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

This document consists of 20 printed pages. IB15 06_0452_22_ML_RP © UCLES 2015 [Turn over *9516175015* Cambridge International Examinations Cambridge International General Certificate of Secondary Education ACCOUNTING 0452/22 Paper 2 May/June 2015 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. MODIFIED LANGUAGE 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 0452/22/M/J/15 1 Nyasha Chingono is a trader. She maintains a full set of accounting records. She buys goods on credit. On 1 April 2015 Nyasha Chingono owed John Moyo $560. The following transactions took place in April 2015. April 3 Bought goods on credit from Wholesalers Limited, $358 12 Bought goods on credit from John Moyo, list price $480, subject to a trade discount of 25% 18 Returned goods to John Moyo, list price $160 27 Paid John Moyo, by cheque, the balance owing on 1 April, subject to a cash discount of 2½% REQUIRED (a) Prepare the purchases journal and the purchases returns journal for April 2015. Total each journal and indicate the ledger account to which the total would be transferred. Nyasha Chingono Purchases journal Date Details $ $ ….…….. ………………………………………… ….…….. ….……. ….…….. ………………………………………… ….…….. ….……. ….…….. ………………………………………… ….…….. ….……. ….…….. ………………………………………… ….…….. ….……. ….…….. ………………………………………… ….…….. ….……. Purchases returns journal Date Details $ $ ….…….. ………………………………………… ….…….. ….……. ….…….. ………………………………………… ….…….. ….……. ….…….. ………………………………………… ….…….. ….……. ….……. ………………………………………… ….……. ….……. ….……. ………………………………………… ….……. ….……. [5]

3 © UCLES 2015 0452/22/M/J/15 [Turn over (b) Prepare the following accounts in Nyasha Chingono’s ledger for the month of April 2015. It is not necessary to balance any of the accounts. Nyasha Chingono John Moyo account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. Purchases account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. Purchases returns account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. [7] (c) State one advantage and one disadvantage of paying credit suppliers before the due date. Advantage Disadvantage [2]

4 © UCLES 2015 0452/22/M/J/15 Nyasha Chingono prepared the following sales ledger control account on 30 April 2015. Nyasha Chingono Sales ledger control account Date Details $ Date Details $ 2015 April 1 30 2015 May 1 Balance b/d Sales Interest charged Balance b/d 750 990 10 ____ 1750 800 2015 April 30 Sales returns Bank Discount Bad debts Contra Balance c/d 60 637 13 120 120 800 1750 REQUIRED (d) Explain the following entries in the control account. State the source of information for each item. The first one has been completed as an example. 1 Sales Explanation The total goods sold on credit in the month Source of information Sales journal 2 Sales returns Explanation Source of information 3 Contra Explanation Source of information

5 © UCLES 2015 0452/22/M/J/15 [Turn over 4 Interest charged Explanation Source of information [6] (e) Suggest two ways Nyasha Chingono could reduce the risk of bad debts. 1 2 [2] Nyasha Chingono allows her credit customers 14 days credit. The total credit sales for the year ended 30 April 2015 were $12 600. REQUIRED (f) Calculate the collection period for trade receivables, using the closing balance on the sales ledger control account. Round up your answer to the next whole day. [2] (g) State whether Nyasha Chingono would be satisfied with the collection period for trade receivables. [1]

6 © UCLES 2015 0452/22/M/J/15 (h) Suggest two ways Nyasha Chingono could improve the collection period for trade receivables. 1 2 [2] [Total: 27]

7 © UCLES 2015 0452/22/M/J/15 [Turn over 2 (a) State two reasons why a trader should reconcile the cash book balance with the balance shown on the bank statement at the end of each month. 1 2 [2] On 31 January 2015 David Jones balanced his cash book and brought down a debit balance of $114 on 1 February. The bank statement showed a credit balance of $154 on 31 January 2015. A comparison of the cash book and the bank statement revealed the following. $ 1 Items appearing only in the cash book Cash from sales paid into the bank on 28 January 235 Cheque paid to M Sharp, a credit supplier 490 2 Items appearing only on the bank statement Bank charges 62 Cheque received from K Taylor, a credit customer, dishonoured 143 Insurance premium paid by standing order 40 Interest on deposit account paid directly into the bank 130 3 The total of the debit side of the cash book had been overcast 100

