Cambridge IGCSE Accounting 0452 — 2006 Oct/Nov Paper 2 · Variant 1

Centre Number Candidate Number Name UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education ACCOUNTING 0452/02 Paper 2 October/November 2006 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. You may use a soft pencil for rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. 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. 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. For Examiner’s Use 1 2 3 4 5 Total This document consists of 12 printed pages. IB06 11_0452_02/4RP  UCLES 2006 [Turn over www.theallpapers.com

2 © UCLES 2006 0452/02/O/N/06 For Examiner's Use 1 (a) Ahmed makes a sale on credit to Bahir. What is the name of the document Ahmed gives to Bahir showing the amount of the sale? [1] (b) Give two examples of a fixed asset. (i) (ii) [2] (c) In which final account would motor expenses appear? [1] (d) State what is meant by a trade creditor. [1] (e) A payment from Peter is entered in Paul’s account in error. What type of error has been made? [1] (f) State two methods of calculating depreciation. (i) (ii) [2] (g) In which section of the Balance Sheet should a bank overdraft be shown? [1] www.theallpapers.com

3 © UCLES 2006 0452/02/O/N/06 [Turn over For Examiner's Use (h) Kay’s business had stock on 1 July 2005 valued at $6000 and on 30 June 2006 valued at $9000. Her cost of goods sold for the year was $45 000. What was her rate of stock turnover? Show your workings. [3] (i) Insert the missing words in the following formula: Gross profit percentage = x 100 [2] [Total: 14] www.theallpapers.com

4 © UCLES 2006 0452/02/O/N/06 For Examiner's Use 2 Tanita has a retail shop and sells clothes. Some of her customers pay cash and some have credit accounts which they settle each month. Tanita had the following transactions in March 2006: Date $ March 4 Sale on credit to Vanni 110 7 Cash sale 55 10 Sale on credit to Saska 200 15 Returns from Vanni 30 31 Cash received from Saska 190 31 Discount allowed to Saska 10 REQUIRED (a) Show the entries for these transactions in the following accounts in Tanita’s ledger. Enter the transfers to the Trading and Profit and Loss Account for the month. Sales account Sales Returns account Vanni account www.theallpapers.com

5 © UCLES 2006 0452/02/O/N/06 [Turn over For Examiner's Use Saska account Discount Allowed account Cash book [15] (b) From your answer to (a), complete items (i), (ii), (iii) and (iv) in the following extract from Tanita’s Trading and Profit and Loss Account for the month of March 2006. Trading and Profit and Loss Account (extract) $ Sales (i) Less: sales returns (ii) Net sales (iii) Expenses Discount allowed (iv) [4] [Total: 19] www.theallpapers.com

6 © UCLES 2006 0452/02/O/N/06 For Examiner's Use 3 Morgan is in business as a printer. He has prepared the following Trial Balance (after calculating net profit) from his accounting records for the year ended 31 August 2006. Morgan Trial Balance at 31 August 2006 $ $ Machinery at cost 7 000 Office equipment at cost 2 500 Provision for depreciation Machinery 1 400 Office equipment 1 000 Accrued expenses 300 Bank 2 200 Cash 200 Creditors 1 800 Debtors 3 500 Loan from Nicola repayable 2011 5 000 Prepayments 600 Stock at 31 August 2006 3 900 Capital 9 000 Drawings 21 000 Profit for the year _____ 18 000 38 700 38 700 REQUIRED (a) State which accounting principle has been applied in the treatment of each of the following items: (i) Profit for the year; (ii) Stock. [4] www.theallpapers.com

7 © UCLES 2006 0452/02/O/N/06 [Turn over For Examiner's Use (b) Prepare Morgan’s Balance Sheet at 31 August 2006. Morgan Balance Sheet at 31 August 2006 [13] www.theallpapers.com

8 © UCLES 2006 0452/02/O/N/06 For Examiner's Use (c) Morgan’s business has a bank overdraft at 31 August 2006. Suggest one way in which he could reduce or eliminate the overdraft. [2] (d) Nicola has given Morgan an additional long term loan of $2000 paid into the bank on 1 September 2006. In the table below, place a tick (
) under the correct heading to indicate the effect of the additional loan on the following items in Morgan’s Balance Sheet: Effect of additional loan Increase Decrease No effect (i) Bank overdraft (ii) Loan account (iii) Working capital (iv) Profit for the year (v) Capital [5] [Total: 24] www.theallpapers.com

