Cambridge A Level Accounting 9706 — 2022 Oct/Nov Paper 1 · Variant 2
9706/12/O/N/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 items would be entered in the General Journal?
1 Which items would be entered in the General Journal? 1 goods taken by owner for personal use 2 goods purchased for resale 3 purchase of a non-current asset on credit 4 purchase of office stationery A 1 and 2 B 1 and 3 only C 1, 3 and 4 D 3 and 4 only
Mark scheme: B
Q2 · Why is it important for a trader to distinguish between capital expenditure and revenue…
2 Why is it important for a trader to distinguish between capital expenditure and revenue expenditure? 1 to apply the realisation concept 2 to know which method of depreciation to use 3 to obtain a more accurate profit figure A 1 and 2 B 1 only C 2 and 3 D 3 only
Mark scheme: D
Q3 · A company purchased a new vehicle for $30 000
3 A company purchased a new vehicle for $30 000. It part-exchanged an existing vehicle at a value of $6500, with the balance being paid by cheque. The part-exchanged vehicle originally cost $12 000 and had a net book value of $4800 on disposal. Which entries will be made in the accounts? income statement bank account A $1700 income motor vehicle at cost $23 500 credit B $1700 expense motor vehicle at cost $30 000 debit C $5500 expense motor vehicle at cost $23 500 debit D $5500 income motor vehicle at cost $30 000 credit
Mark scheme: A
Q4 · At 31 December 2021 a business had a non-current asset with a net book value of $18 000
4 At 31 December 2021 a business had a non-current asset with a net book value of $18 000. It had been purchased during the year ended 31 December 2020. Depreciation is charged at a rate of 25% per annum using the reducing balance method. A full year’s depreciation is charged in the year of purchase. What was the original cost of the non-current asset? A $22 500 B $24 000 C $27 000 D $32 000
Mark scheme: D
Q5 · Which item is an error of principle?
5 Which item is an error of principle? A No record was made of inventory withdrawn by the owner for private use. B Sales returns were credited to the returns inwards account. C The amount shown on a purchases invoice for goods for resale was incorrectly recorded in the purchases journal. D The cost of machinery repairs was debited to the machinery at cost account.
Mark scheme: D
Q6 · The sales ledger control account of a business had a balance of $17 640
6 The sales ledger control account of a business had a balance of $17 640. This did not agree with the total of the individual customer accounts in the sales ledger. The following errors have been discovered. 1 An invoice in the sales journal for $460 has been entered wrongly in the sales ledger as $640. 2 Credit balances on the sales ledger, $470, have been omitted from the sales ledger control account. 3 Discounts allowed have been incorrectly totalled as $310 instead of $325. 4 Goods sold to Harry for $690 have been entered in the account of Barry in error. What is the correct balance on the sales ledger control account? A $16 975 B $17 155 C $17 185 D $18 125
Mark scheme: B
Q7 · The totals on a trial balance were: debit $500 150 credit $500 000 Which error could have…
7 The totals on a trial balance were: debit $500 150 credit $500 000 Which error could have caused the difference? A A cash sale has only been recorded in the sales account. B A credit purchase has only been recorded in a supplier’s account. C A credit sale has not been recorded. D A credit sale has only been recorded in a customer’s account.
