IGCSE Accounting: Accounting Procedures — 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”. 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 practice questions written in the style of Cambridge IGCSE Accounting (0452) assessment objectives. They are not taken from any past paper and are not endorsed by Cambridge International.

Use these questions alongside the Accounting Procedures study guide and revision notes. Accounting 0452 is not tiered, so every question below applies to all candidates.

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. Explain the difference between capital expenditure and revenue expenditure, giving one example of each. [4]

2. State whether each of the following is a capital receipt or a revenue receipt: (i) the proceeds from selling an old delivery van; (ii) rent received from a tenant; (iii) a loan received from a bank; (iv) commission received. [4]

3. State what is meant by depreciation, and give two reasons why a business should account for it. [3]

4. For each of the following non-current assets, name the most suitable method of depreciation and give a reason for your choice: (a) computer equipment; (b) a large number of small hand tools used in a workshop; (c) a machine that is used to the same extent every year for eight years. [6]

5. (a) Explain why a business should match costs and revenues to the period in which they are incurred or earned. [2] (b) Wages of $41,300 were paid during the year and $850 was owing at the year end. Calculate the wages to be charged in the statement of profit or loss, and state the journal entry to record the amount owing. [2]

6. State what is meant by (i) an irrecoverable debt and (ii) an irrecoverable debt recovered, and (iii) give one reason why a business maintains an allowance for irrecoverable debts. [3]

7. At 31 December 2027 Rafael creates, for the first time, an allowance for irrecoverable debts of 2% of his trade receivables of $22,500. Prepare the journal entry (a narrative is not required) and state the net figure for trade receivables in his statement of financial position. [3]

8. A shop holds 50 units of a product that cost $40 each. The expected selling price is $52 each, but each unit will need $15 of repairs and delivery costs before it can be sold. Calculate the value of these units for inventory purposes. [3]

Longer questions

9. Before correcting the errors below, Maria’s profit for the year was $38,400. Machinery is depreciated at 10% per year on cost, with a full year’s charge in the year of purchase. Ignore depreciation on premises and on office furniture.

• (i) The installation cost of a new machine, $1,200, was debited to the repairs account.
• (ii) The cost of repainting the shop, $2,500, was debited to the premises account.
• (iii) An old office desk with a net book value of $700 was sold for $900. The $900 was credited to sales, and the desk has not been removed from the accounts.

(a) Prepare a statement showing Maria’s corrected profit for the year. [5] (b) Calculate the overall effect of correcting the errors on the value of her non-current assets. [2]

10. On 1 January 2027 Tomas bought a delivery vehicle for $36,000. He expects to use it for five years and then sell it for $6,000.

(a) Calculate the annual depreciation using the straight-line method. [2] (b) Tomas decides instead to use the reducing balance method at 30% per year. Calculate the depreciation for 2027 and for 2028, and the net book value of the vehicle at 31 December 2028. [3] (c) Tomas also owns loose tools. They were valued at $2,300 on 1 January 2027, tools costing $740 were bought during 2027, and they were valued at $1,960 on 31 December 2027. Calculate the depreciation of the loose tools for 2027. [2]

11. Nadia’s financial year ends on 31 December. She depreciates machinery at 12.5% per year on the cost of machinery held at the year end, charging a full year’s depreciation in the year of purchase and none in the year of disposal.

On 1 January 2028 the balances were: machinery $64,000; provision for depreciation of machinery $23,500.

• 1 March 2028: a new machine was bought on credit from Hilltop Engineering for $20,000.
• 30 September 2028: a machine bought on 1 January 2025 for $16,000 was sold for $10,600, received by bank transfer.

(a) Prepare the journal entries to record the purchase of the new machine, the sale of the old machine and the transfer of the profit or loss on disposal. Narratives are not required. [5] (b) Prepare the machinery account, the provision for depreciation of machinery account and the disposal of machinery account for the year ended 31 December 2028, balancing the accounts and bringing down the balances where appropriate. [8]

12. Kofi’s financial year ends on 31 December 2028.

• Insurance: on 1 January 2028 insurance of $360 was prepaid. On 1 April 2028 he paid $1,680 by bank transfer for the year to 31 March 2029.
• Commission received: on 1 January 2028 commission of $270 was owed to Kofi. During 2028 he received $3,150 by bank transfer, which includes $340 for work to be done in 2029.

(a) Prepare the insurance account for the year, bringing down the balance on 1 January 2029. [4] (b) Prepare the commission received account for the year, bringing down the balance on 1 January 2029. [4] (c) Prepare the journal entries to record the two closing adjustments at 31 December 2028. Narratives are not required. [2] (d) State how each closing balance is shown in Kofi’s statement of financial position at 31 December 2028. [2]

13. During Lee’s inventory count on 31 December 2027, a batch of goods costing $2,300 was counted twice. The financial statements for 2027 were completed using this figure and the error was never found. Closing inventory at 31 December 2028 was valued correctly.

