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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education
ACCOUNTING Paper 1 Multiple Choice Additional Materials: Multiple Choice Answer Sheet Soft clean eraser Soft pencil (type B or HB is recommended)
0452/01
May/June 2007 1 hour
*0415103409*
READ THESE INSTRUCTIONS FIRST Write in soft pencil. Do not use staples, paper clips, highlighters, glue or correction fluid. Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you. There are forty questions on this paper. Answer all questions. For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet. Read the instructions on the Answer Sheet very carefully. Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet. Calculators may be used.
This document consists of 11 printed pages and 1 blank page.
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2 1 Businesses use financial records to prepare final accounts. Which record is used in the preparation of the balance sheet? A B C D 2 bank statement cash book purchases journal sales journal
What does the owner of a business discover from the profit and loss account? A B C D bank account balance how much has been spent on fixed assets how much she withdrew from the business whether gross profit has exceeded expenses
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Which is a liability of a business? A B C D amount owing by debtors amount owing to creditors long term loan to employee property tax paid in advance
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Which appears in both the trading account and the profit and loss account? A B C D cost of sales gross profit net profit sales
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A trader reduced the telephone expenses in the final accounts by the amount of his personal telephone bill, which had been included in the telephone expenses account. Which accounting principle is the trader using? A B C D business entity going concern matching prudence
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3 6 A payment of rent of $100 is debited to the rent account and credited to the bank account. Which accounting principle is being applied? A B C D 7 consistency duality prudence realisation
Which would not be recorded in the accounting records of a business when applying the money measurement principle? A B C D cost of computers purchased fees paid for staff computer training course new computer skills acquired by staff repair bill for computers
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When are credit sales recorded in the seller’s book-keeping records? A B C D when the cash is received when the goods are delivered when the goods are invoiced when the sales order is received
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Bashir buys goods on credit from Khalid. The goods are damaged and Bashir returns them to Khalid. Which document does Khalid send to Bashir to confirm the return? A B C D credit note debit note invoice statement
10 Which book of prime entry is also a ledger account? A B C D cash book journal purchases journal sales journal
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4 11 A trader provides the following extract from her petty cash book. Date Details Total paid $ April 10 19 26 30 Window cleaner M. Ali Printer paper Total for month 10 12 25 47 25 25 10 12 Stationery $ Analysis columns Cleaning $ 10 12 Ledger accounts $
Which entries are made in the ledger on 30 April? A B C D credit stationery account: credit cleaning account: credit ledger accounts credit stationery account: credit cleaning account: credit M. Ali account debit stationery account: debit cleaning account: debit ledger accounts debit stationery account: debit cleaning account: debit M. Ali account
12 Simon sells goods on credit to Linda. The list price of the goods is $2000. Simon allows his customers a trade discount of 25 %. A cash discount of 2 % is also allowed if the customer pays the account in 30 days. What amount will be entered in Simon’s sales journal? A $1460 B $1470 C $1500 D $1960
13 Which transaction is recorded in the journal? A B C D correction of an error in recording sales returns drawings in cash by the owner purchase of a motor vehicle by cheque purchase of goods on credit
14 Rent is paid to J. Perigo in cash. How is this recorded? account to be debited A B C D cash J. Perigo rent rent account to be credited rent rent cash J. Perigo
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5 15 The totals of the discount columns in a cash book are as follows: debit credit $2000 $1250
Which entries are made in the ledger accounts? account to be debited A B C D discounts allowed discounts allowed discounts received discounts received $ 1250 2000 1250 2000 account to be credited discounts received discounts received discounts allowed discounts allowed $ 2000 1250 2000 1250
16 On 1 April 2007 Chan owes Tan $570. During April 2007 the following transactions took place. Tan sold goods, $380, on credit to Chan Chan returned goods, $150, to Tan Chan paid Tan $500 by cheque What is the balance brought down on Chan’s account in Tan’s ledger on 1 May 2007? A B C D $300 credit $300 debit $840 credit $840 debit
17 How is the purchase of goods on credit recorded? general ledger A B C D debit cash credit cash debit purchases credit purchases purchases ledger credit purchases debit purchases credit supplier debit supplier
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6 18 Saddique’s trial balance failed to balance. The debit column totalled $12 250 and the credit column totalled $12 200. The following errors were discovered and corrected. No entry had been made for cash sales, $150. The total of the discount received account, $50, had been omitted from the trial balance. What will be the totals of the amended trial balance? A $12 250 B $12 300 C $12 350 D $12 400
19 The difference on a trial balance was entered in a suspense account. It was found later that a payment of $1600 for rent had been entered correctly in the cash book but credited in the rent account. Which entry corrects this error? account to be debited A B C D rent rent suspense suspense $ 1600 3200 1600 3200 account to be credited suspense suspense rent rent $ 1600 3200 1600 3200
