Cambridge IGCSE Accounting 0452 — 2006 May/June Paper 1 · Variant 1

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education ACCOUNTING 0452/01 Paper 1 Multiple Choice May/June 2006 1 hour Additional Materials: Multiple Choice Answer Sheet Soft clean eraser Soft pencil (type B or HB is recommended) READ THESE INSTRUCTIONS FIRST Write in soft pencil. Do not use staples, paper clips, highlighters, glue or correction fluid. Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you. There are forty questions on this paper. Answer all questions. For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet. Read the instructions on the Answer Sheet very carefully. Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet. Calculators may be used. This document consists of 11 printed pages and 1 blank page. IB06 06_0452_01/3RP  UCLES 2006 [Turn over www.theallpapers.com

2 © UCLES 2006 0452/01/M/J/06 1 Why should a sole trader record all the financial information about her business? A because she is required to do so by law B because she needs to pay her creditors on time C so that she can prepare final accounts D so that she knows how much her debtors owe her 2 What is net profit? A the amount of money taken out of the business by the owner during the year B the cash in the business bank account C the difference between sales and cost of sales D the sales revenue less cost of sales and expenses 3 What is shown as a liability in a Balance Sheet? A accrued wages B fixtures and fittings C prepaid rent D stock of goods 4 What information is shown by a business’s Trading Account? A if the business assets equal the liabilities B if the business has made a gross profit C if the business has made a net profit D if the business income exceeds expenditure 5 The credit side of a business’s cash book includes the following payments. $ cash taken by proprietor for personal use 5000 cash paid for fuel for proprietor’s private motor car 200 cash taken by proprietor to purchase business stationery 20 How much will be recorded as proprietor’s drawings? A $5000 B $5020 C $5200 D $5220 www.theallpapers.com

3 © UCLES 2006 0452/01/M/J/06 [Turn over 6 A business sends a cheque to a supplier. The transaction is recorded in the cash book and supplier’s account. Which accounting principle is being applied? A consistency B duality C money measurement D prudence 7 When does a business recognise the income from a sale of goods on credit? A when it sends a statement to the customer B when the customer pays for the goods C when the goods are delivered to the customer D when the goods are ordered by the customer 8 Which describes the going concern principle? A Accountants apply the same treatment to similar transactions. B Accountants assume that the business will continue to exist indefinitely. C Accountants keep the transactions of the proprietor and the business separate. D Accountants record the two-fold aspect of every transaction. 9 In which order are documents used when goods are purchased on credit? A cheque, invoice, order B cheque, order, invoice C order, invoice, cheque D invoice, order, cheque 10 When will a business issue a debit note? A when goods are received from a supplier B when goods are returned by a customer C when goods are returned to a supplier D when goods are sent to a customer www.theallpapers.com

4 © UCLES 2006 0452/01/M/J/06 11 Abdul sells goods with a list price of $4000 on credit to Omar. Abdul offers the following discounts. Cash discount 10 % Trade discount 20 % What amount will be entered in the sales journal of Abdul? A $2880 B $3200 C $3600 D $4000 12 A business keeps a three column cash book. Where is the total of the discount column on the debit side posted? A to the credit side of discounts allowed account B to the credit side of discounts received account C to the debit side of discounts allowed account D to the debit side of discounts received account 13 A trader purchases a motor vehicle to deliver goods to his customers. How will he record this? account to be debited account to be credited A bank motor vehicles B motor vehicles bank C bank purchases D purchases bank 14 Sarah sublets part of her premises to Ruth. A cheque for rent has been received from Ruth. How will Sarah record this in her ledger? account to be debited account to be credited A bank rent receivable B rent receivable bank C rent receivable Ruth D Ruth bank www.theallpapers.com

5 © UCLES 2006 0452/01/M/J/06 [Turn over 15 Where are the personal accounts of trade customers found? A purchases journal B purchases (creditors) ledger C sales journal D sales (debtors) ledger 16 What is the main purpose of a trial balance? A to check the arithmetical accuracy of the double entry B to check the bank balance agrees with the bank statement balance C to check that all invoices have been sent D to check that all journal entries have been posted 17 Which is an error of principle? A cheque for $85 from W entered in W’s account as $58 B purchase of machinery entered in purchases account C sales of goods, $300, to X completely omitted from books D sale to Y entered in the account of Z 18 The total of the discounts received account, $400, is entered on the wrong side of a trial balance. Which suspense account entry will balance the trial balance? A $400 credit B $800 credit C $400 debit D $800 debit 19 The purchase of a motor vehicle on credit was debited to the motor expenses account. How is this error corrected? account to be debited account to be credited A creditors motor expenses B motor expenses creditors C motor expenses motor vehicles D motor vehicles motor expenses www.theallpapers.com

6 © UCLES 2006 0452/01/M/J/06 20 What is the purpose of preparing a bank reconciliation statement? A to check that all expenses have been paid B to check on the amount owed by debtors C to explain the difference between the bank statement balance and cash book balance D to see by how much the bank balance has increased during the accounting period 21 A business paid $1800 for insurance in 2005. A prepayment of $150 had been brought forward from 2004. How much is charged to the Profit and Loss Account in 2005? A $1650 B $1800 C $1950 D $2100 22 When preparing his final accounts, a trader forgot to include an unpaid invoice for repairs to his motor vehicle. What is the effect of this? A fixed assets are overstated B fixed assets are understated C net profit is overstated D net profit is understated 23 Which is revenue expenditure? A building an extension to factory premises B legal costs of buying factory premises C purchase of factory premises D redecorating factory premises 24 What is the effect if capital expenditure is treated as revenue expenditure? A gross profit is understated B net profit is understated C total assets are overstated D working capital is understated www.theallpapers.com

