Cambridge IGCSE Accounting 0452 — 2008 May/June Paper 2 · Variant 1

This document consists of 12 printed pages and 4 blank pages. IB08 06_0452_02/2RP © UCLES 2008 [Turn over *3287957689* For Examiner's Use 1 2 3 4 5 Total UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education ACCOUNTING 0452/02 Paper 2 May/June 2008 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 any diagrams or graphs. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. 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. www.theallpapers.com

2 © UCLES 2008 0452/02/M/J/08 For Examiner's Use 1 (a) Give two reasons why it is important for a business to prepare final accounts or financial statements each year. (i) (ii) [2] (b) Give an example of: (i) a current asset (ii) a current liability [2] (c) Which accounting principle is being applied when a provision for depreciation of a fixed asset is made? [1] (d) To which account will the unexplained difference on a trial balance be transferred? [1] (e) In which section of the balance sheet will accrued expenses be shown? [1] (f) Explain what is meant by a bad debt. [2] www.theallpapers.com

3 © UCLES 2008 0452/02/M/J/08 [Turn over For Examiner's Use (g) Marco maintains his petty cash on the imprest system. At the end of April he has vouchers for expenditure of $70 and a balance in hand of $30. (i) What is the amount of the imprest? (ii) How much will Marco draw from the bank to restore his imprest? [2] (h) (i) Define working capital. (ii) Explain why a business needs sufficient working capital. [4] [Total: 15] www.theallpapers.com

4 © UCLES 2008 0452/02/M/J/08 For Examiner's Use 2 Emilie has a shop and sells goods for cash and on credit. She keeps the cash book herself but her accountant writes up her ledger each month. Emilie puts her cash receipts in a till and enters them into her three-column cash book each week. She offers a cash discount of 3 % to her debtors for payment within 15 days. She buys stock in bulk from a wholesaler for cash and receives trade discount of 5 % for orders in excess of $1000. She pays wages each week in cash. On 1 March 2008 Emilie’s cash book showed cash in hand of $1700 and cash at bank of $3000. Emilie had the following transactions in one week in March 2008. $ March 3 Cheque received from Jules for goods sold on 20 February 194 4 Sold goods on credit to Henri 200 5 Paid cash to Andre for goods purchased 1200 6 Cheque received from Michel for goods sold on 29 January 85 7 Cash sales for the week 1850 7 Wages paid for the week 330 REQUIRED (a) Make the necessary entries in Emilie’s cash book to record the above transactions for the week ended 7 March 2008. www.theallpapers.com

5 © UCLES 2008 0452/02/M/J/08 [Turn over For Examiner's Use Bank $ Cash $ Disc. $ Details Date Bank $ Cash $ Disc. $ Details Emilie – Cash Book March 2008 Date [11] www.theallpapers.com

6 © UCLES 2008 0452/02/M/J/08 For Examiner's Use (b) Calculate Emilie’s total sales for the week ended 7 March 2008. Show all workings. [3] Emilie had a stock of goods at 1 March 2008 of $1700 and her stock at 7 March was $1650. REQUIRED (c) Complete the following extract from Emilie’s trading account for the week. Emilie Trading Account for the week ended 7 March 2008 $ $ Sales Stock at 1 March Purchases Stock at 6 March Cost of goods sold Gross profit [6] [Total: 20] www.theallpapers.com

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8 © UCLES 2008 0452/02/M/J/08 For Examiner's Use 3 Ah Sung has a business buying and selling parts for machines. You are given the following information about part Q. At 1 April there were 200 units in stock which cost $3.20 each. In the month of April purchases were: April Units Cost per unit $ 5 100 3.20 10 150 3.00 27 100 3.00 At 30 April there were 300 units in stock and the net realisable value of each unit was $3.00. REQUIRED Calculate the following for part Q. Show all workings. (a) The value of stock at 1 April. [3] (b) The total cost of purchases for April. [4] (c) The value of stock at 30 April. [3] www.theallpapers.com

