0452/12/O/N/18 Question Paper – Accounting Oct/Nov 2018 Paper 12

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Cambridge Accounting (0452) question paper for paper 12, Oct/Nov 2018 — 0452/12/O/N/18, file 0452_w18_qp_12.pdf.

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Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

* 3 7 0 3 5 8 4 6 1 8 *

0452/12

ACCOUNTING

October/November 2018

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 an HB pencil for any diagrams or graphs.
Do not use staples, paper clips, 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.
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.

This document consists of 22 printed pages and 2 blank pages.
DC (RCL/GO) 156837/3
© UCLES 2018

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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 (ü) in the box to indicate the correct answer.
1

(a) Profit is only recorded in the financial statements when legal title passes between buyer and
seller.
Which accounting principle is being applied?
A

consistency

going concern

prudence

realisation

[1]

(b) David and Bashir are in partnership. David made a loan to the partnership.
What is the double entry to record this transaction?
account debited

account credited

bank

David capital

bank

David loan

David capital

David loan

David current

[1]

Debentures have a fixed rate of interest.

Debenture interest must be paid regardless of profit made.

Debentures are a non-current liability.

Debentures carry voting rights.

[1]

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3
(d) Marvin provided the following information.
revenue for the year
percentage of gross profit to revenue
percentage of profit to revenue

$
10 000
40%
15%

What were the expenses for the year?
A

$1500

$2500

$6000

$8500

[1]

(e) Matthias provided the following summary from his financial statements.
$
67 400
48 700
29 100
8 000

Non-current assets
Current assets
Non-current liabilities
Current liabilities
What was the capital employed?

(f)

$11 600

$40 700

$79 000

$108 100

[1]

In Alice’s books an invoice received from Cait was credited to Kate’s account.
Which type of error has been made?
A

commission

compensating

original entry

principle

[1]

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(g) What does the term ‘limited liability’ mean in relation to a company?
A

A company can only issue a limited number of shares.

A company can only pay a fixed amount of dividends.

Shareholders are not at risk of losing personal possessions.

Shareholders’ liability is not limited to the amount paid for their shares.

[1]

(h) Pia sells two products, X and Y. She provided the following information about her inventory at
the year end.
Product

Cost $

Selling price $

1750

1850

1924

1858

What was the total value of inventory to be included in the financial statements?

(i)

(j)

$2608

$2674

$2708

$2774

[1]

What is the role of a book-keeper?
A

to advise on business plans

to analyse the profit or loss for the period

to maintain records of financial transactions

to prepare financial statements

[1]

Baljit paid rent, $2700, in advance for the three months ended 31 March 2018.
He adjusted his financial statements for the year ended 31 January 2018 for rent prepaid.
Which effect did this have on the total expenses for the year?
A

decrease by $900

decrease by $1800

increase by $900

increase by $1800

[1]
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[Total: 10]

5
2

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Jennifer started in business on 1 June 2018 with the following assets and liabilities.
Delivery van
Fixtures and fittings
Inventory
Cash
Loan from Amina

$
15 000
12 700
16 200
11 500
15 000

REQUIRED
(a) Prepare Jennifer’s opening journal entry on 1 June 2018. A narrative is required.
Jennifer
Journal
Date

Debit
$

Credit
$

[5]
(b) State the purpose of a narrative in a journal entry.

[1]
(c) State two uses of the general journal in addition to the recording of opening entries of a
business.
1

2
[2]
© UCLES 2018

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Jennifer’s cousin, John, is also a trader. He started his business on 1 October 2018. He introduced
capital of $30 000, of which he paid $25 000 into the business bank account.
The table shows the account balances following transactions that have taken place.
1 October
2018

2 October
2018

3 October
2018

4 October
2018

11 500

10 000

Assets
Office equipment
Motor vehicle
Bank

25 000

Cash

15 000

13 500

12 500

10 000

30 000

29 000

Liabilities
Payables
Capital

30 000

REQUIRED
(d) State for each date the transaction which has taken place.
The first transaction has been completed as an example.
1 October 2018
John introduced capital of which some was banked and some kept in cash.

2 October 2018

3 October 2018

4 October 2018

[6]

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(e) State the accounting principle which John applied when recording all these transactions.
[1]
(f)

State the meaning of
iii(i) assets

ii(ii) liabilities

(iii) capital
[3]

(g) Explain what is meant by a ‘statement of financial position’.

