Accounting (0452) · Oct/Nov 2020 · Examiner report

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/11
Multiple Choice
There were too few candidates for a meaningful report to be produced.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/12
Multiple Choice
Question
Number
1
2
3
4

Key
D
C
B
B

5

C

6
7

A
B

8
9

D
A

10

A

11
12

D
A

13
14

B
A

15

A

16
17

B
B

18
19
20

Question
Number
21
22
23
24

Key
C
C
D
C

25

B

26
27

D
D

28
29

C
D

30

C

31
32

A
D

33
34
35

C
B
B

A
A
C

Key messages
Candidates must have a thorough knowledge and understanding of double entry book-keeping and be
familiar with all the topics on the syllabus.
It is important that candidates recognise the importance of reading an item very carefully and making sure
they know exactly what is required before attempting to select the Key.
General comments
Those candidates who possessed a good understanding of double entry book-keeping were able to perform
well.
There were some items which proved to be more difficult than anticipated.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
Comments on specific questions
Question 3
Some candidates selected the Key, B. Many candidates treated the loan as a liability and incorrectly
selected Option D as the Key. Hussein made a loan to another individual so this represents an amount due
to Hussein so is an asset to him not a liability.
Question 11
Many candidates did not fully appreciate how the two errors affected the profit for the year. If rent prepaid is
understated then the amount charged as an expense is overstated, so the profit was understated. If closing
inventory is understated then the cost of sales is overstated which results in the gross profit and the profit for
the year being understated.
Question 12
Most candidates had difficulty with this item. The bank statement showed a positive balance. The two items
not entered in the cash book both involved money going into of the trader’s bank account. Before updating,
the cash book would show a smaller balance than that on the bank statement.
Question 13
The majority of candidates understood that the purpose of a sales ledger control account is not to identify
irrecoverable debts and not to provide the total owed to trade payables. A sales ledger control account does
not show the total of the cash and credit sales.
Question 14
This proved to be challenging for some candidates. Information about returns to credit suppliers would be
obtained from the purchases returns journal. Information about refunds from credit suppliers would be
obtained from the cash book. Irrecoverable debts written off do not affect the purchases ledger. Contra
entries with the sales ledger would not appear in any of the other books of prime entry so would be recorded
in the general journal.
Question 16
Machinery repairs had been entered in the asset account which resulted in the depreciation for the year
being $400 (20 per cent × $2000) more than it should have been. The provision for depreciation account
would also show a balance of $400 more than it should have been. The Key was B.
Question 19
It was anticipated that candidates would know that inventory is always valued at the lower of cost and net
realisable value. Product H should be valued at 800 units at $1.20 each and Product G should have been
valued at 900 units at $2 each.
Question 21
The majority of candidates correctly calculated that there was a prepayment of $400. Many did not
appreciate that this was rent receivable paid in advance and not rent payable. Where a tenant pays rent in
advance it is a current liability as the business has received money for which a service has not yet been
provided.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
Question 25
The opening and closing cash balances were known and the trader wished to calculate his cash sales. To do
this he would need to include in the calculation any items which affected the cash. In this case it was cash
banked, the cash drawings and the cash expenses. Cash discount would not affect the amount of cash.
Question 26
There was uncertainty on how to answer this question. The preparation of a ‘T’ account for the total trade
receivables would have shown that the opening balance and the credit sales appear on the debit side and
the receipts from credit customers and the discount allowed appear on the credit side. The correct
calculation for the missing figure of credit sales was Option D.
Question 27
The statistics indicate that candidates were very unsure on how to make the necessary calculations. The rate
of inventory turnover equals the cost of sales divided by the average inventory. In this case the cost of sales
was not known but could be calculated by changing the formula round. The cost of sales was
$480 000 (6 × $80 000). The mark-up was 25 per cent so the sales were $600 000 ($480 000 + 25 per cent).
Question 29
The incorrect selection of Options A and C by a significant number of candidates indicates that they did not
appreciate the significance of the gross margin. The gross margin represents the gross profit as a
percentage of the revenue. Changes to items appearing in the profit and loss section of an income statement
will not affect the gross margin. Reducing the rate of trade discount allowed to customers will mean that the
revenue increases so the gross margin will improve.
Question 30
Many candidates did not appreciate that if 1500 units were sold the cost of sales would be $6750 (1500 units
× $4.50). The gross profit was $5250 ($5500 – $250). The total value of sales was $12 000 ($6750 + $5250).
Question 31
The return on capital employed is the profit for the year expressed as a percentage of capital employed.
Ordinary share dividend paid does not affect the profit for the year, but it does reduce retained earnings. If
the amount of retained earnings decreases the capital employed also decreases. If the capital employed
decreases and the profit remains the same then return on capital employed will increase.
Question 35
Some candidates found this item quite difficult. The word ‘not’ was emboldened in the stem to make
candidates aware that this was a negative item. Almost half of the candidates incorrectly selected Option D.
One of the main aims of international accounting standards is to reduce the variety of accounting practices
worldwide so this answer is definitely a distractor and not the Key. Of the four options A, C and D are all
aims of international accounting standards. The Key was B.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/13
Multiple Choice
Question
Number
1
2
3
4

