All Combined PDF'S PDF

Prepared by D.
El-Hoss
Ledgers &
Books of
Original Entry
www.igcseaccounts.com
All questions are the copyright of Cambridge International Examination Board.

Prepared by D. El-Hoss
4 For
Examiner’s
Use
2 Jim Dee is a sole trader who buys and sells on credit and keeps full accounting records. His
transactions for the month of September 2003 include the following.
Date Transaction Customer’s name Amount ($)

September 6 Goods sold Whizzo Products 400
10 Goods sold T Culpepper 750
14 Goods returned Whizzo Products 100
20 Goods sold Sam Beesi 1500
26 Goods returned T Culpepper 150
(a) Enter these transactions in Jim’s Sales Journal and Sales Returns Journal below and
show the totals for the month.
Sales Journal
Date Amount
2003 Customer $
Sales Returns Journal
Date Amount
2003 Customer $
[7]
0452/02/O/N/03
5 For
Examiner’s
Use
2 (b) Make the necessary entries in the ledger accounts below.
Jim Dee
Sales Ledger
Whizzo Products account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
T Culpepper account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
Sam Beesi account

..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
Nominal Ledger
Sales account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
Sales Returns account
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
0452/02/O/N/03 [Turn over

6 For
Examiner’s
Use
2 (c) On 3 October 2003 Jim sent an invoice for $800 to Rachel Smith for goods sold to her
on credit. Rachel paid for these goods by cheque on 12 October 2003, deducting 2 %
cash discount.
Enter these transactions in Rachel’s account in Jim’s Sales Ledger below.
Rachel Smith account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
0452/02/O/N/03
2 Ombeya sells musical instruments. In September he had the following transactions: For
Examiner's
Use
Date Details Reference Amount
September $
4 Sale to Hales orchestra INV23 1200
15 Sale to Sing Song band INV24 450
17 Returns from Hales orchestra RT7 300
28 Sale to Town school INV25 700
REQUIRED
(a) Show the entries to be made for September in Ombeya’s sales journal and sales
returns journal.
Ombeya
Sales Journal

$
Ombeya
Sales Returns Journal

$
[4]
© UCLES 2008 0452/02/O/N/08

(b) Using the information in Ombeya’s sales journal and his sales returns journal, write up For
the following accounts in his ledger for September. Examiner's
Use
Show the amounts transferred to his trading account for the month.
Sales account
Sales returns account
Hales Orchestra account
Sing Song band account
Town School account
[8]
© UCLES 2008 0452/02/O/N/08 [Turn over

The Sing Song band goes out of business on 10 October without paying the amount due to For
Ombeya. Examiner's
Use
REQUIRED
(c) Show the journal entry (with narrative) to write off the bad debt.
Date Dr Cr
[5]
(d) State which accounting principle Ombeya has followed in writing off the bad debt.
[2]
[Total: 19]
© UCLES 2008 0452/02/O/N/08

2 (a) State which accounting document would show the amount of: For
Examiner's
Use
(i) trade discount
(ii) cash discount
[2]
Chen makes the following sales on credit in the week ending 16 October 2009.
October Customer Reference $

12 Artelis A4 230
14 Brook B1 300
15 Chadri C7 55
He writes up his sales journal at the end of the week as shown below.
Chen
Sales journal
October Reference $
12 Artelis A4 250
14 www.igcseaccounts.com
Brook B1 300
16 Total sales for week 550
REQUIRED
(b) From the entries in the sales journal, write up the accounts in Chen’s ledger shown on
the next page to record the transactions for the month.
Sales account
[2]
Artelis account
[2]
Brook account
[2]
© UCLES 2009 0452/02/O/N/09

Chen realises he has made two errors in writing up the sales journal. He decides to correct For
these errors by journal entries. Examiner's
Use
REQUIRED
(c) Show the two separate journal entries necessary to correct these errors. Narratives are
not required.
Dr Cr
$ $
Dr Cr
$ $
[4]
(d) State the balance on each of the accounts in Chen’s ledger after correcting the two
errors.
Dr Cr
$ $
Sales account
Artelis account
Brook account
Chadri account
[6]
[Total: 18]

3 Moma keeps full accounting records and makes up her financial statements (final accounts) For
to 31 October in each year. Examiner's
Use
Extracts from her accounting records for October 2010 show the following:
Purchases Journal
$
October 5 Summa 320
17 Carter 500
29 Summa 270
Purchases Returns Journal

$
October 8 Summa 100
Cash Book (credit side)

Discount Bank
$ $
October 30 Summa 220
31 Carter 15 485
REQUIRED
(a) Write up the accounts of Summa and Carter in Moma’s purchases ledger for the month
of October 2010. Show any balances carried and brought down.
Purchases Ledger
Summa account
[7]

10
Carter account For

Examiner's
Use
[5]
At 1 October Moma had 200 units of inventory (stock) which had cost $2.80 per unit. In the
month of October her purchases were:
October Units Cost per unit

$
5 100 3.20
10 130 3.10
27 120 2.90
REQUIRED
(b) Calculate the following. Show your workings.
(i) The value of inventory (stock) at 1 October.

[2]
(ii) The total cost of purchases for October.
[6]
© UCLES 2010 0452/13/O/N/10

11
(c) Stock is sold in the order in which it is received. At 31 October Moma had 250 units in stock. For
The net realisable value of each unit was $3.00. Examiner's
Use
Calculate the value of inventory (stock) at 31 October.
[5]
[Total: 25]

3 The following balances were taken from the books of Hans Lee, a sole trader, at 30 April 2012. For
Examiner's
Use
$
Revenue 110 000
Purchases 65 000
Inventory 1 May 2011 11 500
Trade receivables 1 300
Trade payables 1 900
Machinery 7 400
Expenses 31 600
Bank (overdraft) 3 100
Capital 11 500
Drawings 7 600
Hans Lee’s inventory at 30 April 2012 was $12 100.
REQUIRED
(a) State one reason for preparing a trial balance.
[1]
(b) Complete the following trial balance for Hans Lee at 30 April 2012. Show any difference
you find as a balance in an appropriate account.
Hans Lee
Trial Balance at 30 April 2012
Dr Cr
$ $
Revenue
Purchases
Inventory
Trade receivables
Trade payables
Machinery
Expenses
Bank (overdraft)
Capital
Drawings
[7]
© UCLES 2012 0452/11/M/J/12

After the trial balance had been prepared, the following errors were discovered. For
Examiner's
Use
1 The purchases journal had been undercast by $1600.
2 $150 received from John Tan, a credit customer, had been debited to his account.
3 No entry had been made in the drawings account for $200 cash taken by Hans Lee.
REQUIRED
(c) Prepare the entries in Hans Lee’s journal to correct the above errors.
Narratives are not required.
Hans Lee
Journal
Debit Credit
$ $
3
[6]
(d) In the following table place a tick () under the correct heading to show how correcting
each of the above errors would change the profit for the year.
Increase Decrease No effect

Error 1
Error 2
Error 3
[3]
© UCLES 2012 0452/11/M/J/12 [Turn over

10
(e) Using your answer to (b), state whether you consider that all the errors on Hans Lee’s For
books have been discovered. Give a reason for your answer. Examiner's
Use
[2]
[Total: 19]
© UCLES 2012 0452/11/M/J/12

1 Dalia Said is a trader. She maintains a full set of accounting records. She purchases and For
sells goods on credit. Examiner's
Use
The following transactions took place in March 2012.
March 2 Bought goods, $1950, on credit from Essam Wholesalers

8 Bought goods on credit from Ramy El Din, list price $680, subject to a trade
discount of 20%
14 Returned goods, list price $120, to Ramy El Din
21 Paid the balance owing to Essam Wholesalers by cheque, less 2% cash discount
28 Paid a cheque for $300 on account to Ramy El Din
REQUIRED
(a) Write up the purchases journal and the purchases returns journal for March 2012.
Total each journal and indicate the ledger account to which the total would be transferred.
Dalia Said
Purchases journal
Date Details $ $
[3]
Purchases returns journal
Date Details $ $
[2]
© UCLES 2012 0452/22/M/J/12

(b) Write up the accounts of Essam Wholesalers and Ramy El Din as they would appear in For
Dalia Said’s ledger for the month of March 2012. Examiner's
Use
There was no balance on either of these accounts on 1 March 2012.
Where traditional “T” accounts are used they should be balanced and the balance
brought down. If there is no balance the account should be totalled.
Where three-column running balance accounts are used the balance column should be
updated after each entry.
Dalia Said
Essam Wholesalers account
[3]
Ramy El Din account
[4]
(c) Name the ledger in which Dalia Said would maintain the accounts of Essam
Wholesalers and Ramy El Din.
[1]

Dalia Said’s total purchases for the year ended 31 March 2012 were $33 400. On 31 March 2012 For
her trade payables amounted to $2600. Dalia Said is allowed a period of 30 days in which to pay Examiner's
Use
her accounts.
REQUIRED
(d) Calculate the payment period for the trade payables.
Your answer should be rounded up to the next whole day.

Show your workings.
[2]
(e) State one advantage to Dalia Said of paying creditors after the due date.
[1]
(f) State one disadvantage to Dalia Said of paying creditors after the due date.
[1]
(g) Dalia Said is concerned that some of her credit customers are exceeding the period of
credit allowed.
Suggest three ways in which Dalia Said could improve the collection period for trade
receivables.
(i)
(ii)
(iii)
[3]
[Total: 20]
© UCLES 2012 0452/22/M/J/12

12
4 Theba maintains a petty cash book using the imprest system. For
Examiner's
Use
REQUIRED
(a) State one reason why Theba maintains a petty cash book in addition to her main cash
book.
[2]
(b) Explain what is meant by the imprest system of petty cash.
[2]
Theba’s imprest amount is $200.
On 1 April 2012 she had $97 in the petty cash box. On the same day she made a transfer
from the business bank account to restore the petty cash to the imprest amount.
On 30 April 2012 Theba had the following petty cash vouchers.
$
April 4 Postage stamps 24
12 Stationery 36
17 Fuel for motor vehicle 38
21 Refund from stationery supplier 4
24 Catering supplies 12
29 Cleaning 70
REQUIRED
(c) Prepare Theba’s petty cash book for the month of April 2012.
Balance the book on 30 April 2012 and carry down the balance.
Make the entry on 1 May 2012 to restore the petty cash to the imprest amount.
[12]
© UCLES 2012 0452/11/M/J/12

13
For
Examiner's
Cleaning Use
$
Catering
supplies
$
Motor expenses
$
Postages &
Stationery
Theba – Petty Cash Book
$
Total Paid
$
Details
Date
Total Received

14
(d) From the entries in the petty cash book, record the transactions for the month in
Theba’s ledger.
For
Examiner's
Postage and Stationery account Use
Motor expenses account
Catering supplies account
Cleaning account
[5]
(e) State the amount of petty cash which would be included in Theba’s balance sheet
prepared on 30 April 2012.
[1]
[Total: 22]
© UCLES 2012 0452/11/M/J/12

Cash Book &

Petty Cash
Book

8 For
Examiner’s
Use
4 Karl is a sole trader who keeps full double entry accounting records including Sales,
Purchases and Nominal Ledgers.
On 1 April 2003, balances in Karl’s books included the following.

$
Debit balances brought forward from 31 March 2003
Cash 200
Bank 2500
Debtor’s accounts (in the Sales Ledger)
M Fynne 200
J Bildt 1500
Creditor’s accounts (in the Purchases Ledger)
S Ghalli 615
T Daktyl 830
Karl’s transactions for the month of April 2003 included the following.
April 4 M Fynne paid the amount he owed by cheque after deducting

cash discount of $10.
6 Cash was withdrawn from bank for office use 300
8 Paid S Ghalli by cheque after deducting cash discount of $15.
10 Paid wages in cash. 250
14 J Bildt paid the amount he owed by cheque, deducting cash
discount, $40.
17 Cash was withdrawn from bank for office use. 400
21 Paid T Daktyl by cheque after deducting cash discount of $30.
25 Paid wages in cash. 350
28
30
Cash sales. www.igcseaccounts.com
Cash was paid into bank.
800
500
(a) Enter the above transactions in Karl’s cash book on the page opposite (the cash and
bank balances on 1 April 2003 have been entered for you).
Balance the cash and bank accounts at 30 April 2003 and bring down the balances on
1 May 2003.
[21]
0452/02/M/J/03
9 For
Examiner’s
Use
Bank
$
Cash
$
Discount
$
Cash Book
Karl
2003
Date
April
Bank
2500
$
Cash
200
$
Discount
$
Balances b/d
1
2003
Date
April
0452/02/M/J/03
[Turn over
10 For
Examiner’s
Use
4 (b) Total the discounts columns in the cash book.
Make the entries required in the discounts accounts on 30 April 2003 in Karl’s nominal
ledger below.
Karl
Nominal Ledger
Discounts Allowed account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
Discounts Received account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
0452/02/M/J/03
4
For
Examiner's
2 Loretti started a business on 1 April 2006. On that day he introduced the following into the Use
business:
Stock $12 000, office furniture $1500, and cash $2500, of which $200 was kept on hand for
petty cash and the balance, $2300, was paid into a business bank account.
On the same day his cousin Hassan paid $3000 into the business bank account as a loan to
the business.
REQUIRED
(a) Show the opening journal entry to record these transactions. A narrative is not required.
Loretti
Journal
Dr Cr
$ $
[8]
Loretti decided to keep his petty cash book on the imprest system. In the month of
April 2006 he paid the following expenses from his cash balance.
$
3 April Stationery 35
8 April Refreshments 40
13 April Cleaning 50
20 April Travelling 20
On 1 May he withdrew the appropriate amount from the bank to restore the imprest amount.
REQUIRED
(b) Write up Loretti’s petty cash book, on the page opposite, for the month of April and
show the amount transferred from the bank on 1 May.
© UCLES 2006 0452/02/M/J/06

5
For
Examiner's
Use
[Total: 16]
[8]
$
$
$
$
Total
paid
Loretti – Petty Cash Book
Details
Date
received
Total
$
Details
Date

2
For
Examiner's
1 Tarek Wahid is a sole trader who keeps full double entry records including a three column Use
cash book.
On 1 April 2006 his cash book showed the following debit balances:
$
Cash 125
Bank 6750
Tarek’s transactions for the month of April 2006 included the following:
April 5 Cheque for $230, received from Asmaa El Zein in March, was dishonoured by
the bank.
10 Received a cheque from Mohammed Riyas in settlement of his account of

$480, after deducting cash discount of 2 ½ %.
16 Paid cheques totalling $9980 for a new motor vehicle costing $9900, and
repairs to existing motor vehicle costing $80.
24 Paid Salma Abbas a cheque for $546 to settle the amount due, after deducting
cash discount of $14.
29 Cash sales amounted to $2150.
30 Paid all the cash into the bank except $100.
REQUIRED
(a) Enter the above transactions in Tarek Wahid’s cash book on the page opposite.
Balance the cash book at 30 April and bring down the balances on 1 May 2006.
[11]
© UCLES 2006 0452/03/M/J/06

3
For
Examiner's
Use
Bank
$
Cash
$
Received
Discount
$
Details
Date
Tarek Wahid
Cash Book
Bank
$
Cash
$
Discount
Allowed
$
Details
Date

4 For
Examiner's
Use
2 Tanita has a retail shop and sells clothes. Some of her customers pay cash and some have
credit accounts which they settle each month. Tanita had the following transactions in
March 2006:
Date $
March
4 Sale on credit to Vanni 110
7 Cash sale 55
10 Sale on credit to Saska 200
15 Returns from Vanni 30
31 Cash received from Saska 190
31 Discount allowed to Saska 10
REQUIRED
(a) Show the entries for these transactions in the following accounts in Tanita’s ledger.
Enter the transfers to the Trading and Profit and Loss Account for the month.
Sales account
Sales Returns account
Vanni account
© UCLES 2006 0452/02/O/N/06

5 For
Examiner's
Use
Saska account
Discount Allowed account
Cash book
[15]
(b) From your answer to (a), complete items (i), (ii), (iii) and (iv) in the following extract
from Tanita’s Trading and Profit and Loss Account for the month of March 2006.
Trading and Profit and Loss Account (extract)

$
Sales (i)
Less: sales returns (ii)
Net sales (iii)
Expenses
Discount allowed (iv)
[4]
[Total: 19]

15
5 Sohara has a shop and sells goods for cash and on credit. She keeps the cash book herself For
but her accountant writes up her ledger each month. Examiner's
Use
Sohara puts her cash receipts in a till and enters them into her three-column cash book
each week. She offers a cash discount of 3% to her debtors for payment within 15 days.
She buys stock in bulk from Apollo for cash and receives trade discount of 5% for orders in
excess of $1000.
She pays wages each week in cash.
On 1 September 2010 Sohara’s cash book showed cash in hand of $700 and cash at bank
of $3000.
Sohara had the following transactions in one week in September 2010.
$
September 6 Cheque received from Juno for goods sold on 24 August 291
7 Sold goods on credit to Hercules 100
8 Paid cash to Apollo for goods purchased 1900
9 Cheque received from Minos for goods sold on 29 June 85
10 Cash sales for the week 1850
10 Wages paid for the week 350
REQUIRED
(a) (i) State the type and amount of discount allowed to Juno by Sohara.
[3]
(ii) State the type and amount of discount received by Sohara on paying Apollo.
[3]
(b) Make the necessary entries in Sohara’s cash book to record the above transactions for
the week ended 10 September 2010. You are not required to balance the cash book.
The cash book is on the next page.

16
Sohara Cash Book For

September 2010 Examiner's
Use
[12]
Bank
$
Cash
$
Discount
$
Details
Date
Bank
$
Cash
$
Discount
$
Details
Date
© UCLES 2010 0452/13/O/N/10

17
Sohara also keeps a petty cash book on the imprest system with an imprest of $300. For
Examiner's
Use
On 30 September 2010 there was $20 in the petty cash box and vouchers for expenses
totalling $270.
REQUIRED
(c) (i) State the amount of cash there should have been in the petty cash box.
[2]
(ii) Suggest one reason why there was a difference in the petty cash between the
amount actually in the box and the expected amount.
[2]
(iii) State the amount which was transferred from the bank on 1 October to restore the
imprest.
[2]
[Total: 24]

8
3 Amanda’s cash book for the month of April 2012 is shown below. For
Examiner's
Use
Amanda
Cash Book
Date Details Discount Cash Bank Date Details Discount Cash Bank
April $ $ $ April $ $ $
1 Balances b/d 60 100 6 Mitchell 120
9 Julian 6 194 21 Sylvia (Dis. chq) 180
14 Sylvia 180 26 Equipment 2000
28 Sales 1300 29 Bank 1100
29 Cash 1100 30 Balance c/d 140
30 Balance c/d 606
6 1360 2180 1360 2180
May May
1 Balance b/d 140 1 Balance b/d 606
REQUIRED
(a) Explain the following entries in the above cash book.
April 6 Mitchell
[1]
April 9 Julian
[2]
April 14 Sylvia
[1]
April 21 Sylvia
[1]
© UCLES 2012 0452/12/M/J/12

9
April 26 Equipment For

Examiner's
Use
[1]
April 28 Sales
[1]
(b) Explain the transaction which took place on 29 April.
[2]
(c) (i) Explain the significance of the cash balance and the bank balance on 1 May.
[2]
(ii) State the section of Amanda’s balance sheet on 30 April in which the balances
shown in the cash book would appear.
Cash balance
Bank balance [2]
(iii) State why the cash column of a cash book can never have a balance brought
down on the credit side.
[2]

10
(d) Using the information in the extract from Amanda’s cash book above, write up the For
following accounts in her ledger for April. Examiner's
Use
Amanda
Mitchell account
Julian account
Sylvia account
Equipment account
Sales account
Discount allowed account
[9]
[Total: 24]
© UCLES 2012 0452/12/M/J/12

2
1 Stewart Hanson is a sole trader who maintains a full set of accounting records including a For
three-column cash book. Examiner's
Use
REQUIRED
(a) Explain why the cash book is both a book of prime (original) entry and also part of the
double entry system.
[2]
On 1 January 2012 Stewart Hanson had the following debit balances in his cash book:
$
Cash 100
Bank 1942
Stewart Hanson’s transactions for the month of January 2012 included the following:
Jan 3 Paid Paul Yim $398 by cheque in full settlement of his account of $410
8 Purchased office equipment, $1795, and paid by cheque
13 Withdrew $250, by cheque, to pay personal motor expenses
20 A cheque received in December 2011 for $115 from Sue West was
dishonoured and returned by the bank
28 Cash sales, $1970
30 Paid all the remaining cash into the bank except $50
REQUIRED
(b) Enter the above transactions in Stewart Hanson’s cash book on the page opposite.
Balance the cash book at 31 January 2012 and bring down the balances on
1 February 2012.
[10]
© UCLES 2012 0452/21/M/J/12

3
For
Examiner's
Bank
Use
$
Cash
$
Discount
received
$
Details
Stewart Hanson
Date
Cash Book
Bank
$
Cash
$
Discount
allowed
$
Details
Date

4
(c) Stewart Hanson’s bank statement for January 2012 showed that his bank account was For
overdrawn for most of the month. Examiner's
Use
(i) Explain why this overdraft occurred.
[2]
(ii) Explain how the overdraft could have been prevented.
[2]
(d) Explain how the business entity principle has been applied in the treatment of the
personal motor expenses.
[2]
(e) On 20 March 2012 Stewart Hanson decided to write off $115 owed by Sue West as a
bad debt.
Prepare the journal entry Stewart Hanson would make to record this. A narrative is
required.
Journal
Debit Credit
$ $
[3]
© UCLES 2012 0452/21/M/J/12

5
(f) On 14 May 2012 Stewart Hanson received a cheque for $115 from Sue West.
For
Name the ledger accounts in which Stewart Hanson would record this transaction. Examiner's
Use
Account debited Account credited
[2]
(g) Suggest two ways in which Stewart Hanson could reduce the risk of bad debts in the
future.
(i)
(ii)
[2]
[Total: 25]

8
3 Walek sells goods for cash and on credit. He puts the cash receipts in a box and pays the For
total into his bank account each month. He pays the cheques received from his credit Examiner's
Use
customers into the bank on the day he receives them.
On 1 September 2012 Walek’s cash book showed a debit balance at the bank of $2400.
Walek had the following transactions in September 2012.
September $
3 Cheque received from Lashki 640
4 Sold goods on credit to Sharon 420
9 Purchased goods on credit from Bruton 1980
14 Paid two weeks’ wages by cheque 250
16 Cheque received from Yovell 370
28 Paid two weeks’ wages by cheque 280
29 Paid cheque to Bruton 1980
30 Cash sales for the month 3560
On 21 September the bank returned Yovell’s cheque dishonoured.
REQUIRED
(a) Make the necessary entries in the bank columns of Walek’s cash book to record the
above transactions. Balance the cash book and bring down the balance on
1 October 2012.
Walek
Cash Book (bank columns only)
Date Details $ Date Details $
[8]
© UCLES 2012 0452/11/O/N/12

9
(b) From the information given on page 8 and the entries in the cash book, make the entries in For
the following accounts in Walek’s ledger to record the transactions for September 2012. Examiner's
Use
Walek
Sales account
Purchases account
Wages account
Lashki account
Sharon account
Yovell account
Bruton account
[11]

10
At 30 September Walek had recorded the cash sales in his cash book, but had not For
deposited the money in the bank. The cheque payable to Bruton dated 29 September was Examiner's
Use
not cleared by the bank until 6 October.
The bank statement at 30 September showed a balance at the bank of $2510.
REQUIRED
(c) Prepare a bank reconciliation statement for Walek at 30 September 2012.
Walek
Bank Reconciliation Statement 30 September 2012
[4]
(d) Explain why items are recorded on the opposite side of the cash book to that on which
they appear on the bank statement.
[4]
[Total: 27]
© UCLES 2012 0452/11/O/N/12

Non-profit
Organisations
& Club
Accounts

14 For
Examiner’s
Use
5 The Cobbydale Sports Club was formed on 1 May 2002.
The treasurer produced the following information for the year ended 30 April 2003.
Receipts and Payments Account for the year ended 30 April 2003
Receipts $ Payments $
Subscriptions 6 800 General expenses 1 430
Sale of tickets for open day 3 250 Insurance 670
Loan from a member 1 000 Purchase of equipment 3 500
Expenses of open day 1 950
Rent of premises 2 420
Balance 30 April 2003 c/d 1 080
––––– –––––
11 050 11 050
––––– –––––
Balance 1 May 2003 b/d 1 080
Additional notes –
1. At 30 April 2003
$
Subscriptions due from members amounted to 300
Rent due amounted to 220
2. The equipment is expected to have a useful life of 6 years after which time its scrap
value is expected to be $200. Depreciation is to be provided using the straight line
(equal instalment) method. A full year’s depreciation is charged in the year of purchase.
(a) Prepare the Income and Expenditure Account of the Cobbydale Sports Club for the year
ended 30 April 2003.
0452/03/M/J/03
15 For
Examiner’s
Use
Cobbydale Sports Club
Income and Expenditure Account for the year ended 30 April 2003
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
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.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.....................................................................................................................................................[7]
(b) (i) Select one of the items appearing in the Receipts and Payments Account which
should not be included in the Income and Expenditure Account and explain why it
does not appear.
Item ...........................................................
Explanation ................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
0452/03/M/J/03 [Turn over

16 For
Examiner’s
Use
(ii) Select one of the items appearing in the Income and Expenditure Account which
does not appear in the Receipts and Payments Account and explain why it does
not appear.
Item ...........................................................
Explanation ................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(c) Prepare the Balance Sheet of the Cobbydale Sports Club as at 30 April 2003.
Cobbydale Sports Club
Balance Sheet as at 30 April 2003
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
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.........................................................................................................................................................
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.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.....................................................................................................................................................[8]
0452/03/M/J/03
11 For
Examiner’s
Use
4 (a) Explain the term ‘Accumulated Fund’ in connection with the accounts of a non-trading
organisation such as a club.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
(b) The following balances appeared in the books of the Green Jackets Sports Club on 30
September 2002.
$
Clubhouse 25 000
Equipment 5 400
Subscriptions prepaid by members 1 000
Refreshments stock 1 020
Creditors for refreshments stock 850
Cash 280
Bank overdraft 2 990
Insurance prepaid 190
Calculate the Accumulated Fund of the Green Jackets Sports Club as at 30 September
2002. Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[5]

12 For
Examiner’s
Use
(c) On 1 October 2002 the Green Jackets Sports Club had prepaid insurance amounting to
$190.
On 1 December 2002 the Club paid $1200 by cheque for 1 year’s insurance to
30 November 2003.
Prepare the Insurance account as it would appear in the ledger of the Green Jackets
Sports Club for the year ended 30 September 2003. Show clearly the amount
transferred to the Income and Expenditure Account. Bring down the balance on 1
October 2003.
Insurance account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]
0452/03/O/N/03
13 For
Examiner’s
Use
(d) The Green Jackets Sports Club has 300 members who pay an annual subscription of
$200.
The following information is available.
1. On 1 October 2002, 5 members had paid their subscriptions in advance for the
financial year ending 30 September 2003.
2. During the year ended 30 September 2003, 280 members paid their annual
subscription in full.
3. At 30 September 2003 subscriptions due from 15 members remained unpaid.
Prepare the Subscriptions account as it would appear in the ledger of the Green Jackets
Sports Club for the year ended 30 September 2003. Show clearly the amount
transferred to the Income and Expenditure Account. Bring down the balance on 1
October 2003.
Subscriptions account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]

10 For
Examiner’s
Use
4 The All Star Sports Club was formed on 1 August 2003.
The treasurer produced the following information for the year ended 31 July 2004.
Receipts Payments
$ $
Subscriptions 14 600 Sports equipment 9000
Snack bar sales 10 900 Snack bar supplies 7850
Barbecue ticket sales 1 400 Barbecue expenses 750
Staff wages –
Snack bar staff 2100
General staff 2430
Rent 2160
Insurance 1660
Repairs and maintenance 1840
General expenses 1220
Additional information
1. On 31 July 2004 –
10 members each owed the club $50 for their subscription for the current year.
2 members had each paid $50 subscription for the year ending 31 July 2005.
2. At 31 July 2004 –
$
Creditors for snack bar supplies were owed 850
Stock of snack bar supplies was valued at
Rent prepaid amounted to
1200
80
General expenses accrued amounted to 60
3. The sports equipment is to be depreciated using the straight line (equal instalment)
method at 10% p.a. A full year’s depreciation is charged in the year of purchase.
© UCLES 2004 0452/03/O/N/04

11 For
Examiner’s
Use
(a) Prepare the Snack Bar Trading Account of the All Star Sports Club for the year ended
31 July 2004.
All Star Sports Club

Snack Bar Trading Account for the year ended 31 July 2004
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]

12 For
Examiner’s
Use
(b) Prepare the Income and Expenditure Account of the All Star Sports Club for the year
ended 31 July 2004.
All Star Sports Club

Income and Expenditure Account for the year ended 31 July 2004
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[12]
© UCLES 2004 0452/03/O/N/04

13 For
Examiner’s
Use
(c) The All Star Sports Club has been given the opportunity to purchase the clubhouse and
grounds in 2006. At the end of the first year the club has a bank overdraft of $2110. The
treasurer is worried that the club will not have enough money to pay for the property.
Suggest two ways in which the club could raise a large sum of money for this purpose.
1. ......................................................................................................................................
2. ..................................................................................................................................[2]
[Total: 20]

12 For
Examiner’s
Use
4 The following terms are used in connection with non-trading organisations such as clubs.
REQUIRED
(a) Explain each of the following terms.
(i) Income and Expenditure Account
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) Accumulated Fund
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
The Siltones Music Society was formed some years ago. It has 40 members who each pay
an annual subscription of $100.
On 1 April 2004 the Siltones Music Society had the following assets.
Balance at bank
Musical instruments (book value) 1200
2210
Subscriptions due from members 1000
Rent of premises prepaid 280
The treasurer provided the following information relating to the year ended 31 March 2005.
All receipts were paid into the bank and all payments were made by cheque.
$ $
Subscriptions received from members
for the year ended 31 March 2004 1000
for the year ending 31 March 2006 800 5800
Receipts from concert 1900
Expenses of concert 1250
Rent of premises
for the year ending 31 March 2006 420 1820
Insurance 325
Proceeds of sale of musical instruments 700
Purchase of new musical instruments 3350
© UCLES 2005 0452/03 M/J/05

13 For
Examiner’s
Use
REQUIRED
(b) Prepare the Receipts and Payments Account of the Siltones Music Society for the year
ended 31 March 2005. Balance the account at 31 March and bring down the balance on
1 April 2005.
Siltones Music Society

Receipts and Payments Account for the year ended 31 March 2005
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[10]
© UCLES 2005 0452/03 M/J/05 [Turn over

14 For
Examiner’s
Use
REQUIRED
(c) Prepare the subscriptions account as it would appear in the ledger of the Siltones Music
Society for the year ended 31 March 2005.
Show the amount transferred to the Income and Expenditure Account.
Where a traditional ‘T’ account is used it should be balanced and the balance brought
down on 1 April 2005.
Where a three column running balance account is used the balance column should
be up-dated after each entry.
Siltones Music Society

..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
[Total: 21]
© UCLES 2005 0452/03 M/J/05

10
For
Examiner's
3 The assets and liabilities of the Safat Judo Club on 1 February 2005 were as follows: Use
$
Bank 3150 debit
Motor vehicle at valuation 2000
Subscriptions owed by members 250
Rent owing 50
The treasurer provided the following information for the year ended 31 January 2006:
Receipts during the year Payments during the year

$ $
Subscriptions 10 650 Purchase of new motor vehicle 10 000
Proceeds of sale of motor vehicle 1 750 Competition prizes 210
Competition entrance fees 800 General expenses 2 645
Travelling expenses 830
Rent 2 600
The following information is also available:
1 The motor vehicle is used to take members to tournaments and competitions.
The motor vehicle owned on 1 February 2005 was sold in March 2005. No depreciation
is provided for in the year of sale.
A new motor vehicle was purchased on the same day. On 31 January 2006 the new
motor vehicle was valued at $8500.
2 On 31 January 2006:
subscriptions paid in advance by members amounted to $400;
rent prepaid amounted to $100.
© UCLES 2006 0452/03/M/J/06

11
For
Examiner's
REQUIRED Use
(a) Prepare the Income and Expenditure Account of the Safat Judo Club for the year ended
31 January 2006.
Safat Judo Club

Income and Expenditure Account for the year ended 31 January 2006
[10]

12
For
Examiner's
(b) Prepare the Balance Sheet of the Safat Judo Club at 31 January 2006. Use
Safat Judo Club

Balance Sheet at 31 January 2006
[8]
© UCLES 2006 0452/03/M/J/06

13
For
Examiner's
A member of the club is worried that the surplus or deficit in the Income and Expenditure Use
Account does not agree with the bank balance shown in the Balance Sheet at
31 January 2006.
REQUIRED
(c) State and explain two reasons for this difference.
(i)
(ii)
[2]
[Total: 20]

8
For
Examiner's
3 The accounts maintained by non-trading organisations such as clubs and societies often Use
use different terms to those used in the accounts of a trading business.
REQUIRED
(a) Complete the following table to name the equivalent terms used by a non-trading
organisation.
The first one has been completed as an example.
Trading business Non-trading organisation
(i) Cash book Receipts and Payments Account
(ii) Net loss
(iii) Capital
(iv) Profit and Loss Account
[3]
The treasurer of El Nil Sailing Club maintains a full set of accounting records. The following
account appears in the ledger of El Nil Sailing Club.
2005 $ 2005 $
Aug 1 Balance b/d 750 Aug 1 Balance b/d 300
2006 2006
July 31 Income & July 31 Bank 5850
Expenditure 4500
Balance c/d 900 ____

6150 6150
2006
Aug 1 Balance b/d 900
For candidates who are not familiar with the layout of the account shown above, an
alternative presentation is provided.
Debit Credit Balance
2005 $ $ $
Aug 1 Balances 750 300 450 Dr
2006
July 31 Bank 5850 5400 Cr
Income & Expenditure 4500 900 Cr
© UCLES 2006 0452/03 O/N/06

9
For
Examiner's
REQUIRED Use
(b) (i) Explain each of the following entries in the subscriptions account as it appears in
the ledger of El Nil Sailing Club. State where the double entry for each transaction
would be made.
2005
Aug 1 Balance $300
Explanation This is the total subscriptions paid by members during
the financial year ended 31 July 2005 which relate to
the following financial year.
Double entry Debit subscriptions account for year ended 31 July 2005
2005
Aug 1 Balance $750
Explanation
Double entry
2006
July 31
Bank $5850
Explanation
Double entry
2006
July 31
Income and Expenditure $4500
Explanation
Double entry [6]
(ii) Explain the significance of the $900 shown at the end of the subscriptions account
and state where this amount will appear in El Nil Sailing Club’s Balance Sheet at
31 July 2006.
[2]
© UCLES 2006 0452/03 O/N/06 [Turn over

10
For
Examiner's
The treasurer of El Nil Sailing Club provided the following information relating to the Use
year ended 31 July 2006. All receipts were paid into the bank and all payments were
made by cheque.
$
Bank balance at 1 August 2005 6 300 debit
Purchase of new boat 13 000
Repairs to boat 90
Proceeds of sale of old boat 280
Insurance 750
Competition entrance fees received 690
Cost of competition prizes 420
1 Details of the subscriptions are provided in the subscriptions account shown

above.
2 At 31 July 2006 insurance prepaid amounted to $150 and general expenses

outstanding amounted to $30.
REQUIRED
(c) Using the information above and the subscriptions account shown earlier in the
question, prepare the Receipts and Payments Account of El Nil Sailing Club for the
year ended 31 July 2006.
El Nil Sailing Club

