Cambridge IGCSE Accounting (9-1) 0985 — 2020 May/June Paper 1 · Variant 1

Question 1

1 Which statement is correct? A Accounting involves measuring profits and losses. B Accounting is the recording of financial transactions. C Book-keeping involves communicating financial data. D Book-keeping requires the use of ratio analysis.

Accepted Answer

A

Question 2

2 The balances remaining on the books of a business after the preparation of the income statement included the following. $ loan from XY 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

Accepted Answer

C

Question 3

3 On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was returned unpaid by the bank. What entry would Nina make on 12 April? account to be debited account to be credited A irrecoverable debts bank B irrecoverable debts Zaffar C provision for doubtful debts Zaffar D Zaffar bank

Accepted Answer

D

Question 4

4 Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520. The following transactions took place during April. April 2 Ann returned goods, $30, to Cindy. 14 Ann bought goods, $210, from Cindy, and paid in cash. Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct? A Ann owes Cindy $490. B Ann owes Cindy $700. C Cindy owes Ann $490. D Cindy owes Ann $700.

Accepted Answer

A

Question 5

5 Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo keeps a full double entry system. Where will Tumelo record the return of goods? A cash book and sales ledger B general ledger only C general ledger and purchases ledger D purchases ledger only

Accepted Answer

C

Question 6

6 Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or received the following documents in April. $ April  7 invoice 360 12 cheque (after deducting $11 cash discount) 429 13 debit note 50 15 credit note 50 What was the closing balance on the statement of account on 30 April? A $260 B $310 C $321 D $421

Accepted Answer

B

Question 7

7 What is recorded in the sales journal? A all money received from sales B all sales transactions C cash sales transactions D credit sales transactions

Accepted Answer

D

Question 8

8 Which statement about a two-column cash book is correct? A It is a ledger account for bank transactions only. B It is a ledger account for cash transactions only. C It is a book of prime entry. D It records cash discounts.

Accepted Answer

C

Question 9

9 Which statements about trade discount are correct? 1 It is debited to the supplier’s account. 2 It is only given if the invoice is paid within the period allowed by the supplier. 3 It is shown as a deduction from the price of the goods on an invoice. 4 It is used to encourage bulk buying. A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4

Accepted Answer

D

Question 10

10 Why is a trial balance prepared? A to analyse the financial information B to assist preparation of financial statements C to control the costs of the business D to evaluate the performance of the business

Accepted Answer

B

Question 11

11 The income statement of a business showed a loss for the year of $16 000. On checking the books the following errors were discovered. 1 No adjustment had been made for insurance prepaid, $480. 2 No entry had been made for bank charges, $620. What was the correct loss for the year? A $14 900 B $15 860 C $16 140 D $17 100

Accepted Answer

C

Question 12

12 Peter’s bank statement showed a debit balance of $600 on 1 April. The following transactions took place in April. $ total cheque deposits 7400 total cheque payments 6200 direct debit for insurance premium 180 credit transfer from customer 450 What was the bank statement balance on 30 April? A $870 credit B $870 debit C $2070 credit D $2070 debit

Accepted Answer

A

Question 13

13 A sales ledger control account had a debit balance of $10 000. It was found that a $2000 contra entry to the purchases ledger control account had been entered on the wrong side of the sales ledger control account. What was the correct debit balance on the sales ledger control account? A $6000 B $8000 C $12 000 D $14 000

Accepted Answer

A

Question 14

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

Accepted Answer

C

Question 15

15 A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information. cost $20 000 working life 4 years residual value $4000 It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year of correcting this error? A decrease by $2000 B increase by $2000 C decrease by $6000 D increase by $6000

Accepted Answer

A

Question 16

16 A company’s financial year ended on 31 December 2019. On 1 December 2019 it paid rent, $8000, for the four months ending 31 March 2020. What was the opening balance on the rent account on 1 January 2020? A $2000 credit B $2000 debit C $6000 credit D $6000 debit

Accepted Answer

D

Question 17

17 Alice’s financial year ends on 31 December. The balances on her books on 1 January 2020 included the following. $ commission receivable 250 debit rent receivable 500 credit What do these balances represent? commission receivable rent receivable A income outstanding income outstanding B income outstanding income prepaid C income prepaid income outstanding D income prepaid income prepaid

Accepted Answer

B

Question 18

18 Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by $250. Which journal entry records an increase in the provision for doubtful debts? debit credit $ $ A credit customer 250 income statement 250 B income statement 250 credit customer 250 C income statement 250 provision for doubtful debts 250 D provision for doubtful debts 250 income statement 250

Accepted Answer

C

Question 19

19 Which items are deducted from the gross profit when calculating the profit for the year? 1 balance on the provision for doubtful debts account 2 carriage paid on goods supplied to customers 3 drawings made by the owner during the year 4 wages paid to employees during the year A 1, 2 and 3 B 1 and 4 C 2 and 3 only D 2 and 4

Accepted Answer

D

Question 20

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

Accepted Answer

B

Question 21

21 At the end of his financial year, Raminder made an adjustment for rent owed by a tenant. How did this affect Raminder’s financial statements? profit for current assets the year A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

D

Question 22

22 The owner of a business took goods for his own use but forgot to make an entry in the accounts. What was the effect of this error? profit for the year capital employed A overstated no effect B overstated understated C understated no effect D understated overstated

Accepted Answer

C

Question 23

23 Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership agreement. They provided the following information. Rajid Sunil capital introduced 1 January 2019 $40 000 $20 000 during the year ended 31 December 2019 drawings $5 000 $3 500 share of work 50% 50% They decided to draw up a partnership agreement for future years. Which item would be most beneficial to Rajid in 2020? A interest on capital B interest on drawings C limit on annual drawings D partnership salaries