(a) For each of the following, state whether it was overstated, understated or not affected, and by how much: (i) gross profit for 2027; (ii) profit for the year 2027; (iii) equity at 31 December 2027; (iv) inventory in the statement of financial position at 31 December 2027; (v) gross profit for 2028. [5] (b) Explain why Lee’s equity at 31 December 2028 is not affected by the error. [1]

14. Structured question in the style of Paper 2 (20 marks).

Aisha Rahman is a sole trader. Her draft profit for the year ended 31 December 2028 was $27,560, before the following matters were dealt with.

1. Trade receivables at 31 December 2028 were $31,400 before any of the adjustments below.
2. B Tan, a customer who owes $1,400, has been declared bankrupt. The debt is to be written off as irrecoverable.
3. On 20 December 2028 L Moyo paid $450 by bank transfer. His debt had been written off as irrecoverable in 2026. No entries have yet been made for this receipt.
4. The allowance for irrecoverable debts was $860 on 1 January 2028. At 31 December 2028 it is to be 2.5% of trade receivables, after B Tan’s debt has been written off.
5. Closing inventory was included in the draft profit at its cost of $18,250. This includes 120 units of product Z which cost $15 each. Product Z has gone out of fashion and can now be sold for only $12 each, after repacking which will cost $1.50 per unit.

(a) Prepare the journal entries to record items 2 and 3. Narratives are not required. [3] (b) Prepare the allowance for irrecoverable debts account for the year ended 31 December 2028, bringing down the balance on 1 January 2029. [4] (c) Calculate the corrected value of closing inventory at 31 December 2028. [3] (d) Prepare a statement showing Aisha’s corrected profit for the year ended 31 December 2028. [5] (e) Show how trade receivables will appear in Aisha’s statement of financial position at 31 December 2028. [2] (f) Aisha says: “Product Z should stay at cost, because I may be able to sell it for more later.” Explain why she is wrong, naming the accounting concept that applies, and state the effect on her figures for 2028 and 2029 if product Z were kept at cost. [3]

---

Answers

1. Capital expenditure is spending on buying or improving non-current assets, including the costs of getting them ready for use [1], for example buying a delivery van or paying for a machine’s installation [1]. Revenue expenditure is spending on the day-to-day running of the business, including maintaining non-current assets [1], for example wages, fuel or repairs [1].

2. (i) Capital receipt [1]; (ii) revenue receipt [1]; (iii) capital receipt [1]; (iv) revenue receipt [1].

3. Depreciation is the part of the cost of a non-current asset that is used up during an accounting period, through wear and tear, the passage of time or becoming out of date [1]. Any two reasons [2, allow 1 mark per reason], for example: to match the cost of the asset against the revenue it helps to earn over its useful life; so that profit for the year is not overstated; so that the asset is not shown in the statement of financial position at more than a realistic value.

4. (a) Reducing balance [1] — computer equipment loses most of its value in its early years as it quickly becomes out of date, so a higher charge when new is more realistic [1]. (b) Revaluation [1] — the tools are many small, low-cost items, so it is not practical to depreciate each one separately; a year-end valuation shows how much value has been used up [1]. (c) Straight-line [1] — the machine gives the same benefit every year of its eight-year life, so an equal charge each year matches its cost to the revenue it helps to earn [1].

5. (a) So that the statement of profit or loss includes all the expenses and incomes that belong to the period, whether or not cash has been paid or received (the matching / accruals concept) [1]; otherwise profit for the year would be overstated or understated, and would not be comparable from year to year [1]. (b) Wages charged: $41,300 + $850 = $42,150 [1]. Journal: debit wages $850, credit other payables $850 [1].

6. (i) An amount owed by a credit customer that the business decides will never be paid, and so writes off [1]. (ii) A debt that was written off as irrecoverable in an earlier period but is later paid by the customer [1]. (iii) Any one: to follow the prudence concept by not showing trade receivables at more than the business expects to collect; to match the expected cost of unpaid debts to the period in which the credit sales were made [1].

7. Allowance: 2% × $22,500 = $450 [1].

                                                          Debit $  Credit $
31 Dec  Statement of profit or loss                           450
          Allowance for irrecoverable debts                             450

Correct debit and credit [1]. Trade receivables shown at $22,500 less $450 = $22,050 [1].

8. Net realisable value per unit: $52 − $15 = $37 [1]. This is lower than cost of $40, so each unit is valued at $37 [1]. Value: 50 × $37 = $1,850 [1].

