Cambridge A Level Accounting 9706 — 2013 Oct/Nov Paper 1 · Variant 1
9706/11/O/N/13 · 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 non-current asset costs $250 000 and has a useful economic life of 25 years
1 A non-current asset costs $250 000 and has a useful economic life of 25 years. The estimated residual value is $10 000. Depreciation is provided on a straight line basis. After 10 years the asset is sold for $120 000. Disposal costs of $20 000 are incurred. What is the loss on disposal? A $30 000 B $34 000 C $50 000 D $54 000
Mark scheme: D
Q2 · Goods that had previously been purchased on credit have been returned to the supplier
2 Goods that had previously been purchased on credit have been returned to the supplier. How should this be recorded in the purchaser’s books of account? account to be debited account to be credited A bank purchases returns B trade payable bank C creditor purchases returns D purchases returns trade payable
Mark scheme: C
Q3 · On 1 January 2012 a business had prepaid rent of $50
3 On 1 January 2012 a business had prepaid rent of $50. During 2012, it made three rent payments of $250 each. On 31 December 2012, the business owed $200 rent for 2012. The business owner only charged the rent payments made during 2012 in the income statement. What is the effect on profit for the year? A $200 overstated B $200 understated C $250 overstated D $250 understated
Mark scheme: C
Q4 · A computer used for demonstration to customers was treated as capital expenditure
4 A computer used for demonstration to customers was treated as capital expenditure. The following year a customer purchased the computer in the ordinary course of business. Which entries are needed to adjust the cost of sales? account to be debited account to be credited A inventory computers B purchases computers C sales inventory D selling expenses sales
Mark scheme: B
Q5 · The table shows information about a business
5 The table shows information about a business. $ provision for doubtful debts at 1 January 2012 700 trade receivables at 31 December 2012 (after writing off a bad 15 000 debt of $30) charge to income statement for bad and doubtful debts for year 200 ended 31 December 2012 (including the bad debt written off) What is the total percentage provision that has been made for doubtful debts at 31 December 2012? A 3.5% B 4.7% C 5.8% D 6.0%
Mark scheme: C
Q6 · The following information is extracted from the statement of financial position of a…
6 The following information is extracted from the statement of financial position of a business. $ bank loan (repayable 2019) 16 200 bank loan interest owing 1 880 bank overdraft 11 600 capital 20 710 drawings 19 100 inventory 14 610 prepayments 1 420 trade payables 14 110 trade receivables 9 050 What is the value of the net current liabilities? A $1590 B $2510 C $18 710 D $20 320
Mark scheme: B
Q7 · A business sells computers
7 A business sells computers. When they value their inventory they exclude the value of the inventory that is over one year old, as they may be obsolete. Which accounting principle does this demonstrate? A going concern B historical cost C prudence D realisation
Mark scheme: C
Q8 · When preparing a bank reconciliation statement, the following information is available
8 When preparing a bank reconciliation statement, the following information is available. $ bank balance shown by the cash book 20 000 debit unpresented cheques 2 500 uncleared bankings 1 400 standing order shown on the bank statement 300 (not in the cash book) What is the balance on the bank statement? A $18 600 B $19 200 C $20 800 D $21 400
Mark scheme: C
Q9 · The following financial information has been extracted from the books of account
9 The following financial information has been extracted from the books of account. $ bad debts written off 7 000 cash from credit customers 925 000 credit sales 900 000 opening trade receivables 300 000 discounts allowed 10 000 discounts received 25 000 increase in provision for doubtful debts 9 000 returns inwards 8 000 returns outwards 5 000 What is the closing balance on the sales ledger control account? A $235 000 B $241 000 C $250 000 D $253 000
Mark scheme: C
Q10 · Discount received of $280 has been incorrectly posted to the credit of the discount…
10 Discount received of $280 has been incorrectly posted to the credit of the discount allowed account. Which entry must be made to the discount received account to correct the error? A credit $280 B credit $560 C debit $280 D debit $560
Mark scheme: A
Q11 · A trader provides the following financial information for the year
11 A trader provides the following financial information for the year. $ direct costs 210 000 indirect costs 55 000 increase in work in progress 7 000 raw materials taken for own use 2 000 Which figures should appear in the manufacturing account? transfer to trading account prime cost overheads of income statement $ $ $ A 208 000 55 000 256 000 B 208 000 55 000 270 000 C 210 000 53 000 256 000 D 210 000 53 000 270 000
Mark scheme: A
Q12 · Which item appears in a company’s income statement?
