Cambridge A Level Accounting 9706 — 2020 Oct/Nov Paper 1 · Variant 3
9706/13/O/N/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 company decided not to capitalise the purchase of a stapler for use in its office
1 A company decided not to capitalise the purchase of a stapler for use in its office. Which accounting concept was the company applying? A consistency B duality C materiality D prudence
Mark scheme: C
Q2 · Which book of prime entry is also used as a ledger account?
2 Which book of prime entry is also used as a ledger account? A cash book B purchases journal C sales journal D journal
Mark scheme: A
Q3 · A motor vehicle costing $8000 is depreciated by 25% per annum using the reducing balance…
3 A motor vehicle costing $8000 is depreciated by 25% per annum using the reducing balance method. After depreciating it for two years it was sold for $4000. What is the profit or loss on disposal? A $500 loss B $500 profit C $2000 loss D $2000 profit
Mark scheme: A
Q4 · A business purchased a new delivery van
4 A business purchased a new delivery van. The total amount paid is made up of the basic cost of the delivery and the following: 1 changing the inside to carry tools and materials 2 one year’s insurance and servicing 3 painting the exterior with the business name Which items are included in the total to be entered in non-current assets? A 1 and 2 only B 1 and 3 only C 2 and 3 only D 1, 2 and 3
Mark scheme: B
Q5 · A business owner suspects that a loss of cash has occurred
5 A business owner suspects that a loss of cash has occurred. He provides the data shown. $ cash balance at the start of the month 150 cash balance at the end of the month 100 cash banked 10 200 cash sales for the month 10 500 How much cash has been lost? A $200 B $250 C $300 D $350
Mark scheme: D
Q6 · The difference on a trial balance is entered in a suspense account
6 The difference on a trial balance is entered in a suspense account. It is discovered that a discount received has been debited to the discount allowed account. Which journal entry corrects the error? account(s) to be debited account(s) to be credited A discount received suspense B discount allowed suspense discount received C suspense discount allowed D suspense discount allowed discount received
Mark scheme: D
Q7 · Which items will be entered in the debit side of the purchases ledger control account?
7 Which items will be entered in the debit side of the purchases ledger control account? 1 contra with sales ledger control account 2 discount received 3 returns inwards A 1 and 2 B 2 and 3 C 2 only D 3 only
Mark scheme: A
Q8 · The bank column of a business cash book showed a debit balance of $25 000
8 The bank column of a business cash book showed a debit balance of $25 000. The following was then discovered. $ direct debit payments not recorded in the cash book 6500 payments for sales made directly into the bank by 5500 customers but not recorded in the cash book bank charges not recorded in the cash book 1500 payment made by the business but not yet shown in 4500 the bank statement What was the correct cash book balance? A $18 000 B $19 500 C $22 500 D $27 500
Mark scheme: C
Q9 · At the year end a company discovers that some of its inventory is damaged
9 At the year end a company discovers that some of its inventory is damaged. This inventory originally cost $2000 and to replace it would now cost $1900. It would normally sell for $2400 but can now only be sold for $2200 if repairs costing $400 are undertaken. What value of the damaged inventory should be shown in the financial statements? A $1800 B $1900 C $2000 D $2200
Mark scheme: A
Q10 · The following information relates to rent receivable for the year ended 31 March 2020
10 The following information relates to rent receivable for the year ended 31 March 2020. $ 1 April 2019 rent owed by the tenants 700 1 April 2019 rent prepaid by the tenants 1200 rent received during the year 7800 31 March 2020 rent owed by the tenants 1000 How much is the rental income entered in the income statement for the year ended 31 March 2020? A $6300 B $7300 C $8300 D $9300
Mark scheme: D
Q11 · A business has provided the following information
11 A business has provided the following information. A provision for doubtful debts has been calculated as $1750. It is based on 5% of trade receivables after an irrecoverable debt of $4200 had been written off. What was the original amount of trade receivables before making these adjustments? A $29 050 B $30 800 C $37 450 D $39 200
Mark scheme: D
Q12 · A sole trader provides the following information
12 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
Q13 · On the dissolution of a partnership, one of the partners takes a motor vehicle in part…
13 On the dissolution of a partnership, one of the partners takes a motor vehicle in part settlement of the amount due to him. How is this entered in the books of account? debit account credit account A capital motor vehicle B capital realisation C realisation capital D motor vehicle capital
Mark scheme: B
Q14 · At 31 December 2019 X, Y and Z were in partnership sharing profits and losses equally
14 At 31 December 2019 X, Y and Z were in partnership sharing profits and losses equally. At that date the net assets of the partnership were valued at $300 000 and X’s capital account balance was $70 000. On 1 January 2020 X retired. The net assets were then revalued upwards by $90 000. X left half of the amount due to him on retirement as a loan to the partnership. What was the value of the partnership’s net assets remaining after X’s retirement? A $220 000 B $230 000 C $290 000 D $350 000
Mark scheme: C
Q15 · Which items would appear in a partnership’s appropriation account?
15 Which items would appear in a partnership’s appropriation account? 1 partners’ interest on capital 2 partners’ introduction of new capital 3 salaries of employees 4 salaries of partners A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4
Mark scheme: B
Q16 · Which item will affect the total equity of a limited company?
