0452/21/O/N/22 Question Paper – Accounting Oct/Nov 2022 Paper 21

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Cambridge Accounting (0452) question paper for paper 21, Oct/Nov 2022 — 0452/21/O/N/22, file 0452_w22_qp_21.pdf.

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Cambridge IGCSE™

* 3 0 9 7 1 7 7 7 0 3 *

ACCOUNTING

0452/21

Paper 2 Structured Written Paper

October/November 2022
1 hour 45 minutes

You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
●
Answer all questions.
●
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.
●
Write your answer to each question in the space provided.
●
Do not use an erasable pen or correction fluid.
●
Do not write on any bar codes.
●
You may use a calculator.
●
International accounting terms and formats should be used as appropriate.
●
You should show your workings.

INFORMATION
●
The total mark for this paper is 100.
●
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. Any blank pages are indicated.
DC (DE) 321200
© UCLES 2022

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1

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Anika owns property which she rents out to university students. She has made a consistent profit
for each year she has been in business. Her trial balance at 31 August 2022 was as follows.

Capital
Rent receivable
General expenses
Bank
Rates
Insurance
Repairs
Drawings
Non-current assets at cost
Premises
Fittings
Provision for depreciation of non-current assets
Premises
Fittings

Debit
$
26 500
39 400
38 200
12 400
32 000
18 500

Credit
$
400 000
162 000

418 000
90 000

675 000

42 000
71 000
675 000

Additional information
1

At 31 August 2022, rent received of $8100 has been paid in advance.

At 31 August 2022, general expenses of $1300 have been paid in advance and rates of
$3400 were owing.

The insurance includes $1800 paid for the 15 month period ending 30 November 2022.

Expenditure of $9000 for new fittings has been recorded in repairs.

Depreciation is to be provided as follows:
Premises
Fittings

by equal instalments on cost each year over a 50 year period
20% per annum by the reducing balance method

A full year’s depreciation is charged on fittings during the year of purchase.

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REQUIRED
(a) Prepare the income statement of Anika for the year ended 31 August 2022.
Anika
Income Statement for the year ended 31 August 2022
$

Workings:

[9]

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(b) Prepare the capital account for the year ended 31 August 2022 showing the balance brought
down at 1 September 2022.
Anika
Capital account
Date

Details

Date

Details

[3]

Anika plans to buy more property to rent out. She will need additional capital for this. She has
savings earning 3% per annum which she could use for the additional capital. Alternatively, she
could invite Janos, a builder, to provide the capital and join her to form a partnership.
REQUIRED
(c) Advise Anika on her plans and whether she should provide her own additional capital or form
a partnership with Janos. Justify your answer.

[5]
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(d) Explain to Anika the difference between capital expenditure and revenue expenditure. Why is
this difference between the two important when preparing the financial statements?

[3]
[Total: 20]

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Rasheed started a business on 1 October 2021. He maintains a petty cash book in the business.
A monthly imprest of $100 is restored on the first day of each month.
REQUIRED
(a) State two advantages of maintaining a petty cash book.
1

2
[2]
Rasheed’s transactions for the month of September 2022 were as follows.
September 2
7
13
18
25
29

Paid taxi fare
Paid purchases ledger account of Crystal
Bought postage stamps
Paid purchases ledger account of Kalpa
Paid bus fare
Paid cleaner

$
12
16
10
15
5
28

REQUIRED
(b) Complete Rasheed’s petty cash book for the month of September 2022 on the next page.
Balance the petty cash book and bring down the balance on 1 October 2022. Clearly show
the amount required to restore the imprest.
[8]

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September 1

100

2022

Date

Total
Received
$

Cash

Details

Total
paid
$

Travel

Rasheed – Petty Cash Book

Postage

Cleaning

Ledger
accounts
$

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(c) Record the entries which would be made in the following accounts in September 2022. It is
not necessary to total or balance the accounts.
Rasheed
Postage account
Date

Details

Date

Details

Purchases ledger
Crystal account
Date

Details

Date

Details

[2]

At the end of his first year in business Rasheed had a closing inventory of $8600.
REQUIRED
(d) Prepare the inventory account at 30 September 2022. Balance the account and bring down
the balance on 1 October 2022.
Rasheed
Inventory account
Date

Details

Date

Details

[2]

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(e) At the end of his first year in business Rasheed would like to compare his financial performance
with other businesses. Explain to Rasheed three problems of inter-firm comparison.
1

[6]
[Total: 20]

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10
3

The following balances have been taken from the accounts of RB, a trader.

Insurance
Commission receivable

1 April 2021
$
2500 prepaid
700 owing

31 March 2022
$
850 prepaid
630 owing

The following transactions relate to the year ended 31 March 2022. All receipts and payments
were through the bank account.
Insurance paid
Insurance refund
Commission receivable

$
15 300
600
7 200

REQUIRED
(a) Prepare the following ledger accounts for the year ended 31 March 2022. Balance the
accounts and bring down the balances on 1 April 2022.
RB
Insurance account
Date

Details

Date

Details

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Commission receivable account
Date

Details

Date

Details

[8]

(b) Prepare the entries for insurance and commission receivable in RB’s statement of financial
position at 31 March 2022.
RB
Extract from statement of financial position at 31 March 2022

[2]
(c) Explain why the matching principle is important in the preparation of RB’s income statement.