20 Mohammed deals in office equipment. A desk intended for use by the business was recorded as the purchase of goods for resale. Which entry corrects this error? account to be debited A B C D purchases office equipment sales office equipment account to be credited office equipment purchases office equipment sales
21 A business receives a bank statement and updates its cash book. Which item will increase the bank balance in the cash book? A B C D bank charges credit transfers received interest charges standing orders paid
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7 22 Why should all accrued expenses be shown in a business’s final accounts? A B C D so that the correct total of current assets is shown in the balance sheet so that the income of a period is matched against the costs of that period to show how much customers owe the business to show the amount owed to trade suppliers
23 Susan receives a cheque from a tenant on 10 December 2006. This is rent due to the business for the period 1 January to 31 March 2007. How is this treated in Susan’s final accounts for the year ended 31 December 2006? A B C D accrued expense accrued income prepaid expense prepaid income
24 Which is a capital receipt? A B C D discount received interest received from bank account proceeds from sale of fixed asset sales income
25 A purchase of equipment is debited to the equipment repairs account in error. What is the effect of this error on the business’s final accounts? net profit too high A B C D       too low fixed assets in balance sheet too high   too low
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8 26 A business fails to depreciate its fixed assets. What is the effect of this? A B C D fixed assets are overstated and net profit is overstated fixed assets are overstated and net profit is understated fixed assets are understated and net profit is overstated fixed assets are understated and net profit is understated
27 Paul purchased a motor vehicle for $15 000. He estimated that it would be used for 5 years and then be sold for $2000. Paul decided to spread the depreciation of the motor vehicle equally over its working life at the rate of 20 % per annum. What is the accumulated depreciation at the end of year 2? A $4680 B $5200 C $5400 D $6000
28 How should stock be valued? A B C D higher of selling price and cost higher of net realisable value and cost lower of selling price and cost lower of net realisable value and cost
29 The following information is provided. $ sales for the year purchases for the year opening stock closing stock What is the cost of goods sold? A $90 000 B $92 000 C $128 000 D $132 000 220 000 130 000 10 000 12 000
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9 30 Abu is a trader. In March 2006 he wrote off a credit customer’s account as a bad debt. Where will this bad debt appear in Abu’s final accounts prepared at 31 December 2006? A B C D deducted from creditors in balance sheet deducted from debtors in balance sheet deducted from gross profit in profit and loss account deducted from sales in trading account
31 Which is not entered in a partnership profit and loss appropriation account? A B C D drawings interest on capital interest on drawings partners' salaries
32 Amy and Beth are in partnership, sharing profits equally. No salaries are paid to the partners. For the financial year ended 31 December 2006: $ net profit interest charged on partners' drawings Amy Beth 100 000 6 000 4 000
How much is credited to Beth's current account for the year ended 31 December 2006? A $50 000 B $51 000 C $55 000 D $59 000
33 A trader provides the following information. 1 January 2006 $ total assets total liabilities 50 000 15 000 31 December 2006 $ 60 000 22 000
The owner’s drawings for the year ended 31 December 2006 were $12 000. What was the net profit for the year? A $3 000 B $9 000 C $10 000 D $15 000
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10 34 A trader does not keep complete accounting records but is able to provide the following information at the end of her first year of trading. $ cheques received from customers cash received from customers amount owed by customers at the end of the year discounts allowed What are the sales for the year? A $726 B $825 C $850 D $875 628 149 73 25
35 A trader’s balances at 31 December include the following. $ creditors cash stock bank overdraft equipment debtors What is the total of the current assets? A $1350 B $1650 C $1750 D $2100 500 50 1100 400 750 200
36 Which group contains only tangible fixed assets? A B C D bank, cash, debtors, stock bank, debtors, loan, prepaid expenses equipment, goodwill, machinery, vehicles equipment, machinery, premises, vehicles
37 How is working capital calculated? A B C D current assets – current liabilities current assets – current liabilities – long term liabilities fixed assets + current assets – current liabilities fixed assets – long term liabilities
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11 38 The net profit of a business was $15 000. Balances in the books of the business include the following: $ premises debtors creditors stock cash long term loan What is the return on capital employed (ROCE) %? A 15.79 % B 17.05 % C 19.23 % D 22.06 % 80 000 12 000 7 000 2 000 1 000 20 000
39 A business provides the following information for the year ended 30 April 2007. $ sales cost of sales expenses What is the percentage of gross profit to sales? A 22.22 % B 38.89 % C 61.11 % D 77.78 % 90 000 55 000 15 000
40 The table shows information about Ahmed’s business for the last two years. 2005 sales gross profit as a percentage of sales net profit as a percentage of sales $40 000 35 % 15 % 2006 $50 000 28 % 14 %
What does a comparison of these results show about Ahmed’s business? A B C D Expenses were controlled better in 2005 than in 2006. Expenses were controlled better in 2006 than in 2005. The value of gross profit was greater in 2005 than in 2006. The value of gross profit was greater in 2006 than in 2005.
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