Cambridge IGCSE Accounting 0452 — 2020 Oct/Nov Paper 1 · Variant 3

Question 1

1 A trader prepares financial statements each year. What do these assist the trader to do? A calculate the amount owing to credit suppliers B calculate the cash drawings C check the bank statement balance D make decisions about the future

Accepted Answer

D

Question 2

2 The following balances appeared in Hussein's books. $ fixtures 6000 inventory 3300 trade receivables 3000 trade payables 4500 other receivables 500 other payables 300 loan to Imran 1000 bank overdraft 1400 What was the total of the liabilities? A $4800 B $6200 C $6400 D $7200

Accepted Answer

B

Question 3

3 The following account appeared in the books of Mary. Paul account $ $ April 1 balance b/d 90 April 21 returns 25 14 sales 150 30 bank 88 discount 2 balance c/d 125 240 240 Which statement is correct? A On 1 April Paul owed Mary $90. B On 14 April Paul sold goods, $150, to Mary. C On 21 April Mary returned goods, $25, to Paul. D On 30 April Mary owed Paul $125.

Accepted Answer

A

Question 4

4 Which business document is used to update the cash book for standing order payments? A bank statement B cheque counterfoil C paying-in slip D receipt

Accepted Answer

A

Question 5

5 On 1 March 2020 the bank column of a cash book had a credit balance of $290. During March cheques totalling $580 were received and cheques totalling $610 were paid to suppliers. Bank charges of $12 incurred in February were also entered in the cash book. What was the balance of the bank column in the cash book on 1 April 2020? A $248 credit B $248 debit C $332 credit D $332 debit

Accepted Answer

C

Question 6

6 Ziningi prepared a trial balance. The total of the debit column was $225 750 and the total of the credit column was $225 250. What could explain the difference? A Bank overdraft, $250, was recorded as a debit balance. B Inventory, $500, was included as a debit balance. C Purchases returns, $250, were included as a credit balance. D Sales returns, $250, were included as a debit balance.

Accepted Answer

A

Question 7

7 Rent received from a tenant was debited to the rent receivable account and credited to the cash book. Which type of error has been made? A commission B compensating C complete reversal D principle

Accepted Answer

C

Question 8

8 A computer system purchased from Ace Computers for $1430 had been incorrectly recorded as $1340 and was entered in the stationery account instead of the office equipment account. Which journal entry corrects this error? debit credit $ $ A Ace computers 90 stationery 1340 office equipment 1340 B Ace computers 90 stationery 1340 office equipment 1430 C office equipment 1340 Ace computers 90 stationery 1340 D office equipment 1430 Ace computers 90 stationery 1340

Accepted Answer

D

Question 9

9 Kate calculated her draft profit for the year at $28 400. She later discovered the following errors. 1 Rent prepaid by Kate was understated by $1000. 2 Closing inventory was understated by $1500. What was the correct profit for the year? A $25 900 B $27 900 C $28 900 D $30 900

Accepted Answer

D

Question 10

10 What would not be included in a sales ledger control account? A cash sales recorded in the cash book B cheques received from credit customers recorded in the cash book C goods sold on credit recorded in the sales journal D irrecoverable debts written off recorded in the journal

Accepted Answer

A

Question 11

11 A trader debited the cost of repairing office equipment to the office equipment account. How did this error affect the financial statements? profit for non-current the year assets A overstated overstated B overstated understated C understated overstated D understated understated

Accepted Answer

A

Question 12

12 A trader uses the reducing balance method of depreciation. What effect will this have over the life of the non-current asset? A depreciation charged evenly over the years B more depreciation charged in the early years C more depreciation charged in the later years D the non-current asset being revalued each year

Accepted Answer

B

Question 13

13 Rashid provided the following information at 31 December. $ machinery at cost 52 000 provision for depreciation of machinery 23 000 Depreciation for the year is calculated at 20% on cost. After the statement of financial position was prepared it was found that the machinery repairs costing $2000 had been debited to the machinery account. What is the correct balance on the provision for the depreciation of machinery account? A $21 000 B $22 600 C $23 400 D $25 000

Accepted Answer

B

Question 14

14 At the end of his financial year on 31 August 2020 a trader had prepaid insurance. How will this appear in the insurance account and the statement of financial position at 31 August 2020? insurance account statement of financial position A credit balance carried down current asset B credit balance carried down current liability C debit balance carried down current asset D debit balance carried down current liability

