Cambridge IGCSE Accounting 0452 — 2016 Oct/Nov Paper 1 · Variant 1

This document consists of 19 printed pages and 1 blank page. DC (NH) 114525/4 © UCLES 2016 [Turn over * 7 1 4 4 2 9 4 9 5 2 * ACCOUNTING 0452/11 Paper 1 October/November 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. Cambridge International Examinations Cambridge International General Certificate of Secondary Education

2 0452/11/O/N/16 © UCLES 2016 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) Amber sells goods on credit to Bashir. Which statement is correct about a credit note? A It is sent by Amber when Bashir buys goods. B It is sent by Amber when Bashir returns goods. C It is sent by Bashir when he buys goods. D It is sent by Bashir when he returns goods. [1] (b) Antony decided to write off $300 owed by Mariam. He debited Mariam’s account and credited the provision for doubtful debts account, both with $300. Which entries are needed to correct the error? Debit entry Credit entry A Bad debts $300 Mariam $300 B Bad debts $300 Provision for doubtful debts $300 Mariam $600 C Provision for doubtful debts $300 Bad debts $300 D Provision for doubtful debts $600 Bad debts $300 Mariam $300 [1] (c) Jack’s bank statement showed a credit balance of $600 on 30 June. It contained bank charges, $20, which did not appear in the cash book. Cheques, $150, issued by Jack did not appear on the bank statement. Which value for bank appeared in Jack’s statement of financial position on 30 June? A $450 current asset B $580 current asset C $620 current liability D $750 current liability [1]

3 0452/11/O/N/16 © UCLES 2016 [Turn over (d) A sales ledger control account showed the following entries. $ opening balance 100 closing balance 180 sales 2000 receipts 1750 What is the missing entry? A discount allowed $170 B discount allowed $330 C discount received $170 D discount received $330 [1] (e) During 2015 John made a payment of $1200 for insurance for the 12 months to 30 September 2016. Which amount appeared in John’s statement of financial position at 30 June 2016? A $300 current asset B $300 current liability C $900 current asset D $900 current liability [1] (f) A retailer has an item of inventory which cost $60 and which is on sale at $50. How does the retailer value this item in his statement of financial position? A at cost price, to allow for losses as early as possible B at cost price, to avoid recognising profit before it is earned C at selling price, to allow for losses as early as possible D at selling price, to avoid recognising profit before it is earned [1]

4 0452/11/O/N/16 © UCLES 2016 (g) A statement of financial position showed non-current assets, current assets, current liabilities and non-current liabilities. What equals owner’s capital? A current assets – current liabilities B non-current assets C total assets – current liabilities D total assets – total liabilities [1] (h) Which statement is true about dividends paid on ordinary shares? A They appear in the appropriation account and are paid to partners. B They appear in the income statement and are paid to partners. C They appear in the statement of changes in equity and are paid to members of a company. D They appear in the statement of financial position and are paid to members of a company. [1] (i) A club has 200 members paying an annual subscription of $50. It provided the following information. $ subscriptions received 9800 new equipment purchased 1120 depreciation of equipment 850 other running costs 8280 What was the surplus for the year? A $400 B $600 C $670 D $870 [1]

5 0452/11/O/N/16 © UCLES 2016 [Turn over (j) Elzevir had been in business for only four months when a fire destroyed all of his inventory. In that period his sales were $1200. He paid $820 to suppliers and a supplier’s invoice for $70 was unpaid. His cost of sales was $800. What was the cost of the inventory which was destroyed? A $50 B $90 C $310 D $380 [1] [Total: 10] Question 2 is on the next page.