Receipts and Payments Account for the year ended 31 July 2006
[10]
[Total: 21]
© UCLES 2006 0452/03 O/N/06

8
3 The financial year of the El Darb Sports Club ends on 31 December. For
Examiner's
Use
The El Darb Sports Club has 200 members who each pay an annual subscription of $20.
The treasurer provided information relating to the year ended 31 December 2009.
At 1 January 2009
10 members had not paid their subscription for the year ended 31 December 2008
3 members had paid their subscription in advance for the year ended 31 December 2009.
During the year ended 31 December 2009 subscriptions received were as follows:
$
For the year ended 31 December 2008 200
For the year ended 31 December 2009 3800
For the year ending 31 December 2010 80
Total subscriptions received 4080
At 31 December 2009 a number of members had not paid their subscription for the financial
year ended on that date.
REQUIRED
(a) Prepare the subscriptions account as it would appear in the ledger of the El Darb
Sports Club for the year ended 31 December 2009.
Show the amount transferred to the income and expenditure account.
Where a traditional “T” account is used it should be balanced and the balances
brought down on 1 January 2010.
Where a three column running balance account is used the balance column should be
up-dated after each entry.
El Darb Sports Club

[10]
© UCLES 2008 0452/02/SP/10

9
In addition to providing sporting facilities for the members, the El Darb Sports Club also has For
a shop selling sports goods to members and their guests. Examiner's
Use
All goods are sold for cash and all purchases are made on credit terms.
The treasurer provided the following information relating to the El Darb Sports Club shop for
the year ended 31 December 2009.
$
At 1 January 2009
Inventory (stock) 990
Amount owing to suppliers 282
During the year ended 31 December 2009

Shop takings 7280
Cheques paid to suppliers 2990
Wages of part-time shop assistant 2500
At 31 December 2009
Inventory (stock) 835
Amount owing to suppliers 397
For the year ended 31 December 2009

Depreciation of shop fixtures 200
REQUIRED
(b) Select the appropriate figures and calculate the purchases for the year ended
31 December 2009.
Your answer may be in the form of a ledger account or a calculation.
[4]
© UCLES 2008 0452/02/SP/10 [Turn over

10
(c) Prepare the shop income statement (shop trading account) of the El Darb Sports Club For
shop for the year ended 31 December 2009. Examiner's
Use
El Darb Sports Club

Shop Income Statement (Shop Trading Account) for the year ended 31 December 2009
www.igcseaccounts.com [7]
(d) Suggest two ways in which the profitability of the El Darb Sports Club shop could be
improved.
(i)
(ii) [2]
[Total: 23]
© UCLES 2008 0452/02/SP/10

14
4 The Lobatse Rugby Club had the following assets and liabilities on 1 April 2008. For
Examiner's
Use
$
Equipment at book value 4400
Cash at bank 3700
Subscriptions prepaid by members 100
Subscriptions owed by members 50
Accumulated fund 8050
The treasurer of the club prepared the following receipts and payments account for the year
ended 31 March 2009.
2008 $ 2009 $
April 1 Balance b/d 3700 Mar 31 Transfer to bank
2009 deposit a/c 2000
Mar 31 Subscriptions 2250 Equipment 1800
Interest received 100 Secretarial expenses 210
Entrance fees for Advertising 40
sports day 520 General expenses 490
Rent 1530
Sports day expenses 370
Balance c/d 130
6570 6570
2009
April 1 Balance b/d 130
The treasurer supplied the following additional information.
1 On 31 March 2009:www.igcseaccounts.com
$
Subscriptions owing by members 200
Rent accrued 30
General expenses prepaid 20
2 The equipment is depreciated by 10 % per annum on the value of equipment held at

the end of each financial year.
© UCLES 2009 0452/03/M/J/09

15
REQUIRED For
Examiner's
Use
(a) Prepare the subscriptions account as it would appear in the ledger of the Lobatse
Rugby Club for the year ended 31 March 2009.
Where a traditional “T” account is used it should be balanced and the balance brought
down on 1 April 2009. Where a three column running balance account is used the
balance column should be up-dated after each entry.
Lobatse Rugby Club


16
(b) Prepare the income and expenditure account of the Lobatse Rugby Club for the year For
ended 31 March 2009. Examiner's
Use
Lobatse Rugby Club

Income and Expenditure Account for the year ended 31 March 2009
[10]
© UCLES 2009 0452/03/M/J/09

17
(c) (i) Select one of the items appearing in the receipts and payments account which For
should not be included in the income and expenditure account and explain why it Examiner's
Use
does not appear.
Item
Explanation
[2]
(ii) Select one of the items appearing in the income and expenditure account which
does not appear in the receipts and payments account and explain why it does
not appear.
Item
Explanation
[2]
[Total: 21]

9
3 The Mokolodi Athletics Club was formed on 1 August 2009. For

Examiner's
Use
In addition to providing sports facilities for members, the Club also has a shop selling sports
clothing. All the shop sales are made on a cash basis.
The treasurer provided the following summary of the cash book for the year ended
31 July 2010.
Receipts $ Payments $
Subscriptions 7950 Sports equipment 6100

Shop sales 7500 Purchases of shop supplies 2950
Open day ticket sales 840 Open day expenses 690
Interest-free loan from Rent 5200
Sport for All 6000 Insurance 1700
Repairs and maintenance 1070
Wages – Groundsman 2500
– Shop assistant 1470
Additional information:
1 The Club has 170 members. The annual subscription is $50.
On 31 July 2010
15 members still owed their subscription for the current year.
4 members had paid their subscription for the year ending 31 July 2011.
2 At 31 July 2010
$
Creditors for shop supplies were owed 550
Shop inventory (stock) was valued at 650
Shop assistant’s wages owing amounted to 90
General expenses prepaid amounted to 140
Sports equipment was valued at 5400
3 It was decided that 20% of the rent should be charged to the shop.

10
REQUIRED For
Examiner's
Use
(a) Prepare the shop income statement (trading account) of the Mokolodi Athletics Club for
the year ended 31 July 2010.
Mokolodi Athletics Club

Shop Income Statement (Trading Account) for the year ended 31 July 2010
[8]
© UCLES 2010 0452/23/O/N/10

11
(b) Prepare the income and expenditure account of the Mokolodi Athletics Club for the For
year ended 31 July 2010. Examiner's
Use
Mokolodi Athletics Club

Income and Expenditure Account for the year ended 31 July 2010
[14]

12
For
(c) A member of the Club is worried because the surplus or deficit in the income and Examiner's
Use
expenditure account does not agree with the bank balance on 31 July 2010.
Explain one reason why the surplus or deficit does not equal the bank balance.
[2]
[Total: 24]
© UCLES 2010 0452/23/O/N/10

13
4 The accounts maintained by clubs and societies often use different terms to those used by For
businesses. Examiner's
Use
REQUIRED
(a) Complete the following table to name the equivalent term used by a club or society
which does not operate any trading activities.
Business Club or society
(i) Income statement
(ii) Profit for the year
(iii) Capital
[3]
The Muara Swimming Club was formed some years ago. It has 60 members who each pay
an annual subscription of $90.
On 1 March 2010 the Muara Swimming Club had a balance at bank of $3450.
The treasurer provided the following information relating to the year ended 28 February 2011.
All receipts were paid into the bank and all payments were made by cheque.
$ $
Subscriptions received from members
for the year ended 28 February 2010 270
for the year ended 28 February 2011 5400
for the year ending 29 February 2012 180 5850
Proceeds of sale of old equipment 890
Purchase of new equipment 1200
Receipts from swimming competition 780
Expenses of swimming competition 645
Rent of premises 1690
Insurance 496
Loan from Swim-for-all 1000

14
REQUIRED For
Examiner's
Use
(b) Prepare the receipts and payments account of the Muara Swimming Club for the year
ended 28 February 2011.
Balance the account and bring down the balance on 1 March 2011.
Muara Swimming Club

Receipts and Payments Account for the year ended 28 February 2011
[12]
© UCLES 2011 0452/21/M/J/11

15
(c) Prepare the subscriptions account as it would appear in the ledger of the Muara For
Swimming Club for the year ended 28 February 2011. Examiner's
Use
down on 1 March 2011.
Muara Swimming Club

[8]
[Total: 23]

15
4 The Dhavari Sports Club was formed some years ago. After the preparation of the income
and expenditure account for the year ended 31 March 2012 the following balances For
Examiner's
remained on the books. Use
$
Accumulated fund at 1 April 2011 60 000
Premises at cost 70 000
Sports equipment at valuation at 1 April 2011 13 000
Inventory of club shop 8 500
Trade payables for shop supplies 4 300
Subscriptions owing by members 1 500
Loan repayable 1 January 2015 10 000
Surplus for the year 17 400
The following errors were then discovered:
1 Petty cash, $200, had been omitted from the list of balances.
2 The equipment should have been revalued on 31 March 2012. The estimated value at
that date was $11 600.
3 The bank statement for January 2012 showed bank charges of $150. These had not
been entered in the accounting records.
4
No adjustment had been made for insurance prepaid at 31 March 2012, amounting to
$300.
5 The income and expenditure account included subscriptions, $600, which relate to the
following financial year.
6 The total of the expenditure in the income and expenditure account had been overcast
by $100.
REQUIRED
(a) Explain how the accumulated fund of the Dhavari Sports Club has arisen.
[2]

16
(b) Calculate the corrected surplus for the year ended 31 March 2012. For
Examiner's
Use
[6]
(c) Suggest two reasons why the Dhavari Sports Club’s bank balance is not equal to the
surplus for the year.
(i) www.igcseaccounts.com
(ii)
[4]
© UCLES 2012 0452/21/M/J/12

17
(d) Prepare the balance sheet of the Dhavari Sports Club at 31 March 2012.
For
Examiner's
Dhavari Sports Club Use
Balance Sheet at 31 March 2012
[12]
[Total: 24]

Control
Accounts

2 For
Examiner’s
Use
1 Ian Selkirk is a sole trader who maintains a full set of accounting records. He divides his
ledger into three sections – general ledger, purchases ledger and sales ledger.
(a) State and explain one advantage of dividing the ledger into these three sections.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
(b) Name two accounts which would appear in the general ledger.
(i) ...................................................................................................................................
(ii) ...............................................................................................................................[2]
(c) Ian Selkirk prepares control accounts for his purchases and sales ledgers at the end of
each month.
On 1 April 2003 the balances brought down on the control accounts were –
$
Purchases Ledger Control account 1960 credit
Sales Ledger Control account 1750 debit
Sales Ledger Control account 100 credit
Totals of the journals for April 2003 were –
$
Purchases Journal 4190
Sales Journal 5150
Purchases Returns Journal 135
Sales Returns Journal 270
The Cash Book for April 2003 showed –

$
Cheques received from debtors 4990
Cheques paid to creditors 3830
Cheque paid to debtor in respect of
overpayment 100
Discount allowed 110
Discount received 180
The journal entries for April 2003 showed –
$
Bad debts written off 74
Prepare Ian Selkirk’s Purchases Ledger Control account and Sales Ledger Control account
for the month of April 2003. Bring down the balances on 1 May 2003.
0452/03/M/J/03
3 For
Examiner’s
Use
Purchases Ledger Control account
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.....................................................................................................................................................[6]
Sales Ledger Control account
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.....................................................................................................................................................[8]

10
3 Mohammed Hanif maintains a full set of books of prime (original) entry and prepares a For
sales ledger control account and a purchases ledger control account at the end of every Examiner's
Use
month.
He provided the following information for the month of April 2009.
$
April 1 Sales ledger balances 4100 debit
Sales ledger balances 72 credit
April 30 Totals for the month:

Sales journal 5300
Sales returns journal 320
Cash sales 3900
Cheques received from debtors 3850
Cheque received from a debtor (included 65
in the cheques received shown above)
later dishonoured
Cash received relating to a bad debt 250
written off in September 2007
Increase in provision for doubtful debts 60
Transfer from a purchases ledger account 240
to a sales ledger account
© UCLES 2009 0452/03/M/J/09

11
REQUIRED For
Examiner's
Use
(a) Select the relevant figures and prepare Mohammed Hanif’s sales ledger control
account for the month ended 30 April 2009. There is only one balance on the account
at the end of the month.
down on 1 May 2009. Where a three column running balance account is used the
balance column should be up-dated after each entry.
Mohammed Hanif
Sales ledger control account
[10]
(b) State one reason why it is possible to have a credit balance brought down on a sales
ledger control account.
[1]

12
(c) State where each of the following items will appear in a purchases ledger control For
account. If the item will not appear in a purchases ledger control account write “No Examiner's
Use
entry”.
Entry in purchases ledger

Item
control account
(i) Purchases returns debit
(ii) Cash purchases
(iii) Discount received
(iv) Interest charged by supplier [3]

on overdue account
Mohammed Hanif’s accountant advised him that it is necessary to make decisions in

relation to accounting policies. He informed Mohammed Hanif that one of the four
objectives he must consider is “relevance”.
REQUIRED
(d) Explain to Mohammed Hanif what is meant by the term “relevance”.
[2]
© UCLES 2009 0452/03/M/J/09

13
Mohammed Hanif’s accountant informed him that the accounting statements prepared at For
the end of the financial year provide only a limited amount of information about the Examiner's
Use
business.
REQUIRED
(e) State how each of the following may be regarded as a limitation of accounting
statements.
(i) Historic cost
All transactions are recorded at the actual cost price.
It is difficult to compare transactions taking place at different times.
(ii) Money measurement
(iii) Time factor
[2]
[Total: 20]

4
2 Suzie Chow is a trader. She maintains a full set of books of prime (original) entry and For
prepares a sales ledger control account and a purchases ledger control account at the end Examiner's
Use
of each month.
REQUIRED
(a) State two advantages of preparing control accounts.
(i)
(ii)
[2]
Suzie Chow provided the following information for the month of September 2010.
$
September 1 Debit balances in sales ledger 21 976
Credit balance in sales ledger 54
September 30 Totals for the month

Cheques paid to credit suppliers 24 585
Cheques received from credit customers 21 860
Cheque received from a credit customer (included
in the cheques received shown above) later dishonoured 610
Discounts allowed 488
Discounts received 532
Returns to credit suppliers 414
Returns by credit customers 391
Credit sales 22 800
Bad debts written off 100
Provision for doubtful debts 550
Contra entry 78
REQUIRED
(b) Select the relevant figures and prepare Suzie Chow’s sales ledger control account for
the month ended 30 September 2010.
There is only one balance on the account at the end of the month.
down on 1 October 2010.
© UCLES 2010 0452/22/O/N/10

5
Suzie Chow For

Sales ledger control account Examiner's
Use
[11]
(c) Explain the meaning of a contra entry in connection with control accounts and explain
why such an entry may be made.
[2]
(d) Explain why the information used to write up Suzie Chow’s sales ledger control account
is obtained from books of prime (original) entry and not from the sales ledger.
[2]

6
Suzie Chow’s financial year ended on 30 September 2010. Her total sales for the year were For
as follows. Examiner's
Use
$
Cash sales 95 000
Credit sales 275 000
She allows her credit customers a period of 21 days in which to pay their accounts.
REQUIRED
(e) Using the closing balance on the sales ledger control account you prepared in (b) and
the above information, calculate the debtors’ collection period. Your answer should be
rounded up to the next whole day.
Show your workings.
[2]
(f) Suggest three ways in which the collection period for debtors may be improved.
(i)
(ii)
(iii)
[3]
[Total: 22]
© UCLES 2010 0452/22/O/N/10

11
4 Ruth Van Zyl is a trader who maintains a full set of accounting records. She divides her For
ledger into three sections – general ledger, sales ledger and purchases ledger. Examiner's
Use
REQUIRED
(a) State one advantage of dividing the ledger into these three sections.
[1]
Ruth Van Zyl prepares control accounts at the end of each month and provided the
following information.
$
1 September 2012 Debit balances in purchases ledger 210
Credit balances in purchases ledger 9 530
Totals of the journals on 30 September 2012

Purchases journal 11 740
Purchases returns journal 1 160
The cash book for September 2012 showed:

Cheques paid to credit suppliers 8 730
Discounts received 270
The journal entries for September 2012 showed:
Interest charged by credit supplier 90
1 October 2012 Debit balances on the purchases ledger 160

Credit balances on the purchases ledger ?

12
(b) Prepare Ruth Van Zyl’s purchases ledger control account for the month of For
September 2012. Examiner's
Use
Where a traditional “T” account is used it should be balanced and the balances brought
down.
Ruth Van Zyl

Purchases ledger control account
[11]
(c) State two advantages of maintaining a purchases ledger control account.
[2]
© UCLES 2012 0452/21/O/N/12

13
(d) State where each of the following items will appear in Ruth Van Zyl’s sales ledger For
control account. If the item will not appear in a sales ledger control account write Examiner's
Use
“No entry”.

Item Entry in sales ledger control account
Cash refund to a credit customer debit

Sales returns
Bad debt written off
Provision for doubtful debts
Credit customer’s cheque dishonoured [4]
On 2 November 2012 Ruth Van Zyl had the following transactions.
1 Charged Wilhelm, a credit customer, $15 interest on his overdue account.
2 Transferred the balance of $500 from Ansie’s account in the purchases ledger to her
account in the sales ledger.
REQUIRED
(e) Prepare journal entries to record the above transactions. Narratives are required.
Ruth Van Zyl

Journal
Debit Credit
$ $
[6]
[Total: 24]

Provision for
Depreciation
and Disposal of
Assets
All Questions Copyright of Cambridge International Examinations

2 For
Examiner’s
Use
1 John Kamel is a sole trader whose financial year ends on 31 July.
(a) The following account appears in John’s ledger.
Disposal of Motor Vehicle account
$ $
2003 2003
Mar 12 Motor Vehicles 5 000 Mar 12 Provision for
Depreciation 3 000
XY Garages 1 500
July 31 Profit and Loss 500
–––– ––––
5 000 5 000
–––– ––––
For candidates who are not familiar with the layout of the account shown above, an
Disposal of Motor Vehicle account
Dr Cr Balance
$ $ $
2003
Mar 12 Motor Vehicles 5 000 5 000
Provision for
Depreciation 3 000 2 000
July 31
XY Garages
Profit and Loss
1 500
500
500
0
Explain each entry in the Disposal of Motor Vehicle account as it appears in John
Kamel’s ledger.
March 12 Motor Vehicles
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
March 12 Provision for Depreciation
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
0452/03/O/N/03

3 For
Examiner’s
Use
March 12 XY Garages
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
July 31 Profit and Loss
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
(b) On 1 August 2001 John Kamel purchased a machine costing $8600 on credit from
Superlooms. He decided to depreciate the machine using the reducing balance method
at the rate of 60% per annum.
(i) Write up the Provision for Depreciation of Machinery account in John’s ledger for
each of the two years ending 31 July 2002 and 31 July 2003.
Provision for Depreciation of Machinery account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[9]

4 For
Examiner’s
Use
(ii) When preparing the Profit and Loss Account for the year ended 31 July 2003, John
Kamel included depreciation of machinery at 60% of the cost price instead of 60%
of the book value of the machinery.
Calculate how this error would affect John’s Net Profit for the year ended
31 July 2003. Show your workings.
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[4]
0452/03/O/N/03

10 For
Examiner’s
Use
4 (a) What is the reason for charging depreciation on capital expenditure in the Profit and
Loss Account?
..........................................................................................................................................
......................................................................................................................................[2]
Koala bought a printing press on 1 October 2004 for $40 000. She is preparing her final
accounts for the year ended 30 September 2005 and needs to decide which method of
depreciation should be used.
She expects the printing press to have a useful life of ten years, and to be able to sell it at the
end of that time for $4 000.
Using this information she could use the straight line method, or the reducing (diminishing)
balance method at 20% per annum.
(b) Calculate how much depreciation will be charged in Koala’s Profit and Loss Account for
the next three years under each of the two methods.
Straight line Reducing (diminishing)

Year ended
method balance method
30 September
$ $
2005
2006
2007
You may use the space below for your workings
[5]
© UCLES 2005 0452/02 O/N/05

11 For
Examiner’s
Use
Koala decides to use the reducing balance method of depreciation.
(c) Show the entries in the provision for depreciation of machinery account below for each
of the three years ending 30 September 2005, 2006 and 2007
Provision for depreciation of machinery account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
[Running balance format acceptable]

[Total: 14]

12
For
Examiner's
4 David Parnell is a trader. His financial year ends on 30 September. He purchased the Use
following motor vehicles on credit from Peter Drury on 1 October 2004.
Motor vehicle KUA 468 costing $20 000

Motor vehicle VWU 503 costing $16 000
David Parnell decided that depreciation should be calculated on motor vehicles owned at
30 September each year at the rate of 25 % per annum, using the straight line method. A full
year’s depreciation should be provided in the year of purchase, but no depreciation should
be provided in the year of disposal.
On 1 April 2006 David Parnell decided that only one motor vehicle was required and he sold
motor vehicle VWU 503 on credit to Remuera Traders for $12 500.
REQUIRED
(a) (i) Name one accounting principle which is applied when fixed assets are depreciated.
[1]
(ii) Explain why the accounting principle named in (i) is applied when providing for
depreciation of fixed assets.
[2]
(b) Write up the following accounts in David Parnell’s ledger for each of the years ended
30 September 2005 and 30 September 2006:
(i) Motor vehicles account
(ii) Provision for depreciation of motor vehicles account
(iii) Disposal of motor vehicles account
Where traditional “T” accounts are used they should be balanced at the end of each
year and, where appropriate, the balance brought down on the first day of the following
financial year. Where three column running balance accounts are used the balance
column should be up-dated after each entry.
© UCLES 2006 0452/03 O/N/06

13
For
Examiner's
(i) Motor vehicles account Use

14
For
Examiner's
(iii) Disposal of motor vehicles account Use
[16]
(c) Using your answer to (b), state the entries in relation to motor vehicles which will
appear in David Parnell’s Profit and Loss Account for the year ended
30 September 2006. State whether the Profit and Loss Account would be debited or
credited for each entry.
[2]
[Total: 21]
© UCLES 2006 0452/03 O/N/06

4 (a) State two causes of depreciation in the value of a fixed asset. For
Examiner's
Use
(i)
(ii)
[2]
Paul has a business for which he bought a new machine on 1 April 2008 for $1200.
He decides to charge depreciation on the machine at 15% per annum using the reducing
balance method.
REQUIRED
(b) Calculate the depreciation to be charged on the machine for
(i) the year ended 31 March 2009;
[3]
(ii) the year ended 31 March 2010.

[3]
(c) Show the entries in the provision for depreciation account for the machine in Paul’s
ledger for the two years ended 31 March 2010.
Provision for depreciation account - machine
[4]

10
On 1 April 2010 Paul sells the machine for $750. For

Examiner's
Use
REQUIRED
(d) Show the entries required in the disposal of fixed assets account to record the sale of
the machine and show the transfer to profit and loss account of any profit or loss on the
sale.
Disposal of fixed assets account
[8]
(e) Using the profit or loss found in your answer to (d) above, advise Paul on the selection
of the rate of depreciation he chose for the machine.
[2]
[Total: 22]
© UCLES 2008 0452/01/SP/10

18
5 Tahir Ali supplies building materials. His financial year ends on 31 December. For
Examiner's
Use
On 1 January 2006 he decided to provide a delivery service for his customers. On that date
he purchased three motor vehicles, costing $20 000 each, on credit from Ansari Road
Motors.
Tahir Ali decided that depreciation should be calculated on motor vehicles owned at
31 December each year at the rate of 20 % per annum, using the reducing (diminishing)
balance method. A full year’s depreciation should be provided in the year of purchase, but
no depreciation should be provided in the year of disposal.
On 30 June 2007 Tahir Ali decided that only two motor vehicles were required and he sold
the other motor vehicle on credit to Apollo Traders for $17 000.
REQUIRED
(a) Explain how Tahir Ali is applying the matching principle when he depreciates his motor
vehicles.
[2]
(b) Write up the following accounts in Tahir Ali’s ledger for each of the years ended
31 December 2006 and 31 December 2007.
(i) Motor vehicles account.
(ii) Provision for depreciation of motor vehicles account.
(iii) Disposal of motor vehicles account.
Where traditional “T” accounts are used they should be balanced at the end of each year
and, where appropriate, the balance brought down on the first day of the following financial
year. Where three column running balance accounts are used the balance column should
be updated after each entry.
© UCLES 2008 0452/03/M/J/08

19
(i) Motor vehicles account For

Examiner's
Use

20
(iii) Disposal of motor vehicles account For

Examiner's
Use
[18]
[Total: 20]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been
included, the publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of
University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
© UCLES 2008 0452/03/M/J/08

14
5 (a) State the purpose of providing for depreciation of a fixed asset. For
Examiner's
Use
[2]
(b) State which accounting principle is being followed when depreciation is provided on a
fixed asset.
[1]
Mandy decides to set up a laundry business and on 1 July 2007 buys a large washing
machine at a cost of $9000. She decides to depreciate the washing machine using the
straight line method over a period of four years. The expected scrap value of the washing
machine at the end of that period is $600.
(c) Calculate the depreciation to be charged in Mandy’s accounts for:
(i) the year ended 30 June 2008
(ii) the year ending 30 June 2009.
[4]
© UCLES 2008 0452/02/O/N/08

15
(d) Show the entries to be made in Mandy’s provision for depreciation account for the year For
ended 30 June 2008 and the year ending 30 June 2009. Examiner's
Use
Show the transfer to the profit and loss account for each year.
Provision for depreciation account
[8]
(e) State the net book value of the washing machine at 30 June 2009.
[Total: 16]
© UCLES 2008 0452/02/O/N/08

1 Tony and Alice Mundondo started a business on 1 March 2007 supplying and repairing For
computers. On that date they purchased a motor vehicle, $9500, on credit from Valley Examiner's
Use
Motors. They purchased a further motor vehicle, $10 800, on 1 July 2008 and paid by
cheque.
They decided to depreciate the motor vehicles at 20 % per annum using the straight line
(equal instalment) method. The depreciation was to be calculated from the date of
purchase. No depreciation was to be charged in the year of disposal of a motor vehicle.
REQUIRED
(a) Write up the following accounts in the ledger of Tony and Alice Mundondo for each of
the years ended 29 February 2008 and 28 February 2009:
Where traditional “T” accounts are used they should be balanced at the end of each year,
and the balance brought down on the first day of the following financial year. Where three
column running balance accounts are used the balance column should be up-dated after
each entry.
© UCLES 2009 0452/03/M/J/09

(ii) Provision for depreciation of motor vehicles account For

Examiner's
Use
[9]
(b) Prepare the relevant extract from the fixed assets section of Tony and Alice
Mundondo’s balance sheet at 28 February 2009.
Tony and Alice Mundondo

Extract from Balance Sheet at 28 February 2009
[3]

On 31 March 2009 Tony and Alice Mundondo decided that the motor vehicle purchased in For
2007 was too small. On that date they purchased a larger motor vehicle from Valley Motors Examiner's
Use
who agreed to accept the original motor vehicle in part exchange.
Tony and Alice Mundondo opened an account in the ledger to record the disposal of the
motor vehicle.
REQUIRED
(c) Complete the following table to indicate the ledger accounts to be debited and credited
to record the disposal of the motor vehicle on 31 March 2009.
account to be debited account to be credited

(i) eliminating original cost
of motor vehicle from
ledger
(ii) eliminating accumulated

depreciation from ledger
(iii) recording part exchange

allowance made by
Valley Motors
Tony and Alice Mundondo have heard of the revaluation method of depreciation but do not
understand how it is applied.
REQUIRED
(d) (i) Explain the revaluation method of depreciation.
[2]
(ii) State one type of fixed asset which is suitable for depreciation using the
revaluation method.
[1]
[Total: 21]
© UCLES 2009 0452/03/M/J/09

4 Rashida has a business selling office machines, office supplies and stationery from her For
warehouse. Examiner's
Use
REQUIRED
(a) In the following table, place a tick () under the correct heading to show the correct
category of each asset shown on her balance sheet.
Tangible Intangible Current

fixed fixed assets
assets assets
Goodwill
Motor van
Warehouse
Stock
[4]
Cleo is in business and prepares her accounts to 30 September each year. On

1 October 2008 she bought a new photocopier from Rashida for $2100.
Cleo decides to depreciate the photocopier over three years using the straight line method.
She expects the scrap value of the photocopier at the end of this period to be $300.
REQUIRED
(b) Calculate the amount of depreciation to be charged in Cleo’s profit and loss account for
each of the two years ended 30 September 2009 and 30 September 2010.
[4]
© UCLES 2009 0452/02/O/N/09

(c) Prepare the provision for depreciation account in Cleo’s ledger for the two years ended For
30 September 2009 and 30 September 2010. Balance the account at the end of each Examiner's
Use
year and show the amount transferred to the profit and loss account for each year.
Cleo
Provision for depreciation account
[4]
(d) Complete the following extract from Cleo’s balance sheet on 30 September 2010.
Cleo
Balance Sheet at 30 September 2010 (extract)
Cost Provision for Net book

depreciation value
$ $ $
[3]

10
(e) Explain what the balance at 30 September 2010 on Cleo’s provision for depreciation For
account represents. Examiner's
Use
[2]
[Total: 17]
© UCLES 2009 0452/02/O/N/09

12
5 Griffin has a car hire business. He hires cars to customers for a fixed period of time. He For
buys cars new and keeps them for three years. At the end of the three years a motor dealer Examiner's
Use
buys the used car in part exchange for a new car.
REQUIRED
(a) In the table below, place a tick () under the correct heading to show whether Griffin’s
receipts are capital or revenue.
Capital Revenue
Hire charges
Cash discount received from motor dealer
for prompt payment for new car
Part exchange value of used car
[6]
(b) (i) On 1 April 2009 Griffin bought a new car at a cost of $12 000. He charges
depreciation on cars using the reducing balance basis at 30% per annum.
Calculate the depreciation charged in Griffin’s income statement (profit and loss
account) for the year ended 31 March 2010.
[3]
(ii) State the net book value of the car to be shown in Griffin’s balance sheet at
31 March 2010.
[1]
(c) On 1 April 2010 the car was involved in an accident and was damaged so badly that it
could not be repaired and had to be scrapped. The insurance company paid Griffin
$5000 for the scrapped car.
Prepare the disposal of motor vehicles account in Griffin’s nominal (general) ledger for
April 2010, showing any profit or loss on the disposal.
(The disposal of motor vehicles account is on the next page.)
© UCLES 2010 0452/11/M/J/10

13
Disposal of motor vehicles account For

Examiner's
Use
[5]
(d) Griffin is finding that the part exchange value being paid by the motor dealer is less
than the net book value after three years.
(i) Comment on the annual rate of depreciation charged by Griffin.
(ii) Suggest a different method for charging depreciation on Griffin’s hire cars. Give
one reason for your answer.
Method
Reason
[2]
[Total: 19]

17
6 Accounting statements can be used for decision-making purposes. For

Examiner's
Use
REQUIRED
(a) Give two examples of interested parties, other than the owner or shareholders, who
may use accounting statements for decision-making purposes.
(i)
(ii) [4]
(b) Selkirk Ltd decides to extend and improve their factory building. Show by placing a tick
() in the table below which items of expenditure should be treated as capital and
which as revenue.
Capital Revenue
New factory extension
Repainting old factory
Architect’s fees for designing extension
New plant and equipment for extension
[4]
The cost of the new factory extension is $30 000 and the architect’s fees are 10% of this
amount.
The cost of the new plant and equipment is $6000.
Selkirk Ltd decides to depreciate all the costs of the new factory extension on the straight
line basis over its useful life of 20 years. The factory extension is not expected to have any
residual value after this time.
The company decides to depreciate the new plant and equipment on the straight line basis
over its useful life of four years. The plant is expected to have a residual value of $800 after
that time.
REQUIRED
(c) (i) Calculate the depreciation charge for a full year for the new factory extension.
Show all your workings.
[4]

18
(ii) Calculate the depreciation change for a full year for the new plant and equipment. For
Examiner's
Use
[3]
(d) It is not usual to charge depreciation on land. Suggest two reasons why depreciation
should not be charged on land.
(i)
(ii)
[4]
[Total: 19]
© UCLES 2010 0452/12/M/J/10

13
4 Ameena Saber started a business on 1 September 2008. On that date she purchased For
equipment, $12 200, on credit from Bashir Supplies. She purchased additional equipment, Examiner's
Use
$9300, on 1 May 2010 and paid by cheque.
Ameena Saber decided to depreciate equipment at 15% per annum using the straight line
(equal instalment) basis. The depreciation was to be calculated from the date of purchase.
No depreciation was to be charged in the year of disposal.
REQUIRED
(a) Define depreciation.
[1]
(b) State two causes of depreciation.
(i)
(ii) [2]
(c) (i) Name one accounting principle which is applied when providing for depreciation of
non-current (fixed) assets.
[1]
(ii) Explain why the accounting principle named in (i) above is applied when providing
for depreciation of non-current (fixed) assets.
[2]
(d) Write up the equipment account and the provision for depreciation of equipment
account in Ameena Saber’s ledger for each of the years ended 31 August 2009 and
31 August 2010.
Where traditional “T” accounts are used they should be balanced at the end of each
year, and the balance brought down on the first day of the following financial year.
Where three column running balance accounts are used the balance column should be

14
Ameena Saber For

Equipment account Examiner's
Use
[3]
Provision for depreciation of equipment account
[5]
© UCLES 2010 0452/23/O/N/10

15
On 30 September 2010 Ameena Saber sold one quarter of the equipment she had For
purchased on 1 September 2008 as it was no longer suitable. She received $900 in cash. Examiner's
Use
Ameena Saber opened an account in her ledger to record the disposal of equipment.
REQUIRED
(e) Prepare entries in Ameena Saber’s journal to record the disposal of the equipment on
30 September 2010.
Narratives are required.
Ameena Saber
Journal
Debit Credit
$ $
[9]
[Total: 23]

12
5 Piranha Limited is planning to buy a computer system costing $4500 for use in its business. For
Examiner's
Use
It estimates the computer system will have a useful life of three years and will have a
scrap value of $750 after that time.
The company decides it will depreciate the computer system on the reducing balance
method at the rate of 40% per annum.
REQUIRED
(a) State two other methods of calculating depreciation.
(i)
(ii) [2]
(b) Calculate the depreciation to be charged on the computer system for each of the three
years of its useful life. Show your workings for each year.
(i) Year 1
(ii) Year 2
(iii) Year 3
[9]
(c) Complete the following extract from the company’s balance sheet at the end of the
third year.
Piranha Limited
Balance Sheet at end of third year (extract)
Cost Provision for Net book

depreciation value
$ $ $
Non-current assets
Computer system [3]
© UCLES 2011 0452/12/M/J/11

13
(d) Piranha Limited compared the calculated net book value of the computer system after For
three years with its expected scrap value after three years, $750. Examiner's
Use
State whether you consider the percentage rate the company should be using to
calculate the depreciation should be higher or lower. Give a reason for your answer.
[2]
(e) Piranha Limited is proposing to take a three year bank loan.
In the table below, place a tick () under the correct heading to show the effect of
taking the bank loan on the item.
Net profit
Working capital
Return on capital employed

[6]
www.igcseaccounts.com [Total: 22]

11
4 Youssef El Rahman is a business consultant. His financial year ends on 31 March. For
Examiner's
Use
Youssef El Rahman depreciates his office equipment by 20% per annum on cost.
Depreciation on new office equipment is calculated from the date of purchase. No
depreciation is charged in the year of disposal.
REQUIRED
(a) Name the accounting principle Youssef El Rahman applies when he writes off the
same percentage of depreciation each year.
[1]
(b) Explain how depreciation of non-current assets is an application of the accounting

principle of prudence.
[2]
(c) Name one other accounting principle which is applied when non-current assets are depreciated.
[1]
On 1 April 2010 the balances on Youssef El Rahman’s books included the following:
$
Office equipment at cost 7500
Provision for depreciation of office equipment 4500
On 1 October 2010 Youssef El Rahman purchased new office equipment, $3500, by cheque.
On 31 December 2010 Youssef El Rahman sold equipment on credit to AH Company for

$2000. The equipment had been purchased on 1 April 2008 for $4000.
REQUIRED
(d) Write up the office equipment account, provision for depreciation of office equipment
account and office equipment disposal account on the following pages for the year
Where traditional “T” accounts are used they should be balanced and, where
appropriate, the balances brought down on 1 April 2011.

