There is no set way to
approach using this Workbook. You may wish to use it to supplement your understanding of the
different topics as you work through each chapter of the Student’s Book, or you may prefer to
use it to reinforce your skills in dealing with particular topics as you prepare for...
,Welcome to the Cambridge IGCSE and O Level Accounting Workbook. The aim of this Workbook is to
provide you with further opportunity to practise the skills you have acquired through using the
Cambridge IGCSE and O Level Accounting Student’s Book. It is designed to complement the Student’s
Book and to provide additional exercises to support you throughout the course and help you to
prepare for examinations.
The chapters in this Workbook reflect the topics in the Student’s Book. There is no set way to
approach using this Workbook. You may wish to use it to supplement your understanding of the
different topics as you work through each chapter of the Student’s Book, or you may prefer to
use it to reinforce your skills in dealing with particular topics as you prepare for examination. The
Workbook is intended to be sufficiently flexible to suit whatever you feel is the best approach for
your needs.
2 Photocopying prohibited Cambridge IGCSE® and O Level Accounting Workbook
,Contents
SECTION 1 The fundamentals of accounting
1 The purpose of accounting 4
2 The accounting equation 7
SECTION 2 Sources and recording of data
3 The double entry system of book-keeping 9
4 Business documents 15
5 Books of prime entry 17
SECTION 3 Verification of accounting records
6 The trial balance 23
7 Correction of errors 26
8 Bank reconciliation 29
9 Control accounts 32
SECTION 4 Accounting procedures
10 Capital and revenue expenditure and receipts 36
11 Accounting for depreciation and disposal of non-current assets 38
12 Other payables and receivables 44
13 Irrecoverable debts and provision for doubtful debts 48
14 Valuation of inventory 52
SECTION 5 Preparation of financial statements
15 Sole traders 53
16 Partnerships 60
17 Limited companies 64
18 Clubs and societies 68
19 Manufacturing accounts 72
20 Incomplete records 74
SECTION 6 Analysis and interpretation
21 Calculation and understanding of accounting ratios 80
22 Interpretation of accounting ratios 84
23 Inter-firm comparison 87
24 Interested parties 89
25 Limitations of accounting statements 91
Photocopying prohibited Cambridge IGCSE® and O Level Accounting Workbook 3
,1 The purpose of accounting
1 What is the purpose of double entry book-keeping? 3 Which statement about book-keeping and
A To avoid errors accounting is correct?
B To calculate the owner’s equity A A book-keeper interprets financial statements
C To ensure no transaction is missing from the B A book-keeper prepares financial statements
books C Accounting is dependent on the records
D To record two entries for every transaction maintained by a book-keeper
[1 mark] D Accounting is only performed once in two
years [1 mark]
2 How does an owner of a business make use of
the business’ financial statements? 4 What will financial data not include?
A To calculate the amount owing by trade
A The good location of a clothing shop in a
receivables
busy city
B To calculate the amount owing to trade
B Purchases for the month of May
payables
C To check the bank statement balance C Return of damaged goods at cost
D To monitor the progress being made by the D Value of a building owned by a business
business [1 mark] [1 mark]
5 Businesses make use of both book-keeping and accounting procedures. Explain why
businesses use book-keeping. [2 marks]
8 Complete the following table by writing the word ‘true’ or ‘false’ against each statement. [5 marks]
True/False
A book-keeper needs more accounting skills than an accountant.
Book-keeping is carried out throughout the financial year.
Owners use financial statements to know the net worth of the business.
One of the main aims of a business is to make a profit.
Analysing financial statements is one of the tasks a manager does.
6 Photocopying prohibited Cambridge IGCSE® and O Level Accounting Workbook
,2 The accounting equation
1 Why is a statement of financial position C Cash taken out of the business for owner’s
prepared by a sole trader? personal use
A To calculate the loss for the year D Rent for owner’s personal house, paid using
business cash [1 mark]
B To calculate the owner’s equity for the
year
4 Which statement is not true?
C To record the transactions that took place
A Machinery is a current asset
during the financial year
B Resources supplied to the business =
D To summarise what the business owns
resources owned by the business
and what it owes [1 mark]
C The accounting equation is reflected in the
2 Which of these is a liability of a business? statement of financial position
A Debts owing by credit customers D When an owner takes inventory for his
own use it is called drawings [1 mark]
B Debts owing by credit suppliers
C Debts owing to credit suppliers 5 Which is a business liability?
D Loan given to a family member [1 mark] A Bank loan
B Cash
3 What increases owner’s equity?
C Machinery
A Business expenses paid by owner from his
personal bank account D Premises [1 mark]
B Business inventory taken by owner for
6 State the accounting equation. [1 mark]
personal use
.................................................................
8 Sylvester, a sole trader, had the following assets and liabilities on 31 December 2019:
$
Equipment 50 000
Motor vehicle 10 000
Balance at bank 2 500
Debts owing to suppliers 3 800
Calculate Sylvester’s owner’s equity on 31 December 2019. Show your workings. [2 marks]
9 Complete the following table by placing a tick () in the correct column to indicate whether each
item is an asset or a liability. [10 marks]
Asset Liability
Motor van
Trade receivables
Long-term loan
Property and buildings
Bank overdraft
Equipment
Inventory
Trade payables
Cash in hand
10 Complete the following table to calculate the value of the missing items. [6 marks]
Assets Liabilities Owner’s equity
$ $ $
a 4 500 1 800
b 35 700 49 500
c 7 890 6 350
d 5 680 2 470
e 5 240 6 570
f 23 760 13 770
8 Photocopying prohibited Cambridge IGCSE® and O Level Accounting Workbook
, The accounting equation
11 Complete the following table with the words ‘decrease’ or ‘increase’ to show which effect each transaction
would have on the assets, liabilities and owner’s equity of a business. The first one has been completed as
an example. [9 marks]
Transaction Effect
a Bought goods on credit Increase (inventory) Increase (trade payables)
b The owner introduced cash into
business bank account
c The owner takes money out of the
business bank account for personal use
d The business sold goods for cash
e The business pays the amount owed to a
trade payable by cheque
f The business sold goods on credit
g The business took a loan in cash
h A credit customer pays the business in
cash
i The business bought a motor vehicle
paying by bank transfer
j The business pays back the loan by bank
transfer
3 he double entry system of
T
book-keeping
1 Explain what is meant by the double entry system of book-keeping. [2 marks]
Photocopying prohibited Cambridge IGCSE® and O Level Accounting Workbook 9
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