1 Leo maintains a petty cash book using the imprest system. The imprest amount, which is $200, is restored on the first day of each month. All payments of less than $100 are made from petty cash. All cash receipts of less than $100 are paid into petty cash. On 1 April 2021 Leo had $48 in his petty cash box. Leo provided the following information for April 2021. April 1 Restored petty cash imprest from the business bank account 5 Paid for office cleaning, $21 7 Paid for train ticket, $13 13 Paid $72 to Hunter, a trade payable 18 Paid taxi fare, $14 25 Received cash, $11, from Conrad, a trade receivable REQUIRED (a) Prepare Leo’s petty cash book for the month of April 2021, on page 3. Balance the petty cash book and bring down the balance on 1 May 2021. Leo Petty Cash Book Total received $ Date 2021 Details Total paid $ Travel $ Office expenses $ Ledger accounts $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [10] (b) (i) Name the ledger to which each of the following would be posted. The total of the column for travel expenses … The payment to Hunter … [2] (ii) Name the accounting principle which is being applied when figures from the petty cash book are posted to the appropriate ledgers. … [1] Leo received a statement of account from Hunter. REQUIRED (c) State two purposes of issuing this statement to Leo. 1 … … 2 … … [2] Leo is considering making all payments over $50 to trade payables by credit transfer. REQUIRED (d) Advise Leo whether he should go ahead with this change. Justify your answer by providing two advantages and two disadvantages. … … … … … … … … … … [5] [Total: 20]

1(a) Leo Petty Cash Book Total received Date Details Total paid Travel Office expenses Ledger accounts $ 2021 $ $ $ $ 48 Apr 1 Balance b/d (1) 152 Bank (1) 5 Office cleaning (1) 21 21 7 Train ticket (1) 13 13 13 Hunter (1) 72 72 11 18 Taxi fare (1) 14 14 25 Conrad (1) 120 27 21 72 91 211 30 Balance c/d 211 91 May 1 Balance b/d (1)OF + (1) dates + (1) OF totalling analysis columns 10 1(b)(i) Travel – general ledger (1) Hunter – purchases ledger (1) 2 1(b)(ii) Duality (1) 1 1(c) To remind Leo to pay the balance (1) To allow Leo to check his records (1) To provide a summary of the transactions for the month/period (1) Accept other valid points Max (2) 2 1(d) Advantages Do not need to keep as much cash on the premises (1) Less risk of theft or fraud (1) Do not have to have face to face meeting to pay/save time (1) Or other relevant advantages Max (2) Disadvantages No source document immediately available (1) Still have to pay amounts below $50 by other methods (1) May be easier / more suitable to use cheques (1) May Increase bank charges (1) Or other relevant disadvantages Max (2) Recommendation (1) 5 To earn marks, you need to correctly record the opening balance, the bank imprest restoration, and each transaction in the correct 'Total received' or 'Total paid' column and the appropriate analysis column. You also need to correctly balance the account and bring down the balance for the next period, and ensure all dates are accurate.

1 Shiv is a trader. His financial year ends on 31 August. He does not maintain a full set of accounting records but was able to provide the following information for the year ended 31 August 2021. Total revenue $320 000 Mark-up 25% Bank account summary for the year ended 31 August 2021 $ $ Balance b/d 49 000 Expenses 34 000 Cash sales 3 700 Drawings 4 200 Receipts from trade receivables 312 400 Payments to trade payables 257 700 Equipment 16 000 Balance c/d 53 200 365 100 365 100 Assets and liabilities 1 September 2020 31 August 2021 $ $ Inventory at cost 23 500 ? Trade receivables 22 000 25 900 Expenses owing – 400 Trade payables 32 600 29 600 Equipment at net book value – 12 800 Premises at cost 90 000 90 000 Shiv had withdrawn $900 for a family holiday during the year. He had included this in the expenses. On 31 August 2021 Shiv decided to create a provision for doubtful debts of 3% of trade receivables. REQUIRED (a) Calculate the purchases for the year ended 31 August 2021. … … … … … … … [3] (b) Prepare the income statement for the year ended 31 August 2021. The inventory on 31 August 2021 should be clearly shown within the statement. Shiv Income Statement for the year ended 31 August 2021 $ $ … … … … … … … … … … … … … … … ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… [11] (c) Name the accounting principle Shiv should apply when recording the $900 he had used for a family holiday. … [1] Shiv has always valued his inventory at cost price. He is considering valuing the inventory on 31 August 2021 at selling price as he believes it would result in a higher profit for the year. REQUIRED (d) Discuss the implications of Shiv valuing the inventory on 31 August 2021 at selling price. … … … … … … … … … … … … [5] [Total: 20] PLEASE TURN OVER

