IGCSE Accounting: Capital and revenue items, depreciation and disposals (Cambridge 0452) – Practice Questions

Syllabus edition note. This resource follows the Cambridge IGCSE Accounting 0452 syllabus (and Cambridge O Level Accounting 7707, which has the same subject content for the same series) 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”. For this topic, the 2026 syllabus says “recovery of debts written off” where the 2027-2029 syllabus says “irrecoverable debts recovered”, asks for simple inventory valuation statements, and does not separately list choosing a depreciation method for each type of non-current asset, journal entries for purchasing a non-current asset, or calculating the profit or loss on disposal. 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 from your board or school.

These questions cover syllabus sections 4.1 Capital and revenue expenditure and receipts and 4.2 Accounting for depreciation and disposal of non-current assets in Cambridge IGCSE Accounting 0452, for exams in 2027 to 2029 (version 1). All businesses and figures are invented, and amounts are in dollars. Method: study guide and revision notes. The course hub, printable checklist and free diagnostics help you plan.

Questions

1. State whether each payment by Valdez Couriers is capital or revenue expenditure: (i) 6,200 for a refrigerated body fitted to a new van before use; (ii) fuel for the vans; (iii) legal fees on buying a depot; (iv) replacing a worn tyre; (v) adding a loading ramp to the depot. [5]

2. For each receipt of Ibarra Bakery, state whether it is a capital receipt or a revenue receipt and name the account credited: (i) 9,000 paid into the business by the owner; (ii) 350 from selling an old mixer; (iii) 2,800 for letting a flat above the shop; (iv) a bank loan of 15,000. [4]

3. Corbin Landscaping bought a mowing machine for 14,000 on credit from Norwood Machinery Supplies. It paid delivery of 350 and, later, 180 for servicing a trailer, both by bank. (a) Prepare the journal entries for the three items. [3] (b) State where the delivery and the servicing each appear at the year end. [2]

4. Corbin Landscaping’s draft profit was 26,400. Equipment is depreciated at 20% a year on cost, straight-line, charging a whole year in the year an asset is bought. Errors found:

• (i) 900 for fitting a rack to a new trailer before use was debited to repairs.
• (ii) 640 to repair a mower was debited to the equipment account.
• (iii) A bank loan of 3,000 was credited to sales.

(a) Prepare a statement of corrected profit. [6] (b) Calculate the net effect of correcting (i) and (ii) on the equipment in the statement of financial position. [2]

5. An owner says: “Depreciation is the cash we put aside each year to replace the van.” Explain why this is incorrect, and give one reason why depreciation must still be accounted for. [4]

6. Ibarra Bakery owns these assets. (a) An oven costing 18,000, with a residual value of 2,000 and a life of eight years. Calculate one year’s straight-line depreciation. [2] (b) A van costing 12,500 is depreciated at 40% reducing balance. Calculate the depreciation for years 1 and 2 and the net book value after two years. [3] (c) Baking tins are valued at 1,260 at the start of the year and 1,085 at the end, and tins costing 340 are bought. Calculate the depreciation. [2]

7. State the most suitable depreciation method, with a reason, for each of: (a) a delivery lorry; (b) a large number of reusable plastic crates; (c) shelving fitted in a warehouse. [6]

8. Ibarra Bakery depreciates ovens at 10% on the cost of ovens held at the year end (charge a whole year when bought, nothing when sold). Ovens held at 1 January 2028 cost 41,000. On 15 February 2028 an oven costing 18,000 was bought on credit from Tamarack Ovens. On 30 June 2028 an oven that cost 11,000, with accumulated depreciation of 7,700, was sold for 2,900 by bank transfer. Prepare the journal entries for the purchase, the sale, the loss on disposal and the depreciation for 2028. [6]

