London Examinations Igcse: Accounting

Surname
Initial(s)
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Paper Reference
No.
4 3 0 5 0 1
Candidate
Signature
No.
Paper Reference(s)
4305/01 Examiner’s use only
London Examinations Team Leader’s use only
IGCSE
Accounting Question Leave
Number Blank
Paper 1 1
Monday 10 November 2008 – Afternoon 2
Time: 2 hours 30 minutes 3

4
5
Materials required for examination Items included with question papers 6

Nil Nil

Instructions to Candidates
In the boxes above, write your centre number, candidate number, your surname, initials and signature.
The paper reference is shown at the top of this page. Check that you have the correct question paper.
Answer ALL the questions in Section A and Section B in the spaces provided in this question paper.
Final accounts and balance sheet may be set out in a range of acceptable forms. You may draw up
your own ruling for final accounts and balance sheet.
Ledger accounts and books of original entry should be completed (if required) in the format required
by the layout given.

Information for Candidates

The total mark for this paper is 100.
The marks for individual questions and the parts of questions are shown in round brackets: e.g. (2).
There are 6 questions in this question paper. Any blank pages are indicated.
There are 4 ruled pages at the end of this question paper which you may use if you cannot fit your
answer in the space provided.

Advice to Candidates
You are reminded of the importance of clear English and careful presentation in your answers.

Total
This publication may be reproduced only in accordance with
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*M32101A0128*
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M32101A
W850/4305/57570 4/4/5/4/4/
M32101A_IGCSE_Accounting_Paper_11 1 13/08/2008 14:14:11

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Section A
Answer ALL questions
Question 1
For each question, choose the best answer A, B, C or D and write it in the box.
(a) Cash discount allowed is originally recorded in the

A general ledger
B journal
C purchases book
D cash book
(1)
(b) Individual entries in the sales day book are posted to which of the following?
A debit side of the customer’s account
B debit side of the sales account
C credit side of the sales account
D credit side of the customer’s account
(1)
(c) Postage costs recorded in the petty cash book are posted to the
A debit side of the cash book
B debit side of the postages account
C credit side of the cash book
D credit side of the postages account
(1)
(d) A suspense account is opened when which of the following does not balance?
A the trading account
B the profit and loss account
C the balance sheet
D the trial balance
(1)
(e) What does the closing balance on a creditors ledger control account represent?
A the amount owing to credit suppliers
B the amount due from credit customers
C the amount of total purchases for the year
D the amount paid to credit suppliers for the year
(1)

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(f) A sale on credit to A. Patel was posted in error to S. Patel in the sales ledger. This is an
error of
A commission
B omission
C principle
D reversal
(1)
(g) Working capital is the surplus of

A all assets over all liabilities
B current assets over all liabilities
C current assets over current liabilities
D all assets over current liabilities
(1)
(h) In a partnership, to which of the following accounts would a partner’s drawings be debited?
A appropriation account
B bank account
C capital account
D current account
(1)
(i) A sports club has received subscriptions totalling £1 040 during the year, of which £80
was received in advance. At the end of the year £120 was outstanding. Which amount for
subscriptions should be included in the income and expenditure account?
A £960
B £1 000
C £1 040
D £1 080
(1)
(j) A business issues an invoice for stock with a list price of £20 000. The invoice was subject
to a trade discount of 25% and a cash discount of 5%. VAT is charged at 10%.
How much VAT should be shown on the invoice?
A £1 425
B £1 500
C £1 900
D £2 000
(1) Q1
(Total 10 marks)

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Question 2
Throughout Question 2, assume that the rate of VAT is 10%
Charles Brown is a wholesaler of footwear. He buys and sells mainly on credit terms. He does
not offer cash discount to any of his customers.
On 1 April 2008 his sales ledger contained the following debit balances.
C Lyon £1 200
H Green £3 200
D Black £1 000
F White £2 500
The following are extracts from his books for April 2008.
Sales Journal
Date Narration Goods VAT Total

£ £ £
April 1 C Lyon 750 75 825
April 5 H Green 1 200 120 1 320
April 13 D Black 500 50 550
April 21 F White 2 300 230 2 530
April 28 C Lyon 600 60 660
Totals for Month 5 350 535 5 885
Returns Inwards Journal
Date Narration Goods VAT Total

£ £ £
April 3 C Lyon 120 12 132
April 8 F White 50 5 55
Totals for Month 170 17 187

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Cash Book (Debit side)
Bank Column
Date Narration Bank

£
April 1 Balance b/d 3 500
April 3 Cash Sales (including VAT) 240
April 5 C Lyon 1 200
April 8 H Green 3 200
April 15 Cash Sales (including VAT) 600
April 21 D Black 1 000
April 30 F White 2 500
The Journal
Date Narration Debit Credit

£ £
April 21 C Lyon (Purchases Ledger) 650
C Lyon (Sales Ledger ) 650
Being transfer of balance in purchases ledger set off

against balance in the sales ledger


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(a) Prepare the account of C Lyon in Charles Brown’s sales ledger. Balance the account on
30 April 2008 and bring the balance down.
C Lyon Account
Date Narration £ Date Narration £
(6)
(b) Prepare the total debtors account for the month of April 2008. Balance the account on
30 April 2008 and bring the balance down.
Total Debtors Account
(6)

