Cambridge IGCSE Accounting 0452 — 2015 Oct/Nov Paper 2 · Variant 2

This document consists of 18 printed pages and 2 blank pages. IB15 11_0452_22/FP © UCLES 2015 [Turn over *7240471273* Cambridge International Examinations Cambridge International General Certificate of Secondary Education ACCOUNTING 0452/22 Paper 2 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 0452/22/O/N/15 1 Shahid Ayub is a trader who maintains a full set of accounting records including a three column cash book. On 1 August 2015 Shahid Ayub had the following balances in his cash book: $ Cash 50 Bank overdraft 7150 Shahid Ayub’s transactions for August 2015 included the following. August 9 A cheque received in July for $362 from El Nil Supply Company was dishonoured by the bank 18 Paid $54 by cheque for fuel of private motor vehicle 24 Received a cheque from Mariam Soliman to settle her debt of $520, less 2½% cash discount 30 Cash sales, $3224 31 Paid all the remaining cash into the bank except $100 REQUIRED (a) Complete Shahid Ayub’s cash book on the page opposite. Balance the cash book and bring down the balances on 1 September 2015. [9]

3 © UCLES 2015 0452/22/O/N/15 [Turn over Shahid Ayub - Cash Book Bank $ ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. Cash $ ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. Discount received $ …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. Details ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… Date ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. Bank $ ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. Cash $ ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. Discount allowed $ …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. Details ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… ……………………… Date ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. ………..

4 © UCLES 2015 0452/22/O/N/15 The following incomplete statement of account was available on 31 August 2015. STATEMENT OF ACCOUNT Shahid Ayub 44 Narrow Lane, Anytown Mariam Soliman The Avenue Weston 31 August 2015 Date Reference Debit $ Credit $ Balance $ 2015 August 1 9 13 24 Balance due Goods Returns Payment Discount 340 24 507 13 520 860 ? ? ? REQUIRED (b) (i) Calculate the balance due on 31 August. [1] (ii) State the name of the trader who owes the balance at 31 August. [1] (c) State the business document and the book of prime (original) entry Shahid Ayub would use to record the following transactions which appear on the statement of account. Transaction Document Book of prime (original) entry August 9 Goods 13 Returns 24 Payment … … … … … … [6]

5 © UCLES 2015 0452/22/O/N/15 [Turn over (d) Prepare the account of Shahid Ayub as it would appear in the ledger of Mariam Soliman. Balance the account and bring down the balance on 1 September 2015. Mariam Soliman Shahid Ayub account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. [6] [Total: 23]

6 © UCLES 2015 0452/22/O/N/15 2 Grace Zindi runs a secretarial agency. Her financial year ends on 31 July. She provided the following information on 31 July 2015. $ Capital 1 August 2014 85 000 Cash drawings 15 500 Fees from clients 28 500 Wages 21 600 Rates and insurance 3 900 General expenses 990 Heat and light 710 Commission receivable 7 600 Motor vehicles at cost 1 August 2014 12 500 Provision for depreciation of motor vehicles 1 August 2014 4 500 Office equipment at valuation 1 August 2014 11 400 Additional information 1 At 31 July 2015 Insurance prepaid amounted to $300 Commission receivable of $250 was outstanding Fees from clients of $3400 was outstanding. 2 Grace Zindi lives in a flat above the business premises. One quarter of the rates and insurance relate to the flat. 3 On 31 July 2015 Grace Zindi decided to create a provision for doubtful debts of 1% of the amount owed by clients. 4 The motor vehicles are being depreciated by 20% per annum on the reducing (diminishing) balance method. 5 The office equipment was valued at $14 500 on 31 July 2015. Additional office equipment costing $6900 was purchased during the year. No office equipment was disposed of during the year.

