Cambridge A Level Accounting 9706 — 2021 Feb/March Paper 1 · Variant 2
9706/12/F/M/21 · 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 business values its inventory at the lower of cost and net realisable value
1 A business values its inventory at the lower of cost and net realisable value. Which accounting concept is being applied? A business entity B duality C matching D prudence
Mark scheme: D
Q2 · On 1 May, Tom sold an old motor vehicle with a net book value of $10 000 to Arnold for…
2 On 1 May, Tom sold an old motor vehicle with a net book value of $10 000 to Arnold for $12 000. Arnold paid $7500 by cheque and agreed to pay the balance by instalments. What was the net effect of these transactions on Arnold’s accounting equation on 1 May? owner’s equity assets liabilities / capital $ $ $ A increase 2500 increase 2500 no effect B increase 2500 increase 4500 decrease 2000 C increase 4500 increase 2500 increase 2000 D increase 4500 increase 4500 no effect
Mark scheme: D
Q3 · Which item is not included as part of the capital cost of a new machine?
3 Which item is not included as part of the capital cost of a new machine? A cost of delivering the machine to the factory B cost of installing the new machine C interest on a loan used to buy the machine D invoice price of the machine
Mark scheme: C
Q4 · Why does a business charge depreciation on its non-current assets?
4 Why does a business charge depreciation on its non-current assets? A to retain profits for the replacement of worn out assets B to show the correct value of the asset in the statement of financial position C to show when an asset needs replacing D to spread the cost of the assets over their useful lives
Mark scheme: D
Q5 · The net book value of motor vehicles of a company is shown
5 The net book value of motor vehicles of a company is shown. beginning of end of the year the year $312 000 $305 000 During the year, an old vehicle was traded in as part exchange for a new vehicle. The part exchange value of the old vehicle was $8000. The remaining purchase price of the new vehicle, $30 000, was paid by cheque. What was the depreciation charge for the year? A $29 000 B $37 000 C $45 000 D $53 000
Mark scheme: C
Q6 · The bank statement of a business showed a credit balance of $4520
6 The bank statement of a business showed a credit balance of $4520. This did not agree with the cash book. The following were discovered. 1 Bank charges of $89 had not been entered in the cash book. 2 There were unpresented cheques paid to suppliers of $680. 3 A dishonoured cheque for $210 appeared on the bank statement, but was not shown in the cash book. 4 Sales receipts of $750 had been entered in the cash book, but did not appear on the bank statement. What is the bank balance to be shown in the statement of financial position? A current asset $4501 B current asset $4590 C current liability $4450 D current liability $4539
Mark scheme: B
Q7 · What may help a book-keeper detect errors in the accounting records of a business?
7 What may help a book-keeper detect errors in the accounting records of a business? 1 books of original entry 2 sales ledger control account 3 statement of financial position 4 trial balance A 1 and 3 B 2 and 3 C 2 and 4 D 3 and 4
Mark scheme: C
Q8 · The closing balance on a purchases ledger control account is $163 762
8 The closing balance on a purchases ledger control account is $163 762. The purchases journal has been undercast by $1000. What is the correct closing balance on the purchases ledger control account? A $162 762 B $163 762 C $164 762 D $165 762
Mark scheme: C
Q9 · A business has calculated its draft profit for the year as $15 000
9 A business has calculated its draft profit for the year as $15 000. The following were then discovered. 1 General expenses were understated by $600. 2 The sales journal total of $55 690 had been posted to the sales account as $56 590. 3 Repairs to vehicles of $1100 had been entered in the vehicles (at cost) account. 4 The salaries account included travelling expenses of $2400 paid to the salesmen. What was the correct profit for the year? A $12 400 B $13 600 C $14 200 D $14 800
Mark scheme: A
Q10 · A sole trader maintains a provision for doubtful debts at 5% of trade receivables
