0452/11/O/N/19 Question Paper – Accounting Oct/Nov 2019 Paper 11

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Cambridge Accounting (0452) question paper for paper 11, Oct/Nov 2019 — 0452/11/O/N/19, file 0452_w19_qp_11.pdf.

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Cambridge Assessment International Education
Cambridge International General Certificate of Secondary Education

* 9 3 8 0 7 3 6 1 9 7 *

0452/11

ACCOUNTING

October/November 2019

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 23 printed pages and 1 blank page.
DC (CJ) 188378
© UCLES 2019

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2
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 (3) in the box to indicate the correct answer.
1

(a) Insurance paid by a business included $400 relating to the owner’s private house.
This amount was not included in the income statement.
Which accounting principle was applied?
A

accruals (matching)

business entity

duality

prudence

[1]

(b) The following account appeared in Jacob’s ledger.
Cindy account
Date
2019
Aug 16
29
31

Details
Returns
Bank
Discount
Balance

c/d

$
110
441
9
280
840

Date
2019
Aug 1
14

Details
Balance
b/d
Purchases

$
450
390
840

Which statement is correct?
A

Cindy paid Jacob $441 by cheque on 29 August.

Cindy purchased goods, $390, on credit from Jacob on 14 August.

Jacob allowed Cindy $9 cash discount on 29 August.

Jacob owed Cindy $450 on 1 August.

[1]

information must be available in time for decisions to be made

information must be free from bias

information must be free from errors

information must be prepared with suitable caution applied
to any judgement

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[1]

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(d) On 2 September Tumelo purchased goods on credit, list price $4200, less trade discount of
20% and a cash discount of 2% if the invoice was paid within 30 days.
On 5 September Tumelo returned one-third of the goods to the supplier.
Which amount did Tumelo enter in his purchases returns journal?
A

$1092

$1120

$1372

$1400

[1]

(e) Which statements about debentures are correct?

(f)

Debentures carry a fixed rate of interest.

Debentures do not carry voting rights.

Debenture holders are members of the company.

Debenture interest depends on the profit of the company.

1 and 2

1 and 4

2 and 3

3 and 4

[1]

The totals of a trial balance did not agree.
Which error caused this?
A

A cheque paid to Hong for $500 had been credited to the account
of Heng.

An invoice for goods purchased, $50, was entered in the purchases
journal as $500.

Goods sold on credit to Gemma, $500, were debited to the account
of Gina.

Rent paid by cheque, $500, was debited to the rent receivable
account.

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[1]

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(g) Sally provided the following information at the end of her financial year.
$
Revenue
44 000
Opening inventory
3 000
Closing inventory
1 000
Purchases
32 000
Expenses
6 000
What was Sally’s percentage of gross profit to revenue (gross profit margin)?
A

9.09%

11.76%

22.73%

29.41%

[1]

(h) A food retailer purchased a computer and debited the cost to the purchases account.
What was the effect on the profit for the year and the non-current assets?
profit for the year
overstated

(i)

non-current assets

understated

overstated

understated

3
3

[1]

Hassan’s trial balance did not balance and a suspense account was opened.
It was found that the total of the discount received column in the cash book, $173, had been
debited to the discount allowed account in the ledger.
Which journal entry corrects this error?
details
A
B
C
D

debit
$

discount allowed
discount received
suspense
discount received
suspense
suspense
discount allowed
suspense
discount allowed
discount received

173
173
173
173
346

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credit
$

346
173
173
173
173

[1]

5
(j)

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Beketele’s financial year ends on 31 December. On 1 January 2015 she purchased a machine
costing $18 000. The machine was depreciated by 15% per annum using the straight line
(equal instalment) method. The machine was sold on 1 January 2019.
What was the book value of the machine on the date of sale?
A

$4500

$7200

$10 800

$13 500

[1]
[Total: 10]

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6
2

Aisha is a retailer. She buys goods on credit from Kadir, a wholesaler. They exchanged several
documents during September 2019.
The following incomplete document was issued on 18 September 2019.
Credit Note
Kadir
123 West View
Some City

Aisha
14 Straight Row
Anywhere
Quantity

18 September 2019
Description

Unit price
$

Suits assorted sizes

Amount
$

(i)

Less 20% Trade discount

4130
(ii)

Reason for issue: Correcting overcharge
on goods supplied on 4 September 2019

(iii)

REQUIRED
(a) Insert the missing figures in (i) – (iii) in the above document.

[3]

(b) Name the person who issued the above document.

[1]

[1]
(d) State why it was necessary to deduct trade discount on the credit note.

