0452 ACCOUNTING - maxpapers.commaxpapers.com/wp-content/uploads/2012/11/0452_w14_ms_all.pdf · 0452 ACCOUNTING 0452/11 Paper 1 ... Cash/bank 37 691 (1) 2014 Discount received 663(1)

® IGCSE is the registered trademark of Cambridge International Examinations.

CAMBRIDGE INTERNATIONAL EXAMINATIONS

Cambridge International General Certificate of Secondary Education

MARK SCHEME for the October/November 2014 series

0452 ACCOUNTING

0452/11 Paper 1, maximum raw mark 120

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2014 series for most Cambridge IGCSE

®, Cambridge International A and AS Level components and some

Cambridge O Level components.

Page 2 Mark Scheme Syllabus Paper

Cambridge IGCSE – October/November 2014 0452 11

© Cambridge International Examinations 2014

1 (a) B (b) C (c) D (d) C (e) C (f) A (g) D (h) A (i) A (j) C (1) each [10]




2 (a) Capital = assets – liabilities (1) OR other acceptable version of formula [1] (b)

Debit entry Credit entry

1

Bank account

$ 10 000

Capital account $ 10 000

2 Motor vehicles account 6 500 (1) Capital account 6 500 (1)

3 Purchases account 2 000 (1) Zed account 2 000 (1)

4 Rent account 3 000 (1) Bank account 3 000 (1)

[6] (c) Can withdraw more from bank than put in/can have overdraft (1) Cannot take more cash than is physically present (1) [2] (d)

Arun Journal Debit

$ Credit

$

Rupa (account in purchases ledger) Rupa (account in sales ledger)

37 37

(1) (1)

[2] (e) Save on administration costs (1) The debt can be settled by using one cheque only (1) [2] (f)

Applying the same accounting treatment to similar items at all times

Consistency

Assuming a business will continue to operate indefinitely

Going concern (1)

Expressing transactions in monetary terms Money measurement (1)

[2]




(g)

Debit Credit

Rent receivable �

Sales returns �(1)

Inventory �(1)

Discount allowed �(1)

Provision for depreciation (1)

[4] [Total: 19]




3 (a) Advertising account

$ $ 2013 2014 Nov 1 Bank/cash 450 (1) Aug 31 Income Statement 915 (1)OF 2014 Balance c/d 155 (1)CF May 1 Bank/cash 620 (1)

1070 1070 2014 Sept 1 Balance b/d 155 (1)OF

+ (1) dates [6] (b)

Book of prime entry Source document

Sales journal Sales invoice (1)

Purchases journal Purchases invoice (1)

Sales returns journal Credit note issued (1)

Purchases returns journal Credit note received (1)

Petty cash book Voucher/receipt (1)

Cash book Cheque counterfoil/cheque/receipt/paying-in slip (1)

[6] (c) Reduces the number of entries in the ledger Acts as an aid for posting to the ledger Helps to gather and summarise accounting information/facilitate preparation of control

accounts Groups together similar types of transactions Allows work to be divided between several people Any 1 reason (2) [2] (d) [4] [Total: 18]

Account(s) to be debited Account(s) to be credited $ $ Amber Retail 100 (1) Sales 187 (1) Business Supplies 65 (1) Custom Print 22 (1)




4 (a) [9] (b)

Suspense Account $ $ Difference on Sales returns 80 (1) Trial balance 60 Purchase returns 80 (1) Purchases 100 (1)

160 160 [3] (c) Error of principle (1) [1] [Total: 13]

Journal

Debit $

Credit $

Sales returns Purchases returns Suspense

8080

160

(1) (1) (1)

Motor vehicle expenses Motor vehicles

150150

(1) (1)

Suspense Purchases

100100

(1) (1)

Drawings Purchase

5555

(1) (1)




5 (a) Sales ledger control account

$ $ 2013 2014 July 1 Balance b/d 4 100 (1) June 30 Sales returns 1 001 (1) 2014 Cash/bank 45 702 (1) June 30 Sales 48 610 (1) Discount allowed 890 (1) Interest 77 (1) Bad debts 274 (1) Balance c/d 4 920

52 787 52 787

2014 July 1 Balance b/d 4 920 (1)OF

Purchases ledger control account $ $ 2014 2013 June 30 Purchases returns 910 (1) July 1 Balance b/d 3 161 (1) Cash/bank 37 691 (1) 2014 Discount received 663 (1) June 30 Purchases 39 101 (1) Balance c/d 2 998

42 262 42 262


[14] (b)

Book of prime entry Credit sales Sales journal (1) Returns of credit purchases Purchases returns journal (1) Receipts from credit customers Cash book (1) Bad debts written off Journal (1) Interest charged on overdue accounts Journal (1)

[5] (c)

Provision for doubtful debts account $ $ 2014 2013 June 30 Balance c/d 246 (1)OF July 1 Balance b/d 205 (1) (5%×4920) 2014

June 30 Income statement 41 (1)OF

246 246

2014 July 1 Balance b/d 246 (1)OF

[4] (d) The provision was $246 OF but the actual bad debts were higher. (1) The provision may not be adequate. (1) Comment to be based on OF provision in (c) [2] [Total: 25]




6 (a) The partnership was making losses The drawings exceeded the partners’ profit share, interest and salary Any 1 reason (2) [2] (b)

$ $ Fixtures and fittings (100 000 – 10 000) 90 000 (1) Delivery van (40 000 – 12 000) 28 000 (1) Inventory 56 400 } Trade receivables 19 000 }(1) 193 400 Bank 6 600 (1) Trade payables 25 400 (1) 32 000 Net assets at 31 December 2013 161 400 (1)CF

[6] (c)

$ $ Net assets at 31 December 2013 161 400 (1)OF Add Drawings – Dina 18 000 }(1) Lee 17 000 } 35 000

196 400 Less Net assets 1 January 2013 150 000 (1)

Profit for the year 46 400 (1)OF

[4] (d)

