Cambridge IGCSE Accounting 0452 — 2008 Oct/Nov Paper 2 · Variant 1

This document consists of 13 printed pages and 3 blank pages. IB08 11_0452_02/3RP © UCLES 2008 [Turn over *9174613272* 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 October/November 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/O/N/08 For Examiner's Use 1 (a) Give two examples of a book of prime (original) entry. (i) (ii) [2] (b) In the table below, place a tick (√) under the correct heading to show whether each item is an asset or a liability. Asset Liability (i) Motor car (ii) Accrued expenses payable (iii) Debtors [3] (c) What accounting principle states that a business will continue indefinitely? [1] (d) Annie makes a sale on credit to Bill. State the names of the accounts in Annie’s ledger which will be: (i) credited (ii) debited [2] (e) In which final account will sales returns be shown? [1] www.theallpapers.com

3 © UCLES 2008 0452/02/O/N/08 [Turn over For Examiner's Use (f) In Mohamed’s books, cash sales have been credited to the cash account and debited to the sales account in error. What type of error has been made? [1] (g) What is the name of the account showing the division of the net profit of a partnership between the partners? [1] (h) Rosco’s balance sheet at 30 September 2008 includes debtors of $49 000, stock of $24 000, cash of $3500 and creditors of $21 000. Calculate the following. Show all workings. (i) Current ratio (ii) Quick ratio [6] [Total: 17] www.theallpapers.com

4 © UCLES 2008 0452/02/O/N/08 For Examiner's Use 2 Ombeya sells musical instruments. In September he had the following transactions: Date Details Reference Amount September $ 4 Sale to Hales orchestra INV23 1200 15 Sale to Sing Song band INV24 450 17 Returns from Hales orchestra RT7 300 28 Sale to Town school INV25 700 REQUIRED (a) Show the entries to be made for September in Ombeya’s sales journal and sales returns journal. Ombeya Sales Journal Date Details Reference Amount $ Ombeya Sales Returns Journal Date Details Reference Amount $ [4] www.theallpapers.com

5 © UCLES 2008 0452/02/O/N/08 [Turn over For Examiner's Use (b) Using the information in Ombeya’s sales journal and his sales returns journal, write up the following accounts in his ledger for September. Show the amounts transferred to his trading account for the month. Sales account Sales returns account Hales Orchestra account Sing Song band account Town School account [8] www.theallpapers.com

6 © UCLES 2008 0452/02/O/N/08 For Examiner's Use The Sing Song band goes out of business on 10 October without paying the amount due to Ombeya. REQUIRED (c) Show the journal entry (with narrative) to write off the bad debt. Date Dr Cr [5] (d) State which accounting principle Ombeya has followed in writing off the bad debt. [2] [Total: 19] www.theallpapers.com

7 BLANK PAGE 0452/02/O/N/08 [Turn over Question 3 is on the next page. www.theallpapers.com

8 © UCLES 2008 0452/02/O/N/08 For Examiner's Use 3 Stella Maris started a business as a bookseller on 1 May 2008 with initial capital of $10 000 which she deposited in a new business bank account. She is not an experienced bookkeeper but has drawn up the following trial balance at 31 October 2008. Stella has put certain balances in the wrong column and may have made other errors. Trial Balance at 31 October 2008 Debit Credit $ $ Capital 10 000 Shelving and equipment 5 000 Purchases 24 000 Rent payable 6 000 Sales 34 900 Stock at 31 October 2008 5 300 General expenses 2 500 Cash at bank 7 400 Difference 300 47 700 47 700 REQUIRED (a) State which accounting principle Stella was following when she deposited her initial capital into a new business bank account. [2] (b) Name the account in which an unexplained difference on a trial balance should be entered. [1] www.theallpapers.com

9 © UCLES 2008 0452/02/O/N/08 [Turn over For Examiner's Use (c) Prepare a corrected trial balance at 31 October 2008. Stella Maris Trial Balance at 31 October 2008 Debit $ Credit $ [10] www.theallpapers.com