6 0452/11/O/N/16 © UCLES 2016 2 (a) Name the accounting principle which assumes that a business will continue to operate indefinitely. …[1] (b) State one reason why a book-keeper prepares a trial balance. … …[1] (c) Name the account which is opened when a trial balance does not agree. …[1] (d) Complete the following table and indi cate with a tick (✓) whether each item would appear on the debit side or the credit side of a trial balance. Debit side Credit side Capital Cash Drawings Rent paid Sales returns Bank overdraft Machinery Discount received Provision for depreciation Bad debts [5] (e) State one reason why a trader’s ledger might be divided into different sections. … … …[1]

7 0452/11/O/N/16 © UCLES 2016 [Turn over (f) Complete the following table, naming the ledger in which each account appears. The first one has been completed as an example. Account Ledger Insurance Nominal/general Sales Discount allowed Philip, a credit customer Purchases Amit, a credit supplier [5] (g) State one reason why each type of discount may be given. (i) Trade discount … …[1] (ii) Cash discount … …[1] (h) Name the type of discount which is recorded in the books of account. …[1] Karen is a retailer of car parts. She took goods for her own use. She also transferred her computer to the business. REQUIRED (i) State how these transactions were recorded in Karen’s books of account of the business. debit entry credit entry Goods taken Computer transferred [4] (j) Name the accounting principle Karen applied in recording these transactions. …[1]

8 0452/11/O/N/16 © UCLES 2016 (k) Name two interested parties who might wish to look at Karen’s business financial statements. In each case give a reason why they might be interested. Interested party Reason 1 2 [4] (l) State the meaning of the accounting objective of relevance. … …[1] [Total: 27]

9 0452/11/O/N/16 © UCLES 2016 [Turn over Question 3 is on the next page.

10 0452/11/O/N/16 © UCLES 2016 3 (a) State what is meant by an asset. … …[1] (b) State the difference between a non-current asset and a current asset. … … … …[2] (c) State what is meant by a liability. … …[1] (d) State the difference between a non-current liability and a current liability. … … … …[2] Malorie is in business as a baker. REQUIRED (e) (i) Suggest one item Malorie would include in her non-current assets. …[1] (ii) Suggest one item Malorie might include in her inventory. …[1]

11 0452/11/O/N/16 © UCLES 2016 [Turn over Malorie provided the following information. 30 June 2015 30 June 2016 $ $ Bank 400 debit 1300 credit Trade receivables 850 1400 Trade payables 750 700 Inventory 550 ? Current ratio ? 1.2 : 1 REQUIRED (f) Calculate: (i) Malorie’s current ratio at 30 June 2015 (to one decimal place) … … …[3] (ii) Malorie’s inventory at 30 June 2016 … … …[3] (g) Suggest two possible reasons for the change in Malorie’s bank balance. 1 … 2 …[2] [Total: 16]

12 0452/11/O/N/16 © UCLES 2016 4 Grindle is a trader. He provided the following information for his business. 1 Fixtures and fittings at cost were: $ 1 January 2015 17 200 31 December 2015 17 600 2 On 1 March 2015 new fixtures and fittings, cost $3600, were bought on credit from Bill. 3 On 1 August 2015 some fixtures and fittings, which were bought in 2014, were sold. REQUIRED (a) Prepare the fixtures and fittings account for the year ended 31 December 2015. Show the transfer to the disposal account. Bring down the balance on 1 January 2016. Grindle Fixtures and fittings account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [6] Grindle also provided the following information. Fixtures and fittings are depreciated at the rate of 10% per annum on the straight line (equal instalment) basis. A full year’s depreciation is charged in the year of purchase and none in the year of disposal. REQUIRED (b) Calculate the depreciation charge for the year ended 31 December 2015. … … …[2]

13 0452/11/O/N/16 © UCLES 2016 [Turn over (c) Prepare the provision for depreciation of fixtures and fittings account for the year ended 31 December 2015. Bring down the balance on 1 January 2016. Grindle Provision for depreciation of fixtures and fittings account Date Details $ Date 2015 Details $ … … … Jan 1 Balance b/d 5800 … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [4] (d) State whether the purchase of the fixtures and fittings was capital expenditure or revenue expenditure. …[1] (e) State the effect this purchase had on Grindle’s capital. …[1] (f) Complete the following table by placing a tick (✓) in the correct box to indicate the effect of depreciation charge on Grindle’s capital. Increase Decrease [1] [Total: 15]

