Cambridge IGCSE Accounting 0452 — 2015 Oct/Nov Paper 1 · Variant 1

This document consists of 20 printed pages. IB15 11_0452_11/2RP © UCLES 2015 [Turn over *8375935637* Cambridge International Examinations Cambridge International General Certificate of Secondary Education ACCOUNTING 0452/11 Paper 1 October/November 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 0452/11/O/N/15 There are 10 parts to Question 1. For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Choose the one you consider correct and place a tick (✓) in the box to indicate the correct answer. 1 (a) Which business document would be sent by a customer to a supplier? A credit note B debit note C invoice D statement of account [1] (b) An insurance account shows an amount paid for the year of $2000 and a prepayment at the end of the year of $400. Which entry appears in the insurance account to record the transfer to the income statement? A credit entry of $1600 B credit entry of $2400 C debit entry of $1600 D debit entry of $2400 [1] (c) Where would a dishonoured cheque from a customer be recorded in the books of the supplier? A credit side of the purchases ledger control account B credit side of the sales ledger control account C debit side of the purchases ledger control account D debit side of the sales ledger control account [1]

3 © UCLES 2015 0452/11/O/N/15 [Turn over (d) Jamal treats purchases of loose tools as capital expenditure. On 1 July 2014 his loose tools were valued at $7100. On 1 September 2014 he bought new tools costing $1200. On 30 June 2015 he valued loose tools at $6000. Which amount for loose tools appeared in his income statement for the year ended 30 June 2015? A $100 B $1100 C $1200 D $2300 [1] (e) The following account appeared in Andrew’s ledger. Andrew Advertising account 2015 $ 2014 $ 30 April Bank 4000 1 May Balance b/d 500 2015 30 April Income statement 2800 Balance c/d 700 4000 4000 2015 1 May Balance b/d 700 Which statement is correct? A Andrew earned $2800 from advertising during the year. B Andrew had prepaid $700 for advertising on 1 May 2015. C Andrew owed $700 for advertising on 1 May 2015. D Andrew paid $2800 for advertising during the year. [1]

4 © UCLES 2015 0452/11/O/N/15 (f) Why does a partnership prepare an appropriation account? A to allocate profit for the year to each partner B to calculate interest on partners’ loans C to ensure that drawings are accounted for D to record dividends paid and proposed [1] (g) During the accounting year a limited company had the following transactions. $ ordinary share dividend paid 25 000 interest paid on short term bank loan 3 000 interest paid on debentures (repayable in 2019) 12 000 interest received on bank deposit 5 000 Which amount appeared in the expenses in the income statement? A $10 000 B $12 000 C $15 000 D $35 000 [1] (h) Why does a sports club prepare the trading account section of an income statement? A it has paid staff as well as voluntary workers B it operates a café C to calculate subscriptions for the year D to value the closing inventory [1]

5 © UCLES 2015 0452/11/O/N/15 [Turn over (i) The rent of a manufacturing business is split 60% factory, 10% offices and 30% showrooms. Business rent is $40 000 a year and salesmen’s salaries are $12 000 a year. How much appears in the manufacturing account for these costs? A $24 000 B $31 200 C $36 000 D $46 800 [1] (j) Financial statements must be free from error and bias. Which accounting policy is being applied? A comparability B relevance C reliability D understandability [1] [Total: 10]

6 © UCLES 2015 0452/11/O/N/15 2 (a) State what is meant by a book of prime (original) entry. [1] (b) Name two of the books of prime (original) entry which a business may maintain. 1 2 [2] (c) Complete the following table using a tick (
) to indicate whether each item is an asset, a liability or an expense. The first has been completed as an example. asset liability expense fixtures and fittings
insurance bank overdraft cash trade payable wages accrued electricity increase in provision for doubtful debts unpaid commission receivable [4]

7 © UCLES 2015 0452/11/O/N/15 [Turn over (d) Name the financial statement in which the following are recorded. (i) assets [1] (ii) expenses. [1] Neel started a business on 1 June. The following transactions took place in June. 1 Opened a business bank account with $8000 of his own money. 2 Received a bank loan, $2000. 3 Bought a delivery van, $5200, from A1 Motors on credit. 4 Bought inventory, $3700, paying by cheque. 5 Paid shop rent, $1000, by standing order. 6 Withdrew cash, $100, to start up an imprest system. REQUIRED (e) Complete the following table showing how these transactions were recorded. The first has been completed as an example. Debit entry Credit entry $ $ 1 Bank account 8000 Capital account 8000 2 3 4 5 6 [10]