Dina and Lee Appropriation Account for the year ended 31 December 2013 $ $ Profit for the year 46 400 (1)OF Less interest on capital: Dina 10 000 (1) Lee 6 000 (1) 16 000 Salary: Lee 15 000 (1) 31 000 15 400 Share of profit: Dina 7 700 (1)OF Lee 7 700 (1)OF 15 400

[6]




(e)

Current Accounts Dina Lee Dina Lee $ $ $ $ 2013 2013 Jan 1 Balance b/d (1) 5 200 4 800 Dec 31 Interest on capital (1)OF 10 000 6 000Dec 31 Drawings (1) 18 000 17 000 Salary (1) 15 000 Balance c/d 6 900 Share of Profit (1)OF 7 700 7 700 Balance c/d 5 500 23 200 28 700 23 200 28 7002014 2014 Jan 1 Balance (1)OF 5 500 Jan 1 Balance b/d (1)OF 6 900

[7] (f) 1 (56 400 + 19 000) (1) : (6600 + 25 400) (1) = 75 400 : 32 000 = 2.36 : 1 (1)OF 2 19 000 (1) : (6600 + 25 400) (1) = 19 000 : 32 000 = 0.59 : 1 (1)OF [6] (g) (i) Holding excessive inventory/increase in inventory (1) Reduction in bank balance because of one of the following (1) Purchase of non-current assets OR increase in partners’ drawings OR repayment of long term loan Answer to be appropriate to ratio calculated in (f) Part 2 [2] (ii) Cannot meet debts when due Cannot take advantage of cash discounts Cannot take advantage of business opportunities as they arise May have difficulty in obtaining further supplies Or other suitable comments based on answer to (f) Part 1 Any 1 comment (2) [2] [Total: 35]





0452 ACCOUNTING








1 (a) B (b) C (c) D (d) C (e) C (f) A (g) D (h) A (i) A (j) C (1) each [10]




2 (a) Capital = assets – liabilities (1) OR other acceptable version of formula [1] (b)


1

Bank account

$ 10 000

Capital account $ 10 000

2 Motor vehicles account 6 500 (1) Capital account 6 500 (1)

3 Purchases account 2 000 (1) Zed account 2 000 (1)

4 Rent account 3 000 (1) Bank account 3 000 (1)

[6] (c) Can withdraw more from bank than put in/can have overdraft (1) Cannot take more cash than is physically present (1) [2] (d)

Arun Journal Debit

$ Credit

$

Rupa (account in purchases ledger) Rupa (account in sales ledger)

37 37

(1) (1)

[2] (e) Save on administration costs (1) The debt can be settled by using one cheque only (1) [2] (f)

Applying the same accounting treatment to similar items at all times

Consistency

Assuming a business will continue to operate indefinitely

Going concern (1)

Expressing transactions in monetary terms Money measurement (1)

[2]




(g)

Debit Credit

Rent receivable �

Sales returns �(1)

Inventory �(1)

Discount allowed �(1)

Provision for depreciation (1)

[4] [Total: 19]




3 (a) Advertising account

$ $ 2013 2014 Nov 1 Bank/cash 450 (1) Aug 31 Income Statement 915 (1)OF 2014 Balance c/d 155 (1)CF May 1 Bank/cash 620 (1)

1070 1070 2014 Sept 1 Balance b/d 155 (1)OF

+ (1) dates [6] (b)

Book of prime entry Source document

Sales journal Sales invoice (1)

Purchases journal Purchases invoice (1)

Sales returns journal Credit note issued (1)

Purchases returns journal Credit note received (1)

Petty cash book Voucher/receipt (1)

Cash book Cheque counterfoil/cheque/receipt/paying-in slip (1)

[6] (c) Reduces the number of entries in the ledger Acts as an aid for posting to the ledger Helps to gather and summarise accounting information/facilitate preparation of control

accounts Groups together similar types of transactions Allows work to be divided between several people Any 1 reason (2) [2] (d) [4] [Total: 18]

Account(s) to be debited Account(s) to be credited $ $ Amber Retail 100 (1) Sales 187 (1) Business Supplies 65 (1) Custom Print 22 (1)




4 (a) [9] (b)

Suspense Account $ $ Difference on Sales returns 80 (1) Trial balance 60 Purchase returns 80 (1) Purchases 100 (1)

160 160 [3] (c) Error of principle (1) [1] [Total: 13]

Journal

Debit $

Credit $

Sales returns Purchases returns Suspense

8080

160

(1) (1) (1)

Motor vehicle expenses Motor vehicles

150150

(1) (1)

Suspense Purchases

100100

(1) (1)

Drawings Purchase

5555

(1) (1)




5 (a) Sales ledger control account

$ $ 2013 2014 July 1 Balance b/d 4 100 (1) June 30 Sales returns 1 001 (1) 2014 Cash/bank 45 702 (1) June 30 Sales 48 610 (1) Discount allowed 890 (1) Interest 77 (1) Bad debts 274 (1) Balance c/d 4 920

52 787 52 787


Purchases ledger control account $ $ 2014 2013 June 30 Purchases returns 910 (1) July 1 Balance b/d 3 161 (1) Cash/bank 37 691 (1) 2014 Discount received 663 (1) June 30 Purchases 39 101 (1) Balance c/d 2 998

42 262 42 262


[14] (b)

Book of prime entry Credit sales Sales journal (1) Returns of credit purchases Purchases returns journal (1) Receipts from credit customers Cash book (1) Bad debts written off Journal (1) Interest charged on overdue accounts Journal (1)

[5] (c)

Provision for doubtful debts account $ $ 2014 2013 June 30 Balance c/d 246 (1)OF July 1 Balance b/d 205 (1) (5%×4920) 2014

June 30 Income statement 41 (1)OF

246 246

2014 July 1 Balance b/d 246 (1)OF

[4] (d) The provision was $246 OF but the actual bad debts were higher. (1) The provision may not be adequate. (1) Comment to be based on OF provision in (c) [2] [Total: 25]




6 (a) The partnership was making losses The drawings exceeded the partners’ profit share, interest and salary Any 1 reason (2) [2] (b)

