Cambridge IGCSE Accounting 0452 — 2018 Oct/Nov Paper 1 · Variant 3

This document consists of 20 printed pages. DC (RCL/GO) 156836/1 © UCLES 2018 [Turn over Cambridge International Examinations Cambridge International General Certificate of Secondary Education * 5 7 9 4 9 3 4 6 0 9 * ACCOUNTING 0452/13 Paper 1 October/November 2018 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 0452/13/O/N/18 © UCLES 2018 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 task would an accountant perform? A drawing up a trial balance B entering transactions in the ledger C preparing financial statements D writing up the cash book [1] (b) Amina returned goods to Nadia. Which document did Amina issue? A credit note B debit note C invoice D statement of account [1] (c) Arissa purchased a motor vehicle costing $23 000 on 1 August 2016. She decided to depreciate the motor vehicle using the straight line (equal instalment) method at 20% per annum. Depreciation on the motor vehicle of $4600 was charged to the income statement for the year ended 31 July 2017. How much was charged to the income statement for the year ended 31 July 2018 for depreciation on the motor vehicle? A $3680 B $4600 C $8280 D $9200 [1]

3 0452/13/O/N/18 © UCLES 2018 [Turn over (d) A trader provided the following information on 1 October 2018. $ Non-current assets 121 000 Inventory 35 000 Bank overdraft 9 000 Trade receivables 29 000 Trade payables 25 000 Loan repayable 30 September 2020 70 000 How much was the capital employed? A $30 000 B $81 000 C $151 000 D $185 000 [1] (e) Which is an intangible asset? A goodwill B inventory C office fixtures D trade receivables [1] (f) Mahendra designs computer systems. He provided the following information. $ Fees prepaid by clients at the start of the year 2 120 Fees received from clients during the year 42 150 Fees owing by clients at the end of the year 2 840 How much would be entered for fees in the income statement? A $37 190 B $41 430 C $42 870 D $47 110 [1]

4 0452/13/O/N/18 © UCLES 2018 (g) Amy and John are in partnership. Amy is entitled to an annual partnership salary of $9000. Profits and losses are shared 2:1. The profit for the year ended 31 August 2018 was $14 700. On 1 September 2017 Amy’s current account had a debit balance of $2100. What was the credit balance on Amy’s current account on 1 September 2018? A $10 700 B $14 900 C $16 700 D $20 900 [1] (h) A sports club purchased sports equipment. Where will this be entered in the financial statements at the year end? receipts and payments account income and expenditure account statement of financial position A    B   C   D   [1] (i) How is cost of production calculated? A direct material + direct labour B direct material + direct labour + factory overheads C direct material + direct labour + factory overheads + increase in work in progress D direct material + direct labour + factory overheads – increase in work in progress [1]

5 0452/13/O/N/18 © UCLES 2018 [Turn over (j) A business provided the following information. year 1 year 2 percentage of gross profit to revenue 30% 25% percentage of profit for the year to revenue 12% 8% The revenue was the same in both years. Which statements are correct? 1 Cost of sales was higher in year 2. 2 Cost of sales was lower in year 2. 3 Expenses were higher in year 2. 4 Expenses were lower in year 2. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4 [1] [Total: 10]

6 0452/13/O/N/18 © UCLES 2018 2 (a) State the meaning of the term ‘owner’s equity’. … …[1] (b) Complete the following table stating the double entry necessary to record each transaction in the ledger of Evie, who sells computers and computer accessories. transaction account to be debited account to be credited obtained loan from bank purchased office fixtures by cheque sold computer for cash took printer for personal use [8] (c) State one reason why a trial balance is prepared. … … [1] (d) Complete the following table, indicating with a tick () where each account would appear in a trial balance. debit column credit column capital drawings provision for depreciation carriage inwards carriage outwards rent received stationery sales returns [4]

7 0452/13/O/N/18 © UCLES 2018 [Turn over (e) Give one example of each of the following errors which will not be revealed by a trial balance. Error of commission … … Error of omission … … Compensating error … … [3] (f) Complete the following sentences. Money spent on purchasing or improving non-current assets is known as … ………………………………………………… Money spent on the day-to-day running of a business is known as ……………………………… ………………………………………………… [2] (g) Complete the following table by placing a tick () to indicate where each item will appear in the financial statements of Anwar, who owns a food store. Income Statement Statement of Financial Position purchase of motor vehicle charge for delivering motor vehicle insurance for motor vehicle fuel for motor vehicle [4] [Total: 23]