8 © UCLES 2015 0452/11/O/N/15 (f) Calculate the balance on Neel’s bank account after these transactions. [3] [Total: 22]

9 © UCLES 2015 0452/11/O/N/15 [Turn over 3 (a) Name three types of inventory which might be held by a manufacturing business. 1 2 3 [3] (b) State how inventory should be valued. [1] (c) State how Asrul, a retailer, records goods taken for his personal use. Account debited Account credited [2] (d) Name the accounting principle which Asrul is applying. [1] (e) State one reason why Asrul prepares a bank reconciliation statement. [1] (f) State what is meant by a bank statement. [1]

10 © UCLES 2015 0452/11/O/N/15 (g) Give one example of each of the following. 1 An item in the cash book not in the bank statement 2 An item in the bank statement not in the cash book. [2] [Total: 11]

11 © UCLES 2015 0452/11/O/N/15 [Turn over 4 (a) Explain what is meant by the term provision for doubtful debts. [2] On 1 May 2014 Samuel’s provision for doubtful debts account showed a balance of $450. On 30 April 2015 his trade receivables amounted to $9750. This included a debt of $250 which had gone bad and should be written off. Samuel provides for doubtful debts at a rate of 4%. REQUIRED (b) Prepare Samuel’s provision for doubtful debts account. Bring down the balance on 1 May 2015. Samuel Provision for doubtful debts account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. [5] (c) State where the entry for doubtful debts will appear in the income statement. [1] (d) Name the two accounting principles Samuel is applying by maintaining a provision for doubtful debts account. 1 2 [2]

12 © UCLES 2015 0452/11/O/N/15 (e) Name the two items in the statement of financial position which might be overstated if Samuel did not maintain a provision for doubtful debts account. 1 2 [2] [Total: 12]

13 © UCLES 2015 0452/11/O/N/15 [Turn over 5 Nzita is a sole trader. His statement of financial position at 31 January 2014 included the following balances. $ Trade receivables 700 Trade payables 400 Inventory 1 100 Equipment at cost 15 700 Provision for depreciation of equipment 4 100 Prepaid rent 250 Bank 2 100 debit REQUIRED (a) Calculate Nzita’s capital at 31 January 2014. [6]

14 © UCLES 2015 0452/11/O/N/15 A summary of Nzita’s bank statements showed the following for the year ended 31 January 2015. $ Receipts from customers 28 900 Payments to suppliers 12 600 Wages 5 200 Rent 3 100 Purchase of new equipment 1 100 Sundry expenses 2 650 Drawings 6 600 Further information is as follows. 1 Nzita depreciates his non-current assets at the rate of 10% per annum on the straight line basis. A full year’s depreciation is provided in the year of purchase. 2 No non-current assets were disposed of during the year. 3 Proper books of account were not kept during the year but Nzita provided the following information at 31 January 2015. $ Trade receivables 900 Trade payables 650 Inventory 1400 Prepaid rent 150 4 All sales and purchases were made on credit.

15 © UCLES 2015 0452/11/O/N/15 [Turn over REQUIRED (b) Prepare the following accounts for the year ended 31 January 2015 to determine the sales and purchases for the year. Nzita Total trade receivables account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. Nzita Total trade payables account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. [8]

16 © UCLES 2015 0452/11/O/N/15 (c) Prepare Nzita’s income statement for the year ended 31 January 2015. Nzita Income Statement for the year ended 31 January 2015 $ $ ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. [9]

17 © UCLES 2015 0452/11/O/N/15 [Turn over (d) Prepare an extract from Nzita’s statement of financial position at 31 January 2015 showing the capital section. Nzita Statement of Financial Position (extract) at 31 January 2015 [4] (e) Calculate, to two decimal places, Nzita’s gross profit margin for the year. [2] (f) Suggest two reasons why Nzita’s gross profit margin was lower than in the previous year. 1 2 [2] [Total: 31]