Mark scheme: D
Q8 · A draft statement of financial position for a business showed total net assets of $600 000
8 A draft statement of financial position for a business showed total net assets of $600 000. The following items were then discovered. 1 A long-term loan for $10 000 had not been recorded. This was taken out on the last day of the financial year. 2 Closing inventory had been overstated by $20 000. 3 Depreciation had been understated by $15 000. What is the correct total net assets value? A $555 000 B $565 000 C $595 000 D $605 000
Mark scheme: B
Q9 · A company has produced draft financial statements for the year
9 A company has produced draft financial statements for the year. It is then discovered that some inventory is damaged and the value must be reduced. What will be the effect? profit for the year current assets A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: A
Q10 · A trader took out a 6% bank loan of $30 000 on 1 November 2021, to be repaid in full in…
10 A trader took out a 6% bank loan of $30 000 on 1 November 2021, to be repaid in full in 10 years’ time. Interest is to be paid annually. No interest had been paid by 30 April 2022. How should this be recorded in the statement of financial position at 30 April 2022? current non-current liabilities liabilities $ $ A 0 30 000 B 900 30 000 C 1 800 30 000 D 30 900 0
Mark scheme: B
Q11 · In preparing the financial statements, an accrual for rent payable was treated as a…
11 In preparing the financial statements, an accrual for rent payable was treated as a prepayment. What effect does this have on the profit and the current liabilities? profit current liabilities A overstated overstated B overstated understated C understated overstated D understated understated
Mark scheme: B
Q12 · A sole trader is preparing his income statement for the year ended 31 December 2021, his…
12 A sole trader is preparing his income statement for the year ended 31 December 2021, his first year of trading. The following information is available. $ takings banked 16 400 payments to trade payables 8 500 expenses for the year 2 900 balance of trade payables 1 200 balance of trade receivables 700 He took goods for his own use, $1000, during the year. There was no closing inventory. What was his profit for the year? A $4500 B $5500 C $7400 D $7900
Mark scheme: B
Q13 · The following information is available for the year ended 31 December 2021
13 The following information is available for the year ended 31 December 2021. $ trade payables at 1 January 2021 18 000 trade payables at 31 December 2021 14 000 discount received 6 000 payments to credit suppliers 158 000 returns outwards 3 000 contra to sales ledger control account 2 000 What were the credit purchases for the year? A $143 000 B $161 000 C $165 000 D $173 000
Mark scheme: C
Q14 · What is recorded in both the appropriation account and the current accounts of a…
14 What is recorded in both the appropriation account and the current accounts of a partnership? 1 drawings 2 interest on drawings 3 interest on capital A 1, 2 and 3 B 1 only C 2 and 3 only D 3 only
Mark scheme: C
Q15 · R, S and T were in partnership, sharing profits equally
15 R, S and T were in partnership, sharing profits equally. T retired as a partner. At that time, the balance on his capital and current accounts totalled $320 000. Goodwill was valued at $60 000. The partnership assets were revalued upwards by $30 000. T agreed to leave $90 000 in the partnership as a loan on retirement. The balance due to him was paid from the partnership bank account. How much was paid to T on his retirement? A $230 000 B $240 000 C $250 000 D $260 000
Mark scheme: D
Q16 · Owing to an issue with Question 16, it has been removed from the question paper
16 Owing to an issue with Question 16, it has been removed from the question paper.
Q17 · Where is the dividend received by a company shown in its financial statements?
17 Where is the dividend received by a company shown in its financial statements? A income statement only B income statement and statement of changes in equity C statement of changes in equity only D statement of financial position and income statement
Mark scheme: A
Q18 · On 1 January a company had 300 000 ordinary shares of $1 each and a 10% bank loan of $100…
18 On 1 January a company had 300 000 ordinary shares of $1 each and a 10% bank loan of $100 000. On 1 July the company issued a 6% debenture of $800 000. The profit from operations for the year ended 31 December was $120 000. The company paid a dividend of $0.05 per ordinary share during the year. What was the profit for the year ended 31 December? A $71 000 B $86 000 C $96 000 D $110 000
Mark scheme: B
Q19 · X Limited recorded the following information in its books of account
19 X Limited recorded the following information in its books of account. 1 issue of 10 000 ordinary shares of $1 each at a price of $1.80 2 payment of dividends, $6200 3 transfer to general reserve, $7500 What was the effect on total revenue reserves? A $6200 decrease B $6700 increase C $8000 increase D $13 700 decrease
Mark scheme: A