8 0452/13/O/N/18 © UCLES 2018 3 Lefika is a trader. He maintains a three column cash book. Lefika had the following transactions in August 2018. August 5 Received a cheque from Tabia, $441, in settlement of her account less 2% cash discount 8 Paid Tebago’s account of $280 by cheque after deducting a cash discount of 2½% 16 Received a cheque from Nyack, $282, in full settlement of his debt of $290 28 Cash sales, $243, of which $153 was paid directly into the bank 30 Received $250 cash from the disposal of a non-current asset 31 Lefika took cash, $200, for personal use 31 Paid all the cash into the bank except $20 REQUIRED (a) Complete Lefika’s cash book on the page opposite. Balance the cash book and bring down the balances on 1 September 2018. [12]

9 0452/13/O/N/18 © UCLES 2018 [Turn over Lefika Cash Book Date 2018 Aug 1 ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… Details Balance b/d …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… Discount allowed $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Cash $ 30 ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Bank $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Date 2018 Aug 1 ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… Details Balance b/d …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… …………………………… Discount received $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Cash $ ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… Bank $ 1253 ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… …………

10 0452/13/O/N/18 © UCLES 2018 On 31 August Lefika’s bank statement showed a bank overdraft of $812. He compared the cash book with the bank statement and found that the bank had not recorded the transactions entered in the bank columns of the cash book on the following dates. August 8 16 28 31 REQUIRED (b) Prepare a bank reconciliation statement at 31 August 2018. Lefika Bank Reconciliation Statement at 31 August 2018 … … … … … … … … … … [6] Lefika’s ledger is divided into a sales ledger, a purchases ledger and a nominal (general) ledger. REQUIRED (c) State one advantage of dividing the ledger into these three sections. … … [1] (d) Name the ledger in which each of the following accounts would appear. (i) Nyack (a credit customer) account … ledger (ii) Purchases account … ledger (iii) Discount received account … ledger (iv) Tebago (a credit supplier) account … ledger [4] [Total: 23]

11 0452/13/O/N/18 © UCLES 2018 [Turn over 4 Ava operates a secretarial agency. Her financial year ends on 31 July. She provided the following information on 31 July 2018. 1 A cheque for $194 was received from Wilma, a credit customer, whose account had been written off in 2016. 2 Gary, a credit customer, paid one third of the amount he owed in cash. The balance is regarded as irrecoverable and should be written off. 3 The provision for doubtful debts should be increased by $150. 4 The discount allowed for July 2018 of $144 should be transferred to the discount allowed account. 5 The office equipment cost $16 000 and is being depreciated using the straight line (equal instalment) method at 20% per annum. No office equipment had been bought or sold during the year. REQUIRED (a) Record this information in the following accounts in Ava’s ledger at 31 July 2018. Close the accounts by balancing or by making a transfer to an appropriate account. Some entries have already been made in the accounts during the year. Ava Bad debts recovered account Date ……… ……… ……… Details …………………… …………………… …………………… $ ………. ………. ………. Date ……… ……… ……… Details …………………… …………………… …………………… $ ………… ………… ………… Bad debts account Date 2018 July 1 ……… ……… ……… Details Total to date …………………… …………………… …………………… $ 218 ………. ………. ………. Date ………. ………. ………. ………. Details …………………… …………………… …………………… …………………… $ ………… ………… ………… …………

12 0452/13/O/N/18 © UCLES 2018 Gary account Date 2018 July 1 ……… ……… ……… Details Balance b/d ……………………… ……………………… ……………………… $ 270 ……… ……… ……… Date ……… ……… ……… ……… Details …………………… …………………… …………………… …………………… $ ………… ………… ………… ………… Provision for doubtful debts account Date ……… ……… ……… ……… ……… Details ……………………… ……………………… ……………………… ……………………… ……………………… $ ……… ……… ……… ……… ……… Date 2017 Aug 1 ……… ……… ……… ……… Details Balance b/d …………………… …………………… …………………… …………………… $ 310 ………… ………… ………… ………… Discount allowed account Date 2018 July 1 ……… ……… ……… Details Total to date ……………………… ……………………… ……………………… $ 1495 ……… ……… ……… Date ……… ……… ……… ……… Details …………………… …………………… …………………… …………………… $ ………… ………… ………… …………