12
Youssef El Rahman For

Office equipment account Examiner's
Use
[5]
Provision for depreciation of office equipment account
[7]
© UCLES 2011 0452/22/M/J/11

13
Office equipment disposal account For

Examiner's
Use
[4]
[Total: 20]

16
5 Agricola bought a tractor, $6400, on 1 January 2010 for use on his farm. The tractor will have For
a useful life of four years and is expected to have a scrap value of $800 after that time. Examiner's
Use
REQUIRED
(a) State two methods used to calculate depreciation of a non-current asset.
2 [2]
Agricola decided to use the most suitable method to depreciate his tractor.
REQUIRED
(i) Depreciation for each of the two years ended 31 December 2010 and
31 December 2011.
[3]
(ii) Net book value at 31 December 2011.
[2]
(c) Agricola sold the tractor on 1 January 2012 for $2600. Prepare the disposal account.
Agricola
Disposal of tractor account
[5]
© UCLES 2012 0452/11/O/N/12

17
(d) (i) State one reason why there was a profit or loss on the sale of Agricola’s tractor. For
Examiner's
Use
[2]
(ii) Suggest one way in which a loss on a sale of a non-current asset may be reduced
or avoided.
[2]
On checking his accounting records, Agricola discovered the following errors:
1 A cheque, $320, paid to Cattle Feeds Ltd had been debited to the account of Cattle & Co.
2 Repairs to farm machinery, $30, had been recorded in the farm machinery account.
REQUIRED
(e) Prepare journal entries to correct the above errors. Narratives are required.
Agricola Journal
Debit Credit
$ $
[6]
[Total: 22]

Accounting
Errors

8 For
Examiner’s
Use
4 On 1 August 2003 Polly Glotte started a furniture business with the following assets:
$
Freehold shop premises 20 000
Stock of furniture 8 000
Cash (paid into a business bank account) 5 000
Polly obtained a loan of $7000 from her uncle, Sven, on the same date and also paid this into
the bank account.
(a) (i) Show how Polly’s Journal records the above transactions. No narrative is required.
Polly Glotte
Journal
Dr Cr
$ $
[7]
0452/02/O/N/03
9 For
Examiner’s
Use
(a) (ii) During August 2003 Polly discovered the following matters.
1. New shop fittings had been purchased on credit from Quickbuild Supplies for
$6000, but no entry had been made in Polly’s books.
2. A sale on credit to S Holmes, $601, had been entered in the Sales account
and in S Holmes’s account as $610.
3. Goods bought on credit from J Robertson, $1000, had been entered in

J Robertshaw’s account.
4. The purchase of office equipment for $3000 had been entered in the
Purchases account.
Make the required entries in Polly’s Journal to correct each of the above errors. No
narratives are required.
Polly Glotte
Journal
Dr Cr
$ $
[8]

14 For
Examiner’s
Use
5 Archer and Bowman are partners.
Their Profit and Loss Account for the year ended 31 August 2003 showed a net profit of
$18 490.
It was then found that the following errors had been made.
1. No entry had been made for a stock of stationery, $30, on 31 August 2003.
2. The stock of goods for re-sale on 31 August 2003 had been valued at selling price,
$8400, instead of cost price, $7 000.
3. No entry had been made for depreciation of equipment. The equipment cost
$13 000 and was estimated to have a scrap value of $1000 after 6 years. All the
fixed assets of the partnership are depreciated using the straight line (fixed
instalment) method.
4. Discount received of $210 has been included in the expenses instead of the
income in the Profit and Loss Account.
5. A provision for doubtful debts is maintained equal to 5% of the debtors at the end of
each financial year. On 1 September 2002 the provision was $400. On 31 August
2003 the debtors owed the partnership $8400. No adjustment has been made to
the provision for doubtful debts.
(a) Prepare a statement to show the effect of correcting each of the errors 1–5 on Archer
and Bowman’s original net profit. Calculate the corrected net profit. The first one has
been completed as an example.
Archer and Bowman
Statement of Corrected Net Profit for the year ended 31 August 2003
$
Net Profit before corrections 18 490
Effect on Net Profit
+ –
$ $
Error 1 30
Error 2
Error 3
Error 4
Error 5
––––– –––––
_____ _____
–––––––
Corrected Net Profit _______
[10]
0452/03/O/N/03
15 For
Examiner’s
Use
Archer and Bowman’s partnership agreement states that
(i) Interest is to be allowed on capital at 5% per annum.
(ii) Interest is to be charged on drawings at 5% per annum.
(iii) Archer is to receive an annual salary of $6000.
(iv) Profits and losses are to be shared equally.
On 3l August 2003 the following balances appeared in the partnership books.
$
Capital account (at 1 September 2002) – Archer 40 000
Bowman 80 000
Drawings during the year ended 31 August 2003 – Archer 7 000
Bowman 3 000
(b) Using the corrected net profit calculated in (a) prepare the Profit and Loss Appropriation
Account of Archer and Bowman for the year ended 31 August 2003.
Archer and Bowman
Profit and Loss Appropriation Account for the year ended 31 August 2003
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
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..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
0452/03/O/N/03
7 For
Examiner’s
Use
3 (a) When is it necessary to open a suspense account?
......................................................................................................................................[1]
(b) On checking his sales ledger, a trader found the following errors had been made.
1. Cash received from Tarek El Sayed was correctly entered in the cash book but had
been credited to the account of Tarek El Sherif.
2. A cheque received from Susan Zafar was correctly entered in the cash book but
had been debited to Susan Zafar’s account.
Only one of the above errors will require a correcting entry in the suspense account.
State which one and give a reason for your answer.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
(c) Mary Manake is a sole trader. She has very little knowledge of bookkeeping, but
attempted to prepare a trial balance and a set of final accounts.
The Balance Sheet she prepared is shown on the following page.

8 For
Examiner’s
Use
$
Fixed assets at cost 40 000
Depreciation on fixed assets 8 000
––––––
32 000
Stock 8 500
Debtors 6 100
––––––
46 600
––––––
Capital at 1 May 2003 34 000

Net profit for the year 8 440
––––––
42 440
Drawings 7 300
––––––
35 140
Creditors 5 200
––––––
42 350
Suspense account (difference on trial balance) 4 250
––––––
46 600
––––––
When the books were checked the following matters were discovered.
1. No adjustment has been made for expenses prepaid at 30 April 2004 amounting to $30.
2.
The bank statement received on 30 April 2004 showed that the bank had debited the
business’s bank account with $70 for interest charged on the overdraft. No adjustment
has been made for this in Mary Manake’s books.
3. The total of the discount received column in the cash book, amounting to $150, has not
been transferred to the discount received account in the ledger. Because of this,
discount received does not appear in either the trial balance or the Profit and Loss
Account.
4. Fixed assets costing $5000 had been sold during the year ended 30 April 2004.
Depreciation of $500 had been provided up to the date of sale. The amount received for
the assets, $4100, had been correctly entered in the cash book, but no other entries
had been made.
Taking the above items into account, prepare a corrected Balance Sheet for Mary Manake
as at 30 April 2004.
The Balance Sheet should be shown using a suitable form of presentation, showing the
different types of assets and liabilities, and the working capital. The calculation of the
corrected net profit should also be shown, either within the Balance Sheet, or as a separate
calculation.
© UCLES 2004 0452/03/M/J/04

9 For
Examiner’s
Use
Mary Manake
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
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.........................................................................................................................................................
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.........................................................................................................................................................
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.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
...................................................................................................................................................[14]
[Total: 18]

14 For
Examiner’s
Use
5 Ruth and Lucy Lebengo formed a partnership on 1 October 2003. They share profits and
losses 2:1. They agreed that a current account and a capital account would be kept for
each partner.
The Profit and Loss Account for the year ended 30 September 2004 showed a net profit
of $12 000.
Lucy has very little knowledge of bookkeeping, but attempted to prepare a Balance Sheet as
at 30 September 2004. The Balance Sheet she prepared, containing errors, is shown below.
Balance Sheet as at 30 September 2004

$ $ $
Motor vehicles at cost 15 000
Less depreciation 1 500 13 500
––––––
Office equipment 3 000
Stock 9 300
Debtors 5 900
––––––
66 700
––––––
Capital – Ruth 30 000
Lucy 20 000 50 000
––––––
Net profit 12 000
Less drawings – Ruth 4 000
Lucy 4 400 8 400 3 600
–––––– ––––––
Creditors
Bank overdraft www.igcseaccounts.com
7 400
5 100
––––––
66 100
––––––
The following matters were then discovered.
1. No adjustment had been made in the Balance Sheet for the following.
$
Depreciation of office equipment 300
These items had been correctly charged in the Profit and Loss Account.
2. Cash in hand, $100, had been omitted from the Balance Sheet.
3. The overdraft shown on the bank statement had been entered in the Balance Sheet
instead of the overdraft of $5300 shown in the cash book.
© UCLES 2004 0452/03/O/N/04

15 For
Examiner’s
Use
(a) Taking the above matters into account, prepare a corrected Balance Sheet for Ruth and
Lucy as at 30 September 2004.
different types of assets and liabilities, the working capital, and the capital and current
accounts of each partner.
Ruth and Lucy Lebengo

.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
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.........................................................................................................................................................
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.........................................................................................................................................................
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.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
...................................................................................................................................................[14]
16 For
Examiner’s
Use
(b) On 1 October 2004 Ruth and Lucy decided to admit their brother, Paul, to the partnership.
Ruth, Lucy and Paul agreed to share profits and losses 2:1:1.
Goodwill was valued at $9000 on 1 October 2004, but did not appear in the books. The
partners agreed that adjustments should be made for Goodwill, but that a Goodwill
account was not to be maintained on the books permanently.
Complete the following tables to show what entries are required. It is not necessary to
prepare the ledger accounts.
(i) To enter the Goodwill on the books –
account(s) to be debited $ account(s) to be credited $
………………………... ………... ………………………... ….……
………………………... ………... ………………………... ….……
………………………... ………... ………………………... ….……
(ii) To write off the Goodwill –
………………………... ………... ………………………... ….……
………………………... www.igcseaccounts.com
………... ………………………... ….……
………………………... ………... ………………………... ….……
[7]
[Total: 21]
Every reasonable effort has been made to trace all copyright holders where the publishers (i.e. UCLES) are aware that third-party material has been reproduced.
The publishers would be pleased to hear from anyone whose rights they have unwittingly infringed.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of
the University of Cambridge.
© UCLES 2004 0452/03/O/N/04

16 For
Examiner’s
Use
5 Ahmed Shafik’s financial year ends on 31 January. The totals of his trial balance on
31 January 2005 failed to agree. Ahmed entered the difference on the trial balance in a
suspense account.
REQUIRED
(a) Explain why it is necessary to open a suspense account when the totals of a trial
balance fail to agree.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
The following errors were later discovered.
1 Commission received, $390, was entered in the cash book but not in the commission
received account.
2 $400 paid to Mutua, a supplier, had been credited to the account of Mutola, another
supplier.
3 The purchase of stationery, $20, was credited to the cash book and debited to the
purchases account.
4 No entry had been made for cash discount, $15, allowed to Limo, a debtor, for prompt
payment. www.igcseaccounts.com
5 The total of the sales returns journal, $420, had been credited to the purchases returns
account as $240.
© UCLES 2005 0452/03 M/J/05

17 For
Examiner’s
Use
REQUIRED
(b) Prepare the entries in Ahmed’s journal to correct the above errors.
Ahmed Shafik
Journal
Debit Credit
$ $
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
[12]

18 For
Examiner’s
Use
Before the errors were discovered Ahmed calculated that he had made a net profit of
$16 000.
REQUIRED
(c) Prepare a statement to show the effect of correcting the errors 1–5 on Ahmed’s original
net profit and calculate the corrected net profit.
If the error does not affect the original net profit write ‘No effect’.
The first correction has been completed as an example.
Ahmed Shafik
Statement of corrected net profit for the year ended 31 January 2005
$
Net profit before corrections 16 000
Effect on net profit

+ –
$ $
Error 1 390
Error 2
Error 3
Error 4
Error 5 _____ _____
_____ _____ ______
Corrected net profit ______
[5]
[Total: 19]
© UCLES 2005 0452/03 M/J/05

16 For
Examiner’s
Use
5 Ebor and Olicana are in partnership trading in sports goods. Their financial year ends on
31 July. After the preparation of their Trading and Profit and Loss Account for the year ended
31 July 2005 the following errors were discovered.
1 Olicana had taken goods costing $500 for her own use. This had not been recorded.
2 $15 paid for carriage inwards had been debited to the carriage outwards account.
3 The purchase of computer paper, $30, had been debited to the purchases account.
4 Motor vehicle repairs of $200 had been debited to the motor vehicles account. Motor
vehicles are depreciated by 25% on the cost of motors held at the end of each financial
year.
REQUIRED
(a) Complete the following table to show the effect of correcting the errors on the gross
profit and the net profit. If the correction of the error does not affect the profit write ‘no
effect’.
Error
Effect of correcting the error
on the gross profit on the net profit
1 +$500 +$500
2
3
4
[7]
You may use the space below for your workings.
© UCLES 2005 0452/03 O/N/05

17 For
Examiner’s
Use
Ebor and Olicana maintain a full set of books of account.
The following transactions took place on 31 August 2005.
1 Olicana took further goods costing $400 for her own use.
2 Ebor brought his own computer, valued at $900, into the business.
3 Ebor’s current account showed a credit balance of $10 000. It was agreed that he
should transfer half of this to his capital account.
REQUIRED
(b) Prepare the necessary journal entries to record the above transactions.
Ebor and Olicana

Journal
Debit Credit
$ $
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
........................................................................................ .................. ..................
[9]

18 For
Examiner’s
Use
Ebor and Olicana have invited Lindum to join the partnership and have given him their final
accounts for the year ended 31 July 2005.
Lindum is aware that these final accounts will not provide all the relevant information he
needs.
REQUIRED
(c) State and explain two limitations Lindum should be aware of when he is studying the
set of final accounts Ebor and Olicana have provided.
1 .......................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
2 .......................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
[Total: 20]
© UCLES 2005 0452/03 O/N/05

4
For
Examiner's
2 Amina Nawaz is a sole trader. Her financial year ends on 31 August. The trial balance Use
prepared on 31 August 2006 showed a shortage on the credit side of $1450. Amina entered
this in a suspense account.
The following errors were later discovered:
1 Goods costing $750, taken by Amina for her own use, had been debited to her
drawings account, but no other entry had been made.
2 $250 paid to Sabina Khan had been debited to the account of Robina Khan, another
creditor, in the purchases ledger.
3 $150 received in cash from a debtor, whose account had been written off in 2005, had
been debited to both the cash account and bad debts account.
REQUIRED
(a) Prepare the entries in Amina Nawaz’s journal to correct the above errors.
Journal
Debit Credit
$ $
[7]
© UCLES 2006 0452/03 O/N/06

5
For
Examiner's
(b) Prepare the suspense account in Amina Nawaz’s ledger to show the required Use
amendments. Start with the balance arising from the difference on the trial balance.
Where a traditional “T” account is used it should be balanced or totalled as necessary.

Suspense account
[5]
(c) Using your answer to (b) state whether you consider that all the errors on Amina’s
books have been discovered. Give a reason for your answer.
[2]

6
For
Examiner's
Amina Nawaz has a large number of debtors. She is considering preparing monthly control Use
accounts for her sales ledger. She believes that this will help to locate errors if the trial
balance fails to balance.
REQUIRED
(d) State three advantages to Amina of preparing a sales ledger control account other than
the location of errors.
(i)
(ii)
(iii)
[3]
(e) Explain what is meant by a contra entry in connection with control accounts.
[2]
(f) State where the following items will appear in a sales ledger control account. If the item
will not appear in a sales ledger control account write “No entry”.
Item Entry in sales ledger control

account
(i) Sales returns credit

(ii) Bad debts
(iii) Provision for doubtful debts
(iv) Interest charged on overdue account
[3]
[Total: 22]
© UCLES 2006 0452/03 O/N/06

14 For
Examiner's
Use
After the trial balance had been prepared, the following errors were found.
1 Cash sales of $2000 had been paid into the bank but had not been posted to the
sales account.
2 Drawings of $900 had been correctly entered in the cash book but posted to the
drawings account as $500.
3 The cash account of $500 had been omitted from the list of balances.
REQUIRED
(c) Give the journal entries, with narratives, required to correct each error.
Dr Cr
$ $
(i)
[3]
(ii)
[3]
(iii)
[3]
© UCLES 2007 0452/02/M/J/07

15 For
Examiner's
Use
(d) State the balance on the suspense account after these journal entries have been
posted to the ledger.
Use the space below for your workings.
[1]
[Total: 22]
© UCLES 2007 0452/02/M/J/07

5
2 Zeema Jumbe is a trader. Her financial year ends on 31 January. For

Examiner's
Use
She provided the following information.
2009 $
1 February Insurance prepaid for 2 months to 31 March 440
1 April Paid insurance premium for 12 months by cheque 3000
REQUIRED
(a) Write up the insurance account as it would appear in Zeema Jumbe’s ledger for the
year ended 31 January 2010.
Where a traditional “T” account is used it should be balanced and the balances brought
down on 1 February 2010.
Zeema Jumbe
Insurance account
[6]
The totals of Zeema Jumbe’s trial balance on 31 January 2010 failed to agree.
The difference was a shortage on the credit side of $350. This was entered in a suspense
account.
1 A cheque, $540, paid to A Zaheer had been debited to the account of A Zahir.
2 The balance of the petty cash book, $50, had been omitted from the trial balance.
3 Rent received, $250, had been debited to the rent paid account.
4 No entry had been made for goods costing $385 taken by Zeema Jumbe for her own
use.

6
REQUIRED For
Examiner's
Use
(b) Prepare the entries in Zeema Jumbe’s journal to correct the above errors.
Zeema Jumbe
Journal
Debit Credit
$ $
[8]
© UCLES 2008 0452/02/SP/10

7
(c) Prepare the suspense account in Zeema Jumbe’s ledger to show the required entries. For
Start with the balance arising from the difference on the trial balance. Examiner's
Use
Zeema Jumbe
Suspense account
[5]
(d) Using your answer to (c) state whether you consider that all the errors on Zeema
Jumbe’s books have been discovered. Give a reason for your answer.
[2]
(e) Select one of the errors 1–4 above which has not been corrected by an entry in the
suspense account. Explain why an entry in the suspense account was not necessary.
Error
Explanation
[2]
[Total: 23]

9
3 Abdul and Amina Mahmoud are in partnership. Their financial year ends on 30 April. The For
trial balance prepared on 30 April 2008 failed to agree. The debit side totalled $95 857 and Examiner's
Use
the credit side totalled $95 457. The difference was entered in a suspense account.
1 Abdul had spent $20 of his personal funds to purchase business stationery. This had
not been recorded in the books.
2 Goods withdrawn by Abdul for personal use, costing $300, had been debited to his
drawings account but no other entry had been made.
3 $50 recovered from a bad debt (written off in 2006) had been correctly entered in the
cash book and had been debited to the bad debts account.
4 The partners decided that the debit balance of $2200 on Amina’s current account
should be transferred to her capital account. This had not been recorded.

10
REQUIRED For
Examiner's
Use
(a) Prepare the entries in Abdul and Amina Mahmoud’s journal to correct the above errors.
Journal
Debit Credit
$ $
[9]
(b) Prepare the suspense account in Abdul and Amina Mahmoud’s ledger to show the
required entries. Start with the balance arising from the difference on the trial balance.

© UCLES 2008 0452/03/M/J/08

11
Suspense account For

Examiner's
Use
[4]
Before the errors were discovered Abdul and Amina Mahmoud calculated that they had
made a net profit of $12 900 for the year ended 30 April 2008.
REQUIRED
(c) Prepare a statement to show the effect of correcting errors 1-4 on the original net profit
and calculate the corrected net profit.
If the error does not affect the net profit write “No effect”.
Abdul and Amina Mahmoud

Statement of corrected net profit for the year ended 30 April 2008
$

Increase Decrease
$ $
Error 1 20
Corrected net profit
[4]

12
Abdul and Amina Mahmoud calculated the percentage of net profit to sales and found that it For
was lower than that of the previous financial year. Examiner's
Use
REQUIRED
(d) State two ways in which the percentage of net profit to sales could be improved.
(i)
(ii)
[2]
[Total: 19]
© UCLES 2008 0452/03/M/J/08

8
3 Stella Maris started a business as a bookseller on 1 May 2008 with initial capital of $10 000 For
which she deposited in a new business bank account. Examiner's
Use
She is not an experienced bookkeeper but has drawn up the following trial balance at
31 October 2008. Stella has put certain balances in the wrong column and may have made
other errors.
Trial Balance at 31 October 2008
Debit Credit
$ $
Capital 10 000
Shelving and equipment 5 000
Purchases 24 000
Rent payable 6 000
Sales 34 900
Stock at 31 October 2008 5 300
General expenses 2 500
Cash at bank 7 400
Difference 300
47 700 47 700
REQUIRED
(a) State which accounting principle Stella was following when she deposited her initial
capital into a new business bank account.
[2]
(b) Name the account in which an unexplained difference on a trial balance should be
entered.
[1]
© UCLES 2008 0452/02/O/N/08

9
(c) Prepare a corrected trial balance at 31 October 2008. For

Examiner's
Use
Stella Maris
Debit Credit
$ $
[10]

10
(d) Using the information above, complete Stella’s trading and profit and loss account for For
the six months ended 31 October 2008. Examiner's
Use
Stella Maris
Trading and Profit and Loss Account for the six months ended 31 October 2008
$ $
Sales
Stock at 1 May 2008 nil
Purchases
Stock at 31 October 2008
Cost of sales
Gross profit
Expenses
Rent
General expenses
Net profit
[9]
[Total: 22]
© UCLES 2008 0452/02/O/N/08

6
2 Michael Ong started a business on 1 July 2007. He had very little knowledge of For
bookkeeping, but attempted to prepare a set of final accounts at the end of his first year of Examiner's
Use
trading.
The final accounts Michael prepared, containing errors, are shown below.
Trading and Profit and Loss Account

$ $
Sales of goods 80 000

Sale of motor vehicle (AB 246) at book value 2 000 82 000
Purchases of goods 60 000

Purchase of new motor vehicle (CD 357) 8 000
68 000
Closing stock of goods 12 000 56 000
Gross profit 26 000
Bad debts 200 11 000
Net profit 15 000
Balance Sheet
$
Equipment 2 000
Bank 1 000
Debtors 7 000
Closing stock of goods 12 000
Purchases of stationery 200
Commission received 500
22 700
Creditors 17 000
Capital (balancing figure) 5 700
22 700
REQUIRED
(a) (i) Explain the difference between capital expenditure and revenue expenditure.
[2]
© UCLES 2008 0452/03/O/N/08

7
(ii) Explain the difference between capital receipts and revenue receipts. For
Examiner's
Use
[2]
(b) Calculate the corrected net profit of Michael Ong for the year ended 30 June 2008.
Michael Ong
Statement of corrected net profit for the year ended 30 June 2008
[5]
On 1 July 2008 Michael Ong started to maintain a set of double entry records. A trial
balance drawn up on 30 September 2008 failed to balance. Michael entered the difference
on the trial balance in a suspense account.

8
REQUIRED For
Examiner's
Use
(c) State one reason why it is necessary to open a suspense account when the totals of a
trial balance fail to agree.
[1]
1 Goods returned to J Chan, $20, had been incorrectly entered in the account of J Chua,
another supplier.
2 A cheque for the sale of equipment, $400, had been debited to the bank account, but
no other entry had been made.
3 Goods for Michael’s own use, $100, had been debited to both the purchases account
and the drawings account.
4 On 15 September 2008, $50 had been received from W Lee. This amount was
incorrectly debited to the bad debts account and credited to W Lee’s account.
W Lee’s account had been written off as a bad debt on 30 June 2008.
REQUIRED
(d) Complete the following table to show the entries required to correct the above errors.
1 J Chan 20 J Chua 20
[8]
[Total: 18]
© UCLES 2008 0452/03/O/N/08

4
2 (a) State which accounting document would show the amount of: For
Examiner's
Use
(i) trade discount
(ii) cash discount
[2]
Chen makes the following sales on credit in the week ending 16 October 2009.
October Customer Reference $

12 Artelis A4 230
14 Brook B1 300
15 Chadri C7 55
He writes up his sales journal at the end of the week as shown below.
Chen
Sales journal
October Reference $
12 Artelis A4 250
14 www.igcseaccounts.com
Brook B1 300
16 Total sales for week 550
REQUIRED
(b) From the entries in the sales journal, write up the accounts in Chen’s ledger shown on
the next page to record the transactions for the month.
Sales account
[2]
Artelis account
[2]
Brook account
[2]
© UCLES 2009 0452/02/O/N/09

5
Chen realises he has made two errors in writing up the sales journal. He decides to correct For
these errors by journal entries. Examiner's
Use
REQUIRED
(c) Show the two separate journal entries necessary to correct these errors. Narratives are
not required.
Dr Cr
$ $
Dr Cr
$ $
[4]
(d) State the balance on each of the accounts in Chen’s ledger after correcting the two
errors.
Dr Cr
$ $
Sales account
Artelis account
Brook account
Chadri account
[6]
[Total: 18]

6 For
Examiner’s
Use
3 Anwar El Wakiel is a trader. He maintains a full set of accounting records including a journal.
REQUIRED
(a) State why a narrative should be shown as part of a journal entry.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
Anwar El Wakiel prepared draft financial statements (final accounts) for the year ended
30 April 2010.
1 A cheque, $170, received from Zubin Khan had been credited to the account of
Zaffar Khan, another debtor.
2 Purchase of equipment, $1000, had been debited to the office expenses account.
3 Stationery, $19, had been debited to the purchases account.
4 No entry had been made for sales returns, $25, from Mariam Sitar.
© UCLES 2010 0452/22/M/J/10

7 For
Examiner’s
Use
REQUIRED
(b) Prepare the entries in Anwar El Wakiel’s journal to correct the above errors.
Journal
Debit Credit
$ $
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
.......................................................................
............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
[12]

8 For
Examiner’s
Use
(c) Indicate the effect of correcting each of the above errors 1– 4 on the profit for the year
(net profit). Circle the answer which you think is correct.
Give reasons for your answers.
Effect on profit for the year (net profit)
Error 1 Increase Decrease No effect
Reason Correcting this error only affected the accounts of Zubin Khan and
Zaffar Khan. These accounts do not affect the profit.
Reason ...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
Reason ...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
Reason ...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
[Total: 23]
© UCLES 2010 0452/22/M/J/10

6 For
Examiner’s
Use
3 Anwar El Wakiel is a trader. He maintains a full set of accounting records including a journal.
REQUIRED
(a) State why a narrative should be shown as part of a journal entry.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
Anwar El Wakiel prepared draft financial statements (final accounts) for the year ended
30 April 2010.
1 A cheque, $170, received from Zubin Khan had been credited to the account of
Zaffar Khan, another debtor.
2 Purchase of equipment, $1000, had been debited to the office expenses account.
3 Stationery, $19, had been debited to the purchases account.
4 No entry had been made for sales returns, $25, from Mariam Sitar.
© UCLES 2010 0452/23/M/J/10

7 For
Examiner’s
Use
REQUIRED
(b) Prepare the entries in Anwar El Wakiel’s journal to correct the above errors.
Journal
Debit Credit
$ $
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
.......................................................................
............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
....................................................................... ............................. .............................
[12]

8 For
Examiner’s
Use
(c) Indicate the effect of correcting each of the above errors 1– 4 on the profit for the year
(net profit). Circle the answer which you think is correct.
Give reasons for your answers.
Reason Correcting this error only affected the accounts of Zubin Khan and
Zaffar Khan. These accounts do not affect the profit.
Reason ...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
Reason ...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
Reason ...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
[Total: 23]
© UCLES 2010 0452/23/M/J/10

17
6 Waseem Shah is a trader. His financial year ends on 31 July. For

Examiner's
Use
The totals of Waseem Shah’s trial balance on 31 July 2010 failed to agree.
The debit side totalled $398 240 and the credit side totalled $397 000.
He placed the difference on the trial balance in a suspense account and prepared draft
financial statements (final accounts).
The draft financial statements (final accounts) included the following:
$
Revenue (sales) 247 600
Cost of sales 163 100
Expenses 51 500
REQUIRED
(a) Calculate the percentage of gross profit to sales. The calculation should be correct to
two decimal places.
Show your workings.
(b) Suggest two reasons why the percentage of gross profit to sales is greater than it was
at the end of the previous financial year.
(i)
(ii)
[4]

18
After the preparation of the draft financial statements (final accounts) the following errors For
were discovered. Examiner's
Use
1 Rent paid, $650, was correctly recorded in the cash book but had been entered in
the rent account as $560.
2 $860 paid by cheque to M Ali had been debited to the account of J Ali.
3 Repairs to machinery, $1150, had been entered in the machinery account.
4 The bank overdraft, $1520, had been omitted from the trial balance.
REQUIRED
(c) Prepare the suspense account in Waseem Shah’s ledger to show the required entries.
Start with the balance arising from the difference on the trial balance.
down. If there is no balance the account should be totalled.
Waseem Shah
Suspense account
[5]
(d) Select one of the errors 1– 4 above which has not been corrected by an entry in the
suspense account. Explain why an entry in the suspense account was not necessary.
Error
Explanation
[3]
© UCLES 2010 0452/21/O/N/10

19
(e) Prepare a statement to show the effect of correcting errors 1– 4 on the original profit for For
the year (net profit) and calculate the corrected profit for the year. Examiner's
Use
If the error does not affect the profit for the year (net profit) write “No effect”.
Waseem Shah
Statement of corrected profit for the year ended 31 July 2010
$
Profit for the year (net profit) before corrections 33 000
Increase Decrease
in profit in profit
$ $
Error 1 90
2
3
4
Corrected profit for the year
[7]
[Total: 21]
© UCLES 2010 0452/21/O/N/10

14
6 Monica has a shop. She writes up the books of account herself but is not an experienced For
bookkeeper. Her financial year ends on 28 February. Examiner's
Use
The trial balance she prepared on 28 February 2011 showed a shortage on the debit side of
$720. Monica entered this in a suspense account and then prepared a draft income
statement showing a profit for the year of $3600.
1 A cheque payment of $460 to repay a loan from Carlo has been correctly entered
in the cash book but $640 has been debited to his loan account.
2 Cash sales of $850 have been completely omitted from the books.
3 A cheque payment for $900 for goods has been entered in the cash book but no
other entry has been made.
4 The purchase of new display shelves for $1200 has been debited to the repairs
account.
REQUIRED
(a) Show the journal entries required to correct the above errors. The date and narrative
are not required.
Dr Cr
Error 1
$ $
Error 2
Error 3
Error 4
[8]
© UCLES 2011 0452/12/M/J/11

15
(b) Write up the suspense account in Monica’s ledger from the above journal entries. For
Dates are not required. Examiner's
Use
Monica
Suspense account
[6]
(c) Prepare a statement to show Monica’s profit for the year after correcting the errors 1 - 4.
Monica
Statement of corrected profit for the year ended 28 February 2011
[5]
[Total: 19]
© UCLES 2011 0452/12/M/J/11

16
5 Leo Yang runs a gym and fitness centre. His financial year ends on 31 October. He For
employs a book-keeper to maintain his accounting records. Examiner's
Use
Leo Yang rents part of his premises to another business. The following account appeared in
Leo Yang’s ledger.
Rent receivable account
$ $
2009 2009
Nov 1 Balance b/d 100 Nov 2 Bank 1350
2010 2010
Oct 31 Income statement 2500 April 1 Bank 1300
Balance c/d 50
2650 2650
2010
Nov 1 Balance b/d 50
For candidates who are not familiar with the layout of the account shown above an
Rent receivable account

Debit Credit Balance
2009 $ $ $
Nov 1 Balance 100 100 Dr
2010
2 Bank
www.igcseaccounts.com 1350 1250 Dr
April 1 Bank 1300 2550 Cr

Oct 31 Income statement 2500 50 Cr
REQUIRED
(a) Explain the following entries in the above account.
State where the double entry for each transaction would have been made.
(i) Balance 1 November 2009
Explanation
Double Entry [3]
© UCLES 2011 0452/21/M/J/11

17
(ii) Bank 2 November 2009 For

Examiner's
Use
Explanation
Double Entry [3]
(iii) Income statement 31 October 2010
Explanation
Double Entry [3]
(b) Explain the significance of the $50 shown at the end of the account.
[2]

18
After the book-keeper had prepared a trial balance on 30 April 2011 Leo Yang decided to For
draft a set of financial statements for the six months ended 30 April 2011. Examiner's
Use
The draft financial statements, containing errors, are shown below.
Income Statement
$ $
Fees for the period 14 000
Sale of all old equipment at book value 9 200
Loan from Sports-aid 10 000
33 200
Less Purchase of new equipment 16 800
General expenses 8 500 25 300
Profit for six months 7 900
Balance Sheet
$
Rent received 1 200
Balance at bank 5 210
Purchase of stationery 110
52 900
Loan interest paid 200

Capital (balancing figure) 52 700
52 900
REQUIRED
(c) (i) State the difference between capital expenditure and revenue expenditure.
[2]
(ii) State the difference between capital receipts and revenue receipts.
[2]
© UCLES 2011 0452/21/M/J/11

19
(d) Calculate the corrected profit of Leo Yang for the six months ended 30 April 2011. For
Examiner's
Use
Leo Yang
Statement of corrected profit for the six months ended 30 April 2011
[7]
[Total: 22]

17
5 Bethany Searle is a trader. Her financial year ends on 31 March. The trial balance prepared For
on 31 March 2012 failed to agree. The difference was entered in a suspense account. Examiner's
Use
1 The total of the discount received column in the cash book, $96, had not been posted
to the ledger.
2 Cash received from a tenant, $340, had been entered in the cash book but had not
been posted to the rent received account.
3 Stationery returned to the supplier, $24, had been correctly entered in the supplier’s
account but had been entered in the purchases returns journal.
4 The balance of the petty cash book, $100, had not been included in the trial balance.
5 The total of the sales journal had been overcast by $1000.
REQUIRED
(a) Prepare the entries in Bethany Searle’s journal to correct the above errors.
Bethany Searle
Journal
Debit Credit
$ $
1 Suspense www.igcseaccounts.com
96
[8]

18
Before the errors were discovered Bethany Searle calculated that she had made a profit for For
the year ended 31 March 2012 of $14 940. Examiner's
Use
REQUIRED
(b) Prepare a statement to show the effect of correcting errors 1-5 on the original profit for
the year.
If the error does not affect the profit for the year write “No effect”.
Bethany Searle
Statement of corrected profit for the year ended 31 March 2012
$
Profit for the year before corrections 14 940
Effect on profit
Increase Decrease
$ $
Error 1 96
2
3
4
5
[9]
Bethany Searle provided the following information at 31 March 2012.
$
Cash 100
Inventory 14 210
REQUIRED
(c) Calculate the quick ratio. The calculation should be correct to two decimal places.
Show your workings.
[2]
© UCLES 2012 0452/22/M/J/12

19
(d) Explain the importance of the quick ratio to Bethany Searle. For
Examiner's
Use
[2]
(e) Explain why the quick ratio is more reliable as an indicator of liquidity than the current
ratio.
[2]
[Total: 23]
© UCLES 2012 0452/22/M/J/12

