Cambridge A Level Accounting 9706 — 2012 Oct/Nov Paper 1 · Variant 1
9706/11/O/N/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 · A business makes up its financial statements to 30 April each year
1 A business makes up its financial statements to 30 April each year. Included in the ledger account balances on 1 May 2011 was insurance (debit) $800. On 31 October 2011 an insurance premium of $2100 was paid for the year ending 31 October 2012. Which amount was charged for insurance in the income statement for the year ended 30 April 2012? A $1050 B $1850 C $2100 D $2900
Mark scheme: B
Q2 · A business increases its provision for doubtful debts by $1600
2 A business increases its provision for doubtful debts by $1600. What will be the effect of this adjustment on the financial statements? profit for the year trade receivables (net) A decrease by $1600 decrease by $1600 B decrease by $1600 increase by $1600 C increase by $1600 decrease by $1600 D increase by $1600 increase by $1600
Mark scheme: A
Q3 · The dividends receivable account shows dividends of $7500 received during the year
3 The dividends receivable account shows dividends of $7500 received during the year. Dividends of $1200 are due at the year end. How will dividends be shown in the financial statements? statement of income statement $ $ financial position A credit 7500 other receivables 1200 B credit 8700 other receivables 1200 C debit 7500 other payables 1200 D debit 8700 other payables 1200
Mark scheme: B
Q4 · Which statement is correct?
4 Which statement is correct? A All reserves are created by a transfer from retained earnings. B Revaluation reserves appear in the non-current assets section of the statement of financial position. C Some reserves are treated as current liabilities at the financial year end. D Total reserves form part of shareholders’ equity.
Mark scheme: D
Q5 · A business has a good reputation
5 A business has a good reputation. The owner wishes to include goodwill in the financial statements. An accountant advises against it. Which accounting principle is the accountant applying? A business entity B going concern C matching D prudence
Mark scheme: D
Q6 · A trader provided the following information
6 A trader provided the following information. $ gross profit 3 000 motor expenses for repairs to private motor car 500 wages paid to staff 1 000 rent paid for premises 600 interest on home loan 700 What is the profit for the year? A $200 B $700 C $900 D $1400
Mark scheme: D
Q7 · What is an example of the substance over form concept?
7 What is an example of the substance over form concept? A accounting for assets on hire purchase B depreciating assets over their useful lives C using doubtful debt provisions D valuing inventory at the lower of cost and net realisable value
Mark scheme: A
Q8 · Alfredo received his bank statement which showed a balance of $937 overdrawn
8 Alfredo received his bank statement which showed a balance of $937 overdrawn. This did not agree with his cash book. On investigation he noted the following. • Bank charges of $76 had not been entered in the cash book. • There was an unpresented cheque of $214. • Alfredo had paid $35 cash into his bank account but this was not showing on the statement. At which value was the bank overdraft shown in the statement of financial position? A $758 B $937 C $1116 D $1192
Mark scheme: C
Q9 · The purchases ledger control account has a closing balance of $15 300
9 The purchases ledger control account has a closing balance of $15 300. Discounts received of $600 have been entered on the wrong side of the control account. What is the corrected balance? A $14 100 B $14 700 C $15 900 D $16 500
Mark scheme: A
Q10 · Which statement about trial balance totals is correct?
10 Which statement about trial balance totals is correct? A They may not agree since a trial balance is not a statement of financial position. B They may not agree until various adjustments are made. C They should, in the absence of errors, always agree. D They will not agree because the trial balance does not include a figure for closing inventory.
Mark scheme: C
Q11 · A manufacturer has inventories of 1 finished goods 2 work-in-progress 3 raw materials…
11 A manufacturer has inventories of 1 finished goods 2 work-in-progress 3 raw materials Which inventories appear in the manufacturing account? A 1 and 2 only B 1 and 3 only C 1, 2 and 3 D 2 and 3 only
Mark scheme: D
Q12 · A company discovers that its opening inventory was overvalued by $30 000
12 A company discovers that its opening inventory was overvalued by $30 000. Which effect will the correction of this error have on the financial statements for the year? profit for closing the year inventory A – $30 000 nil B nil – $30 000 C + $30 000 nil D + $30 000 – $30 000
Mark scheme: C
Q13 · In the absence of a partnership agreement partners are: 1 entitled to interest on the…
13 In the absence of a partnership agreement partners are: 1 entitled to interest on the capitals at 5 % per annum 2 entitled to interest on loans at 5 % per annum 3 entitled to interest on loans at 10 % per annum 4 not entitled to interest on capitals 5 not entitled to interest on loans Which statements are correct? A 1 and 2 B 2 and 4 C 3 and 4 D 4 and 5
Mark scheme: B
Q14 · X and Y are in partnership
14 X and Y are in partnership. Their income statement and appropriation account shows the following. $ depreciation of non-current assets 5 000 interest on loan from Y 600 interest on capital 2 400 interest charged on drawings 900 partners’ salaries 5 000 residual profit 12 000 What is the profit for the year before any appropriations? A $18 500 B $19 100 C $20 300 D $25 900
Mark scheme: A
Q15 · The committee of a sports club decided to introduce a life membership scheme
15 The committee of a sports club decided to introduce a life membership scheme. The cost of life membership was $200, to be transferred to the income and expenditure account over a twenty–year period. Seven members took up life membership in the first year. Which values would be shown in the financial statements at the end of year 1? income and current deferred expenditure account liabilities income $ $ $ A nil nil 1400 B 70 nil 1330 C 70 70 1260 D 1400 nil nil