7 © UCLES 2006 0452/01/M/J/06 [Turn over 25 A trader recognises that his motor vehicles depreciate in value each year. How does he record this in his final accounts? Profit and Loss Account Balance Sheet increase expense decrease expense increase fixed assets decrease fixed assets A   B   C   D   26 A business buys a machine for $20 000. It will be used for 5 years and the estimated residual value is $5000. What is the annual depreciation charge using the straight line method? A $1000 B $3000 C $4000 D $5000 27 Zafar owed Ali $500. Zafar was only able to pay Ali $200. Ali wrote the balance off as a bad debt. Which entries record this in Ali's ledger? account to be debited $ account to be credited $ A bad debts 500 bank Zafar 200 300 B bank Zafar 200 300 bad debts 500 C bad debts bank 300 200 Zafar 500 D Zafar 500 bad debts bank 300 200 28 A trader made a net profit of $15 600. Sales were $40 000 and overhead expenses were $10 000. What was the cost of sales? A $14 400 B $24 400 C $25 600 D $30 000 www.theallpapers.com

8 © UCLES 2006 0452/01/M/J/06 29 How is carriage inwards recorded in final accounts? A credit Profit and Loss Account B debit Profit and Loss Account C credit Trading Account D debit Trading Account 30 After preparing her final accounts, a trader finds that she has not included accrued electricity charges. How will the correction of this error affect her final accounts? Profit and Loss Account Balance Sheet increase expenses decrease expenses increase capital decrease capital A   B   C   D   31 Mark and Sally are in partnership sharing profits and losses in the ratio of 2 : 1. The following is extracted from their final accounts for the year ended 30 April 2006. $ $ Net profit 56 000 Partners’ salaries - Mark 8 000 Sally 12 000 20 000 Profit available for distribution 36 000 How much in total will be recorded in Sally’s current account on 30 April 2006? A $18 667 B $24 000 C $30 667 D $32 000 www.theallpapers.com

9 © UCLES 2006 0452/01/M/J/06 [Turn over 32 A partnership makes a loss during the financial year. How is this shown in the accounts? account to be debited account to be credited A Appropriation Account partners’ capital accounts B Appropriation Account partners’ current accounts C partners’ capital accounts Appropriation Account D partners’ current accounts Appropriation Account 33 The following information is available in respect of a sole trader. $ net profit for year 14 000 drawings 18 000 capital at end of year 62 000 There were no additions to capital during the year. What was the trader’s opening capital? A $30 000 B $58 000 C $66 000 D $94 000 34 What is an intangible asset? A debtors B goodwill C prepayment D stock www.theallpapers.com

10 © UCLES 2006 0452/01/M/J/06 35 The following is extracted from a trader’s Balance Sheet. $ fixed assets 3500 current assets 4750 creditors 1300 accruals 85 long term loan 3270 What is the working capital? A $3365 B $3450 C $3535 D $3595 36 Jones starts a business with capital of $20 000. In addition to this he obtains a five year loan of $12 000 to purchase fixed assets. What is the capital employed? A $8000 B $12 000 C $20 000 D $32 000 37 Which is a current asset? A accrued expense B bank overdraft C creditors D prepaid expense 38 A business has the following assets and liabilities. $ fixed assets 30 000 current assets 4 000 current liabilities 2 000 long term loan 12 000 What is the current ratio? A 2.0 : 1 B 2.4 : 1 C 3.0 : 1 D 5.0 : 1 www.theallpapers.com

11 © UCLES 2006 0452/01/M/J/06 39 A business provided the following information for the year ended 31 December 2005. $ $ Sales 150 000 Cost of sales Opening stock 15 000 Purchases 100 000 115 000 Less closing stock 10 000 105 000 What is the rate of stock turnover? A 4.2 times B 8.0 times C 8.4 times D 12.0 times 40 A business has calculated the following ratios. percentage of gross profit to sales percentage of net profit to sales Year 1 40 % 19 % Year 2 40 % 25 % Why did the net profit percentage increase in Year 2? A cost of sales decreased B cost of sales increased C expenses decreased D expenses increased www.theallpapers.com

12 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. 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. 0452/01/M/J/06 BLANK PAGE www.theallpapers.com

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education MARK SCHEME for the May/June 2006 question paper 0452 ACCOUNTING 0452/01 Paper 1 – Multiple Choice, maximum raw mark 40 These mark schemes are published as an aid to teachers and students, to indicate the requirements of the examination. They show the basis on which Examiners were initially instructed to award marks. They do 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. The minimum marks in these components needed for various grades were previously published with these mark schemes, but are now instead included in the Report on the Examination for this session. • CIE will not enter into discussion or correspondence in connection with these mark schemes. CIE is publishing the mark schemes for the May/June 2006 question papers for most IGCSE and GCE Advanced Level and Advanced Subsidiary Level syllabuses and some Ordinary Level syllabuses. www.theallpapers.com

Page 1 Mark Scheme Syllabus Paper IGCSE – May/June 2006 0452 01 © University of Cambridge International Examinations 2006 Question Number Key Question Number Key 1 C 21 C 2 D 22 C 3 A 23 D 4 B 24 B 5 C 25 A 6 B 26 B 7 C 27 C 8 B 28 A 9 C 29 D 10 C 30 C 11 B 31 B 12 C 32 D 13 B 33 C 14 A 34 B 15 D 35 A 16 A 36 D 17 B 37 D 18 B 38 A 19 D 39 C 20 C 40 C www.theallpapers.com