12
4 Mbane sells craft items from a market stall. He sells for cash and buys his goods on credit. For
He prepared the following trial balance at 31 October 2012. Although the trial balance totals Examiner's
Use
were equal, Mbane had made some errors.
Mbane
Dr Cr
$ $
Capital 2 600
Motor vehicle 4 400
Purchases 12 400
Revenue 30 800
Inventory 31 October 2012 3 300
Cash at bank 5 200
Motor vehicle expenses 860
Drawings 8 640
36 000 36 000
Mbane had inventory on 1 November 2011 of $4500.
REQUIRED
(a) Prepare a corrected trial balance at 31 October 2012.
Mbane
Corrected Trial Balance at 31 October 2012
Dr Cr
$ $
[7]
© UCLES 2012 0452/11/O/N/12

13
(b) From your answer to (a) and the other information shown, prepare Mbane’s income For
statement for the year ended 31 October 2012. Examiner's
Use
Mbane
Income Statement for the year ended 31 October 2012
[8]
(c) (i) State the formula for the calculation of working capital.
[1]
(ii) Calculate Mbane’s working capital at 31 October 2012.
[2]

14
Mbane wishes to know the effect on his working capital of changes in his business. For
Examiner's
Use
REQUIRED
(d) In the table below, place a tick () under the correct heading to show the effect on
Mbane’s working capital of each of the following.
Increase Decrease No change
Increased revenue
Increased trade payables
Increased motor expenses
Reduced drawings
[4]
(e) (i) State the formula for the calculation of the current ratio.
[1]
(ii) Calculate Mbane’s current ratio at 31 October 2012. Give your answer to one
decimal place.
[2]
[Total: 25]
© UCLES 2012 0452/11/O/N/12

Limited
Liability Final
Accounts

9
4 Timpani Ltd makes machine parts and their financial year ends on 31 March. After For
preparing the income statement (trading and profit and loss account) for the year ended Examiner's
Use
31 March 2010 the trial balance showed the following items.
$
Bank 500 Dr
Bank loan (repayable 2011) 2 800
Trade payables (creditors) 700
Trade receivables (debtors) 1 000
Plant and equipment 20 000
Provision for depreciation 12 000
Inventory (stock) at cost 3 000
Share capital 5 000
Profit for the year 4 000
Timpani Ltd found that the inventory (stock) could be sold for only $2700.
REQUIRED
(a) (i) State the basis on which inventory (stock) should be valued at the end of a
financial year.
[3]
(ii) State the value that Timpani Ltd should use for inventory (stock) in the balance
sheet at 31 March 2010.
[1]
(iii) State the effect on the company’s profit for the year of adjusting the value of
inventory (stock).
[2]

10
REQUIRED For
Examiner's
Use
(b) Prepare Timpani Ltd’s balance sheet at 31 March 2010.
Timpani Ltd
[11]
© UCLES 2010 0452/11/M/J/10

11
Timpani Ltd must repay its bank loan by 31 March 2011. The company is not sure if it will For
be able to repay the loan. Examiner's
Use
Timpani Ltd decides to take some action to enable it to repay the bank loan when it
becomes due.
REQUIRED
(c) For each proposed action place a tick () under the correct heading to show if it might
be successful.
Successful Not successful
Reduce dividend paid
Reduce depreciation
Reduce trade payables (creditors)
[6]
(d) (i) Name the accounting principle which states that a business is assumed to
continue to operate indefinitely.
[1]
(ii) If a business is not expected to continue, state the value at which its assets should
be valued in the balance sheet.
[2]
[Total: 26]

14
5 Ellis Ltd was formed some years ago. It raised funds from the issue of preference shares, For
ordinary shares and debentures. Examiner’s
Use
REQUIRED
(a) Explain two features of each of the following.
(i) Preference shares
1 ..............................................................................................................................
..................................................................................................................................
2 ..............................................................................................................................
............................................................................................................................ [4]
(ii) Ordinary shares
1 ..............................................................................................................................
..................................................................................................................................
2 ..............................................................................................................................
............................................................................................................................ [4]
Ellis Ltd has an authorised share capital consisting of 200 000 5% preference shares of $1
each and 800 000 ordinary shares of $0.50 each.
Half of the preference shares and 600 000 of the ordinary shares have been issued. The
company has also issued $100 000 4% debentures.
On 1 April 2009 the balance on the profit and loss account brought forward was $10 000.
After the appropriations the profit retained for the year ended 31 March 2010 was $5000.
© UCLES 2010 0452/21/M/J/10

15
REQUIRED For
Examiner’s
(b) Prepare a relevant extract from the balance sheet of Ellis Ltd at 31 March 2010 to show Use
the issued capital and reserves.
Ellis Ltd
Extract from Balance Sheet at 31 March 2010
Capital and Reserves
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [6]
On 31 March 2010 the directors proposed to pay the preference share dividend and to pay
an ordinary share dividend of $0.05 per share.
On 31 March 2010 one year’s interest on debentures was accrued.
REQUIRED
(c) Prepare a relevant extract from the current liabilities section of the balance sheet of Ellis
Ltd at 31 March 2010.
Ellis Ltd
Current Liabilities
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [6]
[Total: 20]

4 For
Examiner’s
Use
2 DEC Ltd was formed some years ago. It raised funds from the issue of ordinary shares,
preference shares and debentures.
REQUIRED
(a) Explain the meaning of the term ‘limited liability’.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
(b) State two differences between preference shares and debentures.
(i) .....................................................................................................................................
..........................................................................................................................................
(ii) ....................................................................................................................................
......................................................................................................................................[4]
(c) Explain the meaning of each of the following terms.
(i) Authorised capital

..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(ii) Called-up capital
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(iii) Paid-up capital
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
© UCLES 2010 0452/22/M/J/10

5 For
Examiner’s
Use
The following information was taken from the books of DEC Ltd on 31 March 2010.
$
Profit for the year (net profit) 22 000
Profit and loss account balance 1 April 2009 4 300
6% Preference shares of $1 each 70 000
Ordinary shares of $1 each 150 000
During the year ended 31 March 2010 the company paid an interim dividend of 2% on the
preference shares.
On 31 March 2010 the directors proposed:
1 A transfer of $3000 to a general reserve.

2 To pay the remainder of the preference share dividend.
3 To pay a dividend of 8% on the ordinary shares.
REQUIRED
(d) Prepare the profit and loss appropriation account of DEC Ltd for the year ended
31 March 2010.
DEC Ltd
Profit and Loss Appropriation Account for the year ended 31 March 2010
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[11]
[Total: 23]

10
4 The financial year of Searle Ltd ends on 31 August. For

Examiner's
Use
Searle Ltd has the following capital structure.
Authorised share capital 80 000 ordinary shares of $0.50 each

40 000 4% preference shares of $1 each
Paid-up share capital 60 000 ordinary shares of $0.50 each

25 000 4% preference shares of $1 each
Loan capital $15 000 3% debentures
During the year ended 31 August 2010 one year’s preference share dividend was paid.
On 31 August 2010 one year’s interest on debentures was accrued.
On 31 August 2010 the directors recommended the payment of an ordinary share dividend
of 5%.
REQUIRED
(a) Explain the difference between authorised share capital and paid-up share capital.
[4]
(i) Dividend paid on preference shares (in $)
[2]
(ii) Interest payable on debentures (in $)
[2]
© UCLES 2010 0452/21/O/N/10

11
(iii) Dividend to be paid on ordinary shares (in $) For

Examiner's
Use
[2]
(c) Complete the following table to indicate where each of the following should appear in
the financial statements (final accounts) of Searle Ltd for the year ended
31 August 2010. If the item does not appear write “No entry”.
The first has been completed as an example.
Income statement Appropriation Balance

(profit and loss account sheet
account)
Preference share dividend paid No entry No entry
Debenture interest payable
Ordinary share dividend payable
(d) Calculate the capital employed on 31 August 2010.
Show your workings.
[1]

12
(e) Using a net profit figure of $11 840, calculate the return on capital employed (ROCE). For
The calculation should be correct to two decimal places. Examiner's
Use
Show your workings.
[2]
(f) Explain why the directors of Searle Ltd will be pleased that the return on capital
employed (ROCE) is higher than at the end of the previous financial year.
[2]
[Total: 19]
© UCLES 2010 0452/21/O/N/10

2
1 The following is the profit and loss appropriation account of Silston Ltd for the year ended For
31 October 2010. Examiner's
Use
$ $
Profit for the year (Net profit) 18 200
Less Transfer to general reserve 3 000
Preference share dividend proposed 1 600
Ordinary share dividend paid 1 200
Ordinary share dividend proposed 3 600 9 400
Profit retained in the year 8 800
Balance brought forward from previous year 2 200
Balance carried forward to next year 11 000
The following information is also available at 31 October 2010.
$
Issued share capital – 4% Preference shares of $1 each 40 000
Ordinary shares of $1 each 80 000
3% Debentures of $100 each 20 000
Inventory (stock) 13 350
Trade payables (creditors) 6 500
Cash 210
Non-current (fixed) assets at cost 174 000
Provision for depreciation of non-current (fixed) assets 26 100
General reserve at 1 November 2009 4 000
REQUIRED
(a) Prepare the balance sheet of Silston Ltd at 31 October 2010.
© UCLES 2010 0452/23/O/N/10

3
Silston Ltd For

Balance Sheet at 31 October 2010 Examiner's
Use
[13]

4
(b) State two differences between ordinary shares and preference shares. For
Examiner's
Use
(i)
(ii)
[4]
(c) State two features of debentures.
(i)
(ii)
[4]
[Total: 21]
© UCLES 2010 0452/23/O/N/10

8
3 White Rose Ltd was formed some years ago. The company raised funds from the issue of For
ordinary shares and debentures. Examiner's
Use
REQUIRED
(a) Explain why it is an advantage to the shareholders in White Rose Ltd to have limited
liability.
[2]
(b) State two differences between ordinary shares and debentures.
[4]
White Rose Ltd provided the following information at the end of the financial year on
31 August 2012.
1 The issued share capital consisted of 350 000 ordinary shares of $0.50 each.
2 The company had issued 1000 5% debentures of $100 each.
3 On 1 September 2011:
General reserve $18 500
Retained profit $7 300
4 The profit for the year ended 31 August 2012 was $36 000.
5 During the year ended 31 August 2012 an interim dividend of 3% on the ordinary
shares was paid.
6 On 31 August 2012 it was decided to transfer $10 000 to general reserve and pay a
dividend of 4% on the ordinary shares.
© UCLES 2012 0452/21/O/N/12

9
REQUIRED For
Examiner's
Use
(c) Prepare the profit and loss appropriation account of White Rose Ltd for the year ended
31 August 2012.
White Rose Ltd

(d) Prepare the capital and reserves section of the balance sheet of White Rose Ltd at
31 August 2012.
White Rose Ltd

Extract from Balance Sheet at 31 August 2012
[5]

10
(e) Prepare the non-current liabilities section of the balance sheet of White Rose Ltd at For
31 August 2012. Examiner's
Use
White Rose Ltd

Non-current liabilities
[2]
[Total: 22]
© UCLES 2012 0452/21/O/N/12

Manufacturing
Accounts

5 For
Examiner’s
Use
2 (a) Explain why it is necessary for a manufacturing business to prepare a Manufacturing
Account in addition to a Trading and Profit and Loss Account.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
(b) Explain each of the following terms in connection with a manufacturing business.
(i) Cost of materials consumed
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) Prime cost
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(iii) Production cost
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]

6 For
Examiner’s
Use
(c) The financial year of El Sayed Manufacturing Company ends on 31 August.
The following information is provided.
Stocks At 1 September 2002 At 31 August 2003

$ $
Raw material 7 040 6 220
Work in progress 810 950
Finished goods 5 780 6 100
For the year ended 31 August 2003

$
Sales of finished goods 180 500
Purchases of raw materials 43 820
Wages – factory operatives 40 190
factory supervisors 18 400
office and sales staff 37 000
General expenses – factory 5 340
office 3 600
Rates and insurance 7 500
Additional information –
1. The factory machinery cost $42 000 and the office machinery cost $23 000. In each
case the annual depreciation charge is 20% on cost.
2. The rates and insurance are to be apportioned - factory 4/5 and office 1/5.
3. www.igcseaccounts.com
On 31 August 2003 wages due were – factory operatives $1170
office staff $600.
Extract the necessary information from the above figures and prepare the
Manufacturing Account of El Sayed Manufacturing Company for the year ended 31
August 2003.
0452/03/O/N/03

7 For
Examiner’s
Use
El Sayed Manufacturing Company
Manufacturing Account for the year ended 31 August 2003
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
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.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
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...................................................................................................................................................[14]

6 For
Examiner's
Use
2 Mark Sekota started trading as Red Barn Manufacturing on 1 September 2004. The
business makes wooden barns which are supplied in sections for customers to construct to
their own designs.
Mark Sekota provides the following information:
At 1 September 2006 At 31 August 2007

$ $
Stocks – Raw materials 43 500 37 000
Work in progress 21 400 15 800
Finished goods 142 100 163 500
For the year ended 31 August 2007

$
Sales of finished goods 2 249 400
Direct factory wages 473 600
Indirect factory wages 197 600
Factory general expenses 335 500
The factory machinery is being depreciated using the reducing balance method at
20% per annum. The machinery originally cost $250 000 and the accumulated
depreciation at 1 September 2006 was $90 000.
REQUIRED
(a) Explain to Mark Sekota why it is important that his stocks are valued at the lower of
cost and net realisable value.
[2]
© UCLES 2007 0452/03/O/N/07

7 For
Examiner's
Use
(b) Prepare the manufacturing account of Red Barn Manufacturing for the year ended
31 August 2007.
Red Barn Manufacturing

Manufacturing Account for the year ended 31 August 2007
[11]

8 For
Examiner's
Use
(c) Prepare the trading account of Red Barn Manufacturing for the year ended
31 August 2007.
Red Barn Manufacturing

Trading Account for the year ended 31 August 2007
[5]
Mark Sekota is concerned that his rate of stock turnover of finished goods is slower than it
was in the previous financial year.
REQUIRED
(d) Using your answer to (c) calculate, correct to two decimal places, the rate of stock
turnover of finished goods. Show your workings.
[2]
(e) State two ways in which the rate of stock turnover of finished goods may be improved.
(i)
(ii)
[2]
[Total: 22]
© UCLES 2007 0452/03/O/N/07

14
4 Gideon Yeboah is a manufacturer. He provided the following information. For

Examiner's
Use
At 1 April 2007 At 31 March 2008
$ $
Stock - raw materials 21 230 19 410
work in progress 11 680 12 130
finished goods 46 900 53 170
For the year ended 31 March 2008

$
Sales of finished goods 825 000
Purchases of finished goods 13 200
The following additional information is available on 31 March 2008:
1 Direct factory wages accrued amounted to $4800.
2 The factory general expenses include insurance on the factory which is prepaid by
$210.
3 The factory machinery was valued at $92 000.

On 1 April 2007 the factory machinery was valued at $103 000. Additional machinery
costing $21 000 was purchased during the year. There were no sales of machinery
during the year.
REQUIRED
(a) (i) State the basis on which Gideon Yeboah should value his stocks.
[1]
(ii) Name one accounting principle Gideon Yeboah is applying by valuing his stocks
on this basis.
[1]
© UCLES 2008 0452/03/M/J/08

15
(b) Prepare the manufacturing account of Gideon Yeboah for the year ended For
31 March 2008. Examiner's
Use
Gideon Yeboah
Manufacturing Account for the year ended 31 March 2008
[11]

16
(c) Prepare the trading account of Gideon Yeboah for the year ended 31 March 2008. For
Examiner's
Use
Gideon Yeboah
Trading Account for the year ended 31 March 2008
[6]
[Total: 19]
© UCLES 2008 0452/03/M/J/08

2 Ahmed Zaki manufactures office furniture. His financial year ends on 30 April. For
Examiner’s
Use
REQUIRED
(a) Explain why it is necessary for Ahmed Zaki to prepare a manufacturing account at the
end of his financial year.
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [2]
(b) During the year ended 30 April 2010 Ahmed Zaki purchased some finished goods from
another manufacturer.
Suggest two reasons why Ahmed Zaki purchased these goods rather than manufacturing
them himself.
1 ......................................................................................................................................
..........................................................................................................................................
2 ......................................................................................................................................
.................................................................................................................................... [2]
Ahmed Zaki provided the following information:
At 1 May 2009 At 30 April 2010

$ $
Inventory (stock) – raw material 33 400 35 230
Stock – work in progress 14 200 13 900
For the year ended 30 April 2010

$
Indirect factory wages 130 200
Additional information on 30 April 2010:
1 Indirect factory wages accrued amounted to $1520.
2 Factory general expenses include prepaid insurance, $400.
3 On 1 May 2009 the factory machinery was valued at $162 000.

Additional machinery costing $19 500 was purchased during the year.
There were no sales of machinery during the year.
On 30 April 2010 the factory machinery was valued at $150 000.
© UCLES 2010 0452/21/M/J/10

REQUIRED For
Examiner’s
(c) Prepare the manufacturing account of Ahmed Zaki for the year ended 30 April 2010. Use
Ahmed Zaki
Manufacturing Account for the year ended 30 April 2010
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................. [13]
[Total: 17]

10
3 Herman Wagner makes furniture. For

Examiner's
Use
He provided the following information for the year ended 30 April 2012
$
Inventories 1 May 2011 – Raw materials 14 300
Finished goods 12 100
Revenue 600 000
Carriage on purchases of raw materials 2 600
Wages – Factory direct 193 700
Factory indirect 43 600
Administration 121 100
General expenses – Factory 24 450
Administration 9 640
Factory machinery at cost 98 000
Office equipment at cost 14 500
Provision for depreciation of factory machinery 35 280
Provision for depreciation of office equipment 4 350
Loose tools 1 May 2011 at valuation950
1 At 30 April 2012: $
Inventories were valued at
Raw materials 16 400
Finished goods 11 300
2 The factory general expenses include rates and insurance, $6200, which should
be apportioned – factory ¾ and office ¼.
3 The factory indirect wages include $10 000 taken by Herman Wagner for personal
use.
4 The factory machinery is being depreciated at 20% per annum using the reducing
balance method.
The office equipment is being depreciated by 10% per annum using the straight
line method.
5 During the year additional loose tools, $45, were purchased.

At 30 April 2012 the loose tools were valued at $890.
© UCLES 2012 0452/22/M/J/12

11
REQUIRED For
Examiner's
Use
(a) Select the relevant information and prepare the manufacturing account of Herman
Wagner for the year ended 30 April 2012.
Herman Wagner
Manufacturing Account for the year ended 30 April 2012
[16]

12
(b) Define and give one example of each of the following types of inventory in Herman For
Wagner’s business. Examiner's
Use
(i) Raw materials
[2]
(ii) Work in progress
[2]
(iii) Finished goods
[2]
(c) Explain why Herman Wagner revalues the loose tools at the end of each financial year
rather than using the straight line or reducing balance method of depreciation.
[2]
© UCLES 2012 0452/22/M/J/12

13
After the preparation of the manufacturing account for the year ended 30 April 2012, For
Herman Wagner prepared an income statement showing a gross profit of $170 200 and Examiner's
Use
total expenses of $144 000.
On 1 May 2011 Herman Wagner’s capital was $130 000. On that date he borrowed
$20 000 (repayable on 30 April 2016) from Cashco Ltd.
REQUIRED
(d) Calculate the return on capital employed (ROCE) for Herman Wagner.
Use the total capital employed on 1 May 2011.
The calculation should be correct to two decimal places.
Show your workings.
[3]
(e) The return on capital employed (ROCE) calculated on 30 April 2011 was 19.50%.
State and explain whether Herman Wagner will be satisfied with the ratio you
calculated in (d).
Will he be satisfied?
Explanation
[3]
[Total: 30]

1 Zabeel opened a manufacturing business on 1 November 2011.
The following information was provided at 31 October 2012.
$
Revenue 183 400
Returns from customers 2 600
Returns to suppliers of raw materials 2 100
Factory direct wages 46 000
Factory indirect wages 11 210
Office and administration wages 23 950
Rates and insurance 6 000
Office and selling expenses 9 400
Carriage on raw materials 480
Carriage on sales 630
1 On 31 October 2012 Inventories were valued at:

raw materials 4 300
work in progress 10 200
finished goods 12 620
2 On 31 October 2012 factory direct wages outstanding amounted to $2150 and factory general
expenses prepaid were $370.
3 60% of the rates and insurance relates to the factory and 40% relates to the office.
4 Machinery costing $64 500 was purchased on 1 November 2011. Depreciation is to be

charged at 20% per annum on cost.
5 Loose tools, $980, were purchased on 1 November 2011. Additional tools, $130, were
purchased during the year. No loose tools were disposed of during the year.
On 31 October 2012 the loose tools were valued at $820.
REQUIRED
(a) Select the relevant figures and prepare the manufacturing account of Zabeel for the year
ended 31 October 2012.
© UCLES 2012 0452/21/O/N/12

Zabeel For
Manufacturing account for the year ended 31 October 2012 Examiner's
Use
[14]

(b) Select the relevant figures and prepare the income statement (trading section) of For
Zabeel showing the calculation of the gross profit for the year ended 31 October 2012. Examiner's
Use
Zabeel
Income Statement for the year ended 31 October 2012
(c) (i) State the basis on which Zabeel should value his inventories.
[1]
(ii) Name the accounting principle Zabeel is applying by valuing the inventories on this
basis.
[1]
(d) Name the accounting principle Zabeel applied in each of the following.
(i) Credit sales were recorded at the time of sale rather than when payment was
received.
[1]
(ii) No entries were made for expenses paid by Zabeel for running his personal motor car.
[1]
[Total: 24]
© UCLES 2012 0452/21/O/N/12

Multiple
Choice
Questions

There are 10 parts to Question 1. For

Examiner's
Use
For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Choose the
one you consider correct and place a tick () in the box to indicate the correct answer.
1 (a) Why does the owner of a business need to know how much profit he has made?
A to calculate interest payable on a bank loan
B to calculate cost of sales
C to calculate the return on capital
D to calculate total expenses [1]
(b) Which business document shows all the transactions that have taken place with a
customer during a month?
A credit note
B debit note
C invoice
D statement
(c) A shop makes all its sales for cash.
Where does the sales account appear?
A cash book
B nominal (general) ledger
C sales journal
D sales ledger [1]
(d) Which account could appear in either the debit column or the credit column of a trial
balance?
A bad debts
B bank
C drawings
D sales [1]
© UCLES 2010 0452/11/M/J/10

(e) The cash book showed a balance in the bank of $1000 Dr. On the same date, the bank For
statement showed a balance in the bank of $900 Dr. Examiner's
Use
Which could be the reason for this difference?
A bank interest received
B payments made directly into the trader’s bank account
C standing order for property tax paid directly by the bank
D unpresented cheque [1]
(f) What is an income statement (profit and loss account)?
A A list of all the assets and liabilities of a business at a particular

date.
B A list of all the balances in the ledger accounts of a business at a
particular date.
C A statement of receipts and payments of a business during a
particular period.
D A summary of income and expenditure of a business during a
[1]
particular period.
(g) Which entry is made to reduce a provision for doubtful debts?
income statement
A provision for doubtful debts
(profit and loss account)
income statement
B provision for doubtful debts
(profit and loss account)
C provision for doubtful debts trade receivables (debtors)
D trade receivables (debtors) provision for doubtful debts

[1]

(h) The total of the sales returns journal is posted to the sales returns account. For
Examiner's
Use
Where will the double entry appear?
A bank account
B creditors’ accounts
C debtors’ accounts
D sales account [1]
(i) How is working capital calculated?
A current assets – current liabilities
B current assets + current liabilities
C non-current (fixed) assets + current assets – current liabilities
D non-current (fixed) assets + current assets + current liabilities [1]
(j) A sole trader compares his results with those of a similar business.
Which shows how well expenses are being controlled?
A bank balance
B cost of sales
C gross profit
D net profit [1]
[Total: 10]
© UCLES 2010 0452/11/M/J/10


Examiner's
Use
1 (a) Businesses use financial records to prepare financial statements (final accounts).
Which record is used in the preparation of the balance sheet?
A bank statement
B cash book
C purchases journal
D sales journal [1]
(b) Which documents received by a business are used to write up the purchases returns
journal?
A credit notes
B debit notes
C statements
D sales invoices [1]
(c) A business keeps a petty cash book with an imprest amount of $300. During
September the following transactions take place:
imprest restored on 1 September 100

petty cash drawn from bank on 15 September 150
expenses paid from petty cash 400
What amount will be required to restore the imprest on 30 September?
A $50 B $250 C $400 D $550 [1]
© UCLES 2010 0452/12/M/J/10

(d) Which error would not be revealed by a trial balance? For

Examiner's
Use
A completely omitting a transaction
B incorrectly balancing an account
C making only one entry for a transaction
D recording a transaction twice on the same side [1]
(e) Which will be shown on a bank statement?
A cash paid into bank not yet credited
B cheque dishonoured
C cheque drawn not yet presented
D petty cash payment [1]
(f) What is meant by the realisation concept?
A Revenue and profit should not be anticipated.
B
Revenue is recognised as being earned when ownership of goods
passes to the customer.
C Similar items should be accounted for in a similar way from one
accounting period to the next.
D Transactions must be expressed in monetary terms. [1]
(g) A business values its inventory (stock) of items X and Y. The following information is
available.
cost price net realisable

item amount
per unit value per unit
X 300 units $3 $4
Y 600 units $6 $5
What is the total value of the inventory (stock)?
A $3900 B $4200 C $4500 D $4800 [1]

(h) What is the effect of not including intangible assets on the balance sheet? For
Examiner's
Use
A overstate the value of the non-current (fixed) assets
B overstate the value of the working capital
C understate the value of the current assets
D understate the total value of the assets [1]
(i) Which will appear in the income statement (profit and loss account) of a limited
company?
A debenture interest paid
B preference share dividend paid
C retained profit brought forward
D transfer to general reserve [1]
(j) A trader does not keep proper accounting records. Her capital at the end of the
financial year is higher than at the start. She has not introduced any further capital
during the year. www.igcseaccounts.com
What does this show?
A A net loss has been made during the year.
B Annual drawings are greater than the net profit.
C Assets less liabilities have reduced during the year.
D Net profit is greater than annual drawings. [1]
[Total: 10]
© UCLES 2010 0452/12/M/J/10


Examiner's
Use
1 (a) Businesses use financial records to prepare financial statements (final accounts).
Which record is used in the preparation of the balance sheet?
A bank statement
B cash book
C purchases journal
D sales journal [1]
(b) Which documents received by a business are used to write up the purchases returns
journal?
A credit notes
B debit notes
C statements
D sales invoices [1]
(c) A business keeps a petty cash book with an imprest amount of $300. During
September the following transactions take place:
imprest restored on 1 September 100

petty cash drawn from bank on 15 September 150
expenses paid from petty cash 400
What amount will be required to restore the imprest on 30 September?
A $50 B $250 C $400 D $550 [1]
© UCLES 2010 0452/13/M/J/10

1 There are 10 parts to question 1. For

Examiner's
For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Use
Choose the one you consider correct and place a tick () in the box to indicate the correct
answer.
(a) Why should a trader record all the financial information about her business?
A to calculate her bank balance
B to calculate her trade receivables (debtors)
C to calculate her drawings
D to calculate her profit [1]
(b) Which entries are made in Xanthe’s ledger to record the payment by a customer of
money owing to Xanthe?
A cash creditor
B cash debtor
C creditor cash
D debtor cash [1]
(c) Which error will require a correcting entry in a suspense account?
A cash paid to Gideon debited to Gibson’s account
B motor vehicles account omitted from the trial balance
C purchase of fixtures for cash debited to the purchases account
D no entry made for cash paid for stationery [1]
© UCLES 2010 0452/11/O/N/10

(d) Maria maintains a provision for doubtful debts at 5% of the trade receivables (debtors) For
at the end of each financial year. Examiner's
Use
On 31 December 2008 the trade receivables (debtors) owed $25 000 and on
31 December 2009 the trade receivables (debtors) owed $20 000.
How much will appear in Maria’s income statement (profit and loss account) for the
year ended 31 December 2009?
A $250 credit B $250 debit C $1000 credit D $1000 debit
[1]
(e) Karl’s trial balance for 31 December 2009 includes the following balances.
sales 3 200
inventory (stock) at 1 January 2009 200
purchases 1 800
expenses 800
Karl’s inventory (stock) at 31 December 2009 was $300.
What is Karl’s net profit for the year?
A $400 B $500 C $700 D $1500
[1]
(f) Which is not a current asset?
A cash in hand
B money owed by a customer
C prepaid bill for electricity
D unpaid invoice from a supplier [1]

(g) Which group contains only tangible fixed assets? For

Examiner's
Use
A bank, cash, trade receivables (debtors), inventory (stock)
B bank, trade receivables (debtors), loan, prepaid expenses
C equipment, goodwill, machinery, vehicles
D equipment, machinery, premises, vehicles [1]
(h) Joe and Paul are partners sharing profits in the ratio 3:2, after paying Paul an annual
salary of $15 000. For the year ended 31 March, the partnership’s net profit was
$55 000.
How much was credited to Paul’s current account for the year ended 31 March?
A $15 000 B $22 000 C $31 000 D $37 000
[1]
(i) A business provided the following information.
year 1 year 2 year 3
gross profit as a percentage of sales 37 % 37 % 37 %

net profit as a percentage of sales 12 % 10 % 7%
A control over expenses is getting better
B control over expenses is getting worse
C sales have reduced
D sales have increased [1]
© UCLES 2010 0452/11/O/N/10

(j) The same accounting treatment should be applied to similar items at all times. For
Examiner's
Use
Which accounting principle is being applied?
A consistency
B duality
C money measurement
D prudence [1]
[Total: 10]

(d) Maria maintains a provision for doubtful debts at 5% of the trade receivables (debtors) For
at the end of each financial year. Examiner's
Use
On 31 December 2008 the trade receivables (debtors) owed $25 000 and on
31 December 2009 the trade receivables (debtors) owed $20 000.
How much will appear in Maria’s income statement (profit and loss account) for the
year ended 31 December 2009?
A $250 credit B $250 debit C $1000 credit D $1000 debit
[1]
(e) Karl’s trial balance for 31 December 2009 includes the following balances.
sales 3 200
inventory (stock) at 1 January 2009 200
purchases 1 800
expenses 800
Karl’s inventory (stock) at 31 December 2009 was $300.
What is Karl’s net profit for the year?
A $400 B $500 C $700 D $1500
[1]
(f) Which is not a current asset?
A cash in hand
B money owed by a customer
C prepaid bill for electricity
D unpaid invoice from a supplier [1]

(g) Which group contains only tangible fixed assets? For

Examiner's
Use
A bank, cash, trade receivables (debtors), inventory (stock)
B bank, trade receivables (debtors), loan, prepaid expenses
C equipment, goodwill, machinery, vehicles
D equipment, machinery, premises, vehicles [1]
(h) Joe and Paul are partners sharing profits in the ratio 3:2, after paying Paul an annual
salary of $15 000. For the year ended 31 March, the partnership’s net profit was
$55 000.
How much was credited to Paul’s current account for the year ended 31 March?
A $15 000 B $22 000 C $31 000 D $37 000
[1]
(i) A business provided the following information.
year 1 year 2 year 3
gross profit as a percentage of sales 37 % 37 % 37 %

net profit as a percentage of sales 12 % 10 % 7%
A control over expenses is getting better
B control over expenses is getting worse
C sales have reduced
D sales have increased [1]
© UCLES 2010 0452/12/O/N/10

(j) The same accounting treatment should be applied to similar items at all times. For
Examiner's
Use
Which accounting principle is being applied?
A consistency
B duality
C money measurement
D prudence [1]
[Total: 10]

1 There are 10 parts to question 1. For

Examiner's
For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Use
Choose the one you consider correct and place a tick () in the box to indicate the correct
answer.
(a) What is shown as a liability in a balance sheet?
A bank overdraft
B fixtures and fittings
C inventory (stock)
D prepaid rent [1]
(b) Rent is paid to J. Perigo in cash.
How is this recorded?
A www.igcseaccounts.com
cash rent
B J. Perigo rent
C rent cash
D rent J. Perigo [1]
(c) When is a suspense account opened?
A when a balance sheet fails to balance
B when a trial balance fails to balance
C when an error of omission is corrected
D when an error of principle is corrected [1]
© UCLES 2010 0452/13/O/N/10

(d) Which item on a bank statement would cause the balance on the bank statement to be For
more than the balance in the cash book? Examiner's
Use
A bank charges
B bank interest credited
C dishonoured cheque
D standing orders paid [1]
(e) Why should costs be matched with revenues at the end of an accounting period?
A so that profit may be calculated
B so that the trial balance will balance
C to calculate the amount owed to trade creditors
D to calculate the bank balance [1]
(f) Peter sold goods on credit to Ann in 2009. In October 2010 Peter wrote off the amount
owed by Ann as a bad debt.
What entries must Peter make in his ledger to write off the bad debt?
Ann bad debts

A
Ann sales
B
bad debts Ann

C
sales Ann
D [1]

(g) The following information is available for a sole trader for the year ended For
30 September 2010. Examiner's
Use
$
sales in year 59 200
inventory (stock) at 1 October 2009 2 500
inventory (stock) at 30 September 2010 3 800
purchases in year 28 600
What is the gross profit for the year?
A $24 300
B $29 300
C $30 600
D $31 900 [1]
(h) Which of the following appears in the income statement (profit and loss account) of a
partnership?
A a partner’s drawings
B a partner’s salary
C interest on a partner’s capital
D interest on a partner’s loan [1]
© UCLES 2010 0452/13/O/N/10

(i) A business has calculated the following ratios: For

Examiner's
Use
percentage of gross profit to sales percentage of net profit to sales
Year 1 40 % 19 %
Year 2 40 % 25 %
Why did the percentage of net profit to sales increase in Year 2?
A cost of sales decreased
B cost of sales increased
C expenses decreased
D expenses increased [1]
(j) Which of the following should not be recorded in the books of account?
A canteen costs
B maintenance of office buildings
C wages of staff
D workers' skills [1]
[Total: 10]


Examiner's
Use
1 (a) Which business documents are used to write up the sales returns journal?
A credit notes issued to customers
B credit notes received from suppliers
C invoices issued to customers
D invoices received from suppliers [1]
(b) What is cash discount?
A an allowance given to a customer for paying in cash
B an allowance given to a customer for prompt payment
C a deduction from the list price of goods bought by a customer
D a deduction from the list price of goods for bulk buying by a customer [1]
(c) Which type of error is corrected using a suspense account?
A complete reversal
B omission
C principle
D single entry [1]
(d) A business receives a bank statement and updates its cash book.
Which item will increase the bank balance in the cash book?
A bank charges
B credit transfers received
C interest charges
© UCLES 2011 0452/11/M/J/11

(e) Adam’s debt is to be written off as bad. For

What entries are required? Examiner's
Use
A Adam bad debts
B Adam income statement
C bad debts Adam
D bad debts income statement

[1]
(f) Which is an intangible asset?
A goodwill
B inventory
C other receivables
D trade receivables [1]
(g) A trader took goods costing $100 for his own use.
How is this recorded in the ledger?
A debit drawings, credit inventory
B debit drawings, credit purchases
C debit inventory, credit drawings
D debit purchases, credit drawings [1]
(h) Which is a factory overhead?
A carriage on finished goods
B carriage on raw materials
C wages of factory supervisors
D wages of machine operators [1]

(i) How is the collection period for debtors calculated? For

Examiner's
Use
A credit sales / debtors x 100
B credit sales / debtors x 365
C debtors / credit sales x 100
D debtors / credit sales x 365 [1]
(j) At which point is revenue considered to be earned by a business?
A when an invoice is sent to the customer
B when ownership of the goods passes to the customer
C when the customer orders the goods
D when the customer pays for the goods [1]
[Total: 10]
© UCLES 2011 0452/11/M/J/11


Examiner's
Use
A complete reversal
B omission
C principle
D single entry [1]
A bank charges
C interest charges
© UCLES 2011 0452/12/M/J/11


Use
A Adam bad debts
C bad debts Adam

[1]
A goodwill
B inventory
C other receivables


Examiner's
Use
[Total: 10]
© UCLES 2011 0452/12/M/J/11


Examiner's
Use
A complete reversal
B omission
C principle
D single entry [1]
A bank charges
C interest charges
© UCLES 2011 0452/13/M/J/11


Use
A Adam bad debts
C bad debts Adam

[1]
A goodwill
B inventory
C other receivables


Examiner's
Use
[Total: 10]
© UCLES 2011 0452/13/M/J/11


Examiner's
Use
1 (a) In which book of prime (original) entry are invoices issued by a trader recorded?
A purchases journal
B purchases returns journal
C sales journal
D sales returns journal [1]
(b) Where are the personal accounts of customers who buy goods on credit found?
A purchases journal
B purchases ledger
C sales journal
D sales ledger [1]

(c) A trader has received a bank statement and brought his cash book up to date.
Which item will be included in the trader’s bank reconciliation statement?
A bank charges
B bank interest
C direct debits
D unpresented cheques [1]
© UCLES 2012 0452/11/M/J/12

For
(d) K Lain owns a bakery shop. Examiner's
Use
Which of the following are capital expenditure?
1 motor vehicle
2 petrol for motor vehicle
3 shop fixtures
4 wages of bakers
A 1 and 3
B 1, 2 and 3
C 2 and 4
D 2, 3 and 4 [1]
(e) What is the effect of providing for depreciation?
A It increases profit.
B It reduces profit.
C It extends the life of non-current assets.
D www.igcseaccounts.com
It increases the cash balance. [1]
(f) On which basis should inventory be valued?
A the higher of cost and net realisable value
B the lower of cost and net realisable value
C the higher of selling price and net realisable value
D the lower of selling price and net realisable value [1]

(g) In December 2010 Imran wrote off Ahmed’s debt of $50. On 30 April 2012 Ahmed sent For
a cheque for $50. Examiner's
Use
Which journal entry would Imran make on 30 April 2012?
debit credit
$ $
A Ahmed 50
bank 50
B bad debts recovered 50
Ahmed 50
C bad debts recovered 50
bank 50
D bank 50
bad debts recovered 50 [1]
(h) Which would appear in an income statement?
A bank overdraft
B capital introduced
C motor vehicle expenses
(i) Which is a current liability for a business?
A accrued interest charges on loan from bank
B provision for depreciation of non-current assets
C five-year loan from bank
D insurance premium prepaid [1]
(j) Paul is preparing his financial statements.