[2]
[Total: 20]

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8
3

Saul prepared the following trial balance at 31 March 2018 which contains errors.
Motor vehicle at net book value
Revenue
Purchases
Inventory
Bank overdraft
Cash in hand
Drawings
Discount allowed
Other operating expenses
Wages and salaries
Capital
Difference

$
138 000
109 000

113 900
111 500

9 350
116 500

188 250

180 230
1 5 100

16 500
11 720

135 000
160 700
188 250

REQUIRED
(a) Prepare a corrected trial balance at 31 March 2018.
Saul
Corrected Trial Balance at 31 March 2018
Debit
$

Credit
$

Motor vehicle at net book value
Revenue
Purchases
Inventory
Bank overdraft
Cash in hand
Drawings
Discount allowed
Other operating expenses
Wages and salaries
Capital
[7]

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From 1 April 2018, Saul decided to make sales and purchases on credit.
He maintains a full set of accounting records and prepares control accounts at the end of each
month.
REQUIRED
(b) State what is meant by a ‘book of prime (original) entry’.

[1]
(c) Complete the table to name the book of prime (original) entry which Saul uses to obtain
information when preparing his control accounts.
The first one has been completed as an example.
Book of prime (original) entry
Purchases

Purchases Journal

Cash and cheques received from credit customers
Bad debts written off
Discount received from credit suppliers
Sales returns
Interest charged by credit suppliers
[5]

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Saul provided the following information for the month ended 30 June 2018.
2018
June 1
30

July 1

Sales ledger debit balances
Sales ledger credit balances

$
16 420
390

Credit sales
Sales returns
Cash and cheques received from credit customers
Bad debt written off
Sales ledger balance set off against purchases ledger balance
Discount allowed
Interest charged to credit customers on overdue accounts

39 800
2 700
36 350
340
760
?
175

Sales ledger debit balances
Sales ledger credit balances

15 485
200

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11
REQUIRED

(d) Prepare the sales ledger control account for the month of June 2018.
Insert the figure for discount allowed.
Balance the account and bring down the balances on 1 July 2018.
Saul
Sales ledger control account
Date

Details

Date

Details

……

[10]

(e) State two benefits of maintaining a sales ledger control account.
1

2
[2]
[Total: 25]

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12
4

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Most businesses have receipts and payments which include both capital and revenue items.
REQUIRED
(a) Complete the table by inserting a tick (ü) to show how each item should be classified.
The first one has been completed as an example.
Capital
expenditure

Revenue
expenditure

Motor vehicle repairs

Capital
receipt

Revenue
receipt

Legal fees on purchase of office building
Purchase of goods for resale
Insurance of plant and equipment
Proceeds of sale of fixtures at net book
value
Discount received from supplier
[5]
Ahmed is a wholesaler. He provided the following draft income statement for the year ended
30 September 2018, which contains errors.
Ahmed
Draft Income Statement for the year ended 30 September 2018
Revenue
Proceeds from sale of motor vehicle
Opening inventory
Purchases

58 500
52 200
60 700
5(7 300)

Closing inventory
Cost of sales
Gross profit
Expenses
Profit for the year

$
75 000
52 600
77 600

(53 400)
24 200
(12 900)
11 300

Additional information
1

Purchases included $15 000 for new plant and equipment.

The motor vehicle was sold at net book value. No entry had been made in the motor vehicles
account.

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13
REQUIRED

(b) Complete the following table by inserting a tick (ü) to show the effect of correcting the errors
on each of the following items.
Increase

Decrease

Plant and equipment
Motor vehicle

[2]

(c) Complete the statement to calculate the corrected gross profit for the year ended
30 September 2018.
Ahmed
Statement of corrected gross profit for the year ended 30 September 2018
Increase
$

Decrease
$

Draft gross profit

24 200

Corrected gross profit

[3]

Ahmed’s brother, Khalid, also has a business. His financial year ends on 31 March.
Khalid provided the following information.
1 April 2017:
Office equipment:
cost
provision for depreciation

$
9000
3600

Khalid provides depreciation on the office equipment at 20% per annum on the straight line (equal
instalment) basis. A full year’s depreciation is charged in the year of purchase and none in the
year of sale.
On 31 March 2018 Khalid sold office equipment which had been purchased on 1 April 2016 at a
cost of $1500. Sales proceeds, $1100, were received by cheque.
On the same day Khalid purchased new office equipment, costing $2500.

