0452/12/O/N/19 Question Paper – Accounting Oct/Nov 2019 Paper 12

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Cambridge Accounting (0452) question paper for paper 12, Oct/Nov 2019 — 0452/12/O/N/19, file 0452_w19_qp_12.pdf.

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Cambridge Assessment International Education
Cambridge International General Certificate of Secondary Education

* 2 5 6 9 4 5 5 5 3 1 *

0452/12

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 21 printed pages and 3 blank pages.
DC (SC) 169006/2
© UCLES 2019

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

(a) Which group contains only assets?
A

accrued wages, inventory, trade payables

cash, machinery, rent receivable accrued

bank loan, drawings, office fixtures and fittings

bank overdraft, prepaid insurance, trade receivables

[1]

(b) On 1 January 2018 Jennie, a food retailer, had stationery valued at $45.
During the year she purchased stationery, $200.
On 31 December 2018 she transferred $194 from the stationery account to the income
statement.
What was the balance of the stationery account on 1 January 2019?
A

$39 credit

$39 debit

$51 credit

$51 debit

[1]

contra entry
discount received
interest on overdue account
purchases

1 and 2 only

1, 2 and 3

3 and 4

4 only

[1]

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(d) A trader always depreciates his motor vehicles using the reducing (diminishing) balance
method.
Which accounting principle is he applying?
A

consistency

duality

going concern

realisation

[1]

(e) Which ratio can only be calculated using information from both the income statement and the
statement of financial position?

(f)

margin

mark-up

rate of inventory turnover

return on capital employed

[1]

Asim and Bakari are in partnership. Their partnership agreement provides for an annual
salary of $15 000 for Bakari and the balance of the profit to be shared equally.
The profit for the year was $93 000.
What was Bakari’s total income from the business?
A

$39 000

$46 500

$54 000

$61 500

[1]

(g) Which error does not affect the balancing of a trial balance?
A

Cash received from Smith was debited to Smythe’s account.

Motor vehicle expenses were debited to the motor vehicles account.

One page of the sales journal was overcast.

Purchases returns were omitted from the purchases ledger.

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[1]

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(h) A manufacturer provided the following information at the end of his financial year.
direct materials
direct labour
factory overheads
increase in work in progress

$
314 000
181 000
117 000
32 000

What was the cost of production?

(i)

$346 000

$410 000

$580 000

$644 000

[1]

Jamal did not maintain double entry records during his first year of trading.
Which item is not required in order to calculate his credit sales using a total trade receivables
account?

(j)

bad debts

discount allowed

provision for doubtful debts

receipts from credit customers

[1]

During her first year of trading Daraja purchased 1000 units of inventory at $16 each.
She sold 910 units at $19 each. Of the inventory remaining at the end of her financial year
30 units were damaged and valued at $7 each.
What was the value of Daraja’s inventory at the end of the financial year?
A

$1170

$1350

$1440

$1710

[1]
[Total: 10]

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6
2

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Saleh started to maintain a petty cash book on 1 August 2019. He decided to use the imprest
system, with the monthly imprest of $150 which would be restored on the first day of each month.
Saleh’s transactions for the month of August 2019 included the following.
August 4
9
14
20
26
30

Purchased stationery
Paid Omar, a credit supplier
Bought flowers for office
Paid taxi fare
Bought tea and coffee for office
Paid cleaner

$
21
57
10
9
7
30

REQUIRED
(a) Enter the transactions in Saleh’s petty cash book on the page opposite.
Balance the petty cash book and bring down the balance on 1 September 2019.

