Capital and revenue expenditure and receipts — Paper 1 · IGCSE Accounting 0452

10 When Mark started a car repair business, he purchased premises and equipment. Two years later he spent $5000 on building an extension, $600 on new equipment and $750 on repainting the original premises. By how much will the non-current assets increase because of these transactions? A $5000 B $5600 C $5750 D $6350

1 marks

Answer: B

This question in 0452/12 Feb/March 2020

11 A farmer sold a piece of land at market value. How should the proceeds of this sale be treated? A as a capital receipt B as a revenue receipt C as capital expenditure D as revenue expenditure

1 marks

Answer: A

This question in 0452/12 Feb/March 2020

14 A business had a new extension to its workshop premises. It incurred the following expenditure. $ building cost 65 000 legal fees 1 800 air conditioning system for the original workshop 2 300 air conditioning system for the new workshop extension 1 100 decorating the original workshop 1 400 decorating the new workshop extension 800 What was the total capital expenditure of the business? A $67 900 B $70 200 C $71 000 D $72 400

1 marks

Answer: C

This question in 0452/11 May/June 2020

15 The following payments were made when a new machine was purchased. $ cost of the machine 32 000 charge for delivering the machine 1 800 insurance of the machine 2 000 wages of employees installing the machine 1 300 How much was the capital expenditure? A $32 000 B $33 300 C $35 100 D $37 100

1 marks

Answer: C

This question in 0452/12 May/June 2020

10 Sita discovers that $1000 received from the sale of fixtures had been entered in the sales account. Which journal entry corrected this error? debit credit $ $ bank 1000 A disposal of fixtures 1000 bank 1000 B fixtures 1000 sales 1000 C disposal of fixtures 1000 sales 1000 D fixtures 1000

1 marks

Answer: C

This question in 0452/13 May/June 2020

15 The following payments were made when a new machine was purchased. $ cost of the machine 32 000 charge for delivering the machine 1 800 insurance of the machine 2 000 wages of employees installing the machine 1 300 How much was the capital expenditure? A $32 000 B $33 300 C $35 100 D $37 100

1 marks

Answer: C

This question in 0452/13 May/June 2020

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

1 marks

Answer: A

This question in 0452/11 Oct/Nov 2020

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

1 marks

Answer: C

This question in 0452/11 Oct/Nov 2020

10 Motor vehicle expenses, $50, were incorrectly debited to the motor vehicles account. Which journal entry corrects this error? debit credit $ $ A motor vehicle expenses 50 motor vehicles 50 B motor vehicles 50 motor vehicle expenses 50 C motor vehicles expenses 50 motor vehicles 50 suspense 100 D suspense 100 motor vehicles expenses 50 motor vehicles 50

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2020

15 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

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2020

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

1 marks

Answer: D

This question in 0452/13 Oct/Nov 2020

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

1 marks

Answer: A

This question in 0452/13 Oct/Nov 2020

11 What is the effect of treating an item of capital expenditure as revenue expenditure? 1 Cost of non-current assets is overstated. 2 Cost of non-current assets is understated. 3 Depreciation for the year is overstated. 4 Depreciation for the year is understated. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4

1 marks

Answer: D

This question in 0452/11 May/June 2021

15 Which statements about capital expenditure are correct? 1 It is money spent on day-to-day business operations. 2 It is money spent on purchasing non-current assets. 3 It is recorded in the statement of financial position. 4 It includes expenses relating to non-current assets. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4

1 marks

Answer: C

This question in 0452/12 May/June 2021

15 Which statements about capital expenditure are correct? 1 It is money spent on day-to-day business operations. 2 It is money spent on purchasing non-current assets. 3 It is recorded in the statement of financial position. 4 It includes expenses relating to non-current assets. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4

1 marks

Answer: C

This question in 0452/13 May/June 2021

13 A trader has purchased new business premises. What are examples of capital expenditure? 1 cost of heating and lighting the new premises 2 cost of purchasing the new premises 3 legal costs of purchasing the new premises 4 office furniture purchased for use in the new premises A 1 and 2 only B 1, 2 and 4 C 2, 3 and 4 D 3 and 4 only

