Cambridge IGCSE Accounting 0452 — 2016 Feb/March Paper 2 · Variant 2

This document consists of 20 printed pages. DC (LK) 111775/5 © UCLES 2016 [Turn over Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 2 4 2 6 1 5 2 9 7 2 * ACCOUNTING 0452/22 Paper 2 February/March 2016 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 0452/22/F/M/16 © UCLES 2016 1 Abhinav maintains a petty cash book using the imprest system. The imprest amount of $120 is restored on the first day of each month. The petty cashier entered the transactions in the petty cash book for the first week of February 2016 in the total column of the petty cash book as shown on the opposite page. He was then taken ill and was away from the office for the rest of the month. The following transactions took place. $ February 10 Received refund from stationery supplier for overcharge on 7 February 4.00 13 Paid train fare 9.50 15 Paid Office Supply Limited, a credit supplier 29.00 21 Paid taxi fare 9.90 26 Paid window cleaner 17.00 REQUIRED (a) Complete the entries for the transactions on 4 February and 7 February in Abhinav’s petty cash book on the page opposite. Enter the transactions for 10 February to 26 February in the petty cash book. Balance the petty cash book on 29 February and bring down the balance on 1 March 2016. [10] The petty cash book is printed on the next page.

3 0452/22/F/M/16 © UCLES 2016 [Turn over Abhinav – Petty Cash Book Total received Date Details Total paid Postage and stationery Travel Cleaning expenses Ledger accounts $ 24.00 96.00 ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… 2016 Feb 1 4 7 ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. Balance b/d Bank Stamps Copy paper and cartridges …………………………………….. …………………………………….. …………………………………….. …………………………………….. …………………………………….. …………………………………….. …………………………………….. …………………………………….. …………………………………….. …………………………………….. …………………………………….. $ …………. …………. 14.00 33.00 ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. ……...….. …………. $ ………….. ………….. … ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. …………... ………….. …………. $ …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. $ …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. …………. $ ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….. ………….

4 0452/22/F/M/16 © UCLES 2016 (b) (i) State the amount which would have been received on 1 March 2016 when the petty cash was restored to the imprest amount. …[1] (ii) State the double entry for restoring to the imprest amount. debit credit … … [2] (c) Show the entries which would be made in the postage and stationery account in February 2016. It is not necessary to close the account. Abhinav Postage and stationery account Date … … Details … … $ … … Date … … Details … … $ … … [2] (d) Name the accounting principles which Abhinav ignored in each of the following. (i) Abhinav decided that the profit would increase if he changed the method of depreciation on fixtures from the straight line method to the reducing (diminishing) balance method. …[1] (ii) Abhinav decided that the retirement of the manager would adversely affect the business, so he reduced the profit for the year by $5000. …[1] (iii) Abhinav recorded a sale of goods to Wahid who had seen goods on display in the shop window and promised to return the following week with the cash. …[1] (iv) Abhinav intends to trade for several years but decided to record his motor vehicle at the possible sale value rather than the book value. …[1] [Total: 19]

5 0452/22/F/M/16 © UCLES 2016 [Turn over 2 The cash book of Aireville Limited was balanced on 31 December 2015 and showed an overdraft of $ 3420. On the same date, the bank statement showed an overdraft of $1800. A comparison of the cash book and the bank statement revealed the following. $ 1 Items appearing only on the bank statement Bank charges 190 Dishonoured cheque, PB Limited 330 2 Items appearing only in the cash book Cash sales paid into bank 28 December 2015 1560 Cheque paid to M Raja, a credit supplier 2700 3 Debit side of the cash book being undercast 1000 REQUIRED (a) Update the cash book of Aireville Limited. Bring down the updated bank balance on 1 January 2016. Aireville Limited Cash book (bank columns only) Date … … … … … … … Details … … … … … … … $ … … … … … … … Date 2016 Jan 1 … … … … … … Details Balance b/d … … … … … … $ 3420 … … … … … … [4]

