Practice MCQsBuild a paperTopical banksYearly papersBuild a paperPricing
Topical›Accounting 9706›Financial accounting (AS Level)›Types of business entity›Paper 1

Types of business entity — Paper 1 · A Level Accounting 9706

1.1· 296 questions · 296 marks · 355 min · 2006–2025· Multiple choice

Every Cambridge A Level Accounting Paper 1 question on types of business entity, laid out as 68 A4 pages with the mark scheme below. Nothing is left out. Free to read, no account.

QuestionsMark scheme
Different topic or paper

Questions68 pages

Question 1: A partnership maintains both capital and current accounts for its partners. What is the correct accounting entry for recording interest on …Question 2: Dele and Iyabo are partners in a business and share profits in the ratio of 3:1. Their net profit is $80 000. The following information is …Question 3: A company has issued non-cumulative preference shares and ordinary shares. Which statement is correct? A If no preference dividend is paid,…1 / 68
Question 4: Hilary and Lee commenced in partnership on 1 January 2005. There was no partnership agreement concerning the division of interest on the lo…Question 5: A director-owned company needs additional funds. Which method of finance might lead to a reduction of the director’s control of the busines…Question 6: The following information is available for the partnership of Atul and Mansoor at 31 December: $ net profit before appropriations 60 000 sa…Question 7: A company makes a bonus issue of shares. What is the effect on the net assets and the reserves in the balance sheet? net assets reserves A …2 / 68
Question 8: What appears as a credit entry in the appropriation account of a partnership? A goodwill B interest on capital C net trading profit D partn…Question 9: A company’s capital is $ ordinary shares of $1.00 each 200 000 share premium account 80 000 revenue reserves 160 000 Changes now to be made…3 / 68
Question 10: The table shows how a property appears in the balance sheet. $ land and buildings 100 000 accumulated depreciation (40 000) net book value …Question 11: When a businessman introduces capital into his business, the transaction is debited in the cash book and credited to his capital account. O…Question 12: How can net profit be calculated? A Closing Capital + Drawings – Additional Capital – Opening Capital B Closing Capital – Drawings + Additi…Question 13: Which transaction would appear in both the receipts and payments account and the income and expenditure account of a cricket club? A the cl…4 / 68
Question 14: Information about the final accounts of a partnership is given. $ net profit before interest 160 000 interest on bank loan 14 000 interest …Question 15: What is the effect on a company’s balance sheet of issuing bonus shares? A the bank balance will be increased B the long term liabilities w…Question 16: A company, with an existing issued share capital of 200 000 ordinary shares of $0.50 each, made a one for four bonus issue. This was later …Question 17: A business sells some of its stock for $500 on credit to a customer. The stock originally cost $600. What is the effect of this transaction…5 / 68
Question 18: X and Y are partners in a business. X receives an annual salary of $5000 from the partnership and the balance of profits and losses is shar…Question 19: A shareholder sells some ordinary shares for more than he paid for them. What is the effect on the company balance sheet? ordinary share ca…Question 20: At the beginning of the year a company has authorised share capital of 800 000 ordinary shares of $0.25 each and an issued share capital of…Question 21: A business is separate from its owner. This results in only business transactions being recorded in the accounts. Which accounting principl…Question 22: A new business was established with opening capital of $15 000. At the end of the year net assets were $20 000. During the year the proprie…6 / 68
Question 23: X and Y are in partnership. Their profit and loss appropriation account shows the following. X Y total $ $ $ interest on capital 1 600 1 80…Question 24: A new business was established with opening capital of $15 000. At the end of the year net assets were $20 000. During the year the proprie…Question 25: The summarised balance sheets for a business for two years are as follows. year 1 year 2 $ $ fixed assets 9 000 12 000 current assets 6 000…Question 26: X and Y are in partnership. Their profit and loss appropriation account shows the following. X Y total $ $ $ interest on capital 1 600 1 80…7 / 68
Question 27: An extract from a company’s balance sheet is given. $000 issued ordinary share capital 250 issued preference shares 180 profit and loss acc…Question 28: An extract from a company’s balance sheet shows the following. $000 issued ordinary shares of $0.25 each 600 share premium account 150 reta…Question 29: A company’s Balance Sheet at 31 December 2008 includes: $ Ordinary shares of $1.00 12 000 Profit and Loss Account 4000 In January 2009, the…8 / 68
Question 30: The table shows balances at the end of a year. $ expenses prepaid 6 000 expenses accrued 4 000 bank overdraft 11 500 trade creditors 13 400…Question 31: The personal spending of the owner of a business is not recognised as a business expense. Which accounting principle is being applied? A bu…Question 32: A business obtained a machine by means of a hire purchase agreement. It showed the machine in its balance sheet at the cash price of $30 00…Question 33: A firm has incomplete accounting records. The following figures are known. $ capital at start of year 20 000 owner’s drawings 7 000 capital…9 / 68
Question 34: X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3. Y is entitled to a salary of $18 000 per annum. Partners r…Question 35: L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash…Question 36: A company is set up with an authorised share capital of $3 million. It plans to purchase immediately a factory for $1 million. Preliminary …Question 37: At 1 January 2009 the capital structure of a company was as follows. $ issued share capital 100 000 ordinary shares of $1 each 100 000 shar…10 / 68
Question 38: When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are redeemed by the company a…Question 39: The personal spending of the owner of a business is not recognised as a business expense. Which accounting principle is being applied? A bu…Question 40: X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3. Y is entitled to a salary of $18 000 per annum. Partners r…Question 41: L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash…Question 42: A company is set up with an authorised share capital of $3 million. It plans to purchase immediately a factory for $1 million. Preliminary …11 / 68
Question 43: At 1 January 2009 the capital structure of a company was as follows. $ issued share capital 100 000 ordinary shares of $1 each 100 000 shar…Question 44: When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are redeemed by the company a…Question 45: X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3. Y is entitled to a salary of $18 000 per annum. Partners r…Question 46: L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash…12 / 68
Question 47: A company is set up with an authorised share capital of $3 million. It plans to purchase immediately a factory for $1 million. Preliminary …Question 48: At 1 January 2009 the capital structure of a company was as follows. $ issued share capital 100 000 ordinary shares of $1 each 100 000 shar…Question 49: When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are redeemed by the company a…Question 50: Information relating to a club’s subscription is: $ received during the year 20 000 paid in advance in the previous year 2 000 paid in adva…13 / 68
Question 51: X and Y are in partnership, sharing residual profits and losses equally after the payments below are made. 1 2 % interest is charged on par…Question 52: X started a business 3 years ago and now has a capital of $175 000. Over that period his profits have been $73 000 and his drawings $52 000…Question 53: What does the application of the accounting principle of consistency ensure? A that all losses are provided for B that assets are recorded …Question 54: X and Y are in partnership, sharing residual profits and losses equally after the payments below are made. 1 2 % interest is charged on par…14 / 68
Question 55: X started a business 3 years ago and now has a capital of $175 000. Over that period his profits have been $73 000 and his drawings $52 000…Question 56: X and Y are in partnership, sharing residual profits and losses equally after the payments below are made. 1 2 % interest is charged on par…Question 57: The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 3…Question 58: A partnership provides the following financial information for the year ended 30 June 2011. $000 profit from operations 240 bank interest p…15 / 68
Question 59: A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The own…Question 60: The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 3…Question 61: A partnership provides the following financial information for the year ended 30 June 2011. $000 profit from operations 240 bank interest p…Question 62: The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 3…16 / 68
Question 63: A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The own…Question 64: X, Y and Z are in partnership, sharing profits in the ratio 2 : 2 : 1. X is allowed an annual salary of $10 000. Y has made a loan to the p…Question 65: What should companies not show as non-current assets in their balance sheets? A plant bought on hire purchase B plant fully depreciated C p…Question 66: If partners do not draw up a partnership agreement, the provisions of the Partnership Act apply. Which statement is true as a provision of …Question 67: X and Y have been business partners for several years, sharing profits in the ratio of 2:1. Y now wishes to retire and leave X to continue …Question 68: What occurs in a rights issue of shares? A Any premium on the issue is added to a capital reserve. B Any premium on the issue is added to a…17 / 68
Question 69: X, Y and Z are in partnership, sharing profits in the ratio 2 : 2 : 1. X is allowed an annual salary of $10 000. Y has made a loan to the p…Question 70: An investor owns 10 000 5 % preference shares in Howdo Limited. One year Howdo does not have enough profits to pay the preference dividend.…Question 71: The table shows information about four partners in a partnership. Which partner has the greatest net reward from interest on capital and in…Question 72: In which account should a partner’s drawings appear in the partnership’s end-of-year financial statements? A appropriation account B income…Question 73: A company has an issued share capital of 200 000 6 % cumulative preference shares of $1 each fully paid and 800 000 ordinary shares of $1 e…18 / 68
Question 74: A non-current asset costing $206 000, with a net book value of $131 000, is revalued to $275 000. How should the revaluation be recorded? A…Question 75: A sole trader owns a vehicle valued at $4000 for his own use and a vehicle valued at $2500 for business use. On 1 April 2012 he sold the bu…Question 76: The table shows information about four partners in a partnership. Which partner has the greatest net reward from interest on capital and in…Question 77: X and Y are in partnership sharing the profits equally. No goodwill account is maintained in the accounts. Z joins the partnership and pays…19 / 68
Question 78: Which statements about non-profit making organisations are correct? 1 A club or society may engage in trading activities. 2 A club or socie…Question 79: A company has an issued share capital of 200 000 6 % cumulative preference shares of $1 each fully paid and 800 000 ordinary shares of $1 e…Question 80: The following items appear in the books of a builder. $ rent of own home 3 000 rent of builder’s yard 2 500 housekeeping expenses 2 000 ove…Question 81: Which statement is correct? A All reserves are created by a transfer from retained earnings. B Revaluation reserves appear in the non-curre…20 / 68
Question 82: A trader provided the following information. $ gross profit 3 000 motor expenses for repairs to private motor car 500 wages paid to staff 1…Question 83: In the absence of a partnership agreement partners are: 1 entitled to interest on the capitals at 5 % per annum 2 entitled to interest on l…Question 84: X and Y are in partnership. Their income statement and appropriation account shows the following. $ depreciation of non-current assets 5 00…Question 85: A company raises cash by issuing 8 % debentures. What is the effect on the company’s profits and net current assets in the year of issue? p…21 / 68
Question 86: A company is financed by 25 000 $1 ordinary shares. The company wishes to finance expansion by issuing 5000 $1 ordinary shares at a premium…Question 87: Which item appears in the financial statements of a limited company but not in those of a sole trader or partnership? A dividends paid B ot…Question 88: Which items would appear in a partnership’s appropriation account? 1 partners’ interest on capital 2 partners’ introduction of new capital …Question 89: A business does not keep complete accounting records. The following information is known: $ capital at start of year 52 000 capital at end …Question 90: A company has issued non-cumulative preference shares and ordinary shares. Which statement is correct? A If no preference dividend is paid,…22 / 68
Question 91: A company has an authorised share capital of 1 000 000 $0.50 ordinary shares. Its issued share capital is 800 000 shares. An ordinary divid…Question 92: Which of these statements are correct? 1 A share premium account is classified as a reserve. 2 A revaluation reserve may be negative if a n…Question 93: Which statement regarding partnerships, constituted under a partnership agreement, is always correct? A Each partner is paid interest on ca…Question 94: X and Y are in partnership, sharing profits and losses in the ratio of 2:1. X had taken goods costing $1500 from the business for his own u…Question 95: Which statements about debentures and ordinary shares are correct? debentures ordinary shares A can be issued at a premium are never issued…23 / 68
Question 96: A club’s income and expenditure account for 2012 showed rent and rates of $4000. On 31 December 2012 rent owing was $600 and rates paid in …Question 97: X and Y are in partnership sharing profits equally. They have capital account balances of $30 000 and $80 000 respectively. Z joins the par…Question 98: What do the reserves of limited companies include? A debentures B ordinary shares C preference shares D share premiumQuestion 99: Which stakeholder in a limited company has a voting right? A company accountant B debenture holder C ordinary shareholder D preference shar…Question 100: The summarised statements of financial position for a business for two years are as follows. year 1 year 2 $ $ non-current assets 9 000 12 …24 / 68
