Cambridge A Level Accounting 9706 — 2012 May/June Paper 1 · Variant 1
9706/11/M/J/12 · 30 questions · 30 marks · ≈34 min
The question paper and its mark scheme, free to read here and free to download. This is Cambridge’s own paper, exactly as it was sat.
Question paper12 pages
Mark scheme2 pages
Answers below. Sit the paper first if you are practising.
Questions as text
Q1 · Which asset is often revalued in a business’s accounts?
1 Which asset is often revalued in a business’s accounts? A buildings B inventory C IT equipment D trade receivables
Mark scheme: A
Q2 · Which statement is correct?
2 Which statement is correct? A Carriage inwards is a credit. B Carriage outwards is a debit. C Purchase returns is a debit. D Sales returns is a credit.
Mark scheme: B
Q3 · The principle of prudence in the preparation of financial statements is practised through…
3 The principle of prudence in the preparation of financial statements is practised through the application of which action? A create additional reserves B exclude unpaid credit sales C overstate the liabilities D provide for anticipated losses
Mark scheme: D
Q4 · What is evidence that a company’s financial statements are true and fair?
4 What is evidence that a company’s financial statements are true and fair? A The directors have signed off the financial statements. B The profit has been agreed with the tax authorities. C They are filed on time. D They follow generally accepted accounting principles.
Mark scheme: D
Q5 · The following items appear in the books of a builder
5 The following items appear in the books of a builder. $ rent of own home 3 000 rent of builder’s yard 2 500 housekeeping expenses 2 000 overalls 100 loose tools 300 equipment 3 000 lorries 1 500 rates on business premises 650 rent of business premises 3 500 assistant’s wages 3 000 What is the total business expenditure? A $11 250 B $14 550 C $16 550 D $19 550
Mark scheme: B
Q6 · The table shows details relating to a company’s banking transactions at 31 December
6 The table shows details relating to a company’s banking transactions at 31 December. $ balance at bank as per bank statement 22 650 uncleared lodgements 3 110 unpresented cheques 6 290 bank credit recorded twice by bank in error 650 Which balance for cash at bank should appear in the statement of financial position at 31 December? A $18 820 B $20 120 C $25 180 D $26 480
Mark scheme: A
Q7 · A company’s accounts showed a gross profit for the year of $32 500
7 A company’s accounts showed a gross profit for the year of $32 500. After the draft financial statements were prepared it was found that the opening inventory had been overstated by $2400 and the closing inventory had been understated by $3400. What is the corrected gross profit for the year? A $26 700 B $31 500 C $33 500 D $38 300
Mark scheme: D
Q8 · A manufacturing company has the following information for the year ended 31 December
8 A manufacturing company has the following information for the year ended 31 December. $ purchase of raw materials 58 000 wages of machine operators 97 000 depreciation on factory plant 15 000 opening inventory of raw materials 10 000 closing inventory of raw materials 8 000 wages of factory supervisor 18 000 factory light and heating costs 22 000 What is the prime cost for the year? A $153 000 B $157 000 C $175 000 D $212 000
Mark scheme: B
Q9 · The table shows information about four partners in a partnership
9 The table shows information about four partners in a partnership. Which partner has the greatest net reward from interest on capital and interest on drawings? fixed capital annual drawings $ $ A 20 000 30 000 B 20 000 50 000 C 60 000 30 000 D 60 000 50 000
Mark scheme: C
Q10 · In which account should a partner’s drawings appear in the partnership’s end-of-year…
10 In which account should a partner’s drawings appear in the partnership’s end-of-year financial statements? A appropriation account B income statement C partner’s capital account D partner’s current account
Mark scheme: D
Q11 · The table shows the assets and liabilities of a club
11 The table shows the assets and liabilities of a club. $ non-current assets 10 000 cash at bank 6 400 electricity owing 600 rent prepaid 900 subscriptions: in arrears 5 700 in advance 3 800 How much is the accumulated fund? A $14 200 B $14 800 C $18 000 D $18 600
Mark scheme: D
Q12 · A company purchases a product that costs $120
12 A company purchases a product that costs $120. The company expects to make a gross profit margin of one-third. What is the company’s mark-up? A $40 B $60 C $160 D $180
Mark scheme: B
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Q13 · The inventory records of a business show the following information for product X
13 The inventory records of a business show the following information for product X. cost per unit units $ 1 January opening balance 100 3 3 January receipts into inventory 50 4 8 January inventory issued 120 – What is the value of the inventory issued on 8 January using the first in first out (FIFO) method? A $360 B $380 C $410 D $420
Mark scheme: B
Q14 · A company has an issued share capital of 200 000 6 % cumulative preference shares of $1…
14 A company has an issued share capital of 200 000 6 % cumulative preference shares of $1 each fully paid and 800 000 ordinary shares of $1 each fully paid. Assuming that the company earns no profit in the year, which statement is correct? A Both preference and ordinary shares are paid a dividend in the year. B The unpaid dividends for both preference and ordinary shares are carried forward to a future year. C The unpaid preference dividend is carried forward to a future year. D The preference shares are paid a total dividend of $12 000 in the year.