6 0452/22/F/M/16 © UCLES 2016 (b) Prepare a bank reconciliation statement for Aireville Limited at 31 December 2015. Aireville Limited Bank Reconciliation Statement at 31 December 2015 … … … … … … … … $ … … … … … … … … [6] The financial year of Aireville Limited ends on 31 December. The following information is available. At 1 January 2015 $ Ordinary share capital – 600 000 shares of $0.50 each 300 000 General reserve 24 000 Retained earnings 45 000 During the year ended 31 December 2015 Issue of ordinary shares – 100 000 shares of $0.50 each 50 000 Payment of final dividend relating to the financial year ended 31 December 2014 25 000 Payment of interim dividend relating to the financial year ended 31 December 2015 15 000 At 31 December 2015 Profit for the year 49 000 Transfer to general reserve 10 000

7 0452/22/F/M/16 © UCLES 2016 [Turn over REQUIRED (c) Prepare the statement of changes in equity for the year ended 31 December 2015. Aireville Limited Statement of Changes in Equity for the year ended 31 December 2015 Ordinary share capital $ General reserve $ Retained earnings $ Total $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [7] The profits of Aireville Limited have decreased over the last few years and the directors have decided on a policy of modernisation. The directors considered raising the extra funds required from the issue of debentures but decided to issue additional ordinary shares instead. REQUIRED (d) Suggest two disadvantages to the ordinary shareholders of issuing debentures instead of ordinary shares. 1 … … 2 … …[2] [Total: 19]

8 0452/22/F/M/16 © UCLES 2016 3 Daksha is a trader. Her financial year ends on 31 January. She does not maintain a full set of accounting records but was able to provide the following information at 1 February 2015. $ Premises at cost 90 000 Fixtures and fittings at cost 22 000 Trade receivables 2 750 Trade payables 2 160 Other payables 330 Inventory 3 000 Bank 1 940 debit Long-term loan 20 000 Capital 97 200 During the year ended 31 January 2016: Capital introduced amounted to $12 000 Drawings amounted to $4200 Fixtures and fittings costing $5200 were purchased A motor vehicle costing $8000 was purchased A further long-term loan of $10 000 was obtained In addition to providing this information, Daksha compared her assets and liabilities on 31 January 2016 with those on 1 February 2015 and found: $ Trade receivables had increased by 1150 Trade payables had decreased by 210 Other payables amounted to 160 Other receivables amounted to 327 Bank balance had reduced by 2300 Petty cash amounted to 100 Inventory had increased by 10%. On 31 January 2016 it was decided to: 1 Create a provision for doubtful debts of 3% of trade receivables. 2 Provide for depreciation of fixtures and fittings and the motor vehicle at 20% per annum (based on cost of assets held at the end of the financial year). REQUIRED (a) Prepare a statement of affairs at 31 January 2016 showing the total capital at that date.

9 0452/22/F/M/16 © UCLES 2016 [Turn over Daksha Statement of Affairs at 31 January 2016 … … … … … … … … … … … … … … … … … … … … … … … … $ … … … … … … … … … … … … … … … … … … … … … … … … $ … … … … … … … … … … … … … … … … … … … … … … … … $ … … … … … … … … … … … … … … … … … … … … … … … … [15]

10 0452/22/F/M/16 © UCLES 2016 (b) Prepare the capital account of Daksha for the year ended 31 January 2016 to show the profit or loss for the year. Daksha Capital account Date … … … … … … … Details … … … … … … … $ … … … … … … … Date … … … … … … … Details … … … … … … … $ … … … … … … … [5] [Total: 20]

11 0452/22/F/M/16 © UCLES 2016 [Turn over Question 4 is on the next page.

