Centre Number Candidate Number Name

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS

International General Certificate of Secondary Education
ACCOUNTING 0452/02
Paper 2
October/November 2004

1 hour 30 minutes
Candidates answer on the Question Paper.
No Additional Materials are required.

READ THESE INSTRUCTIONS FIRST

Write your Centre name, candidate number and name on all the work you hand in.
Write in dark blue or black pen in the spaces provided on the Question Paper.
You may use a soft pencil for rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.

Answer all questions.

At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
You may use a calculator.
Where layouts are to be completed, you may not need all the lines for your answer.

For Examiner’s Use

2
If you have been given a label, look at the
details. If any details are incorrect or 3
missing, please fill in your correct details
in the space given at the top of this page. 4

Stick your personal label here, if 5

provided.
Total

This document consists of 11 printed pages and 1 blank page.

SP (BR) S60099/5
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1 (a) State one purpose for which the journal may be used.

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(b) Name the final account to which the balance of the carriage outwards account is
transferred at the end of the financial year.

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(c) State the basis on which a business should value its closing stock.

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(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.

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(ii) Name the type of discount claimed by the debtor in (i) above.

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(e) State the name given to the list of debit and credit balances in a business’s books on a
given date.

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(f) Name a partnership’s final account which shows the division of profits and losses
between the partners.

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(g) Explain what is meant by a compensating error.

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(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]

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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
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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;

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(ii) net profit as a percentage of her sales for the year.

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2 (c) In her next financial year (ending on 31 August 2005), Martha plans to reduce her total
expenses in the Profit and Loss account by 10%. Assuming her sales remain
unchanged, state the effect this reduction would have on her gross and net profit to
sales percentages.

1. Effect on gross profit to sales percentage

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2. Effect on net profit to sales percentage

......................................................................................................................................[2]

[TOTAL: 13]

3 Otto began a motor vehicle repair business on 1 October 2001. On that date he bought
machinery on credit from JD Engineering for $20 000. He decided to depreciate this
machinery at 30% using the reducing (diminishing) balance method.

(a) Make the entries required in Otto’s ledger accounts below for the three years ended 30
September 2004. (There were no other purchases or sales of machinery during this
period.) Show the balance brought down on the provision for depreciation of machinery
account on 1 October 2004.

You may use this space for your workings.

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Machinery account

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Provision for depreciation of machinery account

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3 (b) Complete the extract below to show how machinery appears in Otto’s Balance Sheet
as at 30 September 2004.

Extract from Balance Sheet as at 30 September 2004

Fixed Assets Cost Depreciation Net book value

to date
$ $ $

Machinery ............................. ............................. ............................. [3]

Otto estimates that the machinery has a useful life of six years when its scrap value is
expected to be $2000.

His accountant has advised him to consider using the straight line (equal instalment)
method for depreciating the machinery instead of the reducing (diminishing) balance
method.

(c) (i) Calculate the accumulated depreciation on the machinery at 30 September 2004
using the straight line (equal instalment) method. Show your workings

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(ii) Suggest one reason why the straight line (equal instalment) method might be more
suitable for Otto to use when depreciating his machinery.

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...............................................................................................................................[2]

[TOTAL: 17]

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BLANK PAGE

QUESTION 4 IS ON THE FOLLOWING PAGE

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4 Jonah is a sole trader who keeps full double entry accounting records including a three
column cash book. All cheques received are banked on the same day.

On 30 June 2004 balances in his books included the following.

Debtors $
H Syde 500
B Sharp 800
M Yaveli 630
Creditors
J Teime 400
P Mulder 1000
Cash 600
Bank (Dr) 2500

Jonah’s transactions for the month of July 2004 included the following.
$
July 3 H Syde paid the amount he owed by cheque after deducting
cash discount of $10.
7 Cash was withdrawn from bank for office use. 200
10 Paid J Teime by cheque after deducting $15 cash discount.
12 Paid wages in cash. 400
14 B Sharp paid the amount he owed by cheque after deducting
cash discount of $20.
17 Paid P Mulder by cheque after deducting cash discount of $25.
20 Cash sales paid directly into bank. 350
21 M Yaveli paid the amount he owed by cheque.
24 Paid wages in cash. 250
Paid electricity bill by cheque. 600
29 Jonah’s bank returned M Yaveli’s cheque for $630 as
dishonoured.

(a) Enter the transactions shown on the next page in Jonah’s cash book on the page
provided (the cash and bank balances on 1 July 2004 have already been entered for
you).

Balance the cash book at 31 July and bring down the balances on 1 August 2004. [21]

© UCLES 2004 0452/02/O/N/04

 4 (a) Jonah

Cash Book

© UCLES 2004
Date Discount Cash Bank Date Discount Cash Bank
2004 $ $ $ 2003 $ $ $
July 1 Balances b/d 600 2500 July
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(b) Make the entries required in the discounts accounts on 31 July 2004.

Discounts allowed account

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Discounts received account

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[TOTAL: 25]

5 Rosie Lee is a sole trader who does not operate a full double entry accounting system.
However she is able to provide the following information about her business.

At 1 October 2003 At 30 September 2004

$ $
Fixtures and fittings 12 000 14 000
Motor vehicle – 3 000
Stock 3 000 11 000
Debtors 5 500 1 000
Cash at bank 1 500 –
Bank overdraft – 2 000
Creditors 5 000 4 000

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(a) Using the above information, calculate Rosie’s capital at 1 October 2003 and 30 September
2004. Show your workings.

Calculation of capital

At 1 October 2003

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At 30 September 2004

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Rosie introduced additional capital to buy the motor vehicle which is used in the
business. Her drawings during the year ended 30 September 2004 were $8000.

Rosie has not yet charged any depreciation on her fixed assets at 30 September 2004
and now decides that they should be depreciated by $1000.

(b) Using your answer to 5(a) and the above information, calculate Rosie’s profit or loss for
the year ended 30 September 2004. Show your workings.

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(c) Suggest one reason which could explain why Rosie’s business had a bank overdraft on
30 September 2004.

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[TOTAL: 23]

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 0452/02/O/N/04