Cambridge IGCSE Accounting 0452 — 2004 Oct/Nov Paper 2 · Variant 1

This document consists of 11 printed pages and 1 blank page. SP (BR) S60099/5 © UCLES 2004 [Turn over UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education ACCOUNTING 0452/02 Paper 2 October/November 2004 1 hour 30 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre name, 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. 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 © UCLES 2004 0452/02/O/N/04 1 (a) State one purpose for which the journal may be used. …[1] (b) Name the final account to which the balance of the carriage outwards account is transferred at the end of the financial year. …[1] (c) State the basis on which a business should value its closing stock. …[1] (d) (i) An invoice showed a balance owing of $1000, less 2
 % discount for payment by the end of the month. The debtor paid in time and claimed the discount. How much did he pay? Show your workings. … … … …[2] (ii) Name the type of discount claimed by the debtor in (i) above. …[1] (e) State the name given to the list of debit and credit balances in a business’s books on a given date. …[1] (f) Name a partnership’s final account which shows the division of profits and losses between the partners. …[1] (g) Explain what is meant by a compensating error. … …[2] (h) Sam owns a factory making agricultural machines. Give one example of capital expenditure and one example of revenue expenditure for his business. 1. Capital expenditure … 2. Revenue expenditure …[2] [TOTAL: 12] www.theallpapers.com

For Examiner’s Use 3 © UCLES 2004 0452/02/O/N/04 [Turn over 2 Martha Adebuyo owns a retail shop. Her financial year ends on 31 August. Her Trading and Profit and Loss Account for the year ended 31 August 2004 is shown below. Some words and figures are missing. (a) In each of the boxes (i) to (vii) enter the missing word(s) or figures. Trading and Profit and Loss Account for the year ended 31 August 2004 $ $ $ Sales 106000 Less Sales returns (i) 100000 –––––– Less Cost of goods sold Opening (ii) 12000 Purchases (iii) Less Purchase returns 4000 –––––– 67000 Plus Carriage (iv) 5000 72000 –––––– –––––– 84000 Less Closing stock (v) 70000 –––––– –––––– Gross profit 30000 Add Rent (vi) 6000 –––––– 36000 Less Wages 14000 Insurance 3000 General expenses (vii) 24000 –––––– –––––– –––––– Net profit 12000 –––––– [7] (b) Calculate, showing your workings, Martha’s (i) gross profit as a percentage of her sales for the year; … … …[2] (ii) net profit as a percentage of her sales for the year. … … …[2] www.theallpapers.com

2 (c) In her next financial year (ending on 31 August 2005), Martha plans to reduce her total expenses in the Profit and Loss account by 10%. Assuming her sales remain unchanged, state the effect this reduction would have on her gross and net profit to sales percentages. 1. Effect on gross profit to sales percentage … 2. Effect on net profit to sales percentage …[2] [TOTAL: 13] 3 Otto began a motor vehicle repair business on 1 October 2001. On that date he bought machinery on credit from JD Engineering for $20000. He decided to depreciate this machinery at 30% using the reducing (diminishing) balance method. (a) Make the entries required in Otto’s ledger accounts below for the three years ended 30 September 2004. (There were no other purchases or sales of machinery during this period.) Show the balance brought down on the provision for depreciation of machinery account on 1 October 2004. You may use this space for your workings. … … … … … … … Machinery account … … … … … … 4 © UCLES 2004 0452/02/O/N/04 For Examiner’s Use www.theallpapers.com

5 © UCLES 2004 0452/02/O/N/04 [Turn over Provision for depreciation of machinery account … … … … … … … … … … … … … …[9] For Examiner’s Use www.theallpapers.com