Key
D
B
A
A

5

C

6
7

A
C

8
9

D
D

10

A

11
12

A
B

13
14

B
A

15

C

16
17

B
A

18
19
20

Question
Number
21
22
23
24

Key
B
B
D
A

25

B

26
27

A
D

28
29

D
C

30

C

31
32

D
C

33
34
35

B
C
B

B
C
D

Key messages
Candidates must have a thorough knowledge and understanding of double entry book-keeping and be
familiar with all the topics on the syllabus.
It is important that candidates recognise the importance of reading an item very carefully and making sure
they know exactly what is required before attempting to select the Key.
General comments
Those candidates who possessed a good understanding of double entry book-keeping were able to earn a
good mark.
Two questions proved to be slightly easier than anticipated.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
Comments on specific questions
Question 2
Approximately half of the candidates selected the Key B. Some candidates treated the loan as a liability and
incorrectly selected Option D as the Key. Hussein made a loan to another individual so this represents an
amount due to Hussein so is an asset to him not a liability.
Question 9
The statistics reveal that many candidates did not fully appreciate how the two errors affected the profit for
the year. If rent prepaid is understated then the amount charged as an expense is overstated, so the profit
should be higher than shown in the draft income statement. If closing inventory is understated then the cost
of sales is overstated which results in the gross profit and the profit for the year being understated.
Question 14
The majority of candidates understood that a prepayment of insurance is a current asset. Those candidates
with a thorough understanding of double entry understood that a prepaid expense is carried down as a
balance from the credit side of the expense account and brought down as a debit balance to start the
following financial year.
Question 15
An understanding of the principles of double entry book-keeping was useful in determining the correct journal
entry for transferring the income for the year to the income statement. The majority of candidates correctly
calculated that the income for the year was $5600. In order to add this income to the gross profit it is
necessary to credit the income statement, so the debit entry will be in the rent receivable account.
Question 21
This proved to be more difficult than anticipated. The only entries in the capital account of a partner are those
which record permanent increases and permanent decreases of capital. A loan from a partner should be
recorded in a loan account. Interest on a partner’s capital should be recorded in the partner’s current
account. The correct closing balance on the partner’s capital account was $100 000.
Question 24
The Key was selected by approximately half of the candidates. It was expected that candidates would
appreciate that only monies paid and received are recorded in a receipts and payments account. In this item,
the receipts and payments account was prepared one year after the formation of the club and at the end of
the financial year some subscriptions were in arrears. These would not be included in the account as they
had not been received during the financial year to which that account relates.
Question 26
In a manufacturing account, the cost of production is adjusted for opening and closing work in progress. The
value at the start of the year is added and the value at the end of the year is deducted. In this situation, there
is a net amount of $9350 to deduct. The effect of this is to decrease the cost of production which also results
in a decrease in the cost of sales.
Question 31
The incorrect selection of Options A and C by a significant number of candidates indicates that they did not
appreciate the significance of the gross margin. The gross margin represents the gross profit as a
percentage of the revenue. Changes to items appearing in the profit and loss section of an income statement
will not affect the gross margin. Reducing the rate of trade discount allowed to customers will mean that the
revenue increases so the gross margin will improve.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
Question 32
A trader was considering calculating the annual depreciation on the net book value of machinery rather than
continuing to apply the straight-line method. Using the straight-line method the annual depreciation would be
$6000 and using the reducing balance method the depreciation for the year would be $3600. In accounting it
is recommended that the same method is applied year-on-year unless there is a good reason for change.
Applying the principle of consistency, the key was C
Question 35
Some candidates found this item quite difficult. The word ‘not’ was emboldened in the stem to make
candidates aware that this was a negative item. Almost half of the candidates incorrectly selected Option D.
One of the main aims of international accounting standards is to reduce the variety of accounting practices
worldwide so this answer is definitely a distractor and not the Key. Of the four options A, C and D are all
aims of international accounting standards.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/21
Paper 21
There were too few candidates for a meaningful report to be produced.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/22
Paper 22