[1]
(e) Name the book of prime (original) entry in which each trader would record the credit note.
book of prime (original) entry
used by Aisha

book of prime (original) entry
used by Kadir

[2]

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On 1 September 2019 Aisha owed Kadir $3400.
During September 2019 Aisha and Kadir exchanged the following documents (in addition to the
credit note).
September 4 Invoice for goods, $8960
13 Debit note, $3540, claiming overcharge for goods supplied on 4 September
27 Cheque to settle balance outstanding on 1 September less 2% cash discount
30 Statement of account showing a closing balance of $5656
REQUIRED
(f)

Name the book of prime (original) entry in which Aisha would record these documents.
If the document is not recorded in a book of prime (original) entry, write ‘no entry’.
document

book of prime (original) entry used by
Aisha

invoice

debit note

cheque

statement of account

[4]

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(g) Prepare the account of Kadir as it would appear in the ledger of Aisha for the month of
September 2019.
Balance the account and bring down the balance on 1 October 2019.
Aisha
Kadir account
Date
Details
$
Date
Details
$
2019
2019

[7]
(h) State the name of the ledger in which Aisha would maintain Kadir’s account.
[1]
[Total: 20]

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9
3

Timothy is a trader who buys and sells on both cash and credit terms. He maintains a full set of
accounting records and prepares monthly control accounts.
REQUIRED
(a) State two advantages to Timothy of preparing monthly control accounts.
1

2
[2]
(b) Name the book of prime (original) entry which Timothy would use to obtain the following
information when preparing his purchases ledger control account.
book of prime (original) entry
purchases returns
contra entry
discount received
interest charged on overdue account
[4]
(c) State the meaning of a contra entry in connection with control accounts.
State why Timothy made a contra entry.
Meaning

Reason
[2]
(d) State two reasons why it is possible for Timothy to have a debit balance on his purchases
ledger control account.
1

2
[2]

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Timothy provided the following information for October 2019.
$

On 1 October
Debit balance on sales ledger control account
Credit balance on sales ledger control account

6530
110

Totals for the month of October
Credit sales
Cash sales
Receipts from credit customers
Discount allowed to credit customers
Discount received from credit suppliers
Returns by credit customers
Bad debts written off
Increase in provision for doubtful debts
Contra entry
Interest charged on a credit customer’s overdue account

7860
3850
5782
118
246
285
260
170
300
15

On 1 November
Debit balance on sales ledger control account
Credit balance on sales ledger control account

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?
80

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11
REQUIRED

(e) Select the relevant figures and prepare the sales ledger control account for the month of
October 2019.
Balance the account and bring down the balances on 1 November 2019.
Timothy
Sales ledger control account
Date
Details
2019
Oct 1 Balance b/d

$
6530

Date
2019
Oct 1

Balance b/d

Details

$
110

[9]
[Total: 19]

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Question 4 is on the next page.

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13
4

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Abiola started a business on 1 September 2017. On that date she opened a business bank account
with a capital of $40 000 and a loan of $10 000. On the same day she purchased inventory, $6600,
and fixtures and fittings, $11 750, paying by bank transfer.
REQUIRED
(a) Prepare a journal entry, to include all the above information, to open the books of the business
on 1 September 2017.
A narrative is required.
Abiola
General Journal
Date
2017

Details

Debit
$

Credit
$

Sept 1

[5]

(b) State why it is useful to show a narrative as part of a journal entry.

[2]

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The following transactions took place on 1 March 2018.
1

Abiola transferred her private motor vehicle to the business at a valuation of $12 000.

Abiola took goods, $450, from the business for personal use.

REQUIRED
(c) Prepare journal entries to record the transactions of 1 March 2018.
Narratives are not required.
Abiola
General Journal

Date
2018

Details

Debit
$

Credit
$

Mar 1

[4]

Abiola rents premises at an annual rent of $6000, payable on the first of each month.
She provided the following information.
2018
September 1

Rent payable accrued

500

The following amounts of rent were paid by bank transfer.

2018
September 2

3000

2019
February
August

3000
1500

3
6

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15
REQUIRED

(d) Prepare the rent payable account in the ledger of Abiola for the year ended 31 August 2019.
Balance the account and bring down the balance on 1 September 2019.
Abiola
Rent payable account
Date

Details

Date

Details

[5]
(e) Explain how the accounting principle of accruals (matching) was applied in the preparation of
the rent payable account.