1 marks

Answer: C

This question in 0452/12 Oct/Nov 2021

15 Which item should be treated as capital expenditure? A the annual depreciation on office premises B the cost of building an office extension C the cost of repairing office equipment D the purchase of a new computer for resale

1 marks

Answer: B

This question in 0452/12 Feb/March 2022

16 On the last day of the financial year, Khalid purchased office fittings, $900. This was incorrectly recorded as office expenses, $90. Khalid does not charge depreciation in the year of purchase. What was the effect on the profit for the year? A overstated by $810 B overstated by $990 C understated by $90 D understated by $900

1 marks

Answer: C

This question in 0452/12 Feb/March 2022

10 After the preparation of Abdul’s draft financial statements, two errors were discovered. The purchase of a machine by bank transfer, $5000, was omitted from the accounts. The purchase of a motor vehicle, $15 000, was entered in the motor vehicle repair account. What effect will correcting these errors have on the non-current assets and the working capital? non-current assets working capital $ $ A increase 15 000 decrease 5000 B increase 15 000 no effect C increase 20 000 decrease 5000 D increase 20 000 no effect

1 marks

Answer: C

This question in 0452/11 May/June 2022

14 The following payments were made by John when he purchased a machine. $ purchase of machine 10 000 delivery charge 1 200 insurance 800 installation charge 900 pre-paid maintenance charge 400 How much should have been debited to the machinery account? A $10 900 B $11 200 C $12 100 D $12 500

1 marks

Answer: C

This question in 0452/11 May/June 2022

8 After the preparation of Abdul’s draft financial statements, two errors were discovered. The purchase of a machine by bank transfer, $5000, was omitted from the accounts. The purchase of a motor vehicle, $15 000, was entered in the motor vehicle repair account. What effect will correcting these errors have on the non-current assets and the working capital? non-current assets working capital $ $ A increase 15 000 decrease 5000 B increase 15 000 no effect C increase 20 000 decrease 5000 D increase 20 000 no effect

1 marks

Answer: C

This question in 0452/12 May/June 2022

11 Maria’s draft income statement for the year ended 31 March 2022 showed a profit for the year of $38 750. On 31 December 2021, Maria received a 5% bank loan of $4800 which was incorrectly treated as a revenue receipt. In error, a whole year’s interest on the bank loan was included in the draft income statement for the year ended 31 March 2022. What was the correct profit for the year ended 31 March 2022? A $33 770 B $34 130 C $43 370 D $43 730

1 marks

Answer: B

This question in 0452/12 May/June 2022

8 After the preparation of Abdul’s draft financial statements, two errors were discovered. The purchase of a machine by bank transfer, $5000, was omitted from the accounts. The purchase of a motor vehicle, $15 000, was entered in the motor vehicle repair account. What effect will correcting these errors have on the non-current assets and the working capital? non-current assets working capital $ $ A increase 15 000 decrease 5000 B increase 15 000 no effect C increase 20 000 decrease 5000 D increase 20 000 no effect

1 marks

Answer: C

This question in 0452/13 May/June 2022

11 Maria’s draft income statement for the year ended 31 March 2022 showed a profit for the year of $38 750. On 31 December 2021, Maria received a 5% bank loan of $4800 which was incorrectly treated as a revenue receipt. In error, a whole year’s interest on the bank loan was included in the draft income statement for the year ended 31 March 2022. What was the correct profit for the year ended 31 March 2022? A $33 770 B $34 130 C $43 370 D $43 730

1 marks

Answer: B

This question in 0452/13 May/June 2022

12 Hamid purchased a motor vehicle from an overseas motor manufacturer. Which expenditure relating to the motor vehicle is capital expenditure? A delivery charge B insurance C petrol D replacement tyres

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2022

10 Mona paid $32 000 for a new motor vehicle. This included $100 for fuel and $250 for road tax. She debited the purchases account and credited the bank account with $32 000. Which journal entry corrects this error? debit credit $ $ A motor vehicle 32 000 purchases 32 000 B purchases 32 000 motor vehicles 32 000 C motor vehicles 31 650 motor vehicle expenses 350 purchases 32 000 D purchases 32 000 motor vehicles 31 650 motor vehicle expenses 350