Question 101: During the year ended 31 December 2012 a business made a profit of $31 000. A dividend of 8% was paid on the 200 000 ordinary shares of $0.…Question 102: X and Y have been in partnership for some years sharing profits in the ratio of 3 : 2. Z joins the partnership and introduces cash of $40 0…Question 103: Which statement about a receipts and payments account is correct? A Capital expenditure is not included. B Figures are adjusted for prepaym…Question 104: An extract from a statement of financial position is as follows. $ ordinary share capital 50 000 general reserve 10 000 retained earnings 4…25 / 68
Question 105: The table shows balances at the end of a year. $ expenses prepaid 6 000 expenses accrued 4 000 bank overdraft 11 500 trade payables 13 400 …Question 106: L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash…Question 107: A new business was established with opening capital of $15 000. At the end of the year net assets were $20 000. During the year the proprie…Question 108: S and T are in partnership sharing profits and losses in the ratio 3 : 2. Their fixed capital accounts have balances of S $80 000 and T $60…26 / 68
Question 109: Which account is adjusted for the valuation of goodwill? A appropriation B bank C capital D premisesQuestion 110: A shareholder in a company sells his shares to another person. What is the effect on the share capital account of the company? A It is incr…Question 111: A business sells computers. When they value their inventory they exclude the value of the inventory that is over one year old, as they may …Question 112: X and Y are in partnership sharing residual profits and losses in the ratio 7 : 3. Their fixed capital accounts have balances of X $40 000;…27 / 68
Question 113: X, Y and Z are in partnership, sharing profits, X 40%, Y 20% and Z 40%. Existing goodwill is shown in the ledger as $10 000. The partners a…Question 114: X becomes a partner in a business receiving a 25% share in the profits. He pays in $60 000 as his capital. The goodwill of the business is …Question 115: The following information relates to a company’s non-current assets at 31 December. cost price disposal value $ $ motor vehicles 25 000 18 …28 / 68
Question 116: W, X, Y and Z are in partnership. What would be shown in the partnership appropriation account? A drawings made by W B goods taken for the …Question 117: When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are issued at a price below n…Question 118: Fred and Perry are in business sharing profits and losses in the ratio 3 : 1. Fred’s capital account balance is $90 000 and Perry’s is $60 …Question 119: A company issues 500 000 ordinary shares of $1 each for $3 each and $250 000 6% debentures. By which amount will the net assets of the comp…Question 120: An investor owns 10 000 5% preference shares in Howdo Limited. One year Howdo Limited does not have enough profits to pay the preference di…29 / 68
Question 121: Which items would appear in a partnership’s appropriation account, in the absence of a partnership agreement? 1 profit for the year 2 partn…Question 122: A partnership makes a profit for the year of $108 000 before taking account of appropriations. Other financial information is as follows. X…Question 123: A shareholder sells some shares for less than he paid for them. What happens to the share capital of the company? A decreases by the nomina…Question 124: Which shares are entitled to have arrears of dividend carried forward to future years? A cumulative preference shares B non-cumulative pref…Question 125: A company issues shares at a premium. Which effect does the issue have on the company’s statement of financial position? net assets share c…30 / 68
Question 126: A company’s financial statements include the following. $ profit before interest 200 000 profit for the year 140 000 issued share capital 5…Question 127: A sports club maintains a life subscriptions account. How should the balance on the account appear in the financial statements? A asset in …Question 128: X and Y are in partnership sharing profits equally. They admit Z who brings in $10 000 capital and takes 3 1 share of the profit. Goodwill…Question 129: A company has ordinary share capital of $80 000. Each share has a nominal value of $0.25. A dividend of $0.06 per share is paid. What is th…Question 130: A company issues for cash 50 000 shares of $5 each at a premium of $15 each and $300 000 4% debentures. By which amount will the net assets…31 / 68
Question 131: A shareholder sells some ordinary shares for more than he paid for them. What is the effect on the company statement of financial position?…Question 132: Frank and George have been in partnership for a number of years, sharing profits and losses in the ratio 2 : 1. They decide to admit Harry …Question 133: Which item will not appear in the income statement of a sole trader? A accounting charges B bank loan interest C director’s fee D hire char…Question 134: What is not part of a company’s equity? A debentures B ordinary share capital C retained earnings D share premium32 / 68
Question 135: Partnership capitals are $60 000 for X and $90 000 for Y. The partnership agreement provides for interest on capitals at 10% per annum, but…Question 136: Z is admitted as a new partner in the partnership of X and Y. He brings the following into the business. $ cash 20 000 inventory 6 000 vehi…Question 137: Radis Limited pays dividends on ordinary shares in the range of 8% to 12% each year. The current dividend is $20 000. The directors do not …Question 138: Why are debentures usually secured on a company’s assets? A so that debenture holders can be certain of receiving their interest B so that …33 / 68
Question 139: Goodwill is adjusted in partners’ accounts when there is a change in the profit sharing ratio. How is this recorded? debit credit A capital…Question 140: The following information is available for a partnership at 31 December 2013. $ residual loss 3 000 total salaries to partners 5 000 total …Question 141: The following balances are extracted from the books of Juno Limited. 30 April 2014 30 April 2013 $ $ ordinary shares of $0.50 each 700 000 …Question 142: A company issues 1 000 000 ordinary shares of $1 each at a premium of 20%. Which value will be shown for ordinary shares in the statement o…Question 143: Which items increase when a company issues new shares? A equity and bank B equity and current liabilities C intangible assets and current l…34 / 68
Question 144: X Limited and Y Limited both started trading on 1 January 2001. Each year, both businesses had a profit from operations of $20 000. On 31 D…Question 145: Which rule does not apply in the absence of a partnership agreement? A interest on loans is charged at 6% per annum B no interest on capita…Question 146: The equity of a limited company is as follows. at 31 December 2012 at 31 December 2013 $ $ ordinary shares of $0.50 each 400 000 400 000 7%…Question 147: X is admitted to a partnership sharing 20% of its profits and losses. The goodwill of the firm is valued at $30 000. X is to pay $25 000 in…35 / 68
Question 148: The table shows an extract from the statement of financial position of a limited company at 30 June 2014. $ 4% debenture (2018 – 2019) 30 0…Question 149: The following information is available at the end of the financial year. $ net assets 850 000 drawings 47 300 loss for the year 135 600 Wha…Question 150: The following information has been taken from a summarised statement of financial position. $ non-current assets 175 000 current assets 45 …Question 151: Which item appears as a credit entry in the appropriation account of a partnership? A goodwill B interest on capital C partnership salaries…36 / 68
Question 152: Alice and Bharti have been in partnership sharing profits and losses in the ratio of 3 : 2. The balances on the partners’ capital accounts …Question 153: How is any premium on an issue of shares treated? A added to a capital reserve B added to a revenue reserve C deducted from a capital reser…Question 154: The following statement describes a type of preference share. ‘Shareholders are entitled to a fixed annual dividend with any unpaid dividen…Question 155: How should interest charged on a partner’s drawings account be treated? A credited to the appropriation account B credited to the income st…Question 156: Kay and Lay share profits and losses in the ratio of 3 : 1. Capital account balances are Kay $100 000 and Lay $84 000. There was no goodwil…37 / 68
Question 157: A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The own…Question 158: A business has the following assets and liabilities at the start of the year. a motor car valued at $2500 inventory which cost $4000 with a…Question 159: The provisions of the Partnership Act apply if partners do not draw up a partnership agreement. Which statement is true as a provision of t…Question 160: Adil and Bashir are in partnership sharing profits and losses in the ratio 2 : 1. Chandra joins the partnership and profits and losses are …Question 161: A motor vehicle retailer has the following transactions. 1 issue of shares 2 sale of motor vehicles 3 sale of surplus premises Which transa…38 / 68
Question 162: Which item appears as a reserve in a statement of financial position? A bank overdraft B provision for depreciation C provision for doubtfu…Question 163: Which entries are made to record interest on capital in partnership accounts? debit credit A appropriation account capital account B approp…Question 164: Two partners, X and Y, have a capital account of $10 000 each and share profits and losses equally. They agree to admit Z to the partnershi…Question 165: Information from a partnership’s accounts is shown. $ profit for the year before interest 15 000 interest on partner’s loan to the firm 1 0…Question 166: Which item will not be shown as part of the equity in the statement of financial position of a limited company? A debentures B ordinary sha…39 / 68
Question 167: Which items increase when a company issues new shares? 1 cash (and cash equivalents) 2 equity 3 non-current liabilities 4 retained earnings…Question 168: A depreciated non-current asset is revalued upwards. What is the effect of this on the statement of financial position? A Non-current asset…Question 169: Omar wishes to become a trader. He decides to buy an existing business in a good location. He pays more for the business than its net asset…Question 170: P joined the partnership of G and H. He brought into the business the following assets. non-current assets cost $25 000, valued at $38 000 …Question 171: X and Y have capital accounts of $50 000 each and share profits equally. They plan to admit Z into partnership. The new profit sharing rati…40 / 68
Question 172: David and Jane have been business partners for several years, sharing profits in the ratio of 2 : 1. Jane now wishes to retire. Her capital…Question 173: Which is not an appropriation of partnership profit? A interest on capital B interest on drawings C interest on loan D share of profitQuestion 174: A limited company intends to issue shares at a price above the nominal value. Which items, apart from bank balance, will be affected by the…Question 175: A company issues one million ordinary shares of $1 each at $1.30 per share. It also issues a debenture for $500 000. What is the increase i…Question 176: The statement of financial position showed the following balances at 31 December 2015. X Y $ $ capital accounts 20 000 10 000 current accou…41 / 68
Question 177: Smith and Jones are in partnership sharing profits and losses in the ratio 3 : 2 respectively. Profit for the year was $152 000. Smith was …Question 178: X, Y and Z have been in business sharing profits in the ratio 3 : 2 : 1. Y decided to retire at the end of the year when the balance on his…Question 179: A company has a bank balance of $20 000. The company’s equity and reserves are shown. $ ordinary shares of $0.50 each 10 000 capital reserv…Question 180: Which statement about rights issues is true? A Shares can be sold to anyone. B Shares can only be offered to existing shareholders. C Share…Question 181: A limited company's financial statements contain the following items. 1 bonus issue of ordinary shares 2 debenture interest 3 profit for th…42 / 68
Question 182: A company issued 25 000 ordinary shares of $0.50 each at a premium of 25%. They had a market value of $1.50 each. What is the value of ordi…Question 183: X and Y were in partnership sharing profit and losses equally. They then admitted Z into the partnership and profits and losses were still …Question 184: A and B were in partnership sharing profits and losses equally when they decided to retire. Details of the realisation are shown in the tab…Question 185: The statement of financial position showed the following balances at 31 December 2015. X Y $ $ capital accounts 20 000 10 000 current accou…43 / 68
Question 186: Smith and Jones are in partnership sharing profits and losses in the ratio 3 : 2 respectively. Profit for the year was $152 000. Smith was …Question 187: X, Y and Z have been in business sharing profits in the ratio 3 : 2 : 1. Y decided to retire at the end of the year when the balance on his…Question 188: A company has a bank balance of $20 000. The company’s equity and reserves are shown. $ ordinary shares of $0.50 each 10 000 capital reserv…Question 189: Which statement about rights issues is true? A Shares can be sold to anyone. B Shares can only be offered to existing shareholders. C Share…Question 190: A limited company's financial statements contain the following items. 1 bonus issue of ordinary shares 2 debenture interest 3 profit for th…44 / 68
Question 191: A company issued 25 000 ordinary shares of $0.50 each at a premium of 25%. They had a market value of $1.50 each. What is the value of ordi…Question 192: Abdul and Omar are in partnership. The following information has been extracted from their current accounts. Abdul Omar $ $ balances at 1 J…Question 193: J, H and P are in partnership. The profit for the year was $80 000. J is entitled to a partnership salary of $5000. They share profits in t…Question 194: X, Y and Z were partners sharing profits and losses equally. On 31 March 2014 Z retired and the net asset valuation showed a loss of $15 00…Question 195: Which statement about ordinary shares is not correct? A Shareholders receive return on investment before other investor groups. B They are …45 / 68
Question 196: An investor owns 10 000 5% preference shares in Howdo Limited. One year Howdo Limited does not have enough profits to pay the preference di…Question 197: The issued ordinary share capital of a company at the beginning of a period was $240 000 (nominal value $0.60 per share). A rights issue of…Question 198: In 2014 a company was entirely financed by its equity and reserves which total $1 000 000. Its return on capital employed was 28%. On 1 Jan…Question 199: A sole trader provides the following information. start of year end of year $ $ total assets 100 000 135 000 total liabilities excluding ow…46 / 68