Key messages
This is the first year of assessment of the new syllabus. Candidates were required to answer five set
questions of 20 marks each. Increased emphasis had also been placed upon discussion style questions that
used accounting information to arrive at a recommended course of business action.
Candidate responses have generally been very encouraging and this broader base of knowledge and skill
requirement has been linked effectively to the understanding and production of financial systems and
accounting statements.
General comments
Candidates’ performance has been reasonable. Strong candidate responses demonstrated their
understanding of double entry bookkeeping. There were many examples of well-presented financial
statements for limited companies in Question 3. This was in contrast to Question 2 on non-trading
organisations, where many candidates had only a superficial level of understanding of the processes
involved.
The calculation of ratios in Question 4 were very well answered, but this was often not accompanied with an
appreciation of the reasons behind the changes in them.
There were three questions that required advantages and disadvantages to be considered culminating in a
resulting recommendation. Some excellent answers covered both aspects of the question scenario but
unfortunately came to no clear recommendation with which to conclude their decision.
Question 5 looked at correcting errors and how to resolve them using a suspense account. This proved to
be challenging area for candidates.
Comments on specific questions
Question 1
(a)

The question focused upon business documentation and books of prime entry in which the source
documents would be listed. Most candidates recognised the appropriate book of prime entry but
found documents required for banking cash sales and recording credit transfers such as bank
statements and paying-in slips for verification purposes as difficult.

(b)

This question required the posting of entries into a sales ledger account. It is important to recognise
immediately which side of the business (either sales or purchase ledger) the account is located and
then to apply double entry rules for the relevant postings. Stronger responses listed the date,
details and amounts accurately. Weaker responses often opened with balances on the wrong side,
discounts allowed calculated incorrectly and the final balance on the account often being incorrect
due to inclusion of the cash sales figure of $412.

(c)

This required candidates to identify the section of the statement of financial position where a sales
ledger account balance would appear. The majority of answers were correct but where candidates
took a wrong turn in part (a) an own figure mark could still be achieved.

(d)

This required a discussion of one advantage and one disadvantage of reducing the level of cash
discount available to credit customers. This was very well answered with increased profits/cash

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
flows being regularly identified versus possible loss of customers. Weaker answers just referred to
increased sales and expenses and did not consider the possibility that customers may choose not
to take the reduced discount option.
(e)

The final part of this question considered the options of whether or not to form a limited company.
Appropriate advantages and disadvantages were mentioned and this formed a sound basis upon
which to go forward and make and a recommendation. This style of question needs a clear
recommendation and many candidates often omitted this aspect or left their answer as an
academic discussion and did not receive the fifth mark.
There were some answers that confused limited and unlimited liability to sole traders and limited
companies and this difference should be abundantly clear with the ability to discuss the benefits
and drawbacks accordingly.

Question 2
(a)

BH Sports club is a non-trading organisation and the steps to produce financial statements required
are specified clearly in the syllabus.
To produce the subscriptions account, the same technique is applied as used in control account
preparation. Opening and closing subscriptions have to be entered correctly along with any
receipts from both cash and cheques/direct transfers through the receipts and payments account.
The balancing figure is then transferred to the income and expenditure account. This figure was
often incorrectly identified as income and expenditure which cannot be applied to a non-trading
organisation.