9 © UCLES 2008 0452/02/M/J/08 [Turn over For Examiner's Use (d) The number of units sold in April. [4] (e) The cost of goods sold for the month of April. [4] [Total: 18] www.theallpapers.com

10 © UCLES 2008 0452/02/M/J/08 For Examiner's Use 4 Solomon is a sole trader and his trial balance at 31 March 2008 was as follows: Solomon Trial Balance at 31 March 2008 $ $ Bank 4 050 Capital 36 000 Cash 250 Carriage outwards 720 Creditors 2 400 Debtors 4 000 Drawings 24 000 Electricity 1 800 Motor car 9 600 Motor expenses 1 380 Provision for depreciation 4 800 Purchases 28 800 Rent 6 000 Sales 47 500 Stock at 1 April 2007 1 500 Wages 8 600 90 700 90 700 The following additional information is available: 1 Stock at 31 March 2008 was $1800. 2 A bonus of $400 is to be accrued in the wages account. 3 Depreciation of $2400 is to be provided for the year. 4 Rent includes $1200 paid in advance. www.theallpapers.com

11 © UCLES 2008 0452/02/M/J/08 [Turn over For Examiner's Use REQUIRED (a) Prepare Solomon’s trading and profit and loss account for the year ended 31 March 2008. Solomon Trading and Profit and Loss Account for year ended 31 March 2008 [15] www.theallpapers.com

12 © UCLES 2008 0452/02/M/J/08 For Examiner's Use (b) Write up Solomon’s capital account for the year ended 31 March 2008. Solomon Capital account [4] (c) Suggest two ways in which Solomon could reduce his loss or increase his profit. (i) (ii) [2] (d) Suggest two ways in which Solomon could increase the credit balance on his capital account. (i) (ii) [2] [Total: 23] www.theallpapers.com

13 © UCLES 2008 0452/02/M/J/08 For Examiner's Use 5 Tina decides to start a business driving a taxi. She buys a suitable motor car on 1 April 2008 but has to spend more money installing a meter. Each year she has to pay for a taxi licence and for taxi insurance. REQUIRED (a) In the table below, place a tick (√) under the correct heading for each item of expenditure incurred by Tina. Capital expenditure Revenue expenditure Purchase of taxi Installing meter Taxi licence Taxi insurance Filling taxi with fuel Servicing engine [6] Tina has spent $18 000 on her taxi and decides to charge depreciation using the reducing balance method at 30 % per annum. REQUIRED (b) Calculate the depreciation to be charged in Tina’s accounts for each of the following years. (i) Year ending 31 March 2009. [3] (ii) Year ending 31 March 2010. [3] (c) Calculate what the net book value of the taxi will be on 31 March 2010. [2] [Total: 14] www.theallpapers.com

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16 BLANK PAGE 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 Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. 0452/02/M/J/08 www.theallpapers.com