Question 200: A partnership admits a new partner. Which statement is correct? A Profits will always be shared equally following the new partner’s admissi…Question 201: X, Y and Z are in partnership sharing the profits and losses in the ratio of 2 : 2 : 1. At 31 December the following information is availab…Question 202: The following information relates to a partnership. $ profit from operation 90 000 loan interest 3 200 interest on drawings 6 000 drawings …Question 203: A partnership earned an average profit during the year of $15 000 per month. Halfway through the year D and E were joined by a new partner …47 / 68
Question 204: Which statement regarding partnerships, constituted under a partnership agreement, is always correct? A Each partner is always paid interes…Question 205: X and Y are in partnership sharing profits and losses in the ratio 3 : 2 respectively. Z was introduced as a partner. Goodwill was valued a…Question 206: A and B are in partnership. The following information relates to 2015. $ profit before appropriation 88 000 interest on drawings: A 1 000 B…Question 207: Which statement is correct? A A bonus issue of shares will increase the amount of cash available to the company. B A rights issue of shares…48 / 68
Question 208: A limited company has an issued share capital of 300 000 $1 ordinary shares. It makes a bonus issue of one share for every three held. This…Question 209: The following information is available for a limited company which has 280 000 ordinary shares of $0.50 each. $ share premium 70 000 10% de…Question 210: The following balances related to Ladha’s business. at 31 March 2016 at 31 March 2015 $ $ total assets 388 000 345 000 total liabilities 84…Question 211: Why is goodwill adjusted in the books of account when a new partner is admitted? A A more accurate value of non-current assets is shown in …Question 212: A partnership revalues its non-current assets upwards. What are the ledger entries to record this? account to debit account to credit A non…49 / 68
Question 213: X and Y are in partnership. They admit Z as a new partner. The profit sharing ratio will be 2 : 1 : 1 respectively. Goodwill is valued at $…Question 214: Which facts about preference shares are correct? rate of dividends voting rights A fixed no B fixed yes C variable no D variable yesQuestion 215: The assets of a partnership were revalued when a partner retired. Which ratio is used to divide the surplus or deficit on revaluation? A ne…Question 216: X and Y are in partnership sharing profits and losses in the ratio 2 : 1 respectively. Capital account balances are X $80 000 and Y $50 000…Question 217: L, M and N were in partnership sharing profit and losses in the ratio 4 : 3 : 1 respectively. N retired from the partnership on 31 October …50 / 68
Question 218: A company makes a 1 for 4 bonus issue of ordinary shares. What happens to share capital and total equity? share capital total equity A incr…Question 219: A company has the following: 12 000 ordinary shares of $1 each 10% debenture $10 000 It made a loss of $15 000 for the year ended 31 Decemb…Question 220: Finn provides the following information. $ capital at the start of the year 19 800 profit for the year 24 000 drawings (cash) 19 500 drawin…Question 221: Which item is not taken into account when a partner joins a partnership? A balances on the partners’ current accounts B capital introduced …51 / 68
Question 222: Ali, Bharti and Chan were in partnership sharing profit and losses in the ratio 3 : 2 : 1. Bharti retired from the partnership on 30 June 2…Question 223: A partnership maintains both capital and current accounts for its partners. What is the correct accounting entry for recording interest on …Question 224: Which statement describes the treatment of purchased goodwill for a limited company? A a tangible non-current asset that can be amortised B…Question 225: A company’s equity is made up as shown. $ 100 000 ordinary shares of $0.25 each 25 000 share premium 3 000 retained earnings 8 000 The foll…52 / 68
Question 226: Which statement about ordinary shares is correct? A dividends on ordinary shares are an appropriation of profit B dividends on ordinary sha…Question 227: A company decided not to capitalise the purchase of a stapler for use in its office. Which accounting concept was the company applying? A c…Question 228: Where should a partner’s drawings be recorded? A appropriation account B income statement C partner’s capital account D partner’s current a…Question 229: X and Y were in partnership sharing profits equally. Z became a partner and all three partners shared profits equally. Goodwill was valued …Question 230: The personal spending of the owner of a business is not recognised as a business expense. Which accounting concept is being applied? A busi…53 / 68
Question 231: Why should non-current assets be revalued when a partner retires and a new partner is admitted? A so that the new partner gains from the in…Question 232: The table shows information about four partners in a partnership. Which partner has the greatest net reward from interest on capital and in…Question 233: A business does not keep complete accounting records. The following information is known for the year. $ capital at start 52 000 capital at…Question 234: A partnership maintains capital accounts and current accounts. Which statements are correct? 1 The capital accounts show the total amount o…54 / 68
Question 235: X, Y and Z had been in partnership, sharing profits and losses in the ratio of 2 : 2 : 1. On 1 January 2017, Y retired. The balances of his…Question 236: S and T are in partnership, sharing profits and losses in the ratio 2 : 1. The balances on their capital accounts at 31 March 2017 were: $ …Question 237: A partnership provides the following financial information for the year ended 30 June 2017. $ profit from operations 240 000 bank interest …55 / 68
Question 238: Which accounting entry could record the issue of bonus shares? debit credit A bank share capital B general reserve share capital C general …Question 239: From which accounts can a company pay dividends? 1 general reserve 2 retained earnings 3 revaluation reserve 4 share capital A 1 and 2 B 1 …Question 240: Which rule does not apply in the absence of a partnership agreement? A interest on loans is charged at 6% per annum B no interest on capita…Question 241: The partnership of Ravi and Tania, who shared profits equally, was dissolved. The capital accounts prior to dissolution were Ravi $50 000 a…Question 242: Partnership profit, $60 000, accrued evenly through the year ended 31 December 2017. Jim became a third partner on 31 March 2017. The partn…56 / 68
Question 243: X and Y are in partnership and revalue their assets as follows. revalued book value asset amount $ $ freehold property 50 000 71 000 fixtur…Question 244: The following statements relate to a revaluation account. 1 An entry on the credit side of the revaluation account means that a non-current…Question 245: X and Y were in partnership sharing profit and loss equally. Z was admitted to the partnership and it was agreed that profit and loss were …57 / 68
Question 246: L, M and N were in partnership sharing profits and losses in the ratio 3 : 2 : 1. M retired on 31 December 2017. At that date the balance o…Question 247: Which accounting concept is being applied when goods taken by an owner for own use are treated as drawings? A business entity B materiality…Question 248: When is a revaluation account prepared? 1 when a new partner is admitted 2 when an existing partner retires 3 when the partnership is sold …Question 249: Which items only appear on the credit side of a partner’s capital account? 1 goodwill in an agreed ratio split 2 opening balances 3 profit …Question 250: Why is the profit on revaluation credited to the capital accounts and not the current accounts of existing partners? A assets are long term…58 / 68
Question 251: X and Y were in partnership sharing profits and losses equally. When Z became a partner, profits continued to be shared equally and partner…Question 252: An inexperienced book-keeper has prepared the following appropriation account for the partnership of P and Q. $ $ profit as per income stat…Question 253: L and M are in partnership. The following information relates to the year ended 31 December 2017. L M $ $ drawings 20 000 30 000 interest o…59 / 68
Question 254: Joe is a sole trader. Which statement(s) relating to his business are not correct? 1 Joe can receive a bank loan for the business. 2 Joe’s …Question 255: The provisions of the Partnership Act apply if partners do not draw up a partnership agreement. Which statement is true as a provision of t…Question 256: X and Y are in partnership. Z was admitted to the partnership on 1 July 2018. It was also agreed that at that date: 1 Assets of the partner…Question 257: F and P are in business sharing profits and losses in the ratio 3 : 1. Their capital account balances are: $ F 90 000 P 60 000 B is introdu…60 / 68
Question 258: Which item is capital income? A bank interest received B proceeds from sale of business premises C rental income from property D sale of in…Question 259: An investor owns 5% preference shares in H Limited. One year H Limited does not have enough profits to pay the preference dividend. The inv…Question 260: Adil and Bashir were in partnership sharing profits and losses in the ratio 2 : 1. Chandra joins the partnership and profits and losses are…Question 261: How is a loss on realisation recorded when a partnership is dissolved? A Credit each partner’s capital account equally. B Debit each partne…61 / 68
Question 262: John and Brian are in partnership sharing profits and losses equally. John receives a salary of $2000 per annum. Brian loaned the business …Question 263: X is a sole trader. Which statement about X is correct? A Her accounts include both a capital and a current account. B She can receive an a…Question 264: Why might a sole trader form a partnership? 1 to enable the revaluation of business assets 2 to have the protection of limited liability 3 …Question 265: Which statement is correct in the absence of a partnership agreement? A Interest is charged on drawings at 5%. B Only one partner can have …Question 266: How would the following transactions affect the owner’s equity of a sole trader? paying the owner’s personal taking a long-term loan to mot…Question 267: 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 interes…62 / 68
Question 268: What will apply to a partnership where there is no partnership agreement? A Partners are entitled to interest on the capital they have cont…Question 269: The provisions of the Partnership Act apply if partners do not draw up a partnership agreement. Which statement is true as a provision of t…Question 270: X and Y are in partnership but do not have a partnership agreement. X had introduced twice as much capital as Y and made a loan to the part…Question 271: Owing to an issue with Question 16, it has been removed from the question paper.Question 272: Owing to an issue with Question 8, it has been removed from the question paper.Question 273: Why did Amitav prefer to form a partnership with Lennie rather than set up as a sole trader? A Amitav was certain they could work without d…63 / 68
Question 274: Joe is a sole trader. Which statements relating to his business are not correct? 1 Joe can receive a bank loan for the business. 2 Joe’s dr…Question 275: Which row correctly describes an advantage and a disadvantage of a partnership? advantage disadvantage A limited liability risk of disagree…Question 276: A partnership maintains separate capital accounts and current accounts. Which statements are correct? 1 The capital accounts represent the …Question 277: What are advantages of being in a partnership? 1 All partners have limited liability. 2 Responsibility for running the business is shared. …Question 278: In the absence of a partnership agreement, the Partnership Act 1890 might apply. Which statement is not correct about the provisions of the…64 / 68
Question 279: Which sources are external short-term sources of finance for a limited company? 1 bank overdraft 2 retained earnings 3 share capital 4 trad…Question 280: Which statements describe the advantages of a rights issue of shares? 1 Additional funds for a company can be raised cheaply. 2 Control of …Question 281: Which list is a long-term source of additional funds for a limited company? A bank loan, bonus issue of shares, debenture issue B bank loan…Question 282: A partnership agreement only provides for interest on capital at a rate of 6% and interest on drawings at a rate of 8%. What will be the in…Question 283: L and M are in partnership. The following information relates to the financial year. L M $ $ drawings 20 000 30 000 interest on drawings 1 …65 / 68
Question 284: Which statement about sole traders is correct? A They always trade by buying and selling goods. B They do not employ any staff. C They keep…Question 285: Which source of finance would be available to a public limited company but not to a partnership? A bank overdraft B debentures C leasing D …Question 286: Which provision of the Partnership Act 1890 applies when there is no partnership agreement? A Partners receive 5% interest per annum on the…Question 287: Jamie is setting up a business. There are three details which are important to Jamie. 1 Jamie wants to have a salary for his work in managi…Question 288: What are the advantages of being a sole trader? 1 ability to make quick decisions 2 no bank borrowings are needed 3 owner keeps all the pro…66 / 68
Question 289: X and Y are in partnership. They do not have a partnership agreement. Which statement is correct? A Interest on capital is earned at 5%. B …Question 290: Anne and Margaret have formed a partnership but have not made a partnership agreement. Which statement is correct for this situation? A any…Question 291: What are disadvantages of operating as a partnership compared to operating as a sole trader? 1 Partners may be liable for the actions of th…Question 292: Ahmed and Betty are in partnership. They plan to convert the business from a partnership to a limited company. Ahmed and Betty will be shar…Question 293: What are disadvantages of operating as a partnership compared to operating as a sole trader? 1 Partners may be liable for the actions of th…67 / 68
Question 294: Which row describes an advantage and a disadvantage of operating as a sole trader? advantage disadvantage A complete control over financial…Question 295: A company needs to raise finance to build a factory. Which action is suitable to protect the existing shareholders’ interest? A bonus issue…Question 296: What are advantages of operating as a partnership? 1 ideas and workload can be shared 2 no requirement to publish financial statements 3 se…68 / 68