(b)

The second stage is to analyse the expenses and revenues generated from operating a cafe. This
represents a distinct income stream for a club that is transferred as a separate figure into the final
income and expenditure account. Individual entries for the cafe should not be made in part (c) and
this was a very common error.

(c)

The income and expenditure account was consequently not well attempted, with adjustments for
insurance being ignored and depreciation, when calculated, needed to identify specific non-current
asset narratives such as sports hall or sports equipment. Members need to be aware if equipment
requires replacing and possible funding implications for the future.

(d) (i)

Many candidates expressed incorrectly that the accumulated fund represented the capital of the
organisation. There are no shares for a non-trading organisation, only excesses of income built up
through subscriptions and donations beginning from when the club commenced.

(ii)

The majority of candidates could identify that a surplus would increase an accumulated fund but
too often this comment was not accompanied by their own figure calculation from part (c).

Question 3
(a)

This was a relatively easy introduction to limited company accounts. The cost of sales information
was available and the only additional complication was to include carriage inwards as a cost that is
necessary to bring it to its present location and therefore recorded within the cost of sales.

(b)

The calculation of the revised provision for doubtful debts is a standard adjustment required for the
income statement. A common error was to omit a deduction of the irrecoverable debt of $500 from
the trade receivables and this resulted in the new provision being calculated incorrectly on $80500.
Another common error was to add the opening and closing provision together or to submit the
closing provision to the income statement and this would be an error in principle. Only the
difference between the opening and closing provision is taken to the income statement.

(c)

Information from parts (a) and (b) should have been fed into this answer to provide an income
statement that also required a range of expenditure adjustments including accruals, prepayments
and depreciation. The most common errors were confusing accruals and prepayments and omitting
to adjust debenture interest with $700 as an accrued expense.

(d)

The table here required candidates to indicate the effect that a range of transactions would have
upon equity. This was assessing an awareness of the movements that are formally recorded in a

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
statement of changes in equity for a limited company. This was generally very well answered
although the last two ‘no effect’ answers presented some problems for the weaker candidates.
Question 4
(a)

This was a straight forward calculation of profit that was answered correctly by most candidates.

(b)

This required the calculation of three standard ratios: profit margin, gross margin and return on
capital employed. As the profit had been brought forward from part (a) the ratios were very often
calculated correctly indicating regular practice and familiarity with this area of the syllabus.

(c)

The question required candidates to compare and produce comments on the performance of the
sole trader over the two year period based on the ratios calculated in part (b). Many candidates
found this a difficult exercise and could only identify that profit had increased relative to the
previous year or could only report that the key ratios had increased or decreased. It is critical to
identify whether changes are improvements or deteriorations when compared to previous years.
This will then lead to potential reasons for the changes, for example a reduced profit margin due to
an increase in/or poor control of expenses. It is important to link the potential reasons to specific
ratios within the written answer, as a list of reasons attached at the end does not indicate the
implication behind the ratios has been fully understood by the candidate.

(d)

The scenario posed in this question required a decision whether to invest further owner funds or
obtain a two-year bank loan necessary in order to reduce a decreasing bank balance. Advantages
and disadvantages were regularly identified and comments made such as interest payable on
loans but not on private funds contributed both gained marks. Some candidates however indicated
that endless funds could be borrowed from a bank, this was too simplistic and highlights the need
for calculating key ratios and producing financial statements before a bank would consider
advancing a loan. Strong responses demonstrated familiarity with terms such as security and
collateral may be required in order to secure a loan and recognised this as a potential
disadvantage. Some candidates did not gain the final mark as they omitted to make a clear
recommendation.

(e)

This was a popular question and the mark was readily obtained. A common answer for the
interested party was the bank along with the government to ensure that taxes were assessed and
paid. The question did exclude any answers that referred to employees, even so managers were a
common incorrect answer.

Question 5
(a)

The question required the preparation of a suspense account after considering seven errors
following the extraction of a trial balance. For many candidates this represented a real challenge.
Candidates should understand that not all errors will require a posting into the suspense account.
Only single entries or differing amounts in the double entry will cause an imbalance in the trial
balance. Consequently only errors 1, 4, 5 and 7 needed an entry to be passed through the
suspense account that would enable the difference of $200 to be eliminated. Many candidates
were unfamiliar with this procedure or included every error within the suspense account.

