BRIDGING DOCUMENT IGCSE ACCOUNTING

What changes are happening to Cambridge International IGCSE Accounting?

Cambridge International Examinations made some very slight changes to the
syllabus for 0452 IGCSE Accounting for examinations in 2014 and 2015.
These changes are

Replacing the requirement to produce balance sheets with a requirement to

produce statements of financial position. This applies the following syllabus
sections:
4.3.2, 4.5.2, 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.6

Replacing the requirement to produce an appropriation account for a limited

company with a requirement to produce a statement of changes in equity.
This applies to syllabus section 4.6.3

There are no changes to

the ways in which the qualification can be taken

the forms of assessment and construction of question s

the weightings for each question paper

What do these changes mean for the CIE IGCSE Accounting resource suite
from Cambridge?
The existing textbook and workbook can be used by teachers and learners until a
new edition becomes available which will incorporate the above changes.
Replacing balance sheets with statement of financial position
Any reference to balance sheets in the existing textbook will be replaced with a
reference to statements of financial position. The recommended format for a vertical
statement of financial position is shown below.

Sole Trader
Statement of Financial Position at ...................
$
$

Assets
Non-current assets

Cost

Land and buildings

Fixtures and fittings
Office equipment
Motor vehicles

xxxx
xxxx
xxxx
xxxx
xxxx

Current assets
Inventory
Trade receivables
Less Provision for doubtful debts
Other receivables
Other receivables (accrued income)
Bank
Cash

Depreciation
to date
xxxx
xxxx
xxxx
xxxx

Book
value
xxxx
xxxx
xxxx
xxxx
xxxx

xxxx
xxxx
xxxx

Total assets

xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx

Capital and liabilities

Capital
Opening balance
**Plus Profit for the year
Less Drawings

Non-current liabilities
Loan
Current liabilities
Trade payables
Other payables
Prepaid income
*Bank overdraft

Total liabilities

* If the business has only one bank account, only one of these will appear
** If there is a loss for the year, this will be deducted rather than added

xxxx
xxxx
xxxx
xxxx
xxxx

xxxx

xxxx
xxxx
xxxx
xxxx
xxxx
xxxx

Replacing limited company appropriation accounts with statements of changes

in equity
The statement of changes in equity should summarise the changes during the year to
the ordinary share capital, retained earnings, and general reserve.
The treatment of preference share dividend depends on the type of preference
shares. However the syllabus does not require learners to understand the different
types of preference shares, so CIE are taking the approach that preference
share dividend will be included in the income statement.
Any ordinary share dividend which has actually been paid during the financial year
is recorded in the statement of changes in equity for that particular year. Sometimes
the directors will recommend an interim ordinary dividend (half way dividend) to be
paid during the year. This will appear in the statement of changes in equity for that
particular financial year. At the end of each financial year the directors of a
company propose that ordinary share dividends are paid and these will be paid early
in the following year. These proposed dividends will appear only as a note to the
financial statements for that particular year: they will be included in the statement of
changes in equity in the year in which they are actually paid.
Example
Anand Ltd was formed on 1 July 20-3. By 30 June 20-6, 200 000 5% preference
shares of $1 each and 600 000 ordinary shares of $0.50 had been issued and were
fully paid.
The profit for the year ended 30 June 20-6 before the preference share dividend was
$58 000. On that date retained earnings brought forward amounted to $41 000 and
the general reserve amounted to $45 000.
Half of the preference share dividend was paid on 31 December 20-5. On 30 June
20-6 the remaining preference share dividend was outstanding.

The proposed final ordinary share dividend of $30 000 for the year ended 30 June
20-5 was paid on 30 September 20-5. On 1 January 20-6 an interim ordinary share
dividend of
$12 000 was paid.
The directors proposed a final ordinary share dividend of 8% for the year ended 30
June 20-6 and a transfer to general reserve of $8000.
(a) Prepare a relevant extract from the income statement for the year ended 30 June
20-6.
(b) Prepare the statement of changes in equity for the year ended 30 June 20-6.
(a)

Anand Ltd
Extract from Income Statement for the year ended 30- June 20-6
$
10 000

Expenses Preference share dividend (5000 + 5000)

(b)

Anand Ltd
Statement of Changes in Equity for the year ended 30 June 20-6

Balance at 1 July 20-5

Profit for the year
Dividend paid (final)
Dividend paid (interim)
Transfer to general reserve
Balance at 30 June 20-6

Ordinary
Share
Capital
$
300 000

300 000

General
Reserve

Retained
Earnings

Total

$
45 000

8 000

$
41 000
48 000
(30 000)
(12 000)
(8 000)

$
386 000
48 000
(30 000)
(12 000)
-

53 000

39 000

392 000

The proposed ordinary share dividend for the year ended 30 June 20-6
does not appear in the statement as it has not yet been paid.