8 © UCLES 2015 0452/22/M/J/15 REQUIRED (b) Update the cash book of David Jones. Bring down the updated bank balance on 1 February 2015. David Jones Cash book (bank columns only) Date Details $ Date Details $ 2015 Feb 1 Balance b/d 114 ……… ……………………… …..….. ….…. ……………..…..………. …..…. ……… ……………………… …..….. ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. [6]

9 © UCLES 2015 0452/22/M/J/15 [Turn over (c) Prepare a bank reconciliation statement for David Jones at 31 January 2015. David Jones Bank Reconciliation Statement at 31 January 2015 $ ……………………………………………………………………………….. …………….. ……………………………………………………………………………….. …………….. ……………………………………………………………………………….. …………….. ……………………………………………………………………………….. …………….. ……………………………………………………………………………….. …………….. ……………………………………………………………………………….. …………….. ……………………………………………………………………………….. …………….. ……………………………………………………………………………….. …………….. [6] (d) (i) State whether the cash book balance or the bank statement balance should be shown in David Jones’ statement of financial position at 31 January 2015. (ii) Give a reason for your answer in (i). [3] (e) State two reasons why David Jones’ bank manager would be interested in his financial statements. 1 2 [2] [Total: 19]

10 © UCLES 2015 0452/22/M/J/15 3 Akhtar Hussain is a trader. He maintains a full set of accounting records. His financial year ends on 31 March. Akhtar Hussain provided the following information at 31 March 2015. 1 The inventory was valued at $4150. 2 $54 owed by XY Limited is to be written off as a bad debt. 3 The provision for doubtful debts is to be reduced to $1010. 4 A machine was sold on 1 March. The amount received was recorded, but no other entries were made. The machine originally cost $3000 and had been depreciated by $2250. 5 The remaining machine cost $5000 and is to be depreciated at 25% per annum using the straight line method. REQUIRED (a) Record this information in the following accounts in Akhtar Hussain’s ledger at 31 March 2015. Close the accounts by balancing or by making a transfer to an appropriate account. Some entries have already been made in the accounts during the year. Akhtar Hussain Inventory account Date Details $ Date Details $ 2014 April 1 Balance b/d 3560 ……… ……………………… …..….. ….…. ……………..…..…… …..…. ……… ……………………… …..….. ….…. ……………..…..…… …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. …….. ………..…..………… …….. …….. ………..…..………… …….. …….. ………..…..………… …….. …….. ………..…..………… …….. Bad debts account Date Details $ Date Details $ 2015 Jan 10 ABC Stores 136 ……… ……………………… …..….. ….…. ……………..…..…. …..…. ……… ……………………… …..….. ….…. ……………..…..…… …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..….

11 © UCLES 2015 0452/22/M/J/15 [Turn over Provision for doubtful debts account Date Details $ Date Details $ ….…. ……………..…..…. …..…. 2014 April 1 Balance b/d 1130 ….…. ……………..…..…… …..…. ……… ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. Provision for depreciation of machinery account Date Details $ Date Details $ ….…. ……………..…..…. …..…. 2014 April 1 Balance b/d 4500 ….…. ……………..…..…… …..…. ……… ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..…. …….. ……………………… …..…. ….….. ………..…..………… …..…. Disposal of machinery account Date Details $ Date Details $ ….…. ……………..…..…. …..…. 2015 March 1 Bank 550 ….…. ……………..…..…… …..…. ……… ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..….

12 © UCLES 2015 0452/22/M/J/15 Drawings account Date Details $ Date Details $ 2015 Feb 1 Bank 1000 …..…. ……………..…..…. …..…. ….…. ……………..…..…… …..…. ……… ……………………… …..….. …..…. ……………………… …..…. …..…. ……………………… …..….. [17] On 30 March 2015 Akhtar Hussain received an invoice for $9360 from PJ Autos Limited. This included $360 for repairs to a motor vehicle. The remainder was the cost of a new motor vehicle. REQUIRED (b) Prepare a journal entry to record this transaction. A narrative is required. Akhtar Hussain Journal Debit $ Credit $ ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. [3]

13 © UCLES 2015 0452/22/M/J/15 [Turn over (c) State the meaning of the following terms. Capital expenditure Revenue expenditure [2] On 31 March 2015 Akhtar Hussain discovered that an item of revenue expenditure had been recorded as capital expenditure. REQUIRED (d) Complete the following table by putting a tick (
) in the correct column to indicate the effect of this error on the non-current assets and the profit for the year. overstated understated non-current assets at 31 March 2015 profit for the year ended 31 March 2015 [2] [Total: 24]