What should he do to observe the principle of prudence?
A include all foreseeable losses
B include all foreseeable revenue
C show expenses as low as possible
D show prepayments as expenses [1]
[Total: 10]
© UCLES 2012 0452/11/M/J/12


Examiner's
Use
1 (a) Beth sold goods on credit to Peter. It was later discovered that Peter had been
overcharged.
Which document will Beth send to Peter to correct the error?
A credit note
B debit note
C invoice
D statement [1]
(b) Where are the balances of carriage inwards and carriage outwards shown in the trial
balance?
debit column credit column
A carriage inwards carriage outwards
B
carriage outwardscarriage inwards
carriage inwards
C –
carriage outwards
carriage inwards
D –
carriage outwards [1]
(c) A trader purchased stationery for office use. This was entered in the ledger as
purchase of goods for resale.
Which entry will correct this error?
account debited account credited
A purchases stationery
B stationery purchases
C stationery sales
D sales purchases
[1]
© UCLES 2012 0452/12/M/J/12

(d) A trader maintains a sales ledger control account. For

Examiner's
Use
From which books of prime (original) entry would he obtain the totals for cash discounts
and goods returned?
discounts goods returned
cash book – discount allowed

A purchases returns journal
column
cash book – discount allowed
B sales returns journal
column
cash book – discount received
C purchases returns journal
column
cash book – discount received
D sales returns journal
column [1]
(e) David owes $1000 to Parvinder. He pays 90% of the debt. Parvinder writes off the
remaining debt.
What entry will Parvinder make to write off the bad debt?
account to be debited $ account to be credited $
A bad debts 100 David 100
B David www.igcseaccounts.com
100 bad debts 100
C bad debts 900 David 900
D David 900 bad debts 900

[1]
(f) Which is a current asset?
A accrued wages
B bank loan
C motor vehicles at cost
D prepaid insurance [1]

(g) Susan receives a cheque from a tenant on 10 December 2011. This is rent due to the For
business for the period 1 January to 31 March 2012. Examiner's
Use
How is this treated in Susan’s financial statements for the year ended 31 December 2011?
A accrued expense
B accrued income
C prepaid expense
D prepaid income [1]
(h) In partnership accounts, which item appears in both the profit and loss appropriation
account and in the partners’ current accounts?
A current account balances
B drawings
C interest on drawings
D interest on loans [1]
(i) A business has not kept full accounting records.
Which of the following are used to calculate the profit for the year?
A bank reconciliation statements
B control accounts
C statement of affairs
D suspense account [1]
(j) What is meant by the money measurement principle?
A accounts are kept on the double entry basis
B accounts contain only items which have a monetary value
C non-current assets are shown at cost less depreciation
D profits are calculated by deducting cash paid from cash received [1]
[Total: 10]
© UCLES 2012 0452/12/M/J/12


Examiner's
Use
1 (a) In which book of prime (original) entry are invoices issued by a trader recorded?
A purchases journal
B purchases returns journal
C sales journal
D sales returns journal [1]
(b) Where are the personal accounts of customers who buy goods on credit found?
A purchases journal
B purchases ledger
C sales journal
D sales ledger [1]

(c) A trader has received a bank statement and brought his cash book up to date.
Which item will be included in the trader’s bank reconciliation statement?
A bank charges
B bank interest
C direct debits
D unpresented cheques [1]
© UCLES 2012 0452/13/M/J/12

For
(d) K Lain owns a bakery shop. Examiner's
Use
Which of the following are capital expenditure?
1 motor vehicle
2 petrol for motor vehicle
3 shop fixtures
4 wages of bakers
A 1 and 3
B 1, 2 and 3
C 2 and 4
D 2, 3 and 4 [1]
(e) What is the effect of providing for depreciation?
A It increases profit.
B It reduces profit.
C It extends the life of non-current assets.
D www.igcseaccounts.com
It increases the cash balance. [1]
(f) On which basis should inventory be valued?
A the higher of cost and net realisable value
B the lower of cost and net realisable value
C the higher of selling price and net realisable value
D the lower of selling price and net realisable value [1]

(g) In December 2010 Imran wrote off Ahmed’s debt of $50. On 30 April 2012 Ahmed sent For
a cheque for $50. Examiner's
Use
Which journal entry would Imran make on 30 April 2012?
debit credit
$ $
A Ahmed 50
bank 50
B bad debts recovered 50
Ahmed 50
C bad debts recovered 50
bank 50
D bank 50
bad debts recovered 50 [1]
(h) Which would appear in an income statement?
A bank overdraft
B capital introduced
C motor vehicle expenses
(i) Which is a current liability for a business?
A accrued interest charges on loan from bank
B provision for depreciation of non-current assets
C five-year loan from bank
D insurance premium prepaid [1]
(j) Paul is preparing his financial statements.

What should he do to observe the principle of prudence?
A include all foreseeable losses
B include all foreseeable revenue
C show expenses as low as possible
D show prepayments as expenses [1]
[Total: 10]
© UCLES 2012 0452/13/M/J/12

1 There are 10 parts to Question 1. For

Examiner's
Use
For each of the parts (a) to (j) below there are four possible answers A, B, C and D.
Choose the one you consider correct and place a tick () in the box to indicate the
correct answer.
(a) Why should a sole trader record all the financial information about her business?
A because she is required to do so by law
B because she needs to pay her creditors on time
C so that she can prepare final accounts
D so that she knows how much her debtors owe her [1]
(b) Ace Motors sold a delivery van on credit to M. Johnson.
Which entries will be made in the books of Ace Motors?
A M. Johnson motor vehicles
B
M. Johnson sales
C motor vehicles M. Johnson
D sales M. Johnson
[1]
(c) A business has a suspense account. It is found that the amount in the suspense
account is in respect of a cash sale to Tahir, which was omitted from the sales account.
Which entries will correct the error?
A sales suspense
B suspense sales
C suspense Tahir
D Tahir suspense
[1]
© UCLES 2012 0452/11/O/N/12

(d) A trader purchases a supply of office paper on credit. For

Examiner's
Use
How should this transaction be recorded?
debit credit
A office equipment supplier
B supplier office equipment
C stationery supplier
D supplier stationery
[1]
(e) Amounts owed by a trader for electricity are given below.
$
1 January 2 000
31 December 2 500
The charge for electricity shown in the income statement for the year ended
31 December was $15 500.
What was the amount paid for electricity during the year?
A $15 000
B $15 500
C $16 000
D $20 000 [1]
(f) Amina lists her current assets in order of liquidity.
In which order will the current assets appear?
A bank, cash, inventory, trade receivables
B cash, bank, trade receivables, inventory
C inventory, trade receivables, bank, cash
D trade receivables, inventory, bank, cash [1]

(g) How will partners’ interest on drawings be shown in the partnership’s financial For
statements? Examiner's
Use
A debit income statement
B credit income statement
C debit appropriation account
D credit appropriation account [1]
(h) Which term describes the balancing figure in a receipts and payments account?
A excess of expenditure over income for the period
B excess of income over expenditure for the period
C the profit or loss for the year
D total cash and bank balances at the end of the year [1]
(i) A trader sets his selling price by adding a profit figure on to the cost price.
How does he do this?

A by applying margin
B by applying mark-up
C by using the current ratio
D by using the quick ratio [1]
(j) Miriam supplies goods on credit to Anna.
Applying the realisation principle, when does Miriam recognise the sales revenue?
A when Anna acquires legal ownership of the goods
B when Anna orders the goods
C when Anna pays for the goods
D when Anna receives a statement from Miriam [1]
[Total: 10]
© UCLES 2012 0452/11/O/N/12

1 There are 10 parts to Question 1. For

Examiner's
Use
For each of the parts (a) to (j) below there are four possible answers A, B, C and D.
Choose the one you consider correct and place a tick () in the box to indicate the
correct answer.
(a) Why should a sole trader record all the financial information about her business?
A because she is required to do so by law
B because she needs to pay her creditors on time
C so that she can prepare final accounts
D so that she knows how much her debtors owe her [1]
(b) Ace Motors sold a delivery van on credit to M. Johnson.
Which entries will be made in the books of Ace Motors?
A M. Johnson motor vehicles
B
M. Johnson sales
C motor vehicles M. Johnson
D sales M. Johnson
[1]
(c) A business has a suspense account. It is found that the amount in the suspense
account is in respect of a cash sale to Tahir, which was omitted from the sales account.
Which entries will correct the error?
A sales suspense
B suspense sales
C suspense Tahir
D Tahir suspense
[1]
© UCLES 2012 0452/12/O/N/12

(d) A trader purchases a supply of office paper on credit. For

Examiner's
Use
How should this transaction be recorded?
debit credit
A office equipment supplier
B supplier office equipment
C stationery supplier
D supplier stationery
[1]
(e) Amounts owed by a trader for electricity are given below.
$
1 January 2 000
31 December 2 500
The charge for electricity shown in the income statement for the year ended
31 December was $15 500.
What was the amount paid for electricity during the year?
A $15 000
B $15 500
C $16 000
D $20 000 [1]
(f) Amina lists her current assets in order of liquidity.
In which order will the current assets appear?
A bank, cash, inventory, trade receivables
B cash, bank, trade receivables, inventory
C inventory, trade receivables, bank, cash
D trade receivables, inventory, bank, cash [1]

(g) How will partners’ interest on drawings be shown in the partnership’s financial For
statements? Examiner's
Use
A debit income statement
B credit income statement
C debit appropriation account
D credit appropriation account [1]
(h) Which term describes the balancing figure in a receipts and payments account?
A excess of expenditure over income for the period
B excess of income over expenditure for the period
C the profit or loss for the year
D total cash and bank balances at the end of the year [1]
(i) A trader sets his selling price by adding a profit figure on to the cost price.
How does he do this?

A by applying margin
B by applying mark-up
C by using the current ratio
D by using the quick ratio [1]
(j) Miriam supplies goods on credit to Anna.
Applying the realisation principle, when does Miriam recognise the sales revenue?
A when Anna acquires legal ownership of the goods
B when Anna orders the goods
C when Anna pays for the goods
D when Anna receives a statement from Miriam [1]
[Total: 10]
© UCLES 2012 0452/12/O/N/12

Partnership
Final Accounts
All questions copyright of Cambridge International Examinations.

7 For
Examiner’s
Use
3 Frankie and Johnny are in partnership. Their financial year ends on 31 August. After the
preparation of their Trading and Profit and Loss Account for the year ended 31 August 2003,
the following balances remained on the books.
$
Capital Accounts: Frankie 50 000
Johnny 30 000
Current Accounts: Frankie 15 000
Johnny 5 000 (Dr)
Provision for depreciation of fixed assets 10 000
Stock 8 000
Debtors 14 000
Bank balance 5 000 (Dr)
Creditors 12 000
Prepare the Balance Sheet of the partnership as at 31 August 2003. Show the working
capital.
Frankie and Johnny
Balance Sheet as at 31 August 2003
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14 For
Examiner’s
Use
5 Ruth and Lucy Lebengo formed a partnership on 1 October 2003. They share profits and
losses 2:1. They agreed that a current account and a capital account would be kept for
each partner.
The Profit and Loss Account for the year ended 30 September 2004 showed a net profit
of $12 000.
Lucy has very little knowledge of bookkeeping, but attempted to prepare a Balance Sheet as
at 30 September 2004. The Balance Sheet she prepared, containing errors, is shown below.

$ $ $
Less depreciation 1 500 13 500
––––––
Stock 9 300
Debtors 5 900
––––––
66 700
––––––
Capital – Ruth 30 000
Lucy 20 000 50 000
––––––
Net profit 12 000
Less drawings – Ruth 4 000
Lucy 4 400 8 400 3 600
–––––– ––––––
Creditors
Bank overdraft www.igcseaccounts.com
7 400
5 100
––––––
66 100
––––––
The following matters were then discovered.
1. No adjustment had been made in the Balance Sheet for the following.
$
Depreciation of office equipment 300
These items had been correctly charged in the Profit and Loss Account.
2. Cash in hand, $100, had been omitted from the Balance Sheet.
3. The overdraft shown on the bank statement had been entered in the Balance Sheet
instead of the overdraft of $5300 shown in the cash book.
© UCLES 2004 0452/03/O/N/04

15 For
Examiner’s
Use
(a) Taking the above matters into account, prepare a corrected Balance Sheet for Ruth and
Lucy as at 30 September 2004.
different types of assets and liabilities, the working capital, and the capital and current
accounts of each partner.
Ruth and Lucy Lebengo

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...................................................................................................................................................[14]
16 For
Examiner’s
Use
(b) On 1 October 2004 Ruth and Lucy decided to admit their brother, Paul, to the partnership.
Ruth, Lucy and Paul agreed to share profits and losses 2:1:1.
Goodwill was valued at $9000 on 1 October 2004, but did not appear in the books. The
partners agreed that adjustments should be made for Goodwill, but that a Goodwill
account was not to be maintained on the books permanently.
Complete the following tables to show what entries are required. It is not necessary to
prepare the ledger accounts.
(i) To enter the Goodwill on the books –
………………………... ………... ………………………... ….……
………………………... ………... ………………………... ….……
………………………... ………... ………………………... ….……
(ii) To write off the Goodwill –
………………………... ………... ………………………... ….……
………………………... www.igcseaccounts.com
………... ………………………... ….……
………………………... ………... ………………………... ….……
[7]
[Total: 21]
Every reasonable effort has been made to trace all copyright holders where the publishers (i.e. UCLES) are aware that third-party material has been reproduced.
The publishers would be pleased to hear from anyone whose rights they have unwittingly infringed.
© UCLES 2004 0452/03/O/N/04

2 For
Examiner’s
Use
1 James and Susan Mokobi are in partnership, sharing profits and losses equally.
On 1 May 2004 the balances of their current accounts were as follows.
$
James 400 debit
Susan 2 000 credit
During the year ended 30 April 2005 the partners made the following drawings.
$
James 6 000
Susan 10 000
The partners prepared the following Profit and Loss Appropriation Account for the year
James and Susan Mokobi

Profit and Loss Appropriation Account for the year ended 30 April 2005
$ $ $
Net Profit 16 350
Interest on drawings – James 300

Interest on drawings – Susan 500 800
17 150
Interest on capital – James 1 050

Interest on capital – Susan 1 650 600
Partner’s salary – Susan 7 000 8 650
Profit available for distribution to the partners 8 500
© UCLES 2005 0452/03 M/J/05

3 For
Examiner’s
Use
REQUIRED
(a) Prepare the partners’ current accounts as they would appear in the ledger for the year
Where traditional ‘T’ accounts are used they should be balanced and the balances
brought down on 1 May 2005.
Where three column running balance accounts are used the balance column should
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......................................................................................................................................[9]

4 For
Examiner’s
Use
On 1 May 2005 James and Susan decided to admit their sister Anna to the partnership. On
that date the balances on their capital accounts were as follows.
$
James 35 000
Susan 20 000
It was agreed that the profits and losses of the new partnership should be shared in the
following proportions:
James 4/6 Susan 1/6 Anna 1/6
Anna paid $26 000 into the firm’s bank account on 1 May 2005.
Goodwill was valued at $12 000 on 1 May 2005 but did not appear in the books. The
partners agreed that the capital accounts should be adjusted for Goodwill on the admission
of Anna, but that a Goodwill account was not to be maintained on the books.
© UCLES 2005 0452/03 M/J/05

5 For
Examiner’s
Use
REQUIRED
(b) Prepare the capital accounts of James, Susan and Anna as they would appear in the
ledger immediately after Anna was made a partner.
Where traditional ‘T’ accounts are used they should be balanced and the balances
brought down on 2 May 2005.
Where three column running balance accounts are used the balance column should
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[Total: 23]

16 For
Examiner’s
Use
5 Ebor and Olicana are in partnership trading in sports goods. Their financial year ends on
31 July. After the preparation of their Trading and Profit and Loss Account for the year ended
31 July 2005 the following errors were discovered.
1 Olicana had taken goods costing $500 for her own use. This had not been recorded.
2 $15 paid for carriage inwards had been debited to the carriage outwards account.
3 The purchase of computer paper, $30, had been debited to the purchases account.
4 Motor vehicle repairs of $200 had been debited to the motor vehicles account. Motor
vehicles are depreciated by 25% on the cost of motors held at the end of each financial
year.
REQUIRED
(a) Complete the following table to show the effect of correcting the errors on the gross
profit and the net profit. If the correction of the error does not affect the profit write ‘no
effect’.
Error
Effect of correcting the error
on the gross profit on the net profit
1 +$500 +$500
2
3
4
[7]
© UCLES 2005 0452/03 O/N/05

17 For
Examiner’s
Use
Ebor and Olicana maintain a full set of books of account.
The following transactions took place on 31 August 2005.
1 Olicana took further goods costing $400 for her own use.
2 Ebor brought his own computer, valued at $900, into the business.
3 Ebor’s current account showed a credit balance of $10 000. It was agreed that he
should transfer half of this to his capital account.
REQUIRED
(b) Prepare the necessary journal entries to record the above transactions.
Ebor and Olicana

Journal
Debit Credit
$ $
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[9]

18 For
Examiner’s
Use
Ebor and Olicana have invited Lindum to join the partnership and have given him their final
accounts for the year ended 31 July 2005.
Lindum is aware that these final accounts will not provide all the relevant information he
needs.
REQUIRED
(c) State and explain two limitations Lindum should be aware of when he is studying the
set of final accounts Ebor and Olicana have provided.
1 .......................................................................................................................................
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2 .......................................................................................................................................
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......................................................................................................................................[4]
[Total: 20]
© UCLES 2005 0452/03 O/N/05

19
For
Examiner's
5 David and Janet Szabo are in partnership. Their financial year ends on 28 February. Use
On 1 March 2005 the credit balances on their capital accounts were as follows:
$
David Szabo 19 000
Janet Szabo 14 000
On 1 January 2006 David transferred the $3000 debit balance on his current account to his
capital account. On 1 February 2006 Janet paid an amount of cash into the business so that
her capital was equal to David’s.
REQUIRED
(a) Write up the partners’ capital accounts as they would appear in the ledger for the year
ended 28 February 2006.
Where traditional “T” accounts are used they should be balanced and the balances
brought down on 1 March 2006. Where three column running balance accounts are
used the balance column should be up-dated after each entry.
[5]

20
For
Examiner's
David and Janet Szabo own a fashion store. David manages the department dealing in Use
men’s clothes and Janet manages the department dealing in ladies’ clothes.
David suggested that it would assist in the management of the business if the results of
each department were shown separately.
The following information is available for the year ended 28 February 2006:
Men’s Clothing Ladies’ Clothing

Department Department
$ $
Stock 1 March 2005 1 000 2 200
Stock 28 February 2006 1 500 1 800
Purchases 12 000 26 700
Carriage inwards 50 150
The total sales for the year were $48 000, which was split between the departments ⅓ for
Men’s Clothing and ⅔ for Ladies’ Clothing.
The total expenses for the year were $4260. These are apportioned between the
departments in proportion to the total sales made by each department.
© UCLES 2006 0452/03/M/J/06

21
For
Examiner's
REQUIRED Use
(b) Prepare a columnar Trading and Profit and Loss Account for David and Janet Szabo for
the year ended 28 February 2006 to show the gross profit and net profit earned by each
department. Total columns are not required.
David and Janet Szabo

Departmental Trading and Profit and Loss Account for the year ended 28 February 2006
[11]

22
For
Examiner's
The partners are disappointed with the results of the ladies’ clothing department. They Use
decide to ask Ann Ambondo to become a partner and take over the running of this
department as she has had experience in a similar business for many years.
REQUIRED
(c) Explain why David and Janet Szabo should value the Goodwill of the business before
admitting Ann Ambondo to the partnership.
[2]
(d) (i) Explain to Ann Ambondo two advantages of joining the partnership.
2
[2]
(ii) Explain to Ann Ambondo two disadvantages of joining the partnership.
[2]
[Total: 22]
© UCLES 2006 0452/03/M/J/06

10 For
Examiner's
Use
5 Smith and Travers are in partnership sharing profits and losses in accordance with their
partnership agreement which states the following:
1 Interest on capital is allowed at 5 % per annum.

2 Salary to be paid to Smith of $15 000 per annum.
3 Interest to be charged on each partner’s total drawings for the year at 4% per
annum.
4 Travers and Smith share the balance of profits in the ratio 3 : 2.
The balances on the partners’ capital accounts at 1 October 2005 were:
Smith $30 000

Travers $40 000
The partners’ drawings for the year ended 30 September 2006 were:
Smith $35 000

Travers $15 000
The net profit of the partnership for the year ended 30 September 2006 was $89 000.
REQUIRED
(a) Prepare the Profit and Loss Appropriation Account for the partnership for the year
ended 30 September 2006.
You may use the space below for workings.
© UCLES 2006 0452/02/O/N/06

11 For
Examiner's
Use
Smith and Travers
Profit and Loss Appropriation Account for the year ended 30 September 2006
[14]

12 For
Examiner's
Use
Smith’s current account in the partnership books showed a balance of $2300 Cr. at
1 October 2005.
REQUIRED
(b) Using the information above and your answer to part (a), calculate the balance on
Smith’s current account at 30 September 2006.
Show your workings.
[8]
[Total: 22]
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department
of the University of Cambridge.
© UCLES 2006 0452/02/O/N/06

9 For
Examiner's
Use
3 Jamil and Sara Suliman are in partnership.
On 30 April 2007 they discovered that a quantity of stock was missing from the warehouse.
This loss is fully covered by their insurance company.
They are able to provide the following information for the year ended 30 April 2007:
$
Sales 30 000
Purchases 26 000
Stock 1 May 2006 5 000
Stock in warehouse 30 April 2007 4 500
The gross profit margin is 20 %.
REQUIRED
(a) Calculate by means of a trading account the value of the missing stock on
30 April 2007.
Jamil and Sara Suliman

Trading Account for the year ended 30 April 2007
[8]

10 For
Examiner's
Use
The partners provide the following additional information:
$
At 1 May 2006
Current account – Jamil 200 debit
Sara 600 credit
For the year ended 30 April 2007

Running expenses 4600
Interest on capital – Jamil 2000
Sara 1000
Drawings – Jamil 3100
Sara 2800
Profits and losses are shared equally.
REQUIRED
(b) Using your answer to (a) and the information above calculate the net profit for the year
ended 30 April 2007. Show your workings.
[1]
(c) Calculate each partner’s share of the residual profit or loss for the year ended
30 April 2007. Show your workings.
[3]
© UCLES 2007 0452/03/M/J/07

11 For
Examiner's
Use
(d) Prepare the partners’ current accounts as they would appear in the ledger for the year
brought down on 1 May 2007. Where three column running balance accounts are used
the balance column should be updated after each entry.
[5]

12 For
Examiner's
Use
On 1 May 2007 Jamil and Sara decided to admit their sister Fatima to the partnership.
Jamil, Sara and Fatima agreed to share profits and losses 2 : 2 : 1.
Goodwill was valued at $20 000 on 1 May 2007, but did not appear in the books. The
partners agreed that adjustments should be made for goodwill, but that a goodwill account
was not to be maintained on the books permanently.
REQUIRED
(e) Complete the following tables to show the partners what entries are required in the
ledger.
It is not necessary to prepare the ledger accounts.
(i) To enter goodwill on the books.
(ii) To write off the goodwill.
[7]
[Total: 24]
© UCLES 2007 0452/03/M/J/07

14 For
Examiner's
Use
4 Ann and Fay are in partnership. They share profits and losses 3 : 2. On 1 October 2007
Ann’s capital was $30 000 and Fay’s was $15 000.
They invited Kim to join the partnership and to be responsible for the day-to-day running of
the business.
Kim decided to join the partnership on 1 October 2007. She agreed to contribute $10 000
as capital, to be paid into the business bank account, and a computer system valued at
$1000. Ann, Fay and Kim agreed to share profits and losses 5 : 3 : 2.
REQUIRED
(a) State one disadvantage to Ann and Fay of Kim joining the partnership.
[1]
(b) (i) Explain why, in addition to agreeing the profit-sharing ratio, Ann, Fay and Kim
should draw up a partnership agreement.
(ii) Suggest one item which Ann would particularly want to include in the partnership
agreement.
[1]
(iii) Suggest one item Kim would particularly want to include in the partnership
agreement.
[1]
© UCLES 2007 0452/03/O/N/07

15 For
Examiner's
Use
On 1 October 2007 goodwill was valued at $17 000 but did not appear in the books. The
partners agreed that adjustments should be made for goodwill but that a goodwill account
was not to be maintained on the books permanently.
REQUIRED
(c) Prepare the following accounts in the ledger of the partnership on 1 October 2007.
(i) Goodwill account
(ii) Capital accounts of Ann, Fay and Kim
appropriate, the balance brought down on 2 October 2007. Where three column
running balance accounts are used the balance column should be updated after each
entry.
[5]

16 For
Examiner's
Use
(ii) Capital accounts
[12]
[Total: 22]
© UCLES 2007 0452/03/O/N/07

2
1 Raminder and Vijay Singh formed a partnership and drew up a partnership agreement. For
Examiner's
Use
REQUIRED
(a) State two advantages of being in partnership rather than being a sole trader.
(i)
(ii)
[2]
(b) State why, in addition to agreeing the profit-sharing ratio, partners should draw up a
partnership agreement.
[1]
On 1 April 2009 the balances of the partners’ current accounts were as follows.
$
Raminder Singh 4 660 debit
Vijay Singh 1 820 credit
During the year ended 31 March 2008 the partners made the following drawings.
$
Raminder Singh 21 000
Vijay Singh 28 000
The following information was extracted from the profit and loss appropriation account
for the year ended 31 March 2010.
$ $
Interest charged on drawings – Raminder 840
Vijay 1 120 1 960
Interest allowed on capital – Raminder 6 000

Vijay 3 000 9 000
Partner’s salary – Vijay 20 000
Profits and losses are shared equally.
© UCLES 2008 0452/02/SP/10

3
REQUIRED For
Examiner's
Use
(c) (i) Calculate the profit available for distribution between the partners.
[2]
(ii) Calculate each partner’s share of the profit available for distribution.
[1]
(iii) Prepare the partners’ current accounts as they would appear in the ledger for the
year ended 31 March 2010.
Where traditional “T” accounts are used they should be balanced and the
balances brought down on 1 April 2010.
Where three column running balance accounts are used the balance column
should be up-dated after each entry.
[9]

9
3 Abdul and Amina Mahmoud are in partnership. Their financial year ends on 30 April. The For
trial balance prepared on 30 April 2008 failed to agree. The debit side totalled $95 857 and Examiner's
Use
the credit side totalled $95 457. The difference was entered in a suspense account.
1 Abdul had spent $20 of his personal funds to purchase business stationery. This had
not been recorded in the books.
2 Goods withdrawn by Abdul for personal use, costing $300, had been debited to his
drawings account but no other entry had been made.
3 $50 recovered from a bad debt (written off in 2006) had been correctly entered in the
cash book and had been debited to the bad debts account.
4 The partners decided that the debit balance of $2200 on Amina’s current account
should be transferred to her capital account. This had not been recorded.

10
REQUIRED For
Examiner's
Use
(a) Prepare the entries in Abdul and Amina Mahmoud’s journal to correct the above errors.
Journal
Debit Credit
$ $
[9]
(b) Prepare the suspense account in Abdul and Amina Mahmoud’s ledger to show the
required entries. Start with the balance arising from the difference on the trial balance.

© UCLES 2008 0452/03/M/J/08

11
Suspense account For

Examiner's
Use
[4]
Before the errors were discovered Abdul and Amina Mahmoud calculated that they had
made a net profit of $12 900 for the year ended 30 April 2008.
REQUIRED
(c) Prepare a statement to show the effect of correcting errors 1-4 on the original net profit
and calculate the corrected net profit.
If the error does not affect the net profit write “No effect”.
Abdul and Amina Mahmoud

Statement of corrected net profit for the year ended 30 April 2008
$

Increase Decrease
$ $
Error 1 20
Corrected net profit
[4]

14
4 Terry and Candy Wang are in partnership. Their financial year ends on 31 July. They share For
profits and losses in proportion to the capital invested by each partner. Examiner's
Use
On 1 August 2009 the balances on their accounts were as follows:
$
Terry Wang capital account 60 000
current account 5 050 debit
Candy Wang capital account 40 000
current account 4 950 credit
Goodwill was valued at $30 000 on 1 August 2009 but did not appear on the books. On that
date Terry and Candy Wang invited their brother Paul to become a partner.
Paul decided to join the partnership and agreed to contribute $16 000 to be paid into the
business bank account and a motor vehicle valued at $4000.
Terry, Candy and Paul Wang agreed to share profits and losses in the ratio 3 : 2 : 1.
The partners agreed that adjustments should be made for goodwill but that a goodwill
account was not to be maintained permanently in the books.
REQUIRED
(a) Prepare the following accounts in the ledger of the partnership on 1 August 2009.
(ii) Capital accounts of Terry Wang, Candy Wang and Paul Wang
appropriate, the balance brought down on 2 August 2009. Where three column running
balance accounts are used the balance column should be up-dated after each entry.
(i) Terry, Candy and Paul Wang

Goodwill account
[5]
© UCLES 2009 0452/03/O/N/09

15
(ii) Capital accounts For

Examiner's
Use
[12]

16
(b) Explain why it was necessary for Terry and Candy Wang to value the goodwill of the For
business before admitting Paul to the partnership. Examiner's
Use
[2]
Terry, Candy and Paul Wang decided to prepare an opening balance sheet for the new
business on 1 August 2009.
REQUIRED
(c) Prepare the capital section of Terry, Candy and Paul Wang’s balance sheet at
1 August 2009.
Terry, Candy and Paul Wang

Balance Sheet extract at 1 August 2009
[3]
[Total: 22]
© UCLES 2009 0452/03/O/N/09

8
3 Arthur and Nancy formed a partnership on 1 May 2009 to start a business selling furniture. For
Their partnership agreement states: Examiner's
Use
1 Interest on capital is to be allowed at 3% per annum.
2 Salary of $15 000 per annum is to be paid to Arthur.
3 Interest is to be charged on drawings at 4% per annum on total drawings.
4 Arthur and Nancy are to share the balance of profits or losses in the ratio 2:3.
The initial capital introduced on 1 May 2009 was:
Arthur $30 000

Nancy $40 000
The partners’ drawings for the year ended 30 April 2010 were:
Arthur $35 000

Nancy $15 000
The net profit of the partnership for the year ended 30 April 2010 was $89 000.
REQUIRED
(a) Calculate the interest on capital paid to each partner for the year ended 30 April 2010.
(i) Arthur
[2]
(ii) Nancy
[2]
© UCLES 2010 0452/12/M/J/10

9
(b) Calculate the interest on drawings charged to each partner for the year ended For
30 April 2010. Examiner's
Use
(i) Arthur
[2]
(ii) Nancy
[2]
(c) Show how the balance of the net profit for the year ended 30 April 2010 was divided
between Arthur and Nancy. Show all your workings.
[7]

10
(d) Write up Arthur’s current account for the year ended 30 April 2010. For
Examiner's
Use
Arthur
Current account
[6]
(e) Arthur thinks that the partners should reduce the rate of interest charged on their
drawings.
Show, by placing a tick () in the table below, the effect this would have on his total
earnings from the partnership:
Increase
Reduce
Unchanged
[2]
[Total: 23]
© UCLES 2010 0452/12/M/J/10

8
3 Arthur and Nancy formed a partnership on 1 May 2009 to start a business selling furniture. For
Their partnership agreement states: Examiner's
Use
1 Interest on capital is to be allowed at 3% per annum.
2 Salary of $15 000 per annum is to be paid to Arthur.
3 Interest is to be charged on drawings at 4% per annum on total drawings.
4 Arthur and Nancy are to share the balance of profits or losses in the ratio 2:3.
The initial capital introduced on 1 May 2009 was:
Arthur $30 000

Nancy $40 000
The partners’ drawings for the year ended 30 April 2010 were:
Arthur $35 000

Nancy $15 000
The net profit of the partnership for the year ended 30 April 2010 was $89 000.
REQUIRED
(a) Calculate the interest on capital paid to each partner for the year ended 30 April 2010.
(i) Arthur
[2]
(ii) Nancy
[2]
© UCLES 2010 0452/13/M/J/10

9
(b) Calculate the interest on drawings charged to each partner for the year ended For
30 April 2010. Examiner's
Use
(i) Arthur
[2]
(ii) Nancy
[2]
(c) Show how the balance of the net profit for the year ended 30 April 2010 was divided
between Arthur and Nancy. Show all your workings.
[7]

10
(d) Write up Arthur’s current account for the year ended 30 April 2010. For
Examiner's
Use
Arthur
Current account
[6]
(e) Arthur thinks that the partners should reduce the rate of interest charged on their
drawings.
Show, by placing a tick () in the table below, the effect this would have on his total
earnings from the partnership:
Increase
Reduce
Unchanged
[2]
[Total: 23]
© UCLES 2010 0452/13/M/J/10

