Cambridge A Level Accounting 9706 — 2020 Feb/March Paper 1 · Variant 2
9706/12/F/M/20 · 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 trader sells goods for $6600 to a customer on 31 March 2019, the last day of his…
1 A trader sells goods for $6600 to a customer on 31 March 2019, the last day of his financial year. He does not produce an invoice until three days later. He is advised that the sales of $6600 should be entered in the financial statements for the year ended 31 March 2019. Which accounting concepts are being applied? 1 consistency 2 prudence 3 realisation A 1 and 2 B 2 and 3 C 2 only D 3 only
Mark scheme: D
Q2 · The following costs for a business relate to a newly purchased machine
2 The following costs for a business relate to a newly purchased machine. 1 alterations to the factory building to install the machine 2 payment of insurance for the new machine 3 the final purchase price of the machine agreed with the supplier 4 the price of the machine before the discount from the supplier Which costs would be treated as capital expenditure? A 1, 2 and 3 B 1 and 3 only C 2 and 3 only D 2 and 4
Mark scheme: B
Q3 · The following information is available
3 The following information is available. $ freehold premises at cost 125 000 provision for depreciation of freehold premises 50 000 The premises were revalued at $180 000. Which entries are required to record the revaluation? income freehold premises provision for revaluation statement at cost account depreciation reserve A credit $105 000 debit $55 000 none debit $50 000 B debit $55 000 debit $75 000 debit $50 000 credit $180 000 C debit $75 000 debit $55 000 debit $50 000 credit $180 000 D none debit $55 000 debit $50 000 credit $105 000
Mark scheme: D
Q4 · A business has a year end of 31 December
4 A business has a year end of 31 December. It purchased a motor vehicle on 1 January 2017 for $15 000. The motor vehicle was sold on 31 March 2019 for $8000. Depreciation is calculated at 20% per annum using the reducing balance method on a month by month basis. What is the accumulated depreciation and profit/loss on disposal of the motor vehicle? accumulated depreciation profit/loss on disposal $ $ A 5400 1600 loss B 5400 1600 profit C 5880 1120 loss D 5880 1120 profit
Mark scheme: C
Q5 · A trial balance does not balance and a suspense account is opened
5 A trial balance does not balance and a suspense account is opened. Later the following errors are found and the suspense account is cleared. 1 A sales invoice for $1240 had been completely omitted from the books. 2 Purchases had been entered as $85 600. The correct amount should have been $87 580. 3 Rent paid of $2600 was entered correctly in the cash book but as $6200 in the rent account. What was the original balance on the suspense account? A $1620 credit B $1620 debit C $5580 credit D $5580 debit
Mark scheme: A
Q6 · A sales ledger control account included the following entries
6 A sales ledger control account included the following entries. 1 contra with the purchases ledger control account $500, debit 2 discount allowed $600, debit 3 irrecoverable debts written off $1200, debit Which entries must be corrected? A 1 and 2 only B 1 and 3 only C 1, 2 and 3 D 2 and 3 only
Mark scheme: C
Q7 · A company’s bank statement showed a credit balance of $2000
7 A company’s bank statement showed a credit balance of $2000. The following errors were found. 1 A receipt of $2700 and a payment for $3000 were recorded on the bank statement. Both had been omitted from the cash book. 2 Bank charges of $500 were correctly shown on the bank statement but had been recorded as $600 in the cash book. What was the cash book balance before the errors were corrected? A $1600 B $1800 C $2200 D $2400
Mark scheme: C
Q8 · A business makes a provision for doubtful debts equal to 10% of trade receivables
8 A business makes a provision for doubtful debts equal to 10% of trade receivables. The provision at 31 March 2018 was $8300. The trade receivables after the provision on 31 March 2019 were $55 800. What is the change in the provision over the year? A $2100 decrease B $2100 increase C $2720 decrease D $2720 increase
Mark scheme: A
Q9 · A trader sent goods to a customer on a sale or return basis
