Cambridge IGCSE Accounting 0452 — 2015 May/June Paper 2 · Variant 1

This document consists of 19 printed pages and 1 blank page. IB15 06_0452_21/3RP © UCLES 2015 [Turn over *3530724537* Cambridge International Examinations Cambridge International General Certificate of Secondary Education ACCOUNTING 0452/21 Paper 2 May/June 2015 1 hour 45 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 an HB pencil for any diagrams or graphs. Do not use staples, paper clips, 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.

2 © UCLES 2015 0452/21/M/J/15 1 Kuda Maposa maintains a petty cash book using the imprest system. REQUIRED (a) State one advantage of the imprest system of petty cash. [1] On 1 March 2015 the balance of Kuda Maposa’s petty cash book was $100 which was equal to the amount of the imprest. Her transactions for the month of March 2015 were as follows. $ March 6 Paid for postage costs 13 11 Bought tea and coffee 5 14 Purchased stationery 27 18 Paid T Masuka, a credit supplier 15 21 Received refund for damaged stationery 10 26 Paid window cleaner 12 29 Paid P Zhonga, a credit supplier 16 REQUIRED (b) Enter these transactions in Kuda Maposa’s petty cash book on the page opposite. Balance the petty cash book and bring down the balance on 1 April 2015. [11] (c) (i) State the amount required to restore the imprest on 1 April 2015. [1] (ii) Name the account which would be credited with this amount. [1] (d) Name the ledger account in which the transaction of 21 March would be recorded. [1]

3 © UCLES 2015 0452/21/M/J/15 [Turn over Kuda Maposa – Petty Cash Book Ledger accounts $ General Expenses $ Stationery $ Postage $ Total Paid $ Details Date Total Received $

4 © UCLES 2015 0452/21/M/J/15 Kuda Maposa had the following transactions on 31 March 2015. 1 Took goods costing $300 for personal use. 2 Purchased a motor vehicle, $12 000, for business use, using a cheque drawn on her personal bank account. 3 Received an invoice from Valley Machines for $990. This included $865 for a new machine. The balance was for repairs to existing machine. REQUIRED (e) Prepare journal entries to record the above transactions. Narratives are required. Kuda Maposa Journal Debit $ Credit $ 1 …………..……………………………………………… …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. 2 …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. 3 …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. …………..…………………………………………….. …………….. …………….. [9] [Total: 24]

5 © UCLES 2015 0452/21/M/J/15 [Turn over 2 (a) Insert the missing figures in the following document. CREDIT NOTE Jai Kapur 44 West Street Hightown Vijay Singh 11 North Road Lowtown 25 April 2015 Quantity Description Unit price Amount 4 20 metres External doors Less (i)…% trade discount Floorboards $ 55 1.50 $ 220 33 (ii) … …30... (iii)… [3] (b) Name the person who issued the credit note. [1] (c) Suggest one reason for the issue of the credit note. [1] (d) Name the document which would have been issued to request a credit note. [1] (e) Complete the following table to show where the credit note would be recorded. Books of Jai Kapur Books of Vijay Singh Account debited Account credited Account debited Account credited … … … … … … … … [4]

6 © UCLES 2015 0452/21/M/J/15 Vijay Singh maintains a full set of accounting records and prepares control accounts at the end of each month. He provided the following information. 2015 $ April 1 Debit balance on sales ledger control account 475 30 Totals for the month Sales journal 590 Sales returns journal 46 Cash sales 614 Cheques received from credit customers 387 Cheque received from credit customer (included in the above figure) later dishonoured 26 Cheques paid to credit suppliers 469 Discounts allowed 13 Discounts received 34 Bad debts written off 32 Interest charged to credit customer 8 Contra entry to purchases ledger 150 May 1 Debit balance on sales ledger control account ? Credit balance on sales ledger control account 21

7 © UCLES 2015 0452/21/M/J/15 [Turn over REQUIRED (f) Select the relevant figures and prepare Vijay Singh’s sales ledger control account for the month ended 30 April 2015. Balance the account and bring down the balances on 1 May 2015. Vijay Singh Sales ledger control account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. [12] (g) Explain the contra entry to the purchases ledger. [2] (h) Suggest why Vijay Singh charged a credit customer interest. [1]

8 © UCLES 2015 0452/21/M/J/15 (i) State one reason why Vijay Singh prepares a monthly sales ledger control account. [1] (j) State two reasons why Vijay Singh does not use the information contained in the sales ledger to prepare the sales ledger control account. 1 2 [2] [Total: 28]

9 © UCLES 2015 0452/21/M/J/15 [Turn over Question 3 is on the next page.