14 © UCLES 2015 0452/22/M/J/15 4 Rania Gharib is a trader. Her financial year ends on 31 January. All sales are made for cash and all purchases are made on credit terms. Rania Gharib provided the following information. 1 At 1 February 2014 $ At 31 January 2015 $ Inventory 4 700 3 150 Fixtures and fittings at valuation 6 900 7 300 Trade payables 2 950 3 720 $ 2 Payments during the year ended 31 January 2015 Credit suppliers 40 120 Wages 9 520 Rent and rates 5 200 Insurance for 14 months to 31 March 2015 840 Fixtures and fittings 1 100 3 Amounts received during the year ended 31 January 2015 Cash from sales 63 660 4 Cash discounts received from credit suppliers 820

15 © UCLES 2015 0452/22/M/J/15 [Turn over REQUIRED (a) Prepare the income statement for the year ended 31 January 2015. Rania Gharib Income Statement for the year ended 31 January 2015 $ $ ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. [13]

16 © UCLES 2015 0452/22/M/J/15 (b) Calculate the rate of inventory turnover. The calculation should be correct to two decimal places. [3] (c) Suggest two reasons why the rate of inventory turnover has improved. 1 2 [2] (d) Explain what is measured by the return on capital employed (ROCE). [2] (e) Calculate the return on capital employed (ROCE), using the profit for the year in (a) and the capital employed of $83 000. The calculation should be correct to two decimal places. [2] (f) Suggest one reason why the return on capital employed is higher than it was in the previous year. [1]

17 © UCLES 2015 0452/22/M/J/15 [Turn over After the preparation of the income statement for the year ended 31 January 2015, it was discovered that the opening inventory had been overvalued by $250. REQUIRED (g) Complete the following table to show the effect of this. The first one has been completed as an example. overstated understated no effect gross profit for the year ended 31 January 2014
credit balance on capital account on 1 February 2014 gross profit for the year ended 31 January 2015 profit for the year ended 31 January 2015 current assets at 31 January 2015 [4] [Total: 27]

18 © UCLES 2015 0452/22/M/J/15 5 Craven Limited provided the following information at the start of the financial year on 1 April 2014. $ Ordinary share capital 200 000 General reserve 17 000 Retained earnings 9 000 During the year ended 31 March 2015 the following took place. 1 The company made a profit for the year of $43 000. 2 A dividend of $16 000 was paid on the ordinary shares. 3 A transfer of $15 000 was made to general reserve. REQUIRED (a) Complete the following statement of changes in equity for the year ended 31 March 2015. Craven Limited Statement of Changes in Equity for the year ended 31 March 2015 Details Share capital $ General reserve $ Retained earnings $ Total $ On 1 April 2014 Profit for the year Dividend paid Transfer to general reserve On 31 March 2015 200 000 … … … 17 000 … … … 9 000 … … … 226 000 … … … … … … … [4] Craven Limited provided the following information at 31 March 2015. $ Premises at cost 179 000 Fixtures and equipment at book value 54 000 Motor vehicles at book value 22 500 5% Debentures 15 000 Inventory at 31 March 2015 26 525 Trade payables 26 375 Trade receivables 21 000 Provision for doubtful debts 525 Bank overdraft 8 125 REQUIRED (b) Prepare a statement of financial position at 31 March 2015.

19 © UCLES 2015 0452/22/M/J/15 [Turn over Craven Limited Statement of Financial Position at 31 March 2015 $ $ ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. [13]

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 0452/22/M/J/15 Craven Limited wants to raise funds for expansion. It is considering either issuing more ordinary shares or more debentures. REQUIRED (c) State two features of ordinary shares. 1 2 [2] (d) State two features of debentures. 1 2 [2] (e) State two ways the issue of debentures may affect the ordinary shareholders. 1 2 [2] [Total: 23]

® 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 0452/22 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 22 © Cambridge International Examinations 2015 1 (a) Nyasha Chingono Purchases journal Date Details $ $ 2015 3 April 12 30 Wholesalers Limited John Moyo Less 25% trade discount Transfer to purchases a/c 480 120 358 360 718 (1) (1) (1) Purchases returns journal Date Details $ $ 2015 18 April 30 John Moyo Less 25% trade discount Transfer to purchases returns a/c 160 40 120 120 (1) (1) [5] (b) Nyasha Chingono John Moyo account $ $ 2015 2015 18 Apr Returns 120 (1) 1 Apr Balance b/d 560 27 Bank 546 (1) 12 Purchases 360 (1) Discount 14 (1) Purchases account $ $ 2015 30 Apr Total for month 718 (1 o.f.) Purchases returns account $ $ 2015 30 Apr Total for month 120 (1 o.f.) + (1) dates Three column running balance presentation acceptable [7]