10 © UCLES 2008 0452/02/O/N/08 For Examiner's Use (d) Using the information above, complete Stella’s trading and profit and loss account for the six months ended 31 October 2008. Stella Maris Trading and Profit and Loss Account for the six months ended 31 October 2008 $ $ Sales Stock at 1 May 2008 nil Purchases Stock at 31 October 2008 Cost of sales Gross profit Expenses Rent General expenses Net profit [9] [Total: 22] www.theallpapers.com

11 BLANK PAGE 0452/02/O/N/08 [Turn over Question 4 is on the next page. www.theallpapers.com

12 © UCLES 2008 0452/02/O/N/08 For Examiner's Use 4 Electra and Zorba each run a different type of restaurant. For the year ended 31 August 2008 they have recorded the following information: Electra’s restaurant Zorba’s restaurant $ $ Sales 112 000 80 000 Cost of sales 95 200 60 000 Expenses 5 600 8 000 Stock at 1 September 2007 2 000 7 000 Stock at 31 August 2008 2 500 6 200 REQUIRED (a) For each restaurant, calculate the following ratios, correct to one decimal place. Use the boxes on the following page for your workings. Write your answer for each ratio in the table below. Electra’s restaurant Zorba’s restaurant (i) Percentage of gross profit to sales (ii) Percentage of net profit to sales (iii) Rate of stock turnover [12] (b) For each of the following ratios, suggest one business reason to explain the difference in the ratios between Electra’s and Zorba’s restaurants. Percentage of gross profit to sales Reason Rate of stock turnover Reason [4] [Total: 16] www.theallpapers.com

13 © UCLES 2008 0452/02/O/N/08 [Turn over For Examiner's Use WORKINGS Electra’s restaurant Zorba’s restaurant (i) (ii) (iii) www.theallpapers.com

14 © UCLES 2008 0452/02/O/N/08 For Examiner's Use 5 (a) State the purpose of providing for depreciation of a fixed asset. [2] (b) State which accounting principle is being followed when depreciation is provided on a fixed asset. [1] Mandy decides to set up a laundry business and on 1 July 2007 buys a large washing machine at a cost of $9000. She decides to depreciate the washing machine using the straight line method over a period of four years. The expected scrap value of the washing machine at the end of that period is $600. (c) Calculate the depreciation to be charged in Mandy’s accounts for: (i) the year ended 30 June 2008 (ii) the year ending 30 June 2009. [4] www.theallpapers.com

15 © UCLES 2008 0452/02/O/N/08 For Examiner's Use (d) Show the entries to be made in Mandy’s provision for depreciation account for the year ended 30 June 2008 and the year ending 30 June 2009. Show the transfer to the profit and loss account for each year. Provision for depreciation account [8] (e) State the net book value of the washing machine at 30 June 2009. [1] [Total: 16] www.theallpapers.com

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/O/N/08 www.theallpapers.com

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education MARK SCHEME for the October/November 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 October/November 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 – October/November 2008 0452 2 © UCLES 2008 GENERAL NOTES FOR ASSISTANT EXAMINERS MARKING GUIDELINES • Award marks only in accordance with the mark scheme. If a script contains an answer which is not anticipated please refer to Principal Examiner before awarding any marks. • 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 (OF) 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, but not Bbd, bd, or any variation of “Balance carried down”. • Where a day book or 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 may be shown as xx:1 or 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 workings are shown separately and the correct answer is clearly arrived at but a mistake is then made in transferring the answer to the question paper the marks may be awarded if the candidate has demonstrated he has correctly answered the question. This also covers the final answer being shown e.g. as a ratio but the workings clearly show the correct answer to be a percentage. • Where a calculation is stated 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 – October/November 2008 0452 2 © UCLES 2008 1 (a) Sales journal, sales day book, sales book, sales sales returns journal, day book or book, sales returns purchases journal, purchases day book, purchases book, purchases purchases returns journal, day book or book, purchase returns cash book petty cash book journal (but not ledger)(any two) (2) (b) Asset Liability (i) Motor car
(1) (ii) Accrued expenses payable
(1) (iii) Debtors
(1) (3) (c) Going concern (1) (d) (i) sales (1) (ii) Bill’s account/debtor (1) (e) Trading [and Profit and Loss] account (1) (must have word “Trading”, with or without “profit and loss) (f) Error of complete reversal (1) No other error accepted – the word “reversal” must be used (g) [Profit and loss] appropriation account (1) (must have word “appropriation”) (h) (i) Current ratio = current assets/current liabilities (1) 1 : (1) 000 $21 500 $76 500) $3 000 $24 000 ($49 = + + = = 3.6:1 (1)OF (3) Mark for ratio is on own figures in formula (ii) Quick ratio = current assets (less stock)/current liabilities (1) 1 : (1) 000 $21 500 $52 500) $3 000 ($49 = + = = 2.5 : 1 (1)OF (3) Mark for ratio is on own figures in formula [Total: 17] www.theallpapers.com