18 © UCLES 2015 0452/11/O/N/15 6 (a) Complete the following sentences using the words capital current non-current overstated revenue understated ……………………. expenditure relates to the purchase of an asset which will last for more than 12 months. ……………………. expenditure relates to the day-to-day running costs of the business or the purchase of a ……………………. asset. A capital receipt arises when a ……………………. asset is sold. If an item of capital expenditure is wrongly recorded as revenue expenditure profit will be ……………………. If an item of revenue expenditure is wrongly recorded as capital expenditure profit will be……………………. [6] Leroy prepared a trial balance on 30 September 2015 which failed to balance. He opened a suspense account. He then discovered the following errors. 1 Discount allowed, $30, had been posted to the credit side of the discount received account. 2 Receipt of cash, $85, from Yolanda, a credit customer, had been credited to the account of Joanie. 3 The total of the sales returns journal, $110, had been posted as $100. 4 An invoice totalling $1000 for computer equipment and supplies had included a charge of $150 for stationery. The total amount had been posted to the office equipment account. REQUIRED (b) State which two of these errors did not affect the balancing of the trial balance and in each case name the type of error which had occurred. Error Name Error Name [4]

19 © UCLES 2015 0452/11/O/N/15 [Turn over (c) Prepare journal entries to correct all four errors. Narratives are required. Error number Details Debit $ Credit $ …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… …………. …………………………………………. ……………… ……………… [13] Question 6(d) is on the next page.

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 0452/11/O/N/15 (d) Prepare the suspense account, showing the original difference on the trial balance. Leroy Suspense account Date Details $ Date Details $ 2015 Sept 30 ……………..…..………. …..…. 2015 Sept 30 ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. [3] Leroy had a draft profit for the year of $5170 before the errors were corrected. REQUIRED (e) Complete the following table to calculate the correct profit for the year. Where an error has no effect on profit, place a tick (
) in the No Effect column. No Effect Increase $ Decrease $ $ Draft profit 5170 Error 1 Error 2 Error 3 Error 4 ______ ______ ______ ______ ______ Corrected profit ______ [8] [Total: 34]

® IGCSE is the registered trademark of Cambridge International Examinations. CAMBRIDGE INTERNATIONAL EXAMINATIONS Cambridge International General Certificate of Secondary Education MARK SCHEME for the October/November 2015 series 0452 ACCOUNTING 0452/11 Paper 1, 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 October/November 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 – October/November 2015 0452 11 © Cambridge International Examinations 2015 1 (a) B (b) A (c) D (d) D (e) B (f) A (g) C (h) B (i) A (j) C (1) each [10]

Page 3 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 2 (a) The book where transactions (and other entries) are first recorded. (1) [1] (b) Cash book/petty cash book/sales journal/sales returns journal/purchases journal/purchases returns journal/general journal/returns inwards and returns outwards journals Any two for (1) mark each [2] (c) asset liability expense fixtures and fittings
insurance
bank overdraft
cash
trade payable
wages
accrued electricity
Increase in provision for doubtful debts
Unpaid commission receivable
(1) Mark for every two correct [4] (d) Statement of financial position (1) [1] Income statement (1) [1]

Page 4 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 (e) Debit entry Credit entry $ $ 1 Bank account 8 000 Capital account 8 000 2 Bank account 2 000 (1) Loan account 2 000 (1) 3 (Delivery) Van account/ Motor vehicles account 5 200 (1) A1 Motors account 5 200 (1) 4 Purchases account 3 700 (1) Bank account 3 700 (1) 5 Rent account 1 000 (1) Bank account 1 000 (1) 6 Petty cash/Cash 100 (1) Bank account 100 (1) [10] (f) $ $ 8 000 2 000 10 000 (1) 3 700 1 000 100 (4 800) (1) 5 200 (1)of [3] [Total: 22]

Page 5 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 3 (a) Raw materials (1) work in progress (1) finished goods/purchased finished goods (1) [3] (b) Lower of cost and net realisable value (1) [1] (c) Account debited Account credited Drawings (1) Purchases (1) [2] (d) Business entity (1) [1] (e) To check for errors and omissions in his books of account To check the errors in the bank statement To identify stale cheques To identify unpresented cheques To identify amounts not credited To calculate the correct bank balance in his cash book To verify the balance in his cash book To correct/amend his cash book Any one for (1) mark [1] (f) A copy of the customer’s account as it appears in the books of the bank (1) [1] (g) An item in the cash book not in the bank statement Unpresented cheque/uncredited deposit/book-keeper error Any one for (1) mark An item in the bank statement not in the cash book. Bank charges/bank interest/dishonoured cheque/standing order/credit transfer/direct debit/bank error/dishonoured cheque Any one for (1) mark [2] [Total: 11]