Accepted Answer

A

Question 24

24 Harry and Jane are in partnership. The following information relates to Harry for the financial year. $ salary 8000 drawings 2800 share of profit 4600 The opening credit balance on Harry’s current account was $28 200. What was the closing balance on his current account? A $30 000 B $38 000 C $40 800 D $43 600

Accepted Answer

B

Question 25

25 Which item is shown in the income statement of a company and statement of changes in equity? A interest on debentures accrued B ordinary share dividend paid C profit for the year D transfer to general reserve

Accepted Answer

C

Question 26

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

Accepted Answer

A

Question 27

27 Ahmed provided the following information. $ trade receivables at 1 January 2019 15 000 for the year ended 31 December 2019: credit sales 85 000 cash sales 12 000 cheques received from trade receivables 65 000 irrecoverable debts 2 000 By how much had the trade receivables increased by the end of the financial year? A $18 000 B $30 000 C $33 000 D $45 000

Accepted Answer

A

Question 28

28 Gordon provided the following information for the year. revenue $90 000 opening inventory $8 000 closing inventory $2 000 mark up 50% Gordon took goods, $7000, for his own use. What were the purchases? A $43 000 B $47 000 C $54 000 D $61 000

Accepted Answer

D

Question 29

29 A trader provided the following information. $ for the year ended 31 March 2020 revenue 250 000 purchases: cash 125 000 credit 115 000 at March 2020 trade payables 9 765 What was the trade payables turnover? A 14 days B 15 days C 29 days D 31 days

Accepted Answer

D

Question 30

30 On 1 January 2019 current assets totalled $16 000 and the current ratio was 2 : 1. On 31 December 2019 the current liabilities had increased by 50% and the current ratio was 1.5 : 1. What was the value of the current assets on 31 December 2019? A $16 000 B $18 000 C $32 000 D $36 000

Accepted Answer

B

Question 31

31 A company provided the following information about its liquid (acid test) ratio. Year 1 1.2 : 1 Year 2 1.4 : 1 Year 3 1.6 : 1 Which would explain the changes in the ratio? A Inventory is increasing. B Other payables are decreasing. C Trade payables are increasing. D Trade receivables are decreasing.

Accepted Answer

B

Question 32

32 Which user of accounting statements is interested in past performance and taking remedial action where necessary? A government B investors C managers D suppliers

Accepted Answer

C

Question 33

33 Rashid’s financial year ends on 31 December. He paid rent on 1 February, 1 May, 1 August and 1 November. An adjustment was made in the income statement for rent prepaid. Which accounting principle was applied? A duality B matching C money measurement D prudence

Accepted Answer

B

Question 34

34 Which statement describes the going concern principle? A Accounting methods must be used consistently from one accounting period to the next. B It is assumed that the business will continue to operate for the foreseeable future. C Revenue is earned when legal title to goods passes from the seller to the buyer. D The business is treated as being completely separate from the owner of the business.

Accepted Answer

B

Question 35

35 Brad purchased a machine for $1000 on 1 January 2019. The machine was expected to last for four years and have no residual value. On 31 December 2019 the same machine cost $1200 to purchase. At which value should the machine be included in the statement of financial position on 31 December 2019? A current cost with no depreciation B current cost with one year’s depreciation C original purchase price with no depreciation D original purchase price with one year’s depreciation

Accepted Answer

D

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · Which statement is correct?

Q2 · The balances remaining on the books of a business after the preparation of the income…

Q3 · On 2 April Nina received a cheque from Zaffar, a credit customer

Q4 · Ann is a trader

Q5 · Goods bought on credit by Tumelo from Tebogo are returned before they are paid for

Q6 · Dave supplies goods to Peter on credit

Q7 · What is recorded in the sales journal?

Q8 · Which statement about a two-column cash book is correct?

Q9 · Which statements about trade discount are correct?

Q10 · Why is a trial balance prepared?

Q11 · The income statement of a business showed a loss for the year of $16 000

Q12 · Peter’s bank statement showed a debit balance of $600 on 1 April

Q13 · A sales ledger control account had a debit balance of $10 000

Q14 · A business had a new extension to its workshop premises

Q15 · A non-current asset was depreciated at the end of the first year of ownership using the…

Q16 · A company’s financial year ended on 31 December 2019

Q17 · Alice’s financial year ends on 31 December

Q18 · Joseph sells goods on credit and maintains a provision for doubtful debts

Q19 · Which items are deducted from the gross profit when calculating the profit for the year?

Q20 · On 31 December 2019 John had net assets of $2000 and capital of $2000

Q21 · At the end of his financial year, Raminder made an adjustment for rent owed by a tenant

Q22 · The owner of a business took goods for his own use but forgot to make an entry in the…

Q23 · Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership…

Q24 · Harry and Jane are in partnership

Q25 · Which item is shown in the income statement of a company and statement of changes in…

Q26 · Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000

Q27 · Ahmed provided the following information

Q28 · Gordon provided the following information for the year

Q29 · A trader provided the following information

Q30 · On 1 January 2019 current assets totalled $16 000 and the current ratio was 2 : 1

Q31 · A company provided the following information about its liquid (acid test) ratio

Q32 · Which user of accounting statements is interested in past performance and taking remedial…

Q33 · Rashid’s financial year ends on 31 December

Q34 · Which statement describes the going concern principle?

Q35 · Brad purchased a machine for $1000 on 1 January 2019

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