13 0452/13/O/N/18 © UCLES 2018 [Turn over Provision for depreciation of office equipment account Date ………. ………. ………. ………. ………. Details …………………….. …………………….. …………………….. …………………….. …………………….. $ ……….. ……….. ……….. ……….. ……….. Date 2017 Aug 1 ……… ……… ……… ……… Details Balance b/d …………………… …………………… …………………… …………………… $ 9600 ………… ………… ………… ………… [14] (b) Name two accounting principles Ava is applying by maintaining a provision for doubtful debts. 1 … 2 … [2] Ava allows her trade receivables a credit period of 30 days. She provided the following information. At 31 July 2017 At 31 July 2018 Trade receivables collection period 32 days 28 days REQUIRED (c) Comment on Ava’s collection period for trade receivables. … … … … … [2] Ava is proposing to ask clients to pay cash instead of offering credit terms. (d) Suggest two effects of this proposal. 1 … … 2 … … [2] [Total: 20]

14 0452/13/O/N/18 © UCLES 2018 5 Khalid is a furniture wholesaler. His financial year ends on 30 September. All purchases and sales are made on credit terms. Khalid does not maintain a full set of accounting records but was able to provide the following information. $ On 1 October 2017 Inventory 3 100 Trade receivables 4 620 During the year ended 30 September 2018 Cheques received from trade receivables 47 970 Discount allowed 1 230 Bad debts written off 115 Total purchases 39 200 On 30 September 2018 Trade receivables 3 305 After the warehouse was closed on 30 September a fire broke out and a quantity of the inventory was destroyed. The undamaged inventory was valued at $1500. The profit mark-up is 25%. REQUIRED (a) Calculate the sales for the year ended 30 September 2018. … … … … … … … … … [6]

15 0452/13/O/N/18 © UCLES 2018 [Turn over (b) Prepare an income statement (trading account section) to calculate the value of the inventory which was destroyed. Khalid Income Statement (Trading Account section) for the year ended 30 September 2018 ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… ………………………………………………… $ ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… $ ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… $ ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… [7] (c) (i) Calculate the rate of inventory turnover. The calculation should include the total inventory before the fire broke out on 30 September 2018. The calculation should be correct to two decimal places. … … … … [2] (ii) State what is measured by the rate of inventory turnover. … … … [1]

16 0452/13/O/N/18 © UCLES 2018 Khalid decided that in future he would maintain a full set of double entry records and prepare control accounts at the end of each month. REQUIRED (d) Complete the table by using a tick () to show where each of the following items would appear in Khalid’s purchases ledger control account. debit credit opening balance owed to credit suppliers credit purchases cheques paid to credit suppliers cash discount received contra between sales and purchases ledgers [5] [Total: 21]

17 0452/13/O/N/18 © UCLES 2018 [Turn over 6 The financial year of FW Limited ends on 30 September. The following information is available. At 1 October 2017 $ Ordinary share capital of $1 shares 100 000 5% Debentures (repayable 2024) 140 000 General reserve 115 000 Retained earnings 117 000 On 30 September 2018 $ Issue of $1 ordinary shares 50 000 Profit for the year 28 000 Transfer to general reserve 15 000 Payment of ordinary share dividend 19 000 REQUIRED (a) Prepare an extract from the statement of financial position at 30 September 2018 to show the equity and reserves and non-current liabilities. FW Limited Extract from Statement of Financial Position at 30 September 2018 … … … … … … … … … [7]

18 0452/13/O/N/18 © UCLES 2018 (b) Define each of the following terms. i(i) Shareholders … … … [1] (ii) Limited liability … … … [1] (c) i(i) State one difference between ordinary shares and preference shares. ordinary shares preference shares …………………………………………. …………………………………………. …………………………………………. …………………………………………. [2] (ii) State two similarities between preference shares and debentures. 1 … … 2 … … [2]

19 0452/13/O/N/18 © UCLES 2018 [Turn over The directors of FW Limited want to raise $60 000 to purchase additional premises. The directors are considering two proposals: Proposal 1 Issuing 5% debentures (repayable 2030) Proposal 2 Issuing ordinary shares It is anticipated that the ordinary share dividend will be 6% per annum. REQUIRED (d) State how each proposal would affect the profit of FW Limited in the next financial year (if at all). Give a reason for your answer in each case. Proposal 1 Effect on profit … Reason … … [2] Proposal 2 Effect on profit … Reason … … [2]

