Cambridge A Level Accounting 9706 — 2011 May/June Paper 1 · Variant 1

Question 1

1 A business paid $10 000 for waste disposal in the year. The opening prepayment was $1500 and the closing accrual was $2000. What was the charge for waste disposal for the year? A $6500 B $9500 C $10 500 D $13 500

Accepted Answer

D

Question 2

2 The non-current assets of a business are shown. end of year start of year $ $ cost 360 000 300 000 accumulated depreciation 120 000 75 000 net book value 240 000 225 000 During the year, non-current assets costing $110 000 were bought and non-current assets with a net book value of $20 000 were sold. What was the depreciation charge for the year? A $35 000 B $45 000 C $50 000 D $75 000

Accepted Answer

D

Question 3

3 Which transaction would increase the current assets of a business? A paying invoices $950, after receiving $50 cash discount B purchasing a machine on credit for $1200 C purchasing inventory for $1100 cash and selling it on credit for $1500 D selling inventory with an original cost of $800 at below cost price

Accepted Answer

C

Question 4

4 The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 36 000 current accounts (debit) 5 000 current liabilities 7 000 non-current liabilities 15 000 What is the amount of current assets? A $6000 B $11 000 C $17 000 D $21 000

Accepted Answer

B

Question 5

5 Accountants prefer the commercial reality of a transaction to a strictly legal approach. Which accounting principle is being applied? A consistency B materiality C prudence D substance over form

Accepted Answer

D

Question 6

6 There is great uncertainty about the continuance of a business. This has caused the proprietor to make a large reduction in the valuation of the year-end inventory. Which accounting principle does this illustrate? A going concern B matching C materiality D substance over form

Accepted Answer

A

Question 7

7 The cash book of a business shows a credit balance of $12 500 at 30 June. Bank charges of $2000 have not yet been entered in the cash book. A cheque for $20 000 received from a debtor, and a cheque for $3000 paid to a creditor have been entered in the cash book, but have not yet been shown on the bank statement. What is the balance shown on the bank statement at 30 June? A $2500 credit B $2500 debit C $31 500 credit D $31 500 debit

Accepted Answer

D

Question 8

8 Closing inventory has been overvalued. What is the effect on the financial statements? net current assets profit from operations A overstated overstated B overstated understated C understated overstated D understated understated

Accepted Answer

A

Question 9

9 What is the main use of a computerised age analysis of debtors? A aid debt collection procedures B match sales invoices against orders C reconcile sales ledger balances D show credit notes issued

Accepted Answer

A

Question 10

10 A manufacturing company has the following balances at its year end. $ closing inventory of raw materials 24 500 direct manufacturing wages 162 800 purchases of raw materials 85 200 supervisors’ wages 44 000 opening inventory of raw materials 27 800 What is the prime cost for the year? A $244 700 B $248 000 C $251 300 D $295 300

Accepted Answer

C

Question 11

11 A partnership provides the following financial information for the year ended 30 June 2011. $000 profit from operations 240 bank interest payable 21 interest credited to current accounts 15 drawings 100 partnership salaries 95 What is the residual balance of profits to be appropriated between the partners? A $9000 B $104 000 C $109 000 D $204 000

Accepted Answer

C

Question 12

12 A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The owner withdrew $7000 as drawings during the year and this resulted in a bank overdraft of $5000 at the end of the year. What was the profit during the first year? A $8000 B $12 000 C $13 000 D $18 000

Accepted Answer

C

Question 13

13 At the year end a company discovers that some inventory is damaged. This inventory originally cost $2000 and to replace it would now cost $1900. It would normally sell for $2400 but can now only be sold for $2200 if repairs costing $400 are undertaken. At what value should the damaged inventory be shown in the financial statements? A $1800 B $1900 C $2000 D $2200

Accepted Answer

A

Question 14

14 A club charges each of its 100 members an annual subscription of $12. At the end of a year four members had not paid their annual subscription. What will be the entries in the financial statements for subscriptions? income and expenditure account balance sheet $ A 1152 current asset $48 B 1152 current liability $48 C 1200 current asset $48 D 1200 current liability $48

Accepted Answer

C

Question 15

15 How should goodwill be treated by a limited company? A Goodwill should always be written off immediately. B Non-purchased goodwill is shown in the balance sheet. C Purchased goodwill is shown in the balance sheet and written off over its useful life. D Purchased goodwill remains on the balance sheet as a permanent item.

Accepted Answer

C

Question 16

16 A company issues for cash 50 000 shares of $5 each at a premium of $15 each and $300 000 4 % debentures. By what amount will the net assets of the company increase? A $250 000 B $550 000 C $1 000 000 D $1 300 000

Accepted Answer

C

Question 17

17 An extract from Bumble Ltd's balance sheet shows the following. $000 ordinary shares of $0.25 each 500 share premium 100 retained earnings 300 The company makes a rights issue of 1 share for each 4 held at a price of $0.30 per share. All shares are taken up. What will the new balance sheet show? A B C D $000 $000 $000 $000 ordinary shares of $0.25 each 625 500 625 625 rights issue – 125 – – share premium 100 125 125 100 retained earnings 300 275 300 325

Accepted Answer

C

Question 18

18 The following data is available at the end of a financial year. opening inventory $60 000 purchases $420 000 closing inventory $80 000 mark up 25 % trade receivables turnover 50 days Sales are all on credit and accrue evenly over the year. What is the amount of trade receivables at the end of the year (to the nearest $500)? A $55 000 B $57 500 C $68 500 D $72 000

