Cambridge A Level Accounting 9706 — 2025 Oct/Nov Paper 3 · Variant 3

This document has 12 pages. Any blank pages are indicated. [Turn over DC (JP) 340784/3 © UCLES 2025 * 2 3 2 3 7 8 5 2 1 4 * ACCOUNTING 9706/33 Paper 3 Financial Accounting October/November 2025 1 hour 30 minutes You must answer on the question paper. You will need: Insert (enclosed) INSTRUCTIONS ● Answer all questions. ● Use a black or dark blue pen. ● Write your name, centre number and candidate number in the boxes at the top of the page. ● Write your answer to each question in the space provided. ● Do not use an erasable pen or correction fluid. ● Do not write on any bar codes. ● You may use an HB pencil for any diagrams, graphs or rough working. ● You may use a calculator. ● International accounting terms and formats should be used as appropriate. ● You should show your workings. INFORMATION ● The total mark for this paper is 75. ● The number of marks for each question or part question is shown in brackets [ ]. ● The insert contains all of the sources referred to in the questions. Cambridge International AS & A Level ,










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2 9706/33/O/N/25 © UCLES 2025 1 Read Source A in the insert. (a) Explain why a manufacturing business might decide to account for factory profit. … … … … [2] (b) Explain the recording of the provision for unrealised profit in the statement of financial position. … … … … [2] (c) Calculate the rate of factory profit applied in 2024. … … … … … … … … … … … … [6] * 0000800000002 * ,










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3 9706/33/O/N/25 © UCLES 2025 [Turn over (d) Calculate the profit for the year ended 31 December 2024. Start your answer with the gross profit shown in information point 5. … … … … … … … … … … … … … … … … [8] * 0000800000003 * ,










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4 9706/33/O/N/25 © UCLES 2025 Additional information Faizan has been contacted by a new customer who wishes to place a special order. This order would increase sales volume by 50%, but Faizan’s business is already working at 90% capacity. (e) Discuss the factors Faizan should consider before responding to the new customer. Support your answer by considering two ways in which he could fulfil the order. … … … … … … … … … … … … … … … … … … [7] [Total: 25] * 0000800000004 * ,










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5 9706/33/O/N/25 © UCLES 2025 [Turn over 2 Read Source B in the insert. (a) Complete the following table to calculate the profit for each six-month period and the profit for the year ended 31 December 2024. January to June July to December Full year 2024 $ $ $ Revenue Cost of sales Gross profit Wages and salaries Rent Depreciation Other expenses Profit Workings: [10] * 0000800000005 * ,










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6 9706/33/O/N/25 © UCLES 2025 (b) Discuss whether the decision to admit Sami into the partnership has benefited Aimee and Benny. … … … … … … … … … … [5] (c) Calculate the total income for Sami for the six-month period ended 31 December 2024. … … … … … … … … … … … … … … … … [5] * 0000800000006 * ,










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7 9706/33/O/N/25 © UCLES 2025 [Turn over Additional information To obtain all the capital he introduced into the partnership, Sami took out a long-term loan which was secured on his family home. Interest on this loan was payable at the rate of 8% per annum. (d) Evaluate whether or not Sami’s decision to join the partnership has benefited him. Justify your answer. … … … … … … … … … … … … [5] [Total: 25] * 0000800000007 * ,










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8 9706/33/O/N/25 © UCLES 2025 3 Read Source C in the insert. (a) Calculate, to two decimal places, the following ratios. (i) dividend per share in 2024 … … [1] (ii) dividend cover in 2024 … … [1] (iii) gearing at 31 December 2024. … … … … … [2] Additional information The directors believed that if the company invested $220 000 in new non-current assets on 1 January 2025 then the profit from operations would increase by 15%. They had considered two options for raising the necessary funds. Option 1 To take out a long-term bank loan of $220 000, at an annual interest rate of 10%. The company would continue to pay one dividend a year but would increase the dividend per share by $0.01. Option 2 To raise $220 000 by issuing 160 000 new ordinary shares of $1 each at a premium. These shares would be eligible to receive the annual dividend, but the dividend per share would remain at the 2024 level. * 0000800000008 * ,










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9 9706/33/O/N/25 © UCLES 2025 [Turn over (b) Calculate the expected annual profit from operations if the investment in new non-current assets takes place. … … … … … [2] (c) Calculate, to two decimal places, the dividend cover in 2025 and the gearing ratio at 31 December 2025 for each option. Option 1 Option 2 Dividend cover Gearing ratio Workings: [14] * 0000800000009 * ,










