The accounting equation — Paper 1 · IGCSE Accounting 0452

2 A business provided the following information on 1 February 2019. $ non-current assets 75 000 current assets 40 000 current liabilities 25 000 The business made a profit of $10 000 for the year ended 31 January 2020. The owner did not make any drawings during the year. What was the capital on 31 January 2020? A $35 000 B $50 000 C $70 000 D $100 000

1 marks

Answer: D

This question in 0452/12 Feb/March 2020

18 Hassan had the following assets on 31 January 2020. $ premises 12 000 inventory 500 balance at bank 360 goodwill 3 000 cash 120 There were no liabilities on 31 January 2020. Which entries will be made in Hassan’s statement of financial position on 31 January 2020? intangible non-current current capital assets assets assets $ $ $ $ A nil 12 000 980 12 980 B nil 15 000 480 15 480 C 3000 12 000 980 15 980 D 3000 15 000 480 18 480

1 marks

Answer: C

This question in 0452/12 Feb/March 2020

20 On 31 December 2019 John had net assets of $2000 and capital of $2000. On 1 January 2020, goods costing $140 were sold on credit for $220. What was the effect of this transaction on the statement of financial position? net assets capital $ $ A 80 decrease 80 decrease B 80 increase 80 increase C 220 decrease 220 decrease D 220 increase 220 increase

1 marks

Answer: B

This question in 0452/11 May/June 2020

26 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000. Which transactions caused this? capital introduced drawings $ $ A 1000 8200 B 1200 6000 C 2000 8800 D 2200 4600

1 marks

Answer: A

This question in 0452/11 May/June 2020

3 A trader bought new fixtures. He paid half of the purchase price in cash and agreed to pay the balance in two months’ time. How does this purchase affect the accounting equation? owner’s assets liabilities equity A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase

1 marks

Answer: D

This question in 0452/12 May/June 2020

3 A trader bought new fixtures. He paid half of the purchase price in cash and agreed to pay the balance in two months’ time. How does this purchase affect the accounting equation? owner’s assets liabilities equity A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase

1 marks

Answer: D

This question in 0452/13 May/June 2020

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

1 marks

Answer: B

This question in 0452/11 Oct/Nov 2020

3 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

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2020

4 What does the owner’s equity consist of? A the amount of money in the business bank account B the amount owed by the business to the owner C the total of the assets owned by the business D the total of the current assets less the current liabilities

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2020

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

1 marks

Answer: B

This question in 0452/13 Oct/Nov 2020

2 What are assets? amounts owed amounts owed items owned to a business by a business by a business A no no yes B no yes yes C yes no yes D yes yes no

1 marks

Answer: C

This question in 0452/12 Feb/March 2021

2 What increases owner’s capital? A bank loan extended from five to ten years B purchase of inventory on credit C purchase of machinery by cheque D transfer of vehicle to business from private use

1 marks

Answer: D

This question in 0452/11 May/June 2021

19 A business provided the following information. $ long-term loan 20 000 trade receivables 12 000 trade payables 9 700 bank overdraft 2 000 prepaid insurance 400 accrued wages 1 000 rent receivable prepaid 500 What was the total of the current liabilities? A $13 200 B $15 400 C $31 200 D $32 700

1 marks

Answer: A

This question in 0452/11 May/June 2021

2 What increases owner’s capital? A bank loan extended from five to ten years B purchase of inventory on credit C purchase of machinery by cheque D transfer of vehicle to business from private use

1 marks

Answer: D

This question in 0452/12 May/June 2021

2 What increases owner’s capital? A bank loan extended from five to ten years B purchase of inventory on credit C purchase of machinery by cheque D transfer of vehicle to business from private use

1 marks

Answer: D

This question in 0452/13 May/June 2021

2 Which formulas may be used for the accounting equation? 1 assets = owner’s equity minus liabilities 2 liabilities = assets minus owner’s equity 3 owner’s equity = assets plus liabilities 4 owner’s equity plus liabilities = assets A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4

1 marks

Answer: C

This question in 0452/12 Oct/Nov 2021

18 What is shown in the capital and liabilities section of a statement of financial position of a business? A how the resources are being used by the business B the working capital of the business C total amounts owed by and to the business D where the resources of the business have come from

