Cambridge IGCSE Accounting (9-1) 0985 — 2021 May/June Paper 1 · Variant 2

Question 1

1 Which statements about book-keeping and accounting are correct? 1 Accounting is performed periodically rather than daily. 2 Accounting relies on having accurate book-keeping records. 3 Book-keeping includes the preparation of financial statements. 4 Book-keeping involves the recording of financial transactions. A 1, 2 and 4 B 1 and 3 C 2, 3 and 4 D 2 and 4 only

Accepted Answer

A

Question 2

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

Accepted Answer

D

Question 3

3 William paid $500 in cash to Sonia for rent. How did Sonia record this? account debited account credited A cash rent receivable B rent receivable cash C rent receivable William D William rent receivable

Accepted Answer

A

Question 4

4 Abdul buys all his machinery on credit. He provided the following information. at 30 April 2020 at 30 April 2021 $ $ machinery at cost 30 000 42 000 amounts owing to suppliers of machinery 19 000 ? During the year Abdul paid $25 000 to the suppliers of his machinery. How much did he owe them on 30 April 2021? A $6000 B $13 000 C $17 000 D $32 000

Accepted Answer

A

Question 5

5 Shula’s financial year ends on 31 March. On 1 April 2021 there was a credit balance of $100 on Yasmin’s account in Shula’s purchases ledger. What does this mean? A Shula had paid $100 to Yasmin. B Shula owed $100 to Yasmin. C Yasmin had paid $100 to Shula. D Yasmin owed $100 to Shula.

Accepted Answer

B

Question 6

6 Hasina buys radios from Nazneen at a list price of $10 each. Hasina bought 12 radios and was offered 20% trade discount and 4% cash discount. Two radios were faulty and were returned to Nazneen. What was the total of the credit note issued by Nazneen? A $15.36 B $16.00 C $19.20 D $20.00

Accepted Answer

B

Question 7

7 Jameel sold goods on credit. Where did he first record the invoice he issued? A general journal B general ledger C sales journal D sales ledger

Accepted Answer

C

Question 8

8 Which statements about a three-column cash book are correct? 1 It contains ledger accounts for bank and cash. 2 It contains ledger accounts for discounts allowed and received. 3 It records transactions before they are recorded in the ledgers. A 1 and 2 B 1 and 3 C 2 and 3 D 3 only

Accepted Answer

B

Question 9

9 Which statement is not true about a trial balance? A It is a list of ledger account balances at a certain date. B It can assist in finding arithmetical errors. C It is part of the double entry system. D It is useful in preparing financial statements.

Accepted Answer

C

Question 10

10 Which error is an error of original entry? A sale of surplus office equipment on credit to Janet for $230 entered as $320 in both the disposal account and Janet’s account B sale of surplus office equipment on credit to Janet for $230 entered in the office equipment account and Jason’s account C sale of surplus office equipment on credit to Janet for $230 entered in the sales account and Janet’s account D sale of surplus office equipment on credit to Janet for $230 not entered in any accounts

Accepted Answer

A

Question 11

11 A cheque, $85, received from Shakeel, was credited to the account of Shamz. Which journal entry corrects this error? debit credit $ $ A bank 85 Shakeel 85 B Shakeel 85 Shamz 85 C Shamz 85 bank 85 D Shamz 85 Shakeel 85

Accepted Answer

D

Question 12

12 Jamal’s bank statement at 1 May 2021 showed a bank overdraft of $1460. At that date there were unpresented cheques of $385 and uncredited deposits of $255. What was the cash book balance on 1 May 2021? A $1330 credit B $1330 debit C $1590 credit D $1590 debit

Accepted Answer

C

Question 13

13 What is included in a purchases ledger control account? A cash purchases B debts written off as irrecoverable C discount allowed D goods returned to credit suppliers

Accepted Answer

D

Question 14

14 Javid’s sales ledger control account had a debit balance of $12 000. Interest on an overdue account, $40, and discount allowed, $150, had been omitted. What was the correct balance on the sales ledger control account? A $11 810 B $11 890 C $12 110 D $12 190