Page 3 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 (c) May be able to take advantage of cash discounts Improve the relationship with suppliers Avoid paying interest Or other suitable comment Any one advantage (1) The business is deprived of the use of the money earlier than necessary Or other suitable comment Any one disadvantage (1) [2] (d) Sales returns Explanation The total sales returns for the month (1) Source of information Sales returns journal (1) Contra Explanation This is the total set off against accounts in the purchases ledger during the month (1) Source of information Journal (1) Interest charged Explanation This is the total interest charged on credit customers’ accounts which are overdue (1) Source of information Journal (1) [6] (e) Reduce credit sales/sell on a cash basis Obtain references from new credit customers Fix a credit limit for each customer Improve credit control/issue invoices and monthly statements promptly Refuse further supplies until outstanding balance is paid Any two points (1) each [2] (f) (1) } (1) } days 24 1 365 600 12 800 = × [2] (g) Unsatisfied Or o.f. based on answer to (f) [1] (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 is paid Invoice discounting and debt factoring Any two points (1) each [2] [Total: 27]

Page 4 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 2 (a) Obtain correct bank balance Identify errors on the bank account Identify errors on the bank statement Assist in discovering fraud and embezzlement Identify amounts not credited by the bank Identify cheques not presented Identify any stale cheques Any two reasons (1) each [2] (b) David Jones Cash book (bank columns only) $ $ 2015 2015 1 Feb Balance b/d 114 1 Feb Bank charges 62 (1) Bank interest 130 (1) K Taylor Balance c/d 101 (Dis. chq.) 143 (1) Insurance 40 (1) Error correction 100 (1) 345 345 2015 1 Feb Balance b/d 101 (1 o.f.) [6] (c) David Jones Bank Reconciliation Statement at 31 January 2015 $ Balance on bank statement 154 (1) Add Amounts not credited – cash sales (1) 235 (1) 389 Less Cheques not presented – M Sharp (1) 490 (1) Balance in cash book (101) (1 o.f.) Alternative presentation David Jones Bank Reconciliation Statement at 31 January 2015 $ Balance in cash book (101) (1 o.f.) Add Cheques not presented – M Sharp (1) 490 (1) 389 Less Amounts not credited – cash sales (1) 235 (1) Balance on bank statement 154 (1) [6] (d) (i) Cash book balance (1) (ii) Either The statement of financial position would not balance if the bank statement balance was included (2) Or Only balances on the books of the business can be included in the statement of financial position of the business (2) [3]

Page 5 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 (e) Assess prospects of any requested loan/overdraft being repaid when due Assess prospects of any interest on loan/overdraft being paid when due Assess security available to cover any loan/overdraft Or other acceptable reason Any two reasons (1) each [2] [Total: 19]

Page 6 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 3 (a) Akhtar Hussain Inventory account $ $ 2014 2015 1 April Balance b/d 3560 31 Mar Income Statement 3560 (1) 3560 3560 2015 2015 31 Mar Income Statement 4150 (1) 31 Mar Balance c/d 4150 4150 4150 2015 1 April Balance b/d 4150 (1) Bad debts account $ $ 2015 2015 10 Jan ABC Stores 136 31 Mar Income Statement 190 (1) 31 Mar XY Limited 54 (1) 190 190 Provision for doubtful debts account $ $ 2015 2014 31 Mar Income Statement 120 (1) 1 April Balance b/d 1130 Balance c/d 1010 (1) 1130 1130 2015 1 April Balance b/d 1010 (1) Provision for depreciation of machinery account $ $ 2015 2014 1 Mar Disposal 2250 (1) 1 April Balance b/d 4500 31 Balance c/d 3500 (1) 2015 31 Mar Income Statement 1250 (1) 5750 5750 2015 1 April Balance b/d 3500 (1 o.f.) Disposal of machinery account $ $ 2015 2015 1 Mar Machinery 3000 (1) 1 Mar Bank 550 Prov. for Dep. 2250 (1) 31 Income Statement 200 (1 o.f.) 3000 3000 Drawings account $ $ 2015 2015 1 Feb Bank 1000 31 Mar Capital 1000 (1) 1000 1000 + (1) dates Three column running balance presentation acceptable [17]