Page 4 Mark Scheme Syllabus Paper IGCSE – October/November 2008 0452 2 © UCLES 2008 2 (a) Ombeya Sales Journal Date September Details Reference Amount $ 4 Hales Orchestra INV 23 1 200 (1) 15 Sing Song Band INV 24 450 (1) 28 Town School INV 25 700 (1) Total 2 350 Note: the mark for each entry is for the date and month (year not required), narrative and correct amount. Award the mark even if the reference is not shown. Ombeya Sales Returns Journal Date September Details Reference Amount $ 17 Hales Orchestra RT 7 300 (1) Total 300 Award the mark as above [4] www.theallpapers.com

Page 5 Mark Scheme Syllabus Paper IGCSE – October/November 2008 0452 2 © UCLES 2008 (b) Sales account 30 Sept Trading a/c 2 350 (1OF) 30 Sept Total sales 2 350 (1) (accept “sales” or “sales journal” etc), debtors Award mark for date, narrative and amount for each of these accounts. Accept “Profit and loss account” or any variation or short form, but not “Balance carried down” or any variation. If candidate writes out each entry with name and amount on credit side then award one mark in all. Sales returns account 30 Sept Total returns 300 (1) 30 Sept Trading a/c 300 (1OF) (accept “(sales) returns” or “(sales) returns journal” etc) If candidate gives “Hales Orchestra” and amount on debit side award the mark Hales Orchestra account 4 Sept Sales 1 200 (1) 17 Sept Sales returns 300 (1) (not “Hales Orchestra”) (accept “returns”) Sing Song band account 15 Sept Sales 450 (1) (not “Sing Song band”) Town School account 28 Sept Sales 700 (1) (not “Town School”) [8] www.theallpapers.com

Page 6 Mark Scheme Syllabus Paper IGCSE – October/November 2008 0452 2 © UCLES 2008 (c) Date Dr Cr 10 October Bad debts (1) 450 (1) Sing Song band (1) 450 (1) Write off of bad debt from Sing Song band (1) Award mark for account name even if date is wrong or missing but only award mark for amount if Dr entry is with Bad debt account name and Cr entry is with Sing Song Band account (or other incorrect) name. If Dr entry is shown with other incorrect name do not award mark. [5] (d) Prudence (not matching) (2) [2] [Total: 19] www.theallpapers.com

Page 7 Mark Scheme Syllabus Paper IGCSE – October/November 2008 0452 2 © UCLES 2008 3 (a) Business entity or ownership (2) [2] (b) Suspense account (1) [1] (c) Stella Maris Trial Balance at 31 October 2008 Debit Credit $ $ Capital 10 000 (1) Shelving & equipment 5 000 (1) Purchases 24 000 (1) Rent payable 6 000 (1) Sales 34 900 (1) Stock at 1 May 2008 0 (1) General expenses 2 500 (1) Bank 7 400 (2) _____ _____ 44 900 (OF) 44 900 (OF)(1) (to agree) Award mark for correct account name, amount and correct side of trial balance. Stock should have date shown or be “Opening stock”. If candidate has value for stock or any other date then no mark. If no entry for stock then award the stock mark. No mark for any suspense account shown for unexplained balance. Award totals mark only if shown and Dr and Cr sides agree. [10] www.theallpapers.com