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10 9706/33/O/N/25 © UCLES 2025 Additional information The directors decided to implement Option 1. (d) Assess whether or not the directors made the right decision in choosing Option 1. Justify your answer. … … … … … … … … … … … … … … … [5] [Total: 25] * 0000800000010 * ,










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12 9706/33/O/N/25 © UCLES 2025 Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge. BLANK PAGE * 0000800000012 * ,









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This document consists of 18 printed pages. © Cambridge University Press & Assessment 2025 [Turn over Cambridge International AS & A Level ACCOUNTING 9706/33 Paper 3 Structured Questions October/November 2025 MARK SCHEME Maximum Mark: 150 Published This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge International will not enter into discussions about these mark schemes. Cambridge International is publishing the mark schemes for the October/November 2025 series for most Cambridge IGCSE, Cambridge International A and AS Level components, and some Cambridge O Level components.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 2 of 18 Generic Marking Principles These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alon gside the specific content of the mark scheme or generic level descriptions for a question. Each question paper and mark scheme will also comply with these marking principles. GENERIC MARKING PRINCIPLE 1: Marks must be awarded in line with: • the specific content of the mark scheme or the generic level descriptors for the question • the specific skills defined in the mark scheme or in the generic level descriptors for the question • the standard of response required by a candidate as exemplified by the standardisation scripts. GENERIC MARKING PRINCIPLE 2: Marks awarded are always whole marks (not half marks, or other fractions). GENERIC MARKING PRINCIPLE 3: Marks must be awarded positively: • marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate • marks are awarded when candidates clearly demonstrate what they know and can do • marks are not deducted for errors • marks are not deducted for omissions • answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the question as indicated by the mark scheme. The meaning, however, should be unambiguous. GENERIC MARKING PRINCIPLE 4: Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level descriptors.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 3 of 18 GENERIC MARKING PRINCIPLE 5: Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may be limited according to the quality of the candidate responses seen). GENERIC MARKING PRINCIPLE 6: Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thre sholds or grade descriptors in mind.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 4 of 18 Social Science-Specific Marking Principles (for point-based marking) 1 Components using point-based marking: • Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer shows confusion. From this it follows that we: a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark scheme requires a specific term) b DO credit alternative answers/examples which are not written in the mark scheme if they are correct c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …). d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used wrongly.) e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested. This applies equally to ‘mirror statements’ (i.e. polluted/not polluted). g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion) 2 Presentation of mark scheme: • Slashes (/) or the word ‘or’ separate alternative ways of making the same point. • Semi colons (;) bullet points (•) or figures in brackets (1) separate different points. • Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark (except Accounting syllabuses where they indicate negative numbers).

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 5 of 18 3 Calculation questions: • The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark for each answer • If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown. • Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivale nt stages. • Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary an d any exceptions to this general principle will be noted. 4 Annotation: • For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks have no defined meaning for levels of response marking. • For levels of response marking, the level awarded should be annotated on the script. • Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners who marked that paper.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 6 of 18 Annotations guidance for centres Examiners use a system of annotations as a shorthand for communicating their marking decisions to one another. Examiners are trained during the standardisation process on how and when to use annotations. The purpose of annotations is to inform the standard isation and monitoring processes and guide the supervising examiners when they are checking the work of examiners within their team. The meaning of annotations and how they are used is specific to each component and is understood by all examiners who mark the component. We publish annotations in our mark schemes to help centres understand the annotations they may see on copies of scripts. Note that there may not be a direct correlation between the number of annotations on a script and the mark awarded. Similarly, the use of an annotation may not be an indication of the quality of the response. The annotations listed below were available to examiners marking this component in this series. Annotations Annotation Meaning Correct and relevant point made in answering the question. Incorrect point or error made. Two statements are linked. Repeat An extraneous figure No working shown Addition error (Arithmetic error) Required item 1 Required item 2 Own figure

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 7 of 18 Annotation Meaning Evaluation Not answered question Benefit of the doubt given. Noted but no credit given Highlight Highlight Off page Comment Off page comment