9. Valdez Couriers depreciates vehicles at 20% reducing balance on each vehicle’s net book value (charge a whole year when bought, nothing when sold). At 1 January 2028 the vehicles account held 43,000: vehicle X (bought 1 January 2026 for 25,000) and vehicle Y (bought 1 July 2027 for 18,000). The provision for depreciation was 12,600. On 31 March 2028 X was sold for 14,100 by bank. On 1 September 2028 vehicle Z was bought for 21,000 on credit from Ashby Motors. Prepare the vehicles, provision for depreciation and disposal accounts for 2028, balancing where needed. [7]

10. Eastgate Ceramics’ draft profit for 2028 was 31,200. A kiln was bought on 1 January 2028 for 9,500 by bank. Delivery of 400 and installation of 650, paid by bank, were debited to expenses. No depreciation has been charged. Kilns are depreciated at 20% on cost, straight-line, with a full year in the year of purchase. The owner says: “I paid cash for the kiln, so depreciation does not apply.” (a) Calculate the cost of the kiln. [2] (b) Calculate the depreciation for 2028. [1] (c) Prepare a statement showing the corrected profit. [3] (d) Calculate the kiln’s net book value and the amount by which the draft accounts misstated it. [2] (e) Explain why the owner’s reasoning is wrong. [2]

Answers

1. (i) Capital [1]; (ii) revenue [1]; (iii) capital [1]; (iv) revenue [1]; (v) capital [1]. [5] Examiner insight: State one classification per item; naming both types is unlikely to earn credit.

2. (i) Capital receipt, credited to the capital account [1]. (ii) Capital receipt, credited to the disposal account [1]. (iii) Revenue receipt, credited to rent received [1]. (iv) Capital receipt, credited to a loan account [1]. [4] Examiner insight: Where a question asks for the type and the account, each is a separate point.

3. (a) Debit machinery 14,000, credit Norwood Machinery Supplies 14,000 [1]. Debit machinery 350, credit bank 350 [1]. Debit repairs 180, credit bank 180 [1]. (b) Delivery: in the machinery cost, in the statement of financial position [1]. Servicing: an expense in the statement of profit or loss [1]. [5] Examiner insight: Name the account and amount on both sides of every entry.

4. (a) Draft profit 26,400. (i) Depreciation of 20% × 900 = 180 would have been charged, so add 900 − 180 = 720 [2]. (ii) Depreciation of 20% × 640 = 128 was wrongly charged, so deduct 640 − 128 = 512 [2]. (iii) A loan is not income: deduct 3,000 [1]. Corrected profit 26,400 + 720 − 512 − 3,000 = 23,608 [1]. (b) Equipment was understated by 720 and overstated by 512 [1]: net increase 208 [1]. [8] Examiner insight: Show each adjustment with its sign, so one slip can be separated from the rest.

5. Depreciation spreads an asset’s cost over its life [1]. It is a book entry, so no cash is paid out or set aside [1]. It matches the asset’s cost with the revenue it helps earn [1], so profit and asset values are not overstated [1]. [4] Examiner insight: Keep the two points separate; repeating one idea earns it once.

6. (a) (18,000 − 2,000) ÷ 8 [1] = 2,000 [1]. (b) Year 1: 40% × 12,500 = 5,000 [1]. Year 2: 40% × 7,500 = 3,000 [1]. Net book value 12,500 − 5,000 − 3,000 = 4,500 [1]. (c) 1,260 + 340 − 1,085 [1] = 515 [1]. [7] Examiner insight: Write the sum before the answer, so your method is visible even if a figure slips.

7. (a) Reducing balance [1], as the lorry loses most value early [1]. (b) Revaluation [1], as the crates are many, small and low-cost [1]. (c) Straight-line [1], as shelving gives about the same benefit each year [1]. [6] Examiner insight: Tie each reason to the asset described.