$ $ Fixtures and fittings (100 000 – 10 000) 90 000 (1) Delivery van (40 000 – 12 000) 28 000 (1) Inventory 56 400 } Trade receivables 19 000 }(1) 193 400 Bank 6 600 (1) Trade payables 25 400 (1) 32 000 Net assets at 31 December 2013 161 400 (1)CF

[6] (c)

$ $ Net assets at 31 December 2013 161 400 (1)OF Add Drawings – Dina 18 000 }(1) Lee 17 000 } 35 000

196 400 Less Net assets 1 January 2013 150 000 (1)

Profit for the year 46 400 (1)OF

[4] (d)

Dina and Lee Appropriation Account for the year ended 31 December 2013 $ $ Profit for the year 46 400 (1)OF Less interest on capital: Dina 10 000 (1) Lee 6 000 (1) 16 000 Salary: Lee 15 000 (1) 31 000 15 400 Share of profit: Dina 7 700 (1)OF Lee 7 700 (1)OF 15 400

[6]




(e)

Current Accounts Dina Lee Dina Lee $ $ $ $ 2013 2013 Jan 1 Balance b/d (1) 5 200 4 800 Dec 31 Interest on capital (1)OF 10 000 6 000Dec 31 Drawings (1) 18 000 17 000 Salary (1) 15 000 Balance c/d 6 900 Share of Profit (1)OF 7 700 7 700 Balance c/d 5 500 23 200 28 700 23 200 28 7002014 2014 Jan 1 Balance (1)OF 5 500 Jan 1 Balance b/d (1)OF 6 900

[7] (f) 1 (56 400 + 19 000) (1) : (6600 + 25 400) (1) = 75 400 : 32 000 = 2.36 : 1 (1)OF 2 19 000 (1) : (6600 + 25 400) (1) = 19 000 : 32 000 = 0.59 : 1 (1)OF [6] (g) (i) Holding excessive inventory/increase in inventory (1) Reduction in bank balance because of one of the following (1) Purchase of non-current assets OR increase in partners’ drawings OR repayment of long term loan Answer to be appropriate to ratio calculated in (f) Part 2 [2] (ii) Cannot meet debts when due Cannot take advantage of cash discounts Cannot take advantage of business opportunities as they arise May have difficulty in obtaining further supplies Or other suitable comments based on answer to (f) Part 1 Any 1 comment (2) [2] [Total: 35]





0452 ACCOUNTING








1 (a) B (b) C (c) C (d) C (e) C (f) B (g) B (h) B (i) A (j) A (1) mark each [Total: 10]




2 (a) 1 Invoice (1) 2 Debit note (1) 3 Statement of account (1) [3] (b) (i) Debit (1) (ii) Cash discount (1) (iii) For prompt payment (1) [3] (c)


$ $

1 Hal account 300 Sales account 300

2 Cash account 300 (1) Hal account 300 (1)

3 Bank account 250 (1) Cash account 250 (1)

4 Drawings account 400 (1) Bank account 400 (1)

5 Bank account 600 (1) Mabel account 600 (1)

[8] (d) Transaction 3 (1) [1] (e) 620 (1) – 10 (1) = 610 (2) OR 660 (1) – 100 (1) + 50 (1) = 610 (1) [4] (f) Current assets (1) [1] (g) Inventory Trade receivables Other receivables Cash Answer to be consistent with answer to (f) Any 1 item (1) [1] [Total: 21]




3 (a) A prepayment is an amount paid in advance for a service which has not yet been received (1)

An accrual is an amount owed for a service which has been received but not yet paid for (1) [2] (b)

Insurance Account $ $ 2013 2014 July 1 Balance b/d 180 (1) June 30 Income Aug 2 Bank/Cash 2 340 (1) Statement 2 325 (1)OF

Balance c/d 195 2 520 2 520 2014 July 1 Balance b/d 195 (1)CF

+ (1) dates [5] (c) (i) Profit and loss/expenses (1) [1] (ii) Accruals/matching (1) [1] (d) (i) Service business (1) [1] (ii) Sales/revenue/sales returns Inventory (opening and closing) Purchases/purchases returns Carriage Cost of sales Goods for own use Gross profit Any 2 items (1) each [2] (e) (i) Prudence (1) [1] (ii) At the lower (1) of cost and net realisable value (1) [2] (f)

$ Scrap value 10 × $2 20 (1)

Less selling expenses 7 (1)

Net realisable value 13 (1)CF

[3]




(g) (i) It is a record of what has happened in the past. There is a gap between the year end and the preparation of the statements. Items are recorded at cost so may not be realistic/difficult to judge effect of inflation. May not know what policies the business is using so problems of comparison. Only information which can be expressed in monetary terms in recorded – other

important factors are not recorded. Different definitions can make comparisons difficult. Or other reasonable comment Any 1 comment (2) [2] (ii) [4] [Total: 24]

Income statement Statement of financial position

Debit Credit Assets Liabilities

Bank overdraft �

Depreciation charge for the year

� (1)

Prepaid rent � (1)

Discount received � (1)

Commission received � (1)




4 (a)

Error Affects balancing of trial balance Does not affect balancing of trial balance

1 �

2 � (1)

3 � (1)

4 � (1)

5 � (1)

[4] (b)

Statement of corrected profit $ . Draft profit for the year 26 800. Error 1 160. (1) Error 2 1 000. (1) Error 3 250. (1) Error 4 No effect. (1) Error 5 (600) (2)

Corrected profit for the year 27 610. (1)OF

[7] (c) Error of commission (1) [1] [Total: 12]




5 (a) $ $ Cost 1 200 Depreciation year 1 240 240 (1)

960 Depreciation year 2 192 192 (1)

Total depreciation 432 (1)

[3] (b)

Fixtures and fittings account $ $ 2013 2013 Jan 1 Balance b/d 31 200 (1) June 1 Disposal 1 200 (1) Aug 1 Bank/cash 2 500 (1) Dec 31 Balance c/d 32 500

33 700 33 700

2014 Jan 1 Balance b/d 32 500 (1)OF

Provision for depreciation Account $ $ 2013 2013 June 1 Disposal 432 (1)OF Jan 1 Balance b/d 9 702 (1) Dec 31 Balance c/d 13 916 Dec 31 Income Statement 4 646 ***