12 0452/22/F/M/16 © UCLES 2016 4 The Lodi Sports Club was formed some years ago. The club has 150 members. The annual subscription is $100. The club rents a sports centre at a monthly rent of $300. A few years ago the club took out a bank loan of $5000 at 4% per annum interest. The amounts received and paid during the year ended 31 January 2016 were as follows. $ Subscriptions: for the year ended 31 January 2015 (2 members) 200 for the year ended 31 January 2016 (140 members) 14 000 for the year ending 31 January 2017 (5 members) 500 Rent for the year ended 31 January 2016 3 600 Rent for the year ending 31 January 2017 300 General expenses 1 454 Insurance 1 550 Purchase of new sports equipment 7 200 Proceeds of sale of old sports equipment (book value $400) 275 Bank interest and repayment of one quarter of the loan 1 400 REQUIRED (a) Prepare the receipts and payments account for the year ended 31 January 2016. Balance the account and bring down the balance on 1 February 2016. Lodi Sports Club Receipts and Payments Account for the year ended 31 January 2016 Date … … … … … … … … … … … … Details … … … … … … … … … … … … $ … … … … … … … … … … … … Date 2015 Feb 1 … … … … … … … … … … … Details Balance b/d … … … … … … … … … … … $ 210 … … … … … … … … … … … [9]

13 0452/22/F/M/16 © UCLES 2016 [Turn over (b) Calculate the total subscriptions which will appear in the income and expenditure account for the year ended 31 January 2016. … …[2] (c) Complete the following table to show the entries in the statement of financial position on 31 January 2016. Statement of financial position section amount ($) Bank loan Interest on bank loan Rent [6] [Total: 17]

14 0452/22/F/M/16 © UCLES 2016 5 Mohan is a trader. His financial year ends on 31 December. Mohan depreciates his motor vehicles at 20% per annum on cost, calculated from the date of purchase. The following information was available on 1 January 2014. Cost Accumulated depreciation $ $ Motor vehicle A 12 000 7 200 Motor vehicle B 13 000 3 900 On 1 July 2014 Motor vehicle C was purchased for $15 000, by cheque. REQUIRED (a) Prepare the following accounts for each of the two years ended 31 December 2014 and 31 December 2015. Balance the accounts and bring down the balances on 1 January 2015 and 1 January 2016. Mohan Motor vehicles account Date 2014 Jan 1 … … … … … … … … Details Balance b/d A – 12 000 B – 13 000 … … … … … … … … $ 25 000 … … … … … … … … Date … … … … … … … … … … Details … … … … … … … … … … $ … … … … … … … … … …

15 0452/22/F/M/16 © UCLES 2016 [Turn over Provision for depreciation of motor vehicles account Date … … … … … … … … … … … … … … … … … … … Details … … … … … … … … … … … … … … … … … … … $ … … … … … … … … … … … … … … … … … … … Date 2014 Jan 1 … … … … … … … … … … … … … … … … … Details Balance b/d A – 7200 B – 3900 … … … … … … … … … … … … … … … … … $ 11 100 … … … … … … … … … … … … … … … … … [11]

16 0452/22/F/M/16 © UCLES 2016 (b) Prepare an extract from the statement of financial position on 31 December 2015 to show the entries for motor vehicles. Mohan Extract from Statement of Financial Position at 31 December 2015 Non-current assets … … …[2] On 1 January 2016 Motor vehicle B was sold for $2900, cash. REQUIRED (c) Calculate the depreciation on Motor vehicle B up to the date of disposal. … … …[2] (d) Complete the following table to name the ledger accounts to be debited and credited to record the disposal of the motor vehicle. account debited account credited transferring the original cost of the motor vehicle from the asset account transferring the accumulated depreciation on the motor vehicle from the provision account recording the proceeds of sale of the motor vehicle [6] [Total: 21]

17 0452/22/F/M/16 © UCLES 2016 [Turn over Question 6 is on the next page.