10 A sole trader maintains a provision for doubtful debts at 5% of trade receivables. Provision for doubtful debts at the start of the year was $2750. The following information is available at the end of the year. $ trade receivables 37 500 irrecoverable debts written off during the year 500 What is the effect on the profit for the year due to the change in the provision for doubtful debts? A decrease by $875 B decrease by $900 C increase by $875 D increase by $900
Mark scheme: C
Q11 · Esarba has a financial year end of 31 December
11 Esarba has a financial year end of 31 December. On 31 March 2020, she transferred her private vehicle to the business at a value of $12 000. Her profit for the year ended 31 December 2020 was $7800 and her cash drawings amounted to $8000. Depreciation of $900 had been provided on the vehicle. She also took goods for her own use with a cost price of $1000 and a selling price of $2000. What was the increase in Esarba’s capital account balance in the year ended 31 December 2020? A $8900 B $9800 C $9900 D $10 800
Mark scheme: D
Q12 · At the end of his first year of trading, the trader lost all of his inventory in a fire
12 At the end of his first year of trading, the trader lost all of his inventory in a fire. He knows the values of sales and purchases and wishes to calculate the value of the inventory lost. Which ratio should he use? A gross margin B profit margin C trade payables turnover D trade receivables turnover
Mark scheme: A
More questions on Analysis and communication of accounting information
Q13 · X and Y were in partnership sharing profits and losses equally
13 X and Y were in partnership sharing profits and losses equally. Z was admitted as a partner and the profit and loss sharing ratio for X, Y and Z will be 2 : 2 : 1 respectively. On the date of admission, the value of non-current assets was increased by $48 000. Goodwill was valued at $30 000 but would not be retained in the books of account. What was the effect on X’s capital account? A increased by $19 200 B increased by $24 000 C increased by $27 000 D increased by $31 200
Mark scheme: C
Q14 · Which items would appear in a partnership’s appropriation account, in the absence of a…
14 Which items would appear in a partnership’s appropriation account, in the absence of a partnership agreement? 1 profit for the year 2 partners’ interest on drawings 3 partners’ salaries 4 partners’ share of profits A 1 and 4 B 1 only C 2 and 3 D 4 only
Mark scheme: A
Q15 · Annie and Bernie have been in partnership for some years, sharing profits and losses in…
15 Annie and Bernie have been in partnership for some years, sharing profits and losses in the ratio 2 : 1. On 1 January 2020, they decided to introduce interest on drawings. The annual interest on drawings for the year ended 31 December 2020 was $1300 for Annie and $800 for Bernie. Which effect did this change have on the balance on Annie’s current account at 31 December 2020? A decrease of $100 B decrease of $500 C increase of $100 D increase of $500
Mark scheme: C
Q16 · The total of shareholders’ equity at 31 December 2019 was $45 500
16 The total of shareholders’ equity at 31 December 2019 was $45 500. During the year ended 31 December 2020, the following took place. 1 An issue of 10 000 ordinary shares of $1 each at a premium of $0.25 was made. 2 A bonus issue of 5000 shares of $1 each was made. 3 Buildings were revalued from $250 000 to $265 000. 4 The profit for the year was $20 400. 5 There was a transfer to the general reserve of $6000. 6 The directors proposed a final dividend of $8000. What was the balance of the shareholders’ equity at 31 December 2020? A $85 400 B $87 400 C $93 400 D $98 400
Mark scheme: C
Q17 · The following relates to a limited company during a year
17 The following relates to a limited company during a year. $ repayment of a debenture 200 000 receipt from issue of ordinary shares 500 000 non-current assets purchased by cheque 300 000 net book value of disposals 50 000 disposal proceeds 60 000 revaluation surplus 20 000 What was the total net cash inflow arising from these? A $60 000 B $70 000 C $80 000 D $110 000
Mark scheme: A
Q18 · What is included in the reserves of a limited company?
