Cambridge A Level Accounting 9706 — 2018 May/June Paper 1 · Variant 1
9706/11/M/J/18 · 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 scheme3 pages
Answers below. Sit the paper first if you are practising.
Questions as text
Q1 · A book-keeper enters a sales order in the sales journal
1 A book-keeper enters a sales order in the sales journal. Which accounting concept is not being applied? A matching B prudence C realisation D substance over form
Mark scheme: D
Q2 · A company purchased a new machine costing $110 000 with an estimated life of 10 years
2 A company purchased a new machine costing $110 000 with an estimated life of 10 years. The machine was considered to have a residual value of $10 000. The company uses the straight-line method of depreciation and provides depreciation in full in the year of purchase and sale. The machine was sold for $20 000 at the end of its life. Which statement is correct? A The annual depreciation charges have been overstated by $1000. B The choice of the depreciation method has no effect on the annual profits of the company. C The company can replace the machine from accumulated depreciation charges over its life. D The effect of depreciation had been to reduce profits by a total of $110 000 over the life of the asset.
Mark scheme: A
Q3 · A new business has several costs relating to its building
3 A new business has several costs relating to its building. Which costs are classified as revenue expenditure? 1 cost of an extension to the factory 2 legal fees on purchase of land 3 repairs to the warehouse roof A 1 and 2 B 1 only C 2 and 3 D 3 only
Mark scheme: D
Q4 · Opening inventory is found to be overstated by $8000 and closing inventory is overstated…
4 Opening inventory is found to be overstated by $8000 and closing inventory is overstated by $6500. What is the effect of the correction of these errors on profit for the year? A decrease of $1500 B decrease of $14 500 C increase of $1500 D increase of $14 500
Mark scheme: C
Q5 · A business has provided the following information
5 A business has provided the following information. $ provision for doubtful debts at 1 January 2017 2 950 trade receivables at 31 December 2017 75 000 The provision for doubtful debts is to be maintained at 5% of trade receivables. Which entries are made at 31 December 2017? income provision for doubtful statement debts account A $800 credit $800 debit B $800 debit $800 credit C $3750 credit $3750 debit D $3750 debit $3750 credit
Mark scheme: B
Q6 · What is the use of a sales ledger control account?
6 What is the use of a sales ledger control account? A to assist in the location of errors B to calculate the value of irrecoverable debts to be written off C to determine the value of total sales revenue D to identify possible contras with purchases ledger control account
Mark scheme: A
Q7 · On 1 January a business has prepaid $800 for four months’ motor insurance
7 On 1 January a business has prepaid $800 for four months’ motor insurance. It also has an outstanding invoice for fuel of $140. During January it pays the fuel invoice and a further $600 for fuel. At 31 January it has an outstanding fuel invoice of $160. What is the charge for motor expenses in the income statement for January? A $760 B $960 C $1100 D $1560
Mark scheme: B
Q8 · A business provided the following information for a month
8 A business provided the following information for a month. $ credit sales 16 810 sales returns 1 150 discounts allowed 276 irrecoverable debts written off 100 increase in provision for doubtful debts 600 increase in trade receivables 406 How much cash was received from trade receivables during the month? A $14 278 B $14 878 C $15 154 D $15 690
Mark scheme: B
Q9 · At the end of the year, the debit balance on a sales ledger control account was $15 000
9 At the end of the year, the debit balance on a sales ledger control account was $15 000. It was later discovered that when a customer who owed the business $500 had paid, she had taken a cash discount of $20. This was correctly entered in the discount column of the cash book and the full $500 was entered in the bank column. Which value for trade receivables should be included in the statement of financial position? A $14 520 B $14 980 C $15 000 D $15 020
Mark scheme: D
Q10 · A returns inward of $180 has been wrongly recorded as carriage inwards
10 A returns inward of $180 has been wrongly recorded as carriage inwards. What is the impact on profit of the correction of this error? A decreased by $360 B increased by $180 C increased by $360 D no effect
Mark scheme: D
Q11 · During the past month, a business lost some inventory because of theft
11 During the past month, a business lost some inventory because of theft. The table shows the trading results for the month. $ opening inventory, at cost 50 000 purchases 220 000 sales 300 000 closing inventory, at cost 16 000 The mark-up was 25%. What was the cost price of the stolen inventory? A $13 000 B $14 000 C $29 000 D $34 000
Mark scheme: B
Q12 · The correction of which error requires an entry in the suspense account?