14 0452/11/O/N/16 © UCLES 2016 5 (a) State what is meant by a direct cost. … …[1] (b) Give two examples of a direct cost of a clothing manufacturer. Example 1 … Example 2 …[2] (c) Give one example of an indirect production cost. …[1] Mistry Clothing provided the following information for the year ended 30 June 2016. $ Revenue 203 220 Prime cost 89 000 Factory overheads 21 600 Selling and distribution expenses 20 760 Administration expenses 31 760 Purchases of finished goods 36 200 Opening inventory of finished goods 8 800 Closing inventory of finished goods 19 700 Increase in work in progress 100 Finished goods taken by the owner for personal use 320 REQUIRED (d) (i) Calculate the cost of production for the year ended 30 June 2016. … … … …[3]

15 0452/11/O/N/16 © UCLES 2016 [Turn over (ii) Prepare Mistry Clothing’s income statement for the year ended 30 June 2016. Mistry Clothing Income Statement for the year ended 30 June 2016 $ $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [9] (e) State one reason why Mistry Clothing purchases finished goods. … …[1]

16 0452/11/O/N/16 © UCLES 2016 (f) Calculate, to two decimal places, the rate of inventory turnover (in times) for the year. … … … …[3] (g) Suggest two reasons why inventory turnover has fallen from the previous year. 1 … … 2 … …[2] [Total: 22]

17 0452/11/O/N/16 © UCLES 2016 [Turn over 6 Amina and Doreen formed a partnership on 1 January 2016, buying and selling calculators. On that date they each paid $5000 into the business bank account. Amina also brought in a delivery vehicle valued at $8100 to the partnership and Doreen brought in fixtures and fittings valued at $4800. The partnership agreement stated that profits and losses would be shared in the ratio 2:1. Depreciation was to be provided on a monthly basis, at the rate of 20% per annum for the delivery vehicle and 10% per annum for the fixtures and fittings. In the first month of trading they had the following transactions. Jan 1 Paid 3 months’ rent totalling $2700, by cheque 2 Bought 1000 calculators for $4 each from Bertie on credit 6 Sold 800 calculators for cash for $10 each, keeping $100 in hand and banking the remaining cash 13 Sold 50 calculators for $10 each to Charlie on credit 20 Paid Bertie by cheque, deducting 3% discount for prompt payment 31 Paid wages for the month, $800, by credit transfer REQUIRED (a) Prepare the cash book (bank columns only) for the month of January 2016. Bring down the balance on 1 February 2016. Amina and Doreen Cash book (bank columns) Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [6]

18 0452/11/O/N/16 © UCLES 2016 (b) (i) Calculate the gross profit for the month ended 31 January 2016. … … … … …[4] (ii) Calculate the profit for the month of January 2016. … … … … … … … … …[7]

19 0452/11/O/N/16 © UCLES 2016 (c) Prepare the statement of financial position of the partnership at 31 January 2016. Show the partners’ capital and current accounts. Amina and Doreen Statement of Financial Position at 31 January 2016 $ $ $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [13] [Total: 30]

20 0452/11/O/N/16 © UCLES 2016 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. BLANK PAGE

