Cambridge A Level Accounting 9706 — 2016 Oct/Nov Paper 1 · Variant 2
9706/12/O/N/16 · 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 transaction applies the matching concept?
1 Which transaction applies the matching concept? A A machine acquired on long-term rental is included in non-current assets. B Computer equipment is depreciated over two years. C A building is revalued following a fall in property prices. D A waste-paper basket is treated as revenue expenditure.
Mark scheme: B
Q2 · A disposal account is used to record the sale of a non-current asset
2 A disposal account is used to record the sale of a non-current asset. Which transactions are recorded on the credit side of the disposal account? A cost, loss on disposal and sale proceeds B cost, profit on disposal and sale proceeds C depreciation, loss on disposal and sale proceeds D depreciation, profit on disposal and sale proceeds
Mark scheme: C
Q3 · The following information was available for the disposal of a machine
3 The following information was available for the disposal of a machine. $ accumulated depreciation 45 000 profit on disposal 8 100 sale proceeds 75 600 What was the original cost of the machine? A $22 500 B $38 700 C $112 500 D $128 700
Mark scheme: C
Q4 · A printing company installed a large printing press
4 A printing company installed a large printing press. Which costs are capital expenditure in the first year of its operation? 1 installation of the press 2 depreciation of the press 3 repairs to the press 4 upgrades to the press A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4
Mark scheme: B
Q5 · The year-end balance in the cash book was $23 780
5 The year-end balance in the cash book was $23 780. This was different from the balance on the bank statement. The difference was due to the following items. $ bank charges 216 a customer’s cheque which was dishonoured 1375 a bank error meant a cheque was incorrectly 560 debited to the bank account What should be the value of bank in the statement of financial position? A $21 629 B $22 189 C $25 371 D $25 931
Mark scheme: B
Q6 · At the end of the year, the balance on a firm’s sales ledger control account was $12 900
6 At the end of the year, the balance on a firm’s sales ledger control account was $12 900. The total of the customers’ accounts in sales ledger was $11 900. The following errors were then discovered. 1 A customer’s account had been undercast by $700. 2 A contra with a supplier in the purchases ledger of $200 had only been entered in the sales ledger control account. 3 The discount allowed column in the cash book totalled $500. This had not been posted to the nominal ledger. What was the correct balance on the sales ledger control account? A $11 200 B $11 400 C $12 000 D $12 400
Mark scheme: D
Q7 · A suspense account has a balance of $450 debit
7 A suspense account has a balance of $450 debit. What has caused this balance in the suspense account? A motor expenses of $225, correctly entered in the cash book, and posted to motor expenses as a credit B motor expenses of $225, entered in the cash book as a receipt and posted to motor expenses as a credit C motor expenses of $450, correctly entered in the cash book, and posted to motor vehicles as a debit D motor expenses of $675, entered in the cash book as a credit of $225 and posted to motor expenses as $225 debit
Mark scheme: A
Q8 · An item of capital expenditure has been incorrectly treated as revenue expenditure in the…
8 An item of capital expenditure has been incorrectly treated as revenue expenditure in the financial statements of a business. What is the effect of this error on the financial statements of the business? assets profit A overstated overstated B overstated understated C understated overstated D understated understated
Mark scheme: D
Q9 · A company pays or receives the following amounts on the last day of its financial year
9 A company pays or receives the following amounts on the last day of its financial year. $ deposit paid to a supplier 6500 rental income received in advance 8000 loan repayment 3000 payment for last month’s sales commission 900 Which of these amounts will be included as other receivables in the statement of financial position? A $6500 B $14 500 C $17 500 D $18 400
Mark scheme: A
Q10 · A sole trader provides the following information
10 A sole trader provides the following information. start of year end of year $ $ total assets 100 000 135 000 total liabilities excluding owner’s capital (35 000) (40 000) During the year the owner took drawings of $18 000. What was the profit for the year? A $12 000 B $30 000 C $35 000 D $48 000
Mark scheme: D
Q11 · A trader did not keep full accounting records
11 A trader did not keep full accounting records. The following information was available for 2015. $ trade payables on 1 January 32 785 trade payables on 31 December 43 630 payments to suppliers during the year 72 830 discounts received during the year 3 450 What was the value of purchases? A $58 535 B $65 435 C $80 225 D $87 125
Mark scheme: D
Q12 · A partnership admits a new partner
12 A partnership admits a new partner. Which statement is correct? A Profits will always be shared equally following the new partner’s admission. B The new partner will always benefit if assets are later revalued upwards. C The new partner must always contribute capital to the partnership. D The new partner will always pay for a share of partnership goodwill.
