ACCOUNTING EXAM

BASED ON CAMBRIDGE 0452 SYLLABUS

TOPICS INCLUDED:
1. BASIC ACCOUNTING
2. BOOKS OF ORIGINAL ENTRY
3. BUSINESS DOCUMENTS
4. CASH BOOK
5. PETTY CASH BOOK
6. BANK STATEMENT & BANK RECONCILIATION
STATEMENT
7. TRIAL BALANCE
8. ERRORS
9. CORRECTION OF ERRORS

SECTION A: MCQ
TOTAL MARKS: 10
1 Which task is performed by a book-keeper?

A analysing accounting ratios

B interpreting the income statement
C posting entries from the journals to the ledgers
D preparing a statement of financial position

2 Which statement is correct?

A Accounting involves measuring profits and losses.

B Accounting is the recording of financial transactions.
C Book-keeping involves communicating financial data.
D Book-keeping requires the use of ratio analysis.

3 In which book of prime entry does a trader record cash discount received?

A cash book
B general journal
C purchases journal
D sales journal

4 The analysis columns of a petty cash book show the following totals.

postage 20
stationery 31

How should these totals be posted to the ledger?

A credit bank account with $51

B credit postage account with $20 and stationery account with $31
C debit cash account with $51
D debit postage account with $20 and stationery account with $31
5 Which business documents are not entered in the books of prime entry?

1. credit note
2. debit note
3. invoice
4. statement of account

A 1 and 3 B 1 only C 2, 3 and 4 D 2 and 4 only

6 A trader has the following ledger account.

heat and light account

$ $

year 1 year 1
January 1 balance b/d 400 December 31 income statement 4850
December 31 bank 4200
December 31 balance c/d 250 ____
4850 4850
year 2
January 1 balance b/d 250

What does the balance on 1 January, year 2 represent?

A heat and light outstanding

B heat and light refunded
C overpayment of heat and light
D prepayment of heat and light

7 Which statement about a trial balance is correct?

A It is a list of the ledger balances on a particular date.

B It is part of the double entry system of book-keeping.
C It is proof that all items have been posted to the correct accounts.
D It is proof that all transactions have been entered in the books of account.

[Turn over
 4

8 Trevor prepared his financial statements for the year ended 31 December 2020. He then discovered
that he had omitted to record a cash payment, $240, for insurance for the 12 months ending
30 November 2021.

What was the effect of this error on his statement of financial position?

cash other receivables capital

A $240 overstated $20 understated $220 overstated

B $240 overstated $220 understated $20 overstated
C $240 understated $20 overstated $220 understated
D $240 understated $220 overstated $20 understated

9 A payment of $68 for insurance has been entered in the insurance account as $86.

Which double entry will correct this?

debit credit

A insurance $18 suspense $18

B insurance $36 suspense $36
C suspense $18 insurance $18
D suspense $36 insurance $36

10 A business has received a bank statement. The bank statement shows the following entries.

1. a cheque issued to a credit supplier

2. a cheque received from a credit customer
3. a monthly rent payment made by standing order
4. charges made by the bank

Which items appear in the debit column of the bank statement?

A 1, 3 and 4 B 1 and 3 only C 1 only D 2

 ACCOUNTING EXAM
BASED ON CAMBRIDGE 0452 SYLLABUS

TOPICS INCLUDED:
1. BASIC ACCOUNTING
2. BOOKS OF ORIGINAL ENTRY
3. BUSINESS DOCUMENTS
4. CASH BOOK
5. PETTY CASH BOOK
6. BANK STATEMENT & BANK RECONCILIATION
STATEMENT
7. TRIAL BALANCE
8. ERRORS
9. CORRECTION OF ERRORS

SECTION B: Structured Written Paper

TOTAL MARKS: 100

Instructions:
- Do questions 1-6.
- Bonus question is given for bonus marks.
- Bonus marks will be counted once you attempt
question 1-6.
1 Gurjit is a trader. During January 2024, the following transactions took place.

