Accounting (0452) · Oct/Nov 2020 · Question paper 22
Cambridge Accounting (0452) question paper for paper 22, Oct/Nov 2020 — 0452/22/O/N/20, file 0452_w20_qp_22.pdf.
Text of this paper
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Cambridge IGCSE™
* 7 7 1 1 4 5 5 2 4 8 *
ACCOUNTING
0452/22
Paper 2 Structured Written Paper
October/November 2020
1 hour 45 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
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Answer all questions.
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Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
●
Write your name, centre number and candidate number in the boxes at the top of the page.
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Write your answer to each question in the space provided.
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Do not use an erasable pen or correction fluid.
●
Do not write on any bar codes.
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You may use a calculator.
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International accounting terms and formats should be used as appropriate.
●
You should show your workings.
INFORMATION
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The total mark for this paper is 100.
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The number of marks for each question or part question is shown in brackets [ ].
●
Where you are asked to complete a layout, you may not need all the lines for your answer.
This document has 20 pages. Blank pages are indicated.
DC (RCL/GO) 186554/3
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1
Dev owns a business selling furniture.
The following transactions took place during August 2020.
Transaction
1
2
3
4
Date
August 9
14
23
29
Details
Sold goods on credit to Petra
Petra returned damaged goods to Dev
Banked cash sales
Petra settled her outstanding balance at 1 August by
credit transfer after taking a cash discount of 5%
$
675
120
412
On 1 August 2020, the balance on credit customer Petra’s sales ledger account was $940 debit.
REQUIRED
(a) Complete the table to name each business document and book of prime entry for the following
transactions in Dev’s accounting records.
Transaction
Business document
Book of prime entry
2
3
4
[6]
(b) Prepare the account of Petra for August 2020 as it would appear in Dev’s sales ledger.
Balance the account and bring down the balance on 1 September 2020.
Dev
Petra account
Date
2020
$
Date
2020
Details
Details
$
[6]
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(c) Identify the section of Dev’s statement of financial position at 31 August 2020 in which the
balance on Petra’s account would appear.
[1]
Dev allows his credit customers a cash discount of 5% for prompt payment. He is considering
reducing this to 2%.
REQUIRED
(d) State one advantage and one disadvantage to Dev of this proposal.
[2]
Dev is considering turning his business into a limited company.
REQUIRED
(e) Advise Dev whether or not he should form a limited company. Justify your answer with two
advantages and two disadvantages of forming a limited company.
[5]
[Total: 20]
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2
BH Sports Club provides sporting facilities and a café for the use of its members and guests.
The club’s financial year ends on 31 July. The following information is available.
Assets and liabilities
Bank
Café inventory
Sports hall at book value
Insurance prepaid – sports hall and
sports equipment
Sports equipment at book value
Subscriptions in arrears
Subscriptions received in advance
Wages accrued – café staff
At 1 August
2019
$
840
520
17 000
400
3900
360
–
60
At 31 July
2020
$
1270
770
16 560
440
?
720
120
80
Receipts and Payments Account for the year ended 31 July 2020
Details
Balance
Subscriptions received
Café takings
b/d
$
840
9 960
13 520
Details
Purchases of café supplies
Wages – café staff
Wages – sports staff
Insurance – sports hall and
sports equipment
Sports equipment
Sports hall expenses
Balance
c/d
24 320
$
8 190
2 750
5 220
1 430
2 100
3 360
1 270
24 320
Additional information
Sports equipment is depreciated at 10% per annum using the reducing balance method.
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REQUIRED
(a) Prepare the subscriptions account for the year ended 31 July 2020. Balance the account and
bring down the balances on 1 August 2020.
BH Sports Club
Subscriptions account
Date
Details
$
Date
Details
$
[6]
(b) Calculate the café profit for the year ended 31 July 2020.
[4]
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(c) Prepare the income and expenditure account for the year ended 31 July 2020.
BH Sports Club
Income and Expenditure Account for the year ended 31 July 2020
$
$
(d) (i)
[7]
State what the balance on BH Sports Club’s accumulated fund represents.
[1]
(ii) State the effect that the surplus or deficit on BH Sports Club’s income and expenditure
account for the year ended 31 July 2020 will have on the accumulated fund.
[2]
[Total: 20]
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JP Limited’s financial year ended on 30 September 2020.
The following balances were available at that date.
