Cambridge IGCSE Accounting 0452 — 2003 May/June Paper 2 · Variant 1

This document consists of 12 printed pages. BR S37614/3 © CIE 2003 [Turn over CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education ACCOUNTING 0452/02 Paper 2 May/June 2003 1 hour 30 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 in the spaces provided on the Question Paper. You may use a soft pencil for rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. 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. 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. Centre Number Candidate Number Name If you have been given a label, look at the details. If any details are incorrect or missing, please fill in your correct details in the space given at the top of this page. Stick your personal label here, if provided. For Examiner’s Use 1 2 3 4 5 Total www.theallpapers.com

For Examiner’s Use 2 0452/02/M/J/03 1 (a) State one example of a current liability. …[1] (b) State the effect on net profit if opening stock is overvalued. …[1] (c) State one purpose for which the Journal may be used. …[1] (d) For each of the three items place one tick (✓) in the correct box to show where it appears in a partnership’s final accounts. 1 Interest on partners’ drawings 2 Interest on a loan from a partner 3 Interest on partners’ capitals [3] (e) Cherie owns a clothing store For each of the three items shown below, place one tick (✓) in the correct box. 1 Sales assistant’s wages 2 New showroom fittings 3 Cost of installing the new fittings [3] (f) Complete the following sentence. “A debit balance on a ledger account is either an … or an …” [2] Profit and Loss Profit and Loss Account Appropriation Account Revenue Capital expenditure expenditure www.theallpapers.com

For Examiner’s Use 3 0452/02/M/J/03 [Turn over (g) A business paid $20000 for a new machine on 1 January 2001. Depreciation was charged on the machine at the rate of 30% using the reducing balance method. Calculate the machine’s net book value on 31 December 2002. Show your workings. … … … … … …[4] (h) In which section of a Balance Sheet does rent received in advance appear? …[1] (i) Name the system of petty cash in which the petty cashier begins each new accounting period with the same amount of petty cash. …[1] (j) A sale on credit to Smith was entered on the debit side of Smythe’s account in the seller’s ledger. Name this type of error. …[1] (k) Charlie bought an existing business for $200000. The value of the business as shown by the Balance Sheet was $175000. Suggest one reason why Charlie was prepared to pay more for the business than the value of its net assets. … … … …[1] www.theallpapers.com

2 Danbi Wyske runs her business from rented premises. The following balances were extracted from her books on 30 April 2003. $ Stock 1 May 2002 4000 Sales 80000 Purchases 62000 Debtors 10000 Creditors 9000 Electricity paid 3000 General expenses 7000 Cash at bank 5000 Drawings 8000 Rent and insurance paid 6000 Equipment at cost 45000 Provision for depreciation of equipment 16000 Capital ? 4 0452/02/M/J/03 For Examiner’s Use www.theallpapers.com

5 0452/02/M/J/03 [Turn over (a) Using the columns below, prepare Danbi’s trial balance as at 30 April 2003, showing her Capital account balance. Danbi Wyske Trial Balance as at 30 April 2003 Dr Cr $ $ ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– … … ––––––––––––––––––––––––––––– –––––––––––––– ––––––––––––––– [14] –––––––––––––– ––––––––––––––– (b) Name the ledger account to which a difference on a trial balance may be posted. …[1] For Examiner’s Use www.theallpapers.com

6 0452/02/M/J/03 3 Andy Mann owns a general store. His Trading and Profit and Loss Account for the year ended 31 March 2003 is shown below. Some words and figures are missing. (a) In each of the boxes (i) to (vi) enter the missing word(s) or figure. Andy Mann Trading and Profit and Loss Account for the year ended 31 March 2003 $ $ $ Sales 200000 Less Cost of goods sold Opening stock (i) Purchases 120000 Less (ii) 2000 118000 –––––– –––––– 130000 Less (iii) 10000 120000 –––––– –––––– Gross Profit 80000 Add Rent received (iv) Discount (v) 3000 –––––– 88000 Less Wages 12000 Insurance 3000 General expenses 28000 Depreciation (vi) 58000 –––––– Net Profit 30000 –––––– [6] (b) Calculate Andy’s net profit as a percentage of his sales for the year. Show your workings. … … …[2] For Examiner’s Use www.theallpapers.com

7 0452/02/M/J/03 [Turn over 3 (c) On 31 March 2003 Andy’s capital was $200000. He also had a long-term loan from his bank of $50000. Calculate Andy’s net profit as a percentage of the capital employed in his business. Show your workings. … … …[3] (d) Give two reasons why it is important for Andy to know his net profit as a percentage of the capital employed. … … … … … …[4] For Examiner’s Use www.theallpapers.com

8 0452/02/M/J/03 4 Karl is a sole trader who keeps full double entry accounting records including Sales, Purchases and Nominal Ledgers. On 1 April 2003, balances in Karl’s books included the following. $ Debit balances brought forward from 31 March 2003 Cash 200 Bank 2500 Debtor’s accounts (in the Sales Ledger) M Fynne 200 J Bildt 1500 Creditor’s accounts (in the Purchases Ledger) S Ghalli 615 T Daktyl 830 Karl’s transactions for the month of April 2003 included the following. April 4 M Fynne paid the amount he owed by cheque after deducting cash discount of $10. 6 Cash was withdrawn from bank for office use 300 8 Paid S Ghalli by cheque after deducting cash discount of $15. 10 Paid wages in cash. 250 14 J Bildt paid the amount he owed by cheque, deducting cash discount, $40. 17 Cash was withdrawn from bank for office use. 400 21 Paid T Daktyl by cheque after deducting cash discount of $30. 25 Paid wages in cash. 350 28 Cash sales. 800 30 Cash was paid into bank. 500 (a) Enter the above transactions in Karl’s cash book on the page opposite (the cash and bank balances on 1 April 2003 have been entered for you). Balance the cash and bank accounts at 30 April 2003 and bring down the balances on 1 May 2003. [21] For Examiner’s Use www.theallpapers.com

9 0452/02/M/J/03 [Turn over Karl Cash Book Date Discount Cash Bank Date Discount Cash Bank 2003 $ $ $ 2003 $ $ $ April 1 Balances b/d 200 2500 April For Examiner’s Use www.theallpapers.com

10 0452/02/M/J/03 4 (b) Total the discounts columns in the cash book. Make the entries required in the discounts accounts on 30 April 2003 in Karl’s nominal ledger below. Karl Nominal Ledger Discounts Allowed account … … … … Discounts Received account … … … …[4] For Examiner’s Use www.theallpapers.com

11 0452/02/M/J/03 [Turn over 5 Carrie Okie, a sole trader, does not keep full accounting records but supplied the following information about her business. At 1 April 2002 At 31 March 2003 $ $ Fixed assets 50000 75000 Current assets 20000 30000 Current liabilities 15000 20000 (a) Prepare a Balance Sheet for Carrie as at 1 April 2002. Balance Sheet as at 1 April 2002 … … … … … … … …[4] For Examiner’s Use www.theallpapers.com

12 0452/02/M/J/03 You have the following additional information. (1) Carrie’s drawings for the year ended 31 March 2003 were $10000. (2) Fixed assets at 31 March 2003 are to be depreciated by 20%. (b) Use the above information to prepare a Balance Sheet for Carrie as at 31 March 2003, showing her profit or loss for the year ended on that date. Balance Sheet as at 31 March 2003 … … … … … … … … … … … … … … …[10] (c) Explain how Carrie observes the accounting principle of prudence by providing for the depreciation of her fixed assets. … … …[2] For Examiner’s Use www.theallpapers.com