12 The correction of which error requires an entry in the suspense account? A A cheque, $1000, paid to Kong had been debited to Kang’s account. B A purchase of stamps, $50, had been debited to the purchases account. C Commission income, $170, had been debited to a loan interest account. D The insurance account had been undercast by $200 and the wages account had been overcast by $200.
Mark scheme: C
Q13 · Partnership profit, $60 000, accrued evenly through the year ended 31 December 2017
13 Partnership profit, $60 000, accrued evenly through the year ended 31 December 2017. Jim became a third partner on 31 March 2017. The partners shared profits equally from that date. An irrecoverable debt of $12 000 in the financial statements would be ignored when calculating Jim’s share of the profit. What was Jim’s share of the profit for the year ended 31 December 2017? A $5000 B $12 000 C $15 000 D $18 000
Mark scheme: D
Q14 · X and Y are in partnership and revalue their assets as follows
14 X and Y are in partnership and revalue their assets as follows. revalued book value asset amount $ $ freehold property 50 000 71 000 fixtures and fittings 20 000 16 000 inventory 15 000 13 000 X and Y share profits and losses in the ratio of 2 : 1. What is X’s share of profit from revaluation? A $5000 B $10 000 C $14 000 D $15 000
Mark scheme: B
Q15 · The following statements relate to a revaluation account
15 The following statements relate to a revaluation account. 1 An entry on the credit side of the revaluation account means that a non-current asset has fallen in value. 2 If a credit entry is required to close off a revaluation account there is a profit on revaluation. Which row is correct regarding these statements? statement 1 statement 2 A false false B false true C true false D true true
Mark scheme: A
Q16 · Which item will not be affected by the issue of shares at a premium?
16 Which item will not be affected by the issue of shares at a premium? A capital reserves B net assets C profit for the year D working capital
Mark scheme: C
Q17 · A company has the following capital and reserves
17 A company has the following capital and reserves. $000 ordinary shares of $1 each, fully paid 1250 share premium account 100 revaluation reserve 200 general reserve 150 retained earnings 210 It is company policy to maintain reserves in their most flexible form. The company makes a 1-for-5 bonus issue. What is the maximum amount of distributable reserves after the bonus issue? A $110 000 B $310 000 C $360 000 D $410 000
Mark scheme: C
Q18 · P Limited has an ordinary share capital of 100 000 shares of $1 each
18 P Limited has an ordinary share capital of 100 000 shares of $1 each. The market value per share is $1.20. Which entries could record a 1-for-10 bonus issue of ordinary shares? debit credit $ $ A dividend 10 000 ordinary shares 10 000 B dividend 12 000 ordinary shares 10 000 share premium 2 000 C retained earnings 10 000 ordinary shares 10 000 D retained earnings 12 000 ordinary shares 10 000 share premium 2 000
Mark scheme: C
Q19 · The following has been extracted from the financial statements of a business
19 The following has been extracted from the financial statements of a business. statement of financial income statement $ $ position profit from operations 48 000 7% debenture 65 000 debenture interest (4 550) ordinary share capital 95 000 loss on disposal of non-current asset (3 250) share premium 7 500 profit for the year 40 200 retained earnings 35 000 What was the return on capital employed (ROCE)? A 19.9% B 23.7% C 29.2% D 34.9%
Mark scheme: B
More questions on Analysis and communication of accounting information
Q20 · What would affect the current ratio of a business?