Mark scheme: C
Q15 · A company raises finance by issuing debentures
15 A company raises finance by issuing debentures. What is the effect on net current assets and short term profits? net current profits assets A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: C
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Q16 · A business finds that it is unable to pay its trade payables because of a poor cash flow
16 A business finds that it is unable to pay its trade payables because of a poor cash flow. What should it do to improve its cash flow? A factor its trade receivables B increase its trade receivables C increase its inventory D repay its overdraft
Mark scheme: A
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Q17 · Which accounting ratio is used to assess working capital management?
17 Which accounting ratio is used to assess working capital management? A gross profit ratio B net profit ratio C rate of inventory turnover D return on capital employed
Mark scheme: C
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Q18 · The following are extracts from a company’s financial statements
18 The following are extracts from a company’s financial statements. $ profit for the year before finance charges 100 000 issued share capital 200 000 reserves 80 000 non-current liabilities 260 000 What is the company’s return on capital employed? A 18.5 % B 21.7 % C 35.7 % D 50.0 %
Mark scheme: A
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Q19 · Owusu Limited has a constant level of annual sales and a constant gross margin
19 Owusu Limited has a constant level of annual sales and a constant gross margin. Each year the inventory increases. What effect does this have on inventory holding and inventory turnover? inventory holding inventory turnover (in days) (times) A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: C
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Q20 · Which item accounts for the difference between the current and liquid ratios?
20 Which item accounts for the difference between the current and liquid ratios? A cash and cash equivalents B inventory C trade payables D trade receivables
Mark scheme: B
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Q21 · Arun wishes to invest in a business with a skilled workforce which will make a profit in…
21 Arun wishes to invest in a business with a skilled workforce which will make a profit in each of the next five years. Which aspect of financial statements helps Arun to decide where to invest? A Financial statements deal with past performance. B Historic cost is based on objective figures. C Non-monetary values are excluded. D Provisions can be based on estimates.
Mark scheme: B
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Q22 · Which statement best describes a sunk cost?
22 Which statement best describes a sunk cost? A a cost which is irrelevant for the future B a cost which must be matched against the revenue C a cost which remains the same at all levels of production D a cost which varies with the level of production
Mark scheme: A
Q23 · A business has the following costs
23 A business has the following costs. raw materials $3 per unit direct labour $2 per unit stepped costs of $5000 for every 10 000 units What is the cost of producing 15 000 units? A $75 000 B $82 500 C $85 000 D $105 000
Mark scheme: C
Q24 · Which statement best describes fixed costs?
24 Which statement best describes fixed costs? A costs that are constant in total over a range of output. B costs that are the same in total over any output level. C costs that are constant per unit as output increases. D costs that are the same as stepped costs.
Mark scheme: A
Q25 · Ehsen Nadeen manufactures one product, the miji
25 Ehsen Nadeen manufactures one product, the miji. Each miji has a selling price of $10 and variable costs of $8 and annual fixed costs total $12 000. Ehsen wishes to make a profit of $14 000 a year. How many mijis should Ehsen make each year? A 2600 B 6000 C 7000 D 13 000
Mark scheme: D
Q26 · Which costing method is most suitable for fixing a selling price and which for deciding…
26 Which costing method is most suitable for fixing a selling price and which for deciding whether to make or buy in a product? decision to make or fixing of selling price buy in a product A absorption costing absorption costing B absorption costing marginal costing C marginal costing absorption costing D marginal costing marginal costing
Mark scheme: B
Q27 · A business provides the following data
27 A business provides the following data. output level 1 2 direct labour hours 8 500 9 250 total overheads $123 250 $124 563 The variable overhead cost is $1.75 per direct labour hour. What is the fixed overheads cost when 8500 labour hours are used? A $1313 B $14 875 C $108 375 D $123 250
Mark scheme: C
Q28 · The following information is forecast for May
28 The following information is forecast for May. units opening inventory 25 200 closing inventory 28 200 $ marginal cost profit 100 800 absorption cost profit 120 300 What is the overhead absorption rate? A $3.57 B $4.27 C $4.77 D $6.50
Mark scheme: D
Q29 · The manufacture of which product is best suited to job costing?
29 The manufacture of which product is best suited to job costing? A aeroplanes B medicines C newspapers D paint
Mark scheme: A
Q30 · What is the purpose of a job cost sheet?
30 What is the purpose of a job cost sheet? A to enable the business to recover its overheads B to ensure the customer knows the split between materials and labour C to inform the customer of the profit margin D to let the business find the price for a quotation
Mark scheme: D
What was in this paper
The subtopics covered by these 30 questions, and how many questions each got. Open one in a new tab to see every Cambridge question on it.
What you needed in this session
Cambridge’s own grade thresholds for 2012 May/June, Paper 1 · Variant 1. A higher threshold means an easier paper — the bar moves with how the cohort did.