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 8 of 18 Abbreviations and guidance The following abbreviations may be used in the mark scheme: OF = own figure. The answer will be marked correct if a candidate has correctly used their own figure from a previous part or calculation. W = working. The working for a figure is given below. Where the figure has more than one mark associated with it, the working will show where individual marks are to be awarded. CF = correct figure. The figure has to be correct i.e. no extraneous items have been included in the calculation Extraneous item = an item that should not have been included in a calculation, including indirect expenses such as salaries in calculation of gross profit when there is one OF mark for gross profit’ Curly brackets, }, are used to show where one mark is given for more than one figure. If the figures are not adjacent, each is marked with a curly bracket and a symbol e.g. }* row = all figures in the row must be correct for this mark to be awarded Marks for figures are dependent on correct sign/direction Accept other valid responses. This statement indicates that marks may be awarded for answers that are not listed in the mark scheme but are equally valid.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 9 of 18 Question Answer Marks 1(a) Explain why a manufacturing business might decide to account for factory profit. To assess how successful its manufacturing operations have been (1) by comparing the production cost with the buy-in cost (1). Accept other valid responses. 2 1(b) Explain the recording of the provision for unrealised profit in the statement of financial position. The closing balance on the account is deducted from inventory of finished goods (1) in the current asset section (1) to bring the value back to cost (1) which avoids profit being recognised before it is earned (1). Accept other valid responses. Max 2 2 1(c) Calculate the rate of factory profit applied in 2024. $ cost of raw material consumed W1 59 400 (1) direct costs 23 400 (1) factory overheads W2 37 600 (1) increase in work in progress (400) (1) cost of production 120 000 (1)OF rate of factory profit W3 20% (1)OF W1 2 300 + 1 200 + 57 900 – 2 000 = 59 400 W2 13 200 + 18 400 + 6 000 = 37 600 W3 (144 000 – 120 000)/120 000  100% = 20% 6

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 10 of 18 Question Answer Marks 1(d) Calculate the profit for the year ended 31 December 2024. Start your answer with the gross profit shown in the information item 5. $ gross profit 126 620 factory profit W1 24 000 (1)OF administrative expenses W2 (42 180) (1) distribution costs W3 (26 230) (1) provision for unrealised profit W4 (420) (3) finance costs (6 100) (1) profit for the year 75 690 (1)OF W1 120 000  20% = 24 000 W2 30 180 + 12 000 = 42 180 W3 21 830 + 4 400 = 26 230 W4 opening balance = 4 140  15/115 = 540 (1) closing balance = 5 760  20/120 = 960 (1)OF increase in provision (expense) = 420 (1)OF Accept other presentations 8

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 11 of 18 Question Answer Marks 1(e) Discuss the factors Faizan should consider before responding to the new customer. Support your answer by considering two ways in which he could fulfil the order. General comments (Max 3) Faizan should set the selling price such that the order would be profitable. (1) It may increase his profile in the industry. (1) The customer may become a regular customer. (1) The rate of profit on this order may be higher or lower than the rate of factory profit. (1) Max 4 for any two of the following: Increasing production capacity Additional factory space (1) and the employment of more staff (1) should be considered. There will be no need for these resources if this is a one-off order. (1) Buying in instead of manufacturing Faizan must consider the quality / timely delivery of goods if outsourcing. (1) The new customer may be able to buy the goods straight from the supplier. (1) The buy in price should be compared to the manufacturing cost. (1) The contribution per unit may change. (1) Reducing sales to regular customers This may cause a loss of goodwill / bad publicity. (1) The selling price for the bulk order may be lower than the usual selling price hence reducing profit per unit. (1) The customers may not come back once the special order is finished. (1) The bulk order may give rise to a saving in administrative costs compared to multiple small orders. (1) Accept other valid responses 7

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 12 of 18 Question Answer Marks 2(a) Complete the following table to calculate the profit for each six-month period and the profit for the year ended 31 December 2024. Jan-Jun $ Jul-Dec $ Full year $ Revenue W1 150 000 (1) 216 000 (1) 366 000 Cost of sales W2 100 000 144 000 244 000 (1)OF row Gross profit 50 000 72 000 122 000 Wages and salaries W3 16 100 (1) 17 400 (1) 33 500 Rent 6 200 6 600 12 800 (1) row Depreciation W4 4 200 (1) 4 600 (1) 8 800 Other expenses W5 15 000 15 000 30 000 (1)OF row Profit 8 500 28 400 36 900 (1)OF row W1 revenue is split in the ratio 75: (90  1.2) = 75:108 366 000  75/183 = 150 000 366 000  108/183 = 216 000 W2 150 000  2/3 = 100 000 216 000  2/3 = 144 000 W3 16 600 + 400 – 900 = 16 100 17 100 + 700 – 400 = 17 400 W4 84 000  0.10  6/12 = 4 200 ((84 000 – 13 800 – 4 200) + 26 000)  0.10  6/12 = 4 600 W5 85 100 – 33 500 – 12 800 – 8 800 = 30 000 30 000  6/12 = 15 000 10

