Practice Paper 2 (Edexcel IGCSE Accounting)

State two reasons for maintaining a petty cash book.

Jonny maintains a petty cash book with a float of $150

During January 2019 the following petty cash transactions took place.

Prepare the petty cash book for the month ended 31 January 2019.

Balance the petty cash book on that date and bring the balance down on 1 February 2019.

Petty Cash Book

Complete the document where indicated.

Identify which of the following represents capital expenditure.

On 1 April 2018 Rafiq purchased a motor vehicle at a cost of $48 000

On 1 December 2020 Rafiq sold the motor vehicle to Bilal for $28 000. One half of the sale proceeds were received by bank transfer on that date and the balance was to be paid on 30 June 2021.

Depreciation is charged at 20% per annum using the reducing balance method. A full year’s depreciation is charged in the year of purchase and none in the year of disposal.

Rafiq prepares financial statements to 31 January.

Calculate the carrying value of the motor vehicle at 1 December 2020.

Prepare the motor vehicle disposal account.

Motor Vehicle Disposal Account

State two reasons why a credit customer’s account may have a credit balance.

Kirk maintains a full set of accounting books and offers credit customers a 5% trade discount on orders over $1000

During January 2023 the following transactions took place between Kirk and Bella.

Here is the text converted into a table without changing content, punctuation, or order:

Prepare the account of Bella for the month of January 2023. Balance the account on 31 January 2023 and bring the balance down on 1 February 2023.

Bella Account

Identify, indicating with a tick (✓), the classification of each of the following in the statement of financial position.

Rent expense prepaid

Identify, indicating with a tick (✓), the classification of each of the following in the statement of financial position.

Wages accrued

Complete the table below, indicating with a tick (✓) where each would appear in the statement of financial position.

State one benefit of preparing a bank reconciliation statement.

On 31 March 2023 Waan identified that the following transactions had not yet been entered in the cash book.

• Cash banked, $350
• Cheque to restore petty cash, $75
• Bank interest received, $8
• Standing order for rent, $300

Prepare the updated cash book on 31 March 2023 and bring the balance down on 1 April 2023.

Cash Book – Bank Column

On 31 March 2023 Waan’s bank statement showed a credit balance of $528

She identified that the following had not been processed by the bank.

• Unpresented cheques, $215
• Outstanding lodgements, $770

Prepare a bank reconciliation statement at 31 March 2023.

Waan Bank Reconciliation Statement at 31 March 2023

Identify what will be confirmed by preparing a trade payables ledger control account.

Which one of the following errors would require a correcting entry in a suspense account?

Raheem has prepared the following incorrect trial balance.

Prepare the corrected trial balance.

Trial balance at 30 April 2020

Evaluate the benefits of preparing a trial balance.

A trader includes the cost of small items of office equipment as expenses in the income statement.

Identify which accounting concept is being applied.

Identify the principle of professional ethics being described.

“Accountants must make their own judgements on the accounts”

State one advantage and one disadvantage of forming a partnership.

Advantage .........................................

Disadvantage .....................................

Lucas is proposing to change from a manual system to a computerised system of bookkeeping.

Evaluate whether Lucas should proceed with this proposal.

In which book of original entry are irrecoverable debts recorded?

Identify the reason for offering a cash discount.