14 348 14 348

2014 Jan 1 Balance b/d 13 916 (1)OF

***Calculation of depreciation for the year $ $ Cost of asset – Opening balance 31 200 Less disposal 1 200 (1) 30 000 Plus addition 2 500 (1) 32 500 Depreciation – Opening balance 9 702 Less disposal 432 OF 9 270 (1)OF

23 230

20% × 23 230 OF = 4646 (1)OF

Disposal account $ $ 2013 2013 June 1 Fixtures and Fittings 1 200 (1) June 1 Prov for Depreciation 432 (1)OF Bank/Cash 600 (1) Dec 31 Income Statement 168 (1)OF

1 200 1 200

[15]




(c) Ajith

Extract from Income Statement for the year ended 31 December 2013 $ Expenses Loss on disposal of fixtures and fittings

168 (1)OF

Depreciation – fixtures and fittings 4 646 (1)OF

Ajith Extract from Statement of Financial Position at 31 December 2013

$ Non-current assets Fixtures and fittings at cost 32 500 (1)OF Depreciation to date 13 916 (1)OF

18 584 [4] [Total: 22]




6 (a) To obtain limited liability To obtain extra capital Any 1 reason (1) [1] (b) Preference share capital [1] (c) For reinvestment in the business To plough back profits To set aside profit for dividends in the future If there is not enough actual cash available to pay a dividend Any 2 reasons (1) each [2] (d)

ABC Limited $ Profit for the year before interest 15 000 Less debenture interest 1 500 (1)

Profit for the year 13 500 (1)

XYZ Limited $ Profit for the year before interest 15 000 Less debenture interest 8 000 (1)

Profit for the year after interest 7 000 (1)

[4] (e)

ABC Limited Appropriation Account for the year ended 31 December 2013

$ $ Profit for the year 13 500 (1)OF Less Ordinary share dividend

(260 000 shares × $0.03) 7 800 (2)

Transfer to general reserve 5 000 (1) 12 800

Profit retained in the year 700 Retained profit b/f 29 300 (1)

Retained profit c/f 30 000 (1)OF

XYZ Limited

Appropriation Account for the year ended 31 December 2013 $ $ Profit for the year 7 000 (1)OF Less Ordinary share dividend

(62 000 shares × $0.05) 3 100 (2)

Profit retained in the year 3 900 Retained profit b/f 14 100 (1)

Retained profit c/f 18 000 (1)OF

[11]




(f) ABC has more equity XYZ Limited has more long term loans/debentures/debt ABC’s dividend paid is less expensive than XYZ’s loan interest paid ABC paid a higher total dividend than XYZ XYZ paid a higher total loan interest than ABC ABC made a transfer to general reserve Any 2 comments (1) each [2] (g)

ABC Limited Statement of Financial Position at 31 December 2013

$ Non-current assets 100 000 (1) Net current assets 80 000 (1)

180 000 Non-current liabilities 10% Debentures 15 000 (1)

165 000

Capital and reserves Ordinary share of $0.50 each 130 000 (1) General reserve 5 000 (1) Retained profit 30 000 (1)OF

165 000 [6] (h) Shares in ABC had a return of 6% (1) but shares in XYZ had a return of 5% (1) ABC had a lower amount of loan capital (1) so less risky (1) [4] [Total: 31]





0452 ACCOUNTING








1 (a) Work can be shared amongst several people Easier for reference as the same types of account are kept together Easier to introduce checking procedures Reduces the possibility of fraud Or other suitable advantage Any 2 advantages (1) each [2]

(b) Any non-current asset, inventory, capital drawings, loan, sales, purchases,

returns, expenses, incomes, provisions etc. Any 1 example (1) [1]

(c)

Sahira Ali Waheed Khan account

$ $ 2014 2014 October 16 Returns 168 (1) Oct 1 Balance b/d 390 24 Bank/cash 380 (1) 13 Purchases 336 (1) Discount 10 (1) 31 Balance c/d 168

726 ___

726 2014 Nov 1 Balance b/d 168 (1) OF

Iqbal Wholesalers account $ $ 2014 2014 Oct 31 Balance c/d 936 Oct 1 Balance b/d 650 5 Purchases 280 ___

936 31 Interest __6 (1)

936 (1) 2014 Nov 1 Balance b/d 936 (1) OF + (1) dates Three column running balance format acceptable

[9]

(d) 1

365

purchases Credit

payables Trade× [1]




(e) 1

365

200 21

100 3 formula) (whole (1)× = 53.37 = 54 days (1) [2]

(f) May be able to take advantage of cash discounts

Improve the relationship with suppliers Avoid paying interest Or other suitable comment Any 1 advantage (1) [1]

(g) The business is deprived of the use of the money earlier than necessary

Or other suitable comment Any 1 disadvantage (1) [1]

(h) To avoid overstating the profit for the year

To avoid overstating the current assets To apply the principle of prudence Any 2 comments (1) each [2]

(i) The estimated receipts from the sale of the inventory (1) less any costs of completing the goods or costs of selling the goods (1) [2]




(j)

Overstated Understated No effect

Gross profit for the year ended 31 October 2013

� (1)


� (1)

Profit for the year ended 31 October 2013

� (1)


� (1)

Current assets at 31 October 2013 � (1)

Current assets at 31 October 2014

� (1)

[6] [Total: 27]




2 (a) Mochudi Manufacturing Company

Manufacturing Account for the year ended 31 July 2014 $ $ Cost of materials used Purchases of raw materials 99 500 Less Returns 1 100 98 400 (1) Closing inventory of raw materials 8 600 89 800 (1) Direct wages (94 200 + 3100) 97 300 (1) Prime cost 187 100 (1) OF Factory overheads Wages of factory supervisors 41 050 (1) Factory general expenses 19 400 (1) Factory rates and insurance (¾ × (5000 – 400)) 3 450 (1)

