IGCSE Accounting: The purpose of accounting and the accounting equation (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”. 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 sections 1.1 and 1.2 of the Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029 (version 1): the purpose of accounting and the accounting equation. All amounts are in dollars. An earlier, shorter set is fundamentals of accounting practice; the free diagnostics show gaps.

Questions

1. Rosa Fernandez owns Fernandez Tile Supplies. State whether each task is book-keeping or accounting.

(a) Entering a supplier’s bill in the purchases records. (b) Comparing this year’s profit with last year’s and suggesting why it fell. (c) Preparing a statement of profit or loss from the ledger balances. (d) Recording cash received from a customer. [4]

2. In the year just ended, Fernandez Tile Supplies had revenue of 54,000 and expenses of 47,250. Profit in the previous year was 9,000.

(a) Calculate profit for the year. [1] (b) Calculate the percentage change in profit from the previous year. [2] (c) Explain two ways in which Rosa could use this information. [4]

3. State whether each item is an asset, a liability or owner’s equity in the books of a business.

(a) Motor vehicle (b) Bank overdraft (c) Trade payables (d) Inventory (e) Money owed to the business by customers (f) Capital paid in by the owner [6]

4. Calculate the missing figure in each case.

(a) Assets 92,400; liabilities 35,650; owner’s equity? (b) Owner’s equity 48,200; liabilities 19,750; assets? (c) Assets 31,900; owner’s equity 20,450; liabilities? (d) Assets 70,000; liabilities 26,500. The owner then pays 5,000 into the business bank account. New owner’s equity? [4]

5. For each transaction at Fernandez Tile Supplies, state the effect on assets, liabilities and owner’s equity (increase, decrease or no change).

(a) Rosa pays in 8,000 of extra capital by bank transfer. (b) Shelving costing 2,600 is bought on credit. (c) 1,000 of a bank loan is repaid from the business bank account. (d) Rosa takes tiles that cost 300 for use in her own home. (e) Tiles that cost 420 are sold on credit for 615. (f) Shop rent of 750 is paid from the bank. [6]

6. Boateng Garden Services begins with assets of 30,000, liabilities of 10,000 and owner’s equity of 20,000. Copy and complete the table to show the total of each element after each transaction. Each row follows on from the one above.

Transaction	Assets	Liabilities	Owner’s equity
Starting position	30,000	10,000	20,000
1. A mower costing 3,500 is bought on credit
2. Customers pay 4,200 in cash for work done
3. Wages of 1,300 are paid from the bank
4. 2,000 of the loan is repaid from the bank

[8]

7. A trader’s records show:

	Start of year	End of year
Assets	41,300	58,900
Liabilities	12,800	14,150

The owner paid in 5,000 of extra capital and took 8,400 in drawings during the year.

(a) Calculate owner’s equity at the start of the year. [1] (b) Calculate owner’s equity at the end of the year. [1] (c) Calculate profit for the year. [3] (d) The owner says: “Profit is 19,650, so the bank balance rose by 19,650.” Explain why this may not be true. [2]

8. A business has these balances at the year end: motor vehicle 18,400; inventory 4,150; trade receivables 2,780; cash 520; bank overdraft 1,960; trade payables 3,340; bank loan 9,000.

(a) State, with a reason, how the bank overdraft is classified. [1] (b) Calculate total assets. [1] (c) Calculate total liabilities. [1] (d) Calculate owner’s equity. [1] (e) Show that the equation balances. [1]

9. Rosa Fernandez applies for a bank loan and the bank asks to see her accounting records. Explain what information the bank can take from them, and evaluate whether profit alone is enough for the bank to decide. [6]

10. Dalia Whitcombe starts Whitcombe Signs. In its first period she:

1. pays 25,000 into a business bank account;
2. buys equipment for 14,000 from the bank;
3. buys materials for 6,500 on credit;
4. sells materials that cost 3,800 for 5,900 on credit;
5. pays rent of 900 from the bank;
6. takes 1,000 from the bank as drawings;
7. receives 2,500 from customers who owe her;
8. pays the supplier 3,000.

(a) Calculate the end-of-period balance of equipment, inventory, trade receivables and bank. [4] (b) Calculate trade payables at the end of the period. [1] (c) Calculate owner’s equity at the end of the period. [2] (d) Calculate the profit for the period. [2] (e) Show that profit agrees with the change in owner’s equity. [1] (f) Profit is 1,200 but the bank balance is 8,600. Explain why these differ and comment on progress. [2]

Answers

1. (a) Book-keeping [1]. (b) Accounting, as it interprets the figures [1]. (c) Accounting, as it summarises the records [1]. (d) Book-keeping, as it records a transaction [1]. [4] Examiner insight: A correct one-word label is likely to earn the mark; a reason adds nothing if the label is wrong.

2. (a) Profit = 54,000 − 47,250 = 6,750 [1]. [1] (b) Change = 6,750 − 9,000 = −2,250 [1]; 2,250 ÷ 9,000 × 100 = 25.0% fall [1]. [2] (c) Any two uses, applied, such as: judging performance, as profit has fallen [1] [1]; setting drawings, since only 6,750 was earned and taking more would shrink the business [1] [1]. [4] Examiner insight: Uses tend to gain credit when tied to the figures given; “to see the profit” restates the question.

3. (a) Asset [1]. (b) Liability [1]. (c) Liability [1]. (d) Asset [1]. (e) Asset (trade receivables) [1]. (f) Owner’s equity [1]. [6] Examiner insight: Read each phrase for who owes whom; overdraft and trade payables are easily placed on the wrong side.