9. (a)

Statement of corrected profit
                                                          $
Draft profit for the year                            38,400
Add installation cost wrongly charged as repairs      1,200
Less depreciation on installation (10% × $1,200)      (120)
Less repainting wrongly added to premises           (2,500)
Less sale proceeds wrongly included in sales          (900)
Add profit on disposal ($900 − $700)                    200
                                                     ------
Corrected profit for the year                        36,280

Add $1,200 [1]; less depreciation $120 [1]; less $2,500 [1]; less $900 and add profit on disposal $200 [1]; corrected profit $36,280 [1].

(b)

                                                          $
Installation cost added to machinery                  1,200
Less depreciation on it                               (120)
Repainting removed from premises                    (2,500)
Desk removed at net book value                        (700)
                                                     ------
Net decrease in non-current assets                  (2,120)

Correct workings [1]; non-current assets decrease by $2,120 [1].

10. (a) ($36,000 − $6,000) ÷ 5 [1] = $6,000 per year [1]. (b) 2027: 30% × $36,000 = $10,800 [1]. 2028: 30% × ($36,000 − $10,800) = 30% × $25,200 = $7,560 [1]. Net book value at 31 December 2028: $36,000 − $10,800 − $7,560 = $17,640 [1]. (c) $2,300 + $740 − $1,960 [1] = $1,080 [1].

11. Depreciation on the machine sold: 2025, 2026 and 2027, 3 × 12.5% × $16,000 = $6,000; net book value $16,000 − $6,000 = $10,000; profit on disposal $10,600 − $10,000 = $600. Machinery at 31 December 2028: $64,000 − $16,000 + $20,000 = $68,000; depreciation for 2028: 12.5% × $68,000 = $8,500.

(a)

                                                          Debit $  Credit $
1 Mar   Machinery                                          20,000
          Hilltop Engineering                                        20,000
30 Sep  Disposal of machinery                              16,000
          Machinery                                                  16,000
30 Sep  Provision for depreciation of machinery             6,000
          Disposal of machinery                                       6,000
30 Sep  Bank                                               10,600
          Disposal of machinery                                      10,600
31 Dec  Disposal of machinery                                 600
          Statement of profit or loss                                   600

Purchase on credit [1]; transfer of cost to disposal [1]; transfer of accumulated depreciation $6,000 [1]; proceeds [1]; profit on disposal $600 [1].

(b)

Machinery account
Date     Details                        $  Date     Details                        $
2028                                       2028
1 Jan    Balance b/d               64,000  30 Sep   Disposal                  16,000
1 Mar    Hilltop Engineering       20,000  31 Dec   Balance c/d               68,000
                                   ------                                     ------
                                   84,000                                     84,000
                                   ======                                     ======
2029
1 Jan    Balance b/d               68,000

Provision for depreciation of machinery account
Date     Details                        $  Date     Details                        $
2028                                       2028
30 Sep   Disposal                   6,000  1 Jan    Balance b/d               23,500
31 Dec   Balance c/d               26,000  31 Dec   Profit or loss             8,500
                                   ------                                     ------
                                   32,000                                     32,000
                                   ======                                     ======
                                           2029
                                           1 Jan    Balance b/d               26,000

Disposal of machinery account
Date     Details                        $  Date     Details                        $
2028                                       2028
30 Sep   Machinery                 16,000  30 Sep   Provision for depn         6,000
31 Dec   Profit or loss (profit)      600  30 Sep   Bank                      10,600
                                   ------                                     ------
                                   16,600                                     16,600
                                   ======                                     ======

Machinery account: balance b/d and Hilltop Engineering $20,000 [1]; disposal $16,000 and balance c/d $68,000, brought down [1]. Provision account: disposal $6,000 [1]; profit or loss $8,500 [1]; balance c/d $26,000, brought down [1]. Disposal account: machinery $16,000 [1]; provision $6,000 and bank $10,600 [1]; profit or loss $600 on the debit side [1].

12. Insurance for 2028: $360 (January to March) + 9/12 × $1,680 = $360 + $1,260 = $1,620; prepaid at 31 December 2028: 3/12 × $1,680 = $420. Commission earned in 2028: $3,150 − $270 − $340 = $2,540.

(a)

Insurance account
Date     Details                        $  Date     Details                        $
2028                                       2028
1 Jan    Balance b/d                  360  31 Dec   Profit or loss             1,620
1 Apr    Bank                       1,680  31 Dec   Balance c/d                  420
                                   ------                                     ------
                                    2,040                                      2,040
                                   ======                                     ======
2029
1 Jan    Balance b/d                  420

Balance b/d $360 and bank $1,680 [1]; profit or loss $1,620 [1]; balance c/d $420 [1]; balance b/d $420 on the debit side [1].