8. Purchase: debit ovens 18,000, credit Tamarack Ovens 18,000 [1]. Sale: debit disposal 11,000, credit ovens 11,000 [1]; debit provision for depreciation 7,700, credit disposal 7,700 [1]; debit bank 2,900, credit disposal 2,900 [1]. Net book value 3,300, so loss 400: debit statement of profit or loss, credit disposal [1]. Ovens at year end cost 41,000 − 11,000 + 18,000 = 48,000, so debit statement of profit or loss 4,800, credit provision 4,800 [1]. [6] Examiner insight: Compare proceeds with net book value, not cost, before stating the loss.

9. Depreciation of X: 5,000 then 20% × 20,000 = 4,000, so accumulated 9,000 and net book value 16,000; loss 16,000 − 14,100 = 1,900. Charge for 2028: Y 20% × 14,400 = 2,880; Z 4,200; X none; total 7,080.

Vehicles account
1 Jan  Balance b/d        43,000   31 Mar Disposal          25,000
1 Sep  Ashby Motors       21,000   31 Dec Balance c/d       39,000
                          64,000                            64,000

Provision for depreciation of vehicles account
31 Mar Disposal            9,000   1 Jan  Balance b/d       12,600
31 Dec  Balance c/d       10,680   31 Dec Profit or loss     7,080
                          19,680                            19,680

Disposal of vehicles account
31 Mar Vehicles           25,000   31 Mar Provision          9,000
                                   31 Mar Bank              14,100
                                   31 Dec Profit or loss     1,900
                          25,000                            25,000

Vehicles account entries and balance [2]; provision account: transfer 9,000 [1], charge 7,080 [1], balance 10,680 [1]; disposal account entries [1] and loss 1,900 [1]. [7] Examiner insight: Show the accumulated depreciation of the vehicle sold, so the accounts agree.

10. (a) Delivery and installation are capital [1]: 9,500 + 400 + 650 = 10,550 [1]. (b) 20% × 10,550 = 2,110 [1]. (c) 31,200 + 1,050 [1] − 2,110 [1] = 30,140 [1]. (d) Net book value 10,550 − 2,110 = 8,440 [1]. The draft showed 9,500, an overstatement of 1,060 [1]. (e) Depreciation allocates cost over the asset’s life however it was paid for [1]. Without it, profit and the kiln’s value are overstated [1]. [10] Examiner insight: Show where each figure comes from, so later parts can be followed.

Where marks are usually lost

• Putting delivery, installation or legal costs of acquiring an asset into expenses, or repairs into the asset account.
• Crediting a loan, capital or sale proceeds to sales.
• Forgetting that wrongly capitalised amounts were depreciated, so the profit effect is the amount minus the depreciation.
• Applying reducing balance to cost, or comparing proceeds with cost instead of net book value.
• Leaving the sold asset’s depreciation in the provision account.
• Ignoring a stated full-year or part-year policy.

Next steps

• Review the revision notes and the study guide.
• Find your weakest topic with the free diagnostics, or book a free trial class.

Frequently asked questions

How do you calculate depreciation for part of a year? Follow the policy the question states. If depreciation is charged for each complete month owned, multiply the annual charge by the number of months the asset was held, for example 9/12 for an asset sold on 1 October.

Where do the proceeds from selling a non-current asset go? The proceeds are credited to the disposal account, not to sales. The disposal account is also debited with the asset’s cost and credited with its accumulated depreciation, and the balancing figure is the profit or loss on disposal.

What are common errors in depreciation questions in Cambridge IGCSE Accounting (0452)? Common errors include applying reducing balance to cost every year, comparing proceeds with cost instead of net book value, and leaving the sold asset’s depreciation in the provision account. Ignoring a stated full-year or part-year policy also loses marks.

Are legal costs of buying an asset capital expenditure? Yes. Costs of acquiring an asset and getting it ready for use, such as delivery, installation and legal costs, are capital expenditure added to the asset’s cost. Repairs and maintenance are revenue expenditure.

Official syllabus

Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029 (version 1), Cambridge University Press & Assessment: sections 4.1 and 4.2.