0452/23/O/N/23 Question Paper – Accounting Oct/Nov 2023 Paper 23

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Cambridge Accounting (0452) question paper for paper 23, Oct/Nov 2023 — 0452/23/O/N/23, file 0452_w23_qp_23.pdf.

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Cambridge IGCSE™

* 7 6 2 2 3 5 2 6 9 0 *

ACCOUNTING

0452/23

Paper 2 Structured Written Paper

October/November 2023
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 24 pages. Any blank pages are indicated.
DC (PQ) 312328/3
© UCLES 2023

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2
1

Shakir started trading in the year ended 31 August 2023 but did not keep proper books of account.
His assets and liabilities at 1 September 2023 are as follows.
Motor vehicle
Inventory
Cash at bank
Trade payables:
Latif
Harrison

$
9 500
1 240
1 682
200
237

REQUIRED
(a) (i)

Prepare the journal for Shakir’s opening entries at 1 September 2023. A narrative is not
required.
Shakir
Journal
Date

Details

Debit
$

Credit
$

[3]

(ii)

State two advantages of maintaining double entry records.
1

[2]

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During September 2023, the following transactions took place.
Sept 2

Paid rent, $420, by credit transfer

Withdrew cash, $350, from the bank for business use

Paid Latif, $194, by telephone transfer, in full settlement of the amount owing at
1 September 2023

Sold goods on credit, $195, to Sydney

Paid $161, cash, for wages

Cash sales, $290, were paid directly into the bank account

Received a cheque, $100, from Sydney

Paid $95 to Harrison, by electronic transfer, having deducted $5 cash discount from
the amount due

REQUIRED
(b) Prepare Shakir’s cash book on the page opposite.
Balance the cash book and bring down the balances at 1 October 2023.

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[11]

Details

2023

Date

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Discount
allowed
$

Bank

Cash

2023

Date

Shakir
Cash Book

Details

Discount
received
$

Cash

Bank

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Shakir received a bank statement dated 30 September 2023. The bank statement showed that
Shakir had $763 in the bank account. On comparing the bank statement to his cash book, Shakir
noted the following.
Bank charges, $35, were charged by the bank in September.
Cash Sales, $175, had been paid for by credit transfer but not recorded in the cash book.
The cheque received from Sydney had not yet been cleared by the bank.
The cash sales, $290, had been omitted from the bank statement in error.
REQUIRED
(c) Calculate the corrected bank balance.

[4]
[Total: 20]

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8
2

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Hilary owns a manufacturing business. She has provided the following information.
Inventory at 1 August 2022
Raw materials
Work in progress
Finished goods
For the year ended 31 July 2023
Revenue
Purchases of raw materials
Purchases returns of raw materials
Purchases of finished goods
Purchases returns of finished goods
Wages of factory operatives
Wages of factory supervisor
Wages of office supervisor
Heat, light and power
Rates and insurance
Factory repairs and renewals
Factory equipment – at cost
Factory equipment – provision for depreciation

$
9 100
21 357
24 235
457 250
110 000
2 200
23 500
4 700
91 665
29 000
28 000
11 600
8 250
5 125
124 000
35 500

Additional information
1

Inventory at 31 July 2023
Raw material
Work in progress
Finished goods

9 980
22 446
25 110

Heat, light and power is to be apportioned 4/5 to the factory and 1/5 to the office.

Rates and insurance is to be apportioned 3/5 to the factory and 2/5 to the office. Insurance of
$4440 has been paid for the year to 31 December 2023.

At 31 July 2023, a factory repair, $644, was unpaid and no adjustment had been made.

Factory equipment is depreciated at 25% per annum using the reducing balance method.

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REQUIRED
(a) Prepare Hilary’s manufacturing account for the year ended 31 July 2023.
Hilary
Manufacturing Account for the year ended 31 July 2023
$

[11]

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(b) Calculate Hilary’s gross profit for the year ended 31 July 2023.

[4]
Hilary is considering stopping buying any finished goods for resale and instead increasing the
production at her factory.
REQUIRED
(c) Advise Hilary whether she should sell only production from her own factory and increase the
amount produced. Justify your answer by providing arguments for and against selling only
production from her own factory and increasing the amount produced.