16
6 Ben and Jane Mwanga are in partnership. For

Examiner’s
They have agreed the following: Use
Interest is to be allowed on capital at 6% per annum

Interest is to be charged on drawings at 4% per annum
Jane is to receive an annual salary of $10 000
Profits and losses are to be shared in proportion to their capitals
Ben would invest $50 000 and Jane would invest $30 000 as capital
REQUIRED
(a) Explain why an agreement should be drawn up when a partnership is formed.
..........................................................................................................................................
.................................................................................................................................... [2]
(b) Explain why the partnership agreement of Ben and Jane Mwanga included clauses on
each of the following:
(i) interest on drawings
..................................................................................................................................
..................................................................................................................................
............................................................................................................................ [2]
(ii) partner’s salary for Jane
..................................................................................................................................
..................................................................................................................................
............................................................................................................................ [2]
© UCLES 2010 0452/21/M/J/10

17
For the year ended 31 March 2010, the partnership earned a profit for the year (net profit) of For
$12 000. Examiner’s
Use
Drawings during the year ended 31 March 2010 were:
$
Ben Mwanga 8 000
Jane Mwanga 15 000
REQUIRED
(c) Prepare the profit and loss appropriation account of Ben and Jane Mwanga for the year
Ben and Jane Mwanga

..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [8]

18
After the preparation of the financial statements (final accounts) for the year ended For
31 March 2010 the following errors were discovered. Examiner’s
Use
1 The sales account had been undercast by $1000.
2 No entry had been made for bank charges, $30.
3 New equipment, $5000, had been debited to the motor vehicles account.
4 Repairs to premises, $50, had been debited to the premises account.
REQUIRED
(d) Prepare a statement to show the effect of correcting errors 1– 4 on the original profit for
the year (net profit) and calculate the corrected net profit.
If the error does not affect the profit for the year (net profit) write “No effect”.
Ben and Jane Mwanga
Statement of corrected profit for the year ended 31 March 2010
$
Profit for the year (net profit) before corrections 12 000
Increase Decrease
in profit in profit
$ $
Error 1 1000

[7]
[Total: 21]
© UCLES 2010 0452/21/M/J/10

13
5 Samuel and Martha Mavuso are in partnership. Their financial year ends on 31 October. For
Examiner's
Use
Their partnership agreement provides for interest on capital and interest on drawings.
Profits and losses are to be shared in proportion to capital invested.
Martha has suggested that the partnership agreement should be amended so that she can
receive an annual partnership salary.
REQUIRED
(a) Suggest one reason why Martha Mavuso wishes to amend the partnership agreement.
[2]
On 1 November 2009 the balances on the partners’ capital and current accounts were:
Capital Current
account account
$ $
Samuel Mavuso 60 000 1 091 debit
Martha Mavuso 40 000 223 credit
During the year ended 31 October 2010 the partners made the following drawings:
$
Samuel Mavuso 3 100
Martha Mavuso 4 900
The following information was extracted from the profit and loss appropriation account for
the year ended 31 October 2010.
$ $
Profit for the year (net profit) 10 630
Interest charged on drawings Samuel Mavuso 93

Martha Mavuso 147 240
10 870
Interest allowed on capital Samuel Mavuso 2 400

Martha Mavuso 1 600 4 000
Profit available for distribution 6 870

14
On 31 October 2010 the following information was available. For

$ Examiner's
Use
Non-current (fixed) assets at cost 105 950
Provision for depreciation of non-current (fixed) assets 9 350
Current assets 23 562
Current liabilities 18 400
REQUIRED
(b) Prepare the balance sheet of Samuel and Martha Mavuso at 31 October 2010. The
capital and current account of each partner should be shown.
The calculation of the current account balances may either be shown within the
balance sheet or as separate ledger accounts.
© UCLES 2010 0452/21/O/N/10

15
Samuel and Martha Mavuso For

Balance Sheet at 31 October 2010 Examiner's
Use
[10]

16
(c) Using the above information, calculate the current ratio of Samuel and Martha Mavuso. For
The calculation should be correct to two decimal places. Examiner's
Use
Show your workings.
[2]
(d) Explain two ways in which their working capital could be improved.
(i)
(ii)
[2]
(e) Explain why the quick ratio is a more reliable indicator of liquidity than the current ratio.
[2]
[Total: 18]
© UCLES 2010 0452/21/O/N/10

10
3 Omar and Fatima Aziz are in partnership, trading as Aziz Stores. Their financial year ends For
on 31 March. Examiner's
Use
On 1 April 2010 the balances on the partners’ capital and current accounts were:
Capital account Current account

$ $
Omar Aziz 60 000 215 debit
Fatima Aziz 40 000 1945 credit
Aziz Stores made a profit for each of the years ended 31 March 2009 and 31 March 2010.
REQUIRED
(a) On 1 April 2009 there was a credit balance on the current account of Omar Aziz.
Explain what may have caused this balance to change to a debit balance on
1 April 2010.
[2]
During the year ended 31 March 2011 the partners made the following drawings.
$
Omar Aziz 2900
Fatima Aziz
www.igcseaccounts.com 9600
Omar and Fatima Aziz prepared the following profit and loss appropriation account for the
$ $
Interest charged on drawings Omar Aziz 87
Fatima Aziz 288 375
13 950
Interest allowed on capital Omar Aziz 2 400
Fatima Aziz 1 600
4 000
Partner’s salary Fatima Aziz 12 000 16 000
(2 050)
Share of profit/loss Omar Aziz (1 230)
Fatima Aziz (820) (2 050)
© UCLES 2011 0452/21/M/J/11

11
REQUIRED For
Examiner's
Use
(b) Prepare the partners’ current accounts as they would appear in the ledger for the year
brought down on 1 April 2011.
[11]

12
(c) Prepare an extract from the balance sheet of Aziz Stores at 31 March 2011 to show the For
capital and current account balances of each partner and the total funds provided by Examiner's
Use
the partners. It is not necessary to show full details of the current accounts.
Aziz Stores
Omar Aziz Fatima Aziz Total

$ $ $
[5]
(d) State one advantage of maintaining both a capital account and a current account for
each partner.
[2]
(e) Instead of operating Aziz Stores as a partnership, Omar Aziz has suggested that they
should form a limited company.
Explain one reason why this may be of personal benefit to Omar and Fatima Aziz.
[2]
[Total: 22]
© UCLES 2011 0452/21/M/J/11

8
3 Wayne and Tracey Lister are in partnership. The partnership agreement states that Wayne For
and Tracey share profits and losses in the ratio 3:1. Their financial year ends on Examiner's
Use
28 February.
A capital account and a current account is maintained for each partner.
On 27 February 2011 the following transactions took place:
1 Wayne took goods costing $420 for his own use.
2 Tracey purchased office stationery, $32, and paid from personal funds.
3 Wayne introduced a motor vehicle, valued at $15 200, into the business.
4 Tracey transferred $5000 from the credit balance on her current account to her capital
account.
REQUIRED
(a) Name the accounting principle which states that a distinction must be made between
the financial transactions of a business and those of its owners.
[1]
(b) Prepare journal entries on the following page to record each of the above transactions.
Narratives are required. [12]

9
For
Examiner's
Use
Journal
Debit Credit
$ $

10
Financial statements were prepared for Wayne and Tracey Lister for the year ended For
28 February 2011 showing a profit for the year of $18 500. Examiner's
Use
It was later discovered that the closing inventory had been over-valued by $560.
REQUIRED
(c) State the basis on which inventory should be valued.
[1]
(d) Explain why inventory should be valued on this basis.
[2]
(e) Calculate the effect on Wayne’s profit share of correcting the above error.
Show your workings.
[4]
[Total: 20]

15
5 Raoul and Hassan agreed to form a partnership from 1 April 2011 to sell mobile telephones. For
Examiner's
(a) State two advantages of trading in partnership. Use
(i)
(ii)
[2]
(b) State two disadvantages of trading in partnership.
(i)
(ii)
[2]
On 1 April 2011, Raoul introduced capital of $6000 which was paid into the partnership
bank account. Hassan introduced inventory valued at $4000.
On the same day, the partnership paid rent on a shop of $600 and bought shop fittings for
$750. Both payments were made by cheque.
REQUIRED
(c) Prepare journal entries to record the setting up of the partnership.

Raoul and Hassan

Journal
Debit Credit
$ $
[8]

16
Raoul and Hassan agreed that they would allow interest on capital at 3% per annum and For
that Raoul would have a partnership salary of $3000 per annum. It was agreed that they Examiner's
Use
would share profits and losses in the ratio Raoul 2/5 and Hassan 3/5.
In the year ended 31 March 2012 the partnership made a profit of $8800.
REQUIRED
(d) Prepare the profit and loss appropriation account of the partnership for the year ended
31 March 2012.
Raoul and Hassan

[8]
(e) Prepare Raoul’s current account for the year ended 31 March 2012.
Raoul
Current account
[4]
(f) State one way in which the partnership agreement could be changed to recognise the
fact that Raoul makes more sales than Hassan.
[2]
[Total: 26]
© UCLES 2012 0452/11/M/J/12

Prepayments &
Accruals
Adjustments to
Final Accounts

2 For
Examiner’s
Use
1 (a) Ruth is a trader. Her financial year ends on 31 March. She provides the following
information.
2003 $
April 1 Insurance prepaid for 3 months to 30 June 2004
amounted to 60
July 1 Paid insurance premium for 12 months
to 30 June 2004 by cheque 264
Prepare the Insurance account as it would appear in Ruth’s ledger for the year ended
31 March 2004. Show clearly the amount transferred to the Profit and Loss Account.
Insurance account
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.........................................................................................................................................................
.....................................................................................................................................................[6]
(b) (i) In connection with journal entries, explain what is meant by the term ‘narrative’.
...................................................................................................................................
...............................................................................................................................[1]
(ii) Explain why a narrative should be shown as part of a journal entry.
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
© UCLES 2004 0452/03/M/J/04

2 For
Examiner’s
Use
1 Maria van Zyl is a trader. Her financial year ends on 31 July. She provides the following
information.
$
Wages outstanding at 1 August 2004 200
Total wages paid during the year ended 31 July 2005 61 300
Wages outstanding at 31 July 2005 180
REQUIRED
(a) Write up the wages account as it would appear in Maria’s ledger for the year ended
31 July 2005. Show the amount transferred to the Profit and Loss Account.
Where a traditional ‘T’ account is used it should be balanced and the balance brought
down on 1 August 2005.
Where a three column running balance account is used the balance column should
Maria van Zyl

Wages account
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]
Maria van Zyl maintains a provision for doubtful debts.
REQUIRED
(b) Name two accounting principles which Maria is applying by maintaining a provision for
doubtful debts.
1 .......................................................................................................................................
2 ...................................................................................................................................[2]
© UCLES 2005 0452/03 O/N/05

5
2 Simon Nyemba sells farm machinery. His financial year ends on 31 January. For
Examiner's
Use
Mochudi Traders Ltd pay Simon Nyemba a commission on any goods purchased from them
by Simon’s customers. The commission is paid six-monthly in arrears.
On 1 February 2011 Simon Nyemba was owed $280 in commission.
Simon Nyemba received cheques for commission as follows:
$
5 February 2011 280
3 August 2011 312
On 31 January 2012 Simon Nyemba was owed $296 commission.
REQUIRED
(a) Write up the commission received account as it would appear in Simon Nyemba’s
ledger for the year ended 31 January 2012.
down.
Where a three-column running balance account is used the balance column should be
Simon Nyemba
Commission received account
[6]

6
Simon Nyemba owns premises and pays property tax to the authorities. For
Examiner's
Use
On 1 February 2011 two months’ property tax, $520, was prepaid.
On 24 April 2011 Simon Nyemba paid $1620 by cheque for property tax for six months
to 30 September 2011.
On 4 October 2011 he paid a further cheque for $1620 for property tax for six months
to 31 March 2012.
REQUIRED
(b) Write up the property tax account as it would appear in Simon Nyemba’s ledger for the
year ended 31 January 2012.
down.
Simon Nyemba
Property tax account
[6]
(c) Name the accounting principle applied in the preparation of the commission received
account and the property tax account.
[1]
© UCLES 2012 0452/22/M/J/12

7
(d) Name the section of Simon Nyemba’s balance sheet on 31 January 2012 in which For
each of the following balances would appear. Examiner's
Use
(i) Commission receivable account
[1]
(ii) Property tax account
[1]
(e) On 31 January 2012 Simon Nyemba’s discount allowed account had a debit balance of
$324.
Prepare the journal entry Simon Nyemba would make to transfer the discount allowed
account to the income statement for the year ended 31 January 2012.
A narrative is required.
Simon Nyemba
Journal
Debit Credit
$ $
[3]

8
Simon Nyemba maintains a provision for doubtful debts. On 1 February 2011 there was a For
credit balance of $460 on the provision for doubtful debts account. Examiner's
Use
At 31 January 2012 Simon Nyemba’s trade receivables amounted to $14 300 and he
decided to maintain the provision for doubtful debts at 3% of the trade receivables.
REQUIRED
(f) Write up the provision for doubtful debts account as it would appear in Simon Nyemba’s
ledger for the year ended 31 January 2012.
down.
Simon Nyemba
Provision for doubtful debts account
[5]
(g) Name one accounting principle which Simon Nyemba is applying by maintaining a
provision for doubtful debts.
[1]
[Total: 24]
© UCLES 2012 0452/22/M/J/12

5
2 Nancy Tanwin owns a clothing store. Her financial year ends on 31 October. For
Examiner's
Use
She lets part of her premises to Gemstones Ltd at an annual rent of $2592.
On 1 November 2011 Gemstones Ltd prepaid two months’ rent.
On 1 January 2012 Nancy Tanwin received a cheque for $1296 for rent to 30 June 2012.
On 1 July 2012 she received a further cheque for $1080 for rent to 30 November 2012.
REQUIRED
(a) Write up the rent received account as it would appear in Nancy Tanwin’s ledger for the
year ended 31 October 2012.
down.
Nancy Tanwin
Rent received account
[6]
(b) State the section of the balance sheet prepared on 31 October 2012 in which the
balance of the rent received account would appear. Give a reason for your answer.
Section of balance sheet [1]
Reason
[1]

6
On 1 November 2011 Nancy Tanwin owed advertising expenses of $74. She paid this For
outstanding amount in cash on 15 November 2011. Examiner's
Use
On 1 June 2012 Nancy Tanwin paid $1200 by cheque for an advertising campaign which
was for twelve months to 31 May 2013.
REQUIRED
(c) Write up the advertising expenses account as it would appear in Nancy Tanwin’s
ledger for the year ended 31 October 2012.
down.
Nancy Tanwin
Advertising expenses account
[6]
(d) Indicate, by placing a tick () against the correct answer, the effect on the capital
employed at 31 October 2012 if the total cost of the advertising campaign had been
charged to the year ended 31 October 2012.
Effect on capital employed
Overstated
Understated
[1]
© UCLES 2012 0452/21/O/N/12

7
Nancy Tanwin’s income statement showed that she had made a loss of $550 for the year For
ended 31 October 2012. Examiner's
Use
The following errors were then discovered.
1 No entry had been made for general expenses, $20, paid from petty cash.
2 The sales account had been undercast by $1100.
3 New fixtures and fittings, $3000, had been debited to the premises account.
4 The inventory on 31 October 2012 included goods costing $310 which were damaged
and would have to be thrown away.
5 Discount received, $260, had been omitted from the income statement.
REQUIRED
(e) Prepare a statement to show the effect of correcting errors 1-5 on the original loss for
the year and calculate the corrected profit or loss for the year.
If the error does not affect the profit or loss for the year write “No effect”.
Nancy Tanwin
Statement of corrected profit/loss for the year ended 31 October 2012
www.igcseaccounts.com $
Profit for the year before corrections (550)
Increase Decrease
in profit in profit
$ $
20
Error 1
Error 2
Error 3
Error 4
Error 5

[9]
[Total: 24]

8
3 White Rose Ltd was formed some years ago. The company raised funds from the issue of For
ordinary shares and debentures. Examiner's
Use
REQUIRED
(a) Explain why it is an advantage to the shareholders in White Rose Ltd to have limited
liability.
[2]
(b) State two differences between ordinary shares and debentures.
[4]
White Rose Ltd provided the following information at the end of the financial year on
31 August 2012.
1 The issued share capital consisted of 350 000 ordinary shares of $0.50 each.
2 The company had issued 1000 5% debentures of $100 each.
3 On 1 September 2011:
General reserve $18 500
Retained profit $7 300
4 The profit for the year ended 31 August 2012 was $36 000.
5 During the year ended 31 August 2012 an interim dividend of 3% on the ordinary
shares was paid.
6 On 31 August 2012 it was decided to transfer $10 000 to general reserve and pay a
dividend of 4% on the ordinary shares.
© UCLES 2012 0452/21/O/N/12

9
REQUIRED For
Examiner's
Use
(c) Prepare the profit and loss appropriation account of White Rose Ltd for the year ended
31 August 2012.
White Rose Ltd

(d) Prepare the capital and reserves section of the balance sheet of White Rose Ltd at
31 August 2012.
White Rose Ltd

[5]

10
(e) Prepare the non-current liabilities section of the balance sheet of White Rose Ltd at For
31 August 2012. Examiner's
Use
White Rose Ltd

[2]
[Total: 22]
© UCLES 2012 0452/21/O/N/12

Business Ratios

14 For
Examiner’s
Use
5 (a) Explain the meaning of the following accounting terms.
(i) Margin
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
(ii) Mark-up
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[4]
(b) Zakari is a trader. He provides the following information for the year ended 31 January
2004.
$ $ $
Sales – cash 24 000
credit 66 000
Cost of sales –
Opening stock 25 000
Purchases – cash 18 000
credit www.igcseaccounts.com
70 000
––––––
95 000
52 000
––––––
Closing stock 30 200 64 800
––––––
Running expenses 14 400
Debtors at 31 January 2004 6 300

Creditors at 31 January 2004 5 700
Zakari decides to compare his results with those for the previous financial year.
(i) Complete the following table to show the ratios for Zakari’s business for the year
ended 31 January 2004. You may use the space below for your workings.
Workings
© UCLES 2004 0452/03/M/J/04

15
Place the ratios you have calculated into the box below.
Ratio Year ended 31 Year ended 31

January 2003 January 2004
Gross profit as a percentage of sales 25 % %
Net profit as a percentage of sales 10 % %
Collection period for debtors 28 days days
Payment period for creditors 35 days days
[6]
(ii) For each ratio suggest two possible reasons which could account for the change in the
ratio between 31 January 2003 and 31 January 2004.
Gross profit as a percentage of sales
1. ........................................................................................................................................
2. ........................................................................................................................................
Net profit as a percentage of sales
1. ........................................................................................................................................
2. ........................................................................................................................................
Collection period for debtors
1. ........................................................................................................................................
2. ........................................................................................................................................
Payment period for creditors
1. ........................................................................................................................................
2......................................................................................................................................[8]
© UCLES 2004 0452/03/M/J/04

16
(c) Name three business people who would be interested in the final accounts of Zakari.
In each case state one reason why that person would be interested in Zakari’s final accounts.
(i) ............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
(ii) ............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
(iii) ............................................................................................................................................
............................................................................................................................................
........................................................................................................................................[6]
[Total: 24]
© UCLES 2004 0452/03/M/J/04

9 For
Examiner’s
Use
3 David Hoon is a sole trader. He prepared the following Balance Sheet at 28 February 2005.
David Hoon
Balance Sheet at 28 February 2005
$ $ $
Fixed Assets at book value 45 000
Current Assets
Stock 12 000
Debtors 9 500
Cash 500
22 000
Current Liabilities
Creditors 6 300
Bank overdraft 8 200 14 500 7 500
52 500
Capital 52 500
REQUIRED
(a) (i) Calculate, correct to two decimal places, David’s current ratio and quick ratio at
28 February 2005. Show your workings.
1 Current ratio
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
.......................................................................................................................[2]
2 Quick ratio
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
.......................................................................................................................[2]

10 For
Examiner’s
Use
(ii) State and explain which of the above ratios gives a better indication of the liquidity
position of David’s business.
Name of ratio .........................................................................................................[1]
Explanation ................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
David Hoon’s net profit for the year ended 28 February 2005 was $4950.
REQUIRED
(b) Calculate, correct to two decimal places, David’s return on capital employed (ROCE).
Base your calculation on the capital at 28 February 2005. Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
All David Hoon’s sales are made on credit. His debtors are allowed a period of 30 days in
which to pay their accounts. For the year ended 28 February 2005 his sales were $69 300.
REQUIRED
(c) (i) Calculate David’s collection period for debtors. Show your workings.
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) State and explain whether you think David will regard this ratio as satisfactory.
Will David be satisfied?..........................................................................................[1]
Explanation ................................................................................................................
...................................................................................................................................
...............................................................................................................................[1]
© UCLES 2005 0452/03 M/J/05

11 For
Examiner’s
Use
David Hoon purchases all his goods on credit. He is allowed a period of 60 days in which to
pay his accounts. For the year ended 28 February 2005 his purchases were $47 600.
REQUIRED
(d) (i) Calculate David’s payment period for creditors. Show your workings.
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) State one possible advantage to David of paying his creditors before the due date.
...................................................................................................................................
...............................................................................................................................[1]
(iii) State one possible disadvantage to David of paying his creditors before the due
date.
...................................................................................................................................
...............................................................................................................................[1]

16
For
Examiner's
5 Maria Mafule is a sole trader. She sells leather goods to retail shops. Her financial year Use
ends on 30 September. She provided the following information:
For the year ended 30 September 2006
$ $
Sales cash 13 000
credit 47 000 60 000
Purchases cash 5 000

credit 39 000 44 000
At 30 September 2006
$
Stock 3900
Debtors 5200
Creditors 4200
Bank overdraft 2800
Maria decides to compare her liquidity position on 30 September 2006 with that on
30 September 2005.
REQUIRED
(a) Complete the table on the following page to show the ratios for Maria’s business for the
year ended 30 September 2006. You may use the space below for your workings.
Calculations should be correct to two decimal places for (i) and (ii) and should be
rounded up to the next whole day for (iii) and (iv).
Workings
© UCLES 2006 0452/03 O/N/06

17
For
Examiner's
Place the ratios you have calculated into the box below. Use
Ratio Year ended Year ended

30 September 2005 30 September 2006
(i) Current ratio 2.39 : 1
(ii) Quick ratio 1.06 : 1
(iii) Collection period for debtors 34 days
(iv) Payment period for creditors 26 days
[6]
(b) For each of the following ratios suggest one possible reason which could account for
the change in the ratio between 30 September 2005 and 30 September 2006.
Current ratio
Quick Ratio
[2]

18
For
Examiner's
(c) For each of the following ratios suggest two possible reasons which could account for Use
the change in the ratio between 30 September 2005 and 30 September 2006.
Collection period for debtors
(i)
(ii)
Payment period for creditors
(i)
(ii)
[4]
Maria Mafula is interested in comparing her results with those of another business and has
obtained the final accounts of some other businesses in the same city.
REQUIRED www.igcseaccounts.com
(d) Explain three factors which Maria should bear in mind when attempting to compare her
results with the accounts she has obtained relating to other businesses.
(i)
(ii)
(iii)
[6]
[Total: 18]
© UCLES 2006 0452/03 O/N/06

18 For
Examiner's
Use
5 Mona El Tawil is a sole trader. Her financial year ends on 31 December. She provided the
following information:

$ $
credit 275 000 390 000

credit 465 000 470 000
At 31 December 2006
$
Debtors 29 000
Creditors 40 000
Stock 34 000
Bank 7 000 debit
Fixed assets 180 000
Mona El Tawil decides to compare her position with that at the end of the previous financial
year.
REQUIRED
(a) Complete the table on page 19 to show the ratios for Mona El Tawil’s business for the
year ended 31 December 2006. You may use the space below for your workings.
Use the space below for your workings
© UCLES 2007 0452/03/M/J/07

19 For
Examiner's
Use
Place the ratios you have calculated for 5 (a) into the table below.

31 December 2005 31 December 2006
(i) Current ratio 2.25 : 1
(iii) Collection period for debtors 30 days days
(iv) Payment period for creditors 24 days days
[6]
(b) Explain why the quick ratio is more reliable than the current ratio as an indicator of
liquidity.
[2]
(c) State whether Mona El Tawil will be satisfied with the change in the quick ratio.
[1]
(d) Suggest one possible reason which could account for the change in the current ratio.
[2]
(e) State and explain whether you think Mona El Tawil will be satisfied with the change in
the debtors’ collection period.
(i) Will she be satisfied? [1]
(ii) Explanation
[2]

20 For
Examiner's
Use
(f) Explain how the change in the debtors’ collection period may have affected the
payment period for creditors.
[2]
(g) Name one other ratio which would help Mona El Tawil assess the liquidity position.
[1]
Mona El Tawil would like to compare her results with those of other businesses.
She is aware that even comparing with a business of a similar size dealing in similar goods
can produce misleading results.
REQUIRED
(h) List four things Mona El Tawil should consider when comparing her results with those
of a similar business.
(i) There may be differences that affect profitability e.g. one business may rent
premises and the other business may own premises.
(ii)
(iii)
(iv)
[3]
[Total: 20]
© UCLES 2007 0452/03/M/J/07

6 For
Examiner's
Use
3 (a) Complete the missing items (i) to (viii) in Farouk’s balance sheet.
Farouk
Balance Sheet at 30 September 2007
Cost Provision for

depreciation (i)
$ $ $
Fixed assets
Machinery 2 800 700 2 100
Fixtures and fittings 1 200 (ii) 900
4 000 1 000 3 000
Current assets
Stock 5 200
Debtors (iii)
Cash and bank 1 100
14 900
Less Current liabilities
Creditors 3 800
(iv) 11 100
Net assets (v)
Financed by
Capital at 1 October 2006 13 000
Add (vi) 6 700
19 700
Less drawings (vii)
Capital at 30 September 2007 (viii)
[8]
© UCLES 2007 0452/02/O/N/07

7 For
Examiner's
Use
(b) From the information in part (a) above, calculate to two decimal places:
(i) Farouk’s current ratio;
[4]
(ii) Farouk’s return on opening capital employed.
[4]
(c) Farouk’s brother Ahmed has a business which has a higher return on capital employed
than Farouk’s business. Suggest two reasons for this difference.
(ii)
[4]
[Total: 20]

15
5 Marie Mutunda is a sole trader. Her financial year ends on 31 December. She provided the For
following information. Examiner's
Use
$ $
credit 275 000 390 000

credit 465 000 470 000
At 31 December 2009

Bank 7 000 debit
Non-current assets (fixed assets) 180 000
Marie Mutunda decides to compare her position with that at the end of the previous
financial year.
REQUIRED
(a) Complete the table on the following page to show the ratios for Marie Mutunda’s
business for the year ended 31 December 2009. You may use the space below for
your workings.

16
Place the ratios you have calculated for 5 (a) into the table below. For
Examiner's
Year ended Year ended Use
Ratio
31 December 2008 31 December 2009
(i) Current ratio 2.25:1
(iii) Collection period for debtors 30 days days
(iv) Payment period for creditors 24 days days
[8]
(b) (i) Explain why the quick ratio is more reliable than the current ratio as an indicator of
liquidity.
[3]
(ii) Explain whether Marie Mutunda will be satisfied with the change in the quick ratio.
[3]
(c) (i) State and explain whether you think Marie Mutunda will be satisfied with the
change in the debtors’ collection period.
Will she be satisfied?
Explanation
[3]
(ii) Explain how the change in the debtors’ collection period may have affected the
payment period for creditors.
[2]
© UCLES 2008 0452/02/SP/10

17
(iii) Marie Mutunda’s creditors allow her a credit period of 21 days. For
Examiner's
Use
Explain two disadvantages to Marie Mutunda of not paying the creditors within the
set period.
[2]
Marie Mutunda would like to compare her results with those of other businesses.
She is aware that even comparing with a business of a similar size dealing in similar goods
can produce misleading results.
REQUIRED
(d) List four things Marie Mutunda should consider when comparing her results with those
of a similar business.
(i) There may be differences that affect profitability e.g. one business may rent
premises and the other business may own premises.
(ii)
(iii)
(iv)
[3]

18
In addition to Marie Mutunda, the owner, other people are also interested in the financial For
statements (final accounts) of Marie Mutunda’s business. Examiner's
Use
REQUIRED
(e) List two business people (excluding the owner) who would be interested in Marie
Mutunda’s financial statements (final accounts).
In each case state one reason for that person’s interest.
(i) Business person
Reason for their interest
[2]
(ii) Business person
Reason for their interest
[2]
© UCLES 2008 0452/02/SP/10

12
4 Electra and Zorba each run a different type of restaurant. For

Examiner's
Use
For the year ended 31 August 2008 they have recorded the following information:
Electra’s restaurant Zorba’s restaurant

$ $
Sales 112 000 80 000
Cost of sales 95 200 60 000
Expenses 5 600 8 000
Stock at 1 September 2007 2 000 7 000
Stock at 31 August 2008 2 500 6 200
REQUIRED
(a) For each restaurant, calculate the following ratios, correct to one decimal place.
Use the boxes on the following page for your workings.
Write your answer for each ratio in the table below.
(i) Percentage of gross profit to sales
(ii) Percentage of net profit to sales
(iii) Rate of stock turnover
(b) For each of the following ratios, suggest one business reason to explain the difference in
the ratios between Electra’s and Zorba’s restaurants.
Percentage of gross Reason

profit to sales
Rate of stock Reason

turnover
[4]
[Total: 16]
© UCLES 2008 0452/02/O/N/08

13
WORKINGS For
Examiner's
Use
(i)
(ii)
(iii) www.igcseaccounts.com

18
5 Kalpna Khan started a business on 1 April 2007. On that date she rented premises larger For
than she required so that she had space for future expansion. She employs ten staff to Examiner's
Use
make exclusive hand-made sweets and chocolates, which are sold to department stores
and personal customers.
She provided the following information:
Year ended Year ended

ratio
31 March 2008 31 March 2009
percentage of gross profit to sales 25 % 21 %
percentage of net profit to sales 10 % 9%
REQUIRED
(a) Suggest two reasons for the fall in the percentage of gross profit to sales.
(i)
(ii)
[2]
(b) Explain one way in which the percentage of net profit to sales could be increased.
[1]
Kalpna Khan is interested in the effect of expenses on her profitability.
REQUIRED
(c) Using the information in the table above, calculate the percentage of expenses to sales
for each year. Show your calculations.
(i) Year ended 31 March 2008
(ii) Year ended 31 March 2009
[2]
© UCLES 2009 0452/03/M/J/09

19
(d) Explain how the change in the percentage of expenses to sales has affected the For
efficiency of the business. Examiner's
Use
[2]
Kalpna Khan is allowed a period of 60 days in which to pay her creditors. She allows her
debtors a period of 30 days in which to pay their accounts.
` On 31 March 2009 Kalpna Khan owed $44 500 to her creditors and her debtors owed
$38 500.
Kalpna Khan’s purchases and sales for the year ended 31 March 2009 were:
$
credit 320 000
credit 400 000
REQUIRED
(e) Complete the table below to show the ratios for the year ended 31 March 2009.
Calculations should be rounded up to the next whole day.
Year ended Year ended

ratio
31 March 2008 31 March 2009
payment period for creditors 61 days …………..days
collection period for debtors 29 days …………..days
[4]

20
(f) Using the figures in the table above, explain the effect of the change in the ratios on the For
liquidity of Kalpna Khan’s business. Examiner's
Use
[2]
(g) Explain two ways in which Kalpna Khan could improve the collection period for
debtors.
(i)
(ii)
[2]
© UCLES 2009 0452/03/M/J/09

21
Kalpna Khan wishes to compare her results with those of a similar business. She is aware For
that there are problems in making such a comparison. Examiner's
Use
REQUIRED
(h) Explain how each of the following affects inter-firm comparison. Use examples to
illustrate your answers.
(i) Different type of expenses
One business may own premises, another may rent premises. This affects the
expenses and the profit and the profitability ratios – making comparison difficult.
(ii) Non-monetary factors
(iii) Accounting policies

[4]
[Total: 19]
© UCLES 2009 0452/03/M/J/09

3 Dindas has prepared his final accounts for the year ended 30 September 2009 and his For
balance sheet is as follows. Examiner's
Use
Dindas
Balance Sheet at 30 September 2009
$ $ $
Fixed assets at net book value 9 600
Current assets
Stock 2 400
Debtors 11 200
Bank 3 250
Prepaid expenses 850
17 700
Current liabilities
Creditors 8 100
Accrued expenses 1 300
9 400
Net current assets 8 300
17 900
Long term liabilities
Bank loan repayable 2012 6 200
11 700
Financed by:
Capital at 1 October 2008 10 000
Add: Net profit 12 500
22 500
Less: Drawings 10 800
Capital at 30 September 2009 11 700
REQUIRED
(a) From the information in Dindas’s balance sheet above, calculate the following. Show
your workings and give the ratios to two decimal places.
(i) Current ratio
[3]
© UCLES 2009 0452/02/O/N/09

(ii) Quick ratio For

Examiner's
Use
[4]
(iii) Working capital
[3]
Dindas wishes to know the effect on his working capital of making changes to his business.
REQUIRED
(b) In the table below, for each proposed change, place a tick () under the correct heading
to show the effect on his working capital.
Working capital

Introduce additional money as capital
Reduce debtors by collecting outstanding amounts
Repay outstanding amount of loan from bank
Reduce personal drawings
[8]
[Total: 18]

11
4 Helmut Lang is a trader. All his sales and purchases are made on credit terms. For
Examiner’s
He provided the following information for the year ended 30 April 2010. Use
$
Inventory (stock) 1 March 2009 25 200
Inventory (stock) 30 April 2010 28 000
Ordinary goods purchased (Purchases) 347 200
REQUIRED
(a) Explain the meaning of each of the following terms.
(i) Mark-up
..................................................................................................................................
............................................................................................................................ [1]
(ii) Margin
..................................................................................................................................
............................................................................................................................ [1]
(b) (i) www.igcseaccounts.com

Calculate the percentage mark-up.
Show your workings.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
............................................................................................................................ [4]
(ii) Calculate the percentage margin.
Show your workings.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
............................................................................................................................ [2]

12
(c) Suggest two ways in which Helmut Lang could improve his profit margin. For
Examiner’s
1 ...................................................................................................................................... Use
2 ................................................................................................................................ [2]
Helmut Lang provided the following information at 30 April 2010.
$
Trade receivables (trade debtors) 36 300
Trade payables (trade creditors) 29 600
Petty cash 100
REQUIRED
(d) Calculate the current ratio. The calculation should be correct to two decimal places.
Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [3]
(e) Calculate the quick ratio. The calculation should be correct to two decimal places.
Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [3]
© UCLES 2010 0452/21/M/J/10

13
Helmut Lang’s quick ratio at 30 April 2009 was 1.25:1. For

Examiner’s
Use
REQUIRED
(f) State and explain whether you think that Helmut Lang will be satisfied with the change
in the quick ratio.
Will he be satisfied? ..........................................................................................................
Explanation .......................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [3]
(g) In the table below place a tick (✓) under the correct heading to show how each of the
following transactions would affect Helmut Lang’s working capital.
effect on working capital

transaction
increase decrease no effect
(i) introduction of further capital ✓
(ii) payment of creditor in cash
(iii) repayment of long term loan
[2]
[Total: 21]

15 For
Examiner’s
Use
6 Ajit Singh is a trader. His financial year ends on 31 March.
He provided the following information for the year ended 31 March 2010.
$
Sales 54 000
Cost of sales 38 000
Expenses 9 000
Ajit Singh decided to compare his results with those for the previous financial year.
REQUIRED
(a) Complete the table to show the ratios for Ajit Singh’s business for the year ended
31 March 2010. You may use the space below for your workings.
Calculations should be to two decimal places.