(b)

Error 2 was quickly identified correctly. However, only few candidates identified error 4 correctly
and allowances were made for an incorrect figure in one account.

(c)

Candidates performed well on this. Errors 5 and 7 presented problems for the weaker candidates.

(d)

The final part of this question required a consideration on whether Razia should sell on cash terms
only. Candidates could often provide two good advantages such as the receipt of cash immediately
and no irrecoverable bad debts but this was not matched by disadvantages with only one being
popular such as the loss of customers/sales reduction.
As with all the recommendation questions, a balanced answer is required so that one advantage
and one disadvantage must be identified in order to gain the recommendation mark. The
recommendation point must also be clearly evident from the answer.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers

ACCOUNTING
Paper 0452/23
Paper 23

Key messages
Candidates are reminded of the need to read through each question very carefully before attempting an
answer. This ensures that a vital piece of information is not overlooked and that instructions can be followed
precisely. Marks cannot be awarded for a factually correct statement which is not the answer to the question
being asked.
It is extremely important that candidates write their answers clearly.
Many candidates did show calculations were appropriate. Showing calculations ensures that some of the
available marks may be earned even though the final answer is not correct.
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. It
is 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 scripts is being marked.
Candidates should also indicate which version is to be marked by crossing out the version which should not
be considered.
Candidates should avoid the use of inappropriate abbreviations such as ‘b/d’ for ‘balance’ in ledger accounts
and ‘COGS’ for ‘cost of goods sold’.
It is expected that candidates will be familiar with International Accounting Terminology and avoid the use of
‘old’ terminology such as ‘stock’ and ‘net profit’.
General comments
All the questions on the paper were compulsory and covered a wide range of syllabus topics. Most
candidates attempted to answer all questions and were familiar with the correct format of financial
statements.
All the day-to-day records of a business are based on double entry bookkeeping. Those candidates who had
a good knowledge of double entry were able to apply this to various scenarios. In ledger accounts attention
must be given to the words in the details column and the dates as well as the figures.
Candidates are expected to know the correct form of presentation for year-end financial statements. Those
candidates who understood format required for an income statement and a statement of financial position
were able to apply this knowledge to the various scenarios.
The papers contained three questions where candidates were required to discuss a given scenario and
recommend a course of action. Candidates are advised to think very carefully before attempting this type of
question. Many candidates appear to have made a list of the points they wanted to make and these
candidates were then able to construct a coherent response. The responses provided by other candidates
tended to be vague and repetitive and often confused. In each case the question required candidates to
provide advice to a trader on a particular course of action, supported by two advantages and two
disadvantages. Good answers set out the advantages, the disadvantages and then provided a clear
recommendation.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a)

Candidates were required to prepare two journal entries. Many candidates were able to earn most
of the available marks. Those candidates with a poor grasp of double entry were only able to
produce a partially correct answer. Common errors included
•
•
•
•

(b)

reversal of entries
debiting purchases instead of the asset account
crediting the bank rather than the credit supplier
crediting the owner of the business rather than the customer.

Using data provided candidates were required to prepare ledger accounts for a non-current asset,
provision for depreciation and disposal of a non-current asset. Many candidates found this very
difficult and there were many scripts where the cost and the depreciation items were duplicated in
two or more accounts. Additional practice on this topic would have benefitted many candidates.
It is important to remember that only entries relating to cost are entered in the non-current asset
account. In this particular question the entries in the asset account were the cost of the fixtures
held at the start of the year, the fixtures purchased during the year and the cost price of the fixtures
disposed of. Common errors were to include the proceeds of sale of the fixtures and the provision
for depreciation.
The provision for depreciation account should have started with an opening credit balance. The
deprecation relating to fixtures disposed of should have been debited to remove it from the
account. This amounted to $285 (10 per cent $1500 in year 1 and 10 per cent × ($1500 – $150) in
year 2). The depreciation for the year on the assets held at the end of the year should have been
credited.
The disposal account compares the net book value of the asset (the original cost appearing on the
debit side and the depreciation to date on the credit side) with the proceeds of sale. The difference
was a loss on sale which had to be transferred to the income statement.
In all three accounts attention to detail was necessary to ensure that the entries were correctly
dated and the words in the details column were the name of the account in which the double entry
would be made.