Mark scheme: B
Q16 · A company commences business on 1 April
16 A company commences business on 1 April. It buys the following units of inventory. date quantity unit cost 1 April 200 $250 1 September 400 $200 1 December 200 $300 During the year, it sells 500 units at $550 each. What is the gross profit for the year using the FIFO method of inventory valuation? A $85 000 B $155 000 C $156 250 D $165 000
Mark scheme: D
Q17 · A business sells a non-current asset for cash
17 A business sells a non-current asset for cash. The disposal account includes entries for the cost of the asset and the sales proceeds. Which books of prime entry are used? cost sales proceeds A cash book general journal B cash book sales journal C general journal cash book D purchases journal cash book
Mark scheme: C
Q18 · A business buys a vehicle for $10 000 on 1 January Year 1 and sells it for $6500 on 1…
18 A business buys a vehicle for $10 000 on 1 January Year 1 and sells it for $6500 on 1 January Year 3, having depreciated it at 10 % a year using the straight line method. The company provides a full year’s depreciation in the year of purchase and none in the year of disposal. Which amount for profit or loss will appear in the disposal account and on what side of the disposal account will it be shown? A $1500 on the credit side B $1500 on the debit side C $2500 on the credit side D $2500 on the debit side
Mark scheme: A
Q19 · A company raises cash by issuing 8 % debentures
19 A company raises cash by issuing 8 % debentures. What is the effect on the company’s profits and net current assets in the year of issue? profits net current assets A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: B
Q20 · A company is financed by 25 000 $1 ordinary shares
20 A company is financed by 25 000 $1 ordinary shares. The company wishes to finance expansion by issuing 5000 $1 ordinary shares at a premium of $0.20 and $10 000 debentures. What will be the new equity figure in the statement of financial position? A $30 000 B $31 000 C $40 000 D $41 000
Mark scheme: B
Q21 · What does the current ratio show?
21 What does the current ratio show? A if inventory is being used efficiently B the profit that has been made C whether a business is able to pay its debts D whether revenue is likely to increase or decrease
Mark scheme: C
More questions on Analysis and communication of accounting information
Q22 · A company has the following year end information
22 A company has the following year end information. $000 credit purchases 320 credit sales 800 total purchases 440 total sales 900 trade payables 40 trade receivables 160 How long does the company take to pay its trade suppliers? A 34 days B 46 days C 65 days D 73 days
Mark scheme: B
More questions on Analysis and communication of accounting information
Q23 · The following information is extracted from a company's financial statements
23 The following information is extracted from a company's financial statements. income statement $000 profit from operations 200 finance charges (20) 180 taxation (70) profit for the year 110 statement of financial position $000 net assets 1 000 non-current liabilities (100) 900 share capital and reserves 900 What is the return on total capital employed? A 12.2 % B 18 % C 20 % D 22.2 %
Mark scheme: C
More questions on Analysis and communication of accounting information
Q24 · A company’s profit before finance charges has increased by 10 % in a year, whilst its…
24 A company’s profit before finance charges has increased by 10 % in a year, whilst its gross profit has only increased by 5 %. Which factors could explain this? 1 a decrease in finance charges 2 a decrease in selling and distribution expenses 3 an increase in rent received 4 an increase in selling prices A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4
Mark scheme: C
More questions on Analysis and communication of accounting information
Q25 · The diagram shows costs and revenues of a business
25 The diagram shows costs and revenues of a business. Which line represents total cost? A B costs and revenues $ C D 0 number of units
Mark scheme: B
Q26 · A business pays a salesman a basic salary, plus commission based on how much he sells
26 A business pays a salesman a basic salary, plus commission based on how much he sells. Which type of cost is the salesman’s total earnings? A fixed B semi-variable C stepped D variable
Mark scheme: B
Q27 · A business has fixed costs for a month of $150 000
27 A business has fixed costs for a month of $150 000. It sells its single product for $20 per unit and has a contribution/sales ratio of 0.75. It wishes to make a profit of $300 000 for the month. How many units does the business need to sell? A 10 000 B 20 000 C 22 500 D 30 000
Mark scheme: D
Q28 · When valuing inventory of finished goods on an absorption cost basis, which costs should…
28 When valuing inventory of finished goods on an absorption cost basis, which costs should be included? A production B production and administration C production, marketing and distribution D production, marketing, administration and distribution
Mark scheme: A
Q29 · A hospital budgets for overheads totalling $11 500 000 for a financial year
29 A hospital budgets for overheads totalling $11 500 000 for a financial year. It expects to treat 25 000 patients in the year. Each patient stays an average of 10 days and the hospital absorbs overheads on a patient /day basis. Its direct costs for the year are budgeted at $25 000 000. What is its overhead absorption rate per patient day? A $46 B $100 C $146 D $460
Mark scheme: A
Q30 · The following data applies to a business
30 The following data applies to a business. budgeted labour hours 10 000 actual labour hours 9 500 budgeted overheads $150 000 actual overheads $160 000 What is the amount of overhead under-absorbed? A $7500 B $8000 C $10 000 D $17 500
Mark scheme: D
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