31 March 2009 31 March 2010
(i) Percentage of gross profit to sales 35.50% ..........................
(ii) Percentage of net profit to sales 10.45% ..........................
Workings

16 For
Examiner’s
Use
(b) For each of the ratios in (a) comment on the change and suggest one reason for this.
Comment ..................................................................................................................
..................................................................................................................................
..................................................................................................................................
Reason for change ...................................................................................................
..............................................................................................................................[4]
(ii) Percentage of net profit to sales
Comment ..................................................................................................................
..................................................................................................................................
..................................................................................................................................
Reason for change ...................................................................................................
..............................................................................................................................[4]
(c) Ajit Singh is concerned that his working capital has reduced during the year ended
31 March 2010. www.igcseaccounts.com
Explain two disadvantages to Ajit Singh of having insufficient working capital
(i) .....................................................................................................................................
..........................................................................................................................................
(ii) ....................................................................................................................................
......................................................................................................................................[4]
[Total: 18]
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
© UCLES 2010 0452/22/M/J/10

16
5 Mark Utaka prepared the following trial balance after the calculation of the gross profit for For
the year ended 31 October 2010. Examiner's
Use
$ $
Gross profit 85 000
Expenses 49 000
Inventory (stock) 31 October 2010 41 000
Non-current (fixed) assets 300 000
Bank 27 000
Capital 1 November 2009 ______ 330 000
453 000 453 000
1 The cost of sales was $340 000.
2 The non-current (fixed) assets were purchased on 30 September 2010. No

depreciation is charged in the year of purchase.
REQUIRED
(a) Calculate the following ratios. The calculations should be correct to two decimal
places.
Show your workings.
[3]
(ii) Percentage of profit for the year (net profit) to sales
[3]
© UCLES 2010 0452/23/O/N/10

17
(iii) Return on capital employed (ROCE), using the capital on 1 November 2009 For
Examiner's
Use
[2]
(b) State three reasons why each of the above ratios is important to Mark Utaka.
(ii) Percentage of profit for the year (net profit) to sales
[3]

18
(iii) Return on capital employed (ROCE) For

Examiner's
Use
1
[3]
Mark Utaka provided the following information about his inventory (stock).
Cost Net realisable value

$ $
Inventory (stock) 1 November 2009 39 000 42 000
Inventory (stock) 31 October 2010 43 000 41 000
REQUIRED
(c) State the difference between cost and net realisable value.
[2]
(d) Explain why the inventory (stock) at 31 October 2010 was included in the financial
statements (final accounts) at net realisable value rather than at cost.
[2]
© UCLES 2010 0452/23/O/N/10

19
After the preparation of the income statement (trading account) for the year ended For
31 October 2010 it was discovered that the inventory (stock) on 1 November 2009 had Examiner's
Use
been included at net realisable value.
REQUIRED
(e) Complete the following table to indicate the effect of this error on the cost of sales, the
gross profit and the net profit for the year ended 31 October 2010.
Place a tick () under the correct heading to indicate whether the items would be
overstated or understated.
Overstated Understated
Cost of sales
Gross profit
Profit for the year (Net profit)
[3]
(f) Explain two ways in which Mark Utaka could improve his rate of inventory (stock)
turnover.
(i)
(ii)
[2]
[Total: 26]
© UCLES 2010 0452/23/O/N/10

20
6 Anna D’Souza is a trader. She buys and sells on both cash and credit terms. For
Examiner's
Use
Anna D’Souza allows her credit customers 21 days credit and her credit suppliers allow her
30 days credit.
The following information is available.
For the year ended 31 March 2011

Purchases Sales
$ $
Cash 8 700 11 400
Credit 42 500 52 800
At 31 March 2011
$
Trade receivables 4100
Trade payables 5300
Inventory 3800
Bank overdraft 2900
REQUIRED
(a) Calculate the payment period for trade payables. Your answer should be rounded up to
the next whole day.
Show your workings.
[2]
(b) State and explain whether Anna D’Souza’s credit suppliers will regard the payment
period as satisfactory.
Will they be satisfied?
Explanation
[3]
© UCLES 2011 0452/21/M/J/11

21
(c) Calculate the collection period for trade receivables. Your answer should be rounded For
up to the next whole day. Examiner's
Use
Show your workings.
[2]
(d) The collection period for trade receivables for the year ended 31 March 2010 was
24 days.
State and explain whether the change in the collection period is an advantage or a
disadvantage to Anna D’Souza.
Advantage or disadvantage?
Explanation
[3]
(e) Explain two ways in which Anna D’Souza could improve the collection period for trade
receivables.
(i)
(ii)
[2]
(f) Calculate the current ratio. The calculation should be correct to two decimal places.
Show your workings.
[2]

22
(g) State and explain whether Anna D’Souza will be satisfied with the ratio you calculated For
in (f). Examiner's
Use
Will she be satisfied?
Explanation
[2]
(h) Explain two ways in which Anna D’Souza could increase her current ratio.
(i)
(ii)
[2]
[Total: 18]
© UCLES 2011 0452/21/M/J/11

18
6 Cole Limited and Fanza Limited are both electrical wholesalers. They provided the following For
information at 31 March 2012. Examiner's
Use
Cole Limited Fanza Limited

$ $
Inventory 18 000 36 000
Trade receivables 36 000 60 000
Trade payables 21 000 63 000
Cash at bank 4 800
REQUIRED
(a) Complete the following table to show the figures for Fanza Limited.
In each case, state the formula and show your workings.
Cole Limited Fanza Limited

(i) Working capital $37 800 Formula
Calculation
(ii) Current ratio 2.8:1 Formula
Calculation
(iii) Quick (acid test) ratio 1.9:1 Formula
Calculation
[9]
© UCLES 2012 0452/11/M/J/12

19
(b) (i) State which company has the better current ratio. Give a reason for your answer. For
Examiner's
Use
[3]
(ii) State which company has the better quick (acid test) ratio. Give a reason for your
answer.
[3]
Fanza Limited wishes to expand its business and needs to raise extra finance. It is
considering issuing either preference shares or debentures.
REQUIRED
(c) State two features of preference shares.
(i)
(ii)
[4]
(d) State two features of debentures.
(i)
(ii)
[4]
[Total: 23]
© UCLES 2012 0452/11/M/J/12

20
BLANK PAGE
© UCLES 2012 0452/11/M/J/12

18
6 Hart is a trader. His balance sheet at 30 April 2012 was as follows. For
Examiner's
Use
Balance Sheet at 30 April 2012
$ $ $
Tangible non-current assets
(at book value) 9 500
Current assets
Inventory 3 900
Other receivables 780
Cash 120
11 400
Current liabilities
Bank overdraft 4 100 13 800
Net current assets (2 400)
7 100
Financed by
Capital
Opening balance 10 000
Profit for the year 400
10 400
Less drawings 3 300
7 100
REQUIRED www.igcseaccounts.com
(a) State what is meant by a business being a going concern.
[2]
(b) (i) State the formula for the calculation of the current ratio.
[1]
(ii) Calculate Hart’s current ratio at 30 April 2012.

Show your workings and give your answer to two decimal places.
[2]
© UCLES 2012 0452/12/M/J/12

19
(iii) State and explain whether Hart will be satisfied with his current ratio. For
Examiner's
Use
Will he be satisfied?
Reason
[3]
Hart believes that he could make more profit if he increased his sales. He decided to ask
the bank for a long-term loan of $10 000 to help him buy additional inventory.
If the bank agreed to the loan, interest at 5% per annum would be charged.
Hart intended to use the loan to repay the bank overdraft and to purchase additional
inventory.
REQUIRED
(c) In the table below, place a tick () under the correct heading to show the effect taking
the loan will have on the following items.
Capital
Current assets
Current liabilities
[4]
(d) State two reasons why the bank would want to see Hart’s financial statements before
agreeing to the loan.
(i)
(ii)
[4]

20
(e) The bank decided to refuse Hart’s application for a loan.

Suggest two reasons for the bank’s decision. For
Examiner's
(i) Use
(ii)
[4]
(f) Suggest two other possible sources of finance for Hart’s business.
(i)
(ii)
[4]
[Total: 24]
Copyright Acknowledgements:
© UCLES 2012 0452/12/M/J/12

14
5 Tariq Osman is a trader. His financial year ends on 30 September. For

Examiner's
Use
All his sales are made on credit terms.
The selling price is calculated by marking up the cost price by 25%.
Tariq Osman provided the following information.
$
1 October 2011 Trade receivables 4 950
During the year ended 30 September 2012:

Cheques received from credit customers 56 360
Discount allowed to credit customers 1 640
Bad debts written off 1 260
30 September 2012 Trade receivables 6 290

Inventory 5 800
Petty cash 100
REQUIRED
(a) Calculate the credit sales for the year ended 30 September 2012.
Your answer may be in the form of a ledger account or an arithmetic calculation.
[6]
(b) Using your answer to (a) and the information above, calculate the gross profit for the
year ended 30 September 2012.
Show your workings.
[2]
© UCLES 2012 0452/21/O/N/12

15
(c) Using your answers to (a) and (b), calculate the cost of sales. For
Examiner's
Use
Show your workings.
[2]
(d) Assuming that Tariq Osman’s average inventory is $6000, calculate the rate of
inventory turnover.
Show your workings.
[2]
(e) Suggest two ways in which the rate of inventory turnover could be improved.
[4]
(f) Calculate the current ratio.
Show your workings.
[3]

Short Answer
Questions

2 For
Examiner’s
Use
1 (a) State one example of a current liability.
......................................................................................................................................[1]
(b) State the effect on net profit if opening stock is overvalued.
......................................................................................................................................[1]
(c) State one purpose for which the Journal may be used.
......................................................................................................................................[1]
(d) For each of the three items place one tick (✓) in the correct box to show where it
appears in a partnership’s final accounts.
Profit and Loss Profit and Loss
Account Appropriation Account
1 Interest on partners’ drawings
2 Interest on a loan from a partner
3 Interest on partners’ capitals
[3]
(e) Cherie owns a clothing store

For each of the three items shown below, place one tick (✓) in the correct box.
Revenue Capital
expenditure expenditure
1 Sales assistant’s wages
2 New showroom fittings
3 Cost of installing the new fittings
[3]
(f) Complete the following sentence.
“A debit balance on a ledger account is either an ...................... or an ...........................”

[2]
0452/02/M/J/03

3 For
Examiner’s
Use
(g) A business paid $20 000 for a new machine on 1 January 2001. Depreciation was
charged on the machine at the rate of 30% using the reducing balance method.
Calculate the machine’s net book value on 31 December 2002.
Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
(h) In which section of a Balance Sheet does rent received in advance appear?
......................................................................................................................................[1]
(i) Name the system of petty cash in which the petty cashier begins each new accounting
period with the same amount of petty cash.
......................................................................................................................................[1]
(j)
A sale on credit to Smith was entered on the debit side of Smythe’s account in the
seller’s ledger.
Name this type of error.
......................................................................................................................................[1]
(k) Charlie bought an existing business for $200 000. The value of the business as shown
by the Balance Sheet was $175 000.
Suggest one reason why Charlie was prepared to pay more for the business than the
value of its net assets.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[1]

2 For
Examiner’s
Use
1 (a) Oscar sold goods on credit to Felix. Felix later returned some of the goods because
they were damaged.
(i) Name the document Felix sent to Oscar when the goods were returned.
...............................................................................................................................[1]
(ii) Name the book of prime (original) entry in which the return of the goods was
recorded
1. in Oscar’s books
...............................................................................................................................[1]
2. in Felix’s books
...............................................................................................................................[1]
(b) Name the final account to which the total of the Discounts Received account is
transferred at the end of the financial year.
......................................................................................................................................[1]
(c) The following information relates to a sole trader’s business for the year ended 31
August 2003.
$
Cost of goods sold
Stocks: At 1 September 2002
www.igcseaccounts.com 60 000
7 000
At 31 August 2003 3 000
Calculate the rate of stock turnover for the year ended 31 August 2003. Show your
workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
(d) A business sold goods on credit to a customer for $5000, offering a discount of 2 % for
payment within 30 days. The customer paid within 30 days. Calculate the amount paid
by the customer. Show your workings.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
0452/02/O/N/03

3 For
Examiner’s
Use
(e) Name the accounting principle which is described in the following sentence. “The same
accounting treatment should be applied to similar items at all times.”
......................................................................................................................................[1]
(f) In which final account would bank charges appear?
......................................................................................................................................[1]
(g) State one reason why a supplier of goods on credit sends a statement of account to the
customer.
..........................................................................................................................................
......................................................................................................................................[1]
(h) Name the account which is brought up to date before a bank reconciliation statement is
prepared.
......................................................................................................................................[1]
(i) On 30 September 2003 Joe’s business included the following assets and liabilities:
$
Stock 18 000
Trade debtors 9 000
Trade creditors
16 000
(1) Calculate Joe’s working capital. Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
(2) Calculate Joe’s quick ratio. Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]

2 For
Examiner’s
Use
1 (a) Give one example of a fixed asset likely to be used by an engineering business.
......................................................................................................................................[1]
(b) (i) Name the document sent to a customer by a supplier when goods are bought on
credit.
...............................................................................................................................[1]
(ii) Name the book of prime (original) entry in which the customer will enter this
transaction.
...............................................................................................................................[1]
(iii) Name the ledger in which the supplier will keep his customer’s account.
...............................................................................................................................[1]
(c) A machine was bought for $46 000. It has an estimated useful life of five years when its
scrap value is expected to be $6000. It is to be depreciated using the straight line (equal
instalment) method. Showing your workings, calculate
(i) the annual amount of depreciation to be charged
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) the annual percentage rate of depreciation to be charged
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(d) Explain what is meant by an error of original entry.
..........................................................................................................................................
......................................................................................................................................[1]
(e) State one reason why a supplier would give trade discount to a customer.
..........................................................................................................................................
......................................................................................................................................[1]
(f) Name the ledger account to which a difference on a trial balance may be posted.
......................................................................................................................................[1]
© UCLES 2004 0452/02/M/J/04

3 For
Examiner’s
Use
(g) Name one accounting ratio which measures a business’s profitability.
......................................................................................................................................[1]
(h) A sole trader’s Electricity account for the year ended 31 March 2004 showed the
following.
$
1 April 2003 Balance brought down (Cr) 3 000
April 2003–March 2004 Bank – payments made during the year 18 000
On 31 March 2004 $4000 was owing by the trader for electricity.
Calculate the amount charged for electricity in the trader’s Profit and Loss Account for
the year ended 31 March 2004. Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
[TOTAL: 15]

2 For
Examiner’s
Use
1 (a) State one purpose for which the journal may be used.
......................................................................................................................................[1]
(b) Name the final account to which the balance of the carriage outwards account is
transferred at the end of the financial year.
......................................................................................................................................[1]
(c) State the basis on which a business should value its closing stock.
......................................................................................................................................[1]
(d) (i) An invoice showed a balance owing of $1000, less 2 % discount for payment by
the end of the month. The debtor paid in time and claimed the discount.
How much did he pay? Show your workings.
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) Name the type of discount claimed by the debtor in (i) above.
...............................................................................................................................[1]
(e) State the name given to the list of debit and credit balances in a business’s books on a
given date.
......................................................................................................................................[1]
(f) Name a partnership’s final account which shows the division of profits and losses
between the partners.
......................................................................................................................................[1]
(g) Explain what is meant by a compensating error.
..........................................................................................................................................
......................................................................................................................................[2]
(h) Sam owns a factory making agricultural machines. Give one example of capital
expenditure and one example of revenue expenditure for his business.
1. Capital expenditure ...................................................................................................
2. Revenue expenditure ............................................................................................[2]
[TOTAL: 12]
© UCLES 2004 0452/02/O/N/04

2 For
Examiner’s
Use
1 (a) Name two books of prime (original) entry.
(i) ......................................................................................................................................
(ii) ......................................................................................................................................
[2]
(b) Explain what is meant by an accrued expense.
..........................................................................................................................................
......................................................................................................................................[1]
(c) In which section of the Balance Sheet will a bank overdraft be shown?
......................................................................................................................................[1]
(d) To which account would the unexplained difference on a trial balance be transferred?
......................................................................................................................................[1]
(e) In which final account will the cost of repairs to motor vehicles be shown?
......................................................................................................................................[1]
(f) A sales invoice is entered in the sales returns journal by mistake. Name the type of error
which has been made.
......................................................................................................................................[1]
(g) State what is meant by going concern.
..........................................................................................................................................
......................................................................................................................................[1]
(h) Ahmed draws up his accounts to 31 March each year. He bought a machine on
1 April 2004 for $12 000. Depreciation is to be charged at 15% per annum on a straight
line basis.
(i) Calculate the depreciation charge in his accounts for the year ended
31 March 2005.
...................................................................................................................................
...............................................................................................................................[1]
(ii) Calculate the depreciation charge in his accounts for the year ended
31 March 2006.
...................................................................................................................................
...............................................................................................................................[1]
© UCLES 2005 0452/02 M/J/05

3 For
Examiner’s
Use
(iii) Calculate the net book value of the machine at 31 March 2006.
...................................................................................................................................
...............................................................................................................................[1]
(iv) Show the journal entry to enter the depreciation for the year ended 31 March 2005
in Ahmed’s accounts. A narrative is not required.
Dr Cr
$ $
[2]
[Total: 13]

2 For
Examiner’s
Use
1 (a) In which book of prime (original) entry would a cheque received from a customer be
recorded?
......................................................................................................................................[1]
(b) State what is meant by trade discount.
......................................................................................................................................[1]
(c) In which section of the Balance Sheet would trade creditors appear?
......................................................................................................................................[1]
(d) In which system of petty cash does the cashier make up the balance to a fixed amount
each month?
......................................................................................................................................[1]
(e) Stock is valued at the lower of cost and net realisable value. What is meant by net
realisable value?
..........................................................................................................................................
......................................................................................................................................[1]
(f) To which final accounts are the totals on the following accounts transferred?
(i) Carriage inwards www.igcseaccounts.com

...................................................................................................................................
(ii) Carriage outwards
...................................................................................................................................
[2]
(g) In the following table, place a tick (✓) under the correct heading for each item.
Capital Revenue
Purchase of motor van
New tyres for motor van
Painting business name on motor van
Cost of oil for motor van engine
[4]
© UCLES 2005 0452/02 O/N/05

3 For
Examiner’s
Use
(h) For the year ended 31 August 2005, Sayed made a gross profit of $45 000 and had
expenses of $30 000. The balance on his capital account at 31 August 2005 was $150 000.
What is Sayed’s return on capital employed (R.O.C.E.) for the year?

Show your workings.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
(i) Insert the missing words in the following statement.
‘Working capital is defined as..........................................................................assets less
...........................................................liabilities’ [2]
[Total: 16]

2
For
Examiner's
1 (a) In which book of prime (original) entry should discount allowed and discount received Use
be recorded?
[1]
(b) Which accounting principle is being applied when an adjustment is made for a prepaid
expense?
[1]
(c) In which section of the balance sheet will a provision for depreciation be shown?
[1]
(d) Explain what is meant by an error of omission.
[1]
(e) In the following table, place a tick () under the correct heading for each item.
Income Expense
Discount received
Carriage outwards
Interest on bank deposit
Bad debts written off
[4]
(f) In a partnership Appropriation Account, name two items which may be added to, or
deducted from, net profit before the partners’ share of profit is calculated.
(i)
(ii) [2]
© UCLES 2006 0452/02/M/J/06

3
For
Examiner's
(g) State what is meant by working capital. Use
[2]
(h) Frank maintains his petty cash on the imprest system. He keeps a balance of $200.
At the end of April the balance in hand is $65 and there are vouchers for expenditure of
$125.
(i) How much will Frank draw from the bank to restore his petty cash balance?
[1]
(ii) Suggest one reason for the difference in the petty cash balance.
[2]
(i) (i) State what is meant by the quick ratio.
[2]
(ii) Explain why this is a useful accounting ratio.
[2]
[Total: 19]

2 For
Examiner's
Use
1 (a) Ahmed makes a sale on credit to Bahir. What is the name of the document Ahmed
gives to Bahir showing the amount of the sale?
[1]
(b) Give two examples of a fixed asset.
(i)
(ii) [2]
(c) In which final account would motor expenses appear?
[1]
(d) State what is meant by a trade creditor.
[1]
(e) A payment from Peter is entered in Paul’s account in error.

What type of error has been made?
(f) State two methods of calculating depreciation.
(i)
(ii) [2]
(g) In which section of the Balance Sheet should a bank overdraft be shown?
[1]
© UCLES 2006 0452/02/O/N/06

3 For
Examiner's
Use
(h) Kay’s business had stock on 1 July 2005 valued at $6000 and on 30 June 2006 valued
at $9000. Her cost of goods sold for the year was $45 000. What was her rate of stock
turnover?
Show your workings.
[3]
(i) Insert the missing words in the following formula:
Gross profit percentage = x 100
[2]
[Total: 14]

2 For
Examiner's
Use
1 (a) What is the name of the document sent to a customer by a supplier at the end of the
month showing the amount payable for credit sales?
[1]
(b) Give one example of a prepaid expense.
[1]
(c) In which specialist area of the ledger would you find the machinery account?
[1]
(d) What is meant by a trial balance?
[1]
(e) In which final account would interest on drawings be shown?
[1]
(f) Give two examples of adjustments made in a bank reconciliation statement.

(i)
(ii)
[2]
(g) State one type of error which does not affect the trial balance.
[1]
© UCLES 2007 0452/02/M/J/07

3 For
Examiner's
Use
(h) In the following table, place a tick (√) under the most appropriate heading for each item.
Capital Revenue
Purchase of retail shop
Replace broken glass in shop window
Purchase of cash register for shop
Advertising goods for sale in the shop

[4]
(i) Cherry had sales of $80 000 in the month of October. She achieves a percentage of
gross profit to sales of 40 %.
Her expenses were $20 000.
What is Cherry’s percentage of net profit to sales for the month? Give your answer to
two decimal places and show your workings.
[4]
[Total: 16]

2 For
Examiner's
Use
1 (a) Which accounting principle states that business transactions must be expressed in
monetary terms?
[1]
(b) Give two examples of current assets.
(i) [1]
(ii) [1]
(c) Raju decides to start a business with cash of $2000. To which account in his ledger will
this amount be credited?
[1]
(d) In which final account will purchases returns be shown?
[1]
(e) Name two errors which do not affect the trial balance.
(i)
(ii)
[2]
(f) Explain what is meant by a bad debt.
[1]
(g) In the following table, place a tick (√) under the most appropriate heading for each item.
Capital Revenue
Rent paid for use of workshop
Purchase of machine for workshop
Purchase of materials for use in machine
Repairs to roof of workshop
[4]
© UCLES 2007 0452/02/O/N/07

3 For
Examiner's
Use
(h) On 30 June 2007 Monty had debtors of $4000, stock of $6200, bank balance of
$1600 (Dr) and creditors of $3200.
What is his quick ratio? Show your workings and give your answer to two decimal
places.
[4]
[Total: 16]

1 (a) Give two reasons why it is important for a business to prepare final accounts or For
financial statements each year. Examiner's
Use
(i)
(ii)
[2]
(b) Give an example of:
(i) a current asset
(ii) a current liability [2]
(c) Which accounting principle is being applied when a provision for depreciation of a fixed
asset is made?
[1]
(d) To which account will the unexplained difference on a trial balance be transferred?
(e) In which section of the balance sheet will accrued expenses be shown?
[1]
(f) Explain what is meant by a bad debt.
[2]
© UCLES 2008 0452/02/M/J/08

(g) Marco maintains his petty cash on the imprest system. At the end of April he has For
vouchers for expenditure of $70 and a balance in hand of $30. Examiner's
Use
(i) What is the amount of the imprest?
(ii) How much will Marco draw from the bank to restore his imprest?
[2]
(h) (i) Define working capital.
(ii) Explain why a business needs sufficient working capital.
[4]

1 (a) Give two examples of a book of prime (original) entry. For

Examiner's
Use
(i)
(ii) [2]
(b) In the table below, place a tick (√) under the correct heading to show whether each
item is an asset or a liability.
Asset Liability
(i) Motor car
(ii) Accrued expenses payable
(iii) Debtors
[3]
(c) What accounting principle states that a business will continue indefinitely?
[1]
(d) Annie makes a sale on credit to Bill. State the names of the accounts in Annie’s ledger
which will be:
(i) credited
(ii) debited
[2]
(e) In which final account will sales returns be shown?
[1]
© UCLES 2008 0452/02/O/N/08

(f) In Mohamed’s books, cash sales have been credited to the cash account and debited For
to the sales account in error. What type of error has been made? Examiner's
Use
[1]
(g) What is the name of the account showing the division of the net profit of a partnership
between the partners?
[1]
(h) Rosco’s balance sheet at 30 September 2008 includes debtors of $49 000, stock of
$24 000, cash of $3500 and creditors of $21 000.
Calculate the following. Show all workings.
(i) Current ratio
(ii) Quick ratio
[6]
[Total: 17]

1 (a) Name the accounting principle which states that sales are recognised when the For
ownership of goods sold and legal liability to pay passes to the customer. Examiner's
Use
[1]
(b) In the table below, place a tick () under the correct heading to show whether each
item is an asset or a liability:
Asset Liability
(i) Prepaid expense
(ii) Bank overdraft
(iii) Provision for depreciation
[3]
(c) In a bank reconciliation statement, explain what is meant by an unpresented cheque.
[2]
(d) In the balance sheet, stock is valued at the lower of cost and
[1]
(e) In which final account will sales returns be shown?
[1]
(f) Working capital is calculated as follows:
less
[2]
© UCLES 2009 0452/02/M/J/09

(g) (i) Give one example of an item of capital expenditure. For

Examiner's
Use
[1]
(ii) Give one example of an item of revenue expenditure.
[1]
(h) Amhari’s business has sales for the year of $75 000, and her cost of goods sold was
$52 500.
Calculate her percentage of gross profit to sales.
[3]
[Total: 15]

2 (a) Give two examples of non-current (fixed) assets. For

Examiner's
Use
[2]
(b) In the table below, place a tick () under the correct heading to show how the monthly
total in the sales returns journal should be posted in the nominal (general) ledger.
Debit entry Credit entry
Sales returns account
[1]
(c) Which accounting principle states that the same accounting treatment should be
applied to similar items at all times?
[1]
(d) In the balance sheet, non-current (fixed) assets are shown at their net book value.
Explain how net book value is different from cost.
[2]
(e) In which final account will carriage inwards be shown?
[1]
(f) State which accounting principle is being followed when an accrued expense is
included in the income statement (profit and loss account).
[1]

(g) Tamari’s business had sales for the year ended 31 March of $75 000, and her cost of For
goods sold was $52 500. She had expenses of $7500. Examiner's
Use
Calculate the following. Show your workings. Give your answer to two decimal places.
(i) Tamari’s percentage of gross profit to sales.
[4]
(ii) Tamari’s percentage of net profit to sales.
[4]
(h) Hooper Limited has an issued share capital of $5000 divided into shares of $0.50 each.
The company declares a dividend of $0.15 per share.
What will be the total amount of the dividend paid to the shareholders?
[4]
[Total: 20]
© UCLES 2010 0452/11/M/J/10

2 (a) Give two ratios used to measure the profitability of a business. For
Examiner's
Use
(i)
(ii)
[2]
(b) In the table below, place a tick () under the correct heading to show whether the item
is a current asset or a current liability:
Current asset Current liability
Inventory (stock)
Trade payables (creditors)
Other receivables (prepayments)
[3]
(c) In the table below, place a tick () to show where an entry for a dishonoured cheque
would be made in the cash book.
Bank column Cash column
Debit side
Credit side
[1]
(d) Name the final account in which discount allowed should be shown.
[1]
(e) Imran buys a new machine but the cost is entered in the repairs account. Name the
type of error which has been made.
[1]

(f) State which accounting principle is being followed when a business makes a provision For
for a doubtful debt. Examiner's
Use
[1]
(g) Whangi’s business had credit purchases for the year ended 31 March 2010 of $45 500,
and carriage inwards of $2500.
His inventory (stock) at 1 April 2009 was $4000 and at 31 March 2010 was $5600.
His trade payables (creditors) at 31 March 2010 were $3750.
(i) Calculate his rate of inventory (stock) turnover. Give your answer to two decimal
places. Show all your workings.
[4]
(ii) Calculate his payment period for trade payables (creditors) in days. Give your
answer to the nearest whole day. Show all your workings.
[4]
© UCLES 2010 0452/12/M/J/10

(h) Hooper’s financial year ended on 31 March 2010. He paid wages for the year of For
$32 800. Examiner's
Use
He had wages outstanding as follows:
$
at 1 April 2009 300
at 31 March 2010 450
Write up the wages account in his ledger for the year ended 31 March 2010. Show the
amount transferred to the income statement (profit and loss account).
Hooper
Wages account
[5]

2 (a) Give two ratios used to measure the profitability of a business. For
Examiner's
Use
(i)
(ii)
[2]
is a current asset or a current liability:
Current asset Current liability
Inventory (stock)
Trade payables (creditors)
Other receivables (prepayments)
[3]
(c) In the table below, place a tick () to show where an entry for a dishonoured cheque
would be made in the cash book.
Bank column Cash column
Debit side
Credit side
[1]
(d) Name the final account in which discount allowed should be shown.
[1]
(e) Imran buys a new machine but the cost is entered in the repairs account. Name the
type of error which has been made.
[1]

(f) State which accounting principle is being followed when a business makes a provision For
for a doubtful debt. Examiner's
Use
[1]
(g) Whangi’s business had credit purchases for the year ended 31 March 2010 of $45 500,
and carriage inwards of $2500.
His inventory (stock) at 1 April 2009 was $4000 and at 31 March 2010 was $5600.
His trade payables (creditors) at 31 March 2010 were $3750.
(i) Calculate his rate of inventory (stock) turnover. Give your answer to two decimal
places. Show all your workings.
[4]
(ii) Calculate his payment period for trade payables (creditors) in days. Give your
answer to the nearest whole day. Show all your workings.
[4]
© UCLES 2010 0452/13/M/J/10

(h) Hooper’s financial year ended on 31 March 2010. He paid wages for the year of For
$32 800. Examiner's
Use
He had wages outstanding as follows:
$
at 1 April 2009 300
at 31 March 2010 450
Write up the wages account in his ledger for the year ended 31 March 2010. Show the
amount transferred to the income statement (profit and loss account).
Hooper
Wages account
[5]

2 (a) Name two business documents used to make entries in the accounting records of a For
business. Examiner's
Use
(i)
(ii) [2]
is income or expense.
Income Expense
Bad debt recovered
Interest charged to customers

on overdue accounts
Discount allowed
[3]
(c) The total of the purchases journal is posted to the purchases account in the ledger. In
the table below, place a tick () to show whether this entry is a debit or a credit.
Debit Credit
(d) Which accounting policy requires information to represent actual events and to be free
from error and bias?
[1]
(e) A cheque from Hipham was credited to Bipham’s account in the sales ledger. What
type of error has been made?
[1]
(f) Explain what is meant by a shareholder of a company having limited liability.
[2]
© UCLES 2010 0452/11/O/N/10

(g) Sasha has a shop which sells fashion clothing. For

Examiner's
Use
She bought 50 dresses for $13.00 each and paid total carriage inwards of $50.00.
She sold 30 dresses for $20.00 each.
The price at which she can sell the dresses has now fallen to $13.50 each.
At what amount will Sasha value the remaining dresses in her balance sheet?
[3]
(h) Tamara keeps her petty cash on the imprest system with an imprest of $150. She paid
expenses in the month of October of $80.50.
(i) What was the amount of petty cash remaining at 31 October?
(ii) How much cash was transferred to restore the imprest at 1 November?
[4]
Kishu’s business had inventory (stock) on 1 July 2009 of $6000 and on 30 June 2010
of $9000. His cost of goods sold for the year ended 30 June 2010 was $45 000.
Calculate his rate of inventory (stock) turnover. Show all your workings.
[4]
[Total: 21]

2 (a) Name two business documents used to make entries in the accounting records of a For
business. Examiner's
Use
(i)
(ii) [2]
is income or expense.
Income Expense
Bad debt recovered
Interest charged to customers

on overdue accounts
Discount allowed
[3]
(c) The total of the purchases journal is posted to the purchases account in the ledger. In
the table below, place a tick () to show whether this entry is a debit or a credit.
Debit Credit
(d) Which accounting policy requires information to represent actual events and to be free
from error and bias?
[1]
(e) A cheque from Hipham was credited to Bipham’s account in the sales ledger. What
type of error has been made?
[1]
(f) Explain what is meant by a shareholder of a company having limited liability.
[2]
© UCLES 2010 0452/12/O/N/10

(g) Sasha has a shop which sells fashion clothing. For

Examiner's
Use
She bought 50 dresses for $13.00 each and paid total carriage inwards of $50.00.
She sold 30 dresses for $20.00 each.
The price at which she can sell the dresses has now fallen to $13.50 each.
At what amount will Sasha value the remaining dresses in her balance sheet?
[3]
(h) Tamara keeps her petty cash on the imprest system with an imprest of $150. She paid
expenses in the month of October of $80.50.
(i) What was the amount of petty cash remaining at 31 October?
(ii) How much cash was transferred to restore the imprest at 1 November?
[4]
Kishu’s business had inventory (stock) on 1 July 2009 of $6000 and on 30 June 2010
of $9000. His cost of goods sold for the year ended 30 June 2010 was $45 000.
Calculate his rate of inventory (stock) turnover. Show all your workings.
[4]
[Total: 21]

(g) On 1 July 2010 Helia paid a premium of $600 for a new insurance policy for 12 months For
to 30 June 2011. Examiner's
Use
Calculate the amount for insurance in her income statement (profit and loss account)
for the financial year ended 30 September 2010.
Show your workings.
[3]
(h) Beja’s balance sheet at 31 July 2010 included the following:
$
non-current (fixed) assets 30 000
inventory (stock) 15 000
trade receivables (debtors) 14 500
balance at bank 16 000 Dr
trade payables (creditors) 18 200
Calculate Beja’s working capital at 31 July 2010.
Show your workings.