7% debentures (2026)
Administrative expenses
Carriage inwards
Distribution costs
Debenture interest paid
Inventory at 1 October 2019
Non-current assets at book value at 1 October 2019
Provision for doubtful debts
Purchases
Revenue
Trade receivables
$
20 000
44 000
1 500
38 000
700
66 000
610 000
1 000
263 000
529 500
80 500
Additional information
1
Inventory at 30 September 2020 was valued at $59 000.
2
Interest on the 7% debentures (2026) had been paid up to 31 March 2020.
3
Administrative expenses included rates of $1200 for the six months ending 31 March 2021.
4
Distribution costs of $800 were outstanding at 30 September 2020.
5
Non-current assets should be depreciated by 10% per annum using the reducing balance
method.
6
Irrecoverable debts of $500 are to be written off.
7
The directors wish to maintain the provision for doubtful debts at 2% of trade receivables.
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REQUIRED
(a) Calculate the cost of sales for the year ended 30 September 2020.
[2]
(b) Calculate the increase or decrease in the provision for doubtful debts at 30 September 2020.
[2]
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(c) Prepare the income statement for the year ended 30 September 2020.
JP Limited
Income Statement for the year ended 30 September 2020
$
$
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(d) Complete the table by placing a tick (✓) in the correct column to indicate the effect on the
equity of JP Limited of each of the following.
The first one has been completed as an example.
Increase
Issue additional debentures
Decrease
No effect
✓
Issue additional ordinary shares
Payment of ordinary share dividend
Proposal of ordinary share dividend
Transfer from retained earnings to general reserve
[4]
[Total: 20]
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4
Carlos owns a business selling computer equipment.
He provided the following information for the year ended 31 July 2020.
$
240 000
169 000
55 000
18 000
62 000
Sales
Cost of sales
Operating expenses
Drawings
Capital employed
REQUIRED
(a) Calculate the profit for the year ended 31 July 2020.
Workings
Profit for the year ended
31 July 2020
31 July 2019
$11 550
[1]
(b) Calculate the following ratios correct to two decimal places.
Profit margin
Workings
Year ended
31 July 2020
31 July 2019
8.56%
Gross margin
Workings
Year ended
31 July 2020
31 July 2019
34.26%
Return on capital employed (ROCE)
Workings
Year ended
31 July 2020
31 July 2019
32.08%
[6]
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(c) Comment on the performance of Carlos’s business over the two years (2019 and 2020).
[6]
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Carlos is concerned that the business bank balance has shown a large decrease. He is considering
either investing more cash from his private funds or obtaining a two-year bank loan.
REQUIRED
(d) Advise Carlos which option he should select. Justify your answer by providing one advantage
and one disadvantage of each option.
[5]
(e) State the name of one party, other than himself and his employees, who would be interested
in Carlos’s financial statements. State one reason for their interest.
Interested party
The interest they would have
[2]
[Total: 20]
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Razia’s financial year ends on 30 September.
The totals of the trial balance on 30 September 2020 did not agree. The totals were debit $10 450
and credit $10 250. A suspense account was opened.
The following errors were later discovered.
1
The total of the sales returns journal had been overcast by $300.
2
Cash sales, $820, had not been recorded in the books of account.
3
A purchase invoice, $190, had been credited to the account of P Hill instead of D Hill.
4
A cheque payment, $240, for motor repairs had been correctly entered in the cash book but
had been posted to the debit of motor repairs account as $420.
5
Rent received, $310, had been debited to the rent payable account.
6
Staff wages, $250, had been posted to Razia’s drawings account.
7
A cheque paid, $900, to Kamil, a credit supplier, had been entered correctly in the cash book
but had not been posted to Kamil’s account.
REQUIRED
(a) Prepare the suspense account. Start with the balance arising from the difference on the trial
balance. The account should be balanced or totalled as necessary.
Razia
Suspense account
Date
Details
$
Date
Details
$
[6]
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(b) Identify the types of error made in Error 2 and Error 4.
Error
Type of error
2
4
[2]
(c) Complete the table by placing a tick (✓) in the correct column to indicate the effect on the
profit for the year of correcting each error.
Error
number
Increase profit
Decrease profit
No effect on profit
1
2
3
4
5
6
7
[7]
Razia is considering whether or not to sell on cash terms only.
REQUIRED
(d) Advise Razia whether or not she should sell on cash terms only. Justify your answer with two
advantages and two disadvantages of selling on cash terms only.
[5]
[Total: 20]
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