diff --git a/src/basic/Matrix.js b/src/basic/Matrix.js
index c6d9d899..3e57be9b 100644
--- a/src/basic/Matrix.js
+++ b/src/basic/Matrix.js
@@ -70,16 +70,20 @@ var Matrix = Base.extend(/** @lends Matrix# */{
      * @name Matrix#initialize
      * @param {Matrix} matrix the matrix to copy the values from
      */
-    initialize: function Matrix(arg) {
+    initialize: function Matrix(arg, _dontNotify) {
         var count = arguments.length,
             ok = true;
-        if (count === 6) {
+        if (count >= 6) { // >= 6 to pass on optional _dontNotify argument.
             this._set.apply(this, arguments);
-        } else if (count === 1) {
+        } else if (count === 1 || count === 2) {
+            // Support both Matrix and Array arguments through #_set(), and pass
+            // on the optional _dontNotify argument:
             if (arg instanceof Matrix) {
-                this._set(arg._a, arg._b, arg._c, arg._d, arg._tx, arg._ty);
+                this._set(arg._a, arg._b, arg._c, arg._d, arg._tx, arg._ty,
+                        _dontNotify);
             } else if (Array.isArray(arg)) {
-                this._set.apply(this, arg);
+                this._set.apply(this,
+                        _dontNotify ? arg.concat([_dontNotify]) : arg);
             } else {
                 ok = false;
             }
diff --git a/src/item/Item.js b/src/item/Item.js
index bfd09a82..6537ce11 100644
--- a/src/item/Item.js
+++ b/src/item/Item.js
@@ -1562,7 +1562,7 @@ new function() { // Injection scope for various item event handlers
         }
         // Use Matrix#initialize to easily copy over values.
         if (!excludeMatrix)
-            this._matrix.set(source._matrix);
+            this._matrix.set(source._matrix, true);
         // We can't just set _applyMatrix as many item types won't allow it,
         // e.g. creating a Shape in Path#toShape().
         // Using the setter instead takes care of it.
diff --git a/test/tests/Item_Cloning.js b/test/tests/Item_Cloning.js
index b3051744..762701d0 100644
--- a/test/tests/Item_Cloning.js
+++ b/test/tests/Item_Cloning.js
@@ -179,3 +179,22 @@ test('Item#clone() Hierarchy', function() {
         return clone.isBelow(path2);
     }, true);
 });
+
+test('Item#clone() and #applyMatrix (#1225)', function() {
+    var group = new Group({
+        applyMatrix: false,
+        children: [
+            new Shape.Rectangle({
+                size: [100, 100],
+                point: [100, 100],
+                strokeColor: 'red',
+            })
+        ]
+    });
+
+    group.translate(300, 300);
+
+    equals(function() {
+        return group.clone().matrix.translation;
+    }, new Point(300, 300));
+});
diff --git a/test/tests/PathItem.js b/test/tests/PathItem.js
index 6ff1ae79..41b89e28 100644
--- a/test/tests/PathItem.js
+++ b/test/tests/PathItem.js
@@ -122,7 +122,7 @@ test('PathItem#create() with SVG path-data (#1101)', function() {
 test('PathItem#compare()', function() {
     var empty = new Path();
     var circle = new Path.Circle({
-        point: [100, 100],
+        center: [100, 100],
         radius: 100
     });
     var square = new Path.Rectangle({