1 marks

Answer: D

This question in 0452/12 Oct/Nov 2021

19 John maintains a full set of accounting records. Why does he also prepare a statement of financial position? A to calculate the profit for the year B to check if assets equal capital plus liabilities C to show the transactions which took place during the year D to summarise what the business owns and what it owes

1 marks

Answer: D

This question in 0452/12 Oct/Nov 2021

20 A sole trader paid off the business’s overdraft using his own personal funds. How did this affect the statement of financial position? liabilities capital assets A no effect increase increase B decrease increase increase C decrease increase no effect D decrease no effect increase

1 marks

Answer: C

This question in 0452/12 Oct/Nov 2021

2 Which item is an asset? A an amount owing by credit customers B an amount owing to credit suppliers C interest accrued on bank loan D rent received in advance from tenant

1 marks

Answer: A

This question in 0452/12 Feb/March 2022

22 A business provided the following information. $ current assets 25 000 current liabilities 12 000 non-current assets 18 000 non-current liabilities 21 000 What was the capital of the business? A $10 000 B $22 000 C $31 000 D $43 000

1 marks

Answer: A

This question in 0452/12 Feb/March 2022

23 A trader bought a machine for use in the business. He paid a part of the cost in cash and agreed to pay the remaining part in 15 months’ time. In addition to the non-current assets, which items in the statement of financial position will increase as a result of this transaction? current current non-current assets liabilities liabilities Jv Jv Jv 0 0O WwW > v x v x v x x x v

1 marks

Answer: D

This question in 0452/12 Feb/March 2022

2 What is the accounting equation? A assets = capital – liabilities B assets = liabilities – capital C assets – liabilities = capital D assets + capital = liabilities

1 marks

Answer: C

This question in 0452/11 May/June 2022

2 Which transaction will increase both assets and capital by the same amount? A A credit customer settled his account after deducting a cash discount. B Goods were sold for cash at a price higher than their cost price. C Rent received included an amount prepaid for the next accounting period. D The owner repaid a business loan from his personal bank account.

1 marks

Answer: B

This question in 0452/11 Oct/Nov 2022

1 Which transaction will increase both assets and capital by the same amount? A A credit customer settled his account after deducting a cash discount. B Goods were sold for cash at a price higher than their cost price. C Rent received included an amount prepaid for the next accounting period. D The owner repaid a business loan from his personal bank account.

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2022

18 How would current assets be listed if they are arranged in decreasing order of liquidity? A bank, cash, trade receivables, inventory B cash, bank, trade receivables, inventory C inventory, trade receivables, bank, cash D inventory, trade receivables, cash, bank

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2022

2 Which transaction will increase both assets and capital by the same amount? A A credit customer settled his account after deducting a cash discount. B Goods were sold for cash at a price higher than their cost price. C Rent received included an amount prepaid for the next accounting period. D The owner repaid a business loan from his personal bank account.

1 marks

Answer: B

This question in 0452/13 Oct/Nov 2022

22 A service business provided the following information at the end of the year. $ non-current assets 16 000 trade receivables 150 capital 14 100 trade payables 800 What was the bank balance? A $1250 credit B $1250 debit C $2850 credit D $2850 debit

1 marks

Answer: A

This question in 0452/12 Feb/March 2023

2 Padma started a business on 1 April 2022 with $30 000 of her own money. On 31 March 2023, her assets and liabilities were as shown. $ machinery at net book value 38 000 other assets 15 000 long-term loan from bank 16 500 What was Padma’s capital on 31 March 2023? A $30 000 B $36 500 C $46 500 D $53 000

1 marks

Answer: B

This question in 0452/11 May/June 2023

30 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000. Which transactions caused this? capital introduced drawings $ $ A 1000 8200 B 1200 6000 C 2000 8800 D 2200 4600

1 marks

Answer: A

This question in 0452/11 May/June 2023

2 Which components of a statement of financial position do descriptions 1, 2 and 3 relate to? 1 finance and other resources that have been provided by the owner 2 money owed for goods supplied, unpaid expenses and loans made to the business 3 property owned by the business, amounts owed by customers, unsold goods and money in the bank 1 2 3 A assets capital liabilities B assets liabilities capital C capital assets liabilities D capital liabilities assets

