Many candidates had problems in identifying the journal as the response for items two and four.

(b)

Two reasons for the preparation of a purchases ledger control account were required. Many
responses correctly mentioned reducing fraud and checking for errors. A number of candidates
erroneously believed that the purchase ledger control account is used to calculate purchases. The
account may help in reducing and discovering fraud but will not actually prevent it. Some answers
lacked precision. For example ‘checks arithmetical accuracy’ was not regarded as adequate as it
should have been related specifically to the purchases ledger.

(c)

Using information provided candidates were required to prepare a purchases ledger control
account. Most candidates answered well. Common errors included entering the contra item on both
sides; or including extraneous items such as cash purchases and discount allowed; or not taking
the debit balance into consideration when calculating the credit balance and incorrect details such
as ‘cheque’ and ‘refund’.

(d)

Many candidates understood that discount may be available, but they did not specify whether the
discount referred to was cash discount or trade discount.

(e)

The fact that the money would not be available for other uses within the business was explained by
many candidates. Some incorrectly stated that the working capital would be decreased. A
significant number appear to have misunderstood the question and provided a disadvantage of
paying a supplier after the due date.

Question 2
(a)

Candidates had to identify the books of prime (original) entry in which various business documents
would be entered by a supplier and a customer. There were some wholly correct responses.
Common errors included making reference to ledgers; or confusing the supplier with the customer;
or not recognising that debit notes and statements of account do not appear in accounting records.

(b)

The name of the person issuing various business documents and the reason for the issue of each
document had to be stated. A common error was to use ‘supplier’ and ‘customer’ rather than the
name of the trade as required by the question. Most candidates were able to suggest a valid
reason for the issue of the documents, but some found it challenging to express themselves
clearly. Others did not appear to understand the purpose of these documents.

(c)

The account of the credit customer had to be prepared in the books of the supplier. Candidates
with a good understanding of double entry were able to earn marks. Common errors included
incorrect details such as ‘purchases’ and ‘invoice’ for ‘sales’; or inclusion of the debit note and the
statement of account.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
Question 3
(a)

Candidates were required to state the meaning of three terms relating to clubs and societies. Most
candidates understood that subscriptions were the amounts paid by members to use the facilities
of the club. A few incorrectly referred to amounts received form customers or fees to join the club.
The majority of candidates knew that accumulated fund represents the ‘capital’ of a club but often
incorrectly referred to the funds invested by the owners of the club.
Very few candidates were able to explain that a receipts and payments account is a summary of
the cash book: most stated that it was the cash book of a club.

(b)

Using information provided, the income statement of a shop had to be prepared. Most candidates
earned some of the available marks. Common errors included not adjusting the purchases for the
amount due to suppliers; or incorrect treatment of the loan to shop assistant; or inclusion of
extraneous items; or incorrect calculation of the shop expenses; or incorrect labelling of the shop
profit.

(c)

Candidates were required to prepare an income and expenditure account. Once again, most
candidates answered this well. Common errors included incorrect calculations of the subscriptions
and some of the expenses; or inclusion of extraneous items; or including loan interest for twelve
months instead of six months; or not including the name of the asset being depreciated; or
incorrect labelling of the deficit.

Question 4
(a)

Some candidates found it difficult to express themselves when stating the meaning of three
accounting terms. Most candidates understood the term ‘bad debts’ but a few incorrectly stated that
these are debts which may not be paid or amounts not yet paid by customers. When explaining the
term ‘bad debts recovered’ mention should have been made of the fact that these are debts which
had previously been written off; it was not adequate to state ‘amounts received from credit
customers’. Candidates should understand that a provision for doubtful debts does not represent a
sum of money. It is an estimate of the amount a business will lose in a financial period because of
bad debts.

(b)

Most candidates were able to identify at least one of the accounting principles applied by
maintaining a provision for doubtful debts.

(c)

The question required candidates to suggest two ways in which the possibility of bad debts could
be reduced. Common correct responses included reducing credit sales/selling for cash only,
obtaining references from new credit customers, and refusing further supplies until outstanding
debts were paid. A few answers were inadequate. For example, it was not acceptable to simply
state ‘give discount’ or ‘send invoices’.

(d)

Three journal entries had to be prepared. Many candidates would benefit from extra practice on
journal entries. To write off a bad debt the bad debts account should have been debited and the
account of Uzma should have been credited. Closing the bad debts account at the end of the
financial year required the income statement to be debited and the bad debts account to be
credited. The amount was $2314 which was the total bad debts for the year. To adjust the provision
for doubtful debts the income statement to be debited and the provision for doubtful debts account
to be credited. The amount was $138 which represented the increase in the provision from $1450
to $1588 (2% of $79 400).

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(e)

An extract from the statement of financial position was required showing the entry for trade
receivables. Many candidates found this challenging. The provision for doubtful debts of $1588
should have been deducted from the trade receivables ($79 400) to show the net figure. Some
candidates seemed to confuse the presentation with that of non-current assets and attempted a
columnar format. Other candidates wrote down figures but no accompanying descriptions.