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REQUIRED

(d) Prepare the provision for depreciation account for office equipment for the year ended
31 March 2018. Balance the account and bring down the balance on 1 April 2018.
Khalid
Provision for depreciation account for office equipment
Date

Details

Date

Details

………

[5]

(e) Prepare the office equipment disposal account.
Khalid
Office equipment disposal account
Date

Details

Date

Details

………

[4]

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(f)

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Prepare an extract from Khalid’s statement of financial position at 31 March 2018 to show the
office equipment.
Khalid
Extract from Statement of Financial Position at 31 March 2018

[3]

(g) Name the accounting principle applied when charging depreciation.
[1]
[Total: 23]

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16
5

TP Limited manufactures toys.
REQUIRED
(a) Complete the table by inserting a tick (ü) to show how each type of manufacturing cost
should be classified. The first one has been completed as an example.
Direct
material
Purchase of plastic toy parts

Direct
labour

Factory
overhead

Rent of factory
Wages of machine operator
Purchase of packaging
Wages of supervisor

[4]

(b) State how prime cost is calculated.

[2]
TP Limited provided the following information.
$

Inventory on 1 June 2017
Raw materials
Work in progress
Finished goods

1 18 000
1 15 750
1 27 200

For the year ended 31 May 2018
Purchases of raw material
Factory wages
Factory overheads
Purchases of finished goods
Revenue

323 000
198 000
125 000
1128 900
836 000

Inventory on 31 May 2018
Raw materials
Work in progress
Finished goods

122 100
11 6 820
130 100

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REQUIRED
(c) Prepare the manufacturing account for the year ended 31 May 2018.
TP Limited
Manufacturing Account for the year ended 31 May 2018
$

[6]

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(d) Prepare the income statement (trading account section) for the year ended 31 May 2018.
TP Limited
Income Statement (Trading Account section) for the year ended 31 May 2018
$

[4]

(e) State two reasons why TP Limited purchases finished goods.
1

2
[2]

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19
(f)

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Name the accounting principle applied when valuing inventory.
[1]

TP Limited’s inventory turnover was 19.78 times for the year ended 31 May 2018 and 25.24 times
for the previous year.
REQUIRED
(g) Suggest two reasons why the rate of inventory turnover is lower than the previous year.
1

2
[2]
The directors of TP Limited compared their rate of inventory turnover with that of GH Limited, a
bakery. GH Limited has a rate of inventory turnover of 53.41 times.
REQUIRED
(h) Suggest two reasons why GH Limited has a higher rate of inventory turnover than TP Limited.
1

2
[2]
[Total: 23]

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20
6

CC Club provides sporting facilities and also runs a café for its members. The receipts and
payments account for the year ended 30 September 2018 is as follows.
CC Club
Receipts and Payments Account for the year ended 30 September 2018
2017
Oct 1
2018
Sep 30

Oct 1

$
Balance b/d

13 125

Subscriptions
Receipts from café
Competition entry fees

24 500
14 145
11 550

Balance b/d

43 320
13 350

2018
Sep 30

$
Rent
Purchases of food for café
General expenses
Purchase of sports
equipment
Wages of club staff
Wages of café staff
Competition prizes
Balance c/d

14 000
12 300
16 870
17 600
16 900
11 800
1 1500
13 350
43 320

Additional information.
1

Café inventory
1 October 2017
30 September 2018

$
200
185

Subscriptions in arrears
1 October 2017
30 September 2018

$
750
650

Sports equipment was valued at $37 400 on 1 October 2017 and $36 750 on 30 September
2018.

At 30 September 2018, rent paid in advance was $500 and general expenses owing were
$320.

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REQUIRED
(a) Calculate the profit of the club café for the year ended 30 September 2018.

[4]
(b) Prepare CC Club’s income and expenditure account for the year ended 30 September 2018.
CC Club
Income and Expenditure Account for the year ended 30 September 2018

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[9]
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[3]
CC Club wishes to improve the profit earned by the café.
REQUIRED
(d) Suggest three ways the club could improve its café profit.
1

3
[3]
[Total: 19]

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23
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0452/12/O/N/18

Accounting (0452) · Oct/Nov 2018 · Question paper 12

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