9 A trader sent goods to a customer on a sale or return basis. At the trader’s year end he had not heard if the customer had accepted the goods. Where should the value of goods be included in the trader’s books of account at the year end? A inventory and sales revenue B inventory only C sales revenue and trade receivables D sales revenue only
Mark scheme: B
Q10 · On 1 May 2018 Trevor had a debit balance of $3000 on his rent receivable account
10 On 1 May 2018 Trevor had a debit balance of $3000 on his rent receivable account. Rent received during the year was as follows. $ 28 May 2018 18 000 30 November 2018 16 000 On 30 April 2019, $4000 was owing to Trevor for rent for the period ended 30 April 2019. Which entry should be made in the income statement for rent receivable for the year ended 30 April 2019? A $33 000 B $35 000 C $38 000 D $41 000
Mark scheme: B
Q11 · A sole trader makes a profit for the year of $31 000, after taking the following items…
11 A sole trader makes a profit for the year of $31 000, after taking the following items into account. $ carriage inwards 2 600 decrease in provision for doubtful debts 1 500 discount received 2 000 other expenses 28 000 profit on disposal of non-current asset 300 What was the gross profit for the year? A $55 200 B $55 500 C $56 700 D $57 800
Mark scheme: A
Q12 · X and Y are in partnership sharing profit and losses equally
12 X and Y are in partnership sharing profit and losses equally. Y’s opening current account balance was $1350 debit. The residual profit for the year was $23 500. Y was entitled to the following. $ interest on capital 1 200 salary 14 500 Y’s drawings during the year were $25 000. What is the closing balance of Y’s current account at the year end? A $1100 credit B $1100 debit C $3800 credit D $3800 debit
Mark scheme: A
Q13 · F and P are in business sharing profits and losses in the ratio 3 : 1
13 F and P are in business sharing profits and losses in the ratio 3 : 1. Their capital account balances are: $ F 90 000 P 60 000 B is introduced as a new partner and invests $50 000 as capital. Goodwill is valued at $20 000 and is not to be retained in the books of account. The new profit sharing ratio will be 2 : 2 : 1 for F, P and B respectively. What is the new capital account balance of F following B’s admission? A $57 000 B $83 000 C $97 000 D $105 000
Mark scheme: C
Q14 · L and M are in partnership, sharing profits and losses in proportion to their capital…
14 L and M are in partnership, sharing profits and losses in proportion to their capital invested. The following information is available: $ capital: L 68 000 M 102 000 profit for the year before appropriation 28 900 drawings: L 8 000 M 12 000 No interest is charged on drawings up to $10 000 for each partner. Interest at a rate of 5% is charged on any drawings in excess of $10 000. What was L’s share of residual profit? A $11 520 B $11 600 C $11 800 D $11 960
Mark scheme: B
Q15 · Which item is shown in the statement of changes in equity?
15 Which item is shown in the statement of changes in equity? A dividend proposed B interest on long-term loan C issue of debenture D revaluation gain on non-current assets
Mark scheme: D
Q16 · Which statement about bonus shares is correct?
16 Which statement about bonus shares is correct? A They may be issued as repayment of debentures. B They may be issued at a premium. C They may be issued to the holders of preference shares. D They may be issued using the share premium account.
Mark scheme: D
Q17 · The equity of P Limited at 1 January 2019 was $668 000
17 The equity of P Limited at 1 January 2019 was $668 000. Profit for the year ended 31 December 2019 was $120 000. During the year ended 31 December 2019, the following also took place: 1 April Paid an interim dividend of $40 000 1 July Transferred $50 000 from retained earnings to general reserve 1 October Issued 5% debentures for $200 000 31 December Proposed a final dividend of $30 000 What was the total equity of P Limited at 31 December 2019? A $698 000 B $718 000 C $748 000 D $948 000
Mark scheme: C
Q18 · A business applied a mark-up of 25%
18 A business applied a mark-up of 25%. Which statement is correct? A Gross margin is 20%. B Gross margin is 25%. C Profit margin is 20%. D Profit margin is 25%.