® IGCSE is the registered trademark of Cambridge International Examinations. This document consists of 9 printed pages. © UCLES 2016 [Turn over Cambridge International Examinations Cambridge International General Certificate of Secondary Education ACCOUNTING 0452/11 Paper 1 October/November 2016 MARK SCHEME Maximum Mark: 120 Published 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 2016 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 2016 0452 11 © UCLES 2016 Glossary for Q1 (c) A 600 – 150 = 450 B 600 – 20 = 580 C 600 + 20 = 620 D 600 + 150 = 750 (d) A and C 2000 + 100 -180 – 1750 = 170 B and D 2000 – 100 + 180 – 1750 = 330 (i) A 9800 – 1120 – 8280 = 400 B 10 000 – 1120 – 8280 = 600 C 9800 – 850 – 8280 = 670 D 10 000 – 850 – 8280 = 870 (j) A 800 – (820 – 70) = 50 B (820 + 70) – 800 = 90 C 1200 – (820 + 70 ) = 310 D 1200 – 820 = 380 1 (a) B (b) B (c) A (d) A (e) A (f) C (g) D (h) C (i) D (j) B 10 × (1) mark [Total: 10]

Page 3 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2016 0452 11 © UCLES 2016 2 (a) Going concern (1) [1] (b) To check the arithmetical accuracy of the double entry (1) OR To help in the preparation of the financial statements (1) [1] (c) Suspense (1) [1] (d) Debit side Credit side Capital 9 Cash 9 Drawings 9 Rent 9 Sales returns 9 Bank overdraft 9 Machinery 9 Discount received 9 Provision for depreciation 9 Bad debts 9 Any two correct for (1) mark [5] (e) So that accounts of the same type can be kept together To allow division of work To allow easier reference To allow checking procedures to be introduced Any one reason (1) [1]

Page 4 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2016 0452 11 © UCLES 2016 (f) Account Ledger Insurance Nominal/general Sales Nominal/general (1) Discount allowed Nominal/general (1) Philip, a credit customer Sales (1) Purchases Nominal/general (1) Amit, a credit supplier Purchases (1) [5] (g) (i) Trade discount – to encourage bulk purchases to reward business in the same trade to allow customers to make a profit Any one for (1) mark [1] (ii) Cash discount - to reward prompt payment (1) [1] (h) Cash discount (1) [1] (i) debit entry credit entry Goods taken Drawings (1) Purchases (1) Computer transferred Office equipment (1) Capital (1) [4] (j) Business entity (1) [1]

Page 5 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2016 0452 11 © UCLES 2016 (k) Interested party Reason Karen Government department Trade payables/ suppliers Bank manager Customer Potential partner Manager Any two for (1) each To see progress of business To check on tax payable To check on likelihood of receiving money To decide on whether to give/continue overdraft To check on viability of business for continued supply of goods To see potential rewards for investment To see progress of business Any two related reasons for (1) each Reasonable alternatives may be rewarded [4] (l) Financial information is relevant if it affects the business decisions (1) [1] [Total: 27] 3 (a) Something which the business owns or something which is owed to the business (1) [1] (b) Non-current asset –any reasonable definition (1) eg an item held for more than 12 months, an item which is not for resale. Current asset – any reasonable definition (1) eg short term, an item which can be turned into cash quickly. [2] (c) An amount which is owed by the business (1) [1] (d) Non-current liability – any reasonable definition (1) eg long term debt Current liability – any reasonable definition (1) eg an amount owed to be paid within a year [2] (e) (i) any reasonable suggestion (1) eg oven, computer [1] (ii) any reasonable suggestion (1) eg flour, yeast, unsold loaves [1] Other suitable answers are acceptable. (f) (i) 135480 9.51times 14250 = of (1 ) (1of) (1) [3] (ii) [(1300 + 700) × 1.2] (1) – 1400 (1) = 1000 (1) [3]

