Cambridge A Level Accounting 9706 — 2010 Oct/Nov Paper 1 · Variant 2

Question 1

1 On 1 January 2009 a business had prepaid rent of $50. During 2009, three rent payments were made of $250 each. On 31 December 2009, the business still owes $200 rent on account for 2009. The business owner has charged the rent payments made during 2009 in his income (profit and loss) account. What is the effect on net profit? A $200 too high B $200 too low C $250 too high D $250 too low

Accepted Answer

C

Question 2

2 A customer paid a deposit in advance for goods to be supplied at a later date. How should this be recorded in the seller’s books? debit credit A cash customer B cash sales C customer prepayment D customer sales

Accepted Answer

A

Question 3

3 Non current (fixed) assets of a company were: start of year end of year $ $ at cost 460 000 505 000 cumulative depreciation 215 000 237 000 net book value 245 000 268 000 During the year non current (fixed) assets costing $92 000 were purchased and non current (fixed) assets with a net book value of $16 000 were sold. What was the depreciation charge for the year? A $22 000 B $23 000 C $53 000 D $69 000

Accepted Answer

C

Question 4

4 What does the application of the accounting principle of consistency ensure? A that all losses are provided for B that assets are recorded at their actual cost C that financial statements are produced annually D that profits are calculated the same way each year

Accepted Answer

D

Question 5

5 At 30 June the balance sheet of a business includes the following. $ trade receivables (debtors) 46 000 provision for doubtful debts 5 % 2 300 During July, sales of $350 000 were made of which 20 % were in cash. Credit customers paid $303 800 after deducting a 2 % cash discount. How much did the trade receivables (debtors) owe to the business at 31 July? A $15 200 B $16 000 C $22 200 D $76 000

Accepted Answer

B

Question 6

6 Which error will not affect the trial balance? A posting of $3000 purchases to the debit of the motor vehicle account B posting of $3000 purchases to the credit of the motor vehicle account C posting of $3000 road tax refund to the debit of the motor vehicle account D posting of $3000 sales to the debit of the motor vehicle account

Accepted Answer

A

Question 7

7 Closing inventory (stock) has been overvalued. What is the effect on the financial statements? net current assets net profit A no effect understated B overstated no effect C overstated overstated D understated understated

Accepted Answer

C

Question 8

8 The trade receivable (debtors) control account of Y shows a balance of $14 320. Customer X, who owes Y $1000, has also supplied Y with $400 of goods. The supply of goods, $400, is to be offset by Y. What is the corrected trade receivable (debtors) control account balance? A $13 720 B $13 920 C $14 720 D $14 920

Accepted Answer

B

Question 9

9 An electricity accrual of $375 was treated as a prepayment in preparing a trader’s income (profit and loss) account. What was the effect on profit? A overstated by $375 B overstated by $750 C understated by $375 D understated by $750

Accepted Answer

B

Question 10

10 At the end of a financial year the following information is available. $ sales 200 000 opening inventory (stock) 15 000 closing inventory (stock) 18 000 If the business makes a standard mark-up of 25 %, what were the purchases? A $147 000 B $153 000 C $157 000 D $163 000

Accepted Answer

D

Question 11

11 For the eleven months ended 31 August 2009, snack bar takings were correctly recorded at $109 340. For September 2009, the snack bar takings were mixed up with other income. The snack bar profit margin was 30.%. The table shows figures for the snack bar for September 2009. $ opening inventory (stock) at cost 6 303 purchases 8 844 closing inventory (stock) at cost 7 370 What was the gross profit of the snack bar for the year ended 30 September 2009? A $27 566 B $36 135 C $36 593 D $43 912

Accepted Answer

B

Question 12

12 Information relating to a club’s subscription is: $ received during the year 20 000 paid in advance in the previous year 2 000 paid in advance during the current year 1 000 There were no subscriptions in arrears at the start or end of the year. Individual subscriptions have remained constant at $500 per annum for the last two years. How many members does the club have? A 38 B 40 C 42 D 44

Accepted Answer

C

Question 13

13 X and Y are in partnership, sharing residual profits and losses equally after the payments below are made. 1 2 % interest is charged on partners’ drawings 2 salary to Y of $10 000 The partners’ drawings for the year were: X $12 000 Y $8000 The net profit for the current year is $52 000. How much will each partner receive in share of residual profits? A $10 800 B $11 200 C $20 800 D $21 200