Mark scheme296 answers

Answers below. Sit the paper first if you are practising.

Pastlit

Accounting 9706 · Types of business entity — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

1B1
2A1
3D1
4A1
5C1
6D1
7C1
8C1
9A1
10B1
11A1
12A1
13D1
14B1
15C1
16B1
17A1
18C1
19D1
20A1
21A1
22D1
23C1
24D1
25D1
26C1
27C1
28C1
29C1
30C1
31A1
32D1
33B1
34C1
35C1
36B1
37A1
38A1
39A1
40C1
41C1
42B1
43A1
44A1
45C1
46C1
47B1
48A1
49A1
1 / 7

Pastlit

Accounting 9706 · Types of business entity — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

50C1
51D1
52C1
53D1
54D1
55C1
56D1
57B1
58C1
59C1
60B1
61C1
62B1
63C1
64B1
65D1
66C1
67B1
68A1
69B1
70A1
71C1
72D1
73C1
74B1
75A1
76C1
77C1
78A1
79C1
80B1
81D1
82D1
83B1
84A1
85B1
86B1
87A1
88B1
89A1
90D1
91A1
92A1
93D1
94A1
95C1
96C1
97C1
98D1
2 / 7

Pastlit

Accounting 9706 · Types of business entity — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

99C1
100D1
101B1
102C1
103C1
104C1
105C1
106C1
107D1
108C1
109C1
110D1
111C1
112C1
113A1
114B1
115B1
116D1
117A1
118C1
119C1
120A1
121B1
122D1
123D1
124A1
125C1
126A1
127D1
128C1
129D1
130C1
131D1
132B1
133C1
134A1
135B1
136D1
137D1
138C1
139A1
140C1
141C1
142C1
143A1
144D1
145A1
146B1
147B1
3 / 7