Accepted Answer

B

Question 15

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

Accepted Answer

C

Question 16

16 Nia sold equipment with a net book value of $200. The proceeds of the sale, $250, were credited to the sales account and debited in the cash book. What was the effect of this error on Nia’s gross profit and profit for the year? gross profit $ profit for the year $ A overstated 50 overstated 50 B overstated 200 understated 250 C overstated 250 overstated 200 D understated 250 understated 200

Accepted Answer

C

Question 17

17 Why does a business provide for depreciation on non-current assets? A to charge the cost of non-current assets against profit in the year of purchase B to ensure that non-current assets appear at book value in the statement of financial position C to ensure that the matching principle is applied when preparing financial statements D to retain cash in the business for replacement of non-current assets

Accepted Answer

C

Question 18

18 A machine with an original cost of $10 000 had been depreciated for two years at the rate of 10% per annum using the straight-line basis. It was then sold for cash with the loss on disposal amounting to $700. A replacement machine was bought on the same day for $12 400 cash. What was the net decrease in the cash balance? A $3700 B $5100 C $11 700 D $13 100

Accepted Answer

B

Question 19

19 Why would a bakery business not include a value for inventory of stationery in the statement of financial position? A It was expected it would be used in the next few months. B It was purchased regularly and paid for in cash. C It was not for resale. D It was of very low value.

Accepted Answer

D

Question 20

20 Shilpa’s financial year ends on 30 April. On 31 March 2021 she wrote off a debt owed by Tahir as irrecoverable. Which entry did Shilpa make on 31 March 2021? debit credit A income statement Tahir B irrecoverable debts income statement C irrecoverable debts Tahir D Tahir irrecoverable debts

Accepted Answer

C

Question 21

21 How should inventory be valued? A cost B higher of cost and net realisable value C lower of cost and net realisable value D net realisable value

Accepted Answer

C

Question 22

22 James is an accountant and operates as a sole trader. Which items would not appear in his statement of financial position? 1 long-term loan 2 retained earnings 3 trade payables A 1 and 2 B 1 and 3 C 2 only D 2 and 3

Accepted Answer

D

Question 23

23 Zaha is a consultant who receives fees from clients. How would Zaha calculate his profit for the year? A fees received – cost of sales B fees received – cost of sales + expenses C fees received + expenses D fees received – expenses

Accepted Answer

D

Question 24

24 What is added to owner’s capital to calculate capital employed? A current assets B current liabilities C non-current assets D non-current liabilities

Accepted Answer

D

Question 25

25 What is an advantage of forming a partnership? A Decisions have to be recognised by all partners. B Each partner is responsible for actions of other partners. C Profits have to be shared among the partners. D Responsibilities can be shared between the partners.

Accepted Answer

D

Question 26

26 Ann and Ben are in partnership sharing profits and losses equally. They provided the following information for the year ended 30 April 2021. $ profit for the year 20 000 interest on capital: Ann 5 000 Ben 4 000 drawings:               Ann 8 000 Ben 7 000 What was Ben’s share of the residual profit? A $5500 B $10 000 C $13 000 D $14 500

Accepted Answer

A

Question 27

27 Which statement about a receipts and payments account is incorrect? A It includes amounts prepaid at the end of the year. B It shows the surplus for the year. C Non-monetary items are excluded. D The balance represents cash and bank balances.

Accepted Answer

B

Question 28

28 How does a manufacturer calculate prime cost? A direct material + direct labour B direct material + direct labour + direct expenses C direct material + direct labour + direct expenses + factory overheads D direct material + direct labour + factory overheads

Accepted Answer

B

Question 29

29 Nula provided the following information for the year ended 31 March 2021. $ drawings for the year 3 900 net assets at 1 April 2020 60 500 net assets at 31 March 2021 72 275 What was the profit or loss for the year ended 31 March 2021? A $7875 loss B $7875 profit C $15 675 loss D $15 675 profit

