2025 Cambridge IGCSE Accounting (0452) Practice Paper with Answers

A trader calculated his profit for the year as $24,500. He then discovered the following errors:
1. Insurance prepaid at the end of the year, $200, was completely omitted from the ledger.
2. The purchase of office furniture costing $1,500 had been debited to the office expenses account.

What was the correct profit for the year after correcting these errors?

A customer returned goods with a list price of $800 to a trader. The trader had originally allowed a 10% trade discount. Which document and which book of prime entry will the trader use to record this transaction?

On 1 January 2024, a business had prepaid rent of $900. During the year ended 31 December 2024, the business paid rent of $5,400. On 31 December 2024, rent outstanding was $600. What was the rent expense charged to the income statement for the year ended 31 December 2024?

A business bought a machine for $12,000 on 1 January 2022. It depreciates machinery at 20% per annum using the reducing balance method. The machine was sold on 1 January 2024 for $7,200. What was the profit or loss on the disposal of the machine?

On 1 June 2024, H Limited had an ordinary share capital of $200,000 (shares of $0.50 each), a general reserve of $45,000, and retained earnings of $30,000. During the year ended 31 May 2025, the company made a profit of $60,000, transferred $15,000 to the general reserve, and paid a dividend of $0.05 per share. What was the total equity of the company on 31 May 2025?

A trader's cash book showed a bank balance of $1,450 debit. Upon comparison with the bank statement, it was found that:
1. Bank charges of $35 had not been entered in the cash book.
2. A cheque received for $240 had been entered in the cash book but not yet credited by the bank.
3. A cheque issued to a supplier for $410 had not been presented for payment.

What was the balance shown on the bank statement?

A manufacturer provided the following information:
- Opening inventory of raw materials: $4,500
- Closing inventory of raw materials: $5,200
- Purchases of raw materials: $32,000
- Carriage inwards on raw materials: $800
- Direct factory wages: $18,500

What was the prime cost of manufacturing?

A trader provided the following information for a year:
- Revenue: $180,000
- Gross profit margin: 30%
- Expenses: $36,000

What was the profit margin (profit for the year as a percentage of revenue)?

Which transaction is classified as revenue expenditure?

A trader sold goods on credit to a customer. The customer later returned some of these goods because they were faulty. In which book of prime entry would the trader record the return of these goods?

After preparing the income statement, a trader discovered two errors: 1. Rent paid, $600, had been debited to the landlord's personal account instead of the rent account. 2. A cash purchase of stationery, $45, was completely omitted from the books. What is the effect of correcting these errors on the profit for the year?

At 30 September, a trader's bank statement showed a credit balance of $1250. On comparing the bank statement with the cash book, the following were discovered: - Bank charges of $35 had not been recorded in the cash book. - A cheque of $450 paid to a credit supplier was unpresented. - A cheque of $220 received from a customer was not yet credited by the bank. What was the balance in the cash book before updating?

A limited company provided the following information on 1 January 2024: Ordinary share capital: $200 000, General reserve: $30 000, Retained earnings: $18 000. During the year ended 31 December 2024, the company: - made a profit for the year of $35 000, - transferred $5 000 to the general reserve, - paid an ordinary share dividend of $12 000. What was the total value of equity on 31 December 2024?

A manufacturer provided the following information for a financial year: Inventory of raw materials at start: $8 500, Inventory of raw materials at end: $9 200, Purchases of raw materials: $42 000, Carriage inwards on raw materials: $1 100, Wages of factory operatives: $24 500, Wages of factory supervisor: $12 000, Depreciation of factory machinery: $3 400. What was the prime cost of production?

A trader provided the following information for the year ended 31 December: Revenue (all on credit): $180 000, Cost of sales: $120 000, Credit purchases of goods for resale: $90 000, Trade payables at 31 December: $7 500. What was the trade payables turnover period? (Use 365 days in a year).

A business bought a printer for $150 and expects it to last for three years. However, the trader decided to write off the entire cost of the printer as an expense in the current year because of its low value. Which accounting principle is being applied?

A business bought office equipment costing $1500 on credit from Malik. This was entered correctly in Malik's account but was debited to the Office Stationery account. Which journal entry corrects this error?

Farah returned faulty goods to her supplier, Chen. Which document would Chen issue to Farah, and in which book of prime entry would Farah record this transaction?

Leo bought a second-hand delivery van. He paid:

* purchase price: $8000
* insurance for the first year: $450
* painting of business logo on the van: $300
* replacement of a broken window: $120

What was the total capital expenditure on this transaction?

On 31 October, a business's cash book showed a bank balance of $1450 (debit). Comparison with the bank statement showed bank charges of $45 had not been recorded. An unpresented cheque of $180 was also noted.

What was the updated balance in the cash book after adjusting for any necessary items?

In June, a business's sales ledger control account had an opening debit balance of $8400. During the month, credit sales were $12300, cash sales were $4500, customer returns were $600, cash received from credit customers was $9100, and a debt of $250 was written off as irrecoverable.