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(c) Explain two ways in which Charles might find the total debtors account useful in the
running of his business.
(i) ........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
(2)
(ii) ........................................................................................................................................
........................................................................................................................................
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(2)
At the end of April, Charles is advised that one of his debtors, D Black, has ceased trading
and is unable to pay his outstanding amount of £550. Charles decides to write this off as a bad
debt.
(d) Set out the journal entry for this transaction.
The Journal
Date Narration Debit Credit

£ £
(3)


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Charles has been experiencing problems in the past year in collecting payments from credit
customers. He has been advised to offer some form of discount to his customers but is unsure
which one to offer.
(e) Explain the following terms.
(i) Trade Discount
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
(2)
(ii) Cash Discount
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
(2)
(iii) What would be the effect, if any, on the calculation of VAT, if cash discount was
introduced?
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
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(2) Q2
(Total 25 marks)

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Question 3
Luke and Simon have been partners for some years in a travel business. They share profits and
losses equally.
The business final accounts have been prepared and the appropriation account is as follows.
Luke and Simon

Appropriation Account
For year ended 30 September 2008
£ £
Net profit for the year 75 000
Interest on drawings: Luke 500
Simon 750
1 250
76 250
Interest on capitals: Luke 12 000
Simon 10 000
22 000
Partnership salary: Luke 5 000
49 250
Share of remaining profit: Luke 24 625
Simon 24 625
49 250
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In addition the following balances appeared in the partnership books on 30 September 2008.
Account £
Premises 200 000
Bank 7 025
Insurance prepaid 260
Light and heat owing 200
Fixtures and fittings (Cost) 25 000
Provision for depreciation (furniture and fittings) 12 500
Debtors 6 500
Provision for doubtful debts 195
Creditors 4 200
Capital accounts: Luke 120 000
Simon 100 000
Current account balances (1 October 2007): Luke 2 340 (Cr)
Simon 650 (Dr)
Drawings for the year: Luke 35 000
Simon 40 000
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(a) Prepare the current accounts of Luke and Simon as they would appear in the ledger.
Luke – Current Account
Simon – Current Account
(8)
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(b) Prepare a balance sheet for the partnership as at 30 September 2008.
(12)
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(c) Evaluate why the partners have agreed to be charged interest on drawings.
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(5) Q3
(Total 25 marks)
TOTAL FOR SECTION A: 60 MARKS
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Section B
Answer ALL questions
Question 4
The treasurer of the Sevenoaks College Drama Society has produced the following statements
for the society’s committee, covering the financial year ended 31 December 2007.
Sevenoaks College Drama Society

Statement of Affairs
As at 1 January 2007
£ £
Assets
Scenery (Net Book Value) 7 500
Stock of refreshments 100
Subscriptions due 50
Bank balance 3 000
10 650
Liabilities
Costume hire fee outstanding 650
10000

Receipts and Payments Account
For Period 1 January 2007 – 31 December 2007
Receipts £ Payments £
Bank balance 1 January 2007 3 000 Hire of costumes 1 500
Subscriptions : 2006 50 Rent of theatre 750
2007 1 600 Administrative expenses 440
2008 90 Purchase of refreshments 845
Ticket sales 4 000 Purchase of new scenery 7 000
Refreshment sales 1 200
Bank balance 31 December 2007 595
10 535 10 535
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The following additional information is available on 31 December 2007 and is to be taken into
account.
l The closing stock of refreshments is valued at £165

l Scenery has been valued at £12 500
l There are no subscriptions outstanding for 2007
(a) Prepare the trading account for the society to show the profit or loss on the sale of
refreshments for the year ended 31 December 2007.
Draw column lines in the table below for your layout.

Trading Account
Year Ended 31 December 2007
(3)
17

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(b) Prepare the income and expenditure account for the society, showing clearly the surplus
or deficit for 2007.

Income and Expenditure Account
Year Ended 31 December 2007
(6)
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(c) Prepare the balance sheet for the society as at 31 December 2007.

Balance Sheet
As at 31 December 2007
(7) Q4
(Total 16 marks)
19

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Question 5
Ahmed Patel is a manufacturer of high performance motor car engines. His manufacturing
account for 2007 – 2008 is shown below.
Ahmed Patel
Manufacturing Account
For Year Ended 30 September 2008
£000 £000 £000