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education MARK SCHEME for the May/June 2008 question paper 0452 ACCOUNTING 0452/02 Paper 2, maximum raw mark 90 This mark scheme is published as an aid to teachers and candidates, 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. • CIE will not enter into discussions or correspondence in connection with these mark schemes. CIE is publishing the mark schemes for the May/June 2008 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 – May/June 2008 0452 02 © UCLES 2008 Marking Guidelines • Where a candidate makes an arithmetical error or selects the wrong figure in an account or a calculation so that totals or the results of the calculation are wrong but are correct on his own figures, he will lose the mark for selecting the original figure but may earn an own figure mark for the result, total or calculation. • Where particular wording is shown on the mark scheme accept any reasonable spelling and abbreviation as long as the meaning is clear. • For example, for ‘Balance brought down’ accept Balance b/down, Balance b/d, Balance, Bal b/down, Bal b/d, Bal, Brought down, b/down, b/d, B/b/d, B/f, but not Bbd, bd, or any variation of ‘Balance carried down’. • Where a ledger account is to be prepared, each mark is usually for the date, narrative and amount together but if the candidate has correctly prepared the account but not shown some or all of the dates he may earn some marks according to the mark scheme. • If a ledger account is completely reversed no marks will be awarded for individual entries but there may be marks available for own figure balances carried and brought down. • Where an answer is to be shown as a ratio, it should be shown as xx:1 and not as 1:xx. An answer of just the correct figure xx may be accepted but not if any other description such as %, times, days etc. is shown and not if shown as negative when it should be positive. • Where a calculation is to be shown to two decimal places, an answer rounded up or down may be accepted (e.g. 2.85 or 2.86 if the true answer is 2.853) but not an answer shown to only the nearest whole number or one decimal place (e.g. 2.8 or 3). • Where dollars and cents are shown in a question and exact cents are required in a calculated answer (e.g. $35.60) many candidates will show $35.6 as their calculators will suppress the final 0. Although wrong this may be accepted. • Ledger accounts may be accepted in either two sided or the running balance format and the mark scheme will show how marks should be allocated. • Where a final account is requested, a list of items will not normally earn any marks. • If candidates are required to prepare a Balance Sheet, either a two sided or a vertical presentation will be accepted and the mark scheme will show how marks are to be awarded. www.theallpapers.com

Page 3 Mark Scheme Syllabus Paper IGCSE – May/June 2008 0452 02 © UCLES 2008 1 (a) (i) and (ii) to calculate profit or loss, to know what assets and liabilities the business has, to compare with previous years, to compare with other businesses, to calculate accounting ratios, for use by other parties e.g. bank other acceptable but specific answers (1) mark each [2] (b) (i) stock, debtors, prepayments, cash, bank, etc. – any one [1] (ii) creditors, accrued expenses, bank overdraft, etc. – any one [1] (loan but only if stated repayable within one year) (c) Matching, prudence not consistency [1] (d) Suspense account [1] (e) Current liabilities [1] (f) An amount owed (by a debtor) (1) which he is unable or unwilling to pay (1). [2] Accept words making these points. (g) (i) $100 (must be amount not description of imprest) [1] (ii) $70 [1] (h) (i) Current assets (accept CA) (1) less (accept – or :) current liabilities (accept CL) (1) [2] (ii) A business needs sufficient working capital for • the day-to-day running of the business • to pay expenses, liabilities, etc. as they fall due (2 marks for either or similar comment – if given as answer to (i) may award 2 marks but only once) [2] [Total: 15] www.theallpapers.com

Page 4 Mark Scheme Syllabus Paper IGCSE – May/June 2008 0452 02 © UCLES 2008 2 (a) Emilie Cash Book, March 2008 Date Details Discount Cash Bank Date Details Discount Cash Bank $ $ $ $ $ $ 1 Balance b/down 1700 3000 3 Jules (1) 6 (1) 194 (1) 5 Andre (1) 1200 (1) 6 Michel (1) 85 (1) 7 Wages (1) 330 (1) 7 Sales (1) 1850 (1) (Note: date and correct narrative required for mark, discount, cash and bank marks may be awarded if either date or narrative (but not both) is missing, no marks for balances brought down, no requirement to balance the account, no totals required.) [11] (b) Cash sales 1850 (1) Credit sales 200 (1) Total sales 2050 (1)OF [3] Correct figures only, do not accept $194 or $188 for credit sales. Do not award total mark if any aliens shown. (c) Emilie Trading Account for the week ended 7 March 2008 $ $ Sales (accept total from (b)) 2050 (1)OF Stock at 1 March 1700 (1) Purchases (correct figure only) 1200 (1) 2900 Stock at 7 March 1650 (1) Cost of goods sold 1250 (1)OF Gross profit 800 (1)OF [6] [Total: 20] www.theallpapers.com