6 © UCLES 2004 0452/02/O/N/04 3 (b) Complete the extract below to show how machinery appears in Otto’s Balance Sheet as at 30 September 2004. Extract from Balance Sheet as at 30 September 2004 Fixed Assets Cost Depreciation Net book value to date $ $ $ Machinery … … … [3] Otto estimates that the machinery has a useful life of six years when its scrap value is expected to be $2000. His accountant has advised him to consider using the straight line (equal instalment) method for depreciating the machinery instead of the reducing (diminishing) balance method. (c) (i) Calculate the accumulated depreciation on the machinery at 30 September 2004 using the straight line (equal instalment) method. Show your workings … … … … …[3] (ii) Suggest one reason why the straight line (equal instalment) method might be more suitable for Otto to use when depreciating his machinery. … … … …[2] [TOTAL: 17] For Examiner’s Use www.theallpapers.com

7 © UCLES 2004 0452/02/O/N/04 [Turn over BLANK PAGE QUESTION 4 IS ON THE FOLLOWING PAGE www.theallpapers.com

8 © UCLES 2004 0452/02/O/N/04 For Examiner’s Use 4 Jonah is a sole trader who keeps full double entry accounting records including a three column cash book. All cheques received are banked on the same day. On 30 June 2004 balances in his books included the following. Debtors $ H Syde 500 B Sharp 800 M Yaveli 630 Creditors J Teime 400 P Mulder 1000 Cash 600 Bank (Dr) 2500 Jonah’s transactions for the month of July 2004 included the following. $ July 3 H Syde paid the amount he owed by cheque after deducting cash discount of $10. 7 Cash was withdrawn from bank for office use. 200 10 Paid J Teime by cheque after deducting $15 cash discount. 12 Paid wages in cash. 400 14 B Sharp paid the amount he owed by cheque after deducting cash discount of $20. 17 Paid P Mulder by cheque after deducting cash discount of $25. 20 Cash sales paid directly into bank. 350 21 M Yaveli paid the amount he owed by cheque. 24 Paid wages in cash. 250 Paid electricity bill by cheque. 600 29 Jonah’s bank returned M Yaveli’s cheque for $630 as dishonoured. (a) Enter the transactions shown on the next page in Jonah’s cash book on the page provided (the cash and bank balances on 1 July 2004 have already been entered for you). Balance the cash book at 31 July and bring down the balances on 1 August 2004. [21] For Examiner’s Use www.theallpapers.com

9 © UCLES 2004 0452/02/O/N/04 [Turn over For Examiner’s Use For Examiner’s Use 4 (a) Jonah Cash Book Date Discount Cash Bank Date Discount Cash Bank 2004 $ $ $ 2003 $ $ $ July 1 Balances b/d 600 2500 July www.theallpapers.com

10 © UCLES 2004 0452/02/O/N/04 For Examiner’s Use (b) Make the entries required in the discounts accounts on 31 July 2004. Discounts allowed account … … … … Discounts received account … … … …[4] [TOTAL: 25] 5 Rosie Lee is a sole trader who does not operate a full double entry accounting system. However she is able to provide the following information about her business. At 1 October 2003 At 30 September 2004 $ $ Fixtures and fittings 12000 14000 Motor vehicle – 3000 Stock 3000 11000 Debtors 5500 1000 Cash at bank 1500 – Bank overdraft – 2000 Creditors 5000 4000 www.theallpapers.com

11 © UCLES 2004 0452/02/O/N/04 [Turn over For Examiner’s Use (a) Using the above information, calculate Rosie’s capital at 1 October 2003 and 30 September 2004. Show your workings. Calculation of capital At 1 October 2003 … … … … … … … … … … … … At 30 September 2004 … … … … … … … … … … … …[13] www.theallpapers.com

12 © UCLES 2004 0452/02/O/N/04 For Examiner’s Use Rosie introduced additional capital to buy the motor vehicle which is used in the business. Her drawings during the year ended 30 September 2004 were $8000. Rosie has not yet charged any depreciation on her fixed assets at 30 September 2004 and now decides that they should be depreciated by $1000. (b) Using your answer to 5(a) and the above information, calculate Rosie’s profit or loss for the year ended 30 September 2004. Show your workings. … … … … … … … … … … …[8] (c) Suggest one reason which could explain why Rosie’s business had a bank overdraft on 30 September 2004. … … … …[2] [TOTAL: 23] University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. www.theallpapers.com