Question 5
(a)

A statement of changes in equity had to be completed. There were some wholly correct responses,
but many candidates would have benefitted from additional practice on this topic. Some candidates
correctly entered the profit for the year, but then were unsure about the entries required for the
dividend paid and the transfer to reserve.

(b)

Using information provided, candidates were required to prepare the statement of financial position
for a limited company.
A significant number of candidates included only the net book value of the non-current assets.
Alternatively, a large number showed the three figures for each asset, but did not head the columns
with “cost”, “accumulated depreciation” and “net book value”. The presentation of the trade
receivables was also often incorrect. The gross figure for the trade receivables should have been
shown less the provision for doubtful debts (words and figure).
Other common errors included including the bank overdraft in the current assets; or including
debentures in the current liabilities; or within the equity and reserves; or including interest on
debentures when no entry was required for this item; or completely omitting the equity and
reserves section or showing a total figure for the equity and reserves without itemising the
components.

(c)

Candidates were required to calculate the collection period for trade receivables and the payment
period for trade payables, and to comment on their answers. Many candidates answered well on
this question. A few candidates incorrectly included cash sales and cash purchases in their
calculations. Some incorrectly multiplied by 28 days and 30 days rather than 365 days.
Many candidates stated that both the periods fell within the number of days allowed. Only the more
able candidates also mentioned the effect on the company’s liquidity and the possibility of giving
and receiving cash discount.

Question 6
(a)

Using information provided, candidates were required to calculate the gross profit, revenue,
percentage of gross profit to revenue and percentage of profit for the year to revenue.
A large number of candidates calculated the gross profit which was 30% of the cost of sales. Many
candidates also provided the correct answer of $370 500 for the revenue, which was the cost of
sales plus the gross profit.
Using the figures calculated for gross profit and revenue, many candidates were able to earn the
available marks for the percentage of gross profit to revenue. Some candidates did not provide the
answer correct to two decimal places.
The given figure of profit for the year had to be expressed as a percentage of the figure for revenue
calculated in the first part of the question. Again, many candidates earned the available marks,
though some did not provide the answer correct to two decimal places.

(b)

Candidates were required to suggest two reasons for the increase in the percentage of gross profit
to revenue. Correct responses referred to an increase in the selling price and a decrease in the
cost of purchases. Common errors included reference to increase in quantity of goods sold; or
decrease in quantity of goods purchased.

(c)

Two reasons for the decrease in the percentage of profit for the year to revenue had to be
suggested. Many candidates identified higher expenses as the reason, but could not suggest
another reason.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
(d)

A statement had to be completed showing the effect of correcting of various errors on the profit for
the year and the corrected profit figure.
Many candidates correctly identified whether the errors would increase or decrease the profit but
often provided incorrect figures. Errors four and five proved to be the most challenging.
Some candidates did not earn the own figure mark for the corrected profit because of incorrect
calculations. Common errors included omission of the $110 which was provided as an example; or
adjusting the profit with the total of the increase and decrease columns; or deducting a net increase
from the draft profit; or adding a net decrease to the profit.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/22
Paper 22

Key messages
All the questions on this structured paper were compulsory. The paper covered a wide range of syllabus
topics.
Candidates should read through a question very carefully before attempting an answer. This ensures that an
important piece of information is not overlooked and that instructions are followed precisely. For example, to
get full credit candidates were expected to follow an instruction to calculate the percentage of gross profit to
revenue correct to two decimal places. A factually correct statement which is not the answer to the question
being asked cannot be awarded credit. For example, stating the formula for the gross profit percentage is not
an acceptable answer to a question asking for reasons for the change in the ratio. Where a question requires
candidate to provide a set number of points this instruction must be followed.
Where appropriate, candidates are advised to provide supporting calculations. This ensures that at least
some credit may be earned even though the final answer may be incorrect.
The spaces provided on the question paper for candidates’ answers should be adequate. Sometimes it may
be necessary for a candidate to cross out all or part of their answer and provide another answer elsewhere
on the question paper. It is very important that candidates indicate that this has been done. A note ‘Please
refer to Page«..’ or ‘Continued on page«..’ would ensure that this additional work is not overlooked when
the script is being marked.
Candidates should avoid the use of inappropriate abbreviations such as ‘bbd’ for ‘balance’ in ledger accounts
or ‘TR’ for ‘Trade Receivables’ and ‘PDD’ for ‘Provision for Doubtful debts’ in financial statements.
Candidates are expected to be familiar with International Accounting Terminology and avoid the use of ‘old’
terminology such as ‘stock’ and ‘net profit’ etc.
General comments
It is important that candidates present accounting statements in the correct format and that appropriate
descriptions are used in both financial statements and in ledger accounts. The written answers produced in
some of the narrative questions were vague and lacked clarity. Accounting is a subject in which precision is
extremely important.
All the day to day records of a business are based on double entry book-keeping. Candidates must have a
good knowledge of double entry and must be able to apply this to the various scenarios. In addition to the
actual entries in the account, attention must be paid to the words entered in the details column and to the
dates.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a)

Candidates were required to name the source of information for four items appearing in a sales
ledger control account. Most candidates correctly identified the books for items one and three.
Many candidates had problems in identifying the journal as the response for items two and four.