Page 5 Mark Scheme Syllabus Paper IGCSE – May/June 2008 0452 02 © UCLES 2008 3 (a) 200 units (1) @ $3.20 (1) = $ 640 (1)OF [3] Accept if just shown as figures, 3 marks for just the correct answer. (b) 100 units @ $3.20 = $ 320 (1) 150 units @ $3.00 = $ 450 (1) 100 units @ £3.00 = $ 300 (1) Total $1 070 (1)OF [4] Do not award total mark if any aliens (c) 300 units (1) @ $3.00 (1) = $ 900 (1)OF [3] Accept if just shown as figures, 3 marks for just the correct answer. (d) Opening stock (units) 200 (1) Purchases (units) 350 (1) 550 Closing stock (units) 300 (1) Sold (units) 250 (1)OF [4] If closing stock is added, award final mark but not stock mark. (e) $ Opening stock (value) 640 (1)OF Purchases (value) 1070 (1)OF 1710 Closing stock (value) 900 (1)OF Cost of goods sold 810 (1)OF [4] Award these marks if correct or if correctly calculated on own figures from (a), (b) and (c). [Total: 18] www.theallpapers.com

Page 6 Mark Scheme Syllabus Paper IGCSE – May/June 2008 0452 02 © UCLES 2008 4 (a) Solomon Trading and Profit and Loss Account Year ended 31 March 2008 $ $ Sales 47 500 (1) Opening stock 1 500 (1) Purchases 28 800 (1) 30 300 Closing stock 1 800 (1) Cost of sales (goods sold) 28 500 (1)OF (words must appear somewhere)(do not award if any aliens) Gross profit (do not award if any other aliens) 19 000 (1)OF Expenses Carriage outwards 720 (1) Electricity 1 800 (1) Motor expenses 1 380 (1) Depreciation 2 400 (1) Rent (6 000 (1) – 1 200*(1)) 4 800 (2) Wages (8 600 (1) + 400*(1)) 9 000 (2) (*if wrongly added or subtracted, no mark, accept if shown as separate items with no total) Total 20 100 Net loss 1 100 (1)OF (accept Net profit if figure shown as negative (–) or in brackets, or is a profit on own figures; do not award if any aliens) [15] (b) Solomon Capital account, year ended 31 March 2008 2008 $ 2007 $ 31 March Net loss 1 100 (1)OF 1 April Balance b/d 36 000 (1) 31 March Drawings 24 000 (1) (not Capital) 31 March Balance c/d 10 900 (1)OF _____ 36 000 36 000 2008 1 April Balance b/d 10 900 Narrative and amount (but not date) required for mark. Must be an account, not a list or a sum. [4] (c) [Increase sales, buy more cheaply, increase prices] = increase gross profit, reduce [any named] expenses = increase net profit (any two, one mark each) [2] (d) Introduce more capital into the business, reduce drawings, [reduce net loss, make or increase income or net profit] (any two, one mark each) accept ‘take in a partner with capital’ [2] [Total: 23] www.theallpapers.com

Page 7 Mark Scheme Syllabus Paper IGCSE – May/June 2008 0452 02 © UCLES 2008 5 (a) Capital expenditure Revenue expenditure Purchase of taxi
(1) Installing meter
(1) Taxi licence
(1) Taxi insurance
(1) Filling taxi with fuel
(1) Servicing engine
(1) [6] (b) (i) 18 000 (1) × 30% (1) = 5 400 (1)OF [3] If no calculation shown but correct figure award 3 marks; If e.g. used wrong % but calculation correct award 2 marks. (ii) 12 600 (1)OF × 30% (1) = 3 780 (1)OF [3] If no calculation shown but correct figure award 3 marks; If calculations for more than one year then do not award result mark but may award starting mark and rate mark; If e.g. used wrong basis or % but calculation correct award up to 2 marks. (c) (12 600 OF – 3 780 OF) (1) = 8 820 OF (1) [2] or (18 000 – 9 180 OF) (1) If no calculation but correct figure then award 2 marks. [Total: 14] www.theallpapers.com