Accepted Answer

A

Question 15

15 Hayley’s financial year ends on 30 September 2020. She provided the following information. $ on 1 October 2019 rent receivable accrued 480 during the year ended 30 September 2020 rent received 6800 On 30 September 2020 rent received in advance 720 Which journal entry would be made on 30 September 2020? debit credit $ $ A income statement 5600 rent receivable 5600 B income statement 6560 rent receivable 6560 C rent receivable 5600 income statement 5600 D rent receivable 6560 income statement 6560

Accepted Answer

C

Question 16

16 The balances in the books of Jason on 1 July 2019 included the following. $ trade receivables 64 200 provision for doubtful debts 1 284 Trade receivables at 30 June 2020 were $58 500, of which $500 should be written off as irrecoverable. Jason wants to maintain his provision for doubtful debts at 2% of trade receivables. What was the change in the provision for doubtful debts at 30 June 2020? A $114 decrease B $124 decrease C $376 increase D $386 increase

Accepted Answer

B

Question 17

17 Nirmal sells two products, product G and product H. The following information is available about his inventory at the end of the financial year. number cost price net realisable product of units per unit value per unit G 1000 $2.00 $2.50 H 800 $1.50 $1.20 It was found that 100 units of product G were damaged and were unsaleable. What was the total value of Nirmal’s inventory? A $2760 B $3000 C $3260 D $3460

Accepted Answer

A

Question 18

18 Which items will not be shown in an income statement prepared for a service business? 1 cost of sales 2 gross profit 3 profit for the year 4 wages paid to employees A 1 only B 1 and 2 C 2 and 4 D 3 and 4

Accepted Answer

B

Question 19

19 A trader provided the following information. $ capital at 1 October 2019 52 000 motor vehicle given to the business by the trader 3 500 personal expenses paid out of business bank account 1 500 cash drawings made during the year 500 What was the capital at 30 September 2020? A $46 500 B $50 000 C $53 500 D $55 000

Accepted Answer

C

Question 20

20 John and Mark are in partnership. Profits and losses are shared in the ratio 3 : 2. John is entitled to an annual salary of $12 000. The profit for the year ended 31 August 2020 was $52 000. How much would be credited to the partners’ current accounts on 31 August 2020? John’s Mark’s current account current account $ $ A 24 000 16 000 B 26 000 26 000 C 31 200 20 800 D 36 000 16 000

Accepted Answer

D

Question 21

21 A partnership maintains both current and capital accounts for each partner. An inexperienced book-keeper prepared the following account which contains errors. Owen capital account $ $ balance c / d 135 000 balance b / d 100 000 loan made to partnership 30 000 interest on capital 5 000 135 000 135 000 What should appear as the closing balance on Owen’s capital account? A $75 000 B $100 000 C $105 000 D $130 000

Accepted Answer

B

Question 22

22 Z Limited provided the following information. $ 5% debentures 50 000 general reserve 25 000 issued ordinary share capital 300 000 retained earnings 75 000 short-term bank loan 10 000 What was the equity? A $325 000 B $400 000 C $450 000 D $460 000

Accepted Answer

B

Question 23

23 Which statement about preference shares is not correct? A Preference shareholders do not have voting rights. B Preference shareholders receive a fixed dividend. C Preference shareholders have a prior claim before ordinary shareholders in the event of liquidation. D Preference shareholders receive their dividend after the ordinary shareholders have been paid.

Accepted Answer

D

Question 24

24 A sports club was formed on 1 September 2019. What may appear in the receipts and payments account for the year ended 31 August 2020? A closing bank balance B closing inventory of club shop C depreciation of sports equipment D subscriptions in arrears

Accepted Answer

A

Question 25

25 A manufacturing company provided the following information. $ cost of raw materials 186 000 direct wages 75 000 machinery depreciation 45 000 factory supervisor’s salary 32 000 factory rent 24 000 machinery repairs 18 000 What was the prime cost of manufacturing? A $186 000 B $261 000 C $293 000 D $380 000

Accepted Answer

B

Question 26

26 A manufacturer’s work in progress at the start of the year was valued at $850. At the end of the year it was valued at $10 200. What was the effect of this increase on the cost of production and the cost of sales? cost of cost of production sales A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

A

Question 27

27 A trader made the following forecasts for the business for the next financial year. average inventory $80 000 rate of inventory turnover 6 times mark-up 25% What are the forecast sales for the next financial year? A $360 000 B $480 000 C $576 000 D $600 000

Accepted Answer

D

Question 28

28 Kim’s trade payables turnover increased. What could have caused this? A Kim’s customers took longer to pay their accounts. B Kim’s credit purchases increased. C Kim’s sales revenue increased. D Kim took longer to pay her credit suppliers.

