CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Exam-style questions and sample answers have been written by the authors. In examinations, the way marks are awarded may
be different.

Coursebook answers
Most of the answers are in ‘outline’ form indicating the appropriate points and skills that learners need
to include in their answers. They provide the necessary guidance to allow learners to develop and extend
the points for a fuller answer that contains the relevant skills. In many instances, there may be other valid
approaches to answering the question.

Chapter 4
Accounting in context
Know your customers and what they owe
Learners’ answers may include:
• Capital, drawings, sales, various expenses, e.g. stationery, and various assets, e.g. computers or
engineering equipment.
• Some accounts may have few or infrequent entries, e.g. capital; others may be of low value, e.g.
stationery, postage.
• Depends on the business and what their product(s) or service(s) is. For example, a business that does
not sell on credit will not have many, if any, trade receivables.

Activities
Activity 4.1
Capital account
Debit Credit
$ $
Oct 7 Balance c/d 8 000 Oct 1 Bank 8 000
Oct 8 Balance b/d 8 000

Purchases account
Debit Credit
$ $
Oct 2 Dev 5 000 Oct 7 Balance c/d 5 000
Oct 8 Balance b/d 5 000

Rent account
Debit Credit
$ $
Oct 2 Bank 1 000 Oct 7 Balance c/d 1 000
Oct 8 Balance b/d 1 000

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
1 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Sales account
Debit Credit
$ $
Oct 7 Balance c/d 3 700 Oct 4 Yash 3 000
Oct 4 Cash 700
3 700 3 700
Oct 8 Balance b/d 3 700

Yash account
Debit Credit
$ $
Oct 4 Sales 3 000 Oct 7 Balance c/d 3 000
Oct 8 Balance b/d 3 000

Dev account
Debit Credit
$ $
Oct 6 Bank 4 750 Oct 2 Purchases 5 000
Oct 6 Discount received 250
5 000 5 000

Discount received account

Debit Credit
$ $
Oct 7 Balance c/d 250 Oct 7 Cash book 250
Oct 8 Balance b/d 250

Stationery account
Debit Credit
$ $
Oct 6 Cash 30 Oct 7 Balance c/d 30
Oct 7 Balance b/d 30

Cash book
Debit Credit
Disc Cash Bank Disc Cash Bank
$ $ $ $ $ $
Oct 1 Balances b/d 1 000   2 500 Oct 2 Rent   1 000
Oct 1 Capital   8 000 Oct 5 Bank C   500
Oct 4 Sales   700 Oct 6 Dev 250   4 750
Oct 5 Cash C    500 Oct 6 Stationery    30
Oct 7 Balances c/d 1 170   5 250
 –0    1 700 11 000 250 1 700 11 000
Oct 8 Balances b/d 1 170   5 250

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
2 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Activity 4.2
Accounts with debit balances Accounts with credit balances
Cash Sales
Drawings Capital
Assets, e.g. motor vehicles, furniture Purchases returns
Purchases Income, e.g. rent received
Expenses, e.g. rent, wages Loan
Sales returns Trade payables
Trade receivables Discounts received
Discounts allowed
Bank (unless overdrawn)

Note: this is not an exhaustive list.

Practice questions
1 A The bank account receives money – debit, from the owner as capital – credit.
2 D A, B and C are all optional; however, D must occur for a trial balance to be produced.
3 Discounts allowed account
Debit Credit
$ $
Sep 1 Balance b/d  60 Sep 30 Balance c/d 234
Sep 30 Cash book 174
234 234
Oct 1 Balance b/d 234

Discounts received account

Debit Credit
$ $
Sep 30 Balance c/d 130 Sep 1 Balance b/d 110
Sep 30 Cash book  20
130 130
Oct 1 Balance b/d 130

J and P Ltd account

Debit Credit
$ $
Sep 8 Purchases returns 240 Sep 1 Balance b/d 700
Sep 29 Bank 500 Sep 15 Purchases 640
Sep 30 Balance c/d 600
1 340 1 340

Oct 1 Balance b/d 600

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
3 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

A and B Ltd account

Debit Credit
$ $
Sep 7 Sales 450 Sep 30 Balance c/d 1 150
Sep 18 Sales 300
Sep 21 Sales 400
1 150 1 150
Oct 1 Balance b/d 1 150

George account
Debit Credit
$ $
Sep 12 Sales 2 300 Sep 28 Bank 2 208
Sep 28 Discounts allowed 92
2 300 2 300

Motor vehicles account

Debit Credit
$ $
Sep 4 Bank 12 000 Sep 30 Balance c/d 12 000
12 000 12 000
Oct 1 Balance b/d 12 000

Cash account
Debit Credit
$ $
Sep 4 Capital 800 Sep 7 Stationery  45
Sep 23 Sales 100 Sep 24 Sales returns  20
Sep 26 Wages 200
Sep 30 Balance c/d 635
900 900
Oct 1 Balance b/d 635

Bank account
Debit Credit
$ $
Sep 1 Balance b/d 3 000 Sep 8 Motor vehicles 5 000
Sep 5 Sales 450 Sep 25 Purchases 200
Sep 9 Purchases returns 50 Sep 25 Sales returns 100
Sep 30 Balance c/d 1 800
5 300 5 300

Oct 1 Balance b/d 1 800

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
4 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

4 Learners’ answers might include:

• Credit customer’s (trade receivables) accounts received value before they give value, i.e. the
customer receives the goods before they pay or return goods. During this time delay there will be a
balance on the accounts.
• The opposite is true for suppliers who give the goods before they are paid for. During this time
delay there will be a balance on the accounts.
• Occasionally a customer might have a credit balance. This can occur if the customer overpays in
error or returns goods after paying for them.
• It is also possible for a supplier to have a debit balance. This might occur in error or if the supplier
is paid for goods that are then returned.

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
5 © Cambridge University Press 2021