1 marks

Answer: C

This question in 0452/12 Feb/March 2023

15 The following payments were made when a new machine was purchased. $ cost of the machine 32 000 charge for delivering the machine 1 800 insurance of the machine 2 000 wages of employees installing the machine 1 300 How much was the capital expenditure? A $32 000 B $33 300 C $35 100 D $37 100

1 marks

Answer: C

This question in 0452/12 Feb/March 2023

4 Ted, a manufacturer, purchased a machine on credit from T Limited. How did Ted record this? account debited account credited A T Limited machinery B T Limited purchases C machinery T Limited D purchases T Limited

1 marks

Answer: C

This question in 0452/11 May/June 2023

15 A trader’s expenditure during the year includes the following amounts. $ redecoration of premises 5 000 insurance of motor vehicles 2 000 purchase of machinery 10 000 How much should the trader charge to her income statement for the year? A $7000 B $10 000 C $12 000 D $17 000

1 marks

Answer: A

This question in 0452/11 May/June 2023

21 Which group consists of only intangible assets? A bank balance, brand names, goodwill B bank balance, trademarks, trade receivables C brand names, goodwill, trademarks D goodwill, trademarks, trade receivables

1 marks

Answer: C

This question in 0452/11 May/June 2023

14 A wholesaler had the following transactions. sold goods, $30 000, on credit received cheque, $12 000, from sale of old fixtures at book value How would these amounts be classified? revenue receipt capital receipt $ $ A nil 42 000 B 12 000 30 000 C 30 000 12 000 D 42 000 nil

1 marks

Answer: C

This question in 0452/12 May/June 2023

15 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

1 marks

Answer: A

This question in 0452/12 May/June 2023

14 A wholesaler had the following transactions. sold goods, $30 000, on credit received cheque, $12 000, from sale of old fixtures at book value How would these amounts be classified? revenue receipt capital receipt $ $ A nil 42 000 B 12 000 30 000 C 30 000 12 000 D 42 000 nil

1 marks

Answer: C

This question in 0452/13 May/June 2023

15 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

1 marks

Answer: A

This question in 0452/13 May/June 2023

15 Which transaction is capital expenditure? A capital introduced by the owner B payment of wages C purchase of a new computer D repair of equipment

1 marks

Answer: C

This question in 0452/11 Oct/Nov 2023

3 A trader, Karim, purchases a new vehicle by cheque. He will use the vehicle to deliver goods to his customers. How should Karim record this transaction in his books? account to account to be debited be credited A bank motor vehicles B bank purchases C motor vehicles bank D purchases bank

1 marks

Answer: C

This question in 0452/12 Oct/Nov 2023

15 Which transaction is capital expenditure? A capital introduced by the owner B payment of wages C purchase of a new computer D repair of equipment

1 marks

Answer: C

This question in 0452/13 Oct/Nov 2023

15 After the preparation of his financial statements, a trader discovered the following errors. 1 A revenue receipt of $1000 had been recorded as a capital receipt. 2 Capital expenditure of $800 had been recorded as revenue expenditure. 3 A capital receipt of $900 had been recorded as a revenue receipt. What was the overall effect of these errors on the profit for the year? A overstated by $700 B overstated by $900 C understated by $700 D understated by $900

1 marks

Answer: D

This question in 0452/12 Feb/March 2024

14 Samir runs a car hire business. He received cash payments for car hire. He also received the proceeds from the sale of an old vehicle. Which type of receipts were they? proceeds from car hire sale of an old vehicle A capital capital B capital revenue C revenue capital D revenue revenue

1 marks

Answer: C

This question in 0452/11 May/June 2024

14 The cost of repairs to machinery was debited to the machinery account. What was the effect of this error? non-current assets profit for the year A overstated overstated B overstated understated C understated overstated D understated understated

1 marks

Answer: A

This question in 0452/12 May/June 2024

14 The cost of repairs to machinery was debited to the machinery account. What was the effect of this error? non-current assets profit for the year A overstated overstated B overstated understated C understated overstated D understated understated

1 marks

Answer: A

This question in 0452/13 May/June 2024

15 A limited company sells office equipment. The following amounts were recorded in the company’s books of account. 1 cash received from disposal of motor vehicle $6000 2 cash received from issue of shares $9000 3 discount received $8000 4 rent received $5000 What was the total of the capital receipts of the company? A $13000 B $14000 C $15000 D $23000