[2]

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Abiola receives commission from another trader when Abiola’s customers purchase goods from
his shop.
Abiola provided the following information.
2018
September 1

Commission receivable outstanding

350

The following amounts of commission were received by bank transfer.
2018
September 30

350

2019
January
April
July

425
395
470

31
30
31

On 31 August 2019 commission receivable outstanding amounted to $310.
REQUIRED
(f)

Prepare the commission receivable account in the ledger of Abiola for the year ended
31 August 2019.
Balance the account and bring down the balance on 1 September 2019.
Abiola
Commission receivable account
Date

Details

Date

Details

[5]
[Total: 23]

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17
5

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The KW Sports Club has 50 members. The annual subscription is $85. The financial year ends on
30 September. The treasurer prepares a full set of financial statements at the end of each financial
year.
On 1 October 2018 subscriptions had been prepaid by 14 members.
On 30 September 2019 subscriptions had been prepaid by 10 members and 22 members had not
paid their subscription for the year.
REQUIRED
(a) State the meaning of the word ‘subscriptions’ in connection with clubs and societies.

[1]
(b) Calculate the subscriptions received during the year ended 30 September 2019.

[5]
(c) Discuss the possible effects on the bank account and the income and expenditure account of
KW Sports Club if the annual subscription was increased to $105.

[4]

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(d) State four ways in which an income and expenditure account differs from a receipts and
payments account.
1

[4]
The income and expenditure account for the year ended 30 September 2019 showed a deficit.
After the preparation of the account it was found that several errors had been made.
REQUIRED
(e) Complete the table by placing a tick (3) in the correct column to indicate the effect of each
error on the deficit for the year.
If the error does not affect the deficit place a tick (3) in the column headed ‘no effect’.
effect of error on the deficit

error

overstated

understated

no effect

the total of the income from a sports
competition was understated
no entry had been made for bank
charges
proceeds of sale of club equipment were
included in the income
no adjustment was made of club shop
wages accrued at the year-end
shop rent was charged to the income
and expenditure account instead of the
shop income statement
[5]
[Total: 19]
© UCLES 2019

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20
6

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Amrit runs a secretarial agency. His financial year ends on 31 July. He prepared the following trial
balance on 31 July 2019.
Fees from clients
Premises (at cost)
Office equipment (at cost)
Provision for depreciation of office equipment
Capital
Drawings
5% Loan (repayable 1 February 2020)
Trade receivables
Provision for doubtful debts
Bad debts
Insurance
Wages
Operating expenses
Rent receivable
Bank

$
90 000
16 000
11 500
4 650
80
2 100
38 000
6 500
168 830

$
58 800
3 200
85 000
15 000
100

3 000
3 730
168 830

The following information is available.
1

The insurance covers a period of 14 months to 30 September 2019.

At 31 July 2019 wages, $1500, were accrued and one year’s loan interest was outstanding.

A debt of $150 should be written off as irrecoverable.

The provision for doubtful debts should be maintained at 3% of the remaining trade
receivables.

The office equipment is to be depreciated at 20% per annum using the reducing (diminishing)
balance method.

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REQUIRED
(a) Prepare the income statement for the year ended 31 July 2019.
Amrit
Income Statement for the year ended 31 July 2019
$

[14]

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Amrit is considering several proposals to try to increase his working capital.
REQUIRED
(b) Complete the table by placing a tick (3) in the correct column to indicate how each proposal
would affect Amrit’s working capital.
increase

decrease

no effect

extend the loan for a further 2 years
ask the bank to extend the overdraft facility
purchase new office equipment on credit
[3]
(c) Suggest two possible reasons why Amrit’s return on capital employed (ROCE) was higher on
31 July 2019 than it was on 31 July 2018.
1

2
[2]
On 1 August 2019 Amrit decided to admit his sister, Neena, to the business as a partner.
The partnership agreement provided for the following:
interest on capital of 4% per annum
interest on drawings of 3%
Amrit to be entitled to a partnership salary of $6000 per annum
profits and losses to be shared Amrit 60% and Neena 40%.
Amrit made an adjustment to his capital so that it equalled $80 000.
Neena invested $60 000.
It was estimated that the profit for the first year of trading would be $15 500.
It was estimated that the partners’ drawings during the first year of trading would be Amrit $7000
and Neena $5000.

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REQUIRED
(d) State two advantages to Amrit of being a partner rather than a sole trader.
1

2
[2]
(e) State two disadvantages to Amrit of being a partner rather than a sole trader.
1

2
[2]
(f)

Complete the estimated profit and loss appropriation account for the year ending 31 July 2020.
Amrit and Neena
Estimated Profit and Loss Appropriation Account for the year ending 31 July 2020
$

Estimated profit for the year
Interest on drawings Amrit

$
15 500

Neena

Interest on capital

Amrit

Neena

Partnership salary

Amrit

Share of profit/loss

Amrit

Neena

[6]
[Total: 29]

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at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.

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Accounting (0452) · Oct/Nov 2019 · Question paper 11

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