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education MARK SCHEME for the November 2004 question paper 0452 ACCOUNTING 0452/02 Paper 2, maximum raw mark 90 This mark scheme is published as an aid to teachers and students, to indicate the requirements of the examination. It shows the basis on which Examiners were initially instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began. Any substantial changes to the mark scheme that arose from these discussions will be recorded in the published Report on the Examination. All Examiners are instructed that alternative correct answers and unexpected approaches in candidates’ scripts must be given marks that fairly reflect the relevant knowledge and skills demonstrated. Mark schemes must be read in conjunction with the question papers and the Report on the Examination. • CIE will not enter into discussion or correspondence in connection with these mark schemes. CIE is publishing the mark schemes for the November 2004 question papers for most IGCSE and GCE Advanced Level syllabuses. www.theallpapers.com

Grade thresholds taken for Syllabus 0452 (Accounting) in the November 2004 examination. Minimum mark required for grade: Maximum mark available A C E F Component 2 90 77 64 50 43 The threshold (minimum mark) for B is set halfway between those for Grades A and C. The threshold (minimum mark) for D is set halfway between those for Grades C and E. The threshold (minimum mark) for G is set as many marks below F threshold as the E threshold is above it. Grade A* does not exist at the level of an individual component. www.theallpapers.com

NOVEMBER 2004 IGCSE MARK SCHEME MAXIMUM MARK: 90 SYLLABUS/COMPONENT: 0452/02 ACCOUNTING Paper 2 www.theallpapers.com

Page 1 Mark Scheme Syllabus Paper IGCSE – NOVEMBER 2004 0452 2 © University of Cambridge International Examinations 2005 Question Part Mark 1 (a) Opening entries, purchases/sale of fixed asset on credit, correction of errors, writing off bad debt, year end adjustments, items which cannot be entered in other books of prime entry, or acceptable alternative. 1 (b) P/L Account (accept Trading and Profit and Loss Account) 1 (c) At lower of cost of net realisable value 1 (d)(i) $1 000 –2½% 0 25 (1) Amount paid 0 975 (1) OF 2 (ii) Cash discount (accept discount allowed (NOT received), early settlement) 1 (e) Trial balance NOT T/B 1 (f) Appropriation Account 1 (g) Two errors, being incorrect entries of equal amounts (1) which cancel each other out (1). Marks may be given for suitable example. 2 (h) 1. Plant and machinery, premises, motor vehicles, office equipment (NOT agricultural machines) 2. Wages, raw materials, electricity, office or general expenses, or acceptable alternatives in both cases 2 × 1 each 2 12 2 (a)(i) $6000 (1) (ii) Stock (1) (iii) $71 000 (1) (iv) Inwards (1) (v) $14 000 (1) (vi) Received (1) (accept income) (vii) $7000 (1) 7 (b)(i) % 30 100 000 100 000 30 $ = × (2) 28.3% (1) 34.0% (1) 36.0% (1) (1) OF 2 (ii) % 12 100 000 100 000 12 $ = × (2) 11.3% (1) (1) OF 2 (c) 1. No effect Must refer to % (1) 2. Reduction in expenses would increase Gross profit/net profit NP: sales percentage only – no marks (1) 2 13 www.theallpapers.com