1 marks

Answer: C

This question in 0452/11 Oct/Nov 2024

14 Hamid owns a grocery store. He bought a motor vehicle, $2000, and fuel, $50. Both of these amounts were incorrectly debited to the purchases account. What was the effect of this error on the income statement for the year? gross profit motor vehicle expenses $ $ A overstated 2000 overstated 2050 B overstated 2050 overstated 50 C understated 2000 understated 2050 D understated 2050 understated 50

1 marks

Answer: D

This question in 0452/12 Oct/Nov 2024

15 A limited company sells office equipment. The following amounts were recorded in the company’s books of account. 1 cash received from disposal of motor vehicle $6000 2 cash received from issue of shares $9000 3 discount received $8000 4 rent received $5000 What was the total of the capital receipts of the company? A $13000 B $14000 C $15000 D $23000

1 marks

Answer: C

This question in 0452/13 Oct/Nov 2024

15 After preparing his financial statements, Jonty discovered two errors had been made in his accounting records. error 1 Vehicle repair costs of $1500 had been debited to the vehicles account. error 2 Legal fees of $2100, relating to the purchase of new premises, had been included in expenses. Ignoring depreciation, what was the effect of these errors on Jonty’s profit for the year? A $600 overstated B $600 understated C $3600 overstated D $3600 understated

1 marks

Answer: B

This question in 0452/12 Feb/March 2025

16 Which item is a revenue receipt? A cash invested by the owner of the business B proceeds from the sale of a non-current asset at book value C rent received from letting part of the premises D short-term loan received from a finance company

1 marks

Answer: C

This question in 0452/12 Feb/March 2025

9 After calculating his profit for the year, Yui discovered the following errors. 1 A purchase of a new motor vehicle for $3200 was debited to motor expenses. 2 The purchases account was overcast by $500. What was the effect on the profit for the year after correcting these errors (ignore depreciation)? A It decreased by $2700. B It decreased by $3700. C It increased by $2700. D It increased by $3700.

1 marks

Answer: D

This question in 0452/11 May/June 2025

14 What is the effect of incorrectly treating expenses as capital expenditure? income statement profit for the year expenses total A overstated overstated B overstated understated C understated understated D understated overstated

1 marks

Answer: B

This question in 0452/11 May/June 2025

14 When Mark started a car repair business, he purchased premises and equipment. Two years later, he spent $5000 on building an extension, $600 on new equipment and $750 on repainting the original premises. By how much will the non-current assets increase because of these transactions (ignore depreciation)? A $5000 B $5600 C $5750 D $6350

1 marks

Answer: B

This question in 0452/12 May/June 2025

9 After calculating his profit for the year, Yui discovered the following errors. 1 A purchase of a new motor vehicle for $3200 was debited to motor expenses. 2 The purchases account was overcast by $500. What was the effect on the profit for the year after correcting these errors (ignore depreciation)? A It decreased by $2700. B It decreased by $3700. C It increased by $2700. D It increased by $3700.

1 marks

Answer: D

This question in 0452/13 May/June 2025

14 What is the effect of incorrectly treating expenses as capital expenditure? income statement profit for the year expenses total A overstated overstated B overstated understated C understated understated D understated overstated

1 marks

Answer: B

This question in 0452/13 May/June 2025

15 At the beginning of the year on 1 January, Zac paid $420 for an equipment repair. He entered this amount in the equipment account. At the end of the year on 31 December, depreciation of 20% per annum was charged on the balance of the equipment account, using the straight-line method. What was the overall effect on the book value of the equipment on 31 December? A $84 understated B $336 overstated C $420 overstated D $504 understated

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2025

15 An owner bought machinery for her business costing $5000. This was entered as revenue expenditure in the accounting records. She also invested $2000 of additional capital into the business and entered this as a revenue receipt in the accounting records. What was the net effect of these errors on her profit for the year (ignore depreciation)? A $3000 overstated B $3000 understated C $7000 overstated D $7000 understated

1 marks

Answer: B

This question in 0452/13 Oct/Nov 2025