10 © UCLES 2015 0452/21/M/J/15 3 Malala Khan is a trader. Her financial year ends on 31 May. She does not maintain many accounting records, but was able to provide the following information at 31 May 2015. $ Bank overdraft 4 080 Trade payables 8 100 Trade receivables 7 800 Other receivables 101 Inventory 6 750 Machinery at book value on 1 June 2014 (cost $28 600) 22 880 Motor vehicles at book value on 1 June 2014 (cost $24 000) 13 500 Loan (repayable 31 July 2016) 10 000 The following adjustments are required on 31 May 2015. 1 A provision for doubtful debts of 2% of the trade receivables should be created. 2 The machinery should be depreciated by 20% per annum using the straight line method. 3 The motor vehicles should be depreciated by 25% per annum using the reducing (diminishing) balance method. REQUIRED (a) Prepare a statement of affairs on 31 May 2015. The statement of affairs should show the total capital at that date.

11 © UCLES 2015 0452/21/M/J/15 [Turn over Malala Khan Statement of Affairs at 31 May 2015 $ $ $ ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. [12]

12 © UCLES 2015 0452/21/M/J/15 On 1 June 2014 Malala Khan’s capital was $20 000. On 1 January 2015 she transferred $5000 from her private bank account into the business bank account. During the year ended 31 May 2015 Malala Khan made the following drawings: $ Cash 1990 Goods 420 REQUIRED (b) Prepare Malala Khan’s capital account for the year ended 31 May 2015, showing the profit or loss for the year. Malala Khan Capital account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. [6] Malala Khan is concerned that her working capital is very low. She is considering four courses of action which may increase her working capital. REQUIRED (c) Complete the following table by placing a tick () in the correct column to show how each course of action would affect Malala Khan’s working capital. Increase Decrease No effect Reduce the credit period allowed to credit customers Sell a motor vehicle which is no longer used Arrange with the bank to have a loan for six months Allow cash discount to credit customers who pay promptly [4]

13 © UCLES 2015 0452/21/M/J/15 [Turn over (d) State three reasons why it is important for Malala Khan to have an adequate amount of working capital. 1 2 3 [3] [Total: 25]

14 © UCLES 2015 0452/21/M/J/15 4 The following trial balance was extracted from the books of Syed Zilani at the end of his first year of trading on 31 January 2015. $ $ Capital 90 000 Premises at cost 70 000 Equipment at cost 9 300 Revenue 77 100 Purchases 62 030 Wages 10 140 Insurance 2 800 Advertising 1 120 Bad debts 90 Rates 2 160 General expenses 151 Discount received 43 Trade receivables 6 500 Trade payables 5 950 Cash drawings 5 200 Bank 3 602 173 093 173 093 Additional information 1 At 31 January 2015 inventory was valued at $4100. 2 The insurance was paid for 14 months to 31 March 2015. 3 One third of the rates relates to Syed Zilani’s private flat. 4 During the year Syed Zilani took goods costing $580 for personal use. No entries have been made in the accounting records. 5 A provision for doubtful debts of 2% of trade receivables is to be created. 6 Equipment is to be depreciated at 20% per annum on cost. REQUIRED (a) Prepare the income statement for the year ended 31 January 2015.

15 © UCLES 2015 0452/21/M/J/15 [Turn over Syed Zilani Income Statement for the year ended 31 January 2015 $ $ $ ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. [14]

16 © UCLES 2015 0452/21/M/J/15 (b) Explain how the prudence principle has been applied in the preparation of the income statement. Illustrate your answer by reference to one of the items in your answer to (a). [2] Syed Zilani understands that certain objectives must be considered when selecting accounting policies. He knows that one of these objectives is reliability. REQUIRED (c) Name one other accounting objective. [1] (d) Explain two factors Syed Zilani should consider when comparing his results with those of another business. 1 2 [4] [Total: 21]

17 © UCLES 2015 0452/21/M/J/15 [Turn over 5 Dylan Kelly is a trader. After the preparation of his draft income statement for the year ended 28 February 2015 some errors were discovered. REQUIRED (a) Complete the following table to show by how much correcting each of the errors would affect the profit for the year. Error Increase $ Decrease $ Sales returns, $420, had not been recorded Inventory on 1 March 2014 was overstated by $1500 The income statement included rent and rates, $6150, for 15 months to 31 May 2015 Discount allowed, $180, had been recorded as discount received [8] After the correction of the errors on 28 February 2015, Dylan Kelly provided the following information. $ Inventory 9900 Trade receivables 7350 Trade payables 6870 Bank 1120 debit Loan repayable 30 June 2015 5000 REQUIRED (b) Calculate the quick ratio. The calculation should be correct to two decimal places. [2] (c) Comment on your answer to (b). [2]