Pastlit

Accounting 9706 · Types of business entity — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

148B1
149D1
150A1
151D1
152C1
153A1
154A1
155A1
156C1
157C1
158B1
159C1
160B1
161B1
162D1
163B1
164B1
165C1
166A1
167A1
168B1
169C1
170D1
171D1
172A1
173C1
174B1
175B1
176B1
177B1
178C1
179A1
180B1
181B1
182A1
183B1
184A1
185B1
186B1
187C1
188A1
189B1
190B1
191A1
192A1
193C1
194A1
195A1
196A1
4 / 7

Pastlit

Accounting 9706 · Types of business entity — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

197A1
198D1
199D1
200B1
201A1
202C1
203A1
204D1
205B1
206D1
207C1
208D1
209A1
210D1
211B1
212B1
213A1
214A1
215D1
216C1
217C1
218C1
219A1
220C1
221A1
222B1
223B1
224C1
225D1
226A1
227C1
228D1
229A1
230A1
231B1
232C1
233A1
234D1
235A1
236A1
237C1
238B1
239A1
240A1
241B1
242D1
243B1
244A1
245C1
5 / 7

Pastlit

Accounting 9706 · Types of business entity — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

246A1
247A1
248B1
249C1
250B1
251A1
252A1
253A1
254D1
255C1
256B1
257C1
258B1
259A1
260B1
261D1
262C1
263D1
264D1
265C1
266A1
267A1
268B1
269C1
270C1
271—1
272—1
273B1
274D1
275B1
276D1
277D1
278A1
279B1
280A1
281B1
282B1
283A1
284C1
285B1
286C1
287C1
288B1
289C1
290A1
291A1
292B1
293A1
294B1
6 / 7

Pastlit

Accounting 9706 · Types of business entity — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

295B1
296B1
7 / 7
QuestionAnswerMarksFrom
1B19706/11 May/June 2006
2A19706/11 May/June 2006
3D19706/11 Oct/Nov 2006
4A19706/11 Oct/Nov 2006
5C19706/11 Oct/Nov 2006
6D19706/11 May/June 2007
7C19706/11 May/June 2007
8C19706/11 May/June 2008
9A19706/11 May/June 2008
10B19706/11 Oct/Nov 2008
11A19706/11 Oct/Nov 2008
12A19706/11 Oct/Nov 2008
13D19706/11 Oct/Nov 2008
14B19706/11 Oct/Nov 2008
15C19706/11 Oct/Nov 2008
16B19706/11 Oct/Nov 2008
17A19706/11 May/June 2009
18C19706/11 May/June 2009
19D19706/11 May/June 2009
20A19706/11 May/June 2009
21A19706/11 Oct/Nov 2009
22D19706/11 Oct/Nov 2009
23C19706/11 Oct/Nov 2009
24D19706/12 Oct/Nov 2009
25D19706/12 Oct/Nov 2009
26C19706/12 Oct/Nov 2009
27C19706/12 Oct/Nov 2009
28C19706/12 Oct/Nov 2009
29C19706/12 Oct/Nov 2009
30C19706/12 Oct/Nov 2009
31A19706/11 May/June 2010
32D19706/11 May/June 2010
33B19706/11 May/June 2010
34C19706/11 May/June 2010
35C19706/11 May/June 2010
36B19706/11 May/June 2010
37A19706/11 May/June 2010
38A19706/11 May/June 2010
39A19706/12 May/June 2010
40C19706/12 May/June 2010
41C19706/12 May/June 2010
42B19706/12 May/June 2010
43A19706/12 May/June 2010
44A19706/12 May/June 2010
45C19706/13 May/June 2010
46C19706/13 May/June 2010
47B19706/13 May/June 2010
48A19706/13 May/June 2010
49A19706/13 May/June 2010
50C19706/11 Oct/Nov 2010
51D19706/11 Oct/Nov 2010
52C19706/11 Oct/Nov 2010
53D19706/12 Oct/Nov 2010
54D19706/12 Oct/Nov 2010
55C19706/12 Oct/Nov 2010
56D19706/13 Oct/Nov 2010
57B19706/11 May/June 2011
58C19706/11 May/June 2011
59C19706/11 May/June 2011
60B19706/12 May/June 2011
61C19706/12 May/June 2011
62B19706/13 May/June 2011
63C19706/13 May/June 2011
64B19706/11 Oct/Nov 2011
65D19706/12 Oct/Nov 2011
66C19706/12 Oct/Nov 2011
67B19706/12 Oct/Nov 2011
68A19706/12 Oct/Nov 2011
69B19706/13 Oct/Nov 2011
70A19706/13 Oct/Nov 2011
71C19706/11 May/June 2012
72D19706/11 May/June 2012
73C19706/11 May/June 2012
74B19706/12 May/June 2012
75A19706/12 May/June 2012
76C19706/12 May/June 2012
77C19706/12 May/June 2012
78A19706/12 May/June 2012
79C19706/12 May/June 2012
80B19706/13 May/June 2012
81D19706/11 Oct/Nov 2012
82D19706/11 Oct/Nov 2012
83B19706/11 Oct/Nov 2012
84A19706/11 Oct/Nov 2012
85B19706/11 Oct/Nov 2012
86B19706/11 Oct/Nov 2012
87A19706/12 Oct/Nov 2012
88B19706/12 Oct/Nov 2012
89A19706/12 Oct/Nov 2012
90D19706/12 Oct/Nov 2012
91A19706/12 Oct/Nov 2012
92A19706/13 Oct/Nov 2012
93D19706/13 Oct/Nov 2012
94A19706/13 Oct/Nov 2012
95C19706/13 Oct/Nov 2012
96C19706/11 May/June 2013
97C19706/11 May/June 2013
98D19706/11 May/June 2013
99C19706/11 May/June 2013
100D19706/12 May/June 2013
101B19706/12 May/June 2013
102C19706/12 May/June 2013
103C19706/12 May/June 2013
104C19706/12 May/June 2013
105C19706/13 May/June 2013
106C19706/13 May/June 2013
107D19706/13 May/June 2013
108C19706/13 May/June 2013
109C19706/13 May/June 2013
110D19706/13 May/June 2013
111C19706/11 Oct/Nov 2013
112C19706/11 Oct/Nov 2013
113A19706/11 Oct/Nov 2013
114B19706/12 Oct/Nov 2013
115B19706/13 Oct/Nov 2013
116D19706/13 Oct/Nov 2013
117A19706/13 Oct/Nov 2013
118C19706/11 May/June 2014
119C19706/11 May/June 2014
120A19706/11 May/June 2014
121B19706/12 May/June 2014
122D19706/12 May/June 2014
123D19706/12 May/June 2014
124A19706/12 May/June 2014
125C19706/12 May/June 2014
126A19706/12 May/June 2014
127D19706/13 May/June 2014
128C19706/13 May/June 2014
129D19706/13 May/June 2014
130C19706/13 May/June 2014
131D19706/13 May/June 2014
132B19706/11 Oct/Nov 2014
133C19706/11 Oct/Nov 2014
134A19706/11 Oct/Nov 2014
135B19706/11 Oct/Nov 2014
136D19706/11 Oct/Nov 2014
137D19706/11 Oct/Nov 2014
138C19706/11 Oct/Nov 2014
139A19706/12 Oct/Nov 2014
140C19706/12 Oct/Nov 2014
141C19706/12 Oct/Nov 2014
142C19706/12 Oct/Nov 2014
143A19706/12 Oct/Nov 2014
144D19706/12 Oct/Nov 2014
145A19706/13 Oct/Nov 2014
146B19706/13 Oct/Nov 2014
147B19706/13 Oct/Nov 2014
148B19706/13 Oct/Nov 2014
149D19706/11 May/June 2015
150A19706/11 May/June 2015
151D19706/11 May/June 2015
152C19706/11 May/June 2015
153A19706/11 May/June 2015
154A19706/11 May/June 2015
155A19706/12 May/June 2015
156C19706/12 May/June 2015
157C19706/12 May/June 2015
158B19706/13 May/June 2015
159C19706/13 May/June 2015
160B19706/13 May/June 2015
161B19706/11 Oct/Nov 2015
162D19706/11 Oct/Nov 2015
163B19706/11 Oct/Nov 2015
164B19706/11 Oct/Nov 2015
165C19706/11 Oct/Nov 2015
166A19706/11 Oct/Nov 2015
167A19706/12 Oct/Nov 2015
168B19706/13 Oct/Nov 2015
169C19706/12 Feb/March 2016
170D19706/12 Feb/March 2016
171D19706/12 Feb/March 2016
172A19706/12 Feb/March 2016
173C19706/12 Feb/March 2016
174B19706/12 Feb/March 2016
175B19706/12 Feb/March 2016
176B19706/11 May/June 2016
177B19706/11 May/June 2016
178C19706/11 May/June 2016
179A19706/11 May/June 2016
180B19706/11 May/June 2016
181B19706/11 May/June 2016
182A19706/11 May/June 2016
183B19706/12 May/June 2016
184A19706/12 May/June 2016
185B19706/13 May/June 2016
186B19706/13 May/June 2016
187C19706/13 May/June 2016
188A19706/13 May/June 2016
189B19706/13 May/June 2016
190B19706/13 May/June 2016
191A19706/13 May/June 2016
192A19706/11 Oct/Nov 2016
193C19706/11 Oct/Nov 2016
194A19706/11 Oct/Nov 2016
195A19706/11 Oct/Nov 2016
196A19706/11 Oct/Nov 2016
197A19706/11 Oct/Nov 2016
198D19706/11 Oct/Nov 2016
199D19706/12 Oct/Nov 2016
200B19706/12 Oct/Nov 2016
201A19706/12 Oct/Nov 2016
202C19706/12 Oct/Nov 2016
203A19706/12 Oct/Nov 2016
204D19706/13 Oct/Nov 2016
205B19706/13 Oct/Nov 2016
206D19706/13 Oct/Nov 2016
207C19706/13 Oct/Nov 2016
208D19706/13 Oct/Nov 2016
209A19706/13 Oct/Nov 2016
210D19706/12 Feb/March 2017
211B19706/12 Feb/March 2017
212B19706/12 Feb/March 2017
213A19706/12 Feb/March 2017
214A19706/12 Feb/March 2017
215D19706/11 May/June 2017
216C19706/11 May/June 2017
217C19706/11 May/June 2017
218C19706/11 May/June 2017
219A19706/11 May/June 2017
220C19706/12 May/June 2017
221A19706/12 May/June 2017
222B19706/12 May/June 2017
223B19706/12 May/June 2017
224C19706/12 May/June 2017
225D19706/12 May/June 2017
226A19706/12 May/June 2017
227C19706/13 May/June 2017
228D19706/13 May/June 2017
229A19706/13 May/June 2017
230A19706/11 Oct/Nov 2017
231B19706/11 Oct/Nov 2017
232C19706/11 Oct/Nov 2017
233A19706/12 Oct/Nov 2017
234D19706/12 Oct/Nov 2017
235A19706/12 Oct/Nov 2017
236A19706/12 Oct/Nov 2017
237C19706/12 Oct/Nov 2017
238B19706/12 Oct/Nov 2017
239A19706/12 Oct/Nov 2017
240A19706/12 Feb/March 2018
241B19706/12 Feb/March 2018
242D19706/11 May/June 2018
243B19706/11 May/June 2018
244A19706/11 May/June 2018
245C19706/13 May/June 2018
246A19706/13 May/June 2018
247A19706/11 Oct/Nov 2018
248B19706/11 Oct/Nov 2018
249C19706/11 Oct/Nov 2018
250B19706/13 Oct/Nov 2018
251A19706/13 Oct/Nov 2018
252A19706/13 Oct/Nov 2018
253A19706/13 Oct/Nov 2018
254D19706/11 Oct/Nov 2019
255C19706/11 Oct/Nov 2019
256B19706/11 Oct/Nov 2019
257C19706/12 Feb/March 2020
258B19706/12 May/June 2020
259A19706/11 Oct/Nov 2020
260B19706/12 Oct/Nov 2020
261D19706/12 Oct/Nov 2020
262C19706/12 Oct/Nov 2020
263D19706/13 May/June 2021
264D19706/11 Oct/Nov 2021
265C19706/12 Oct/Nov 2021
266A19706/13 Oct/Nov 2021
267A19706/12 Feb/March 2022
268B19706/11 May/June 2022
269C19706/12 May/June 2022
270C19706/11 Oct/Nov 2022
271see sheet19706/12 Oct/Nov 2022
272see sheet19706/13 Oct/Nov 2022
273B19706/12 Feb/March 2023
274D19706/11 May/June 2023
275B19706/12 May/June 2023
276D19706/12 May/June 2023
277D19706/13 May/June 2023
278A19706/13 May/June 2023
279B19706/11 Oct/Nov 2023
280A19706/11 Oct/Nov 2023
281B19706/12 Oct/Nov 2023
282B19706/13 Oct/Nov 2023
283A19706/13 Oct/Nov 2023
284C19706/12 Feb/March 2024
285B19706/12 Feb/March 2024
286C19706/12 Feb/March 2024
287C19706/11 May/June 2024
288B19706/13 May/June 2024
289C19706/13 May/June 2024
290A19706/11 Oct/Nov 2024
291A19706/11 May/June 2025
292B19706/12 May/June 2025
293A19706/13 May/June 2025
294B19706/11 Oct/Nov 2025
295B19706/12 Oct/Nov 2025
296B19706/13 Oct/Nov 2025