1(a) $ Payments to trade payables 257 700 Less Opening trade payables 32 600 (1) 225 100 Add Closing trade payables 29 600 (1) Purchases 254 700 (1) Accept alternative forms of presentation 3 1(b) Shiv Income Statement for the year ended 31 August 2021 $ $ Revenue 320 000 (1) Cost of sales Opening inventory 23 500 Purchases 254 700 (1) OF 278 200 Closing inventory 22 200 (2) CF/(1) OF 256 000 (1) OF Gross profit 64 000 (1) Expenses (34 000 + 400 (1) – 900 (1)) 33 500 Provision for doubtful debts 777 (1) Depreciation of equipment (16 000 – 12 800) 3 200 (1) 37 477 Profit for the year 26 523 (1) OF 11 1(c) Business entity (1) 1 1(d) Inventory should be valued at the lower of cost and net realisable value (1) Cost of sales would be understated (1) The profit will be overstated/profit will not be shown at a realistic level (1) The current assets/inventory will be overstated (1) Prudence principle is not being observed (1) Consistency principle is not being observed (1) Comparison with previous years/competitors would not be accurate (1) Accounting records must present a realistic view of the business (1) Accept other valid points Max (5) 5 (a) To calculate purchases, you need to start with payments to trade payables, subtract the opening trade payables, and then add the closing trade payables. (b) To prepare the income statement, you must correctly calculate the cost of sales (including opening inventory, purchases, and closing inventory), and then calculate expenses by adjusting the given figure for expenses owing, drawings, provision for doubtful debts, and depreciation. (c) The principle being referred to is the business entity concept. (d) To earn marks, you need to state that inventory should be valued at the lower of cost and net realisable value, and explain the impact of not doing so on cost of sales, profit, current assets, and the accounting principles violated.

1 Shiv is a trader. His financial year ends on 31 August. He does not maintain a full set of accounting records but was able to provide the following information for the year ended 31 August 2021. Total revenue $320 000 Mark-up 25% Bank account summary for the year ended 31 August 2021 $ $ Balance b/d 49 000 Expenses 34 000 Cash sales 3 700 Drawings 4 200 Receipts from trade receivables 312 400 Payments to trade payables 257 700 Equipment 16 000 Balance c/d 53 200 365 100 365 100 Assets and liabilities 1 September 2020 31 August 2021 $ $ Inventory at cost 23 500 ? Trade receivables 22 000 25 900 Expenses owing – 400 Trade payables 32 600 29 600 Equipment at net book value – 12 800 Premises at cost 90 000 90 000 Shiv had withdrawn $900 for a family holiday during the year. He had included this in the expenses. On 31 August 2021 Shiv decided to create a provision for doubtful debts of 3% of trade receivables. REQUIRED (a) Calculate the purchases for the year ended 31 August 2021. … … … … … … … [3] (b) Prepare the income statement for the year ended 31 August 2021. The inventory on 31 August 2021 should be clearly shown within the statement. Shiv Income Statement for the year ended 31 August 2021 $ $ … … … … … … … … … … … … … … … ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… [11] (c) Name the accounting principle Shiv should apply when recording the $900 he had used for a family holiday. … [1] Shiv has always valued his inventory at cost price. He is considering valuing the inventory on 31 August 2021 at selling price as he believes it would result in a higher profit for the year. REQUIRED (d) Discuss the implications of Shiv valuing the inventory on 31 August 2021 at selling price. … … … … … … … … … … … … [5] [Total: 20] PLEASE TURN OVER