18 What is included in the reserves of a limited company? A debentures B ordinary shares C preference shares D share premium
Mark scheme: D
Q19 · Which ratio will help a business assess its ability to meet its immediate cash…
19 Which ratio will help a business assess its ability to meet its immediate cash requirements? A expenses to revenue B liquid (acid test) C non-current asset turnover D return on capital employed
Mark scheme: B
More questions on Analysis and communication of accounting information
Q20 · The following information for a business was available at the end of its financial year
20 The following information for a business was available at the end of its financial year. $ inventory 20 000 bank 8 400 credit trade receivables 35 000 trade payables 15 000 rent receivable in arrears 3 000 There is also a 5-year bank loan of $20 000 repayable in equal annual instalments. What was the current ratio? A 2.12 : 1 B 2.88 : 1 C 3.52 : 1 D 4.43 : 1
Mark scheme: A
More questions on Analysis and communication of accounting information
Q21 · A manufacturing company pays its production employees basic wages at the same hourly rate…
21 A manufacturing company pays its production employees basic wages at the same hourly rate every week. It also pays them a bonus based on achieving production targets. What sort of cost is this an example of? A fixed cost B semi-variable cost C stepped cost D variable cost
Mark scheme: B
Q22 · A company receives the following units of raw material into inventory
22 A company receives the following units of raw material into inventory. per unit total units $ $ 120 38 4560 100 40 4000 60 44 2640 It then issued 240 units. Inventory is valued using the weighted average (AVCO) method. What was the closing value of inventory? A $1440 B $1520 C $1600 D $1760
Mark scheme: C
Q23 · The budgeted data of N Limited is as follows
23 The budgeted data of N Limited is as follows. production level total costs 15 000 units $406 000 25 000 units $546 000 What is the budgeted fixed cost? A $196 000 B $238 000 C $336 000 D $357 000
Mark scheme: A
Q24 · In March, a company’s overhead absorption rate was $2 per machine hour
24 In March, a company’s overhead absorption rate was $2 per machine hour. In April this rate increased. What had increased in April causing the change in the overhead absorption rate? A cost of insurance for the factory B hourly pay rate of production workers C number of actual machine hours worked D number of budgeted machine hours
Mark scheme: A
Q25 · A business absorbs its overheads on the basis of machine hours
25 A business absorbs its overheads on the basis of machine hours. The following information is provided. actual budgeted overheads $564 000 $560 000 machine hours 6700 7000 By how much are overheads under or over-absorbed? A over-absorbed by $4000 B under-absorbed by $4000 C over-absorbed by $28 000 D under-absorbed by $28 000
Mark scheme: D
Q26 · Which situation is not usually suitable for the use of marginal costing?
26 Which situation is not usually suitable for the use of marginal costing? A negotiating a regular selling price with a customer B quoting a selling price for a special order C when there is a shortage of direct material for the next month D whether to make or buy-in a product
Mark scheme: A
Q27 · The following budgeted information is available for 10 000 units
27 The following budgeted information is available for 10 000 units. per unit $ selling price 53 direct materials and wages 22 variable manufacturing overhead 2 fixed manufacturing overhead 21 variable selling expenses 1 fixed selling expenses 5 What is the budgeted break-even point in units? A 7242 B 7500 C 8966 D 9286
Mark scheme: D
Q28 · The budgeted income statement of J Limited shows the following
28 The budgeted income statement of J Limited shows the following. $ sales 400 000 variable costs 240 000 fixed costs 132 000 profit for the year 28 000 What is the margin of safety in dollars? A $70 000 B $160 000 C $268 000 D $330 000
Mark scheme: A
Q29 · A business provided the following budgeted information
29 A business provided the following budgeted information. $ break-even sales revenue 300 000 fixed costs 180 000 target profit 144 000 What is the sales revenue required to achieve the target profit? A $486 000 B $540 000 C $624 000 D $810 000
Mark scheme: B
Q30 · Which factors should be considered when setting a budget?
30 Which factors should be considered when setting a budget? 1 availability of skilled labour 2 production capacity 3 quality of goods to be produced A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 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.
6Traditional costing methods5Reconciliation and verification4Accounting for non-current assets3Analysis and communication of accounting information2Budgeting and budgetary control2Costs and cost behaviour2Preparation of financial statements2The accounting system2Activity based costing (ABC)1Analysis and communication of accounting information1What you needed in this session
Cambridge’s own grade thresholds for 2021 Feb/March, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.