Another paper, or another topic

Paper
Paper 1296 questionsPaper 248 questionsPaper 347 questions

All of Financial accounting (AS Level) →

Questions as text

Q1 · A partnership maintains both capital and current accounts for its partners 9706/11 May/June 2006

15 A partnership maintains both capital and current accounts for its partners. What is the correct accounting entry for recording interest on capital for partner X? account to be debited account to be credited A Profit and Loss Appropriation X’s Capital B Profit and Loss Appropriation X’s Current C X’s Capital Profit and Loss Appropriation D X’s Current Profit and Loss Appropriation

1 marks

Answer: B

This question in 9706/11 May/June 2006

Q2 · Dele and Iyabo are partners in a business and share profits in the ratio of 3:1 9706/11 May/June 2006

18 Dele and Iyabo are partners in a business and share profits in the ratio of 3:1. Their net profit is $80 000. The following information is available: Dele Iyabo $ $ interest on capitals 3 000 2 500 interest on drawings 500 1 000 How will the residual net profit be shared? Dele Iyabo $ $ A 57 000 19 000 B 58 875 21 125 C 59 500 20 500 D 60 500 19 500

1 marks

Answer: A

This question in 9706/11 May/June 2006

Q3 · A company has issued non-cumulative preference shares and ordinary shares 9706/11 Oct/Nov 2006

5 A company has issued non-cumulative preference shares and ordinary shares. Which statement is correct? A If no preference dividend is paid, it is carried forward to a future year. B Preference shareholders always get a dividend. C Preference shareholders and ordinary shareholders always get a dividend. D Preference shareholders may get a dividend.

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2006

Q4 · Hilary and Lee commenced in partnership on 1 January 2005 9706/11 Oct/Nov 2006

17 Hilary and Lee commenced in partnership on 1 January 2005. There was no partnership agreement concerning the division of interest on the loan or of profits. Hilary Lee $ $ capital contributions 5000 600 loan to partnership – 1000 At the year end, 31 December 2005, net profit before the loan interest was $8850. What would be Hilary’s share of the profit? A $4400 B $4425 C $4800 D $4827

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2006

Q5 · A director-owned company needs additional funds 9706/11 Oct/Nov 2006

19 A director-owned company needs additional funds. Which method of finance might lead to a reduction of the director’s control of the business? A bank loan B debenture C ordinary share issue D preference share issue

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2006

Q6 · The following information is available for the partnership of Atul and Mansoor at 31… 9706/11 May/June 2007

14 The following information is available for the partnership of Atul and Mansoor at 31 December: $ net profit before appropriations 60 000 salary of Atul 9 000 drawings: Atul 12 000 Mansoor 13 000 interest on capital: Atul 400 Mansoor 500 Residual profits are shared between Atul and Mansoor in the ratio 2 : 1. What is Mansoor’s share of total profit for the year? A $16 200 B $17 000 C $17 100 D $17 200

1 marks

Answer: D

This question in 9706/11 May/June 2007

Q7 · A company makes a bonus issue of shares 9706/11 May/June 2007

18 A company makes a bonus issue of shares. What is the effect on the net assets and the reserves in the balance sheet? net assets reserves A increase decrease B increase unchanged C unchanged decrease D unchanged increase

1 marks

Answer: C

This question in 9706/11 May/June 2007

Q8 · What appears as a credit entry in the appropriation account of a partnership? 9706/11 May/June 2008

16 What appears as a credit entry in the appropriation account of a partnership? A goodwill B interest on capital C net trading profit D partnership salaries

1 marks

Answer: C

This question in 9706/11 May/June 2008

Q9 · A company’s capital is $ ordinary shares of $1.00 each 200 000 share premium account 80… 9706/11 May/June 2008

19 A company’s capital is $ ordinary shares of $1.00 each 200 000 share premium account 80 000 revenue reserves 160 000 Changes now to be made (in the order given) • A one for one bonus issue • A rights issue of 100 000 ordinary shares of $1.00 each at $1.40 per share The company wishes to maximise the amounts available to pay dividends. What will be the ordinary capital and reserves of the company? ordinary share capital share premium revenue reserves $ $ $ A 500 000 40 000 40 000 B 500 000 80 000 nil C 540 000 nil 40 000 D 540 000 40 000 40 000

1 marks

Answer: A

This question in 9706/11 May/June 2008

Q10 · The table shows how a property appears in the balance sheet 9706/11 Oct/Nov 2008

5 The table shows how a property appears in the balance sheet. $ land and buildings 100 000 accumulated depreciation (40 000) net book value 60 000 The land and buildings are revalued to $150 000. What is the journal entry to record the revaluation? Dr Cr $ $ A land and buildings 50 000 profit and loss account 50 000 B land and buildings 50 000 accumulated depreciation 40 000 revaluation reserve 90 000 C land and buildings 50 000 revaluation reserve 50 000 D land and buildings 90 000 revaluation reserve 90 000

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2008

Q11 · When a businessman introduces capital into his business, the transaction is debited in… 9706/11 Oct/Nov 2008

7 When a businessman introduces capital into his business, the transaction is debited in the cash book and credited to his capital account. Of which accounting principle is this an example? A entity B going concern C matching D prudence

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2008

Q12 · How can net profit be calculated? 9706/11 Oct/Nov 2008

11 How can net profit be calculated? A Closing Capital + Drawings – Additional Capital – Opening Capital B Closing Capital – Drawings + Additional Capital – Opening Capital C Opening Capital + Drawings – Additional Capital – Closing Capital D Opening Capital – Drawings – Additional Capital – Closing Capital

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2008

Q13 · Which transaction would appear in both the receipts and payments account and the income… 9706/11 Oct/Nov 2008

14 Which transaction would appear in both the receipts and payments account and the income and expenditure account of a cricket club? A the club bank balance B the depreciation of the club pavilion C the purchase of a motorised lawn mower D the rent of the cricket ground