Accepted Answer

C

Question 19

19 The annual accounts of a business include the following. $ revenue 160 000 opening inventory 10 000 closing inventory 14 000 Inventory turnover is 10 times. What is the gross profit? A $20 000 B $40 000 C $60 000 D $120 000

Accepted Answer

B

Question 20

20 A company’s profit from operations was $128 000. Interest payable was $8000. The following amounts were included in the company’s balance sheet. $ non-current assets 485 000 net current assets 27 000 non current liabilities 80 000 How much is the return on the total capital employed? A 20.3 % B 21.6 % C 23.4 % D 25.0 %

Accepted Answer

D

Question 21

21 A business has $10 000 in the bank and buys inventory for $6000 paying by cheque. What is the effect of this on its current ratio and quick (acid test) ratio? current ratio quick (acid test) ratio A decreases increases B decreases no effect C no effect decreases D no effect no effect

Accepted Answer

C

Question 22

22 A company’s sales are made evenly over a year (360 days). 10 % of the sales are for cash, debtors total $26 700 and the trade receivables turnover period is 30 days. What are the total sales (cash and credit) for the year? A $320 400 B $356 000 C $801 000 D $890 000

Accepted Answer

B

Question 23

23 A business sells goods at a mark up of 33.3 %. Information for a year is given. $ revenue 600 000 opening inventory 53 000 closing inventory 68 000 What are the total purchases for the year? A $415 000 B $435 000 C $450 000 D $465 000

Accepted Answer

D

Question 24

24 Which cost will decrease as production is increased? A fixed costs per unit B total fixed costs C total variable costs D variable cost per unit

Accepted Answer

A

Question 25

25 A business sells its product for $50 a unit and has variable costs of $30 per unit. Its fixed costs for this year were $200 000. Next year, fixed costs are expected to be $260 000. How many more units will have to be sold next year to make the same profit as this year? A 3000 B 5200 C 10 000 D 13 000

Accepted Answer

A

Question 26

26 A business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio of 30 %. What is the profit? A $25 000 B $60 000 C $75 000 D $200 000

Accepted Answer

A

Question 27

27 A business provides the following information for a month. actual direct labour hours worked 8000 actual overhead expenditure $88 000 budgeted direct labour hours 7500 budgeted overhead expenditure $90 000 What is the amount of the overhead over / under recovery? A $2000 over-recovered B $2000 under-recovered C $8000 over-recovered D $8000 under-recovered

Accepted Answer

C

Question 28

28 The following information is provided by a company for a month. actual direct labour hours worked 4500 budgeted direct labour hours 5000 budgeted overhead expenditure $80 000 overheads under-recovered $12 000 What is the amount of the actual overhead expenditure? A $60 000 B $68 000 C $72 000 D $84 000

Accepted Answer

D

Question 29

29 What do the break-even charts show regarding the profitability of and risk attaching to products 1 and 2? product 1 product 2 revenue revenue $1m $1m total cost total cost 0 0 1000 1000 units units profitability risk A 1 is greater 1 is greater B 1 is greater 1 is less C 2 is greater 2 is greater D 2 is greater 2 is less

Accepted Answer

B

Question 30

30 Which graph shows the fixed cost per unit produced in a manufacturing process? A B fixed cost fixed cost per unit per unit 0 0 quantity produced quantity produced C D fixed cost fixed cost per unit per unit 0 0 quantity produced quantity produced

Accepted Answer

A

Cambridge A Level Accounting 9706 — 2011 May/June Paper 1 · Variant 1

Question paper12 pages

Mark scheme2 pages

Questions as text

Q1 · A business paid $10 000 for waste disposal in the year

Q2 · The non-current assets of a business are shown

Q3 · Which transaction would increase the current assets of a business?

Q4 · The following summarised information has been taken from the balance sheet of a…

Q5 · Accountants prefer the commercial reality of a transaction to a strictly legal approach

Q6 · There is great uncertainty about the continuance of a business

Q7 · The cash book of a business shows a credit balance of $12 500 at 30 June

Q8 · Closing inventory has been overvalued

Q9 · What is the main use of a computerised age analysis of debtors?

Q10 · A manufacturing company has the following balances at its year end

Q11 · A partnership provides the following financial information for the year ended 30 June 2011

Q12 · A new business was established with opening capital of $20 000

Q13 · At the year end a company discovers that some inventory is damaged

Q14 · A club charges each of its 100 members an annual subscription of $12

Q15 · How should goodwill be treated by a limited company?

Q16 · A company issues for cash 50 000 shares of $5 each at a premium of $15 each and $300 000…

Q17 · An extract from Bumble Ltd's balance sheet shows the following

Q18 · The following data is available at the end of a financial year

Q19 · The annual accounts of a business include the following

Q20 · A company’s profit from operations was $128 000

Q21 · A business has $10 000 in the bank and buys inventory for $6000 paying by cheque

Q22 · A company’s sales are made evenly over a year (360 days)

Q23 · A business sells goods at a mark up of 33.3 %

Q24 · Which cost will decrease as production is increased?

Q25 · A business sells its product for $50 a unit and has variable costs of $30 per unit

Q26 · A business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio…

Q27 · A business provides the following information for a month

Q28 · The following information is provided by a company for a month

Q29 · What do the break-even charts show regarding the profitability of and risk attaching to…

Q30 · Which graph shows the fixed cost per unit produced in a manufacturing process?

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