7 © UCLES 2015 0452/22/O/N/15 [Turn over REQUIRED (a) Prepare Grace Zindi’s income statement for the year ended 31 July 2015. Grace Zindi Income Statement for the year ended 31 July 2015 $ $ ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. ………………………………………………………… …………….. …………….. [16]

8 © UCLES 2015 0452/22/O/N/15 (b) Prepare the capital account for Grace Zindi for the year ended 31 July 2015. Balance the account and bring down the balance on 1 August 2015. Grace Zindi Capital account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. [6] (c) State the meaning of the accruals (matching) principle. Give one example of how this principle was applied in the preparation of the income statement in (a). Meaning Example [2] (d) State the meaning of the business entity principle. Give one example of how this principle was applied in the preparation of the income statement in (a). Meaning Example [2] [Total: 26]

9 © UCLES 2015 0452/22/O/N/15 [Turn over 3 (a) State two causes of depreciation of non-current assets. 1 2 [2] (b) Explain the straight line method of depreciation. [2] (c) Explain the reducing (diminishing) balance method of depreciation. [2] (d) Explain how charging depreciation is an example of the application of the principle of prudence. [2] (e) Name one other accounting principle which is applied when charging depreciation. [1]

10 © UCLES 2015 0452/22/O/N/15 On 1 October 2013 Natasha Salim started a business altering and mending clothes. On that date she purchased a machine, $4000, paying by cheque. On 1 January 2014 she purchased another machine, $6000, on credit from ABC Machines. She decided to depreciate the machines using the reducing (diminishing) balance method at 20% per annum. A whole year’s depreciation was to be charged in the year of purchase, but no depreciation in the year of sale. On 1 February 2015 Natasha Salim decided that the machine purchased on 1 October 2013 was no longer required. She sold it for $2100, cash. REQUIRED (f) Prepare the following accounts in the ledger of Natasha Salim for each of the two years ended 30 September 2014 and 30 September 2015. Balance the accounts and bring down the balances on 1 October 2014 and 1 October 2015. Natasha Salim Machinery account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. ….…. ………..……..……… ….…. ….…. ………..……..……… ….…. ….…. ………..……..……… ….….

11 © UCLES 2015 0452/22/O/N/15 [Turn over Provision for depreciation of machinery account Date Details $ Date Details $ ….…. ……………..…..………. …..…. ……… ……………………… …..….. …….. ……………………… …..…. ….….. ………..…..………… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… …..…. …..…. ………..……..……… …..…. ….…. ……………………… ……... …..…. ………..……..……… …..…. ….…. ……………….……… …..…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. ….…. ………..……..……… ….…. …..…. ………..……..……… …..…. …..… ………..……..……… …..…. …..…. ………..……..……… …..…. …..… ………..……..……… …..…. …..…. ………..……..……… …..…. [12] (g) Calculate the profit or loss on the disposal of the machine on 1 February 2015. [4] [Total: 25]

12 © UCLES 2015 0452/22/O/N/15 4 Moses and Tobias Iyambo are in partnership. Their financial year ends on 31 October. They share profits and losses equally. A capital and a current account are maintained for each partner. Despite having little accounting knowledge, Tobias prepared the following statement of financial position on 31 October 2015. Statement of Financial Position 31 October 2015 $ $ Premises at cost 80 000 Fixtures and equipment at book value 1 September 2014 24 800 Inventory 6 950 Trade receivables 5 200 Bank 1 500 Drawings – M Iyambo 8 000 T Iyambo 5 500 13 500 131 950 Trade payables 8 520 Provision for doubtful debts 130 Capital account 1 September 2014 – M Iyambo 65 000 T Iyambo 35 000 100 000 Current account 1 September 2014 – M Iyambo Debit 2 000 T Iyambo Credit 3 500 5 500 114 150 Balance 17 800 131 950 The following matters were then discovered. 1 The income statement included adjustments for the following which should have been included in the statement of financial position: $ Depreciation for the year on fixtures and equipment 3100 Expenses accrued 1130 2 Bank charges, $70, had been correctly recorded in the income statement but had not been entered in the cash book. 3 Cash in hand, $500, had not been included in the statement of financial position. 4 Profit for the year was $18 000. REQUIRED (a) Prepare a corrected statement of financial position at 31 October 2015 showing the different types of assets and liabilities, and the capital and current accounts of each partner. The calculation of the current account balances may be shown within the statement of financial position or as separate calculations in the space provided.