Q20 · H Limited uses ratio analysis to analyse its financial performance
20 H Limited uses ratio analysis to analyse its financial performance. On 31 January 2021 the company prepared draft financial statements before it revalued its premises upwards. How did this revaluation affect the company’s ratios? non-current asset return on capital turnover employed A decrease decrease B decrease increase C increase decrease D increase increase
Mark scheme: A
More questions on Analysis and communication of accounting information
Q21 · A company purchases its inventory on credit
21 A company purchases its inventory on credit. The following information is available. $ sales revenue 440 000 purchases 270 000 trade payables 90 000 trade receivables 110 000 What is the trade payables turnover in days? A 75 B 92 C 122 D 149
Mark scheme: C
More questions on Analysis and communication of accounting information
Q22 · A business has the following wages policy for its direct workers
22 A business has the following wages policy for its direct workers. standard working hours per week 40 basic rate per hour $16 overtime basic rate + 25% standard production per worker per week 100 units bonus $4 per unit in excess of standard production Last week Ben produced 115 units and earned $860. How many hours did Ben work last week? A 48 B 50 C 51 D 53.75
Mark scheme: A
Q23 · Which statements are correct about the first in first out (FIFO) method for inventory…
23 Which statements are correct about the first in first out (FIFO) method for inventory valuation? 1 issues to production are valued at the most recent purchase prices 2 issues to production are valued at the oldest purchase prices 3 provides a higher profit during periods of inflation 4 provides a lower profit during periods of inflation A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
Mark scheme: C
Q24 · A manufacturing business has two production departments: assembly and painting
24 A manufacturing business has two production departments: assembly and painting. The following information is available. assembly painting machinery at net book value ($) 150 000 100 000 machinery repair costs ($) 14 000 6 000 machine operating hours 60 000 15 000 number of machines 30 10 The total machinery insurance cost for the year was $5000. How much insurance should be apportioned to the assembly department? A $3000 B $3500 C $3750 D $4000
Mark scheme: A
Q25 · Which statement about absorption costing is correct?
25 Which statement about absorption costing is correct? A It allocates fixed costs to a product when it is sold. B It allocates fixed costs to a product whether it is sold or not. C It increases the costs charged to the income statement. D It reduces the cost of the closing inventory.
Mark scheme: B
Q26 · What is equal to total revenue at the break-even point?
26 What is equal to total revenue at the break-even point? A total contribution B total fixed costs C total variable and fixed costs D total variable costs
Mark scheme: C
Q27 · A business manufactures and sells a single product
27 A business manufactures and sells a single product. It is sold for $10 per batch. The variable cost is $4 per batch. Fixed costs are absorbed based on a normal activity level of 5000 batches at $1 per batch. What is the profit, using marginal costing, if the company makes and sells 6000 batches? A $24 000 B $30 000 C $31 000 D $36 000
Mark scheme: C
Q28 · A company provides the following information for a year
28 A company provides the following information for a year. $ sales 400 000 total variable costs 240 000 total contribution 160 000 total fixed costs 100 000 profit for the year 60 000 To increase the sales volume by 20%, the company plans to reduce the selling price by 10%. Total fixed costs and variable cost per unit will remain unchanged. By how much will profit for the year change? A 8% increase B 10% decrease C 21.33% increase D 26.67% decrease
Mark scheme: D
Q29 · A business makes and sells a single product
29 A business makes and sells a single product. The budget for sales of 5000 units is as follows: per unit $ selling price 75.00 variable production cost 25.00 fixed production cost 18.90 variable selling expenses 5.00 The company plans to reduce the selling price to $60 per unit. How many extra units will need to be sold to break even? A 810 B 1050 C 2100 D 3150
Mark scheme: B
Q30 · Which statements about a budgetary control system are correct?
30 Which statements about a budgetary control system are correct? 1 It is a long-term plan. 2 It is a short-term plan. 3 It is qualitative. 4 It is quantitative. A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
Mark scheme: D
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.
7Reconciliation and verification4Traditional costing methods4Accounting for non-current assets3Costs and cost behaviour3Preparation of financial statements3Analysis and communication of accounting information2Budgeting and budgetary control2The accounting system1Types of business entity1What you needed in this session
Cambridge’s own grade thresholds for 2022 Oct/Nov, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.