Accepted Answer

D

Question 30

30 A trader provided the following information. $ cost of sales 80 000 expenses 4 000 profit for the year 16 000 What was the profit margin? A 16% B 20% C 21.05% D 26.67%

Accepted Answer

A

Question 31

31 A trader provided the following information. $ $ revenue 3600 opening inventory 100 purchases 2600 2700 closing inventory 300 2400 gross profit 1200 It was found that the closing inventory should have been $400. What was the correct rate of inventory turnover? A 6 times B 8 times C 9.2 times D 14.4 times

Accepted Answer

C

Question 32

32 Sally’s business has reached the overdraft limit set by the bank of $1500 and is not able to pay its debts when they fall due. Sally is considering the following proposals. 1 asking the bank to increase the bank overdraft limit to $2000 2 borrowing $2000 from a relative and paying the money back in six months 3 obtaining a loan from the bank of $2000 repayable in two years 4 paying $2000 from Sally’s personal bank account into the business bank account Which proposals will improve the working capital of the business? A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4

Accepted Answer

D

Question 33

33 Company X and Company Y provided the following information. Company X Company Y gross margin 36.7% 42.6% profit margin 5.4% 5.4% Which statement is correct? A Both companies earned the same amount of profit for the year. B Company X had a better gross margin than Company Y. C Company Y had a larger proportion of expenses than Company X. D The cost of sales of Company X was lower than that of Company Y.

Accepted Answer

C

Question 34

34 The current ratio of X is 2 : 1. The current ratio of Y is 1.3 : 1. What does a comparison of these ratios show? A X has fewer liabilities than Y. B X has more liquidity than Y. C Y has fewer current assets than X. D Y has more inventory than X.

Accepted Answer

B

Question 35

35 Which international accounting objectives are described by the following statements? 1 Information in financial statements must be free from material error and bias. 2 Users must be able to identify differences and similarities between information in different financial statements. statement 1 statement 2 A comparability understandability B reliability comparability C reliability understandability D understandability reliability

Accepted Answer

B

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · Which statements about book-keeping and accounting are correct?

Q2 · What increases owner’s capital?

Q3 · William paid $500 in cash to Sonia for rent

Q4 · Abdul buys all his machinery on credit

Q5 · Shula’s financial year ends on 31 March

Q6 · Hasina buys radios from Nazneen at a list price of $10 each

Q7 · Jameel sold goods on credit

Q8 · Which statements about a three-column cash book are correct?

Q9 · Which statement is not true about a trial balance?

Q10 · Which error is an error of original entry?

Q11 · A cheque, $85, received from Shakeel, was credited to the account of Shamz

Q12 · Jamal’s bank statement at 1 May 2021 showed a bank overdraft of $1460

Q13 · What is included in a purchases ledger control account?

Q14 · Javid’s sales ledger control account had a debit balance of $12 000

Q15 · Which statements about capital expenditure are correct?

Q16 · Nia sold equipment with a net book value of $200

Q17 · Why does a business provide for depreciation on non-current assets?

Q18 · A machine with an original cost of $10 000 had been depreciated for two years at the rate…

Q19 · Why would a bakery business not include a value for inventory of stationery in the…

Q20 · Shilpa’s financial year ends on 30 April

Q21 · How should inventory be valued?

Q22 · James is an accountant and operates as a sole trader

Q23 · Zaha is a consultant who receives fees from clients

Q24 · What is added to owner’s capital to calculate capital employed?

Q25 · What is an advantage of forming a partnership?

Q26 · Ann and Ben are in partnership sharing profits and losses equally

Q27 · Which statement about a receipts and payments account is incorrect?

Q28 · How does a manufacturer calculate prime cost?

Q29 · Nula provided the following information for the year ended 31 March 2021

Q30 · A trader provided the following information

Q31 · A trader provided the following information

Q32 · Sally’s business has reached the overdraft limit set by the bank of $1500 and is not able…

Q33 · Company X and Company Y provided the following information

Q34 · The current ratio of X is 2 : 1

Q35 · Which international accounting objectives are described by the following statements?

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