18 © UCLES 2015 0452/21/M/J/15 (d) State how the calculation of the quick ratio differs from the calculation of the current ratio. [1] Dylan Kelly allows his credit customers 30 days credit. The sales for the year ended 28 February 2015 were $90 000, of which $18 500 represented cash sales. REQUIRED (e) State the formula for the calculation of the collection period for trade receivables. [1] (f) Calculate the collection period for trade receivables. Round up your answer to the next whole day. [2] (g) Comment on your answer to (f). [2] (h) Suggest two ways in which Dylan Kelly could improve the collection period for trade receivables. 1 2 [2]

19 © UCLES 2015 0452/21/M/J/15 Dylan Kelly is allowed 40 days credit by his credit suppliers. For the year ended 28 February 2015 the payment period for trade payables was 36 days. REQUIRED (i) Comment on Dylan Kelly’s payment period for trade payables. [2] [Total: 22]

20 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. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after the live examination series. 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. © UCLES 2015 0452/21/M/J/15 BLANK PAGE

® IGCSE is the registered trademark of Cambridge International Examinations. CAMBRIDGE INTERNATIONAL EXAMINATIONS Cambridge International General Certificate of Secondary Education MARK SCHEME for the May/June 2015 series 0452 ACCOUNTING 0452/21 Paper 2, maximum raw mark 120 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, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the May/June 2015 series for most Cambridge IGCSE®, Cambridge International A and AS Level components and some Cambridge O Level components.

Page 2 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 1 (a) Control/limit/keep track of petty cash expenditure The cash remaining and the vouchers received should equal the imprest Can help to reduce fraud Or other suitable advantage Any one advantage (1) [1] (b) See petty cash book on next page [11] (c) (i) $78 (1 o.f.) (ii) Bank (or Cash) (1) [2] (d) Stationery (1) [1] (e) Kuda Maposa Journal Debit $ Credit $ 1 Drawings Purchases Goods taken for personal use 300 300 (1) (1) (1) 2 Motor vehicles Capital Motor vehicle purchased using private funds 12 000 12 000 (1) (1) (1) 3 Machinery Machinery repairs Valley Machines Invoice received for purchase of new machine and repairs to existing machine 865 125 990 }(1) } (1) (1) [9] [Total: 24]

Page 3 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 (b) Kuda Maposa – Petty Cash Book Total Received Date Details Total Paid Postage Stationery General Expenses Ledger accounts $ 100 10 (1) 2015 Mar 1 6 11 14 18 21 26 29 Balance b/d Postage Tea and coffee Stationery T Masuka Refund for stationery Window cleaner P Zhonga $ 13 5 27 15 12 16 $ 13 (1) $ 27 (1) $ 5 (1) 12 (1) $ 15 (1) 16 (1) 30 Balance c/d 88 22 13 27 17 31 110 110 22 (1 o.f.) April 1 Balance b/d (1) Dates (1 o.f.) Totalling analysis columns (1 o.f.) Matching totals on total columns [11]

Page 4 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 2 (a) (i) 15% (1) (ii) $187 (1) (iii) $217 (1) [3] (b) Jai Kapur (1) [1] (c) Goods returned Overcharge Allowance for faulty/damaged goods Any one reason (1) [1] (d) Debit note (1) [1] (e) Books of Jai Kapur Books of Vijay Singh Account debited Account credited Account debited Account credited Sales returns (1) Vijay Singh (1) Jai Kapur (1) Purchases returns (1) [4] (f) Vijay Singh Sales ledger control account $ $ 2015 2015 April 1 Balance b/d 475 (1) April 30 Sales returns 46 (1) 30 Sales 590 (1) Bank 387 (1) Bank (dis. chq.) 26 (1) Discount allowed 13 (1) Interest 8 (1) Bad debt 32 (1) Balance c/d 21 Contra 150 (1) Balance c/d 492 1120 1120 2015 2015 May 1 Balance b/d 492 (1 o.f.) May 1 Balance b/d 21 (1) + (1) dates Three column running balance presentation acceptable [12] (g) This is when the balance of an account in the purchases ledger is set against the balance of an account of the same person in the sales ledger. (1) It is used when a trader both buys goods from and sells goods to another business. (1) [2] (h) The customer had not paid the balance owed by the end of the period of credit allowed. (1) [1]