Page 2 Mark Scheme Syllabus Paper IGCSE – NOVEMBER 2004 0452 2 © University of Cambridge International Examinations 2005 Question Part Mark 3 (a) Machinery account 2001 $ 1 Oct JD Engineering 20 000 (1) No aliens e.g. depreciation Creditors (not Purchases, Bank) Provision for Depreciation of Machinery account 2002 $ 2002 $ 30 Sep Balance c/d 6000 30 Sep P/L A/c 6000 (1) OF 2003 30 Sep Balance c/d 10 200 1 Oct Balanced b/d 6000 (1) OF 2003 30 Sep P/L A/c 4200 (2) OF 10 200 10 200 2004 30 Sep Balance c/d 13 140 1 Oct Balance b/d 10 200 (1) OF 2004 30 Sep P/L A/c 2940 (2) OF 13 140 13 140 (1) OF Reversal – no marks. P/L on Dr. side – no marks. Incorrect date(s) – 1. (Running balance format also acceptable) 9 (b) Extract from Balance Sheet as at 30 September 2004 Fixed Assets Cost Depreciation Net book to date value $ $ $ $ Machinery 20 000 (1) 13 140 (1) OF 6860 (1) OF 3 (c)(i) $20 000 – 2000 (1) = 18 000 $3000 without workings = 2 marks 9000 $ )1 ( 3 3000 $ )1 ( 6 000 18 $ = × = 3 (ii) ONE from: Machinery’s value may not fall heavily in 1 mark for basic earlier years statement Maintenance costs may not rise disproportionately over time +1 mark for Straight line easier to calulate, same amount each suitable year development Difficulty in choosing reducing balance rate or acceptable alternative = 2 2 17 www.theallpapers.com

Jonah Cash Book Date Discount Cash Bank Date Discount Cash Bank 2004 $ $ $ 2004 $ $ $ July 1 Balances b/d 600 2500 July 7 Cash * 200 (1) 3 H Syde 10 (1) 490 (1)OF 10 J Teime 15 (1) 385 (1)OF 7 Bank * 200 (1) 12 Wages 400 (1) 14 B Sharp 20 (1) 780 (1) 17 P Mulder 25 (1) 975 (1)OF 24 Wages 250 (1) 20 Cash Sales banked 350 (1) Electricity 600 (1) 21 M Yaveli 630 (1) 29 M Yaveli ** (dishonoured cheque) 630 (2) 31 Balances c/d 150 1960 30 (1)OF 800 4750 40 (1)OF 800 4750 August 1 Balances b/d 150 (1)OF 1960 (1)OF 21 * Accept: office, Transfer, Contra ** Yaveli – 2 marks for date, name and amount 1 mark if name missing but words “dishonoured cheque” shown Notes: Award discount mark if correct amount on correct date Award amount (OF) mark if correct date, name and amount shown Balance marks – (a) no aliens in account – (b) no CR cash balance – (c) balances must be arithmetically correct Any figure shown in DR and CR column – no marks www.theallpapers.com

Page 4 Mark Scheme Syllabus Paper IGCSE – NOVEMBER 2004 0452 2 © University of Cambridge International Examinations 2005 Question Part Mark 4 (b) Discounts allowed account 2004 $ July 31 Total for July 30 (2) Creditors Cash book Discounts received account 2004 $ July 31 Total for July 40 (2) Debtors Cash book NOT individual discount entries 4 25 5 (a) 1/10/03 30/9/04 $ $ Fixtures and fittings 12 000 (1) 14 000 (1) Motor vehicle - 3 000 (1) Stock 3 000 (1) 11 000 (1) Debtors 5 500 (1) 1 000 (1) Bank 1 500 (1) - . 22 000 29 000 Less Creditors 5 000 (1) 4 000 (1) Bank overdraft - . 5 000 2 000 (1) 6 000 Capital 17 000 (1) 23 000 (1) Accept any clean layout but not just figures added and subtracted without narrative. 13 (b) $ Capital at 30/9/04 23 000 (1) Less Capital at 1/10/03 17 000 (1) 6 000 Add Drawings 8 000 (1) 14 000 Less Capital inttroduced (vehicle) 3 000 (2) Depreication 1 000 (1) 4 000 Net profit for year 10 000 (2) (1) OF Award marks of correct sense (+/-), description and amount. 8 www.theallpapers.com

Page 5 Mark Scheme Syllabus Paper IGCSE – NOVEMBER 2004 0452 2 © University of Cambridge International Examinations 2005 Question Part Mark (c) ONE from: Purchase of more fixtures Increase in stocks Decrease in creditors 2 or 0 Cash flow problems (Possibly) increased drawings or acceptable alternative 2 23 www.theallpapers.com