Mark scheme: A
More questions on Analysis and communication of accounting information
Q19 · A company’s results for a year showed credit sales of $500 000
19 A company’s results for a year showed credit sales of $500 000. The trade receivables collection period was 73 days. In the next year, credit sales were expected to be $550 000 and the collection period was not expected to change. What is the expected percentage change in trade receivables? A decrease of 10% B increase of 10% C decrease of 20% D increase of 20%
Mark scheme: B
More questions on Analysis and communication of accounting information
Q20 · A business has the following current assets and current liabilities
20 A business has the following current assets and current liabilities. $ trade receivables 6000 bank overdraft 1500 cash in hand 50 trade payables 5050 The only other item in the working capital is inventory. The current ratio is 2 : 1. What is the value of the inventory? A $2550 B $4050 C $5550 D $7050
Mark scheme: D
More questions on Analysis and communication of accounting information
Q21 · A mechanic carries out regular factory machine maintenance
21 A mechanic carries out regular factory machine maintenance. He is paid an annual salary of $20 000. Which type of cost is this? A direct labour cost B fixed factory cost C variable factory cost D variable administrative cost
Mark scheme: B
Q22 · A manufacturer uses the weighted average cost (AVCO) method of inventory valuation
22 A manufacturer uses the weighted average cost (AVCO) method of inventory valuation. Opening inventory was 10 units at $50 each. During the month: 30 units were purchased costing $70 each. 20 units were sold at $80 each. What was the value of the inventory at the end of the month? A $1200 B $1300 C $1400 D $1600
Mark scheme: B
Q23 · Which statement is correct when production increases?
23 Which statement is correct when production increases? A Total fixed costs fall. B Total variable costs fall. C The fixed cost per unit falls. D The variable cost per unit falls.
Mark scheme: C
Q24 · Why might absorption costing be used?
24 Why might absorption costing be used? 1 to calculate contribution 2 to decide whether or not to accept a special order 3 to make long-term decisions 4 to set the selling price of a product A 1 and 3 B 1 and 4 C 2 and 3 D 3 and 4
Mark scheme: D
Q25 · The following information is available for a business
25 The following information is available for a business. fixed overheads hours $ budget 180 000 10 000 actual 190 000 11 000 What was the over-absorption or under-absorption of fixed overheads? A $8000 over B $8000 under C $10 000 over D $10 000 under
Mark scheme: A
Q26 · A business plans to sell all the 10 000 units produced next year at the same price as…
26 A business plans to sell all the 10 000 units produced next year at the same price as this year. Direct costs are forecast to decrease by $2 per unit and total fixed costs will increase by $40 000. What will be the effect of this? total cost break-even point A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: D
Q27 · The following information is available for a business
27 The following information is available for a business. $ sales revenue 600 000 variable cost 180 000 break even sales revenue 400 000 What is the profit for the period? A $120 000 B $140 000 C $280 000 D $300 000
Mark scheme: B
Q28 · Which statements about cost–volume–profit analysis are correct?
28 Which statements about cost–volume–profit analysis are correct? 1 It assumes costs and revenues behave in a linear fashion. 2 It assumes that only activity levels are uncertain. 3 It considers activity levels, marginal costs and revenues. A 1 and 2 B 1 and 3 C 1 only D 2 only
Mark scheme: C
Q29 · A company is forecasting its profits at two levels of activity
29 A company is forecasting its profits at two levels of activity. sales units 5000 8000 $ $ total fixed and variable costs 20 000 26 000 profit 15 000 30 000 sales revenue 35 000 56 000 Fixed costs and selling prices are unchanged within the above activity range. What is the forecast profit if sales were 7000 units? A $21 000 B $25 000 C $26 000 D $26 250
Mark scheme: B
Q30 · Why would a business prepare budgets?
30 Why would a business prepare budgets? 1 to communicate its plans 2 to enable it to control costs 3 to improve its products’ quality 4 to plan its operations A 1, 2 and 3 B 1, 2 and 4 C 1, 3 and 4 D 2, 3 and 4
Mark scheme: B
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.
6Preparation of financial statements6Accounting for non-current assets3Analysis and communication of accounting information3Preparation of financial statements3Reconciliation and verification3Traditional costing methods3Budgeting and budgetary control1The accounting system1Types of business entity1What you needed in this session
Cambridge’s own grade thresholds for 2020 Feb/March, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.