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[10]

Aug

2019

Date

150

Total
received
$

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Bank

Details

Office
expenses
$

Total
paid
$

Saleh – Petty Cash Book

Travel

Cleaning

Ledger
accounts
$

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8
(b) (i)

State the amount which was received on 1 September 2019 when the petty cash was
restored to the imprest amount.
[1]

(ii)

State the double entry for restoring the imprest amount.
debit

credit

[2]
(c) Show the entries which were made in the following accounts on 31 August 2019.
It is not necessary to total or balance the accounts.
Saleh
Office expenses account
Date

Details

Date

Details

Omar account
Date

Details

Date

Details

[2]

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Saleh balanced his cash book on 31 August 2019 and compared the balance on the bank column
with his bank statement. The following differences were found.
$

Items not recorded in the cash book
Bank charges
Credit transfer from Laila
Insurance premium paid by standing order

22
190
30

Items not recorded on the bank statement
Cheque paid to Kalifa
Cheque paid to Fatima
Cash sales

114
175
363

REQUIRED
(d) Update the bank columns of the cash book.
Bring down the new balance on 1 September 2019.
Saleh
Cash Book (bank columns only)
Date
2019

Details

Date
2019

Sept 1

Balance

b/d

944

Details

[4]

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(e) Prepare a bank reconciliation statement at 31 August 2019 to show the balance on the bank
statement on that date.
Saleh
Bank Reconciliation Statement at 31 August 2019

[6]
[Total: 25]

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11
3

Tumelo is a trader. He buys goods on credit from Azuel.
The traders exchanged various documents in July 2019.
REQUIRED
(a) Complete the table by naming the person who issued each document.
Name the book of prime (original) entry in which each document would be recorded by each
trader.
If a document is not entered in a book of prime (original) entry, write ‘No entry’.
document

name of
person issuing
document

book of prime (original)
entry used by Tumelo

book of prime (original)
entry used by Azuel

invoice
debit note
credit note
[9]
The following incomplete document was prepared on 31 July 2019.

Azuel
West Street
Somecity

Tumelo
North Avenue
Anytown
Date

31 July 2019
Reference

2019
July 1
14
18
27

Debit
$

Balance due
Goods
Returns
Payment
Discount

470

Credit
$

Balance
$

190
294
6

300
?
?
?
?

REQUIRED
(b) (i)

State the name of the document.
[1]

(ii)

Name the person who issued the document.
[1]

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12
(iii)

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State one reason for the issue of the document.

[1]

(iv)

Name the person who owed the opening balance of $300.
[1]

(v)

Calculate the percentage of the discount on 27 July 2019.

[1]

(vi)

Calculate the balance due on 31 July 2019.

[1]

(vii)

State why this document was not used as a source document by either Tumelo or Azuel.

[1]

Azuel divides his ledger into three – the sales ledger, the purchases ledger and the nominal
(general) ledger.
(c) State two advantages of dividing the ledger into these three sections.
1

2
[2]
(d) Complete the table by naming the ledger in which Azuel would maintain each of the following
accounts.
account

ledger

Tumelo, a credit customer
sales returns
Lerato, a credit supplier
purchases
carriage inwards
[5]
[Total: 23]
© UCLES 2019

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4

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Gary is a manufacturer of kitchen equipment. His financial year ends on 30 September.
On 1 August 2019 Ed, a credit customer, was declared bankrupt and the balance of his account of
$326 was written off as irrecoverable.
No other debts were written off during the year.
REQUIRED
(a) Prepare a journal entry to write off the amount owed by Ed.
A narrative is required.
Gary
General Journal
Date

Details

Debit
$

Credit
$

2019

[3]
On 1 June 2018 the account of Sally, a credit customer who owed $440, was written off as
irrecoverable.
On 4 September 2019 Sally settled her account with $180 in cash and a computer valued at $260.
REQUIRED
(b) State how Gary would record the transaction on 4 September 2019.
account debited

account credited
$

[3]

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Gary maintains a provision for doubtful debts of 2½% of the trade receivables at the end of each
financial year. He provided the following information.
Trade receivables at 30 September 2018 owed $36 400
Trade receivables at 30 September 2019 owed $38 000
(c) Prepare the provision for doubtful debts account for the year ended 30 September 2019.
Balance the account and bring down the balance on 1 October 2019.
Gary
Provision for doubtful debts account
Date

Details

Date

Details

[5]

Gary wishes to increase his profit for the year. He has decided to stop maintaining a provision for
doubtful debts.
REQUIRED
(d) Explain why Gary should continue to maintain a provision for doubtful debts.