What was the closing balance of the sales ledger control account at the end of June?

A manufacturing company provided the following information:

* Opening inventory of raw materials: $4200
* Purchases of raw materials: $18500
* Carriage inwards on raw materials: $800
* Closing inventory of raw materials: $3900
* Direct factory wages: $12400

What was the prime cost for the year?

On 1 January 2024, a sole trader's capital was $45000. During the year ended 31 December 2024, she introduced $10000 of additional capital, made drawings of $8500, and had a closing capital of $52000.

What was the profit or loss for the year?

A limited company has an ordinary share capital of $200000 consisting of shares of $0.50 each. The directors declared a dividend of $0.04 per share.

What was the total dividend payable to ordinary shareholders?

A trader's sales ledger control account had a debit balance of $18,500. A contra entry of $240 with the purchases ledger was entered correctly in the individual customer's account but was omitted from the sales ledger control account. What is the corrected balance of the sales ledger control account?

After calculating his profit for the year of $35,000, Yui discovered the following two errors:
1. Rent received of $450 was debited to the rent payable account in error.
2. The sales journal was undercast by $1,200.

What is the corrected profit for the year?

On 1 January 2024, a business had rent payable prepaid of $1,200. During the year ended 31 December 2024, a total of $14,500 was paid for rent. On 31 December 2024, rent payable of $800 was accrued. What amount for rent should be charged to the income statement for the year ended 31 December 2024?

On 1 January 2024, a company's retained earnings balance was $45,000. During the year ended 31 December 2024, the profit for the year was $32,000. An interim dividend of $8,000 was paid, and a transfer of $10,000 was made to the general reserve. A final dividend of $12,000 was proposed at the end of the year but not yet approved. What was the balance of retained earnings on 31 December 2024?

On 1 January 2023, a business purchased machinery for $24,000. It is depreciated at 25\% per annum using the reducing balance method. A full year's depreciation is charged in the year of purchase. What is the carrying value of the machinery on 31 December 2024?

The following information is provided for a factory for a financial year:

- Purchase of raw materials: $62,000
- Opening inventory of raw materials: $8,500
- Closing inventory of raw materials: $9,200
- Carriage inwards on raw materials: $1,400
- Factory direct wages: $24,500
- Factory supervisor's salary: $12,000

What is the prime cost for the year?

A business's bank statement showed an overdraft of $2,100. There were unpresented cheques totalling $450 and uncredited deposits totalling $800. What was the reconciled balance in the cash book?

A trader who does not maintain full accounting records provides the following information for the year:

- Opening inventory: $4,200
- Closing inventory: $3,800
- Purchases: $28,000

All goods are sold at a gross profit margin of 20\%. What were the sales for the year?

A trader provided the following information about insurance for the year ended 31 March 2025:

* Prepaid insurance on 1 April 2024: $240
* Total insurance paid by cheque during the year: $1860
* Prepaid insurance on 31 March 2025: $310

What was the amount of insurance charged to the income statement for the year ended 31 March 2025?

A limited company provided the following information:

| At 1 January 2024 | $ |
| :--- | :--- |
| Ordinary share capital | 200 000 |
| Retained earnings | 45 000 |
| General reserve | 15 000 |

| For the year ended 31 December 2024 | $ |
| :--- | :--- |
| Profit for the year | 38 000 |
| Transfer to general reserve | 8 000 |
| Dividends paid | 12 000 |

What was the value of total equity at 31 December 2024?

A trader’s bank statement showed a debit balance of $1100 on 30 April. The trader compared the bank statement with his cash book and updated the cash book after discovering the following:

* bank interest received of $25
* a direct debit payment of $80

At 30 April, cheques paid to suppliers but not yet presented to the bank were $460, and deposits not yet credited by the bank were $290.

What was the updated cash book balance on 30 April?

Tariq is a sole trader who does not keep a full set of book-keeping records. He provided the following information:

**Balances at 1 January 2024:**
- Trade receivables: $4,200
- Trade payables: $3,100
- Inventory: $5,400
- Bank balance (debit): $1,250

**Balances at 31 December 2024:**
- Trade receivables: $5,100
- Trade payables: $2,800
- Inventory: $6,100

**Transactions during the year ended 31 December 2024:**
- Payments to trade payables: $22,400
- Receipts from trade receivables: $34,800
- Cash sales deposited directly into bank: $8,900
- Wages paid by cheque: $6,200
- Rent paid by cheque: $4,800
- Drawings taken by Tariq: $5,000 in cash from bank
- Discount allowed to credit customers: $350
- Discount received from credit suppliers: $250
- Irrecoverable debts written off: $150

**REQUIRED**

(a) Prepare Tariq's trade receivables ledger control account for the year ended 31 December 2024 to determine the credit sales. (6 marks)

(b) Prepare Tariq's trade payables ledger control account for the year ended 31 December 2024 to determine the credit purchases. (6 marks)

(c) Calculate Tariq's bank balance at 31 December 2024, and use the capital comparison method to calculate Tariq's profit or loss for the year ended 31 December 2024. (8 marks)