(b)

Two reasons for the preparation of a purchases ledger control account were required. Many
responses correctly mentioned reducing fraud and checking for errors. A number of candidates
erroneously believed that the purchase ledger control account is used to calculate purchases. The
account may help in reducing and discovering fraud but will not actually prevent it. Some answers
lacked precision. For example ‘checks arithmetical accuracy’ was not regarded as adequate as it
should have been related specifically to the purchases ledger.

(c)

Using information provided candidates were required to prepare a purchases ledger control
account. Most candidates answered well. Common errors included entering the contra item on both
sides; or including extraneous items such as cash purchases and discount allowed; or not taking
the debit balance into consideration when calculating the credit balance and incorrect details such
as ‘cheque’ and ‘refund’.

(d)

Many candidates understood that discount may be available, but they did not specify whether the
discount referred to was cash discount or trade discount.

(e)

The fact that the money would not be available for other uses within the business was explained by
many candidates. Some incorrectly stated that the working capital would be decreased. A
significant number appear to have misunderstood the question and provided a disadvantage of
paying a supplier after the due date.

Question 2
(a)

Candidates had to identify the books of prime (original) entry in which various business documents
would be entered by a supplier and a customer. There were some wholly correct responses.
Common errors included making reference to ledgers; or confusing the supplier with the customer;
or not recognising that debit notes and statements of account do not appear in accounting records.

(b)

The name of the person issuing various business documents and the reason for the issue of each
document had to be stated. A common error was to use ‘supplier’ and ‘customer’ rather than the
name of the trade as required by the question. Most candidates were able to suggest a valid
reason for the issue of the documents, but some found it challenging to express themselves
clearly. Others did not appear to understand the purpose of these documents.

(c)

The account of the credit customer had to be prepared in the books of the supplier. Candidates
with a good understanding of double entry were able to earn marks. Common errors included
incorrect details such as ‘purchases’ and ‘invoice’ for ‘sales’; or inclusion of the debit note and the
statement of account.

© 2016

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2016
Principal Examiner Report for Teachers
Question 3
(a)

Candidates were required to state the meaning of three terms relating to clubs and societies. Most
candidates understood that subscriptions were the amounts paid by members to use the facilities
of the club. A few incorrectly referred to amounts received form customers or fees to join the club.
The majority of candidates knew that accumulated fund represents the ‘capital’ of a club but often
incorrectly referred to the funds invested by the owners of the club.
Very few candidates were able to explain that a receipts and payments account is a summary of
the cash book: most stated that it was the cash book of a club.

(b)

Using information provided, the income statement of a shop had to be prepared. Most candidates
earned some of the available marks. Common errors included not adjusting the purchases for the
amount due to suppliers; or incorrect treatment of the loan to shop assistant; or inclusion of
extraneous items; or incorrect calculation of the shop expenses; or incorrect labelling of the shop
profit.

(c)

Candidates were required to prepare an income and expenditure account. Once again, most
candidates answered this well. Common errors included incorrect calculations of the subscriptions
and some of the expenses; or inclusion of extraneous items; or including loan interest for twelve
months instead of six months; or not including the name of the asset being depreciated; or
incorrect labelling of the deficit.

Question 4
(a)

Some candidates found it difficult to express themselves when stating the meaning of three
accounting terms. Most candidates understood the term ‘bad debts’ but a few incorrectly stated that
these are debts which may not be paid or amounts not yet paid by customers. When explaining the
term ‘bad debts recovered’ mention should have been made of the fact that these are debts which
had previously been written off; it was not adequate to state ‘amounts received from credit
customers’. Candidates should understand that a provision for doubtful debts does not represent a
sum of money. It is an estimate of the amount a business will lose in a financial period because of
bad debts.

(b)

Most candidates were able to identify at least one of the accounting principles applied by
maintaining a provision for doubtful debts.

(c)

The question required candidates to suggest two ways in which the possibility of bad debts could
be reduced. Common correct responses included reducing credit sales/selling for cash only,
obtaining references from new credit customers, and refusing further supplies until outstanding
debts were paid. A few answers were inadequate. For example, it was not acceptable to simply
state ‘give discount’ or ‘send invoices’.

(d)

Three journal entries had to be prepared. Many candidates would benefit from extra practice on
journal entries. To write off a bad debt the bad debts account should have been debited and the
account of Uzma should have been credited. Closing the bad debts account at the end of the
financial year required the income statement to be debited and the bad debts account to be