Depreciation Machinery (15% × 102 000) 15 300 (1) Loose tools (4400 – 3300) 1 100 (1) 80 300 267 400 (1) OF Closing work in progress 8 200 (1) Cost of production 259 200 (1) OF Horizontal format acceptable

[12]




(b)

$ $ Revenue 400 400 Cost of sales Cost of production 259 200 (1) OF Purchases of finished goods 19 300 (1) 278 500 Closing inventory of finished goods 21 100 257 400 (1) OF Gross profit 143 000 (1 )OF Less Office staff salaries 33 100 (1) Sales staff salaries 18 900 (1) Office general expenses (17 530 – 280) 17 250 (1) Rates and insurance (¼ × (5000 – 400) 1 150 (1) Depreciation office fixtures and fittings

(12½% × 56 000) 7 000 (1) 77 400 Profit for the year 65 600 (1) OF Horizontal format acceptable

[10] (c)

Error

Effect on profit for the year Increase

$ Decrease

$ No effect

1 200 (1) 2 810 (1) 3 940 (1)

4 1050 (1)

[4] [Total: 26]




3 (a) Leeford Athletics Club Subscriptions account

$ $ 2014 2013 Oct 31 Income & Nov 1 Balance b/d 1 200 (1) Expenditure 12 000 (1) 2014 Oct 31 Bank/cash 7 920 (1)

_ __ ___

12 000

Balance c/d 2 880

12 000 2014 Nov 1 Balance b/d 2 880 (1) OF + (1) dates Three column running balance format acceptable

[5] (b) Current assets (1) OF Answer to be based on closing balance in (a) [1] (c)

Leeford Athletics Club Subscriptions account

$ $ 2013 2014 Nov 1 Balance b/d 4 590 (1) Oct 31 Equipment 4 000 (1) 2014 General Oct 31 Subscriptions 7 920 (1) expenses 9 310 (1) Sale of equipment 1 500 (1) Loan interest 400 (1) Open day receipts 770 (1) Rent 4 500 (1) Balance c/d 3 460 Bank charges 30 (1) 18 240 18 240 2014 Nov 1 Balance b/d 3 460 (1) OF

[10] (d)

Item $ Reason

Sale of equipment 700 (1) Only the loss (1) on the equipment is charged not the capital receipt. (1)

Rent of clubhouse 3 600 (1) The accruals (matching) principle is applied.(1) Only the expense for the year is charged to the income and expenditure account (1)

[6] [Total: 22]




4 (a) 1 June 2013 Balance – rates $70 Explanation This represents rates prepaid (1). This was paid in the year ended 31 May 2013 but relates to the year ended 31 May 2014. (1) Statement of financial position section Current assets (1) [3] 1 June 2013 Balance – rent $120 Explanation This represents rent accrued (1). This relates to the year ended 31 May 2013 and remained unpaid at the end of the year. (1) Statement of financial position section Current liabilities (1) [3] (b) 31 May 2014 Bank $2570 This represents the total amount paid (1) by cheque (1) for rent and rates during the year ended 31 May 2014. [2] 31 May 20134 Income statement $2280 This is the amount transferred to the income statement (1) which represents the rent and rates for that financial year (1). [2] (c) Only the rent and rates relating to the current year are transferred to the income statement. (1) Adjustments are made for accruals and prepayments (1) [2]

(d) }

(1) }

600 47

400 38 600 47 −

× 1

100= 19.33% (1) [2]

(e) Selling goods at lower prices Purchasing goods at higher prices Changes in the proportions of goods sold Or other acceptable reason Any 2 reasons (1) each [2] (f) Assess prospects of any requested loan/overdraft being repaid when due Assess prospects of any interest on loan/overdraft being paid when due Assess security available to cover any loan/overdraft Any 2 reasons (1) each [2] (g) Lender

Investor Credit supplier Customer Owner Manager (if any) Employee/trade union Government body Competitor Take-over bidder Potential partner Or other suitable interested person Any 2 persons (1) each [2] [Total: 20]




5 (a)

Watson Limited Statement of Financial Position at 30 September 2014

$ $ $ Cost Depreciation

to date Net Book value

Non-current Assets Premises 99 000 99 000 Fixtures & fittings 65 000 2 300 42 000 (1) Motor behicles 33 000 11 000 22 000 (1) 197 000 34 000 163 000 (1) Current Assets Inventory 19 300 Trade receivables 28 000 Provision for doubtful debts 1 400 26 600 (1) Other receivables 300 } Cash 500 } (1) 46 700 (1) OF 46 700 (1) OF Current Liabilities Trade payables 16 300 Other payables 350 } Bank 2 050 } (1) Proposed dividend 2 000 (1) 20 700 (1) OF Net Current Assets 26000 189 000 Non-current Liabilities 4% Debentures 10 000 179 000 Capital and Reserves Ordinary share capital 120 000 (1) General reserve (20 000 (1) + 12 000 (1) ) 32 000 Retained profit 27 000 (1) Shareholders’ funds 179 000 (1) OF Accept other suitable formats

[15] (b) Debentures are long-term loans

Debenture holders are not members of the company Debentures do not carry voting rights Debentures carry a fixed rate of interest Debenture interest is not dependent on the company’s profit Debentures are often secured on the assets of the company Debenture holders are repaid before shareholders in the event of a winding up Debentures are repaid by a set date

Any 2 features (1) each [2]




(c) Reduction in profit available for ordinary shareholders Prior claim on the assets of the company in the event of a winding up Or other acceptable point Any 1 point (2) [2] (d) (i) The number of times a business sells and replaces its inventory in a

given period of time. [1]

(ii) inventory Average

sales of Cost [1]

(iii) 2 / 300 19 500 22

200 243

(1) }

}

+

= 11.64 times (1) [2]

(e) Rate falling over the three years

May indicate reduction in efficiency May indicate that sales are slowing down May indicate the inventory is too high Or other suitable comments Comment to be based in OF answer to (d)(iii) Any 2 comments (1) each [2] [Total: 25]





