The Fundamentals of Accounting: Practice Questions

Syllabus edition note. This resource follows the Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029 (version 1), first examined in the March 2027 series in India and the June 2027 series elsewhere. If you sit 0452 in November 2026, you sit the 2026 syllabus (version 2), which differs: Paper 1 has 35 multiple-choice marks in 1 hour 15 minutes, not 40 marks in 1 hour 30 minutes; Topic 7 is “Accounting principles and policies”, without 7.2 Ethical considerations or 7.3 Technology and sustainability; 4.4 is “Irrecoverable debts and provision for doubtful debts”; income statements are named instead of statements of profit or loss; three-column running balance accounts are not required; Clubs and societies is 5.4 and Manufacturing accounts 5.5; and 6.3 is “Inter-firm comparison”. If you sit in November 2026, work from the 2026 syllabus on the Cambridge International website.

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs — examination boards hold copyright in their own papers. Use these alongside the official past papers available free from your board.

Related: The Fundamentals of Accounting revision notes

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Short-answer questions

Cambridge IGCSE Accounting 0452 question papers are not divided into lettered sections, so the questions below are grouped only by length.

1. State the accounting equation and define each element. [3]

2. State whether each is an asset, a liability or capital: bank overdraft, motor vehicle, trade payables, owner’s investment, inventory. [5]

Longer questions

3. For each transaction, state the account debited and the account credited:

(a) Owner pays $10 000 into the business bank account. [2] (b) Goods bought on credit from Ali, $2400. [2] (c) Cash sales of $850. [2] (d) Rent paid by cheque, $600. [2] (e) Ali is paid $2400 by cheque. [2]

4. Explain the purpose of a trial balance and give three errors it will not reveal. [5]

5. Explain the difference between capital expenditure and revenue expenditure, giving an example of each, and state the effect of wrongly treating capital expenditure as revenue expenditure. [6]

6. Explain the following accounting concepts: prudence, matching (accruals), going concern, consistency. [8]

7. Explain the difference between book-keeping and accounting. [3]

8. A business has assets of $45 000 and liabilities of $12 000.

(a) Calculate the owner’s capital. [1] (b) The business then takes out a $6 000 bank loan, received in cash. State the new value of assets, liabilities and capital. [3]

9. Explain why capital is grouped with liabilities in the accounting equation rather than treated as a separate category of its own. [2]

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Answers

1. Assets = Capital + Liabilities [1]. Assets are resources owned by the business [1]; capital is the owner’s investment — what the business owes the owner; liabilities are amounts owed to outside parties [1].

2. Bank overdraft — liability [1]. Motor vehicle — asset [1]. Trade payables — liability [1]. Owner’s investment — capital [1]. Inventory — asset [1].

3. (a) Debit Bank, credit Capital [1] [1]. (b) Debit Purchases, credit Ali (trade payable) [1] [1]. (c) Debit Cash, credit Sales [1] [1]. (d) Debit Rent, credit Bank [1] [1]. (e) Debit Ali, credit Bank [1] [1].

4. A trial balance lists all ledger balances to check that total debits equal total credits, providing arithmetical proof of the double entry and a starting point for the financial statements [1] [1]. Errors it will not reveal: error of omission — the transaction is left out entirely [1]; error of commission — the correct amount is posted to the wrong account of the same type [1]; error of principle — posted to a wholly wrong class of account, e.g. a vehicle to motor expenses [1]; also compensating errors, errors of original entry and complete reversal of entries.

5. Capital expenditure is spending on acquiring or improving a non-current asset that will benefit the business for more than one period, e.g. buying a delivery van [1] [1]. Revenue expenditure is spending on the day-to-day running of the business, consumed within the period, e.g. fuel for the van [1] [1]. If capital expenditure is wrongly treated as revenue expenditure, expenses are overstated so profit is understated [1], and the non-current assets and therefore the capital shown in the statement of financial position are understated [1].

6. Prudence — do not overstate assets or profit and do not understate liabilities or losses; recognise losses as soon as they are foreseen but gains only when realised [1] [1]. Matching (accruals) — revenues and the costs incurred in earning them are recorded in the same period, regardless of when cash moves [1] [1]. Going concern — assume the business will continue trading for the foreseeable future, so assets are valued at cost rather than break-up value [1] [1]. Consistency — apply the same accounting treatment from one period to the next, so results are comparable over time [1] [1].

7. Book-keeping is the routine, day-to-day recording of transactions [1]; accounting is the broader, analytical activity of using those records to interpret performance, monitor progress and inform decisions [1]. Accounting is not simply the mechanical act of writing entries down — examiners specifically test this distinction [1].

8. (a) Capital = Assets − Liabilities = 45 000 − 12 000 = $33 000 [1]. (b) Assets rise by $6 000 to $51 000 [1]; liabilities rise by $6 000 to $18 000 [1]; capital is unchanged at $33 000, since 51 000 = 33 000 + 18 000 confirms the equation still balances [1].

9. From the business’s own point of view, capital is an amount effectively owed back to the owner — conceptually the same as a loan owed to an outside lender [1]. So assets = capital + liabilities balances the same way whether the claim on those assets comes from the owner or from an external party [1]. Capital itself is not fixed across a trading period: it rises through profit earned and further investment, and falls through losses and drawings taken by the owner.

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Where marks are usually lost

• Reversing the debit and credit for capital introduced.
• Saying a trial balance proves the accounts are correct.
• Confusing the direction of the profit effect when expenditure is misclassified.
• Defining prudence as “being cautious” without reference to assets, liabilities and profit.
• Treating book-keeping and accounting as interchangeable terms, rather than the routine-recording vs analytical-interpretation distinction examiners expect.
• Forgetting that a transaction affecting only assets and liabilities leaves capital completely unchanged.