Opening stock of raw materials 120
Purchases of raw materials 540
660
Closing stock of raw materials 100
560
Manufacturing wages 720
1 280
Factory rent and insurance 180
Depreciation of machinery 220
Factory light and heat 80
Factory supervisor wages 260
740
2 020
Work in progress
Opening stock 60
Closing stock ?
(20)
2 000
(a) For the year ended 30 September 2008 identify
(i) cost of raw materials consumed
........................................................................................................................................
(1)
(ii) prime cost
........................................................................................................................................
(1)
(iii) total factory overheads
........................................................................................................................................
(1)
(iv) value of the closing stock of work in progress
........................................................................................................................................
(1)
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The following additional information is available on 30 September 2008 and is to be taken
into account.
l During the year 1 000 engines were manufactured

l Three-quarters of production was sold
l The firm’s pricing policy is to mark up factory cost of production by 50%
(b) For the year ended 30 September 2008 calculate
(i) the selling price of one engine
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
(2)
(ii) the total gross profit
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
(2)
(iii) the value of the closing stock of finished goods based on factory cost of production.
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
(2) Q5
(Total 10 marks)
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Question 6
Ben Farrell is the owner of a retail business which has been operating successfully for a
number of years.
The business’s summarised profit and loss account for the last two years is shown below:
Year ended Year ended

30 June 30 June
2007 2008
£ 000 £ 000
Turnover 480 720
Cost of sales 240 396
Average stock 36 44
Gross profit 240 324
Variable expenses 80 95
Fixed expenses 18 18
Net profit 142 211
(a) Stating clearly the formula used, calculate the Net Profit Margin for each of the two
years.
Formula
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Net Profit Margin for year ended 30 June 2007
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Net Profit Margin for year ended 30 June 2008
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(3)
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(b) Stating clearly the formula used, calculate the Mark up for each of the two years.
Formula
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Mark up for year ended 30 June 2007
...............................................................................................................................................
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Mark up for year ended 30 June 2008
...............................................................................................................................................
...............................................................................................................................................
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(3)
(c) Stating clearly the formula used, calculate the Rate of Stock Turnover for each of the two
years.
Formula
...............................................................................................................................................
...............................................................................................................................................
...............................................................................................................................................
Rate of Stock Turnover for year ended 30 June 2007
...............................................................................................................................................
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Rate of Stock Turnover for year ended 30 June 2008
...............................................................................................................................................
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(3)
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Ben believes that the improvement in the net profit for the year ended 30 June 2008 was due
to the following.
l Turnover increased as a result of (i) cutting selling prices and (ii) changes in the
quality of stock
l Running costs were reduced as a result of improved efficiency in operating the
business
(d) To what extent do you agree with Ben? Use figures to support your answer.
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(5) Q6
(Total 14 marks)
TOTAL FOR SECTION B: 40 MARKS
TOTAL FOR PAPER: 100 MARKS
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London Examinations Igcse: Accounting

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Surname

4305/01 Examiner’s use only

London Examinations Team Leader’s use only

Time: 2 hours 30 minutes 3

Materials required for examination Items included with question papers 6

M32101A_IGCSE_Accounting_Paper_11 1 13/08/2008 14:14:11

Answer ALL questions

(a) Cash discount allowed is originally recorded in the

(g) Working capital is the surplus of

M32101A_IGCSE_Accounting_Paper_13 3 11/08/2008 10:39:22

Throughout Question 2, assume that the rate of VAT is 10%

Date Narration Goods VAT Total

Returns Inwards Journal

Date Narration Goods VAT Total

Date Narration Bank

Date Narration Debit Credit

Being transfer of balance in purchases ledger set off

M32101A_IGCSE_Accounting_Paper_15 5 11/08/2008 10:39:22

Date Narration £ Date Narration £

Total Debtors Account

Date Narration £ Date Narration £

(d) Set out the journal entry for this transaction.

Date Narration Debit Credit

M32101A_IGCSE_Accounting_Paper_17 7 11/08/2008 10:39:22

(e) Explain the following terms.

(i) Trade Discount

(ii) Cash Discount

M32101A_IGCSE_Accounting_Paper_19 9 11/08/2008 10:39:23

Luke and Simon

M32101A_IGCSE_Accounting_Paper_111 11 11/08/2008 10:39:23

Luke – Current Account

Date Narration £ Date Narration £

Simon – Current Account

Date Narration £ Date Narration £

M32101A_IGCSE_Accounting_Paper_113 13 11/08/2008 10:39:23

TOTAL FOR SECTION A: 60 MARKS

M32101A_IGCSE_Accounting_Paper_115 15 11/08/2008 10:39:23

Answer ALL questions

Sevenoaks College Drama Society

Sevenoaks College Drama Society

l The closing stock of refreshments is valued at £165

l There are no subscriptions outstanding for 2007

Draw column lines in the table below for your layout.

Sevenoaks College Drama Society

M32101A_IGCSE_Accounting_Paper_117 17 11/08/2008 10:39:23

Draw column lines in the table below for your layout.

Sevenoaks College Drama Society

Draw column lines in the table below for your layout.

Sevenoaks College Drama Society

M32101A_IGCSE_Accounting_Paper_119 19 11/08/2008 10:39:23

£000 £000 £000

(a) For the year ended 30 September 2008 identify

(i) cost of raw materials consumed

(ii) prime cost

(iii) total factory overheads

(iv) value of the closing stock of work in progress

l During the year 1 000 engines were manufactured

l The firm’s pricing policy is to mark up factory cost of production by 50%

(b) For the year ended 30 September 2008 calculate

(i) the selling price of one engine

(ii) the total gross profit

M32101A_IGCSE_Accounting_Paper_121 21 11/08/2008 10:39:23

Year ended Year ended