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2008

Q14 · Information about the final accounts of a partnership is given 9706/11 Oct/Nov 2008

18 Information about the final accounts of a partnership is given. $ net profit before interest 160 000 interest on bank loan 14 000 interest credited to capital accounts 15 000 drawings 70 000 partnership salaries 24 000 What is the remaining balance of profits to be appropriated amongst the partners? A $66 000 B $107 000 C $121 000 D $137 000

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2008

Q15 · What is the effect on a company’s balance sheet of issuing bonus shares? 9706/11 Oct/Nov 2008

19 What is the effect on a company’s balance sheet of issuing bonus shares? A the bank balance will be increased B the long term liabilities will be increased C the reserves will be reduced D the share capital will be reduced

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2008

Q16 · A company, with an existing issued share capital of 200 000 ordinary shares of $0.50… 9706/11 Oct/Nov 2008

20 A company, with an existing issued share capital of 200 000 ordinary shares of $0.50 each, made a one for four bonus issue. This was later followed by a one for two rights issue at $1.20 per share. What will be the balance on the share capital account after these transactions? A $125 000 B $187 500 C $270 000 D $375 000

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2008

Q17 · A business sells some of its stock for $500 on credit to a customer 9706/11 May/June 2009

11 A business sells some of its stock for $500 on credit to a customer. The stock originally cost $600. What is the effect of this transaction on the balance sheet? current assets owner’s capital A decrease by $100 decrease by $100 B decrease by $100 increase by $100 C increase by $100 decrease by $100 D increase by $100 increase by $100

1 marks

Answer: A

This question in 9706/11 May/June 2009

Q18 · X and Y are partners in a business 9706/11 May/June 2009

15 X and Y are partners in a business. X receives an annual salary of $5000 from the partnership and the balance of profits and losses is shared between X and Y in the ratio of 3 : 2 respectively. In the last financial year, the net profit was $30 000. How much was credited to each partner for the year? X Y $ $ A 10 000 15 000 B 12 000 18 000 C 20 000 10 000 D 21 000 14 000

1 marks

Answer: C

This question in 9706/11 May/June 2009

Q19 · A shareholder sells some ordinary shares for more than he paid for them 9706/11 May/June 2009

20 A shareholder sells some ordinary shares for more than he paid for them. What is the effect on the company balance sheet? ordinary share capital share premium account A decrease decrease B decrease increase C no effect decrease D no effect no effect

1 marks

Answer: D

This question in 9706/11 May/June 2009

Q20 · At the beginning of the year a company has authorised share capital of 800 000 ordinary… 9706/11 May/June 2009

21 At the beginning of the year a company has authorised share capital of 800 000 ordinary shares of $0.25 each and an issued share capital of 400 000 ordinary shares of $0.25. During the year the company makes a further issue of 200 000 ordinary shares at a price of $0.60. What is the balance on the share capital account at the end of the year? A $150 000 B $220 000 C $250 000 D $350 000

1 marks

Answer: A

This question in 9706/11 May/June 2009

Q21 · A business is separate from its owner 9706/11 Oct/Nov 2009

5 A business is separate from its owner. This results in only business transactions being recorded in the accounts. Which accounting principle applies? A business entity B materiality C money measurement D prudence

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2009

Q22 · A new business was established with opening capital of $15 000 9706/11 Oct/Nov 2009

10 A new business was established with opening capital of $15 000. At the end of the year net assets were $20 000. During the year the proprietor’s drawings were $3000 and this resulted in an overdraft at the end of the year of $4000. What was the profit during the year? A $2000 B $4000 C $5000 D $8000

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2009

Q23 · X and Y are in partnership 9706/11 Oct/Nov 2009

14 X and Y are in partnership. Their profit and loss appropriation account shows the following. X Y total $ $ $ interest on capital 1 600 1 800 3 400 interest charged on drawings 500 400 900 partners’ salaries 2 000 3 000 5 000 share of profit 8 000 12 000 20 000 What is the net profit before appropriations? A $17 500 B $22 500 C $27 500 D $29 300

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2009

Q24 · A new business was established with opening capital of $15 000 9706/12 Oct/Nov 2009

9 A new business was established with opening capital of $15 000. At the end of the year net assets were $20 000. During the year the proprietor’s drawings were $3000 and this resulted in an overdraft at the end of the year of $4000. What was the profit during the year? A $2000 B $4000 C $5000 D $8000

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2009

Q25 · The summarised balance sheets for a business for two years are as follows 9706/12 Oct/Nov 2009

12 The summarised balance sheets for a business for two years are as follows. year 1 year 2 $ $ fixed assets 9 000 12 000 current assets 6 000 8 000 less current liabilities (5 000) (6 000) net assets 10 000 14 000 The drawings in year 1 were $5000 and in year 2 $3000. What is the net profit for year 2? A $1000 B $4000 C $5000 D $7000

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2009

Q26 · X and Y are in partnership 9706/12 Oct/Nov 2009

13 X and Y are in partnership. Their profit and loss appropriation account shows the following. X Y total $ $ $ interest on capital 1 600 1 800 3 400 interest charged on drawings 500 400 900 partners’ salaries 2 000 3 000 5 000 share of profit 8 000 12 000 20 000 What is the net profit before appropriations? A $17 500 B $22 500 C $27 500 D $29 300

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2009

Q27 · An extract from a company’s balance sheet is given 9706/12 Oct/Nov 2009

15 An extract from a company’s balance sheet is given. $000 issued ordinary share capital 250 issued preference shares 180 profit and loss account 320 share premium account 125 8 % debentures 100 What are the ordinary shareholders’ funds? A $695 000 B $775 000 C $875 000 D $975 000

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2009

Q28 · An extract from a company’s balance sheet shows the following 9706/12 Oct/Nov 2009

16 An extract from a company’s balance sheet shows the following. $000 issued ordinary shares of $0.25 each 600 share premium account 150 retained profits 300 The company makes a rights issue of one new ordinary share for each three held, at a price of $0.30 per share. All shares were taken up. What does the new balance sheet show? issued ordinary share premium share capital $000 $000 A 600 120 B 800 150 C 800 190 D 800 600

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2009

Q29 · A company’s Balance Sheet at 31 December 2008 includes: $ Ordinary shares of $1.00 12 000… 9706/12 Oct/Nov 2009

17 A company’s Balance Sheet at 31 December 2008 includes: $ Ordinary shares of $1.00 12 000 Profit and Loss Account 4000 In January 2009, the company made a bonus issue of one share for every four held. In June 2009, the company made a rights issue at $1.60 of one share for every two held. By how much did these transactions increase the company’s bank balance? A $9600 B $12 000 C $12 800 D $19 200

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2009

Q30 · The table shows balances at the end of a year 9706/12 Oct/Nov 2009

30 The table shows balances at the end of a year. $ expenses prepaid 6 000 expenses accrued 4 000 bank overdraft 11 500 trade creditors 13 400 trade debtors 10 500 loan (2015) 20 000 What is the total of current liabilities? A $16 500 B $17 400 C $28 900 D $48 900

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2009

Q31 · The personal spending of the owner of a business is not recognised as a business expense 9706/11 May/June 2010

5 The personal spending of the owner of a business is not recognised as a business expense. Which accounting principle is being applied? A business entity B consistency C money measurement D prudence

1 marks

Answer: A

This question in 9706/11 May/June 2010

Q32 · A business obtained a machine by means of a hire purchase agreement 9706/11 May/June 2010

6 A business obtained a machine by means of a hire purchase agreement. It showed the machine in its balance sheet at the cash price of $30 000 although only $10 000 has been repaid. Which accounting principle is involved? A accruals B materiality C prudence D substance over form

1 marks

Answer: D

This question in 9706/11 May/June 2010

Q33 · A firm has incomplete accounting records 9706/11 May/June 2010

13 A firm has incomplete accounting records. The following figures are known. $ capital at start of year 20 000 owner’s drawings 7 000 capital at end of year 30 000 How much profit has the firm made during the year? A $7000 B $17 000 C $27 000 D $30 000

1 marks

Answer: B

This question in 9706/11 May/June 2010

Q34 · X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3 9706/11 May/June 2010

16 X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3. Y is entitled to a salary of $18 000 per annum. Partners receive interest at 6 % per annum on their capital account balances at the start of the year. At the beginning of the year, capital account balances were: X $30 000 Y $22 000 Z $20 000 The net profit before salary and interest for the year is $140 000. What is Y’s share of the total profits? A $23 536 B $28 000 C $42 856 D $46 000

1 marks

Answer: C

This question in 9706/11 May/June 2010

Q35 · L and M are in partnership 9706/11 May/June 2010

17 L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash drawings of L and M during the year C salary due to L D salary paid to M’s wife

1 marks

Answer: C

This question in 9706/11 May/June 2010

Q36 · A company is set up with an authorised share capital of $3 million 9706/11 May/June 2010

18 A company is set up with an authorised share capital of $3 million. It plans to purchase immediately a factory for $1 million. Preliminary expenses will be $100 000 and the immediate requirement for working capital will be $800 000. It will also require new equipment costing $600 000 in 12 months time. What is the minimum amount the company needs to raise now? A $1 000 000 B $1 900 000 C $2 500 000 D $3 000 000

1 marks

Answer: B

This question in 9706/11 May/June 2010

Q37 · At 1 January 2009 the capital structure of a company was as follows 9706/11 May/June 2010

19 At 1 January 2009 the capital structure of a company was as follows. $ issued share capital 100 000 ordinary shares of $1 each 100 000 share premium account 30 000 On 1 April 2009 the company made a rights issue of 20 000 shares of $1 each for $36 000. On 1 June 2009 a bonus issue of one share for every six in issue was made. The share premium account was used for this purpose. What is the balance on the share premium account at 31 December 2009? A $26 000 B $34 000 C $46 000 D $56 000