(c)

Candidates were asked to advise a trader whether or not she should enter into a partnership.
Those candidates who clearly stated the required number of advantages and disadvantages and
then made a recommendation were able to earn high marks. Some candidates did not offer a
definite recommendation. Other candidates incorrectly stated that sharing profits is an advantage
and sharing losses is a disadvantage. Other candidates incorrectly listed ‘sharing profits and
losses’ as both an advantage and a disadvantage.

Question 2
(a)

Using data provided, candidates were required to calculate the corrected balance of the bank
column of a cash book. Many candidates did not appreciate that the opening balance was
overdrawn and consequently deducted the three adjustments instead of adding them. The
unpresented cheques and the uncredited deposits would have already been recorded in the cash
book so no further entry was necessary.

(b)

A bank reconciliation statement had to be prepared to identify the bank statement balance. The
cash book balance to appear in this statement should have been the one answer to Part (a). Many
candidates incorrectly showed this as a positive balance even though they had calculated an
overdraft in Part (a). A number of candidates incorrectly used the cash book balance before the
adjustments were made. In addition to the cash book balance and the bank statement balance only
the unpresented cheques and the uncredited deposits should have been included. There was
some doubt about these two items should be treated.

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
When preparing a reconciliation statement it is important to remember that this is a statement not a
ledger account and also to use the correct terminology.
(c)

Candidates were informed that a trader’s bank balance had decreased significantly and were
asked to comment on two proposals.
The first proposal was whether to hire non-current assets instead of purchasing them. The more
able candidates mentioned the effect on liquidity and some even mentioned that the assets would
never be owned by the trader and there would be no depreciation. Other answers were very vague.
For example, stating that the expenses would reduce was regarded as insufficient.
The second proposal was to delay paying credit suppliers. Many candidates correctly stated that
the suppliers may charge interest or refuse further supplies, and that the money could be used for
other purposes.

(d)

Using data provided, candidates were required to prepare a combined rent and rates account.
Whilst there were some good responses, a large number of candidates found this question difficult.
Many candidates would have benefitted from additional practice on this topic.
Attention should be paid to the details and dates as well as the figures. Frequently the payments
were described as ‘rent’ or ‘rates’ when the correct wording should have been ‘bank’.
It was possible to calculate that, at the end of the financial year, one month’s rent was accrued and
two months’ rates were prepaid. These values should have been inserted as the closing balances
and brought down to the following financial year. It was then possible to calculate the amounts to
be transferred to the income statement representing the expenses for the year.

(e)

Using either the given information or the account prepared in Part (a) candidates were required to
state the section of the statement of financial position in which the account balances would appear.
Whist there were many correct responses, some candidates provided unacceptable answers such
as ‘other receivables’/‘other payables’, ‘non-current assets’/’non-current liabilities’ or
‘income’/‘expense’. A number of candidates made comments which were completely un-related to
the question.

(f)

Candidates were ask to name a principle applied in recording rent and rates in the financial
statements and to state how that principle would be applied.
Many candidates correctly selected matching or prudence: other candidates named an un-related
principle. Some explanations were perfectly acceptable. Other explanations were factually correct
but, because they did not relate to the principle named in Part (i), were not awarded a mark.

Question 3
(a)

An income statement for a sole trader had to be prepared. Applying the gross margin the ‘missing’
value of closing inventory had to be inserted. It was expected that the format of an income
statement would be familiar to candidates: in the event a number of candidates were clearly
unprepared for the topic and were unable to even attempt an answer.
The closing inventory could be ascertained by inserting the other items in the trading section and
inserting the inventory as a missing figure.
Common errors included
•
using inappropriate abbreviations such as COGS, GP and NP
•
using payments to suppliers as the purchases for the year
•
deducting cash drawings from the purchases
•
incorrectly calculating the wages for the year and the rent for the year
•
omitting depreciation for the year
•
including extraneous items such as bank loan.