0452 ACCOUNTING








1 (a) Work can be shared amongst several people Easier for reference as the same types of account are kept together Easier to introduce checking procedures Reduces the possibility of fraud Or other suitable advantage Any 2 advantages (1) each [2]

(b) Any non-current asset, inventory, capital drawings, loan, sales, purchases,

returns, expenses, incomes, provisions etc. Any 1 example (1) [1]

(c)

Sahira Ali Waheed Khan account

$ $ 2014 2014 October 16 Returns 168 (1) Oct 1 Balance b/d 390 24 Bank/cash 380 (1) 13 Purchases 336 (1) Discount 10 (1) 31 Balance c/d 168

726 ___

726 2014 Nov 1 Balance b/d 168 (1) OF

Iqbal Wholesalers account $ $ 2014 2014 Oct 31 Balance c/d 936 Oct 1 Balance b/d 650 5 Purchases 280 ___

936 31 Interest __6 (1)

936 (1) 2014 Nov 1 Balance b/d 936 (1) OF + (1) dates Three column running balance format acceptable

[9]

(d) 1

365

purchases Credit

payables Trade× [1]




(e) 1

365

200 21

100 3 formula) (whole (1)× = 53.37 = 54 days (1) [2]

(f) May be able to take advantage of cash discounts

Improve the relationship with suppliers Avoid paying interest Or other suitable comment Any 1 advantage (1) [1]

(g) The business is deprived of the use of the money earlier than necessary

Or other suitable comment Any 1 disadvantage (1) [1]

(h) To avoid overstating the profit for the year

To avoid overstating the current assets To apply the principle of prudence Any 2 comments (1) each [2]

(i) The estimated receipts from the sale of the inventory (1) less any costs of completing the goods or costs of selling the goods (1) [2]




(j)

Overstated Understated No effect


� (1)


� (1)


� (1)


� (1)

Current assets at 31 October 2013 � (1)

Current assets at 31 October 2014

� (1)

[6] [Total: 27]




2 (a) Mochudi Manufacturing Company

Manufacturing Account for the year ended 31 July 2014 $ $ Cost of materials used Purchases of raw materials 99 500 Less Returns 1 100 98 400 (1) Closing inventory of raw materials 8 600 89 800 (1) Direct wages (94 200 + 3100) 97 300 (1) Prime cost 187 100 (1) OF Factory overheads Wages of factory supervisors 41 050 (1) Factory general expenses 19 400 (1) Factory rates and insurance (¾ × (5000 – 400)) 3 450 (1)

Depreciation Machinery (15% × 102 000) 15 300 (1) Loose tools (4400 – 3300) 1 100 (1) 80 300 267 400 (1) OF Closing work in progress 8 200 (1) Cost of production 259 200 (1) OF Horizontal format acceptable

[12]




(b)

$ $ Revenue 400 400 Cost of sales Cost of production 259 200 (1) OF Purchases of finished goods 19 300 (1) 278 500 Closing inventory of finished goods 21 100 257 400 (1) OF Gross profit 143 000 (1 )OF Less Office staff salaries 33 100 (1) Sales staff salaries 18 900 (1) Office general expenses (17 530 – 280) 17 250 (1) Rates and insurance (¼ × (5000 – 400) 1 150 (1) Depreciation office fixtures and fittings

(12½% × 56 000) 7 000 (1) 77 400 Profit for the year 65 600 (1) OF Horizontal format acceptable

[10] (c)

Error

Effect on profit for the year Increase

$ Decrease

$ No effect

1 200 (1) 2 810 (1) 3 940 (1)

4 1050 (1)

[4] [Total: 26]




3 (a) Leeford Athletics Club Subscriptions account

$ $ 2014 2013 Oct 31 Income & Nov 1 Balance b/d 1 200 (1) Expenditure 12 000 (1) 2014 Oct 31 Bank/cash 7 920 (1)

_ __ ___

12 000

Balance c/d 2 880

12 000 2014 Nov 1 Balance b/d 2 880 (1) OF + (1) dates Three column running balance format acceptable

[5] (b) Current assets (1) OF Answer to be based on closing balance in (a) [1] (c)

Leeford Athletics Club Subscriptions account

$ $ 2013 2014 Nov 1 Balance b/d 4 590 (1) Oct 31 Equipment 4 000 (1) 2014 General Oct 31 Subscriptions 7 920 (1) expenses 9 310 (1) Sale of equipment 1 500 (1) Loan interest 400 (1) Open day receipts 770 (1) Rent 4 500 (1) Balance c/d 3 460 Bank charges 30 (1) 18 240 18 240 2014 Nov 1 Balance b/d 3 460 (1) OF

[10] (d)

Item $ Reason

Sale of equipment 700 (1) Only the loss (1) on the equipment is charged not the capital receipt. (1)

Rent of clubhouse 3 600 (1) The accruals (matching) principle is applied.(1) Only the expense for the year is charged to the income and expenditure account (1)

[6] [Total: 22]




4 (a) 1 June 2013 Balance – rates $70 Explanation This represents rates prepaid (1). This was paid in the year ended 31 May 2013 but relates to the year ended 31 May 2014. (1) Statement of financial position section Current assets (1) [3] 1 June 2013 Balance – rent $120 Explanation This represents rent accrued (1). This relates to the year ended 31 May 2013 and remained unpaid at the end of the year. (1) Statement of financial position section Current liabilities (1) [3] (b) 31 May 2014 Bank $2570 This represents the total amount paid (1) by cheque (1) for rent and rates during the year ended 31 May 2014. [2] 31 May 20134 Income statement $2280 This is the amount transferred to the income statement (1) which represents the rent and rates for that financial year (1). [2] (c) Only the rent and rates relating to the current year are transferred to the income statement. (1) Adjustments are made for accruals and prepayments (1) [2]

(d) }

(1) }

600 47

400 38 600 47 −

× 1

100= 19.33% (1) [2]

(e) Selling goods at lower prices Purchasing goods at higher prices Changes in the proportions of goods sold Or other acceptable reason Any 2 reasons (1) each [2] (f) Assess prospects of any requested loan/overdraft being repaid when due Assess prospects of any interest on loan/overdraft being paid when due Assess security available to cover any loan/overdraft Any 2 reasons (1) each [2] (g) Lender