12 Which item appears in a company’s income statement? A dividends B inventory C trade payables D transfer to reserves
Mark scheme: B
Q13 · The table shows the following balances for a business
13 The table shows the following balances for a business. start end of year of year $ $ inventory 6 000 9 000 trade payables 8 000 10 000 Total payments to trade payables were $20 000. What is the cost of sales for the year? A $15 000 B $19 000 C $21 000 D $25 000
Mark scheme: B
Q14 · X and Y are in partnership sharing residual profits and losses in the ratio 7 : 3
14 X and Y are in partnership sharing residual profits and losses in the ratio 7 : 3. Their fixed capital accounts have balances of X $40 000; Y $60 000. Interest is allowed on these at the rate of 10% per year. X is paid a salary of $40 000 per year. Profit for the year was $200 000. What was the division of profits between the partners? X Y $ $ A 137 000 63 000 B 140 000 60 000 C 149 000 51 000 D 152 000 48 000
Mark scheme: C
Q15 · X, Y and Z are in partnership, sharing profits, X 40%, Y 20% and Z 40%
15 X, Y and Z are in partnership, sharing profits, X 40%, Y 20% and Z 40%. Existing goodwill is shown in the ledger as $10 000. The partners agree that the goodwill is now worth $40 000 and they agree to share future profits equally. They also agree that, in future, goodwill is not to appear in the ledger. Which journal entry will record this change? debit credit $ $ A X 1 334 Y 7 333 Z 1 333 goodwill 10 000 B X 10 000 Y 10 000 Z 10 000 goodwill 30 000 C X 12 000 Y 6 000 Z 12 000 goodwill 30 000 D X 13 334 Y 13 333 Z 13 333 goodwill 40 000
Mark scheme: A
Q16 · A trader provides the following information
16 A trader provides the following information. $ opening inventory 6 000 closing inventory 4 000 purchases 15 000 He uses a uniform gross profit margin of 20%. What was the sales figure for the trading period? A $16 250 B $18 750 C $20 400 D $21 250
Mark scheme: D
Q17 · A club supplies refreshments for its members at a uniform gross profit margin of 30%
17 A club supplies refreshments for its members at a uniform gross profit margin of 30%. The following information is available. $ receipts 62 000 opening inventory 10 000 purchases 45 000 What is the value of closing inventory? A $10 000 B $11 600 C $16 500 D $18 600
Mark scheme: B
Q18 · Y sells goods to X on credit
18 Y sells goods to X on credit. Details of X’s account are as follows. $ trade discount 250 closing balance 750 opening balance 1500 payment received 2000 contra to purchases ledger 2500 What was the value of sales? A $3500 B $3750 C $4000 D $5250
Mark scheme: B
Q19 · The following information has been taken from the books of accounts of a limited company…
19 The following information has been taken from the books of accounts of a limited company for the year ended 31 December 2012. $ bank loan interest for the year 1 650 bank overdraft interest for the year 2 150 ordinary dividends paid during the year 900 8% debenture taken out on 1 October 2012 30 000 What are the total finance costs in the income statement for the year ended 31 December 2012? A $4400 B $4700 C $5300 D $6200
Mark scheme: A
Q20 · A company has 1 000 000 ordinary shares of $1 issued at $2.50
20 A company has 1 000 000 ordinary shares of $1 issued at $2.50. It also has a 5% debenture of $300 000. Profit from operations for the year was $465 000. The directors paid an 8% ordinary dividend during the year. What is the retained profit for the year? A $250 000 B $370 000 C $385 000 D $400 000
Mark scheme: B
Q21 · The following information was extracted from the books of a trader
21 The following information was extracted from the books of a trader. $ revenue for the year 126 000 purchases for the year 87 000 opening inventory 9 000 closing inventory 12 000 What is the rate of inventory turnover? A 4 times B 6 times C 8 times D 12 times
Mark scheme: C
More questions on Analysis and communication of accounting information
Q22 · A company wishes to improve its current ratio and its liquid (acid test) ratio
22 A company wishes to improve its current ratio and its liquid (acid test) ratio. How can this be done? A increasing discounts to trade receivables B increasing the provision for doubtful debts C purchasing additional inventory on credit D selling non-current assets
Mark scheme: D
More questions on Analysis and communication of accounting information
Q23 · Which of the following measures a business’ average credit period?
23 Which of the following measures a business’ average credit period? A current ratio B inventory turnover C liquid (acid test) ratio D trade receivables turnover
Mark scheme: D
More questions on Analysis and communication of accounting information
Q24 · Which expense would be classified as a variable cost of a furniture manufacturer?
24 Which expense would be classified as a variable cost of a furniture manufacturer? A factory manager’s salary B plant depreciation C royalties D vehicle insurance
Mark scheme: C
Q25 · A company has the following annual costs
25 A company has the following annual costs. $ purchases of raw materials during the year 53 000 wages and salaries: production staff 110 000 administration staff 56 000 production overheads 16 000 administration expenses excluding wages 42 000 selling and distribution overheads 34 000 What is the total indirect cost for the year? A $132 000 B $148 000 C $163 000 D $258 000
Mark scheme: B
Q26 · Which statement is correct?
26 Which statement is correct? A Fixed costs per unit decrease as production increases. B Total fixed costs decrease as production increases. C Total variable costs decrease as production increases. D Variable costs per unit decrease as production increases.
Mark scheme: A
Q27 · Which statements about absorption costing are correct?
27 Which statements about absorption costing are correct? 1 It apportions overheads between production and service departments. 2 It enables a company to know its break-even level of production. 3 It leads to higher inventory valuations than marginal costing. 4 It is used by management for make or buy decisions. A 1, 2 and 3 B 1 and 3 only C 2 and 4 only D 3 and 4 only
Mark scheme: B
Q28 · An accountant prepared the following break-even chart
28 An accountant prepared the following break-even chart. 10 sales revenue budget 8 total costs costs 6 and revenues ($m) 4 2 fixed costs 0 0 1 2 3 4 5 sales volume (millions of units) The budgeted sales volume is 4.5 million units. Which profit can be anticipated at this level? A $2.5 million B $4.5 million C $7 million D $9 million
Mark scheme: A
Q29 · Which statement best describes job costing?
29 Which statement best describes job costing? A a costing method that calculates the cost of meeting a specific customer order B a costing method that calculates the cost of producing a number of identical units for a customer C a costing method that enables overheads to be absorbed into the cost of the product D a costing method that separates fixed costs from variable costs
Mark scheme: A
Q30 · Which item would appear in a cash budget?
30 Which item would appear in a cash budget? A bad debts B cash discounts C depreciation D loan repayments
Mark scheme: D
What was in this paper
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What you needed in this session
Cambridge’s own grade thresholds for 2013 Oct/Nov, Paper 1 · Variant 1. A higher threshold means an easier paper — the bar moves with how the cohort did.