Page 6 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 4 (a) An estimate (1) of the amount which will be lost (1) when debts go bad (1) which reduces the value of trade receivables (1) Max 2 [2] (b) Samuel Provision for doubtful debts account 2015 $ 2014 $ 30 April Income statement 70 (1of) 1 May Balance b/d 450 (1) Balance c/d 380 (1) 450 450 2015 1 May Balance b/d 380 (1of) +(1) for dates [5] (c) Below/after gross profit/after trading account/(on credit side) as other income. Profit and loss section/(debit side) as an expense [1of] (d) Accruals/matching (1) Prudence (1) [2] (e) Trade receivables (1) Capital/profit (1) [2] [Total: 12]

Page 7 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 5 (a) $ Trade receivables 700 } Trade payables (400) }(1) Inventory 1 100 (1) Equipment at cost 15 700 } Provision for depreciation of equipment (4 100) } (1) Prepaid rent 250 (1) Bank 2 100 (1) Capital 15 350 (1of) [6] (b) Nzita Total trade receivables account 2014 $ 2015 $ Feb 1 Balance b/d 700 (1) Jan 31 Bank/Cash 28 900 (1) 2015 Jan 31 Sales 29 100 (1of) Balance c/d 900 29 800 29 800 2015 Feb 1 Balance b/d 900 (1of) Nzita Total trade payables account 2015 $ 2014 $ Jan 31 Bank/Cash 12 600 (1) Feb 1 Balance b/d 400 (1) Balance c/d 650 2015 Jan 31 Purchases 12 850 (1of) 13 250 13 250 2015 Feb 1 Balance b/d 650 (1of) [8]

Page 8 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 (c) Nzita Income Statement for the year ended 31 January 2015 $ $ Sales/Revenue 29 100 (1of) Inventory 1 Feb 2014 1 100 Purchases 12 850 (1of) 13 950 Inventory 31 January 2015 1 400 (1 for both) Cost of sales 12 550 Gross profit 16 550 (1of) Rent 3100 (1) + (250–150) (1) 3 200 Wages 5 200 Sundry expenses 2 650 Depreciation of equipment 1 680 (1) 12 730 Profit for the year + 1 for IAS terminology 3 820 (1of) [9] (d) Nzita Statement of Financial Position (extract) at 31 January 2015 $ Capital at 1 Feb 2014 15 350 (1of) Profit for the year 3 820 (1of) 19 170 Drawings 6 600 (1) Capital at 31 January 2015 12 570 (1of) [4]

Page 9 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 (e) 16 550/29 100 (1of) × 100 = 56.87% (1of) [2] (f) Lower selling prices Introduction of trade discount Sales promotions Higher purchases prices not passed on to customers Change in mix of goods sold Higher cost of sales Any two (1of) each [2] [Total: 31]

Page 10 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 6 (a) Capital (1) Revenue (1) Current (1) Non-current (1) Understated (1) Overstated (1) [6] (b) Error 2 (1) Error of commission (1) Error 4 (1) Error of principle (1) [4] (c) Error Debit $ Credit $ 1 Discount allowed Discount received Suspense Correction of misposting of discounts (1) 30 (1) 30 (1) 60 (1) 2 Joanie Yolanda Correction of misposting of receipt of cash (1) 85 (1) 85 (1) 3 Sales returns Suspense Correction of misposting of sales returns journal total (1) 10 (1) 10 (1) 4 Stationery Office equipment Correction of revenue expenditure treated as capital expenditure (1) 150 (1) 150 (1) [13]

Page 11 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 11 © Cambridge International Examinations 2015 (d) Leroy Suspense account 2015 $ 2015 $ Sept 30 Balance b/d 70 (1of) Sept 30 Discount allowed and received 60 (1of) Sales returns 10 (1of) 70 70 [3] (e) No effect Increase $ Decrease $ $ Draft profit 5 170 Error 1 60 (2) Error 2
(1) Error 3 10 (2) Error 4 150 (2) Corrected profit 4 950 (1)OF Marks with figures: 1 for figure, 1 for direction [8] [Total: 34]