18 0452/22/F/M/16 © UCLES 2016 6 Annie is a wholesaler of ladies’ clothing, selling to retail stores on credit terms. She provided the following information at the end of her second year of trading on 31 December 2015. $ Revenue 40 000 Cost of sales 30 500 Profit for the year 3 800 Inventory 1 January 2015 3 600 Inventory 31 December 2015 4 800 Capital employed 1 January 2015 92 000 Trade receivables at 31 December 2015 4 350 Annie decided to compare her results with those of her two brothers, Mark and Tony, who formed a partnership six years ago to operate a wholesale food business. REQUIRED (a) Complete the table on the opposite page to show the ratios for Annie’s business for the year ended 31 December 2015. You may use the space below for your workings. Workings

19 0452/22/F/M/16 © UCLES 2016 [Turn over Ratio Annie Mark and Tony Percentage of gross profit to revenue Percentage of profit for the year to revenue Rate of inventory turnover (to two decimal places) Percentage of profit for the year to opening capital employed (ROCE) (to two decimal places) Trade receivables collection period (rounded up to the next whole day) 23.75% 9.50% … times … % … days 16.50% 11.35% 20.15 times 10.35% 34 days [6] (b) Explain one reason for the difference between the percentages of gross profit to revenue of Annie and her brothers. … … …[2] (c) Comment on the possible effects of Annie increasing the selling price of her goods. … … …[2] (d) State whose business had better control over its expenses. Give a reason for your answer. Business … Reason … …[2] (e) Explain one reason for the difference in the rate of inventory turnover. … … …[2]

20 0452/22/F/M/16 © UCLES 2016 (f) Suggest one way in which Annie could increase her rate of inventory turnover. … …[1] (g) Suggest one way in which Annie could improve her return on capital employed (ROCE). … …[1] (h) State whose business had the better collection period for trade receivables. Give a reason for your answer. Business … Reason … …[2] (i) Suggest two factors, excluding those provided in the question, which should be considered when comparing Annie’s results with those of her brothers. 1 … 2 …[2] Annie has a bank overdraft but believes that her current ratio could be improved. She is considering four courses of action. REQUIRED (j) Complete the following table by placing a tick (✓) in the correct column to show how each of the courses of action would affect Annie’s current ratio. Increase Decrease No effect Create a provision for doubtful debts Delay payments to credit suppliers Obtain a long-term loan Obtain permission from the bank to increase the overdraft [4] [Total: 24] 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.

® IGCSE is the registered trademark of Cambridge International Examinations. CAMBRIDGE INTERNATIONAL EXAMINATIONS Cambridge International General Certificate of Secondary Education MARK SCHEME for the March 2016 series 0452 ACCOUNTING 0452/22 Paper 22, 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 March 2016 series for most Cambridge IGCSE® and Cambridge International A and AS Level components.

Page 2 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 1 (a) Abhinav – Petty Cash Book Total received Date Details Total paid Postage and stationery Travel Cleaning Ledger accounts $ 2016 $ $ $ $ $ 24.00 Feb 1 Balance b/d 96.00 Bank 4 Stamps 14.00 14.00 } (1) 7 Copy paper and cartridges 33 00 33.00 } 4.00 (1) 10 Refund from stationery 13 Train fare 9.50 9.50 (1) 15 Office Supply Ltd 29.00 29.00 (1) 21 Taxi fare 9.90 9.90 (1) 26 Window cleaner 17.00 17.00 (1) 112.40 47.00 19.40 17.00 29.00 29 Balance c/d 11.60 124.00 124.00 11.60 (1) Mar 1 Balance b/d (1) Dates (1) OF Totalling analysis columns (1) OF Totalling total columns [10]

Page 3 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 (b) (i) $108.40 (1)OF [1] (ii) debit credit Petty cash (1) Cash/bank/cash book (1) [2] (c) Abhinav Postage and stationery account $ $ 2016 2016 Feb 29 Petty cash 47 (1) Feb 29 Petty cash 4 (1) [2] (d) (i) Consistency (1) [1] (ii) Money measurement (1) [1] (iii) Realisation (1) [1] (iv) Going concern (1) [1] [Total: 19] 2 (a) Aireville Limited Cash Book (bank columns only) $ $ 2016 2016 Jan 1 Error correction 1 000 (1) Jan 1 Balance b/d 3 420 Balance c/d 2 940 Bank charges 190 (1) PB Limited (Dis. Chq.) 330 (1) 3 940 3 940 2016 Jan 1 Balance b/d 2 940 (1of) [4]