January 4 Cash sales, $640, were paid directly into the bank account

7 Paid Sandy $551 by credit transfer, having deducted 5% cash discount

13 Paid cash, $120, for wages

19 Received payment by cheque, $415, from Uma

21 Paid Viraj $194 by telephone transfer, in full settlement of an invoice for $200

25 Withdrew cash from the bank, $100, for business use

REQUIRED

(a) Prepare Gurjit’s cash book on the page opposite.

Balance the cash book and bring down the balances at 1 February 2024.
 Gurjit
Cash Book
Date Details Discount Cash Bank Date Details Discount Cash Bank
allowed received
2024 $ $ $ 2024 $ $ $

Jan 1 Balance b/d 175 1490 .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

.............. ......................................... .............. .............. .............. .............. ......................................... .............. .............. ..............

[10]

[Turn over
(b) Complete the following table by placing a tick (3) in the correct column to indicate whether
each item would be used to update the cash book or would appear in the bank reconciliation
statement.

Updating cash Bank reconciliation

book statement

Bank error

Cheque from Uma dishonoured

Bank charges

[3]

Gurjit is considering paying amounts of less than $20 via petty cash. He would pay all larger
amounts by bank transfer or card payment. He would also require his customers to pay all amounts
due by bank transfer or card payment. Gurjit would stop issuing and receiving cheques.

REQUIRED

(c) Advise Gurjit whether or not he should make the above changes. Justify your answer by
providing points for and against making these changes.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [5]
(d) State the meaning of the following terms.

(i) Bank overdraft

...........................................................................................................................................

..................................................................................................................................... [1]

(ii) Bank charges

...........................................................................................................................................

..................................................................................................................................... [1]

[Total: 20]

[Turn over
2 Akil prepared his trial balance at 29 February 2024. The total of the debit side was $83 640 and
the total of the credit side was $84 025.

Akil later discovered the following errors.

1 The total of the sales journal for January 2024, $3416, had been credited to the sales
returns account.

2 A direct debit for insurance, $115, had been credited to both the bank account and the
insurance account.

3 Discount allowed, $47, had been credited to the account for discount received.

4 A payment for office equipment, $52, had been debited to the stationery account.

5 The purchases journal for February had been overcast by $90.

REQUIRED

(a) State

(i) which business document shows when the direct debit for insurance was paid

..................................................................................................................................... [1]

(ii) which of the errors listed in 1 to 5 above is an error of principle

..................................................................................................................................... [1]
 11

(b) Prepare the journal entries to correct errors 1 to 3 only. Narratives are not required.

Akil
Journal
Error Details Debit Credit
number $ $

……….. …………………………………………….. ……………… ………………

……….. …………………………………………….. ……………… ………………

……….. …………………………………………….. ……………… ………………

……….. …………………………………………….. ……………… ………………

……….. …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

………… …………………………………………….. ……………… ………………

[7]

[Turn over
(c) (i) State why a balance may remain on the suspense account after errors 1 to 5 have
been corrected.

...........................................................................................................................................

..................................................................................................................................... [1]

(ii) Prepare the suspense account. Bring down any remaining balance at 1 March 2024.

Akil
Suspense account
Date Details $ Date Details $

……… ………………………… ……….. ……… ………………………… ………..

……… ………………………… ……….. ……… ………………………… ………..

……… ………………………… ……….. ……… ………………………… ………..

……… ………………………… ……….. ……… ………………………… ………..

……… ………………………… ……….. ……… ………………………… ………..

……… ………………………… ……….. .......... ………………………… ………..

……… ………………………… ……….. ……… ………………………. ………..

[5]

Akil’s draft profit for the year, before correction of the errors, was $17 420.

REQUIRED

(d) Calculate Akil’s profit after items 1 to 5 have been corrected.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [5]

[Total: 20]
3 Shakir started trading in the year ended 31 August 2023 but did not keep proper books of account.
His assets and liabilities at 1 September 2023 are as follows.

$
Motor vehicle 9 500
Inventory 1 240
Cash at bank 1 682
Trade payables:
Latif 200
Harrison 237

REQUIRED

(a) (i) Prepare the journal for Shakir’s opening entries at 1 September 2023. A narrative is not
required.