1(a) $ Payments to trade payables 257 700 Less Opening trade payables 32 600 (1) 225 100 Add Closing trade payables 29 600 (1) Purchases 254 700 (1) Accept alternative forms of presentation 3 1(b) Shiv Income Statement for the year ended 31 August 2021 $ $ Revenue 320 000 (1) Cost of sales Opening inventory 23 500 Purchases 254 700 (1) OF 278 200 Closing inventory 22 200 (2) CF/(1) OF 256 000 (1) OF Gross profit 64 000 (1) Expenses (34 000 + 400 (1) – 900 (1)) 33 500 Provision for doubtful debts 777 (1) Depreciation of equipment (16 000 – 12 800) 3 200 (1) 37 477 Profit for the year 26 523 (1) OF 11 1(c) Business entity (1) 1 1(d) Inventory should be valued at the lower of cost and net realisable value (1) Cost of sales would be understated (1) The profit will be overstated/profit will not be shown at a realistic level (1) The current assets/inventory will be overstated (1) Prudence principle is not being observed (1) Consistency principle is not being observed (1) Comparison with previous years/competitors would not be accurate (1) Accounting records must present a realistic view of the business (1) Accept other valid points Max (5) 5 (a) To calculate purchases, you need to start with payments to trade payables, subtract the opening trade payables, and then add the closing trade payables. (b) To prepare the income statement, you must correctly calculate the cost of sales by including opening inventory, purchases, and closing inventory. Then, calculate total expenses by adjusting the given expenses for expenses owing, drawings, provision for doubtful debts, and depreciation. Finally, subtract total expenses from gross profit to find the profit for the year. (c) The specific accounting concept being applied is the business entity concept. (d) To earn marks, you need to state that inventory should be valued at the lower of cost and net realisable value. Then, explain the impact of incorrect valuation on the cost of sales, profit, and current assets/inventory, and mention the accounting principles not being observed, such as prudence and consistency, or the impact on comparability and realistic view.

2 Tej is a trader who sells goods on credit. His year end is 28 February. Tej provided the following information. $ At 1 March 2020 Trade receivables 6250 Other receivables (rent prepaid) 300 For the year ended 28 February 2021 Rent charge for the year 3900 Cheque payments for rent 30 June 2020 1950 30 November 2020 2100 At 28 February 2021 Trade receivables 7000 The provision for doubtful debts was 4% of trade receivables at 1 March 2020 and 6% of trade receivables at 28 February 2021. REQUIRED (a) Prepare the rent payable account for the year ended 28 February 2021. Balance the account and bring down the balance on 1 March 2021. Tej Rent payable account Date … … … … … … … … Details … … … … … … … … $ … … … … … … … … Date … … … … … … … … Details … … … … … … … … $ … … … … … … … … [6] (b) Prepare the provision for doubtful debts account for the year ended 28 February 2021. Balance the account and bring down the balance on 1 March 2021. Tej Provision for doubtful debts account Date … … … … … … … … Details … … … … … … … … $ … … … … … … … … Date … … … … … … … … Details … … … … … … … … $ … … … … … … … … [4] (c) Name the accounting principle applied when the income statement is adjusted for rent prepaid. … [1] (d) (i) Explain how the realisation principle is applied to the recording of Tej’s credit sales. … … … … [2] (ii) Explain how the prudence principle is applied to the maintenance of Tej’s provision for doubtful debts. … … … … [2] Tej sells to a small number of customers. He has good working relationships with them and they sometimes recommend him to potential customers. Tej is concerned that his customers are taking a long time to pay him. He is considering charging interest on overdue accounts. REQUIRED (e) Advise Tej whether or not he should charge interest on overdue accounts. Justify your answer. … … … … … … … … … … [5] [Total: 20]