[5]
[Total: 20]
© UCLES 2023

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11
3

Logan is a trader who sells goods on credit. His year end is 30 September. Logan has provided
the following information.
$

At 1 October 2022
Inventory
Trade receivables
Other receivables (rent prepaid)
For the year ended 30 September 2023
Rent charge for the year
Bank payments for rent 1 December 2022
1 June 2023
At 30 September 2023
Inventory
Trade receivables
Other receivables
Irrecoverable debts to be written off

8 400
7 500
820
4 940
2 460
2 490
8 675
8 700
?
325

The provision for doubtful debts is to be maintained at 4% of trade receivables.
REQUIRED
(a) Prepare the inventory account for the year ended 30 September 2023.
Logan
Inventory account
Date

Details

Date

Details

[3]

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(b) Prepare the provision for doubtful debts account for the year ended 30 September 2023.
Balance the account at 30 September 2023 and bring down the balance at 1 October 2023.
Logan
Provision for doubtful debts account
Date

Details

Date

Details

[4]

(c) Prepare the rent payable account for the year ended 30 September 2023. Balance the
account at 30 September 2023 and bring down the balance at 1 October 2023.
Logan
Rent payable account
Date

Details

Date

Details

[6]

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(d) State how:
(i)

the prudence principle is applied to the valuation of Logan’s inventory

[1]

(ii)

the matching principle is applied when the rent payable account is prepared

[1]

Logan is considering buying business premises instead of renting. He would request a long-term
bank loan to finance the purchase of the premises.
REQUIRED
(e) Advise Logan whether he should purchase business premises using a long-term bank loan.
Justify your answer with advantages and disadvantages of purchasing business premises
using a long-term bank loan.

[5]
[Total: 20]

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14
4

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Asia is a trader. She prepared her trial balance at 31 August 2023. The credit side totalled $273
more than the debit side. Asia placed the difference in a suspense account.
Asia later discovered the following errors.
1

A credit purchase, $112, from Jacques, had been entered twice in the purchases journal.

The wages account had been overcast by $300.

Cash received, $75, from Savanah, a trade receivable, had only been entered in the cash
book.

The total of the sales returns journal for August 2023 of $198, had been credited to both the
sales returns account and the purchases returns account.

A payment to Sophie, $93, had been recorded as $39 in Sophie’s account.

REQUIRED
(a) Prepare the journal entries to correct errors 1–5. Narratives are not required.

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Asia
Journal
Error
number

Details

Debit
$

Credit
$

[11]

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(b) Prepare the suspense account, including the original difference on the trial balance.
Asia
Suspense account
Date

Details

Date

Details

[5]

REQUIRED
(c) Complete the following table by placing a tick (3) to show the effect of each error. The first
one has been completed as an example.
Error
number

Error

Gross profit
+

A credit purchase, $112, from Jacques,
had been debited twice to the purchases
account.

The wages account had been overcast
by $300.

Cash received, $75 from Savanah, a
trade receivable, had only been entered
in the cash book.

The total of the sales returns journal for
August 2023, $198, had been credited to
both the sales returns account and the
purchases returns account.

A payment to Sophie, $93, had been
recorded as $39 in Sophie’s account.

–
3

Profit for
the year
+

No effect

–
3

[4]
[Total: 20]

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18
5

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B Limited provides cleaning services to client offices and factories. The clients provide their own
cleaning materials. The trial balance of B Limited at 30 June 2023 was as follows.
B Limited
Trial Balance at 30 June 2023

Revenue
Wages and salaries
Motor expenses
Insurance
General expenses
Motor vehicles at cost
Provision for depreciation of motor vehicles
Equipment at cost
Provision for depreciation of equipment
Trade receivables
Bank
Ordinary share capital
General reserve
Retained earnings
Dividend paid on ordinary shares

Debit
$
72 000
9 820
11 040
12 780
42 000
5 000
1 640
19 950

4 800
179 030

Credit
$
135 040

16 500
2 000
10 000
2 000
13 490
179 030

Additional information
1

Revenue of $9240 was received in advance.

The insurance charge for the 12 months to 31 December 2022 was $7200 and for the
12 months to 31 December 2023 it is $7440. On 1 January 2023 insurance was paid in full for
the 12 months to 31 December 2023.

Accrued general expenses at 30 June 2023 were $186.

Depreciation is to be charged on motor vehicles at 25% per annum using the reducing
balance method.

Depreciation on equipment is to be charged at 20% per annum using the straight line method.

No dividends were outstanding at 30 June 2023.

$1000 is to be transferred to the general reserve at 30 June 2023.

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REQUIRED
(a) Prepare the income statement for B Limited for the year ended 30 June 2023.
B Limited
Income Statement for the year ended 30 June 2023
$

[6]

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(b) Prepare the statement of changes in equity for B Limited for the year ended 30 June 2023.
B Limited
Statement of Changes in Equity for the year ended 30 June 2023
Details

Ordinary
Share
capital
$

General
reserve

Retained
earnings

Total

On 1 July 2022

On 30 June 2023

[5]

B Limited has no inventory

[2]

(ii)

B Limited does not require a provision for doubtful debts

[2]

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The directors of B Limited are also the shareholders. They plan to expand the company. They are
considering whether to issue debentures or ordinary shares.
REQUIRED
(d) Advise the directors whether they should issue debentures or ordinary shares. Justify your
answer.

[5]
[Total: 20]

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
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 Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

0452/23/O/N/23

Accounting (0452) · Oct/Nov 2023 · Question paper 23

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