Accepted Answer

D

Question 14

14 The table shows data for a manufacturing company for a year. $ office salaries 34 500 factory wages 115 000 depreciation on plant 3 700 depreciation on office equipment 1 500 cost of raw materials 89 600 royalties paid 4 200 closing inventory (stock) of completed goods 5 100 What is the production cost of completed goods for the year? A $203 000 B $208 300 C $212 500 D $214 000

Accepted Answer

C

Question 15

15 A company has the following current assets and current liabilities. $ bank deposit account 6 000 bank overdraft 4 500 loan interest payable 2 500 deposits from customers (for orders) 1 500 loans to employees 4 000 trade payables (creditors) 9 000 trade receivables (debtors) 12 000 What is the amount of the net current assets? A $(3500) B $4500 C $7500 D $13 500

Accepted Answer

B

Question 16

16 X started a business 3 years ago and now has a capital of $175 000. Over that period his profits have been $73 000 and his drawings $52 000. In year 2 he introduced cash of $35 000 and in year 3 he took out of the business, for his own use, a non current (fixed) asset with a net book value of $4000. How much capital did he start the business with? A $67 000 B $115 000 C $123 000 D $158 000

Accepted Answer

C

Question 17

17 A business has two departments, men’s clothing and ladies’ clothing. The following information is available. men’s department ladies’ department sales assistants 7 9 floor space 160 m2 200 m2 value of non current (fixed) assets $59 000 $61 000 annual sales $450 000 $750 000 The cost of heating and lighting is $17 692. What is the cost of heating and lighting for the men’s department? A $6634.50 B $7740.25 C $7863.11 D $8698.57

Accepted Answer

C

Question 18

18 A company makes a bonus issue of shares. What is the effect on the net assets and the reserves in the balance sheet? net assets reserves A increase decrease B increase unchanged C unchanged decrease D unchanged increase

Accepted Answer

C

Question 19

19 The table shows extracts from the trial balance of a company at 31 December 2009. $ ordinary share capital 750 000 8 % preference shares 250 000 6 % debentures (2015) 150 000 bank loan repayable (2012) 75 000 bank overdraft 110 000 mortgage on buildings (repayable 2010) 120 000 What is the total of non current liabilities in the balance sheet at 31 December 2009? A $195 000 B $225 000 C $345 000 D $595 000

Accepted Answer

B

Question 20

20 A company’s share capital and reserves are: $ non current (fixed) assets 250 000 net current assets 125 000 375 000 share capital and reserves 150 000 shares $1 each 150 000 share premium 75 000 general reserve 125 000 profits retained 25 000 375 000 The directors propose to issue bonus shares on the basis of one $1 share for every three already held. Following this the directors intend to make a rights issue on the basis of one new $1 share for every four shares held, at a premium of $0.20 per share. What will the total net assets of the company be after the share issues? A $425 000 B $435 000 C $475 000 D $485 000

Accepted Answer

B

Question 21

21 A business has current liabilities of $4000 at its year end. The quick (acid test) ratio is 1.5 : 1 The current ratio is 2.25 : 1 What is the value of inventory (stock) held at the year end? A $3000 B $4000 C $9000 D $15 000

Accepted Answer

A

Question 22

22 A company’s gross profit ratio for the year ended 31 December 2008 was 25 %. This increases to 28 % for the year ended 31 December 2009. What could have been responsible for the increase? A an increase in the cost of purchases during 2009 B an increase in the volume of sales during 2009 C an over-valuation of inventory (stock) as at 31 December 2009 D an under-valuation of inventory (stock) as at 31 December 2009

Accepted Answer

C

Question 23

23 A business has the following assets and liabilities. $000 $000 non current (fixed) assets 420 inventory (stocks) 120 trade receivables (debtors) 310 430 trade payables (creditors) (220) net current assets 210 total assets less current liabilities 630 long term loan (130) net assets 500 What is the business's quick (acid test) ratio? A 1.41 : 1 B 1.95 : 1 C 2.43 : 1 D 3.86 : 1