Page 7 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 (b) Akthar Hussain Journal Debit $ Credit $ Motor vehicles Motor repairs PJ Autos Invoice received for purchase of new vehicle and motor repairs 9000 360 9360 } } (1) (1) (1) [3] (c) Capital expenditure Money spent on acquiring, improving and installing non-current assets (1) Revenue expenditure Money spent on running a business on a day-to-day basis (1) [2] (d) overstated understated non-current assets at 31 March 2015
(1) profit for the year ended 31 March 2015
(1) [2] [Total: 24] 4 (a) Rania Gharib Income Statement for the year ended 31 January 2015 $ $ Revenue 63 660 Cost of sales Opening inventory 4 700 * Purchases (40 120 (1) + 3 720 (1) + 820 (1) – 2 950 (1)) 41 710 46 410 Closing inventory 3 150 * (1) for both 43 260 Gross profit 20 400 (1 o.f.) Discount received 820 (1) 21 220 Wages 9 520 Rent and rates 5 200 (1) Insurance (840 (1) – 120 (1)) 720 Depreciation fixtures and fittings (6 900 + 1 100 – 7 300) 700 (2) 16 140 Profit for the year 5 080 (1 o.f.) Horizontal format acceptable [13]

Page 8 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 (b) o.f.) (1 (1) o.f.) (1 times 11.02 925 3 260 43 2 150) 3 700 (4 260 43 = = ÷ + [3] (c) Lower inventory levels More sales activity Or other suitable explanation Any two reasons (1) each [2] (d) It shows the profit earned for each $100 used in the business (1) It shows how efficiently the capital is being employed (1) [2] (e) o.f.) (1 } o.f.}(1) 6.12% 1 100 000 83 080 5 = × [2] (f) Higher profit for the year Lower capital employed Any one reason (1) [1] (g) overstated understated no effect gross profit for the year ended 31 January 2014
credit balance on capital account on 1 February 2014
(1) gross profit for the year ended 31 January 2015
(1) profit for the year ended 31 January 2015
(1) current assets at 31 January 2015
(1) [4] [Total: 27]

Page 9 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 5 (a) Craven Limited Statement of Changes in Equity for the year ended 31 March 2015 Details Share capital $ General reserve $ Retained earnings $ Total $ On 1 April 2014 200 000 17 000 9 000 226 000 Profit for the year … … 43 000 43 000 (1) Dividend paid … … (16 000) (16 000) (1) Transfer to general reserve … 15 000 (15 000) … (1) On 31 March 2015 200 000 32 000 21 000 253 000 (1) [4] (b) Craven Limited Statement of Financial Position at 31 March 2015 Assets $ $ Non-current assets Premises at cost 179 000 Fixtures and equipment at book value 54 000 Motor vehicles at book value 22 500 255 500 (1) Current assets Inventory 26 525 (1) Trade receivables 21 000 (1) Less Provision for doubtful debts 525 20 475 (1) 47 000 (1 o.f.) Total assets 302 500 Equity and liabilities Equity and Reserves Ordinary share capital 200 000 (1) General reserve (17 000 (1) + 15 000 (1)) 32 000 Retained earnings (9 000 (1) + 12 000 (1)) 21 000 253 000 (1 o.f.) Non-current liabilities 5% Debentures 15 000 (1) Current liabilities Trade payables 26 375 Bank 8 125 34 500 (1) Total liabilities 302 500 Horizontal format acceptable [13]

Page 10 Mark Scheme Syllabus Paper Cambridge IGCSE – May/June 2015 0452 22 © Cambridge International Examinations 2015 (c) Ordinary shareholders are members of the company Ordinary shares carry voting rights Ordinary share dividend is a share of the profit Ordinary share dividend is variable Ordinary share dividend is paid after any dividend on preference shares Ordinary shareholders are repaid last in the event of a winding up Any two features (1) each [2] (d) Debentures are long-term loans Debenture-holders are not members of the company Debentures do not carry voting rights Debentures carry a fixed rate of interest Debenture interest is not dependent on the company’s profit Debentures are often secured on the assets of the company Debenture-holders are repaid before the shareholders in the event of a winding up Any two features (1) each [2] (e) Reduction in profit available for ordinary shareholders Prior claim on the assets of the company in the event of a winding up Or other relevant point Any two points (1) each [2] [Total: 23]