Page 4 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 (b) Aireville Limited Bank Reconciliation Statement at 31 December 2015 $ Balance on bank statement (1 800) (1) Amounts not yet credited – cash sales (1) 1 560) (1) (240) Cheques not yet presented – M Raja (1) 2 700) (1) Balance in cash book (2 940) (1of) Alternative presentation Aireville Limited Bank Reconciliation Statement at 31 December 2015 $ Balance in cash book (2 940) (1of) Cheques not yet presented – M Raja (1) 2 700) (1) (240) Amounts not yet credited – Cash sales (1) 1 560) (1) Balance on bank statement (1 800) (1) [6] (c) Aireville Limited Statement of Changes in Equity for the year ended 31 December 2015 Ordinary share capital $ General reserve $ Retained earnings $ Total $ On 1 January 2015 300 000 24 000 45 000 369 000 (1) Share issue 50 000 50 000 (1) Profit for the year 49 000 49 000 (1) Dividend paid (for 2014) (25 000) (25 000) (1) Dividend paid (for 2015) (15 000) (15 000) (1) Transfer to general reserve 10 000 (10 000) (1) On 31 December 2015 350 000 34 000 44 000 428 000 (1of) [7] (d) Prior claim on the profits of the company Interest must be paid irrespective of whether there is a profit Prior claim on the assets of the company in a winding-up Funds must be available when repayment is due Or other relevant point Any 2 points (1) each [2] [Total: 19]

Page 5 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 3 (a) Daksha Statement of Affairs at 31 January 2016 Assets $ $ $ Non-current assets Cost Depreciation to date Book value Premises 90 000 90 000 (1) Fixtures and fittings 27 200 5 440 (1) 21 760 (1of) Motor vehicle 8 000 1 600 (1) 6 400 (1of) 125 200 7 040 118 160 Current assets Inventory 3 300 (1) Trade receivables 3 900 Less Provision for doubtful debts 117 (1) 3 783 (1) Other receivables 327 (1) Petty cash 100 (1) 7 510 Total assets 125 670 Capital and liabilities Capital Balance 93 200 (1of) Non-current liabilities Loan 30 000 (1) Current liabilities Trade payables 1 950 (1) Other payables 160 (1) Bank overdraft 360 (1) 2 470 Total liabilities 125 670 [15] (b) Daksha Capital account $ $ 2016 2015 Jan 31 Drawings 4 200 (1) Feb 1 Balance 97 200 (1) Loss for year 11 800 (1of) 2016 Balance c/d 93 200 (1of) Jan 31 Bank/Cash 12 000 (1) 109 200 109 200 2016 Feb 1 Balance b/d 93 200 [5] [Total: 20]

Page 6 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 4 (a) Lodi Sports Club Receipts and Payments Account for the year ended 31 January 2016 $ $ 2016 2015 Jan 31 Subscriptions 14 700 (1) Feb 1 Balance b/d 210 Sale of equipment 275 (1) 2016 Balance c/d 739 Jan 31 Rent 3 900 (1) General expenses 1 454 (1) Insurance 1 550 (1) Equipment 7 200 (1) Bank loan 1 250 (1) Bank interest 150 (1) 15 714 15 714 2016 1 Feb Balance b/d 739 (1of) [9] (b) 150 (1) × $100 (1) = $15 000 OR ($14 700 – ($200 + $500)(1) + $1000 (1)) = $15 000 OR $14 000 (1) + $1000 (1) = $15 000 [2] (c) Statement of financial position section amount ($) Bank loan Non-current liabilities (1) 3750 (1) Interest on bank loan Current liabilities (1) 50 (1) Rent Current assets (1) 300 (1) [6] [Total: 17]