Investor Credit supplier Customer Owner Manager (if any) Employee/trade union Government body Competitor Take-over bidder Potential partner Or other suitable interested person Any 2 persons (1) each [2] [Total: 20]




5 (a)

Watson Limited Statement of Financial Position at 30 September 2014

$ $ $ Cost Depreciation

to date Net Book value

Non-current Assets Premises 99 000 99 000 Fixtures & fittings 65 000 2 300 42 000 (1) Motor behicles 33 000 11 000 22 000 (1) 197 000 34 000 163 000 (1) Current Assets Inventory 19 300 Trade receivables 28 000 Provision for doubtful debts 1 400 26 600 (1) Other receivables 300 } Cash 500 } (1) 46 700 (1) OF 46 700 (1) OF Current Liabilities Trade payables 16 300 Other payables 350 } Bank 2 050 } (1) Proposed dividend 2 000 (1) 20 700 (1) OF Net Current Assets 26000 189 000 Non-current Liabilities 4% Debentures 10 000 179 000 Capital and Reserves Ordinary share capital 120 000 (1) General reserve (20 000 (1) + 12 000 (1) ) 32 000 Retained profit 27 000 (1) Shareholders’ funds 179 000 (1) OF Accept other suitable formats

[15] (b) Debentures are long-term loans

Debenture holders are not members of the company Debentures do not carry voting rights Debentures carry a fixed rate of interest Debenture interest is not dependent on the company’s profit Debentures are often secured on the assets of the company Debenture holders are repaid before shareholders in the event of a winding up Debentures are repaid by a set date

Any 2 features (1) each [2]




(c) Reduction in profit available for ordinary shareholders Prior claim on the assets of the company in the event of a winding up Or other acceptable point Any 1 point (2) [2] (d) (i) The number of times a business sells and replaces its inventory in a

given period of time. [1]

(ii) inventory Average

sales of Cost [1]

(iii) 2 / 300 19 500 22

200 243

(1) }

}

+

= 11.64 times (1) [2]

(e) Rate falling over the three years

May indicate reduction in efficiency May indicate that sales are slowing down May indicate the inventory is too high Or other suitable comments Comment to be based in OF answer to (d)(iii) Any 2 comments (1) each [2] [Total: 25]





0452 ACCOUNTING





Page 2 Mark Scheme Syllabus Paper Cambridge IGCSE – October/November 2014 0452 23


1 (a) Removes small cash payments from the main cash book Reduces the number of entries in the main cash book Reduces the number of entries in the ledger Allows the chief cashier to delegate some of the work Provides training for junior staff members Or other suitable reasons Any 2 reasons (1) each [2] (b) At the end of the period the chief cashier will make up or reimburse (1) the cash remaining so

that each month starts off with the same amount (1). [2] (c) The chief cashier knows exactly how much is spent each month The cash remaining and the vouchers received should equal the imprest Can help reduce fraud Or other suitable advantage Any 1 advantage (1) [1] (d) $207 (1) CF [1] (e)

Debit Credit

Petty cash book (1) Bank (or Cash) (1)

[2] (f) Total of column is debited to the cleaning account in the ledger (1) [1] (g) B Smith account is debited with $36 (1) W Jones account is debited with $18 (1) [2]



(h) Peter Pickard Sales Journal

Date 2014 Aug 5 13 31

Details S Bower Goods Less trade discount C Brooke Goods Less trade discount Transferred to sales account

$ 1480 296 1340 201

$ 1184 (1) 1139 (1) ____ 2323 (1)OF

[3]

Sales Returns Journal

Date 2014 Aug 19 31

Details S Bower Goods Less trade discount Transferred to sales returns account

$ 160 32

$ 128 (1) ___

128 (1)OF

[2]

Sales Ledger S Bower account

Date Details $ Date Details $

2014 2014

Aug 5 Sales 1184 (1)OF Aug 19 Sales returns 128 (1)OF

[2]

C Brooke account


2014

Aug 13 Sales 1139 (1)OF

[1]



Nominal (General) Ledger Sales Account


2014

Aug 31 Total for month 2323 (1)OF

[1]

Sales Returns account


2014

Aug 31 Total for month 128 (1)OF

[1]

(i)

×1

365

600 29

2340(1) whole formula = 28.85 = 29 days (1)CF [2]

(j) Satisfied (if the answer to (i) is 30 days or less) Or Unsatisfied (if the answer to (i) is more than 31 days) [1] (k) The business may not have enough liquid funds (1) with which to pay the credit suppliers

until money is received from credit customers (1). Or If the credit customers pay within the set time (1), the business may be able to pay the credit

suppliers within the set time (1) without any significant impact on the bank balance. Or If credit customers fail to pay within the set time it may be necessary to obtain short-term

funds (1) in order to pay the credit suppliers (1). Or other suitable point Any 1 point (1) mark each [2] [Total: 26]



2 (a) Reduce credit sales Obtain references from new credit customers Fix a credit limit for each customer Improve credit control Issue invoices and monthly statements promptly Refuse further supplies until outstanding balance paid Offer cash / settlement discount for early payment Only sell to reliable customers Charge interest on overdue accounts Or other suitable points Any 2 points (1) each [2] (b) [3] (c) An estimate or prediction (1) of the amount which a business will lose in a financial year

because of bad debts (1) [2] (d) Accruals (matching) (1) Prudence (1) [2] (e) [3]

Alina Tan Journal

Debit $

Credit $

(1) (1) (1)

Bad debts Yeung & Co Bad debt written off

66

66

Alina Tan Journal

Debit $

Credit $

(1) (1) (1)

Provision for doubtful debts Income statement Reduction in provision for doubtful debts

45

45



(f) When a debtor pays some, or all, of the amount owed (1) after the amount was written off as a bad debt (1) [2]

(g) Capital expenditure: Money spent on acquiring, improving and installing non-current assets (1) Revenue expenditure: Money spent on running a business on a day-to-day basis (1) Capital receipts: Amount received which do not form part of the day-to-day trading activities (1) Revenue receipts: Amount received in the day-to-day trading activities from revenue and other items of income

