WATERSHED COLLEGE INTERNAL EXAMINATIONS

International General Certificate of Secondary Education

___________________________________________________________________
ACCOUNTING [REVISION] 0452/11
Form 4 Paper 1 Multiple Choice August 2020

You must answer on the multiple choice answer sheet.

You will need: Multiple choice answer sheet
Soft clean eraser
Soft pencil (type B or HB is recommended

INSTRUCTIONS
● There are 35 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 multiple
choice answer sheet.
● Write in soft pencil.
● Write your name and class on the multiple choice answer sheet in the spaces
provided unless this has been done for you.
● Do not use correction fluid.
● You may use a calculator.
INFORMATION
● The total mark for this paper is 35.
● Each correct answer will score one mark. A mark will not be deducted for a
wrong answer.
● Any rough working should be done on this question paper.
___________________________________________________________________
This document has 8 printed pages.
2
1 A business has the following assets and liabilities.
What is the capital?
A $29 900 B $33 900 C $34 100 D $49 900
2 A business purchases a motor vehicle on credit.
What is the effect of this?
A It increases non-current assets. B It increases owner’s capital.
C It reduces profit for the year. D It reduces the bank balance.
3 Why is a statement of financial position prepared?
A to show trade receivables and trade payables at a certain date
B to show how much profit a business made
C to show the financial position of a business at a certain date
D to show the total debits equal the total credits
4 Which is a measure of profitability?
A current ratio B quick ratio (acid test ratio)
C rate of inventory turnover D return on capital employed
5 How is working capital calculated?
A current assets – current liabilities B non-current assets – current liabilities
C owners’ capital – current liabilities D total assets – current liabilities
6 Each financial transaction has two opposite accounting entries.
Which accounting principle is being described?
A business entity B duality
C going concern D money measurement
 3
7 Which is not shown in a business’s financial statements?
A cost of staff training courses B improved knowledge of staff
C increase in sales staff bonuses D staff holiday pay
8 Revenue is recognised as being earned when ownership of goods passes to the
customer.
Which accounting principle is being described?
A duality B matching
C prudence D realisation
9 What is the meaning of the consistency principle?
A Accounts should provide for all accruals and prepayments.
B All businesses in the same industry should account for items in the same way.
C Businesses should not normally change the way in which they treat items.
D Losses should be provided for as soon as they are foreseen.
10 A customer who bought goods on credit returns some of them to the supplier.
Which document will the customer send to the supplier?
A credit note B debit note
C invoice D statement
11 A credit note for $600 issued to a customer has been entered as an invoice for
goods sold. The balance on the customer’s account after this entry is $14 200.
What is the correct balance on the customer’s account?
A $13 000 B $13 600 C $14 800 D $15 400
 4
12 How is profit for the year calculated?
A gross profit + discount received + expenses
B gross profit + discount received – expenses
C gross profit – discount received + expenses
D gross profit – discount received – expenses
13 Sara and Fatima are in partnership. Sara is entitled to a partnership salary of
$30 000 per annum and the balance of the profit is shared equally.
The profit for the year was $180 000.
What is Sara’s total income from the business?
A $75 000 B $90 000 C $105 000 D $120 000
14 Which is shown in a statement of affairs?
A gross profit B overhead expenses
C owner’s capital D sales and purchases
15 On 1 September a trader purchased on credit goods with a list price of $1000.
He was given a trade discount of 20% and was allowed a cash discount of 5%
provided the account was paid in 30 days.
How much would the trader pay to the supplier on 28 September?
A $750 B $760 C $800 D $950
16 A motor vehicle cost $12 000 on 1 January 2015. It is depreciated using the
reducing balance method at 25% per annum.
What is the net book value of the motor vehicle on 31 December 2016?
A $5250 B $6000 C $6750 D $9000
17 Where should the total of the purchases returns journal be posted?
A credit side of the cash book B credit side of the purchases returns account
C debit side of the purchases returns account D debit side of the trading account
5
18 Why is depreciation entered in the income statement?
A to provide cash to replace assets when they are worn out
B to show the assets in the statement of financial position at their market values
C to show when the assets need to be replaced
D to spread the cost of the assets over their useful lives
19 Why is a trial balance prepared?
A to calculate profit for the year
B to check the amount of the owner’s capital
C to check the arithmetical accuracy of the double entry
D to find out how much is owed to credit suppliers
20 On 1 January 2016 a trader’s insurance account had a debit balance of $900.
On 1 July 2016 an annual insurance premium of $2000 was paid for the year
ended 30 June 2017.
Which amount was charged for insurance in the profit and loss account for the
year ended 31 December 2016?
A $900 B $1900 C $2000 D $2900
21 The cost of a new motor vehicle is debited to the motor vehicle expenses
account.
Which type of error is this?
A commission B complete reversal
C original entry D principle
 6
22 A machine costing $10 000 has an estimated life of 4 years. It is to be
depreciated at 40% per annum using the reducing balance method.
What is the charge for depreciation in the second year?
A $2 400 B $2 500 C $4 000 D $6 400
23 In connection with inventory valuation, what is meant by ‘net realisable
value’?
A selling price
B selling price minus estimated profit
C selling price minus estimated trade discount
D selling price minus selling expenses
24 What is profit for the year?
A income less cost of sales B income less expenses
C purchases less cost of sales D purchases less expenses
25 What does not appear in an income statement (profit and loss account)?
A carriage inwards B carriage outwards
C discount allowed D discount received
26 Elizabeth started a business on 1 January but did not maintain any accounting
records.
Which will not be included in a calculation to find credit sales for her first year of
trading?
A amount owing by trade receivables at year end
B irrecoverable debts written off during the year
C cheques received from credit customers during the year
D goods returned to suppliers during the year
 7
27 Which is a current liability of a cleaning business?
A amounts owing by customers B cash at bank
C inventory of cleaning materials D unpaid staff wages
28 Which transaction affects the amount of working capital?
A cash paid into bank B cash paid to a credit supplier
C purchase of premises on credit D purchase of goods on credit
29 Amounts owed by a trader for electricity are given below:
1 January $2 000 31 December $2 500
The charge for electricity shown in the profit and loss account for the year ended