Page 7 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 5 (a) Mohan Motor vehicles account $ $ 2014 2014 Jan 1 Balance b/d Dec 31 Balance c/d 40 000 A – 12 000 B – 13 000 25 000 July 1 Bank C 15 000 (1) 40 000 40 000 2015 2015 Jan 1 Balance b/d Dec 31 Balance c/d 40 000 A – 12 000 B – 13 000 C – 15 000 40 000 (1) 40 000 40 000 2016 Jan 1 Balance b/d A – 12 000 B – 13 000 C – 15 000 40 000 (1) Provision for depreciation of motor vehicles account $ $ 2014 2014 Dec 31 Balance c/d 17 600 Jan 1 Balance b/d A – 7 200 B – 3 900 11 100 Dec 31 Income statement A – 2 400 (1) B – 2 600 (1) C – 1 500 (1) 6 500 17 600 17 600 2015 2015 Dec 31 Balance c/d 25 600 Jan 1 Balance b/d A – 9 600 B – 6 500 C – 1 500 17 600 (1of) Dec 31 Income statement A – 2 400} B – 2 600}(1) C – 3 000 (1) 8 000 25 600 25 600 2016 Jan 1 Balance b/d A –12 000 B – 9 100 C – 4 500 25 600 (1of) + (1) dates [11]

Page 8 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 (b) Mohan Extract from Statement of Financial Position at 31 December 2015 Non-current assets Cost $ Accumulated depreciation $ Book value $ Motor vehicles 40 000 of 25 600 (1of) 14 400 (1of) (c) 3900 (1) + 2600 of} 2600 of} (1) 9100 of [2] (d) account debited account credited transferring the original cost of the motor vehicle from the asset account Disposal (1) Motor vehicles (1) transferring the accumulated depreciation on the motor vehicle from the provision account Provision for depreciation of motor vehicles (1) Disposal (1) recording the proceeds of sale of the motor vehicle Cash (1) Disposal (1) [6] [Total: 21]

Page 9 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 6 (a) Ratio Annie Rate of inventory turnover to two decimal places 7.26 times (2) Percentage of profit for the year to capital employed (ROCE) (to two decimal places) 4.13% (2) Trade receivables collection period (rounded up to the next whole day) 40 days (2) Calculations to show the breakdown of marks: Rate of inventory turnover 30 500 (3 600 4 800) 2 + ÷ (1) whole formula = 7.26 times (1) Percentage of profit for the year to capital employed 3 800 100 4.13% 92 000 1 × = (1) (1) Trade receivables collection period 4 350 365 40 000 1 × (1) whole formula = 39.69 = 40 days (1) [6] (b) Different type of goods (1) EITHER Food has a lower gross profit margin than clothing (1) OR The food store is cutting prices to sell more goods (1) [2] (c) Total revenue from sales may increase so profit may increase (1) Customers may look for cheaper suppliers, so profits may actually fall (1) [2] (d) Mark and Tony (1) Annie’s expenses/revenue is 14.25%: Mark and Tony’s ratio is 5.15% (1) [2] (e) Different type of goods (1) EITHER Food sells more quickly than clothing (1) OR Food is in greater demand than clothing OR Food store will probably have a lower value of inventory OR Food is cheaper than clothing (1) [2] (f) EITHER Reduce inventory levels (1) OR Increase sales activity (1) [1] (g) Increase profit for the year/increase efficiency/use resources more effectively Reduce long term liabilities Any 1 (1) [1]

Page 10 Mark Scheme Syllabus Paper Cambridge IGCSE – March 2016 0452 22 © Cambridge International Examinations 2016 (h) Mark and Tony (1) OF They take an average of 34 days to collect debts whereas Annie takes an average of 40 days (1) OF [2] (i) The businesses should be of approximately the same size/same capital The results are for one year only and will not show trends The financial year may end at different times of the trading cycle The businesses may operate different accounting policies The businesses may have different types of expenses The statements do not show non-monetary factors It may not be possible to obtain all the information needed to make comparisons Or other valid points Any 2 (1) each Not the following which are given in the question Type of goods Type of business (sole trader/partnership) Life of business [2] (j) Increase Decrease No effect Create a provision for doubtful debts
(1) Delay payments to credit suppliers
(1) Obtain a long term loan
(1) Obtain permission from the bank to increase the overdraft
(1) [4] [Total: 24]