Accepted Answer

D

Question 29

29 A company provided the following information about its rate of inventory turnover. year 1 24 times year 2 25 times year 3 27 times What would explain the changes in the ratio? A cost of sales is decreasing B inventory is increasing C sales volume is increasing D selling price is increasing

Accepted Answer

C

Question 30

30 A company provided the following information about its current ratio. year 1 2.3 : 1 year 2 2.4 : 1 year 3 2.5 : 1 What would explain the changes in the ratio? A Inventory is decreasing. B Other payables are increasing. C Other receivables are increasing. D Trade receivables are decreasing.

Accepted Answer

C

Question 31

31 A trader wants to improve his gross margin. How can this be done? A Reduce administrative expenses. B Reduce depreciation of equipment. C Reduce rate of cash discount allowed. D Reduce rate of trade discount allowed.

Accepted Answer

D

Question 32

32 Zak has depreciated his machinery at the rate of 20% per annum using the straight-line method. At 31 December 2018 the statement of financial position included: $ machinery at cost 30 000 depreciation to date 12 000 18 000 On 31 December 2019 Zak was considering calculating the annual depreciation at 20% per annum on the net book value of the machinery. Which statement is correct? A depreciation would be $3600 applying the consistency principle B depreciation would be $3600 applying the prudence principle C depreciation would be $6000 applying the consistency principle D depreciation would be $6000 applying the prudence principle

Accepted Answer

C

Question 33

33 The financial statements of a business are prepared on the basis that it will continue to operate for many years into the future. Which accounting principle is being applied? A business entity B going concern C money measurement D realisation

Accepted Answer

B

Question 34

34 When Marina opened a business she purchased a stapler for the office. She recorded this as office expenses rather than as office equipment. Which accounting principle did Marina apply? A consistency B historic cost C materiality D prudence

Accepted Answer

C

Question 35

35 What is not an aim of international accounting standards? A to ensure accounting standards in different countries agree B to establish an organisation to set standards in every country C to make it easier to compare companies’ financial statements D to reduce the variety of accounting practices worldwide

Accepted Answer

B

Question paper16 pages

Mark scheme3 pages

Questions as text

Q1 · A trader prepares financial statements each year

Q2 · The following balances appeared in Hussein's books

Q3 · The following account appeared in the books of Mary

Q4 · Which business document is used to update the cash book for standing order payments?

Q5 · On 1 March 2020 the bank column of a cash book had a credit balance of $290

Q6 · Ziningi prepared a trial balance

Q7 · Rent received from a tenant was debited to the rent receivable account and credited to…

Q8 · A computer system purchased from Ace Computers for $1430 had been incorrectly recorded as…

Q9 · Kate calculated her draft profit for the year at $28 400

Q10 · What would not be included in a sales ledger control account?

Q11 · A trader debited the cost of repairing office equipment to the office equipment account

Q12 · A trader uses the reducing balance method of depreciation

Q13 · Rashid provided the following information at 31 December

Q14 · At the end of his financial year on 31 August 2020 a trader had prepaid insurance

Q15 · Hayley’s financial year ends on 30 September 2020

Q16 · The balances in the books of Jason on 1 July 2019 included the following

Q17 · Nirmal sells two products, product G and product H

Q18 · Which items will not be shown in an income statement prepared for a service business?

Q19 · A trader provided the following information

Q20 · John and Mark are in partnership

Q21 · A partnership maintains both current and capital accounts for each partner

Q22 · Z Limited provided the following information

Q23 · Which statement about preference shares is not correct?

Q24 · A sports club was formed on 1 September 2019

Q25 · A manufacturing company provided the following information

Q26 · A manufacturer’s work in progress at the start of the year was valued at $850

Q27 · A trader made the following forecasts for the business for the next financial year

Q28 · Kim’s trade payables turnover increased

Q29 · A company provided the following information about its rate of inventory turnover

Q30 · A company provided the following information about its current ratio

Q31 · A trader wants to improve his gross margin

Q32 · Zak has depreciated his machinery at the rate of 20% per annum using the straight-line…

Q33 · The financial statements of a business are prepared on the basis that it will continue to…

Q34 · When Marina opened a business she purchased a stapler for the office

Q35 · What is not an aim of international accounting standards?

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