Accepted Answer

A

Question 24

24 The table shows the year end information for three companies. sales operating profit as % capital employed company $ of all sales $ X 500 000 15 100 000 Y 200 000 8 40 000 Z 400 000 10 80 000 How should the companies rank in order of return on the actual capital employed? return on capital employed highest                                                         lowest A X Z Y B Y Z X C Z X Y D Z Y X

Accepted Answer

A

Question 25

25 In a job costing system, what is the correct entry to record the return of unused direct materials from production to stores? debit credit A cost of sales work in progress B stores control finished goods C stores control work in progress D work in progress stores control

Accepted Answer

C

Question 26

26 A company manufactures two products. product X product Y $ $ selling price 20 30 direct labour (per unit) 10 20 direct materials (per unit) 4 2 Total fixed costs are $48 000. Only 3000 units of Y can be made and sold. How many units of product X must be made and sold to break even? A 1800 B 3000 C 4000 D 8000

Accepted Answer

C

Question 27

27 A factory produces a product with a variable cost of $0.60 per unit. Fixed costs are $15 000 per quarter, including rent of $6000 per quarter. If more than 20 000 units are made per quarter, additional space is required which increases the rent by 50 %. What is the total cost per unit of producing 30 000 units in a quarter? A $0.60 B $0.90 C $1.10 D $1.20

Accepted Answer

D

Question 28

28 A manufacturer has 700 units of finished goods in stock on 1 March. On 31 March the total number of units in stock is 770. At present, stock is valued using the total costing method. What would be the effect on the operating profit if the marginal costing method is used for stock valuation? A increase operating profit B no change in operating profit C no change in operating profit but a 10 % increase in gross profit D reduce operating profit

Accepted Answer

D

Question 29

29 A job cost sheet showed the following estimates. $ materials 680 labour at $20 per hour 200 overheads at $10 per labour hour 100 profit 280 price of job 1 260 The job actually took 25 % more labour hours than were estimated. What was the profit? A $205 B $230 C $330 D $355

Accepted Answer

A

Question 30

30 The diagram shows a break-even chart. $ Y X 0 number of units What is indicated by the line XY? A total costs B total fixed costs C total sales D total variable costs

Accepted Answer

A

Cambridge A Level Accounting 9706 — 2010 Oct/Nov Paper 1 · Variant 2

Question paper12 pages

Mark scheme2 pages

Questions as text

Q1 · On 1 January 2009 a business had prepaid rent of $50

Q2 · A customer paid a deposit in advance for goods to be supplied at a later date

Q3 · Non current (fixed) assets of a company were: start of year end of year $ $ at cost 460…

Q4 · What does the application of the accounting principle of consistency ensure?

Q5 · At 30 June the balance sheet of a business includes the following

Q6 · Which error will not affect the trial balance?

Q7 · Closing inventory (stock) has been overvalued

Q8 · The trade receivable (debtors) control account of Y shows a balance of $14 320

Q9 · An electricity accrual of $375 was treated as a prepayment in preparing a trader’s income…

Q10 · At the end of a financial year the following information is available

Q11 · For the eleven months ended 31 August 2009, snack bar takings were correctly recorded at…

Q12 · Information relating to a club’s subscription is: $ received during the year 20 000 paid…

Q13 · X and Y are in partnership, sharing residual profits and losses equally after the…

Q14 · The table shows data for a manufacturing company for a year

Q15 · A company has the following current assets and current liabilities

Q16 · X started a business 3 years ago and now has a capital of $175 000

Q17 · A business has two departments, men’s clothing and ladies’ clothing

Q18 · A company makes a bonus issue of shares

Q19 · The table shows extracts from the trial balance of a company at 31 December 2009

Q20 · A company’s share capital and reserves are: $ non current (fixed) assets 250 000 net…

Q21 · A business has current liabilities of $4000 at its year end

Q22 · A company’s gross profit ratio for the year ended 31 December 2008 was 25 %

Q23 · A business has the following assets and liabilities

Q24 · The table shows the year end information for three companies

Q25 · In a job costing system, what is the correct entry to record the return of unused direct…

Q26 · A company manufactures two products

Q27 · A factory produces a product with a variable cost of $0.60 per unit

Q28 · A manufacturer has 700 units of finished goods in stock on 1 March

Q29 · A job cost sheet showed the following estimates

Q30 · The diagram shows a break-even chart

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