31 December was $15 500. What was the amount paid for electricity during the
year?
A $15 000 B $15 500 C $16 000 D $20 000
30 The cash book showed a balance in the bank of $1 000 Dr. On the same date,
the bank statement showed a balance in the bank of $900 Dr.
Which could be the reason for this difference?
A bank interest received B payments made directly into the trader’s bank account

C standing order for property tax paid directly by the bank D unpresented cheque
31 Which will be shown on a bank statement?
A cash paid into bank not yet credited B cheque dishonoured
C cheque drawn not yet presented D petty cash payment
32 Which error will require a correcting entry in a suspense account?
A cash paid to Gideon debited to Gibson’s account
B motor vehicles account omitted from the trial balance
C purchase of fixtures for cash debited to the purchases account
D no entry made for cash paid for stationery

8
33 Maria maintains a provision for doubtful debts at 5% of the trade receivables

at the end of each financial year.

On 31 December 2018 the trade receivables owed $25 000 and on 31 December
2019 the trade receivables owed $20 000.
How much will appear in Maria’s income statement (profit and loss account) for
the year ended 31 December 2019?
A $250 credit B $250 debit C $1000 credit D $1000 debit
34 Which of the following appears in the income statement (profit and loss
account) of a partnership?
A a partner’s drawings B a partner’s salary
C interest on a partner’s capital D interest on a partner’s loan
35 What is cash discount?
A an allowance given to a customer for paying in cash
B an allowance given to a customer for prompt payment
C a deduction from the list price of goods bought by a customer
D a deduction from the list price of goods for bulk buying by a customer