16 Which item will affect the total equity of a limited company? A bonus issue of shares B issue of debentures C proposed dividend D rights issue of shares
Mark scheme: D
Q17 · A company makes a fully subscribed rights issue of 100 000 ordinary shares of $1 each at…
17 A company makes a fully subscribed rights issue of 100 000 ordinary shares of $1 each at $1.20. The market value of a share at that date was $1.30. Half of the rights issue proceeds were used to repay a long-term loan. By how much did the company’s capital employed increase? A $60 000 B $65 000 C $120 000 D $130 000
Mark scheme: A
Q18 · Where are dividends paid during the year recorded in the financial statements of a…
18 Where are dividends paid during the year recorded in the financial statements of a limited company? 1 income statement 2 statement of changes in equity 3 statement of financial position A 1 and 2 B 1 only C 2 and 3 D 2 only
Mark scheme: D
Q19 · Which ratios identify how well a business has utilised its resources?
19 Which ratios identify how well a business has utilised its resources? 1 inventory turnover 2 non-current asset turnover 3 profit margin 4 return on capital employed A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4
Mark scheme: A
More questions on Analysis and communication of accounting information
Q20 · A business provided the following information at the year end
20 A business provided the following information at the year end. $ non-current assets 75 000 current assets 25 000 current liabilities 18 000 profit for the year 28 000 There were no interest charges for the year. What was the return on capital employed? A 23.73% B 28.00% C 34.15% D 37.33%
Mark scheme: C
More questions on Analysis and communication of accounting information
Q21 · Anna is paid an hourly rate for each hour worked
21 Anna is paid an hourly rate for each hour worked. She also receives an additional $0.25 for every unit produced in excess of 200 units a week. Which method of labour remuneration is used to pay Anna? A fixed rate only B fixed rate plus bonus C fixed rate plus commission D fixed rate plus piece rate
Mark scheme: B
Q22 · A business uses the first in first out (FIFO) inventory system
22 A business uses the first in first out (FIFO) inventory system. The following information is available. per unit value date details units $ 1 March opening inventory 1 200 10.00 12 March purchases 2 000 10.20 22 March sales 3 000 15.00 26 March purchases 800 10.50 The inventory at 31 March could be sold for $10 800. What is the value of inventory to be included in the statement of financial position at 31 March? A $10 000 B $10 425 C $10 440 D $10 800
Mark scheme: C
Q23 · The following data is available for the production department of a manufacturing company…
23 The following data is available for the production department of a manufacturing company for a period. Overheads are absorbed on a direct labour hour basis. total direct overhead costs labour hours $ budgeted 96 000 242 880 actual 97 600 253 760 What is the over or under absorption of overheads for the period? A $6832 over absorbed B $6832 under absorbed C $10 880 over absorbed D $10 880 under absorbed
Mark scheme: B
Q24 · The records of a company showed the following
24 The records of a company showed the following. machining assembly total fixed overheads $150 000 $60 000 machine hours 3000 employee hours worked 2000 What is the hourly fixed overhead absorption rate for the machining department? A $30 B $42 C $50 D $70
Mark scheme: C
Q25 · Which costs are included in inventory valuation under absorption costing?
25 Which costs are included in inventory valuation under absorption costing? 1 fixed manufacturing overhead 2 variable manufacturing overhead 3 variable selling expenses A 1 and 2 only B 1 and 3 only C 2 and 3 only D 1, 2 and 3
Mark scheme: A
Q26 · What would cause a margin of safety of a product to increase?
26 What would cause a margin of safety of a product to increase? 1 Break-even revenue decreases. 2 Break-even revenue increases. 3 Forecast revenue decreases. 4 Forecast revenue increases. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
Mark scheme: B
Q27 · A company makes and sells a single product for $50 per unit
27 A company makes and sells a single product for $50 per unit. The variable cost is $16 per unit. Fixed costs have been absorbed based on a normal activity level of 1000 units at $4 per unit. What is the profit under marginal costing if the company makes and sells 2000 units? A $32 000 B $60 000 C $64 000 D $68 000
Mark scheme: C
Q28 · Which purpose is cost–volume–profit analysis used for?
28 Which purpose is cost–volume–profit analysis used for? A comparing actual and budgeted costs B organising resources in the most efficient way C planning to achieve targeted profit D preparing annual financial statements
Mark scheme: C
Q29 · The following budgeted information is available
29 The following budgeted information is available. total cost units $ 7000 15 000 9000 19 000 If production exceeded 9000 units, fixed costs would increase by $500. What is the total budgeted production cost for 10 000 units? A $20 500 B $21 000 C $21 500 D $21 750
Mark scheme: C
Q30 · Which statement does not apply to an efficient system of business planning?
30 Which statement does not apply to an efficient system of business planning? A It identifies levels of achievable costs and revenues. B It identifies budgets when a business is only making a loss. C It identifies targets regularly to monitor future performance. D It informs management if standards are not met.
Mark scheme: B
What was in this paper
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Cambridge’s own grade thresholds for 2020 Oct/Nov, Paper 1 · Variant 3. A higher threshold means an easier paper — the bar moves with how the cohort did.