9 © UCLES 2006 0452/02/O/N/06 [Turn over For Examiner's Use 4 (a) Explain and give an example of the accounting principle of matching. [4] Kalim has a retail business and pays insurance on his premises. He pays an annual premium to the insurance company for the year ended 31 December but prepares his accounts to 30 September. At 1 October 2005 he had prepaid insurance of $300. He paid the next year’s annual premium of $1320 on 1 January 2006. REQUIRED (b) Show the entries in Kalim’s insurance account for the year ended 30 September 2006 including the transfer to the Profit and Loss Account for the year and the balance carried down at 30 September 2006. Kalim Insurance account [7] [Total: 11] www.theallpapers.com

10 © UCLES 2006 0452/02/O/N/06 For Examiner's Use 5 Smith and Travers are in partnership sharing profits and losses in accordance with their partnership agreement which states the following: 1 Interest on capital is allowed at 5 % per annum. 2 Salary to be paid to Smith of $15 000 per annum. 3 Interest to be charged on each partner’s total drawings for the year at 4% per annum. 4 Travers and Smith share the balance of profits in the ratio 3 : 2. The balances on the partners’ capital accounts at 1 October 2005 were: Smith $30 000 Travers $40 000 The partners’ drawings for the year ended 30 September 2006 were: Smith $35 000 Travers $15 000 The net profit of the partnership for the year ended 30 September 2006 was $89 000. REQUIRED (a) Prepare the Profit and Loss Appropriation Account for the partnership for the year ended 30 September 2006. You may use the space below for workings. www.theallpapers.com

11 © UCLES 2006 0452/02/O/N/06 [Turn over For Examiner's Use Smith and Travers Profit and Loss Appropriation Account for the year ended 30 September 2006 [14] 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. © UCLES 2006 0452/02/O/N/06 For Examiner's Use Smith’s current account in the partnership books showed a balance of $2300 Cr. at 1 October 2005. REQUIRED (b) Using the information above and your answer to part (a), calculate the balance on Smith’s current account at 30 September 2006. Show your workings. [8] [Total: 22] www.theallpapers.com

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education MARK SCHEME for the October/November 2006 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 instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began. 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 grade thresholds for various grades are published in the report on the examination for most IGCSE, GCE Advanced Level and Advanced Subsidiary Level syllabuses. • CIE will not enter into discussions or correspondence in connection with these mark schemes. CIE is publishing the mark schemes for the October/November 2006 question papers for most IGCSE, GCE Advanced Level and Advanced Subsidiary Level syllabuses and some Ordinary Level syllabuses. www.theallpapers.com

Page 2 Mark Scheme Syllabus Paper IGCSE - OCT/NOV 2006 0452 2 © UCLES 2006 1 (a) [Sales] invoice. Purchase Invoice
[1] (b) Land, buildings, plant, machinery, equipment, fixtures, vehicles etc (any two). [2] Goodwill ✓ (c) Profit & Loss account. Not Trading
[1] Trading & Profit and Loss Account ✓ P & L ✓ (d) A supplier of goods or services to a business who has not been paid. [1] Supplier & is owed for 1 mark (e) Error of commission. [1] (f) (i) Straight line Revaluation ✓ [1] (ii) Reducing balance Diminishing Balance ✓ [1] (g) Current liabilities. [2] (h) Cost of goods sold/average stock = stock turnover. 45 000 (1) / 7 500 (1) = 6 (times)(1)(of) 6 = ✓ but not 6 : 1 max of 1 mark if in days 61 days or 2 months ✓ without ×365 or ×12 [3] (i) Gross profit margin = gross profit (1) / sales. (1) [2] Net Sales ✓ Turnover ✓ Revenue ✓ [Total 15] www.theallpapers.com

Page 3 Mark Scheme Syllabus Paper IGCSE - OCT/NOV 2006 0452 2 © UCLES 2006 2 (a) Sales 31 March Trading a/c Balance c/d = 0 P & L = ✓ 365 ___ 365 (1)(of) 4 March 7 March 10 March Vanni Cash Saska 110 55 200 ___ 365 (1) (1) (1) Date / Narrative and number for each mark Sales Returns 15 March Vanni 30 (1) 31 March Trading a/c Balance c/d = 0 P & L = ✓ 30 (1)(of) Vanni 4 March Sales 110 ___ 110 (1) 15 March 31 March Returns inwards = ✓ Returns = ✓ Sales Returns Balance c/d 30 80 110 (1) Saska 10 March Sales 200 ___ 200 (1) 31 March 31 March Cash Discount alld 190 10 200 (1) (1) Discount allowed 31 March Total Cash Book ✓ Saska ✓ 10 (1) 31 March P/L account 10 (1)(of) Cash book March Discount Cash March Discount Cash Cash =
7 Cash sales 31 Saska Sales = ✓ 10 55(1) 190(1) 245 31 Balance c/d 245 245 [15] www.theallpapers.com