Mark scheme: B
Q13 · X, Y and Z are in partnership sharing the profits and losses in the ratio of 2 : 2 : 1
13 X, Y and Z are in partnership sharing the profits and losses in the ratio of 2 : 2 : 1. At 31 December the following information is available. X Y Z $ $ $ capital account balances 100 000 100 000 50 000 current account balances 20 000 15 000 (5 000) On 31 December Z retires from the partnership. Total assets are revalued upwards by $45 000. There is no goodwill. How much will Z be paid on his retirement? A $54 000 B $59 000 C $60 000 D $65 000
Mark scheme: A
Q14 · The following information relates to a partnership
14 The following information relates to a partnership. $ profit from operation 90 000 loan interest 3 200 interest on drawings 6 000 drawings 40 000 interest on capital 11 000 What is the residual profit to be appropriated amongst the partners? A $41 800 B $69 800 C $81 800 D $91 800
Mark scheme: C
Q15 · A partnership earned an average profit during the year of $15 000 per month
15 A partnership earned an average profit during the year of $15 000 per month. Halfway through the year D and E were joined by a new partner F and profits were shared equally before and after the change. In the first half of the year D transferred his private vehicle to the partnership at a valuation of $12 000. D’s drawings amounted to $60 000 during the year. What was the increase in D’s current account balance during the year? A $15 000 B $30 000 C $75 000 D $87 000
Mark scheme: A
Q16 · How would a transfer to general reserve and the issue of shares at a premium affect the…
16 How would a transfer to general reserve and the issue of shares at a premium affect the revenue reserves of a limited company? transfer to issue of shares general reserve at a premium A decrease decrease B decrease increase C no effect increase D no effect no effect
Mark scheme: D
Q17 · A company is formed with the issue of 100 000 6% non-cumulative preference shares of $1…
17 A company is formed with the issue of 100 000 6% non-cumulative preference shares of $1 each and 300 000 ordinary shares of $1 each issued at a premium of $0.20. It earned profits of $3000, $16 000 and $31 000 in the first three years of trading. The directors wish to pay an ordinary dividend of 5% each year when possible. What value of ordinary dividends does the company actually pay in years 2 and 3? year 2 year 3 $ $ A 7 000 15 000 B 7 000 18 000 C 10 000 15 000 D 10 000 18 000
Mark scheme: C
Q18 · A company had an issued share capital of 400 000 ordinary shares of $1 each
18 A company had an issued share capital of 400 000 ordinary shares of $1 each. It then made a bonus issue of one share for every five held. This was later followed by a rights issue of one share for every three held. What was the balance on the share capital account after these transactions? A $480 000 B $533 333 C $613 333 D $640 000
Mark scheme: D
Q19 · Which action will increase the equity of a limited company?
19 Which action will increase the equity of a limited company? A creating a general reserve B issuing bonus shares C issuing debentures D issuing non-redeemable preference shares
Mark scheme: D
Q20 · Which action leaves the value of working capital unchanged?
20 Which action leaves the value of working capital unchanged? A disposal of a non-current asset B issuing shares for cash C purchasing goods for resale on credit D writing off an irrecoverable debt
Mark scheme: C
More questions on Analysis and communication of accounting information
Q21 · Owusu Limited has a constant level of annual sales and a constant gross margin
21 Owusu Limited has a constant level of annual sales and a constant gross margin. Each year the inventory increases. Which effects does this have on the inventory holding period and on inventory turnover? inventory holding inventory turnover (in days) (times) A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: C
More questions on Analysis and communication of accounting information
Q22 · A business uses the AVCO method of inventory valuation
22 A business uses the AVCO method of inventory valuation. The following transactions took place. 1 March purchased 1000 units at $65 per unit 2 March purchased 1200 units at $66 per unit 4 March sold 1850 units at $68 per unit What was the value of closing inventory? A $22 750 B $22 941 C $23 100 D $23 800
Mark scheme: B
Q23 · A manufacturing company employs 20 workers who are paid a basic rate of $30 per hour for…
23 A manufacturing company employs 20 workers who are paid a basic rate of $30 per hour for a 40-hour week. To meet a special order, the workers each worked 50 hours and were paid a premium of 40% over basic rate for the overtime. What was the value of wages paid to meet the special order? A $30 000 B $32 400 C $33 600 D $42 000
Mark scheme: B
Q24 · A manufacturing business is currently operating at full capacity
24 A manufacturing business is currently operating at full capacity. As part of an expansion programme to increase production capacity, the business intends to employ an additional factory supervisor. How are total supervisory salaries classified? A fixed cost B semi-variable cost C stepped cost D variable cost
Mark scheme: C
Q25 · In a manufacturing business the following could occur
25 In a manufacturing business the following could occur. 1 Actual overheads paid are less than budgeted overheads. 2 Actual overheads paid are more than budgeted overheads. 3 Actual units produced are less than budgeted units. 4 Actual units produced are more than budgeted units. Which situations would result in an under absorption of overhead expenditure? A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
Mark scheme: C
Q26 · A company makes and sells a single product for $12 per batch
26 A company makes and sells a single product for $12 per batch. The variable cost is $4 per batch. Fixed costs have been absorbed based on a normal activity level of 1000 batches at $3 per batch. What is the profit under marginal costing if the company makes and sells 1500 batches? A $6000 B $7500 C $9000 D $12 000
Mark scheme: C
Q27 · The following information was provided about a product
27 The following information was provided about a product. selling price per unit $50 variable cost per unit $26 total fixed costs $10 000 demand 1800 units If the selling price increases only demand changes. When the selling price increased by $4 profit fell by $1200. What was the decrease in demand? A 214 units B 300 units C 571 units D 657 units
Mark scheme: B
Q28 · A business that uses flexible budgets shows the following: units of output 100 000 110…
28 A business that uses flexible budgets shows the following: units of output 100 000 110 000 total fixed and variable costs $400 000 $425 000 What are fixed costs? A $125 000 B $150 000 C $250 000 D $275 000
Mark scheme: B
Q29 · A company makes a product for which the following information is given
29 A company makes a product for which the following information is given. per unit $ selling price 100 direct materials 40 direct labour 30 Total fixed costs are $40 000. Planned production is 1000 units. Which action should the company take to break-even? A decrease direct labour cost by 30% B decrease direct material cost by 25% C increase direct labour cost by 30% D increase direct materials cost by 25%
Mark scheme: B
Q30 · What is the objective of a system of budgetary planning and control?
30 What is the objective of a system of budgetary planning and control? A to determine next year’s production B to determine next year’s profits C to motivate the manufacturing staff D to provide a system for communication, coordination and control
Mark scheme: D
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