13 © UCLES 2015 0452/22/O/N/15 [Turn over Moses and Tobias Corrected Statement of Financial Position at 31 October 2015 $ $ $ ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. …………….. ………………………………………………………… …………….. …………….. ……………..

14 © UCLES 2015 0452/22/O/N/15 You may use the space below for your workings. [16] (b) State two items which Moses and Tobias Iyambo could have included in their partnership agreement in addition to profit-sharing ratios. 1 2 [2] (c) State two ways in which Moses and Tobias Iyambo could obtain long-term funds to finance expansion of the business. 1 2 [2] (d) Complete the following table by placing a tick (
) in the correct column to show how each of the following transactions would affect the working capital of Moses and Tobias Iyambo. Increase Decrease No effect Selling surplus equipment Delay paying credit suppliers Paying surplus cash into bank Writing off a bad debt [4] [Total: 24]

15 © UCLES 2015 0452/22/O/N/15 [Turn over 5 Kelbrook Limited provided the following information. 1 The issued share capital consists of 180 000 ordinary shares of $0.50 each. 2 On 1 October 2014: General reserve $4000 Retained earnings $5500 3 The profit for the year ended 30 September 2015 was $9000. $2000 of this was transferred to the general reserve. An interim dividend of $4500 was paid during the year. No dividends were proposed at the end of the year. REQUIRED (a) Prepare the equity and reserves section of the statement of financial position at 30 September 2015. Kelbrook Limited Extract from Statement of Financial Position at 30 September 2015 [5] Question 5(b) is on the next page.

16 © UCLES 2015 0452/22/O/N/15 Kelbrook Limited provided the following information at 30 September 2015. $ Non-current assets at book value 102 200 Bank overdraft 6 100 Inventory 5 100 Trade receivables 8 500 Trade payables 4 300 Other payables 1 400 REQUIRED (b) Complete the following table. Current ratio Workings Answer to two decimal places Quick ratio Workings Answer to two decimal places Return on capital employed (ROCE) Workings Answer to two decimal places [6]

17 © UCLES 2015 0452/22/O/N/15 [Turn over The ratios calculated at 30 September 2014 were: Current ratio 2.51 : 1 Quick ratio 1.57 : 1 Return on capital employed (ROCE) 12.55% REQUIRED (c) Comment on the change in the current ratio. [2] (d) Suggest one reason for the change in the quick ratio. [1] (e) Suggest two ways to improve the return on capital employed (ROCE). 1 2 [2] Question 5(f) is on the next page.

18 © UCLES 2015 0452/22/O/N/15 Kelbrook Limited provided the following information for the year ended 30 September 2015. $ Credit sales 45 000 Cash sales 5 000 Credit customers are allowed 60 days credit. REQUIRED (f) (i) Calculate the collection period for trade receivables. Round up your answer to the next whole day. [2] (ii) Comment on the collection period for trade receivables. [2] Kelbrook Limited is allowed 30 days credit by their credit suppliers. For the year ended 30 September 2015 the payment period was 52 days. REQUIRED (g) Comment on the payment period for trade payables. [2] [Total: 22]

19 © UCLES 2015 0452/22/O/N/15 BLANK 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 0452/22/O/N/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 October/November 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 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 22 © Cambridge International Examinations 2015 1 (a) Shahid Ayub Cash Book Date Details Discount Allowed Cash Bank Date Details Discount Received Cash Bank 2015 $ $ $ 2015 $ $ $ Aug 1 Balance b/d (1) 50 Aug 1 Balance b/d 7150 24 Mariam Soliman (1) 13 507 9 El Nil Supply Company 30 Sales (1) 3224 (dis cheque) (1) 362 31 Cash c (1)OF 3174 18 Drawings (1) 54 Balance c/d 3885 31 Bank c (1) 3174 Balance c/d 100 13 3274 7566 3274 7566 2015 Balance b/d 2015 Sept 1 Sept 1 Balance b/d 100 (1) 3885 (1)OF + (1) dates [9]