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(e) Complete the table to indicate the effect of omitting to record the bad debt, the bad debt
recovered and the adjustment to the provision for doubtful debts.
The first one has been completed as an example.

item omitted

effect on profit for the
year ended
30 September 2019

effect on current
assets at
30 September 2019

$
bad debts

overstated

326

$
overstated

326

bad debt recovered
adjustment to provision for doubtful
debts
[4]
[Total: 19]

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Oliver and Amy are in partnership. They are considering converting the business to a limited
liability company.
REQUIRED
(a) Explain the term ‘limited liability company’.

[2]
(b) State two benefits (excluding limited liability) to Oliver and Amy of forming a limited liability
company.
1

2
[2]
(c) State the meaning of the following terms.
(i)

called-up share capital

[1]

(ii)

paid-up share capital

[1]

If Oliver and Amy decide to form a limited liability company they plan to raise funds from an issue
of ordinary shares and an issue of debentures.
(d) State two features of ordinary shares.
1

2
[2]

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17
(e) State two features of debentures.

2
[2]
Oliver and Amy understand that a statement of changes in equity has to be prepared in addition to
an annual income statement.
(f)

Complete the table by placing a tick (✓) in the correct column to indicate whether each item
appears in a limited company’s income statement or statement of changes in equity.
If the item does not appear in these financial statements place a tick (✓) in the ‘no entry’
column.
income
statement

statement
of changes
in equity

no entry

issue of 5% debentures during the year

debenture interest relating to the
current year paid during the year
final ordinary share dividend relating to
the previous financial year paid during
the current year
interim ordinary share dividend paid for
the current year
proposed ordinary share dividend
for the current year
[5]
[Total: 15]

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6

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Pavita is a food wholesaler. Her financial year ends on 30 September. She provided the following
information on 30 September 2019 after the calculation of her gross profit.
Gross profit
Non-current assets at cost
Premises
Fixtures and fittings
Motor vehicle
Provisions for depreciation of non-current assets
Fixtures and fittings
Motor vehicle
Wages
Rates and insurance
Trade receivables
Trade payables
Drawings
Capital at 1 October 2018
Operating expenses
Motor expenses
Discount received
Inventory at 30 September 2019
Bank

$
40 780
96 000
12 000
14 400
4 800
6 300
27 120
1 700
8 940
10 280
2 980
112 000
3 195
1 155
970
8 870
1 230 credit

Additional information
1

At 30 September 2019 wages accrued amounted to $980.

The rates and insurance includes $900 for insurance for 15 months to 31 December 2019.

Pavita’s cash drawings, $1000, have been debited to the wages account in error.

$190 owing by a credit customer should be written off as irrecoverable.

The fixtures and fittings are to be depreciated using the straight line (equal instalment) method
at 20% per annum.

The motor vehicle is to be depreciated using the reducing (diminishing) balance method at
25% per annum.

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(a) Prepare the income statement for the year ended 30 September 2019.
Pavita
Income Statement for the year ended 30 September 2019
$

[12]

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(b) Calculate Pavita’s working capital at 30 September 2019.

[3]
(c) Suggest two ways in which Pavita could increase her working capital.
1
2 [2]
(d) Calculate the current ratio correct to two decimal places.

[2]
Pavita provided the following additional information for the year ended 30 September 2019.
$
120 000
88 100

Credit sales
Credit purchases

She allows her credit customers 21 days credit and is allowed 30 days credit by her credit
suppliers.
REQUIRED
(e) State the formula for the calculation of the trade receivables collection period.

[1]

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21
(f)

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Calculate the trade receivables collection period for the year ended 30 September 2019.
Round up your answer to the next whole day.

[2]

(g) Suggest one way in which Pavita could improve the trade receivables collection period.

[1]
(h) State the formula for the calculation of the trade payables payment period.

[1]
(i)

Calculate the trade payables payment period for the year ended 30 September 2019.
Round up your answer to the next whole day.

[2]

(j)

State whether the trade payables would be satisfied with the payment period.
Give a reason for your answer.
Satisfied?
Reason

[2]
[Total: 28]

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reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
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.

0452/12/O/N/19

Accounting (0452) · Oct/Nov 2019 · Question paper 12

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