1 marks

Answer: D

This question in 0452/12 May/June 2023

2 Which components of a statement of financial position do descriptions 1, 2 and 3 relate to? 1 finance and other resources that have been provided by the owner 2 money owed for goods supplied, unpaid expenses and loans made to the business 3 property owned by the business, amounts owed by customers, unsold goods and money in the bank 1 2 3 A assets capital liabilities B assets liabilities capital C capital assets liabilities D capital liabilities assets

1 marks

Answer: D

This question in 0452/13 May/June 2023

1 Which action does not reduce the owner’s capital? A business expenses paid using a personal cheque B cash withdrawn from the business bank account for personal use C goods taken from inventory for personal use D personal expenses paid using business cash

1 marks

Answer: A

This question in 0452/11 Oct/Nov 2023

2 Which statement correctly describes the accounting equation? A capital = assets – liabilities B capital = assets + liabilities C capital = current assets – current liabilities D capital = current assets + current liabilities

1 marks

Answer: A

This question in 0452/11 Oct/Nov 2023

30 The capital of a business is higher at the end of year 2 than it was at the end of year 1. No additional capital has been introduced during year 2. What does this mean? A The business has made a loss. B The business has made a profit. C The business has sold some non-current assets. D The business has taken a long-term loan.

1 marks

Answer: B

This question in 0452/11 Oct/Nov 2023

2 A trader supplied the following information at her year end. $ non-current assets 4000 inventory 350 trade receivables 180 cash at bank 650 debit trade payables 280 What was the trader’s capital? A $4900 B $5100 C $5180 D $5460

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2023

20 A trader has capital of $24 400. His non-current assets are $16 100 and his current liabilities are $4500. There are no non-current liabilities. What is the amount of his current assets? A $8300 B $11 600 C $12 800 D $28 900

1 marks

Answer: C

This question in 0452/12 Oct/Nov 2023

1 Which action does not reduce the owner’s capital? A business expenses paid using a personal cheque B cash withdrawn from the business bank account for personal use C goods taken from inventory for personal use D personal expenses paid using business cash

1 marks

Answer: A

This question in 0452/13 Oct/Nov 2023

2 Which statement correctly describes the accounting equation? A capital = assets – liabilities B capital = assets + liabilities C capital = current assets – current liabilities D capital = current assets + current liabilities

1 marks

Answer: A

This question in 0452/13 Oct/Nov 2023

2 Amarjit had the following closing balances in his books at the end of the year. $ non–current assets 25 000 trade receivables 11 000 bank overdraft 3 000 other payables 600 What was Amarjit’s capital at the end of the year? A $7 400 B $10 400 C $32 400 D $38 400

1 marks

Answer: C

This question in 0452/12 Feb/March 2024

2 The balances remaining on the books of a business after the preparation of the income statement included the following: $ loan from XYY Finance 10 000 wages due 620 rent prepaid 240 trade receivables 3 300 trade payables 4 650 motor vehicles 8 000 provision for depreciation of motor vehicles 2 000 What was the total of the liabilities? A $13 920 B $14 890 C $15 270 D $17 270

1 marks

Answer: C

This question in 0452/12 May/June 2024

21 Which item is a current asset? A bank overdraft B loan repayable in 12 months C prepaid income D work in progress

1 marks

Answer: D

This question in 0452/12 May/June 2024

2 The balances remaining on the books of a business after the preparation of the income statement included the following: $ loan from XYY Finance 10 000 wages due 620 rent prepaid 240 trade receivables 3 300 trade payables 4 650 motor vehicles 8 000 provision for depreciation of motor vehicles 2 000 What was the total of the liabilities? A $13 920 B $14 890 C $15 270 D $17 270

1 marks

Answer: C

This question in 0452/13 May/June 2024

2 At the end of her first year of trading Zoe had $6500 in her business bank account. Then she paid $5000 of her own money into the business bank account. She used $2000 of this amount to repay a business loan. What effect would these transactions have on her assets, capital and liabilities? assets capital liabilities $ $ $ A –3000 –5000 +2000 B +3000 +5000 –2000 C +3000 +3000 unchanged D +5000 +5000 unchanged