Page 3 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 (b) (i) $316 (1) (ii) Mariam Soliman (1) [2] (c) Transaction Document Book of prime (original) entry August 9 Goods 13 Returns 24 Payment Sales invoice (1) Credit note (1) Cheque (OR Paying in book) (1) Sales Journal (1) Sales Returns Journal (1) Cash book (1) [6] (d) Mariam Soliman Shahid Ayub Account $ $ 2015 2015 Aug 13 Returns 24 (1) Aug 1 Balance b/d 520 24 Bank/Cash 507 (1) 9 Purchases 340 (1) Discount 13 (1) 31 Balance c/d 316 860 860 2015 Sept 1 Balance b/d 316 (1)O/F Three column running balance presentation acceptable +(1) for dates [6] [Total: 23]

Page 4 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 2 (a) Grace Zindi Income Statement for the year ended 31 July 2015 $ $ Income from Clients (28 500 (1) + 3400 (1)) 31 900 Commission receivable (7600 (1) + 250 (1)) 7 850 39 750 Wages 21 600 (1) Rates and Insurance ((3900 (1) – 300 (1)) × ¾ (1)) 2 700 General Expenses 990 (1) Heat and Light 710 (1) Provision for Doubtful Debts (1% × 3400) 34 (1) Depreciation motor vehicles (12 500 – 4500 (1) × 20% (1)) 1 600 Depreciation office equipment (11 400 + 6900 (1) – 14 500 (1)) 3 800 31 434 Profit for the year 8 316 (1)OF [16] (b) Grace Zindi Capital Account $ $ 2015 2014 31 July Cash/Drawings 15 500 (1) 1 Aug Balance b/d 85 000 (1) Rates & Insurance 2015 Drawings 900 (1) 31 July Profit 8 316 (1)OF Balance c/d 76 916 93 316 93 316 2015 1 Aug Balance b/d 76 916 (1)OF +(1) For dates Three column running balance presentation acceptable [6] (c) Revenue for the year is matched against the costs of the same period (1) Example Either Insurance prepaid at year-end was deducted Or Commission receivable outstanding at year-end was added Or Amount owing from clients at year-end was added (1) [2] (d) The business is treated as being separate from the owner (1) Example The proportion of rates and insurance relating to the owner’s flat was excluded from the business expenses (1) [2] [Total: 26]

Page 5 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 3 (a) Physical deterioration Economic reasons Passage of time Depletion Any 2 reasons (1) each [2] (b) The depreciation is calculated on the net cost price (1) and the same amount is written off each year (1) [2] (c) The same percentage is written off each year (1) but it is calculated on the net book value of the asset (1) [2] (d) Ensures that non-current assets are shown at more realistic values (1) Ensures that the profit for the year is not overstated (1) [2] (e) Accruals (matching) (1) [1]

Page 6 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 (f) (i) Natasha Salim Machinery Account $ $ 2013 2014 Oct 1 Bank 4 000 (1) Sept 30 Balance c/d 10 000 2014 Jan 1 ABC Machines 6 000 (1) 10 000 10 000 2014 2015 Oct 1 Balance b/d 10 000 (1)OF Feb 1 Disposal 4 000 (1) Sept 30 Balance c/d 6 000 10 000 10 000 2015 Oct 1 Balance b/d 6 000 (1)OF (ii) Provisions for depreciation of machinery account 2014 $ 2014 $ Sept 30 Balance c/d 2 000 Sept 30 Income Statement 800(1) + 1200 (1) 2 000 2 000 2 000 2015 2014 Feb 1 Disposal 800 (1) Oct 1 Balance b/d 2 000 (1)OF Sept 30 Balance c/d 2 160 2015 Sept 30 Income Statement 960 (1) 2 960 2 960 2015 Oct 1 Balance b/d 2 160 (1)OF (2)CF Three column running balance presentation acceptable [12] (g) $ Proceeds of Sale 2 100 Provision for depreciation 800 (1)OF 2 900 Less Cost Price 4 000 (1) Profit/Loss (1) on disposal 1 100 (1)OF Accept alternative formats [4] [Total: 25]