[4]

(i) Khanu’s financial statements showed the following: For

Examiner's
Use
$
cash sales 46 500
credit sales 126 000
cash received from trade debtors 122 800
trade receivables (debtors) 13 800
Calculate his collection period for trade receivables (debtors) to the nearest whole day.
Show your workings.
[4]
[Total: 21]
© UCLES 2010 0452/13/O/N/10

2 (a) Name two books of prime (original) entry. For

Examiner's
Use
(i)
(ii) [2]
(b) State the purpose of preparing an income statement.
[1]
(c) In the table below, place a tick () under the correct heading to show whether the item
is income or an expense.
Income Expense
Carriage outwards
Bad debt recovered
Discount received
[3]
(d) Explain what is meant by the imprest system of petty cash.
[2]
(e) (i) Name the accounting principle which requires that the same accounting treatment
should be applied to similar items at all times.
[1]
(ii) Name the accounting policy which states that accounting information should
represent actual events and be free from error and bias.
[1]
(f) Complete the following statement: working capital is defined as
less [2]

(g) Bailee’s trial balance at 31 March 2011 included the following items: For
Examiner's
Use
$
Trade payables 1800
Bank (Dr) 3500
Drawings 4700
Inventory 2900
Provision for depreciation 3300
(i) Calculate Bailee’s working capital. Show your workings.
[3]
(ii) Calculate Bailee’s quick ratio. Show your workings and give your answer to two
decimal places.
(h) Name two types of shares which may be issued by a limited company.
(i)
(ii) [2]
[Total: 20]
© UCLES 2011 0452/11/M/J/11


Examiner's
Use
(i)
(ii) [2]
[1]
Income Expense
Carriage outwards
Bad debt recovered
Discount received
[3]
[2]
[1]
[1]
less [2]

Examiner's
Use
$
Trade payables 1800
Bank (Dr) 3500
Drawings 4700
Inventory 2900
[3]
decimal places.
(i)
(ii) [2]
[Total: 20]
© UCLES 2011 0452/12/M/J/11


Examiner's
Use
(i)
(ii) [2]
[1]
Income Expense
Carriage outwards
Bad debt recovered
Discount received
[3]
[2]
[1]
[1]
less [2]

Examiner's
Use
$
Trade payables 1800
Bank (Dr) 3500
Drawings 4700
Inventory 2900
[3]
decimal places.
(i)
(ii) [2]
[Total: 20]
© UCLES 2011 0452/13/M/J/11

2 (a) Sheva returned faulty goods to her supplier, Limpo Limited. Name the business For
document which Limpo Limited issued to Sheva: Examiner's
Use
(i) when the goods were supplied
[1]
(ii) when the goods were returned.
[1]
(b) Give two examples of accounts in the nominal (general) ledger which would be entered
in the trading account section of the income statement.
2 [2]
(c) Naomi bought goods on credit from Ruth for $560. Ruth offers 2½% discount for
payment within ten days. Naomi paid her account within this period.
Calculate the amount of the discount which Naomi received.
[1]
(d) Janni has been told that he must use the same method of providing depreciation from
one year to the next. Name the accounting principle which is being applied.
[1]
(e) Lynch bought goods, $100, on credit, but he recorded this as $1000.
Name the type of error which has been made.
[1]
(f) Mubara keeps his petty cash book on the imprest system with an imprest amount of
$120. At 31 October there were vouchers for petty cash expenditure totalling $74.50 in
the petty cash box. He had not claimed for a train fare of $17.50.
State the amount which will remain in the petty cash box after he has claimed his train fare.
[1]
© UCLES 2012 0452/11/O/N/12

For
(g) (i) Explain what is meant by a bad debt. Examiner's
Use
[2]
(ii) Explain what is meant by a provision for doubtful debts.
[2]
(iii) Mary maintains a provision for doubtful debts at 3% of her trade receivables.
On 1 September 2011 Mary’s provision for doubtful debts was $1350.
On 31 August 2012 Mary’s trade receivables amounted to $48 000.
How much would be charged in Mary’s income statement for the year ended
31 August 2012?
[2]
(h) Pringle Limited has an issued share capital of $40 000 divided into ordinary shares of
$0.50 each. The company declared a dividend of $0.30 per share. What was the total
amount of the dividend paid to shareholders?
[2]
[Total: 16]

2 (a) Sheva returned faulty goods to her supplier, Limpo Limited. Name the business For
document which Limpo Limited issued to Sheva: Examiner's
Use
(i) when the goods were supplied
[1]
(ii) when the goods were returned.
[1]
(b) Give two examples of accounts in the nominal (general) ledger which would be entered
in the trading account section of the income statement.
2 [2]
(c) Naomi bought goods on credit from Ruth for $560. Ruth offers 2½% discount for
payment within ten days. Naomi paid her account within this period.
Calculate the amount of the discount which Naomi received.
[1]
(d) Janni has been told that he must use the same method of providing depreciation from
one year to the next. Name the accounting principle which is being applied.
[1]
(e) Lynch bought goods, $100, on credit, but he recorded this as $1000.
Name the type of error which has been made.
[1]
(f) Mubara keeps his petty cash book on the imprest system with an imprest amount of
$120. At 31 October there were vouchers for petty cash expenditure totalling $74.50 in
the petty cash box. He had not claimed for a train fare of $17.50.
State the amount which will remain in the petty cash box after he has claimed his train fare.
[1]
© UCLES 2012 0452/12/O/N/12

For
(g) (i) Explain what is meant by a bad debt. Examiner's
Use
[2]
(ii) Explain what is meant by a provision for doubtful debts.
[2]
(iii) Mary maintains a provision for doubtful debts at 3% of her trade receivables.
On 1 September 2011 Mary’s provision for doubtful debts was $1350.
On 31 August 2012 Mary’s trade receivables amounted to $48 000.
How much would be charged in Mary’s income statement for the year ended
31 August 2012?
[2]
(h) Pringle Limited has an issued share capital of $40 000 divided into ordinary shares of
$0.50 each. The company declared a dividend of $0.30 per share. What was the total
amount of the dividend paid to shareholders?
[2]
[Total: 16]

Sole Trader
Final Accounts

4 For
Examiner’s
Use
2 Danbi Wyske runs her business from rented premises. The following balances were
extracted from her books on 30 April 2003.
$
Stock 1 May 2002 4 000
Sales 80 000
Purchases 62 000
Debtors 10 000
Creditors 9 000
Electricity paid 3 000
Cash at bank 5 000
Drawings 8 000
Rent and insurance paid 6 000
Equipment at cost 45 000
Provision for depreciation of equipment 16 000
Capital ?
0452/02/M/J/03
5 For
Examiner’s
Use
(a) Using the columns below, prepare Danbi’s trial balance as at 30 April 2003, showing her
Capital account balance.
Danbi Wyske
Trial Balance as at 30 April 2003
Dr Cr
$ $
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................

––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– ............................. .............................
––––––––––––––––––––––––––––– –––––––––––––– –––––––––––––––

[14]
–––––––––––––– –––––––––––––––
(b) Name the ledger account to which a difference on a trial balance may be posted.
......................................................................................................................................[1]

6 For
Examiner’s
Use
3 Andy Mann owns a general store. His Trading and Profit and Loss Account for the year
ended 31 March 2003 is shown below. Some words and figures are missing.
(a) In each of the boxes (i) to (vi) enter the missing word(s) or figure.
Andy Mann
Trading and Profit and Loss Account for the year ended 31 March 2003
$ $ $
Sales 200 000
Less Cost of goods sold
Opening stock (i)
Purchases 120 000
Less (ii) 2 000 118 000
–––––– ––––––
130 000
Less (iii) 10 000 120 000
–––––– ––––––
Gross Profit 80 000

Add Rent received (iv)
Discount (v) 3 000
––––––
88 000
Less Wages 12 000
Insurance 3 000
General expenses
Depreciation
(vi)
28 000
58 000
––––––
Net Profit 30 000
––––––
[6]
(b) Calculate Andy’s net profit as a percentage of his sales for the year. Show your
workings.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
0452/02/M/J/03
7 For
Examiner’s
Use
3 (c) On 31 March 2003 Andy’s capital was $200 000. He also had a long-term loan from his
bank of $50 000.
Calculate Andy’s net profit as a percentage of the capital employed in his business.
Show your workings.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
(d) Give two reasons why it is important for Andy to know his net profit as a percentage of
the capital employed.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]

2
For
Examiner's
1 The following Trial Balance was extracted from the books of Salem Ahmed at 31 July 2006. Use
$ $
Capital 62 000
Drawings 7 200
Fixtures at valuation 7 800
Equipment at cost 5 000
Provision for depreciation of equipment 950
Debtors 9 000
Bad debts recovered 170
Creditors 7 970
Bank 4 755
Stock 1 August 2005 10 260
Sales 89 500
Purchases 65 700
Sales returns 1 100
Carriage outwards 210
Administration expenses 21 215
166 085 166 085
1 During the year ended 31 July 2006 Salem took goods costing $1260 for his own use.
No entries had been made in the accounting records.
2 The provision for doubtful debts is to be maintained at 2 % of the debtors.
3 Equipment is to be depreciated at 10 % per annum using the reducing balance method.
4 Fixtures were valued at $7250 on 31 July 2006. No fixtures were bought or sold during
the year ended 31 July 2006.
5 Because of illness, Salem was unable to value the stock on 31 July 2006. Salem’s
gross profit margin is 25 %.
REQUIRED
Prepare the Trading and Profit and Loss Account of Salem Ahmed for the year ended
31 July 2006.
The value of the stock on 31 July 2006 should be clearly shown in the Trading Account.
A Balance Sheet is not required.
© UCLES 2006 0452/03 O/N/06

3
For
Examiner's
Salem Ahmed Use
Trading and Profit and Loss Account for the year ended 31 July 2006
[18]
[Total: 18]

4 For
Examiner's
Use
2 (a) Insert the missing words and figures in the following trading and profit and loss
account.
Shin Lee
Trading and Profit and Loss Account
for the year ended 31 March 2007
Sales 130 000
Less: sales returns (i)
125 000
Cost of goods sold
Stock at (ii) 42 000
Add: purchases (iii)
carriage (iv) 2 000

124 000
Less: Stock at 31 March 2007 36 000
88 000
Gross profit (v)
Rent 1 200
Electricity 600
Water charges 350
Wages (vi)
9 200
(vii) (viii)
[8]
© UCLES 2007 0452/02/M/J/07

5 For
Examiner's
Use
(b) From the information in part (a) calculate to two decimal places Shin Lee’s rate of
stock turnover for the year ended 31 March 2007.
Show your workings.
[4]
(c) Give one example of a business with:
(i) A high rate of stock turnover;
(ii) A low rate of stock turnover.
[4]
[Total: 16]

12
4 Gorman Limited has prepared the following trial balance from the company’s accounting For
records for the year ended 30 September 2010. Examiner's
Use
Gorman Limited
Trial Balance at 30 September 2010
$ $
Bank (overdrawn) 2 200
Ordinary goods purchased (purchases) 70 300
Carriage inwards 600
Inventory (stock) at 1 October 2009 13 900
Rent payable 2 600
Property tax 1 500
Electricity 850
Wages and salaries 5 250
Equipment and office fittings 17 000
Provision for depreciation
on equipment and office fittings 1 700
Repairs and maintenance 1 100
Administrative expenses 4 000
Retained profit at 1 October 2009 28 000
Share capital 9 000
134 700 134 700
1 Inventory (stock) at 30 September 2010 was $14 300.
2 Wages accrued but unpaid were $500.
3 Property tax prepaid was $300.
4 The bank statement for 30 September showed bank charges of $120. This has not
been entered in the books.
5 Depreciation of $1700 is to be provided for the year.
REQUIRED
(a) Define a trial balance.
[3]
© UCLES 2010 0452/13/O/N/10

13
(b) Prepare Gorman Limited’s income statement (trading and profit and loss account) for For
the year ended 30 September 2010. Examiner's
Use
Gorman Limited
Income Statement (Trading and Profit and Loss Account)
for the year ended 30 September 2010
[13]

14
(c) Name the accounting principle which has been applied to the amount included in the For
income statement (trading and profit and loss account) for each of the following. Examiner's
Use
(i) Inventory (stock)
(ii) Property tax
[4]
(d) From your answer to (b) calculate Gorman Limited’s rate of inventory (stock) turnover.
Show your workings.
[5]
(e) Gorman Limited had a bank overdraft at 30 September 2010. Suggest one way in which
the company could reduce or eliminate the overdraft.
[2]
[Total: 27]
© UCLES 2010 0452/13/O/N/10

8
3 Stella Maris started a business as a bookseller on 1 May 2008 with initial capital of $10 000 For
which she deposited in a new business bank account. Examiner's
Use
She is not an experienced bookkeeper but has drawn up the following trial balance at
31 October 2008. Stella has put certain balances in the wrong column and may have made
other errors.
Debit Credit
$ $
Capital 10 000
Shelving and equipment 5 000
Purchases 24 000
Rent payable 6 000
Sales 34 900
Stock at 31 October 2008 5 300
Cash at bank 7 400
Difference 300
47 700 47 700
REQUIRED
(a) State which accounting principle Stella was following when she deposited her initial
capital into a new business bank account.
[2]
(b) Name the account in which an unexplained difference on a trial balance should be
entered.
[1]
© UCLES 2008 0452/02/O/N/08

9
(c) Prepare a corrected trial balance at 31 October 2008. For

Examiner's
Use
Stella Maris
Debit Credit
$ $
[10]

10
(d) Using the information above, complete Stella’s trading and profit and loss account for For
the six months ended 31 October 2008. Examiner's
Use
Stella Maris
Trading and Profit and Loss Account for the six months ended 31 October 2008
$ $
Sales
Stock at 1 May 2008 nil
Purchases
Stock at 31 October 2008
Cost of sales
Gross profit
Expenses
Rent
General expenses
Net profit
[9]
[Total: 22]
© UCLES 2008 0452/02/O/N/08

12
5 Gordon has prepared the following trial balance after calculating his net profit for the year For
ended 31 March 2009. Examiner's
Use
Gordon
Trial balance at 31 March 2009
$ $
Bank 700
Capital at 1 April 2008 6 400
Creditors 2 100
Debtors 3 400
Drawings 12 000
Motor vehicles 4 000
Motor vehicles 1 000
Stock at 31 March 2009 1 900
30 000 30 000
REQUIRED
(a) Prepare Gordon’s capital account for the year ended 31 March 2009.
Gordon
Capital account
[4]
© UCLES 2009 0452/02/M/J/09

13
(b) Prepare Gordon’s balance sheet at 31 March 2009. For

Examiner's
Use
Gordon
Balance sheet at 31 March 2009
[8]

14
(c) From Gordon’s balance sheet, calculate each of the following ratios to two decimal For
places. Show your workings. Examiner's
Use
(i) Current ratio
(ii) Quick ratio
[6]
(d) Place a tick () in one of the boxes below to show which of these two ratios Gordon
should use to decide if he can afford to pay his creditors.
current ratio
quick ratio
[2]
[Total: 20]
© UCLES 2009 0452/02/M/J/09

9
4 Timpani Ltd makes machine parts and their financial year ends on 31 March. After For
preparing the income statement (trading and profit and loss account) for the year ended Examiner's
Use
31 March 2010 the trial balance showed the following items.
$
Bank 500 Dr
Bank loan (repayable 2011) 2 800
Trade payables (creditors) 700
Inventory (stock) at cost 3 000
Share capital 5 000
Timpani Ltd found that the inventory (stock) could be sold for only $2700.
REQUIRED
(a) (i) State the basis on which inventory (stock) should be valued at the end of a
financial year.
[3]
(ii) State the value that Timpani Ltd should use for inventory (stock) in the balance
sheet at 31 March 2010.
[1]
(iii) State the effect on the company’s profit for the year of adjusting the value of
inventory (stock).
[2]

10
REQUIRED For
Examiner's
Use
(b) Prepare Timpani Ltd’s balance sheet at 31 March 2010.
Timpani Ltd
[11]
© UCLES 2010 0452/11/M/J/10

11
Timpani Ltd must repay its bank loan by 31 March 2011. The company is not sure if it will For
be able to repay the loan. Examiner's
Use
Timpani Ltd decides to take some action to enable it to repay the bank loan when it
becomes due.
REQUIRED
(c) For each proposed action place a tick () under the correct heading to show if it might
be successful.
Successful Not successful
Reduce dividend paid
Reduce depreciation
Reduce trade payables (creditors)
[6]
(d) (i) Name the accounting principle which states that a business is assumed to
continue to operate indefinitely.
[1]
(ii) If a business is not expected to continue, state the value at which its assets should
be valued in the balance sheet.
[2]
[Total: 26]

11
4 The following summary list of balances was taken from the books of Deali, a sole trader, on For
31 March 2010. Examiner's
Use
$
Ordinary goods purchased (Purchases) 76 000
Bank (overdraft) 2 300 Cr
Equipment 9 000
Expenses 37 500
Capital 15 500
Drawings 8 000
REQUIRED
(a) Give one reason for preparing a trial balance.
[1]

12
(b) Prepare Deali’s trial balance at 31 March 2010. For

Examiner's
Use
Show any difference you find as a balance on a suspense account.
Deali
Trial Balance at 31 March 2010
[11]
After the trial balance had been prepared, it was found that an error had been made in the
books of account. Sales of $1100 had been entered in the cash book but not posted to the
ledger.
REQUIRED
(c) Show the journal entry, with narrative, to correct this error.
Dr Cr
Date
$ $
[5]
© UCLES 2010 0452/12/M/J/10

13
(d) Deali had inventory (stock) of $18 000 at 31 March 2010. For
Examiner's
Use
Assuming that the journal entry in part (c) has been posted, complete Deali’s summary
income statement (trading and profit and loss account) for the year ended 31 March
2010.
Deali
Summary Income Statement (Trading and Profit and Loss Account)
for the year ended 31 March 2010
$ $
Revenue (sales) (i)
Inventory (stock) at 1 April 2009 (ii)
Ordinary goods purchased (Purchases) (iii)
Inventory (stock) at 31 March 2010
(iv)
Cost of sales (v)
Gross profit (vi)
Expenses (vii)
Net profit (viii)
[8]
[Total: 25]

2
1 The following trial balance was extracted from the books of Robbie McDonald at For
30 September 2010. Examiner's
Use
Dr Cr
$ $
Capital 85 000
Drawings 5 100
Motor vehicle at cost 6 000
Equipment at valuation 3 000
Provision for depreciation of motor vehicle 1 200
Inventory (stock) 1 October 2009 19 500
Purchases 176 000
Wages 28 200
Property tax and insurance 8 900
Administration expenses 4 410 ______
326 710 326 710
1 Because of an oversight the inventory (stock) on 30 September 2010 was not
valued. Robbie marks up all his stock by 25%.
2 During the year ended 30 September 2010 Robbie took goods costing $1900 for
his own use. No entries have been made in the accounting records.
3 The motor vehicle is being depreciated at 20% per annum using the reducing
balance method.
4 Equipment was valued at $2340 on 30 September 2010. There were no sales or

purchases of equipment during the year.
5 The provision for doubtful debts is to be maintained at 2% of the trade receivables

(debtors).
6 A bank statement received on 30 September 2010 included an entry for bank

interest of $1550. No entries have been made in the accounting records.
7 The property tax and insurance includes $2400 for insurance of the premises. This
represents insurance cover for the sixteen months to 31 January 2011.
REQUIRED
Prepare the income statement (trading and profit and loss account) of Robbie McDonald for
the year ended 30 September 2010.
The value of the inventory (stock) on 30 September 2010 should be clearly shown in the
income statement (trading and profit and loss account).
© UCLES 2010 0452/21/O/N/10

3
Robbie McDonald For

Income Statement (Trading and Profit and Loss Account) for the Examiner's
Use
year ended 30 September 2010
[20]
[Total: 20]

6
2 The following trial balance was extracted from the books of Sabena Khan at For
31 January 2011. Examiner's
Use
$ $
Capital 1 February 2010 55 686
Drawings 4 800
Equipment at valuation 4 500
Fixtures and fittings at cost 5 400
Provision for depreciation of fixtures and fittings 1 080
Inventory 1 February 2010 7 500
Bad debts 50
Revenue 58 200
Purchases 51 400
Purchases returns 2 300
Bank 5 240
Administration expenses 7 960
122 632 122 632
1 Sabena Khan did not value her inventory on 31 January 2011 due to an oversight.
Her gross profit margin is 20%.
2 The provision for doubtful debts is to be maintained at 2% of trade receivables.
3 Equipment was valued at $3800 on 31 January 2011. No equipment was bought or

sold during the year ended 31 January 2011.
4 Fixtures and fittings are to be depreciated by 10% per annum on cost.
REQUIRED
Prepare the income statement of Sabena Khan for the year ended 31 January 2011.
The income statement should clearly show the gross and net profits for the year and the
value of the inventory on 31 January 2011.
© UCLES 2011 0452/22/M/J/11

7
Sabena Khan For

Income Statement for the year ended 31 January 2011 Examiner's
Use
[18]
[Total: 18]

4 For
Examiner’s
Use
2 The following trial balance was extracted from the books of Amir Sadiq as at 31 March 2003.
$ $
Capital 33 000
Drawings 2 500
Buildings at cost 20 000
Fixtures and equipment at valuation 3 400
Provision for depreciation of motor vehicles 3 250
Debtors 7 500
Creditors 6 700
Motor vehicle expenses 1 240
Wages 11 940
Insurance 1 470
Sales 92 100
Purchases 68 500
Sales returns 1 200
Stock 1 April 2002 9 900
––––––– –––––––
138 380 138 380
––––––– –––––––
Additional information www.igcseaccounts.com

1. At 31 March 2003:
Stock was valued at $10 200.
Wages outstanding amounted to $1080.
Insurance prepaid amounted to $210.
2. During the year ended 31 March 2003 Amir took goods costing $300 for his own use.
No entries had been made in the accounting records.
3. The provision for doubtful debts is to be maintained at 2% of the debtors.
4. Motor vehicles are to be depreciated at 20% per annum using the reducing balance
method.
5. Fixtures and equipment were valued at $2800 on 31 March 2003. No fixtures and
equipment were bought or sold during the year ended 31 March 2003.
0452/03/M/J/03
11 For
Examiner’s
Use
(a) Prepare Elmer Gantry’s Trading and Profit and Loss Account for the year ended
30 September 2003.
Elmer Gantry
Trading and Profit and Loss Account for the year ended 30 September 2003
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[18]

12 For
Examiner’s
Use
(b) (i) State what is meant by the accounting concept of matching.
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) Explain how the matching principle is applied to insurance in Elmer’s Profit and
Loss Account.
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
0452/02/O/N/03
3 For
Examiner’s
Use
2 Martha Adebuyo owns a retail shop. Her financial year ends on 31 August. Her Trading and
Profit and Loss Account for the year ended 31 August 2004 is shown below. Some words
and figures are missing.
(a) In each of the boxes (i) to (vii) enter the missing word(s) or figures.
Trading and Profit and Loss Account for the year ended 31 August 2004
$ $ $
Sales 106 000
Less Sales returns (i) 100 000
––––––
Less Cost of goods sold

Opening (ii) 12 000
Purchases (iii)
Less Purchase returns 4 000
––––––
67 000
Plus Carriage (iv) 5 000 72 000
–––––– ––––––
84 000
Less Closing stock (v) 70 000
–––––– ––––––
Gross profit 30 000

Add Rent (vi) 6 000
www.igcseaccounts.com ––––––
36 000
Less Wages 14 000
Insurance 3 000
General expenses (vii) 24 000
–––––– ––––––
––––––
Net profit 12 000
––––––
[7]
(b) Calculate, showing your workings, Martha’s
(i) gross profit as a percentage of her sales for the year;
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]
(ii) net profit as a percentage of her sales for the year.
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[2]

4 For
Examiner’s
Use
2 Bonnie Clyde makes parts for cars and her financial year ends on 31 March. After preparing
her Trading and Profit and Loss Account for the year ended 31 March 2005 her trial balance
shows the following items.
$
Bank 500 Dr
Creditors 700
Debtors 1 000
Machinery 20 000
Provision for depreciation on machinery 12 000
Stock 3 000
Drawings 4 500
Capital account at 1 April 2004 6 000
REQUIRED
(a) Prepare Bonnie’s Balance Sheet at 31 March 2005.
Bonnie Clyde
Balance Sheet at 31 March 2005.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
© UCLES 2005 0452/02 M/J/05

5 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[12]
(b) (i) Define working capital.
...............................................................................................................................[1]
(ii) From your answer to (a) above, calculate Bonnie’s working capital at
31 March 2005.
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[3]
[Total: 16]

6 For
Examiner’s
Use
3 Smith has a business selling washing machines. He buys the goods from the manufacturers
and sells them to stores and other suppliers.
He keeps full accounting records and his trial balance at 30 June 2005 is shown below.
Smith
Trial balance at 30 June 2005
Dr. Cr.
$ $
Advertising 400
Bank 3 200
Creditors 8 600
Debtors 14 800
Provision for depreciation of fixed assets 2 800
Drawings 24 000
Fixtures & Fittings 5 600
Insurance 420
Lighting and heating 600
Motor car 12 000
Motor expenses 860
Office expenses 280
Rent 720
Postage and stationery 180
Purchases 75 600
Sales
Capital
102 000
40 000
Stock at 1 July 2004 8 400
Wages and salaries 5 250 _______
153 400 153,400
The following additional information is available.
1 Stock at 30 June 2005 was valued at $7 100.

2 Motor expenses of $350 are to be accrued.
3 Depreciation of $700 for the year is to be charged.
4 Purchase invoices of $4 000 have not been included but the goods are included in the
closing stock valuation.
0452/02 O/N/05
7 For
Examiner’s
Use
(a) Prepare Smith’s Trading and Profit and Loss Account for the year ended 30 June 2005
Smith
Trading and Profit and Loss Account for the year ended 30 June 2005
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[16]

8 For
Examiner’s
Use
(b) (i) Calculate to two decimal places Smith’s gross profit percentage for the year. Show
your workings.
...................................................................................................................................
...............................................................................................................................[2]
(ii) Calculate to two decimal places Smith’s net profit percentage for the year. Show
your workings.
...................................................................................................................................
...............................................................................................................................[2]
(c) Jones has a similar business and his gross profit percentage is higher than Smith’s.
Suggest two reasons for this difference.
(i) ...................................................................................................................................
...................................................................................................................................
(ii) ...................................................................................................................................
...............................................................................................................................[4]
[Total: 24]
© UCLES 2005 0452/02 O/N/05

12 For
Examiner’s
Use
5 Anvil has prepared the following trial balance (after calculating net profit) for the year ended
31 August 2005.
Anvil
Trial Balance at 31 August 2005
$ $
Motor cars 22 000
Motor cars 5 400
Accruals 3 300
Bank and cash 22 400
Creditors 32 000
Debtors 52 000
Prepayments 1 800
Stock at 31 August 2005 16 000
Capital 91 000
Drawings 30 000
Net profit _______ 30 500
189 200 189 200
(a) Prepare Anvil’s Balance Sheet at 31 August 2005.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
© UCLES 2005 0452/02 O/N/05
13 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[16]
(b) From Anvil’s Balance Sheet, calculate the following ratios to two decimal places.
(i) Current ratio www.igcseaccounts.com

...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[3]
(ii) Quick ratio
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[3]
[Total: 22]
© UCLES 2005 0452/02 O/N/05

6
For
Examiner's
3 Hilota has a business supplying spare parts for cars. His financial year ends on 31 March. Use
At 31 March 2006 his accounts showed the following balances:
$
Stock (at 1 April 2005) 3 200
Balance at bank (Dr) 1 550
Sales 56 500
Sales returns 500
Purchases 34 200
Rent 4 000
Wages 7 200
Capital 20 000
Drawings 9 600
REQUIRED
(a) Prepare Hilota’s Trial Balance at 31 March 2006.
Hilota
Trial Balance at 31 March 2006
Dr Cr
$ $
[12]
© UCLES 2006 0452/02/M/J/06

7
For
Examiner's
Hilota has stock on hand at 31 March 2006 amounting to $3800. Use
REQUIRED
(b) From the information above and in part (a), prepare Hilota’s Trading Account for the
Hilota
Trading Account for the year ended 31 March 2006
[7]
(c) (i) Calculate Hilota’s gross profit percentage for the year, to two decimal places.
[3]

8
For
Examiner's
(ii) On the basis that Hilota had no sales returns in the period, calculate his revised Use
gross profit percentage to two decimal places.
[3]
[Total: 25]
© UCLES 2006 0452/02/M/J/06

6 For
Examiner's
Use
3 Morgan is in business as a printer. He has prepared the following Trial Balance (after
calculating net profit) from his accounting records for the year ended 31 August 2006.
Morgan
Trial Balance at 31 August 2006
$ $
Machinery at cost 7 000
Office equipment at cost 2 500
Machinery 1 400
Accrued expenses 300
Bank 2 200
Cash 200
Creditors 1 800
Debtors 3 500
Loan from Nicola repayable 2011 5 000
Prepayments 600
Stock at 31 August 2006 3 900
Capital 9 000
Drawings 21 000
Profit for the year _____ 18 000
38 700 38 700
REQUIRED
(a) State which accounting principle has been applied in the treatment of each of the
following items:
(i) Profit for the year;
(ii) Stock.
[4]
© UCLES 2006 0452/02/O/N/06

7 For
Examiner's
Use
(b) Prepare Morgan’s Balance Sheet at 31 August 2006.
Morgan
Balance Sheet at 31 August 2006
[13]

8 For
Examiner's
Use
(c) Morgan’s business has a bank overdraft at 31 August 2006. Suggest one way in which
he could reduce or eliminate the overdraft.
[2]
(d) Nicola has given Morgan an additional long term loan of $2000 paid into the bank on
1 September 2006.
In the table below, place a tick () under the correct heading to indicate the effect of
the additional loan on the following items in Morgan’s Balance Sheet:
Effect of additional loan
(i) Bank overdraft
(ii) Loan account
(iii) Working capital
(iv) Profit for the year
(v) Capital
[5]
[Total: 24]
© UCLES 2006 0452/02/O/N/06

14
5 The following is the trial balance of Rachel Smith at 31 March 2012. For
Examiner's
Use
$ $
Bank 5280
Cash 160
Purchases 42 500
Revenue 63 100
Inventory at 1 April 2011 3 100
Carriage inwards 1 050
Purchase returns 1 900
Premises 38 600
Equipment 9 600
Provision for depreciation of equipment 3 840
Bad debts 190
Property tax 6 000
Wages 7 100
Capital 48 000
120 740 120 740
The following additional information is available at 31 March 2012.
1 Inventory was valued at $3750.
2 A bonus of $180 is to be accrued in the wages account.
3 Property tax includes $1200 paid in advance.
4 Depreciation of $1920 is to be provided for the year.
5 A provision for doubtful debts of 3% of the trade receivables is to be created.
REQUIRED
(a) Prepare the income statement for the year ended 31 March 2012.
© UCLES 2012 0452/12/M/J/12

15
Rachel Smith For

Income Statement for the year ended 31 March 2012 Examiner's
Use
[16]

16
(b) (i) From your answer to (a), calculate the percentage of gross profit to revenue. Show For
your workings and give your answer to two decimal places. Examiner's
Use
[2]
(ii) Suggest one way in which Rachel Smith could improve this percentage.
[2]
(c) (i) From your answer to (a), calculate the percentage of profit for the year to revenue.
(ii) Suggest one way in which Rachel Smith could improve this percentage.
[2]
[Total: 24]
© UCLES 2012 0452/12/M/J/12

10
3 Mark Mutanda is a business consultant. His financial year ends on 31 January. He provided For
the following information on 31 January 2012. Examiner's
Use
$
Income from clients 82 100
Insurance 5 630
Wages and salaries 33 000
Rent received 2 600
Rates paid 5 200
Provision for doubtful debts 1 February 2011 154
Loan interest paid 900
Office expenses 17 177
Cash drawings 16 000
Capital 1 February 2011 200 000
1 On 31 January 2012 insurance prepaid amounted to $2320 and wages of $3200 are to be
accrued.
2 The rent received covers a period of 13 months to 28 February 2012.
3 The office expenses includes $214 for Mark Mutanda’s home telephone bill.
4 A 10-year loan of $20 000 was received on 1 February 2011. Interest is charged at 6%
per annum. www.igcseaccounts.com
5 The provision for doubtful debts is maintained at 2% of the trade receivables.
On 31 January 2012 the trade receivables totalled $6800.
6 Fixtures and fittings cost $5250. They are depreciated at 10% per annum on the
straight line method.
7 Office equipment was valued at $1900 on 1 February 2011.

Additional office equipment costing $600 was purchased during the year.
There were no sales of office equipment during the year.
On 31 January 2012 the office equipment was valued at $2100.
© UCLES 2012 0452/21/M/J/12

11
REQUIRED
For
(a) Prepare the income statement of Mark Mutanda for the year ended 31 January 2012. Examiner's
Use
Mark Mutanda
Income Statement for the year ended 31 January 2012
[18]

12
(b) Write up the capital account of Mark Mutanda for the year ended 31 January 2012. For
Examiner's
Use
down on 1 May 2012.
Mark Mutanda
Capital account
[6]
(c) Calculate the return on capital employed (ROCE) for Mark Mutanda.
Use the total capital employed on 1 February 2011.
[3]
(d) Explain the importance of the return on capital employed (ROCE).
[2]
© UCLES 2012 0452/21/M/J/12

13
(e) The return on capital employed (ROCE) is lower than it was in the previous year.
Suggest one reason for this. For
Examiner's
Use
[2]
[Total: 31]

17
(d) Prepare the balance sheet of the Dhavari Sports Club at 31 March 2012.
For
Examiner's
Dhavari Sports Club Use
[12]
[Total: 24]

18
5 Tania Yousaf sells office equipment. She values her inventory at the lower of cost and net For
realisable value. Examiner's
Use
REQUIRED
(a) Explain the meaning of the term “cost”.
[2]
(b) Explain the meaning of the term “net realisable value”.
[2]
(c) Explain how valuing inventory at the lower of cost and net realisable value is an
application of the principle of prudence.
[2]
(d) After the preparation of her financial statements for the year ended 31 December 2011,
Tania Yousaf discovered that the closing inventory had been overvalued by $400.
Complete the table below to show the effect of this.
overstated understated no effect

gross profit for the year ended
(i)
31 December 2011
profit for the year ended 31
(ii)
December 2012
credit balance on capital
(iii)
account on 1 January 2013
[4]
© UCLES 2012 0452/21/M/J/12

19
After correcting the financial statements, Tania Yousaf provided the following information: For
Examiner's
Use
$
Revenue for the year ended 31 December 2011 87 000
Inventory at 1 January 2011 6 000
Inventory at 31 December 2011 7 400
Gross profit margin 20%
REQUIRED
(e) Calculate the rate of inventory turnover.
(f) The rate of inventory turnover was better in 2011 than in 2010. Suggest one reason for this.
[2]
(g) State one factor that Tania Yousaf should consider before comparing the results of her
business with those of another business.
[1]

20
(h) State two reasons why Tania Yousaf is interested in the financial statements of her For
credit customers. Examiner's
Use
(i)
(ii)
[2]
(i) State one reason why each of the following business people are interested in Tania
Yousaf’s financial statements.
(i) Employee
(ii) Bank manager
[2]
© UCLES 2012 0452/21/M/J/12


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Prepared by D.

All questions are the copyright of Cambridge International Examination Board.

Date Transaction Customer’s name Amount ($)

Whizzo Products account

Sam Beesi account

Sales Returns account

0452/02/O/N/03 [Turn over

Enter these transactions in Rachel’s account in Jim’s Sales Ledger below.

Rachel Smith account

Date Details Reference Amount

Date Details Reference Amount

© UCLES 2008 0452/02/O/N/08

Sales returns account

Hales Orchestra account

Town School account

© UCLES 2008 0452/02/O/N/08 [Turn over

© UCLES 2008 0452/02/O/N/08

(ii) cash discount

October Customer Reference $

16 Total sales for week 550

© UCLES 2009 0452/02/O/N/09

© UCLES 2009 0452/02/O/N/09 [Turn over

Purchases Returns Journal

Cash Book (credit side)

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Carter account For

October Units Cost per unit

(b) Calculate the following. Show your workings.

(i) The value of inventory (stock) at 1 October.

(ii) The total cost of purchases for October.

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Calculate the value of inventory (stock) at 31 October.

© UCLES 2010 0452/13/O/N/10 [Turn over

Hans Lee’s inventory at 30 April 2012 was $12 100.

(a) State one reason for preparing a trial balance.

© UCLES 2012 0452/11/M/J/12

Increase Decrease No effect

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© UCLES 2012 0452/11/M/J/12

The following transactions took place in March 2012.

March 2 Bought goods, $1950, on credit from Essam Wholesalers

Purchases returns journal

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There was no balance on either of these accounts on 1 March 2012.

Ramy El Din account

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(d) Calculate the payment period for the trade payables.

Your answer should be rounded up to the next whole day.

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(b) Explain what is meant by the imprest system of petty cash.

Theba’s imprest amount is $200.

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Motor expenses account

Catering supplies account

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Cash Book &

All questions are the copyright of Cambridge International Examination Board.

On 1 April 2003, balances in Karl’s books included the following.

April 4 M Fynne paid the amount he owed by cheque after deducting

Discounts Allowed account

Discounts Received account

© UCLES 2006 0452/02/M/J/06