Shakir
Journal

Date Details Debit Credit

$ $

............. ............................................................................. ................. .................

............. ............................................................................. ................. .................

............. ............................................................................. ................. .................

............. ............................................................................. ................. .................

............. ............................................................................. ................. .................

............. ............................................................................. ................. .................

............. ............................................................................. ................. .................

[3]

(ii) State two advantages of maintaining double entry records.

1 ........................................................................................................................................

...........................................................................................................................................

2 ........................................................................................................................................

...........................................................................................................................................
[2]
 4

During September 2023, the following transactions took place.

Sept 2 Paid rent, $420, by credit transfer

4 Withdrew cash, $350, from the bank for business use

7 Paid Latif, $194, by telephone transfer, in full settlement of the amount owing at
1 September 2023

10 Sold goods on credit, $195, to Sydney

12 Paid $161, cash, for wages

17 Cash sales, $290, were paid directly into the bank account

28 Received a cheque, $100, from Sydney

29 Paid $95 to Harrison, by electronic transfer, having deducted $5 cash discount from
the amount due

REQUIRED

(b) Prepare Shakir’s cash book on the page opposite.

Balance the cash book and bring down the balances at 1 October 2023. [11]
 Shakir
Cash Book

Date Details Discount Cash Bank Date Details Discount Cash Bank
allowed received
2023 $ $ $ 2023 $ $ $

........... ........................................ …............ …............ …............ ........... ........................................ …............ …............ ................

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ ................

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ ................

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ ................

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ ................

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ ................
5

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ ................

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ ................

........... ........................................ …............ …............ …............ ........... ........................................ ................ ................ …............

........... ........................................ …............ …............ …............ ........... ........................................ …............ …............ …............

........... ........................................ …............ …............ …............ ........... ........................................ …............ …............ …............

........... ........................................ …............ …............ …............ ........... ........................................ …............ …............ …............
 6

Shakir received a bank statement dated 30 September 2023. The bank statement showed that
Shakir had $763 in the bank account. On comparing the bank statement to his cash book, Shakir
noted the following.

Bank charges, $35, were charged by the bank in September.

Cash Sales, $175, had been paid for by credit transfer but not recorded in the cash book.
The cheque received from Sydney had not yet been cleared by the bank.
The cash sales, $290, had been omitted from the bank statement in error.

REQUIRED

(c) Calculate the corrected bank balance.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [4]

[Total: 20]
 14

4 Asia is a trader. She prepared her trial balance at 31 August 2023. The credit side totalled $273
more than the debit side. Asia placed the difference in a suspense account.

Asia later discovered the following errors.

1 A credit purchase, $112, from Jacques, had been entered twice in the purchases journal.

2 The wages account had been overcast by $300.

3 Cash received, $75, from Savanah, a trade receivable, had only been entered in the cash
book.

4 The total of the sales returns journal for August 2023 of $198, had been credited to both the
sales returns account and the purchases returns account.

5 A payment to Sophie, $93, had been recorded as $39 in Sophie’s account.

REQUIRED

(a) Prepare the journal entries to correct errors 1–5. Narratives are not required.
 15

Asia
Journal

Error Details Debit Credit

number $ $

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

................. ...................................................……........ .................…… .................……

[11]
(b) Prepare the suspense account, including the original difference on the trial balance.

Asia
Suspense account

Date Details $ Date Details $

.......... ......................................... .............. .......... ......................................... ..............

.......... ......................................... .............. .......... ......................................... ..............

.......... ......................................... .............. .......... ......................................... ..............

.......... ......................................... .............. .......... ......................................... ..............

.......... ......................................... .............. .......... ......................................... ..............

[5]

REQUIRED

(c) Complete the following table by placing a tick (3) to show the effect of each error. The first
one has been completed as an example.

Error Error Gross profit Profit for No effect

number the year
+ – + –
1 A credit purchase, $112, from Jacques,
had been debited twice to the purchases 3 3
account.
2 The wages account had been overcast
by $300.
3 Cash received, $75 from Savanah, a
trade receivable, had only been entered
in the cash book.
4 The total of the sales returns journal for
August 2023, $198, had been credited to
both the sales returns account and the
purchases returns account.
5 A payment to Sophie, $93, had been
recorded as $39 in Sophie’s account.
[4]

[Total: 20]
5 Jason is a trader. His financial year ends on 31 May.