4. (a) 92,400 − 35,650 = 56,750 [1]. (b) 48,200 + 19,750 = 67,950 [1]. (c) 31,900 − 20,450 = 11,450 [1]. (d) Before: 70,000 − 26,500 = 43,500; after: 43,500 + 5,000 = 48,500 [1]. [4] Examiner insight: Writing the rearranged equation first makes a slip visible as a method error, not an unexplained wrong answer.

5. (a) Assets increase, liabilities no change, owner’s equity increases [1]. (b) Assets up, liabilities up, owner’s equity no change [1]. (c) Assets down, liabilities down, owner’s equity no change [1]. (d) Assets down, liabilities no change, owner’s equity down (drawings) [1]. (e) Assets up 195, liabilities no change, owner’s equity up 195 (profit of 615 − 420) [1]. (f) Assets down, liabilities no change, owner’s equity down (an expense) [1]. [6] Examiner insight: Each part is likely to need all three elements stated.

6. Row 1: 33,500, 13,500 [1]; 20,000 [1]. Row 2: 37,700, 13,500 [1]; 24,200 [1]. Row 3: 36,400, 13,500 [1]; 22,900 [1]. Row 4: 34,400, 11,500 [1]; 22,900 [1]. Each row balances: 11,500 + 22,900 = 34,400. [8] Examiner insight: Checking the equation on every line catches a slip that would carry down the table.

7. (a) 41,300 − 12,800 = 28,500 [1]. [1] (b) 58,900 − 14,150 = 44,750 [1]. [1] (c) Increase in owner’s equity = 44,750 − 28,500 = 16,250 [1]; less capital introduced: 16,250 − 5,000 = 11,250 [1]; add back drawings: 11,250 + 8,400 = 19,650 [1]. [3] (d) Profit includes credit sales not yet paid for, so cash has not risen by the same amount [1]; the bank balance is also affected by drawings, capital, loan repayments and asset purchases [1]. [2] Examiner insight: Naming a concrete reason, such as credit sales or drawings, tends to gain credit; saying they differ does not.

8. (a) A liability, as the business owes the bank [1]. [1] (b) 18,400 + 4,150 + 2,780 + 520 = 25,850 [1]. [1] (c) 1,960 + 3,340 + 9,000 = 14,300 [1]. [1] (d) 25,850 − 14,300 = 11,550 [1]. [1] (e) 14,300 + 11,550 = 25,850, which equals total assets [1]. [1] Examiner insight: A bare “liability” for the overdraft may be treated as incomplete without the reason.

9. Profit shows whether the business can earn enough to meet repayments [1] and whether it is rising or falling [1]; liabilities show what is already owed [1]; assets and owner’s equity show what the owner has at stake [1]. Evaluation: profit alone is not enough, because it does not show existing debts or whether cash will be available when payments fall due [1]; the bank should weigh profit together with liabilities and assets before judging [1]. [6] Examiner insight: Evaluation marks tend to depend on a reasoned judgement about the limits of one measure; a list alone usually stays in the lower marks.

10. (a) Equipment 14,000 [1]; inventory 6,500 − 3,800 = 2,700 [1]; trade receivables 5,900 − 2,500 = 3,400 [1]; bank 25,000 − 14,000 − 900 − 1,000 + 2,500 − 3,000 = 8,600 [1]. [4] (b) Trade payables = 6,500 − 3,000 = 3,500 [1]. [1] (c) Total assets = 14,000 + 2,700 + 3,400 + 8,600 = 28,700 [1]; owner’s equity = 28,700 − 3,500 = 25,200 [1]. [2] (d) Gross gain on the sale = 5,900 − 3,800 = 2,100 [1]; less rent 900 gives profit of 1,200 [1]. [2] (e) Owner’s equity 25,200 = capital 25,000 + profit 1,200 − drawings 1,000, so the change in equity agrees with profit [1]. [1] (f) Profit includes credit sales not yet received (3,400 is still owed), and the bank balance is also reduced by equipment, drawings and the supplier payment [1]. The business is profitable, but cash is tied up in receivables, inventory and equipment, so cash needs watching as well as profit [1]. [2] Examiner insight: Setting out balances, then totals, then equity keeps a slip in one part from hiding the rest.

Where marks are usually lost

• Leaving interpretation and advice out of the definition of accounting.
• Giving a purpose of profit that only restates the question.
• Working out a percentage change against the new figure and not the original.
• Placing a bank overdraft or trade payables among the assets.
• Forgetting to add back drawings when finding profit from the change in equity.
• Stating the effect on fewer than three elements.
• Assuming that profit equals the increase in the bank balance.

Next steps

• Recall the key points in the revision notes and re-read the study guide.
• Use the course hub, checklist and free diagnostics.
• Book a free trial class if you want help.

Frequently asked questions

Where do students usually lose marks on the accounting equation? Typical losses include placing a bank overdraft or trade payables among the assets, stating the effect of a transaction on fewer than all three elements, and assuming that profit equals the increase in the bank balance.

How do you calculate a percentage change in profit correctly? Divide the change by the original figure, not the new one, and multiply by 100. Then say whether the result is a rise or a fall.

What is a common mistake when defining accounting in Cambridge IGCSE Accounting 0452? Leaving interpretation and advice out of the definition. Accounting goes beyond recording: it summarises, interprets and communicates the information so that it supports decisions.

What should I remember when finding profit from the change in owner’s equity? Adjust the change in equity for capital introduced and drawings. Forgetting to add back drawings is a common error, because drawings reduce equity without being an expense.

Official syllabus

Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029 (version 1), published by Cambridge University Press & Assessment (Cambridge International Education). Sections 1.1 and 1.2.