Accounting (0452) · Oct/Nov 2016 · Mark scheme 23

www.dynamicpapers.com

Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

ACCOUNTING

0452/23

Paper 2

October/November 2016

MARK SCHEME
Maximum Mark: 120

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.
Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.
Cambridge will not enter into discussions about these mark schemes.
Cambridge is publishing the mark schemes for the October/November 2016 series for most
®
Cambridge IGCSE , Cambridge International A and AS Level components and some Cambridge O Level
components.

® IGCSE is the registered trademark of Cambridge International Examinations.

This document consists of 11 printed pages.
© UCLES 2016

[Turn over

Page 2
1

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(a)

2016
Sep 1
5
15
28
30

Discount
allowed
$

Details

Date

Balance
Sales
H Magagula
Cash
Balance

b/d
c
c/d

(1)
(1)
(1)OF

Balance

b/d

(1)

$
193
115

12

12
2016
Oct 1

Cash

308
50

Bank

Date

$

2016
Sep 1
10
21

400
468
258
948

28
30

Discount
received
$

Details
Balance
b/d
C Barnes (dis cheque)(1)
Office equipment
(1)
Repairs
(1)
Bank
c
(1)
Balance
c/d

2074

Cash

Bank

$

$
1560
190
280
44

258
50
308

2016
Oct 1

Balance

b/d

(1)
OF

2074
948

+ (1) dates
[10]

© UCLES 2016

Page 3

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(b) It is not possible to take out more cash than is in the cash box (1)

[1]

(c) Obtain the correct bank balance
Identify errors in the bank account
Identify errors on the bank statement
Assist in discovering fraud and embezzlement
Identify cheques not credited by the bank
Identify cheques not presented
Identify any stale cheques
Understand/reconcile the differences between cash book and bank statement
Any 2 reasons (1) each

[2]

(d) Cheques not presented
Cheques not credited
Cash book errors
Any 2 items (1) each

[2]

(e)
Effect on
working capital

Reason

Reduce credit
sales and increase
cash sales

No effect

Trade receivables decrease and cash increases so
total current assets is unchanged. No effect on
current liabilities

Create a provision
for doubtful debts

Decrease (1)

The current assets reduce. No change to the
current liabilities. (1)

Take a long term
bank loan

Increase (1)

The current assets increase. No change to the
current liabilities. (1)

Take a short term
bank loan

No effect (1)

The current assets and the current liabilities
increase by the same amount (1)

Pay credit
suppliers early to
earn cash discount

Increase (1)

The current assets reduce by a smaller amount
than the current liabilities (1)

[8]
[Total: 23]

© UCLES 2016

Page 4
2

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

(a)
Assets

Syllabus
0452

Paper
23

Crossroads Limited
Statement of Financial Position at 31 October 2016
$
$
$

Non-current assets

Cost

Premises
Machinery and equipment
Fixtures and fittings

363 000
185 000
70 000
618 000

Current assets
Inventory
Trade receivables
Less Provision for doubtful debts
Other receivables

Accumulated
depreciation
83 250
24 073
107 323

Book
value
363 000
101 750 (1)
45 927 (1)
510 677 (1)
30 853

28 000
750

Total assets

27 250 (1)
1 340 (1)
59 443 (1)
570 120

Equity and liabilities
Equity and reserves
Ordinary share capital
General reserve
Retained earnings

400 000 (1)
31 000 (1)
75 000 (1)
506 000 (1)

Non-current liabilities
4% Debentures (repayable 2026)

20 000 (1)

Current liabilities
Trade payables
Other payables (800 + 320)
Bank overdraft

31 600
1 120 (2)
11 400 (1)
44 120 (1)
570 120

Total liabilities

[15]
(b) Issued share capital
The amount of share capital which is actually issued to the shareholders (1)
Called-up share capital
The total amount the company has requested from the shareholders (1)
Paid-up share capital
That part of the called-up share capital for which a company has received the money from its
shareholders. (1)
[3]
[Total: 18]

© UCLES 2016

Page 5
3

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(a) 1 November 2015 Balance b/d
This is the total of the provision for doubtful debts on that date (1)
Double entry – debit provision for doubtful debts account for previous year (1)
31 October 2016 Income statement
This is the difference between the opening and closing provision for doubtful
debts/the amount which is over-provided for doubtful debts (1)
Double entry – credit income statement (1)
31 October 2016 Balance c/d
This is the total of the provision for doubtful debts on that date (1)
Double entry – credit provision for doubtful debts account for next year (1)
(b) $450 (1) deducted from the trade receivables (1)
(c)

[6]
[2]

Kristy
Journal
Debit
$
Office equipment
Capital
Introduction of personal computer into the
business

740

Repairs to office equipment
Office equipment
Comp4u
Invoice received for repairs to equipment
and purchase of printer

40
226

Credit
$
740

266

[7]

© UCLES 2016

Page 6

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(d)
Capital expenditure
Wages paid to employees to
build new office block

Revenue expenditure

(1)

Insurance premium for new
office block

(1)

Cost of painting new office
block

(1)

Cost of moving furniture into
new office block

(1)
[4]

(e)
Effect of error on profit
overstated
Proceeds of sale of old fixtures(sold at book
value) included in income statement

understated

(1)

Interest received on loan to employee
recorded as part repayment of loan

(1)
[2]
[Total: 21]

© UCLES 2016

Page 7
4

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(a)
Effect on profit of correcting error
increase
$

decrease
$

Wages owing at 31 August 2015, $450
were not recorded.