20 0452/13/O/N/18 © UCLES 2018 The following information was available on 30 September 2018. $ Inventory 42 000 Trade receivables 34 000 Trade payables 35 000 Cash at bank 36 000 Loan repayable on 1 January 2019 30 000 REQUIRED (e) Calculate the current ratio. The calculation should be correct to two decimal places. … … … [2] (f) Complete the table by placing a tick () in the correct column to indicate the effect each would have on the current ratio. effect on current ratio increase decrease no effect use the bank balance to repay the loan purchase non-current assets on credit sell half the inventory at cost price to cash customers pay amount owed to trade payables by cheque [4] [Total: 23] 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.

This document consists of 20 printed pages. © UCLES 2018 [Turn over Cambridge Assessment International Education Cambridge International General Certificate of Secondary Education ACCOUNTING 0452/13 Paper 1 October/November 2018 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 International will not enter into discussions about these mark schemes. Cambridge International is publishing the mark schemes for the October/November 2018 series for most Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 2 of 20 Generic Marking Principles These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these marking principles. GENERIC MARKING PRINCIPLE 1: Marks must be awarded in line with: • the specific content of the mark scheme or the generic level descriptors for the question • the specific skills defined in the mark scheme or in the generic level descriptors for the question • the standard of response required by a candidate as exemplified by the standardisation scripts. GENERIC MARKING PRINCIPLE 2: Marks awarded are always whole marks (not half marks, or other fractions). GENERIC MARKING PRINCIPLE 3: Marks must be awarded positively: • marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate • marks are awarded when candidates clearly demonstrate what they know and can do • marks are not deducted for errors • marks are not deducted for omissions • answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the question as indicated by the mark scheme. The meaning, however, should be unambiguous. GENERIC MARKING PRINCIPLE 4: Rules must be applied consistently e.g. in situations where candidates have not followed instructions or in the application of generic level descriptors.

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 3 of 20 GENERIC MARKING PRINCIPLE 5: Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may be limited according to the quality of the candidate responses seen). GENERIC MARKING PRINCIPLE 6: Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or grade descriptors in mind.

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 4 of 20 Question Answer Marks 1(a) C 1 1(b) B 1 1(c) B 1 1(d) C 1 1(e) A 1 1(f) D 1 1(g) A 1 1(h) D 1 1(i) D 1 1(j) B 1

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 5 of 20 Question Answer Marks 1 Glossary (c) A 20% × (23 000–4 600) B 20% × 23 000 C (20% × 18 400)+4 600 D (20% × 23 000)+4 600 (d) A CAs–CLs=(35+29)–(9+25) B Net As–LTLs=(121+35+29–9–25)–70 C Total As–CLs=(121+35+29)–(9+25) D Total As=121+35+29 (f) A 42 150–2 120–2 840 B 42 150+2 120–2 840 C 42 150+2 840–2 120 D 42 150+2 120+2 840 (g) A ( 2 3 ×14 700–9 000)+9 000–2 100 B ( 2 3 ×14 700–9 000)+9 000+2 100 C ( 2 3 ×14 700)+9 000–2 100 D ( 2 3 ×14 700)+9 000+2 100

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 6 of 20 Question Answer Marks 2(a) Total resources provided by the owner for the business/amount the business owes the business owner Allow the amount the owner has invested, but not capital invested. Do not award for just the equation. 1 2(b) transaction account to be debited account to be credited obtained loan from bank Bank/cash at bank (1) loan (1) purchased office fixtures by cheque office fixtures (1) Bank/cash at bank (1) sold computer for cash Cash/cash in hand (1) sales (1) took printer for personal use drawings (1) purchases (1) 8 2(c) Check the arithmetical accuracy of the double entry Assist in preparation of financial statements Any 1 reason Do not allow just accuracy or references to ledgers 1

