Cambridge A Level Accounting 9706 — 2022 Feb/March Paper 1 · Variant 2
9706/12/F/M/22 · 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 · Which actions are taken in respect of the totals of a three-column cash book at the end…
1 Which actions are taken in respect of the totals of a three-column cash book at the end of an accounting period? cash and bank discount columns columns A balanced balanced B balanced totalled C totalled balanced D totalled totalled
Mark scheme: B
Q2 · Which item is an example of capital expenditure?
2 Which item is an example of capital expenditure? A cost of repairs to an office building B cost of repainting business name on delivery van C legal cost paid to purchase an office building D legal cost to collect outstanding receivables
Mark scheme: C
Q3 · On 1 July 2021, Tim bought a delivery van for $10 000
3 On 1 July 2021, Tim bought a delivery van for $10 000. He paid an additional $900 to have racks fitted inside, and $800 for a year’s insurance. Tim provides for depreciation at the rate of 10% per annum. A full year’s depreciation is charged in the year of acquisition. What was the total for expenses recorded in Tim’s income statement in respect of the van for the year ended 30 September 2021? A $1290 B $1690 C $2100 D $2500
Mark scheme: A
Q4 · A business has a year end of 31 December
4 A business has a year end of 31 December. It purchased a non-current asset on 1 January 2020 for $100 000. The asset was depreciated using the reducing balance method at 20% per annum. It was sold for $40 000 on 1 January 2022. What was the loss on disposal? A $20 000 B $24 000 C $40 000 D $60 000
Mark scheme: B
Q5 · What is entered in the sales ledger control account?
5 What is entered in the sales ledger control account? 1 cash sales 2 increase in provision for doubtful debts 3 returns inwards A 1 and 2 B 1 and 3 C 2 and 3 D 3 only
Mark scheme: D
Q6 · A trial balance included a suspense account
6 A trial balance included a suspense account. The bank balance of $28 412 had mistakenly been entered as an overdraft and placed on the credit side as $28 142. There had also been an addition error and the debit side of the trial balance had been undercast by $450. Which entry in the suspense account will correct these errors? A credit $56 104 B debit $56 104 C credit $57 004 D debit $57 004
Mark scheme: C
Q7 · Which statement is correct?
7 Which statement is correct? A The balance on the irrecoverable debts account is carried down to the next accounting period. B The balance on the irrecoverable debts account is treated as an expense in the income statement. C The balance on the provision for doubtful debts account is calculated before the deduction of irrecoverable debts. D The balance on the provision for doubtful debts account is not included in a trial balance.
Mark scheme: B
Q8 · The following information is available for a business at 31 December 2021
8 The following information is available for a business at 31 December 2021. $ general expenses in arrears 1 January 420 general expenses in advance 1 January 240 general expenses in arrears 31 December 720 general expenses in advance 31 December 120 Total amount paid during the year ended 31 December 2021 is $11 500. What is the amount to be included in the income statement for general expenses for the year ended 31 December 2021? A $10 240 B $10 720 C $11 080 D $11 920
Mark scheme: D
Q9 · When would the year end value of inventory need to be adjusted?