Page 7 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 4 (a) Moses and Tobias Lyambo Corrected Statement of Financial Position at 31 October 2015 $ $ $ Assets Non-current assets Premises at cost 80 000 Fixtures and Equipment at book value (24 80 – 3100) 21 700 (1) 101 700 (1) Current Assets Inventory 6 950 Trade Receivable 5 200 Provision for doubtful debts 130 (1) 5 070 Bank (1500 – 70) 1 430 (1) Cash 500 (1) 13 950 (1)OF Total assets 115 650 Capital and liabilities M lyambo T lyambo Total Capital Accounts 65 000 35 000 100 000 (1) Current Accounts Balance (2 000) 3 500 (1) Share of Profit 9 000 9 000 (1) 7 000 12 500 Drawings 8 000 5 500 (1) 1 000 (1) 7 000 (1) 6 000 (1)OF 106 000 (1)OF Current liabilities Trade Payables 8 520 Other Payables 1 130 (1) 9 650 (1) Total Liabilities 115 650 Accept current account calculations outside statement [16] (b) Introduce more capital Obtain long-term loan Mortgage premises Or other suitable way Any two ways (1) each [2]

Page 8 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 (c) Introduce more capital Obtain long-term loan Mortgage premises Or other suitable way Any two ways (1) each [2] (d) Increase Decrease No effect Sale of surplus equipment
(1) Delay payment to credit suppliers
(1) Paying surplus cash into bank
(1) Writing off a bad debt
(1) [4] [Total: 24]

Page 9 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 5 (a) Kelbrook Limited Extract from Statement of Financial Position at 30 September 2015 $ Equity and Reserves Ordinary Share Capital 90 000 (1) General Reserve (4000 (1) + 2000 (1) 6 000 Retained Earnings (5500 (1) + 2500 (1)) 8 000 104 000 [5] (b) Current ratio Workings (5100 + 8500) : (6100 + 4300 + 1400) 13 600 : 11 800 (1) Answer to two decimal places 1.15 : 1 (1) Quick ratio Workings 8500 : (6100 + 4300 + 1400) 8500 : 11 800 (1) Answer to two decimal places 0.72 : 1 (1) Return on capital employed (ROCE) Workings 9000 } × 100 90 000 +6000 + 8000} (1) 1 OR 9000 } ×100 102 200 +13 600 – 11 800} (1) 1 Answer to two decimal places 8.65% (1) [6]

Page 10 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2015 0452 22 © Cambridge International Examinations 2015 (c) Ratio has fallen Current assets only just cover the current liabilities May have problems in meeting debts when they fall due Is below the generally-accepted “benchmark” Or other suitable comments based on answer to (b) Any 2 points (1) each [2] (d) Change from positive bank balance to overdraft/increase in overdraft/reduction in bank balance Increased expenditure on inventory/increase in inventory Purchase of non-current assets Repayment of long-term loan Increase in current liabilities Decrease in trade receivables Any 1 reason (1) [1] (e) Increase the profit Reduce the capital employed Any 2 reasons (1) each [2] (f) (i) 1 365 45000 8500 × (1) = 69 days (1) [2] (ii) On average credit customers are taking 9 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)(i) Any 2 points (1) each [2] (g) On average are taking 22 days more than is allowed to pay credit suppliers This may be caused by the credit customers taking too long to pay May result in further supplies being refused Or other suitable points Any 2 points (1) each [2] [Total: 22]