On 1 May 2017 his ledger included the following balances.

$
Purchases 19 620
Purchases returns 850

Jason’s purchases journal and purchases returns journal for the month of May 2017 were as follows.
Purchases journal
2017 $
May 2 Asnee 400
5 Botan 610
7 Chaitali 388
19 Asnee 190
24 Dae 517
2105

Purchases returns journal

2017 $
May 4 Asnee 105
15 Chaitali 55
160
REQUIRED

(a) Complete the following table, naming the source document used by Jason on each date, and
the person who issued the document.

Date Source document Issued by

May 2

May 4

(b) Prepare the following ledger accounts in the books of Jason for the month of May 2017. Show
the transfers to the income statement.
Jason owed Asnee $480 on 1 May 2017. He paid this balance by cheque on 6 May after deducting
2½% discount.

REQUIRED

(c) Prepare Asnee’s account in Jason’s purchases ledger for the month of May 2017. Include
entries for the relevant transactions recorded in Jason’s journals.

Jason
Asnee account

Before preparing the financial statements Jason prepared a trial balance. The totals of the trial
balance did not agree.

REQUIRED

(d) State what is meant by the term ‘trial balance’.

__________________________________________________________________________
__________________________________________________________________________

(e) Name and explain two errors which would not affect the balancing of the trial balance.
Error 1
Name_________________________________________________________________
Explanation____________________________________________________________
__________________________________________________________________________

Error 2
Name_________________________________________________________________
Explanation____________________________________________________________
__________________________________________________________________________

[Total marks:12]
6 Ben opened a retail store on 1 April 2017. He introduced the following into the business.

$
Inventory 15 200
Shop
fittings 14 300
17 900 (of which $17 400 was paid into a
Cash business bank account)
On the same day, Ben received a business start-up loan of $15 000 which was paid into the
business bank account. Interest at 5% per annum was payable at six-monthly intervals.

REQUIRED

(a) Prepare the opening journal entry. A narrative is not required.

Ben
Journal
Debit Credit
$ $

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

.............................................................................. ....................... .........................

The following transactions took place in September 2017.

September 3 Invoice received from EF Limited for office equipment, $1900

28 Goods taken by Ben for personal use, $430

REQUIRED

(b) Prepare journal entries to record these transactions. Narratives are required. See next page.
[Total marks: 8]
 BONUS QUESTION

B Limited provides cleaning services to client offices and factories. The clients provide their own
cleaning materials. The trial balance of B Limited at 30 June 2023 was as follows.

B Limited
Trial Balance at 30 June 2023

Debit Credit
$ $
Revenue 135 040
Wages and salaries 72 000
Motor expenses 9 820
Insurance 11 040
General expenses 12 780
Motor vehicles at cost 42 000
Provision for depreciation of motor vehicles 16 500
Equipment at cost 5 000
Provision for depreciation of equipment 2 000
Trade receivables 1 640
Bank 19 950
Ordinary share capital 10 000
General reserve 2 000
Retained earnings 13 490
Dividend paid on ordinary shares 4 800
179 030 179 030

Additional information

1 Revenue of $9240 was received in advance.

2 The insurance charge for the 12 months to 31 December 2022 was $7200 and for the
12 months to 31 December 2023 it is $7440. On 1 January 2023 insurance was paid in full for
the 12 months to 31 December 2023.

3 Accrued general expenses at 30 June 2023 were $186.

4 Depreciation is to be charged on motor vehicles at 25% per annum using the reducing
balance method.

5 Depreciation on equipment is to be charged at 20% per annum using the straight line method.

6 No dividends were outstanding at 30 June 2023.

7 $1000 is to be transferred to the general reserve at 30 June 2023.

REQUIRED

(a) Prepare the income statement for B Limited for the year ended 30 June 2023.

B Limited
Income Statement for the year ended 30 June 2023

$ $
............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

............................................................................................... ..................... .....................

[10]