Page 4 Mark Scheme Syllabus Paper IGCSE - OCT/NOV 2006 0452 2 © UCLES 2006 (b) Tanit Trading and Profit and Loss Account (extract) $ Sales (i) 365 (1)(of) Less: sales returns (ii) 30 (1)(of) ________ Net sales (iii) 335 (1)(of) Expenses Discount allowed (iv) 10 (1)(of) [4] Total [19] www.theallpapers.com

Page 5 Mark Scheme Syllabus Paper IGCSE - OCT/NOV 2006 0452 2 © UCLES 2006 3 (a) (i) Realisation, prudence, matching (any one) (2) Accruals ✓ (ii) Prudence, consistency (any one) (2) [4] (b) Morgan Balance sheet at 31 August 2006 Fixed assets Machinery Office equipment Current assets Stock Debtors Prepayments Cash Less current liabilities Creditors Accrued expenses Bank (overdrawn) Net current assets/working capital Total assets Long term liability Loan repayable 2011 Financed by Capital at 1 September 2005 Add Profit for the year Less drawings Cost $ 7 000 2 500 9 500 1 800) 300) 2 200 - not in Current Assets or in calculation of Capital (1) for both entries (1) (1) Provision for depreciation $ 1 400 1 000 2 400 3 900 3 500) 600) 200) 8 200 4 300 (1) for both entries (1) (1) for all three entries Net book value $ 5 600 1 500 7 100 - Description needed 3 900 11 000 5 000 6 000 9 000 18 000 27 000 21 000 6 000 (1) (1)(of) narrative needed (1) (1) (1) (1) (1)(of) to agree balances (no aliens) [13] www.theallpapers.com

Page 6 Mark Scheme Syllabus Paper IGCSE - OCT/NOV 2006 0452 2 © UCLES 2006 (c) Overdraft may be reduced by collecting debtors, reducing stock, delaying payment of creditors, delaying drawings, increasing capital (any one). [2] Sell fixed assets ✓ Long Term Loan ✓ Reduce expenditure
(d) Increase Decrease No effect (i) Bank overdraft ✓ (1) (ii) Loan account ✓ (1) (iii) Working capital ✓ (1) (iv) Profit for the year ✓ (1) (v) Capital ✓ (1) [5] Total [24] www.theallpapers.com

Page 7 Mark Scheme Syllabus Paper IGCSE - OCT/NOV 2006 0452 2 © UCLES 2006 4 (a) Matching income OR expenditure (1) to the period to which it relates. (1) (2) Accrual, prepayments, depreciation (any example). (2) [4] (b) Kalim Insurance account 2005 1 Oct 2006 1 Jan Balance b/d Bal c/d
Bank 300 1 320 _____ 1 620 (1) (2) 2006 30 Sept 30 Sept Profit & Loss account Balance c/d 1 290 330 1 620 (2)(of) (2) - only given if on correct side. If any alien then (1) of. [7] Date, Narrative and Number for each mark. Total [11] www.theallpapers.com

Page 8 Mark Scheme Syllabus Paper IGCSE - OCT/NOV 2006 0452 2 © UCLES 2006 5 (a) Smith and Travers Profit and Loss Appropriation Account Year ended 30 September 2006 Net profit $ $ 89 000 (1) Interest on drawings Smith Travers 4% × $35 000 4% × $15 000 1 400 600 91 000 (2) (2) } must be added Interest on capital Smith Travers 5% × $30 000 5% × $40 000 1 500 2 000 3 500 (1) (1) } must be deducted Salary – Smith (1) 15 000(1) - must be deducted Share of profit Smith Travers 2/5(1) × $72 500 3/5(1) × $72 500 29 000 43 500 72 500 (1)of (1)of 91 000 (1)(of) - if no aliens appear for allocating total profit [14] (b) Smith Current account calculation, year ended 30 September 2006 Balance at 1 October 2005 2 300(1) Add: Interest on capital Salary Share of net profit 1 500 15 000 29 000 47 800 (1)of (1) (1)of Less: Interest on drawings Drawings 1 400 35 000 (1)of (1) 36 400 Balance at 30 September 2006 11 400(2) or 0(of) but no aliens or omissions [8] Total [22] www.theallpapers.com