20 What would affect the current ratio of a business? A purchase of inventory by cash B purchase of new machinery by cheque C receipt of cash from a credit customer D revaluation of a non-current asset
Mark scheme: B
More questions on Analysis and communication of accounting information
Q21 · A restaurant has the following costs in a period
21 A restaurant has the following costs in a period. 1 wages of the kitchen staff 2 depreciation of kitchen equipment 3 costs of ingredients for meals 4 rent paid for the restaurant building What are indirect costs for an individual meal? A 1, 2, 3 and 4 B 1, 2 and 3 only C 1 and 2 only D 2 and 4 only
Mark scheme: D
Q22 · A business employs 20 production staff
22 A business employs 20 production staff. Each worker is employed for 40 hours per week at a rate of $7.80 per hour. Piece rate is calculated at 20% of basic rate pay per hour for each product manufactured above 120 units per employee. In a week, each employee produced 145 units. What were the total wages for the week? A $7020 B $9984 C $10 764 D $10 920
Mark scheme: A
Q23 · A business had the following transactions relating to inventory
23 A business had the following transactions relating to inventory. March 1 opening inventory 20 items at $7.50 each 3 sales of inventory 12 items at $9 each 6 purchases of inventory 18 items at $8.20 each What was the cost per unit of closing inventory on 7 March using the AVCO (perpetual) method? A $7.29 B $7.85 C $7.98 D $8.23
Mark scheme: C
Q24 · Which statements about marginal costing are correct?
24 Which statements about marginal costing are correct? 1 The marginal cost of a product includes an allowance for fixed overheads. 2 The marginal cost of a product represents the additional cost of making one extra unit. 3 If inventory decreases during a period, the profits under absorption costing will be lower than under marginal costing. A 1, 2 and 3 B 1 only C 2 and 3 only D 2 only
Mark scheme: C
Q25 · How is an overhead absorption rate per machine hour calculated?
25 How is an overhead absorption rate per machine hour calculated? A by dividing actual overheads with actual machine hours B by dividing actual overheads with budgeted machine hours C by dividing budgeted overheads with actual machine hours D by dividing budgeted overheads with budgeted machine hours
Mark scheme: D
Q26 · Which changes would result in a decrease in the margin of safety?
26 Which changes would result in a decrease in the margin of safety? unit variable cost total fixed costs A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: D
Q27 · A business provided the following information
27 A business provided the following information. total fixed costs $12 000 break-even point 1500 units unit variable costs $12 What was the contribution to sales ratio? A 12.5% B 40% C 60% D 66.67%
Mark scheme: B
Q28 · A company provides the following information about its product
28 A company provides the following information about its product. selling price $100 variable cost per unit $40 fixed costs $21 600 break-even point 360 units If the business changes its production method, contribution will increase by 10% and fixed costs will increase by 5%. What would be the effect on the break-even point? A decrease by 16 units B decrease by 18 units C increase by 16 units D increase by 18 units
Mark scheme: A
Q29 · The graph shows the way in which a cost increases according to the level of activity of…
29 The graph shows the way in which a cost increases according to the level of activity of the business. $ total cost 0 level of activity (units) Which cost follows this pattern? A administrative salaries B commission on sales C depreciation of factory D office rent
Mark scheme: B
Q30 · Why does a business prepare budgets?
30 Why does a business prepare budgets? 1 co-ordinate business activities 2 meet IAS requirements 3 motivate management A 1 and 3 B 1 only C 2 and 3 D 2 only
Mark scheme: A
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.
6Reconciliation and verification6Preparation of financial statements3The accounting system3Traditional costing methods3Types of business entity3Analysis and communication of accounting information2Preparation of financial statements2Accounting for non-current assets1Budgeting and budgetary control1What you needed in this session
Cambridge’s own grade thresholds for 2018 May/June, Paper 1 · Variant 1. A higher threshold means an easier paper — the bar moves with how the cohort did.