Page 8 Mark Scheme Syllabus Paper IGCSE – October/November 2008 0452 2 © UCLES 2008 (d) Stella Maris Profit and Loss Account for the six months ended 31 October 2008 $ $ Sales 34 900 (1) Stock at 1 May 2008 nil Purchases 24 000 (1) 24 000 Stock at 31 October 2008 5 300 (1) Cost of sales 18 700 (1) Gross profit 16 200 (1)OF [5] Expenses Rent 6 000 (1) General expenses 2 500 (1) 8 500 (2) Net profit 7 700 (1)OF [4] If candidate has value for opening stock then do not award cost of sales mark. Award marks for correct amount only, except for gross and net profit amounts which can be own figures if incorrect amounts are shown in the account but the profit figures are arithmetically correct. Allow OF marks whether gross or net amounts are shown as profit or loss. [Total: 22] www.theallpapers.com

Page 9 Mark Scheme Syllabus Paper IGCSE – October/November 2008 0452 2 © UCLES 2008 4 (a) Electra’s restaurant Zorba’s restaurant (i) 16 800 / 112 000 = 15.0 % (2) 20 000 / 80 000 = 25.0 % (2) (ii) 11 200 / 112 000 = 10.0 % (2)OF 12 000 / 80 000 = 15.0 % (2)OF (iii) 95 200 / 2 250 = 42.3 times (2) (accept 42 times) 60 000 / 6 600 = 9.1 times (2) (accept 9 times) Award 2 or nil for each calculation: if candidate has shown workings, and has made an error in calculating gross profit, then award no marks for (i), but you may award 2 OF marks for correct calculations in (ii) based on incorrect (i). [12] Electra’s restaurant Zorba’s restaurant Sales Cost of sales Gross profit 112 000 95 200 16 800 80 000 60 000 20 000 Gross profit Expenses Net profit 16 800 5 600 11 200 20 000 8 000 12 000 Cost of sales Average stock 95 200 (2 000 + 2 500) / 2 = 2 250 60 000 (7 000 + 6 200) / 2 = 6 600 (b) (i) Electra has lower prices per meal, Zorba charges more per meal Electra pays more for purchases, Zorba buys more cheaply (any suitable comment) (2) (ii) Electra turns over stock almost once a week, may sell fast food. Zorba turns over stock more slowly, may have more varied menu, better quality meals, better storage facilities (any suitable comment) (2) [4] [Total 16] www.theallpapers.com

Page 10 Mark Scheme Syllabus Paper IGCSE – October/November 2008 0452 2 © UCLES 2008 5 (a) To measure the use of a fixed asset over the period of its useful life (2) (not to calculate its net book value or to find a profit or loss on sale) [2] (b) Prudence or matching (1) [1] (c) (i) (9 000 – 600) = 8 400 (1) / 4 (1) = 2 100 (1)OF [3] (ii) 2 100 (1)OF [1] Award OF marks if the calculations are correct but the amounts used are incorrect e.g. the expected scrap value has been omitted giving depreciation of $2 250. Award the marks if depreciation is calculated and shown but ignore any calculations of net book value in this part. (d) Provision for depreciation account 2008 30 June Balance c/d 2 100 2 100 2009 30 June Balance c/d 4 200 4 200 2008 30 June P & L a/c (1) 2 100 (1)OF 2 100 1 July Balance b/d (1) 2 100 (1)OF 2009 30 June P & L a/c (1) 2 100 (1)OF 4 200 1 July Balance b/d (1) 4 200 (1)OF Accept OF entries in account if figures used are from calculations in (c). Award mark for date and description only if both are correct in each case. Date and year must be correct for the mark for description. [8] (e) $4 800 (1)OF [1] Accept OF if calculated correctly from figures in (c) [Total: 16] www.theallpapers.com