(b)

Commission received account
Date     Details                        $  Date     Details                        $
2028                                       2028
1 Jan    Balance b/d                  270  Various  Bank                       3,150
31 Dec   Profit or loss             2,540
31 Dec   Balance c/d                  340
                                   ------                                     ------
                                    3,150                                      3,150
                                   ======                                     ======
                                           2029
                                           1 Jan    Balance b/d                  340

Balance b/d $270 on the debit side [1]; bank $3,150 [1]; profit or loss $2,540 [1]; balance c/d $340 on the debit side and balance b/d $340 on the credit side [1].

(c)

                                                          Debit $  Credit $
31 Dec  Other receivables                                     420
          Insurance                                                     420
31 Dec  Commission received                                   340
          Other payables                                                340

Insurance prepaid [1]; commission received in advance [1].

(d) Insurance prepaid $420: other receivables, a current asset [1]. Commission received in advance $340: other payables, a current liability [1].

13. (a) Closing inventory for 2027 was overstated by $2,300, so cost of sales was understated. (i) Gross profit for 2027 overstated by $2,300 [1]; (ii) profit for the year 2027 overstated by $2,300 [1]; (iii) equity at 31 December 2027 overstated by $2,300 [1]; (iv) inventory at 31 December 2027 overstated by $2,300 [1]; (v) gross profit for 2028 understated by $2,300, because opening inventory for 2028 was overstated [1]. (b) The $2,300 overstatement of profit in 2027 is cancelled by the $2,300 understatement of profit in 2028, so the total profit added to equity by 31 December 2028 is correct [1].

14. (a)

                                                          Debit $  Credit $
        Irrecoverable debts                                 1,400
          B Tan                                                       1,400
        L Moyo                                                450
          Irrecoverable debts recovered                                 450
        Bank                                                  450
          L Moyo                                                        450

Write-off of B Tan’s debt [1]; reinstatement of L Moyo’s debt [1]; receipt from L Moyo [1].

(b) Trade receivables after the write-off: $31,400 − $1,400 = $30,000; allowance required 2.5% × $30,000 = $750; decrease $860 − $750 = $110.

Allowance for irrecoverable debts account
Date     Details                        $  Date     Details                        $
2028                                       2028
31 Dec   Profit or loss               110  1 Jan    Balance b/d                  860
31 Dec   Balance c/d                  750
                                   ------                                     ------
                                      860                                        860
                                   ======                                     ======
                                           2029
                                           1 Jan    Balance b/d                  750

Balance b/d $860 [1]; profit or loss $110 on the debit side [1]; balance c/d $750 [1]; balance b/d $750 on 1 January 2029 [1].

(c) Net realisable value of product Z: $12 − $1.50 = $10.50 per unit [1]. Product Z at 120 × $10.50 = $1,260, compared with cost of 120 × $15 = $1,800, a reduction of $540 [1]. Corrected closing inventory: $18,250 − $540 = $17,710 [1].

(d)

Statement of corrected profit for the year ended 31 December 2028
                                                          $
Draft profit for the year                            27,560
Less irrecoverable debt written off (B Tan)         (1,400)
Add irrecoverable debt recovered (L Moyo)               450
Add decrease in allowance ($860 − $750)                 110
Less reduction in closing inventory (product Z)       (540)
                                                     ------
Corrected profit for the year                        26,180

Less $1,400 [1]; add $450 [1]; add $110 [1]; less $540 [1]; corrected profit $26,180 [1].

(e)

Statement of financial position (extract) at 31 December 2028
                                                $
Current assets
Trade receivables                          30,000
Less allowance for irrecoverable debts      (750)
                                           ------
                                           29,250

Trade receivables $30,000 less allowance $750 [1]; net $29,250 [1].

(f) The prudence concept requires inventory to be valued at the lower of cost and net realisable value, so an expected loss is recognised now and assets are not overstated; a possible higher price later is not certain (naming prudence and giving this reason together earn the mark) [1]. If product Z were kept at cost, gross profit, profit for the year, equity and current assets for 2028 would all be overstated by $540 [1]. In 2029 opening inventory would be overstated by $540, so gross profit and profit for the year 2029 would be understated by $540 [1].

A note on exam technique for this topic

Most answers on this topic are built from a short calculation followed by a double entry, so show both: write the rule, put in the figures, and then name the account debited and the account credited. For depreciation and disposals, work out the accumulated depreciation on the asset sold before you open any ledger account, and check that the disposal account balances with the profit or loss on disposal as the final figure. For accruals, prepayments and the allowance for irrecoverable debts, decide first whether the closing balance is an asset or a liability — that tells you which side it is brought down on. For inventory and for capital and revenue errors, say which figures are affected, in which direction and by how much, and remember that an inventory error carries into the next year. Use the marks shown for each part as a guide to how much detail to give.