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 7 of 20 Question Answer Marks 2(d) debit column credit column capital 9 drawings 9 provision for depreciation 9 carriage inwards 9 carriage outwards 9 rent received 9 stationery 9 sales returns 9 Each two correct items (1) 4 2(e) Error of commission Any suitable example such as crediting X instead of Y, debiting rent instead of rates (1) Error of omission Any suitable example of transaction completely omitted from books, for example, payment of insurance completely missed out (1) Compensating errors Any suitable example such as overcasting sales by $100 and overcasting purchases by $100 (1) 3 2(f) Capital expenditure (1) Revenue expenditure (1) 2

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 8 of 20 Question Answer Marks 2(g) Income Statement Statement of Financial Position purchase of motor vehicle 9(1) charge for delivering motor vehicle 9(1) insurance for motor vehicle 9(1) fuel for motor vehicle 9(1) 4

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 9 of 20 Question Answer Marks 3(a) Lefika Cash Book Date Details Discount allowed Cash Bank Date Details Discount received Cash Bank 2018 $ $ $ 2018 $ $ $ Aug 1 Balance b/d 30 Aug 1 Balance b/d 1 253 5 Tabia (1) 9 441 8 Tebago (1) 7 273 16 Nyack (1) 8 282 31 Drawings (1) 200 28 Sales (1) 90 153 Bank c (1) 150 30 Disposal (1) 250 Balance c/d 20 31 Cash c (1)OF 150 Balance c/d 500 17 370 1 526 7 370 1 526 2018 2018 Sept 1 Balance b/d (1) 20 Sept 1 Balance b/d (1)OF 500 + (1) dates need all dates but do not have to bring balances down + (1) totalling discount columns Do not award non current asset for sale of non current asset in lieu of disposal Need correct label and amount(s) for 1 mark Must have bal c/d amount to gain bal b/d mark 12

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 10 of 20 Question Answer Marks 3(b) Lefika Bank Reconciliation Statement at 31 August 2018 $ $ Balance shown on bank statement (812) (1) Add Amounts not credited – Sales 153 (1) Cash 150 (1)OF Cheque not credited – Nyack 282 (1)OF 585 (227) Less cheques not yet presented – Tebago (273) (1)OF Balance shown in cash book (500) (1)OF 6

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 11 of 20 Question Answer Marks 3(b) Alternative presentation Lefika Bank reconciliation Statement at 31 August 2018 $ $ Balance shown in cash book (500) (1)OF Add Cheques not yet presented – Tebago 273 (1)OF (227) Less amounts not credited – Sales 153 (1) Cash 150 (1)OF Cheques not credited – Nyack 282 (1)OF (585) Balance shown on bank statement (812) (1) 3(c) Work can be shared amongst several people/division of work Easier for reference as same type of accounts are kept together/locate details of transactions Easier to introduce checking procedures Reduce possibility of fraud Or other suitable advantage Any one advantage (1) 1 3(d) (i) sales/trade receivables ledger (1) (ii) nominal (general) ledger (1) (iii) nominal (general) ledger (1) (iv) purchases/trade payables ledger (1) 4

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 12 of 20 Question Answer Marks 4(a) Ava Bad debts recovered account Date Details $ Date Details $ 2018 2018 July 31 Income statement (1) 194 July 31 Bank } (1) 194 OR Wilma 194 194 14 Bad debts account Date Details $ Date Details $ 2018 2018 July 1 Total to date 218 July 31 Income statement (1) 398 31 Gary (1) 180 398 398

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 13 of 20 Question Answer Marks 4(a) Gary account Date Details $ Date Details $ 2018 2018 July 1 Balance b/d 270 July 31 Cash (1) 90 Bad debts (1) 180 270 270 Provision for doubtful debts account Date Details $ Date Details $ 2018 2017 July 31 Balance c/d 460 Aug 1 Balance b/d 310 2018 July 31 Income statement (1) 150 460 460 2018 Aug 1 Balance b/d (1) 460

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 14 of 20 Question Answer Marks 4(a) Discount allowed account Date Details $ Date Details $ 2018 2018 July 1 Total to date 1 495 July 31 Income statement (1) 1639 31 Total for month (1) 144 1639 1639 Provision for depreciation of office equipment account Date Details $ Date Details $ 2018 2017 July 31 Balance c/d 12 800 Aug 1 Balance b/d 9 600 2018 July 31 Income statement (1) (1) 3 200 12 800 12 800 2018 Aug 1 Balance b/d (1)OF 12 800 + (1) dates need dates on all entries but can still have if no bal b/d