[3]

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RB has arranged with his suppliers to receive a 25% trade discount off list price and a 2% cash
discount. The cash discount is only for payments made within 10 days.
On 5 March 2022 RB received an invoice from JP for the supply of goods with a list price of $3000.
The invoice was paid on 13 March 2022.
REQUIRED
(d) Calculate each of the following:
(i)

the trade discount

[1]

(ii)

the cash discount

[1]

(iii)

the amount paid to the supplier JP

[1]

(e) Complete the table below indicating with a tick (✓) the effect of each type of discount on
gross profit and profit for the year.
Discount allowed
increase

decrease

no effect

increase

decrease

no effect

gross profit
profit for the year
Discount received

gross profit
profit for the year
[4]
[Total: 20]

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13
4

The following information is taken from the statement of financial position of C Limited at
1 September 2021.
$
60 000

5% Debentures (2024)
Equity
Ordinary share capital ($0.50)
General reserve
Retained earnings

240 000
36 000
22 000

During the year ended 31 August 2022:
A final dividend payment of $12 000 was made for the year ended 31 August 2021.
An interim dividend payment of $0.02 per share was made for the year ended 31 August 2022.
A transfer of $11 000 was made to general reserve.
At 31 August 2022 the company proposed a final dividend of $10 000 for the year ended
31 August 2022.
The revenue for the year ended 31 August 2022 was $310 000 and the profit (before debenture
interest) was $23 000.
REQUIRED
(a) Prepare the statement for the changes in equity for the year ended 31 August 2022.
C Limited
Statement of Changes in Equity for the year ended 31 August 2022
Details

Share
capital
$

General
reserve
$

Retained
earnings
$

Total

[7]

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(b) Calculate to two decimal places the return on capital employed for the year ended
31 August 2022. (Use closing capital employed).

[4]
(c) (i)

Calculate to two decimal places the profit margin for the year.

[2]

(ii)

Suggest two ways in which the profit margin could be improved.
1

[2]

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C Limited plans to buy additional premises. Two options are being considered to raise the finance
required.
Option 1
Issue 6% debentures to raise $65 000
Option 2
Issue additional ordinary shares to raise $65 000
REQUIRED
(d) Evaluate the two options and advise the company on which one they should choose. Justify
your answer.

[5]
[Total: 20]

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NT started in business on 1 September 2020. All sales are on credit and payment is required from
customers within 25 days.
On 5 May 2021, LW a trade receivable was declared bankrupt and a debt of $600 was written off
as irrecoverable at that date.
REQUIRED
(a) Prepare a journal entry to write off the amount owed by LW. A narrative is required.
NT
General Journal
Date

Details

Debit
$

Credit
$

[3]

In addition to the irrecoverable debt of LW, other irrecoverable debts of $4100 were written off
during the year ended 31 August 2021. Trade receivables at 31 August 2021 were $91 500 and
NT decided to create a provision for doubtful debts of 5% of trade receivables.
REQUIRED
(b) Prepare an extract from the expenses section of NT’s income statement for the year ended
31 August 2021.
NT
Extract from income statement for the year ended 31 August 2021

[2]

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(c) Prepare an extract from the assets section of NT’s statement of financial position at
31 August 2021.
NT
Extract from statement of financial position at 31 August 2021

[2]
During the financial year ended 31 August 2022, PB a trade receivable who owed $7000 had been
declared bankrupt. On 17 July 2022, NT received payment of $2500 by cheque in final settlement
of the debt. The remainder of the debt was written off as irrecoverable.
Other irrecoverable debts of $8400 were written off at 31 August 2022. The remaining trade
receivables at 31 August 2022 were $110 000 and NT decided to maintain the provision for
doubtful debts at 5% of trade receivables.
REQUIRED
(d) Prepare the following ledger accounts for the year ended 31 August 2022. Bring down the
balance on 1 September 2022, where appropriate.
NT ledger accounts
PB account
Date

Details

Date

Details

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Irrecoverable debts account
Date

Details

Date

Details

Provision for doubtful debts account
Date

Details

Date

Details

[8]

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NT is concerned at the increase in irrecoverable debts during the second year of business. To
reduce irrecoverable debts, he is planning to introduce one of the two following options.
Option 1: To charge interest on all debts not paid within his standard terms of payment of 25 days.
Option 2: To stop supplies to all customers who do not pay within his standard terms of payment of
25 days.
(e) Advise NT on which option he should introduce. Justify your answer.

[5]
[Total: 20]

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0452/21/O/N/22

Accounting (0452) · Oct/Nov 2022 · Question paper 21

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