(b)

Candidates were asked to advise a trader whether or not he should maintain a double entry
bookkeeping system. Once again, candidates offering the required number of advantages and
disadvantages and making a recommendation were able to earn high marks. A number of

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
candidates did not provide a definite recommendation. Avoiding fraud and locating errors were
popular advantages. Increase in wages costs and time-consuming were popular disadvantages.
The weaker candidates often incorrectly referred to ‘time-wasting’.
Question 4
(a)

Using information provided candidates were required to calculate the correct value of inventory.
There were very few wholly correct answers. The inventory had been valued at $26 300 which
includes goods costing $5200 which could only be sold for $5000 after repairs costing $600. The
value of the inventory had to be reduced by $800. A common incorrect answer was $21 600.

(b)

Candidates were required to calculate the correct profit for the year, using data provided and also
the answer to Part (a). There was a wide variation of marks. Some of the weaker candidates did to
seem familiar with this type of question.
Common errors included
•
not starting with the original profit for the year
•
making the adjustments on the inventory valuation rather than on the profit
•
making an adjustment for the whole of the inventory not just the amount of decrease
•
adding the prepaid insurance
•
omitting the provision for doubtful debts or deducting the whole of the new provision
•
avoidable arithmetic errors.

(c)

A statement of changes in equity had to be completed. This was prepared with varying degrees of
success with some candidates earning good marks and others very low marks. The opening
balances should have been taken from the list of balances on the previous page of the question
papers. Many candidates incorrectly amended these figures for the events of the year. Other
common errors were to include the original profit rather than the corrected profit and to include
extraneous items such as debentures.

(d)

A statement of financial position of a limited company had to be prepared. It was expected that the
format of such a statement would be familiar to candidates: in the event a number of candidates
were clearly unprepared for the topic and were unable to even attempt an answer. Those
candidates who had a good knowledge or financial statements were able to earn good marks.
Common errors included
•
not dividing the assets and liabilities into their appropriate sections
•
not inserting heading for the cost accumulated depreciation and net book value of non-current
assets when displayed in columnar format
•
not showing the provision for doubtful debts (correctly labelled) deducted from the trade
receivables
•
not including the insurance prepaid in the item for other receivables
•
omitting the debentures or showing the interest rather than the amount of the loan
•
not itemising the three items in the equity section
•
attempting to show capital, plus profit, less drawings as for a sole trader.

Question 5
(a)

Candidates were required to complete a table to indicate the effect of four errors on the profit for
the year and on the working capital. There was a wide range of marks, both the well-prepared
candidates earning full marks.

(b)

Ratios for two similar businesses were provided and candidates were required to suggest two
reasons for the difference in each ratio. A significant number of candidates provide factually correct
statements which did not answer the question being asked so could not be awarded any marks.
Instead of attempting to provide reasons for the difference in each ratio many candidates restricted
their answer to saying which ratio was the highest and which the lowest. Other candidates
incorrectly believed that the ratios were for the same business over two years and attempted to
explain the reasons for the change in the ratios.
Those candidates with an understanding of the calculation of the ratios were able to apply that
knowledge and suggest reasons why one ratio was higher than the other. In this type of question it

© 2020

Cambridge International General Certificate of Secondary Education
0452 Accounting November 2020
Principal Examiner Report for Teachers
is important that candidates make it very clear the business to which they are referring. For
example no marks could be awarded for a statement ‘He had more current assets’ as there is no
indication whether the comment relates to Aziz or to Nazim.
(c)

This required candidates to suggest one reason why one of the traders had a lower rate of
inventory turnover. Once again, it was important that the answer clearly stated the name of the
trader to which the comment referred.

(d)

Candidates were asked to advise a trader whether or not he should introduce a strict credit control
policy. Once again, candidates offering the required number of advantages and disadvantages and
making a recommendation were able to earn high marks. A number of candidates did not provide a
definite recommendation. The possibility of being paid earlier and reducing irrecoverable debts
were popular advantages (though same candidates incorrectly stated that the trader would
definitely be paid earlier). Damaging the relationship with credit customers and losing credit
customers were popular disadvantages.

© 2020