(1) [4] (h)

non-current assets at 31 March 2014

profit for the year ended 31 March 2014

Overstated Understated Overstated Understated

� (1)

� (1)

[2] [Total: 20]



3 (a) Share losses Share responsibilities Share risks Share decision-making Additional finance may be available Additional skills and experience are available Or other suitable advantage Any 2 advantages (1) mark each. [2] (b)

Shahid and Hamza Hussain Income Statement for the year ended 31 July 2014

$ $ Receipts from customers 76 400 Less Wages (41 600 (1) – 1500 (1)) 40 100 Insurance (12 / 14 × 1232) 1 056 (2) General expenses (3090(1) + 94(1)) 3 184 Depreciation motor vehicles

(20% × (25 000 – 9000) 3 200 (2)

Depreciation equipment (2900 + 1150 – 3150) 900 (2) 48 440 Profit for the year 27 960 (1)OF

Horizontal format acceptable [11] (c)

Shahid and Hamza Hussain Profit and Loss Appropriation Account for the year ended 31 July 2014

$ $ Profit for the year 27 960 (1)OF Interest on drawings S Hussain 300} H Hussain 240} (1)CF 540 28 500 Interest on capital S Hussain (5% × 80 000 × 6 mths +

5% × 60 000 × 6 mths)

3 500

(1)

H Hussain 6 500 3 000 (1) Partner’s salary S Hussain 9 000 (1)CF 15 500 Share of profit S Hussain 6 500 (1)OF 13 000 H Hussain 6 500 (1)OF 13 000

Horizontal format acceptable [7]



(d)

Hamza Hussain Current account

$ $ 2013 2014 Aug 1 Balance b / d 1 960 July 31 Interest on

capital 3 000 (1)OF

Profit share 6 500 (1)OF Balance c/d 700 2014 July 31 Drawings 8 000 (1) Interest on

drawings 240 (1)

10 200 10 200 2014 Aug 1 Balance b/d 700 (1)OF

Balance b/d can be on either side Three column running balance format acceptable [5] [Total: 25]



4 (a) Alternative calculation

Total Trade Payables account $ $ 2014 2014 Sept 30 Bank 31 600 (1) Sept 30 Interest 40 (1) Returns 2 100 (1) Purchases 35 650 (2)CF Balance c/d 1 990 (1) _____ (1)OF 35 690 35 690

[6] (b) Alternative calculation

Total Trade Receivables account $ $ 2014 2014 Sept 30 Sales 40 050 (2)CF Sept 30 Bank 35100 (1)OF Discount 900 (1) Bad debts 100 (1) Balance

c / d 3 950 (1)

40 050 40 050 [6]

$ Payments to credit suppliers 31 600 (1) Returns to credit suppliers 2 100 (1) Balance 30 September 2014 1 990 (1) 35 690 Less Interest charged on overdue account 40 (1) Credit purchases for the year 35 650 (2)CF (1)OF

$ Receipts from credit customers 35 100 (1) Discount allowed to credit customers 900 (1) Bad debts written off 100 (1) Balance 30 September 2014 3 950 (1) Credit sales for the year 40 050 (2)CF (1)OF



(c) Horizontal format acceptable [7] (d) Assessment of the liquidity position Identify how long it takes to pay credit suppliers Identify future prospects of the business Establishment of a credit limit Any 2 reasons (1) each [2] (e) Bank manager Lender Manager (if any) Employee Government body Competitor Take-over bidder Potential partner Investors Owner Or other suitable interested person Any 2 persons (1) each [2] [Total: 23]

Grace Mhando Income Statement for the year ended 30 September 2014

$ $ Revenue (sales) 40 050 (1)OF Less Cost of sales Purchases 35 650 (1)OF Less: Purchases returns 2 100 (1)OF 33 550 Add: Carriage inwards 1 090 (1) 34 640 Less Closing Inventory 2 600 (1)OF Gross profit (20%) 32 040

8 010 (2)OF



5 (a) 000 480

000 310 - 000 480 (1) ×

1

100 = 35.42% (1)CF [2]

(b) Reduction in selling price Increase in trade discount allowed to customers Selling at a lower mark-up Increase in cost price Decrease in trade discount allowed by suppliers Not taking advantage of bulk buying Or other suitable reason Any 2 reasons (1) each [2]

(c) 000 480

000 94 - OF 000 170(1) ×

1

100 = 15.83% (1)OF [2]

(d) Reduce expenses Increase other income Increase gross profit percentage Any 2 points (1) each [2]

(e) 000 635

OF 000 76 (1) ×

1

100 = 11.97% (1)OF [2]

(f) It shows the profit earned for each $100 used in the business. (1) The higher the percentage the more efficiently the capital is being employed. (1) [2] (g) 86 800 : 71 800 (1) = 1.21 : 1 (1) [2] (h) 56 000 : 71 800 (1) = 0.78 : 1 (1) [2] (i) Inventory is not included in the calculation of the quick ratio (1) Either Inventory is not regarded as a liquid asset – a buyer has to be found and then the money

collected (1) Or The quick ratio shows whether the business would have any surplus liquid funds if all the

current liabilities were paid immediately from the liquid assets (1) [2]



(j)

Increase Decrease No effect

Issue of additional shares �

Cheque paid to credit supplier �

Repayment of long term loan �

Purchase of goods on credit �

Sale of unused non-current asset �

Cheque paid for repairs to non-current asset

�

[6] (k) To be able to meet debts when they fall due To be able to take advantage of cash discounts To be able to take advantage of business opportunities as they arise To ensure that there is no difficulty in obtaining further supplies Or other suitable explanation Any 2 points (1) each [2] [Total: 26]

Documents

0452 ACCOUNTING - maxpapers.commaxpapers.com/wp-content/uploads/2012/11/0452_w14_ms_all.pdf · 0452 ACCOUNTING 0452/11 Paper 1 ... Cash/bank 37 691 (1) 2014 Discount received 663(1)