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 15 of 20 Question Answer Marks 4(b) Prudence Accruals (matching) Consistency Any two (1) each 2 4(c) Both years are within the credit period allowed Slight improvement in 2018/or collection period has decreased Risk of bad debts is reduced by prompt payment Assists cash flow of business Allows funds to be available for payment of trade payables/running costs No cash discount will be allowed Or other relevant comments Any two comments (1) each 2 4(d) Eliminates possibility of bad debts Improves cash flow/better liquidity Customers may go to other agencies where credit terms are available/sales decrease Reduce provision for doubtful debts Trade receivables will reduce/not exist Or other relevant comments Any two comments (1) each 2 Question Answer Marks 5(a) Calculation of sales $ Cheques received from trade receivables 47 970 (1) Discount allowed 1 230 (1) Bad debts written off 115 (1) Trade receivables at 30 September 2018 3 305 (1) 52 620 Less Trade receivables at 1 October 2017 4 620 (1) Sales 48 000 (1) 6

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 16 of 20 Question Answer Marks 5(a) Alternative presentation Total trade receivables account Date Details $ Date Details $ 2017 2018 Oct 1 Balance b/d (1) 4 620 Sept 30 Bank (1) 47 970 2018 Discount allowed (1) 1 230 Sept 30 Sales (1)OF 48 000 Bad debts (1) 115 Balance c/d (1) 3 305 52 620 52 620 No aliens allowed for OF sales

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 17 of 20 Question Answer Marks 5(b) Khalid Income Statement (Trading Account section) for the year ended 30 September 2018 $ $ $ Revenue 48 000 (1)OF Cost of sales Opening inventory 3 100 (1) Purchases 39 200 (1) 42 300 Closing inventory on premises 1 500 (1) destroyed 2 400 (1)OF 3 900 38 400 (1)OF Gross profit 9 600 (1)OF 7 5(c)(i) 38 400 OF = 38 400 OF(1) whole formula = 10.97 times (1) OF (3 100 + 3 900) OF ÷ 2 3 500 OF 2 5(c)(ii) The number of times the inventory is sold and replaced in the financial year (1) 1

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 18 of 20 Question Answer Marks 5(d) debit entry credit entry opening balance owed to credit suppliers 9(1) credit purchases 9(1) cheques paid to credit suppliers 9(1) cash discount received 9(1) contra between sales and purchases ledgers 9(1) 5 Question Answer Marks 6(a) FW Limited Extract from Statement of Financial Position at 30 September 2018 $ Equity and reserves Ordinary share capital (100 000 + 50 000) 150 000 (1) General reserve (15 000 + 5 000) 20 000 (1) Retained earnings (7 000 + 28 000 (1) – 5 000 (1) – 9 000 (1)) 21 000 191 000 (1) Non-current liabilities 5% Debentures (repayable 2024) 40 000 (1) 7 6(b)(i) Owners of the share capital of a limited liability company (1) 1 6(b)(ii) The liability of shareholders for the debts of the company is limited to the amount they agree to pay for their shares (1) 1

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 19 of 20 Question Answer Marks 6(c)(i) ordinary shares preference shares dividend rate varies dividend is fixed percentage rank after preference shares for dividend rank before ordinary shares for dividend rank after preference shares in a winding-up rank before ordinary shares in a winding-up can vote at the annual general meeting cannot vote at the annual general meeting Any one comparison (2) 2 6(c)(ii) Get a fixed return Have priority over ordinary shares for the interest/dividend Have priority over ordinary shareholders in a winding-up Cannot vote at the annual general meeting Or other suitable point Any two points (1) each 2 6(d) Proposal 1 Effect on profit – decrease of $3 000 (1) Reason – debenture interest is an expense in the income statement/or deducted from operating profit (1) Proposal 2 Effect on profit – no effect (1) Reason – ordinary shares dividend is an appropriation of profit not an expense in the income statement (1) 4 6(e) (42 000 + 34 000 + 36 000) : (35 000 + 30 000) (1) whole formula = 112 000 : 65 000 =1.72 : 1 (1) 2

0452/13 Cambridge IGCSE – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 20 of 20 Question Answer Marks 6(f) effect on current ratio increase decrease no effect use the bank balance to repay the loan 9(1) purchase non-current assets on credit 9(1) sell half the inventory at cost price to cash customers 9(1) pay amount owed to trade payables by cheque 9(1) 4