9 When would the year end value of inventory need to be adjusted? 1 when inventory has not yet been paid for 2 when selling price has fallen below cost 3 when the owner has recorded taking goods for his own use during the year A 1 and 2 B 2 and 3 C 2 only D 3 only
Mark scheme: C
Q10 · A business had a draft profit for the year of $250 000
10 A business had a draft profit for the year of $250 000. The following errors were then discovered. 1 Depreciation charged was $25 000. The figure should have been $40 000. 2 Closing inventory for the period was undervalued by $10 000. What was the correct profit for the year? A $225 000 B $245 000 C $255 000 D $275 000
Mark scheme: B
Q11 · A capital account for a sole trader contained three entries, in addition to the opening…
11 A capital account for a sole trader contained three entries, in addition to the opening and closing balances. What did these entries represent? debit side credit side A capital introduced drawings, loss for the year B capital introduced, drawings profit for the year C drawings, loss for the year capital introduced D profit for the year capital introduced, drawings
Mark scheme: C
Q12 · The year end of a business is 31 December 2021
12 The year end of a business is 31 December 2021. On 5 January 2022, inventory was counted and valued at cost, $30 000. The following was then discovered. 1 Goods purchased and received after the year end, costing $1500, had been included in the valuation. 2 It included goods returned by a customer after the year end. They had a selling price of $900 which included a mark-up of 25% during the year. 3 Some goods included in the inventory, costing $500, were damaged. They can be sold for $300 after repairs costing $100. Which value of inventory should be included in the financial statements at 31 December 2021? A $27 480 B $27 525 C $28 275 D $29 270
Mark scheme: A
Q13 · A sole trader provided the following information for the year ended 31 December
13 A sole trader provided the following information for the year ended 31 December. $ non-current assets increased by 25 000 current assets increased by 10 000 current liabilities increased by 12 500 additional capital introduced during the year 20 000 drawings for the year 13 000 What was the profit for the year ended 31 December? A $10 500 B $14 500 C $15 500 D $29 500
Mark scheme: C
Q14 · Which rule does not apply in the absence of a partnership agreement?
14 Which rule does not apply in the absence of a partnership agreement? A Interest on partners’ loans is charged at 6% per annum. B No interest on capital is charged. C No salaries are paid to partners. D Profits and losses are shared equally between the partners.
Mark scheme: A
Q15 · P and Q are in partnership sharing profits and losses equally
15 P and Q are in partnership sharing profits and losses equally. On 1 January 2021, the partnership had net assets of $410 000. At that date, R was admitted into the business on the following terms. 1 Net assets to be revalued to $480 000. 2 Goodwill was valued at $50 000 but will not be retained in the books of account. 3 Profits and losses will now be shared P 40%, Q 40% and R 20%. What was the change in Q’s capital immediately after R’s admission? A decrease by $33 000 B decrease by $40 000 C increase by $33 000 D increase by $40 000
Mark scheme: D
Q16 · X and Y are in partnership, sharing residual profits and losses equally
16 X and Y are in partnership, sharing residual profits and losses equally. Partners are charged 2% interest on their drawings. Y is entitled to a salary of $10 000. The partners’ drawings for the year were as shown. $ X 12 000 Y 8 000 The profit for the year was $52 000. How much did each partner receive as a share of residual profits? A $10 800 B $11 200 C $20 800 D $21 200
Mark scheme: D
Q17 · Which statements are correct?
17 Which statements are correct? 1 Dividends can be paid out of the general reserve. 2 Rights issues can be made from the share premium account. 3 The general reserve can be created from retained earnings. A 1 and 2 B 1 and 3 C 1 only D 2 and 3
Mark scheme: B
Q18 · A limited company had the following balances on 1 January 2021
18 A limited company had the following balances on 1 January 2021. $ revaluation reserve 20 000 retained earnings 142 000 Profit for the year ended 31 December 2021 was $105 000. The revaluation reserve, $20 000, was created two years ago from a revaluation of a property. The same property was revalued on 31 December 2021 with a revaluation loss of $35 000. On 1 August 2021 an interim dividend, $40 000, was paid. On 31 December 2021 a final dividend, $55 000, was proposed. What was the value of retained earnings at 31 December 2021? A $117 000 B $137 000 C $172 000 D $192 000
Mark scheme: D
Q19 · The bank balance of a limited company was $390 000 before the following transactions took…
19 The bank balance of a limited company was $390 000 before the following transactions took place. 1 An issue of 500 000 new shares of $0.50 each was made at a premium of $0.25 per share. 2 A debenture for $100 000 was repaid. 3 A bonus issue of 100 000 shares of $0.50 each was made. What was the bank balance after these transactions? A $540 000 B $665 000 C $715 000 D $865 000
Mark scheme: B
Q20 · What might cause a decrease in a company’s non-current asset turnover?