Page 5 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 (i) To assist in the location of errors To provide an instant total of trade receivables To prove the arithmetical accuracy of the sales ledger To enable a statement of financial position to be prepared quickly To provide a summary of transactions relating to trade receivables To help reduce fraud Any one reason (1) [1] (j) An error in the sales ledger would not be revealed (1) Any fraud would not be revealed (1) Or other relevant point Any two points (1) each [2] [Total: 28] 3 (a) Malala Khan Statement of Affairs at 31 May 2015 Assets Cost Depreciation Book to date value $ $ $ Machinery 28 600 11 440 (1) 17 160 (1 o.f.) Motor vehicles 24 000 13 875 (1) 10 125 (1 o.f.) 52 600 25 315 27 285 Inventory 6 750 (1) Trade receivables 7 800 (1) Less Provision for doubtful debts 156 7 644 (1) Other receivables 101 (1) 14 495 41 780 Liabilities Long-term loan 10 000 (1) Trade payables 8 100 (1) Bank overdraft 4 080 (1) 12 180 22 180 Capital 19 600 (1 o.f.) 41 780 Any suitable format acceptable [12]

Page 6 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 (b) Malala Khan Capital account $ $ 2015 2014 May 31 Drawings 1 990 (1) June 1 Balance 20 000 (1) Drawings 420 (1) 2015 Loss for year 2 990 (1 o.f.) Jan 1 Bank 5 000 (1) Balance c/d 19 600 (1 o.f.) 25 000 25 000 2015 June 1 Balance b/d 19 600 Three column running balance presentation acceptable [6] (c) Increase Decrease No effect Reduce the credit period allowed to credit customers
(1) Sell a motor vehicle which is no longer used
(1) Arrange with the bank to have a loan for six months
(1) Allow cash discount to credit customers who pay promptly
(1) [4] (d) To be able to meet debts when they fall due To be able to take advantage of cash discounts To be able to take advantage of business opportunities as they arise To ensure that there is no difficulty in obtaining further supplies Or other suitable explanation Any three points (1) each [3] [Total: 25]

Page 7 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 4 (a) Syed Zilani Income Statement for the year ended 31 January 2015 $ $ $ Revenue 77 100 Cost of sales Purchases 62 030 (1) Less Goods for own use 580 61 450 (1) Less Closing inventory 4 100 (1) 57 350 Gross profit 19 750 (1 o.f.) Discount received 43 (1) 19 793 Wages 10 140 Insurance (2 800 (1) – 400 (1)) 2 400 Advertising 1 120 (1) Bad debts 90 (1) Provision for doubtful debts (2% × 6 500) 130 (1) Rates (2 160 (1) – 720 (1)) 1 440 General expenses 151 Depreciation – Equipment (20% × 9 300) 1 860 (1) 17 331 Profit for the year 2 462 (1 o.f.) Horizontal format acceptable [14] (b) Either Profit should not be overstated Or Profit should not be anticipated, but possible losses should be provided for (1) Example Either Creation of provision for doubtful debts Or Providing for depreciation of equipment (1) [2] (c) Comparability Relevance Understandability Any one objective (1) [1] (d) Should compare with a business in the same trade Should compare with a business of approximately the same size/same capital Should compare with a business of the same type (sole trader) The financial statements may be for one year which will not show trends The financial statements may be for one year which is not a typical year The financial year may end on different dates (when inventories are high/low) The businesses may operate different accounting policies The statements do not show non-monetary factors It may not be possible to obtain all the information needed to make comparisons Or other suitable points Any two points (1) for basic statement and (1) for development [4] [Total: 21]

Page 8 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 5 (a) Error Increase $ Decrease $ Sales returns, $420, had not been recorded 420 (2) Inventory on 1 March 2014 was overstated by $1500 1500 (2) The income statement included rent and rates, $6150, for 15 months to 31 May 2015 1230 (2) Discount allowed, $180, had been recorded as discount received 360 (2) (1) for position and (1) for figure in each case [8] (b) (7350 + 1120) : ((6870 + 5000) 8470 : 11 870 (1) 0.71 : 1 (1) [2] (c) Liquid assets are less than the current liabilities Cannot meet the immediate liabilities from the immediate assets Is dependent on selling inventory to meet the current liabilities Is below the generally accepted “benchmark”/is inadequate/unsatisfactory Or other suitable comment based on the answer to (b) Any two points (1) each [2] (d) Excludes the inventory from the calculation [1] (e) 1 365 sales Credit s receivable Trade × [1] (f) (1) 1 365 500 71 350 7 × = 38 days (1) [2] (g) On average credit customers are taking 8 days more than is allowed This may affect the ability of the business to pay current liabilities This may affect the ability of the business to take advantage of opportunities when they arise Or other suitable comments based on answer to (f) Any two points (1) each [2]

Page 9 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 21 © Cambridge International Examinations 2015 (h) Offer cash discount for prompt payment Charge interest on overdue accounts Improve credit control/send invoices or statements promptly Refuse further supplies until outstanding balance paid Invoice discounting and debt factoring Any two points (1) each [2] (i) On average suppliers are paid 4 days earlier than is required This may enable him to take advantage of cash discounts This will improve relations with credit suppliers Deprives the business of the use of the money earlier than necessary Any two points (1) each [2] [Total: 22]