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 13 of 18 Question Answer Marks 2(b) Discuss whether the decision to admit Sami into the partnership has benefited Aimee and Benny. Profit has been much higher since Sami was admitted/ Aimee and Benny’s total share of profit is higher in the second six months (1). Their capital/interest on capital has increased considerably (1). A large proportion of the increase in profit is due to the increase in the selling price (1), which it seems would have occurred whether Sami was admitted or not (1). Another reason for the increase in profit is the increase in units sold (1) which may be due to the involvement of Sami or may be due to seasonal effects (1). The partnership has more funds available for investment (1). Aimee and Benny will find it easier to run the business in cases of sickness or holidays/there may be difficulties in decision making (1). Accept other valid responses. Max 5 5

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 14 of 18 Question Answer Marks 2(c) Calculate the total income for Sami for the six-month period ended 31 December 2024. $ Profit for the period 28 400 (1)OF Interest on capital Aimee 10%  6/12  76000 (3 800) Benny 10%  6/12  56000 (2 800) Sami 10%  6/12  44000 (2 200) (1) 8 800 Residual profit 19 600 (1)OF Shares of profit Aimee 40% 7 840 Benny 40% 7 840 Sami 20% 3 920 (1)OF 19 600 Total for Sami 6 120 (1)OF 5

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 15 of 18 Question Answer Marks 2(d) Evaluate whether or not Sami’s decision to join the partnership has benefited him. Justify your answer. Advantages (Max 2) His total share of profit is greater than the interest payable (1). He may have been able to make drawings more than the interest to enable him to pay it (1). He will benefit from future increases in value of non-current assets / increases in profit. (1). Disadvantages (Max 2) The interest on his loan for the six months is $2000 (1). If the partnership does not prosper Sami would lose his investment and the family home (1). His share of profit may not reward him adequately for the hours he may have put into the business / he may have had to forego a salary elsewhere (1). Decision supported with a comment (1) Accept other valid responses 5 Question Answer Marks 3(a)(i) Calculate, to two decimal places, the following ratios. dividend per share 12 000/200 000 = $0.06 (1) 1 3(a)(ii) Calculate, to two decimal places, the following ratios. dividend cover 60 000/12 000 = 5 times (1) 1

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 16 of 18 Question Answer Marks 3(a)(iii) Calculate, to two decimal places, the following ratios. gearing ratio 300 000 / (300 000 + 335 200) (1)  100 = 47.23% (1)OF 2 3(b) Calculate the expected annual profit from operations if the investment in new non -current assets takes place. $ 2024 profit for the year 60 000 Debenture interest (300 000  0.08) 24 000 2024 profit from operations 84 000 (1) Increase (15%) 12 600 Expected profit from operations 96 600 (1)OF 2

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 17 of 18 Question Answer Marks 3(c) Calculate, to two decimal places, the dividend cover in 2025 and the gearing ratio at 31 December 2025 for each option. Option 1 Option 2 Dividend cover 3.61 times (3)OF 3.36 times (3)OF Gearing ratio 58.31% (4)OF 33.11% (4)OF Workings Option 1 Option 2 Dividend cover Profit for the year = 96 600 (OF) – 24 000 – 22 000 = 50 600 Dividend = 12 000  7/6 = 14 000 50 600 (1)OF ÷ 14 000 (1) = 3.61 times (1)OF Profit for the year = 96 600 (OF) – 24 000 = 72 600 Dividend = 360 000  0.06 = 21 600 72 600 (1)OF ÷ 21 600 (1) = 3.36 times (1)OF Gearing ratio (300 000 + 220 000) (1) ÷ (300 000 + 220 000) + 335 200 + 50 600 (1)OF – 14 000 (1)OF  100 (520 000 ÷ 891 800)  100 = 58.31% (1)OF 300 000 (1) ÷ 300 000 + 335 200+ 220 000 +72 600 (1)OF – 21 600 (1)OF  100 =(300 000 ÷ 906 200)  100 = 33.11% (1)OF 14

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 18 of 18 Question Answer Marks 3(d) Assess whether or not the directors made the right decision in choosing Option 1. Justify your answer. Advantages of option 1 (Max 2) There was no dilution of control (1). The loan can be paid back/no permanent capital is involved (1). The loan could be negotiated with certainty but there was no assurance that all the shares would be sold (1). Dividend cover is better/reduces less than under option 2 which may be more reassuring to shareholders (1). Minimal increase in dividends (1). Disadvantages of option 1 (Max 2) The increase in interest is greater than the increase in profit from operations/profit reduces (1). The company becomes highly geared (1). Option 2 would have reduced gearing / have a lower gearing ratio than option 1 (1). Interest has to be paid whether or not profit is made (1). Loan may require security (1). Business has become riskier (1). Dividends have had to be increased to compensate shareholders for the extra risk (1). Decision supported with a comment (1) Accept other valid responses 5