20 What might cause a decrease in a company’s non-current asset turnover? A increase in expenses B increase in sales revenue C purchase of new non-current assets D selling non-current assets
Mark scheme: C
More questions on Analysis and communication of accounting information
Q21 · The following information for a limited company at 31 December 2021 is available
21 The following information for a limited company at 31 December 2021 is available. $ ordinary share capital 300 000 retained earnings 110 000 8% debenture 100 000 Retained earnings at 1 January 2021 were $82 000. An interim dividend of $45 000 was paid on 1 May 2021. What was the return on capital employed for the year ended 31 December 2021? A 6.83% B 7.06% C 14.31% D 15.88%
Mark scheme: D
More questions on Analysis and communication of accounting information
Q22 · Which statements about stepped costs are correct?
22 Which statements about stepped costs are correct? 1 fixed within a range of activity levels 2 fixed whatever the level of activity 3 include fixed costs only 4 include both fixed and variable costs A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
Mark scheme: A
Q23 · A production worker is paid $15 per hour for working 8 hours a day
23 A production worker is paid $15 per hour for working 8 hours a day. Overtime is paid at the rate of time and a fifth (basic pay plus 20%). A productivity bonus is also paid at the rate of $21 per unit for each unit produced in excess of 12 units per day. Last Friday, the production worker worked 12 hours and assembled 14 units. How much did he earn on Friday? A $144 B $162 C $192 D $234
Mark scheme: D
Q24 · A retailer made the following purchases of inventory in October
24 A retailer made the following purchases of inventory in October. quantity unit price total cost purchase (units) $ $ 5 Oct 50 500 25 000 12 Oct 50 500 25 000 23 Oct 150 525 78 750 128 750 There was no opening inventory for October. The business uses the first-in first-out (FIFO) method to value its inventory. In October, 200 units were sold for $900 each. What was the gross profit for October? A $76 667 B $77 000 C $77 500 D $96 250
Mark scheme: C
Q25 · A company has two departments in its factory
25 A company has two departments in its factory. The details are shown. budgeted fixed budgeted department overheads hours $ machining 180 000 6 000 assembly 90 000 10 000 total 270 000 16 000 What is the fixed overhead absorption rate per hour in the machining department? A $11.25 B $16.875 C $30 D $45
Mark scheme: C
Q26 · What would cause overheads to be over-absorbed?
26 What would cause overheads to be over-absorbed? A Overhead absorbed is greater than overhead budgeted. B Overhead absorbed is less than overhead budgeted. C Overhead incurred is greater than overhead absorbed. D Overhead incurred is less than overhead absorbed.
Mark scheme: D
Q27 · A company has the following information for producing 2000 units of a product
27 A company has the following information for producing 2000 units of a product. $ sales revenue 85 000 direct materials 30 000 direct labour 14 000 direct expenses 2 500 other variable overheads 10 200 fixed overheads 8 000 What is the contribution to sales ratio? A 23.88% B 33.29% C 45.29% D 54.71%
Mark scheme: B
Q28 · The following information is available about two products
28 The following information is available about two products. product 1 product 2 per unit per unit material X 2 kilos 4 kilos material Y 3 kilos 1 kilo direct labour 3 hours 6 hours Production is planned to be 100 units of each product. 700 kilos of material X and 400 kilos of material Y are available. A total of 800 direct labour hours can be worked. What are the limiting factors? A direct labour only B material X only C material Y only D all three inputs
Mark scheme: A
Q29 · A company provides the following information about its product
29 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
Q30 · What are possible limitations of a budgetary control system?
30 What are possible limitations of a budgetary control system? 1 Budgets are based on estimates. 2 Budgets may lead to staff demotivation. 3 Budgets may prevent managers from being creative. A 1 and 2 only B 1 and 3 only C 1, 2 and 3 D 2 and 3 only
Mark scheme: C
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.
7Traditional costing methods6Preparation of financial statements5Accounting for non-current assets3Analysis and communication of accounting information2Costs and cost behaviour2Reconciliation and verification2Budgeting and budgetary control1The accounting system1Types of business entity1What you needed in this session
Cambridge’s own grade thresholds for 2022 Feb/March, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.