1 marks

Answer: B

This question in 0452/11 Oct/Nov 2024

2 A trader bought new fixtures. He paid half the purchase price in cash and agreed to pay the balance at a later date. How does this purchase affect the accounting equation? assets owner’s equity liabilities A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase

1 marks

Answer: D

This question in 0452/12 Oct/Nov 2024

34 Which accounting principle is the accounting equation based on? A duality B going concern C materiality D realisation

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2024

2 At the end of her first year of trading Zoe had $6500 in her business bank account. Then she paid $5000 of her own money into the business bank account. She used $2000 of this amount to repay a business loan. What effect would these transactions have on her assets, capital and liabilities? assets capital liabilities $ $ $ A –3000 –5000 +2000 B +3000 +5000 –2000 C +3000 +3000 unchanged D +5000 +5000 unchanged

1 marks

Answer: B

This question in 0452/13 Oct/Nov 2024

2 A transaction has had the following effects. assets liabilities capital decrease decrease increase The business is not overdrawn at the bank. Which transaction has happened? A A payment was made to a credit supplier after taking a cash discount. B A payment was received from a credit customer after allowing a cash discount. C Goods were sold to a credit customer for less than their cost price. D Goods were sold to a credit customer for more than their cost price.

1 marks

Answer: A

This question in 0452/12 Feb/March 2025

22 What is shown in the capital and liabilities section of a statement of financial position of a business? A how the resources are being used by the business B the working capital of the business C total amounts owed by the business and total amounts owed to the business D where the resources of the business have come from

1 marks

Answer: D

This question in 0452/12 Feb/March 2025

2 What are assets? amounts owed amounts owed items owned to a business by a business by a business A no no yes B no yes yes C yes no yes D yes yes no

1 marks

Answer: C

This question in 0452/11 May/June 2025

27 A trader’s assets increased by $25 000 and liabilities decreased by $5000 during the year. He took no drawings during the year. What was the profit or loss for the year? A $20000 loss B $20000 profit C $30000 loss D $30000 profit

1 marks

Answer: D

This question in 0452/11 May/June 2025

2 How is owner’s equity calculated? A total assets −total liabilities B total assets + total liabilities C current assets −current liabilities D non-current assets −non-current liabilities

1 marks

Answer: A

This question in 0452/12 May/June 2025

30 Gustav began a business on 1 January 2023 with $50000 capital. He provided the following information for the year ended 31 December 2024. $ capital opening balance 58000 additional capital introduced 2000 drawings for the year 9880 capital closing balance 60156 How much profit did Gustav make in 2024? A $4156 B $8000 C $10036 D $18036

1 marks

Answer: C

This question in 0452/12 May/June 2025

2 What are assets? amounts owed amounts owed items owned to a business by a business by a business A no no yes B no yes yes C yes no yes D yes yes no

1 marks

Answer: C

This question in 0452/13 May/June 2025

27 A trader’s assets increased by $25 000 and liabilities decreased by $5000 during the year. He took no drawings during the year. What was the profit or loss for the year? A $20000 loss B $20000 profit C $30000 loss D $30000 profit

1 marks

Answer: D

This question in 0452/13 May/June 2025

2 What are liabilities? A amounts that are owed to or owned by a business B amounts that are owed to others for resources provided C amounts that need to be written off D amounts that the owner owes to the business

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2025

31 The assets of a business increased by $22 000 and its liabilities decreased by $6000 over a one-year period. During this period, the owner invested an additional $4000 of private funds into the business and withdrew $7000 for personal use. How much was the profit for the year? A $13000 B $17000 C $19000 D $31000

1 marks

Answer: D

This question in 0452/12 Oct/Nov 2025

2 What increases owner’s capital? A bank loan extended from five to ten years B purchase of inventory on credit C purchase of machinery by cheque D transfer of vehicle to the business from private use

1 marks

Answer: D

This question in 0452/13 Oct/Nov 2025