Page 6 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2016 0452 11 © UCLES 2016 (g) Any two possible reasons for (1) mark each e.g. making a loss, excess drawings, purchase of non-current assets, bad debts, debtors not paying, paying trade payables sooner, increased expenditure on inventory, repayment of loan. Other suitable answers are acceptable. [2] [Total: 16] 4 (a) Grindle Fixtures and fittings account 2015 $ 2015 $ Jan 1 Balance b/d 17 200 (1) Aug 1 Disposal (1) 3 200 (1of) Mar 1 Bill 3 600 (1) Dec 31 Balance c/d 17 600 20 800 20 800 2016 Jan 1 Balance b/d 17 600 (1) +1 dates [6] (b) $17 600 (1) x 0.10 = $1760 (1) [2] (c) Grindle Provision for depreciation of fixtures and fittings account 2015 $ 2015 $ Aug 1 Disposal 320 (1of) Jan 1 Balance b/d 5 800 Dec 31 Balance c/d 7 240 Dec 31 Income statement 1 760 (1of) 7 560 7 560 2016 +1 dates Jan 1 Balance b/d 7 240 (1of) [4] (d) Capital expenditure (1) [1] (e) None (1) [1] (f) Increase Decrease 9 (1) [1] [Total: 15]

Page 7 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2016 0452 11 © UCLES 2016 5 (a) A cost which can be linked to a specific unit of production (1) [1] (b) Any two correct answers for (1) mark each E.g. purchases of cloth, thread, buttons etc., carriage on material, machinists etc., royalties [2] (c) Factory overhead (1) OR any example for (1) mark e.g. factory supervisor’s salary, depreciation of factory machinery, rent of factory building [1] (d) (i) 89 000 + 21 600 (1) – 100 (1) = $110 500 (1of) [3] (ii) Mistry Clothing Income Statement for the year ended 30 June 2016 $ $ Revenue 203 220 (1) Inventory at 1 July 2015 8 800 (1) Cost of production 110 500 (1of) Purchases 36 200 (1) 155 500 Drawings (320) (1) 155 180 Inventory at 30 June 2016 19 700 (1) Cost of sales 135 480 Gross profit 67 740 (1of) Selling and distribution expenses 20 760 Administration expenses 31 760 52 520 (1) Profit for the year 15 220 (1of) [9] (e) It is cheaper to buy than produce (1) OR Demand is higher than production at full capacity (1) [1] (f) 1800 2.4 :1 750 = (1) (1) (1) [3] (g) Sales have slowed down (1) Inventory has increased (1) [2] [Total: 22]

Page 8 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2016 0452 11 © UCLES 2016 6 (a) Amina and Doreen Cash book (bank columns) 2016 $ 2016 $ Jan 1 Capital A 5 000 } Jan 1 Rent 2 700 (1) Capital D 5 000 }(1) 20 Bertie 3 880 (1) 6 Sales 7 900 (1) 31 Wages 800 (1) Balance c/d 10 520 17 900 17 900 Feb 1 Balance b/d 10 520 (1of) [6] (b) (i) $ $ Revenue 8 500 (1) Purchases 4 000 (1) Closing inventory (600) (1) Cost of sales 3 400 Gross profit 5 100 (1of) [4] (ii) Amina and Doreen Calculation of profit for the month ended 31 January 2016 $ $ Gross profit 5 100 (1of) Discount received 120 (1) 5 220 Rent 900 (1) Wages 800 (1) Depreciation fixtures and fittings 40 (1) Depreciation delivery van 135 (1) 1 875 Profit for the month 3 345 (1of) [7]

Page 9 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2016 0452 11 © UCLES 2016 (c) Amina and Doreen Statement of Financial Position at 31 January 2016 $ $ $ Non-current assets Cost Accumulated depreciation N B V Delivery vehicle 8 100 (1) 135 (1of) 7 965 Fixtures and fittings 4 800 (1) 40 (1of) 4 760 12 900 175 12 725 Current assets Inventory (150 × 4) 600 (1) Trade receivable (50 × 10) 500 (1) Other receivables 1 800 (1) Bank 10 520 (1of) Cash 100 (1) 13 520 Total assets 26 245 Capital Amina 13 100 (1) Doreen 9 800 (1) 22 900 Current Amina 2 230 (1of) Doreen 1 115 (1of) 3 345 26 245 [13] [Total: 30]