Zenith PLC provided the following equity balances at 1 April 2024:
- Ordinary shares of $0.50 each: $200,000
- General reserve: $45,000
- Retained earnings: $68,200
- 8% Debentures (repayable 2030): $80,000

During the year ended 31 March 2025, the following transactions took place:
1. On 1 October 2024, the company made a rights issue of 100,000 ordinary shares of $0.50 each at par value. This was fully subscribed.
2. Profit for the year ended 31 March 2025 after interest on debentures was $42,500.
3. A transfer of $10,000 was made to the general reserve on 31 March 2025.
4. During the year, Zenith PLC paid:
- An interim dividend of $0.02 per share on 15 November 2024 on all shares in issue at that date.
- A final dividend for the previous year of $15,000 on 30 June 2024.

**REQUIRED**

(a) Prepare the Statement of Changes in Equity for Zenith PLC for the year ended 31 March 2025. (8 marks)

(b) Prepare the Equity and Liabilities section of the Statement of Financial Position for Zenith PLC at 31 March 2025. Trade payables at 31 March 2025 were $24,150. (6 marks)

(c) State three differences between ordinary shares and debentures. (6 marks)

Leila prepared a trial balance on 31 December 2024 that did not balance. The debit total exceeded the credit total by $1,420. She opened a suspense account to balance the books.

She later discovered the following errors:
1. A payment of $320 for insurance was recorded correctly in the cash book but was posted to the insurance account as $230.
2. The sales journal total for November was undercast by $600.
3. The purchase of an office computer for $1,200 on credit from Tech Solutions was recorded in the purchases journal.
4. Cash received from a credit customer, J. Patel, $850, was correctly entered in the cash book but was debited to J. Patel’s account in the ledger.
5. The discount received column total in the cash book of $210 had been completely omitted from the ledger.
6. A credit purchase of goods from S. Malik for $500 was correctly entered in the purchases journal but was posted to S. Malik’s account as $1,500.

**REQUIRED**

(a) Prepare the journal entries to correct each of the errors 1 to 6. Narratives are not required. (10 marks)

(b) Prepare the suspense account, showing the original balance and the corrections necessary to close the account. (6 marks)

(c) Explain the difference between an error of commission and an error of principle, providing an example of each. (4 marks)

Clara owns a small factory manufacturing leather boots. She also buys ready-made sandals from a supplier for resale. Clara provided the following information at 31 December 2024:

**Inventory at 1 January 2024:**
- Raw materials: $8,400
- Work in progress: $11,200
- Finished boots: $24,500
- Finished sandals: $14,000

**Transactions during the year ended 31 December 2024:**
- Purchases of raw materials: $62,300
- Purchases of finished sandals: $31,500
- Carriage inwards (on raw materials): $1,800
- Direct wages (factory operatives): $45,600
- Indirect wages (factory supervisor): $18,400
- Rent and rates: $20,000
- Depreciation of factory machinery: $12,500

**Additional information:**
1. Rent and rates are to be apportioned 75% to the factory and 25% to the office.
2. Factory supervisor wages of $1,600 were accrued at 31 December 2024.
3. Inventory at 31 December 2024:
- Raw materials: $9,200
- Work in progress: $10,500
- Finished boots: $26,000
- Finished sandals: 800 pairs of sandals were in stock. The cost price was $18 per pair. 150 of these pairs were water-damaged and could only be sold for $22 per pair after spending $6 per pair on repackaging. 50 other pairs were completely ruined and had zero value. The remaining 600 pairs were in perfect condition and expected to sell at the retail price of $30 per pair.

**REQUIRED**

(a) Prepare Clara's Manufacturing Account for the year ended 31 December 2024. (10 marks)

(b) Calculate Clara's correct valuation of the closing inventory of sandals at 31 December 2024. (4 marks)

(c) Calculate Clara's cost of sales for the purchased sandals for the year ended 31 December 2024. (4 marks)

(d) State the accounting principle applied to the valuation of inventory in (b). (2 marks)

Marcus prepares his financial statements to 30 June each year. He bought and sold machinery as follows:
- 1 July 2021: Purchased Machine A for $20,000 by cheque.
- 1 January 2023: Purchased Machine B for $15,000 by cheque.
- 30 September 2023: Sold Machine A for $9,500 and received a cheque.

Marcus depreciates machinery at 20% per annum using the reducing balance method.
His policy is to charge a full year’s depreciation in the year of purchase and no depreciation in the year of disposal.

**REQUIRED**

(a) Calculate the depreciation charge for the years ended 30 June 2022, 30 June 2023, and 30 June 2024. (6 marks)

(b) Prepare the Machinery account and the Provision for Depreciation of Machinery account for the years ended 30 June 2023 and 30 June 2024. (8 marks)

(c) Prepare the Machinery Disposal account for the year ended 30 June 2024. (4 marks)

(d) State the accounting principle Marcus violates if he decides to change his depreciation method from reducing balance to straight line in 2025 without a valid reason. Define this principle. (2 marks)