2(a) Tej Rent payable account Date 2020 Mar 1 Jun 30 Nov 30 2021 Mar 1 Details Balance b/d (1) Bank (1) Bank (1) Balance b/d (1)OF $ 300 1950 2100 4350 450 Date 2021 Feb 28 Details Income Statement (1) Balance c/d $ 3 900 450 4 350 + (1) dates 6 2(b) Tej Provision for doubtful debts account Date 2021 Feb 28 Details Balance c/d (7 000 × 6%) (1) $ 420 420 Date 2020 Mar 1 2021 Feb 28 Mar 1 Details Balance b/d (6 250 × 4%) (1) Income statement (1)OF Balance b/d (1)OF $ 250 170 420 420 4 2(c) Matching (1) 1 Accept ‘Accruals’ 2(d)(i) Revenue is regarded as being earned (1) when title to the goods is passed (1) The profit on sales is not recognised until it is earned (1) Profit is recognised when earned not when payment is received (1) Profit is earned when the sale is completed/legal title passes (1) No profit is recognised when goods are ordered (1) Accept other valid points. Max (2) 2 2(d)(ii) To ensure that profits/trade receivables are not overstated (1) To ensure that trade receivables are shown at a realistic amount in the statement of financial position (1) Profits and assets are reduced when the provision for doubtful debts is increased/profits and assets are increased when the provision is reduced (1) Accept other valid points Max (2) 2 2(e) Advantages Will encourage customers to pay earlier (1) May increase liquidity/cash flow (1) May reduce administration time/costs (1) Or other relevant advantages Max (2) Disadvantages Good relationships with customers will be damaged (1) May lose customers/sales may reduce (1) May incur extra costs to attract customers/advertising/marketing (1) Or other relevant disadvantages Max (2) Recommendation (1) 5 To earn marks, you must correctly record the opening balance, the bank payments for rent, and the income statement figure for rent expense. You also need to correctly balance the account and bring down the balance for the next period, and ensure all dates are accurate.

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

Answer: C To earn this mark, you need to identify that providing for depreciation ensures the matching principle is applied, aligning the expense of using an asset with the revenue it helps generate over its useful life.

Cambridge IGCSE Accounting · 0452

IGCSE Accounting (0452) Accounting principles and policies past paper questions

Questions on the accounting principles and policies that underpin the financial statements.

79 free questions from 2017–2021, each with its marking scheme. Open the full topical bank to filter by subtopic, paper, and year.

Accounting principles and policies in IGCSE Accounting 0452 exams, 2020–2025

Across 2020–2025, Accounting principles and policies accounted for 115 questions worth 495 marks in Cambridge IGCSE Accounting (0452) papers.

By year
Year	Questions	Marks
2020	27	84
2021	23	137
2022	20	96
2023	15	110
2024	19	38
2025	11	30

Most-tested subtopics

7.1 Accounting principles380 marks
7.2 Accounting policies20 marks

Appears in

Paper 1 · 95 qs
Paper 2 · 20 qs

All most-tested Accounting topics

2021 May/Jun · Paper 2 · Q1 · 20 marks
Marking scheme
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2021 Oct/Nov · Paper 2 · Q1 · 20 marks
Marking scheme
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2021 Oct/Nov · Paper 2 · Q1 · 20 marks
Marking scheme
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2021 May/Jun · Paper 2 · Q2 · 20 marks
Marking scheme
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2021 May/Jun · Paper 1 · Q12 · 1 mark
Marking scheme
Mark scheme — 2021 Paper 1 Q12
Answer: C
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