450

Discount allowed, $115, had been
recorded as discount received.

230

The provision for doubtful debts, $950,
should have been adjusted to 2 ½% of
trade receivables, who owed $36 000.

50

Inventory at 1 September 2014 had
been valued at net realisable value,
$16 700 instead of at cost, $15 300.

1400

(1) for amount and (1) for position for each item

[8]

(b)

Hamza
Income Statement for the year ended 31 August 2016
$
$
Revenue
385 500 (1)
Less Sales returns
7 500 (1)
378 000
Less Cost of sales
Opening inventory
Purchases
Carriage inwards
328 700
Less Closing inventory
Gross profit
Less General expenses
Wages and salaries
Rates and insurance
Depreciation: non-current assets
Profit for the year

14 100 (1)
312 500 (1)OF
2 100 (1)
13 700 (1)
3 910 (1)
21 500 (1)
5 320 (1)
5 660 (1)

315 000 (1)OF
63 000 }(2)CF/
}(1)OF

36 390
26 610 (1)OF
[14]
[Total: 22]

© UCLES 2016

Page 8
5

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(a) Straight line/fixed instalment
Revaluation
Any 1 method (1)

[1]

(b) The loss in value of the non-current asset during the year (1) is set against the
revenue for the same period (1)
OR
The cost of the non-current asset is spread (1) over the years which benefit from
the use of that asset (1)

[2]

(c) Prudence (1)

[1]

(d) (i) Machine A
Cost 1 August 2014
Depreciation to 1 August 2014
Book value 1 August 2014
Depreciation for year ended 31 July 2015
Book value at 1 August 2015
Depreciation for year ended 31 July 2016
Book value at 1 August 2016

$
3000
600
2400
480 (1)
1920
384 (1)
1536

[2]

(ii) Machine B
Cost 1 January 2015
Depreciation for year ended 31 July 2015
Book value 1 August 2015
Depreciation for year ended 31 July 2016
Book value at 1 August 2016

$
3500
700 (1)
2800
560 (1)
2240

[2]

© UCLES 2016

www.dynamicpapers.com

Page 9

Mark Scheme
Cambridge IGCSE – October/November 2016

(e) (i)

Syllabus
0452

Paper
23

Tom
Machinery account

Date
2014
Aug 1
2015
Jan 1
2015
Aug 1

$

Details
Balance (A) b/d

3000

Bank (B)

(1)

3500
6500

Balance b/d

(1)

6500

(ii)

Date
2015
July 31

$

Details
Balance

c/d

6500

6500

Provision for depreciation of machinery account

Date
2015
July 31

Details
Balance c/d

$
1780

Date
2014
Aug 1
2015
July 31

1780
2016
July 31

Balance c/d

2724

2015
Aug 1
2016
July 31

2724
2016
Aug 1

Details
Balance

$
b/d

Income statement
(480OF + 700OF)
(1)OF
Balance b/d
(1)OF
Income statement
(384OF + 560OF)
(1)OF
Balance b/d
(1)OF

600

1180
1780
1780

944
2724
2724

+ (1) dates
[7]
(f)
Cost
Depreciation to date (600 + 480 + 384)
Book value
Proceeds of sale
Profit (1)OF on sale

$
3000 (1)
1464 (1)OF
1536
1640
104 (1)OF

[4]
[Total: 19]

© UCLES 2016

Page 10

6

(a)

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(290 000 − 224 025) } (1) 100
×
= 22.75% (1)
}
290 000
1
(65 975OF − 38 860) } (1) 100
×
= 9.35% (1)OF
}
290 000
1

[4]

(b) They trade in different type of goods
Joey has a higher mark-up
Joey has a lower cost price of goods
Joey sells at a higher price
Joey allows a lower rate of trade discount to customers
Joey received a higher rate of trade discount from suppliers
Or other suitable reason based on OF answer to (a)
Any 2 reasons (1) each

[2]

(c) DT Traders has a higher gross profit
They have different types of expenses
Joey has higher expenses
DT Traders has more other income
Or other suitable reason based on OF answer to (a)
Any 2 reasons (1) each

[2]

(d) DT Traders (1)
OR Joey (1)OF
If difference between OF gross profit % and OF profit for the
year % is lower than 8.25% achieved by DT Traders

[1]

(e)
Increase
Buy in bulk from suppliers to obtain
trade discount

Decrease

No effect

3(1)

Offer cash discount to encourage
credit customers to pay early

3(1)

Pay employees monthly instead of
weekly

3(1)

Write off damaged inventory at
year end

3(1)
[4]

© UCLES 2016

Page 11

www.dynamicpapers.com

Mark Scheme
Cambridge IGCSE – October/November 2016

Syllabus
0452

Paper
23

(f) Historical cost
Transactions are recorded at actual cost. (1)
It is difficult to compare transactions taking place at different times. (1)
Non-financial factors
Only information which can be expressed in monetary terms is recorded. (1)
Many important factors which affect the business are not recorded. (1)
[4]
[Total: 17]

© UCLES 2016