1 marks

Answer: A

This question in 9706/11 May/June 2010

Q38 · When is a share premium account opened? 9706/11 May/June 2010

20 When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are redeemed by the company at a premium C when shares are sold by a shareholder at a price above their nominal value D when the company issues bonus shares

1 marks

Answer: A

This question in 9706/11 May/June 2010

Q39 · The personal spending of the owner of a business is not recognised as a business expense 9706/12 May/June 2010

4 The personal spending of the owner of a business is not recognised as a business expense. Which accounting principle is being applied? A business entity B consistency C money measurement D prudence

1 marks

Answer: A

This question in 9706/12 May/June 2010

Q40 · X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3 9706/12 May/June 2010

15 X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3. Y is entitled to a salary of $18 000 per annum. Partners receive interest at 6 % per annum on their capital account balances at the start of the year. At the beginning of the year, capital account balances were: X $30 000 Y $22 000 Z $20 000 The net profit before salary and interest for the year is $140 000. What is Y’s share of the total profits? A $23 536 B $28 000 C $42 856 D $46 000

1 marks

Answer: C

This question in 9706/12 May/June 2010

Q41 · L and M are in partnership 9706/12 May/June 2010

16 L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash drawings of L and M during the year C salary due to L D salary paid to M’s wife

1 marks

Answer: C

This question in 9706/12 May/June 2010

Q42 · A company is set up with an authorised share capital of $3 million 9706/12 May/June 2010

17 A company is set up with an authorised share capital of $3 million. It plans to purchase immediately a factory for $1 million. Preliminary expenses will be $100 000 and the immediate requirement for working capital will be $800 000. It will also require new equipment costing $600 000 in 12 months time. What is the minimum amount the company needs to raise now? A $1 000 000 B $1 900 000 C $2 500 000 D $3 000 000

1 marks

Answer: B

This question in 9706/12 May/June 2010

Q43 · At 1 January 2009 the capital structure of a company was as follows 9706/12 May/June 2010

18 At 1 January 2009 the capital structure of a company was as follows. $ issued share capital 100 000 ordinary shares of $1 each 100 000 share premium account 30 000 On 1 April 2009 the company made a rights issue of 20 000 shares of $1 each for $36 000. On 1 June 2009 a bonus issue of one share for every six in issue was made. The share premium account was used for this purpose. What is the balance on the share premium account at 31 December 2009? A $26 000 B $34 000 C $46 000 D $56 000

1 marks

Answer: A

This question in 9706/12 May/June 2010

Q44 · When is a share premium account opened? 9706/12 May/June 2010

19 When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are redeemed by the company at a premium C when shares are sold by a shareholder at a price above their nominal value D when the company issues bonus shares

1 marks

Answer: A

This question in 9706/12 May/June 2010

Q45 · X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3 9706/13 May/June 2010

14 X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3. Y is entitled to a salary of $18 000 per annum. Partners receive interest at 6 % per annum on their capital account balances at the start of the year. At the beginning of the year, capital account balances were: X $30 000 Y $22 000 Z $20 000 The net profit before salary and interest for the year is $140 000. What is Y’s share of the total profits? A $23 536 B $28 000 C $42 856 D $46 000

1 marks

Answer: C

This question in 9706/13 May/June 2010

Q46 · L and M are in partnership 9706/13 May/June 2010

15 L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash drawings of L and M during the year C salary due to L D salary paid to M’s wife

1 marks

Answer: C

This question in 9706/13 May/June 2010

Q47 · A company is set up with an authorised share capital of $3 million 9706/13 May/June 2010

16 A company is set up with an authorised share capital of $3 million. It plans to purchase immediately a factory for $1 million. Preliminary expenses will be $100 000 and the immediate requirement for working capital will be $800 000. It will also require new equipment costing $600 000 in 12 months time. What is the minimum amount the company needs to raise now? A $1 000 000 B $1 900 000 C $2 500 000 D $3 000 000

1 marks

Answer: B

This question in 9706/13 May/June 2010

Q48 · At 1 January 2009 the capital structure of a company was as follows 9706/13 May/June 2010

17 At 1 January 2009 the capital structure of a company was as follows. $ issued share capital 100 000 ordinary shares of $1 each 100 000 share premium account 30 000 On 1 April 2009 the company made a rights issue of 20 000 shares of $1 each for $36 000. On 1 June 2009 a bonus issue of one share for every six in issue was made. The share premium account was used for this purpose. What is the balance on the share premium account at 31 December 2009? A $26 000 B $34 000 C $46 000 D $56 000

1 marks

Answer: A

This question in 9706/13 May/June 2010

Q49 · When is a share premium account opened? 9706/13 May/June 2010

18 When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are redeemed by the company at a premium C when shares are sold by a shareholder at a price above their nominal value D when the company issues bonus shares

1 marks

Answer: A

This question in 9706/13 May/June 2010

Q50 · Information relating to a club’s subscription is: $ received during the year 20 000 paid… 9706/11 Oct/Nov 2010

12 Information relating to a club’s subscription is: $ received during the year 20 000 paid in advance in the previous year 2 000 paid in advance during the current year 1 000 There were no subscriptions in arrears at the start or end of the year. Individual subscriptions have remained constant at $500 per annum for the last two years. How many members does the club have? A 38 B 40 C 42 D 44

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2010

Q51 · X and Y are in partnership, sharing residual profits and losses equally after the… 9706/11 Oct/Nov 2010

13 X and Y are in partnership, sharing residual profits and losses equally after the payments below are made. 1 2 % interest is charged on partners’ drawings 2 salary to Y of $10 000 The partners’ drawings for the year were: X $12 000 Y $8000 The net profit for the current year is $52 000. How much will each partner receive in share of residual profits? A $10 800 B $11 200 C $20 800 D $21 200

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2010

Q52 · X started a business 3 years ago and now has a capital of $175 000 9706/11 Oct/Nov 2010

16 X started a business 3 years ago and now has a capital of $175 000. Over that period his profits have been $73 000 and his drawings $52 000. In year 2 he introduced cash of $35 000 and in year 3 he took out of the business, for his own use, a non current (fixed) asset with a net book value of $4000. How much capital did he start the business with? A $67 000 B $115 000 C $123 000 D $158 000

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2010

Q53 · What does the application of the accounting principle of consistency ensure? 9706/12 Oct/Nov 2010

4 What does the application of the accounting principle of consistency ensure? A that all losses are provided for B that assets are recorded at their actual cost C that financial statements are produced annually D that profits are calculated the same way each year

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2010

Q54 · X and Y are in partnership, sharing residual profits and losses equally after the… 9706/12 Oct/Nov 2010

13 X and Y are in partnership, sharing residual profits and losses equally after the payments below are made. 1 2 % interest is charged on partners’ drawings 2 salary to Y of $10 000 The partners’ drawings for the year were: X $12 000 Y $8000 The net profit for the current year is $52 000. How much will each partner receive in share of residual profits? A $10 800 B $11 200 C $20 800 D $21 200

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2010

Q55 · X started a business 3 years ago and now has a capital of $175 000 9706/12 Oct/Nov 2010

16 X started a business 3 years ago and now has a capital of $175 000. Over that period his profits have been $73 000 and his drawings $52 000. In year 2 he introduced cash of $35 000 and in year 3 he took out of the business, for his own use, a non current (fixed) asset with a net book value of $4000. How much capital did he start the business with? A $67 000 B $115 000 C $123 000 D $158 000

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2010

Q56 · X and Y are in partnership, sharing residual profits and losses equally after the… 9706/13 Oct/Nov 2010

12 X and Y are in partnership, sharing residual profits and losses equally after the payments below are made. 1 2 % interest is charged on partners’ drawings 2 salary to Y of $10 000 The partners’ drawings for the year were: X $12 000 Y $8000 The net profit for the current year is $52 000. How much will each partner receive in share of residual profits? A $10 800 B $11 200 C $20 800 D $21 200

1 marks

Answer: D

This question in 9706/13 Oct/Nov 2010

Q57 · The following summarised information has been taken from the balance sheet of a… 9706/11 May/June 2011

4 The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 36 000 current accounts (debit) 5 000 current liabilities 7 000 non-current liabilities 15 000 What is the amount of current assets? A $6000 B $11 000 C $17 000 D $21 000

1 marks

Answer: B

This question in 9706/11 May/June 2011

Q58 · A partnership provides the following financial information for the year ended 30 June 2011 9706/11 May/June 2011

11 A partnership provides the following financial information for the year ended 30 June 2011. $000 profit from operations 240 bank interest payable 21 interest credited to current accounts 15 drawings 100 partnership salaries 95 What is the residual balance of profits to be appropriated between the partners? A $9000 B $104 000 C $109 000 D $204 000

1 marks

Answer: C

This question in 9706/11 May/June 2011

Q59 · A new business was established with opening capital of $20 000 9706/11 May/June 2011

12 A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The owner withdrew $7000 as drawings during the year and this resulted in a bank overdraft of $5000 at the end of the year. What was the profit during the first year? A $8000 B $12 000 C $13 000 D $18 000

1 marks

Answer: C

This question in 9706/11 May/June 2011

Q60 · The following summarised information has been taken from the balance sheet of a… 9706/12 May/June 2011

13 The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 36 000 current accounts (debit) 5 000 current liabilities 7 000 non-current liabilities 15 000 What is the amount of current assets? A $6000 B $11 000 C $17 000 D $21 000

1 marks

Answer: B

This question in 9706/12 May/June 2011

Q61 · A partnership provides the following financial information for the year ended 30 June 2011 9706/12 May/June 2011

16 A partnership provides the following financial information for the year ended 30 June 2011. $000 profit from operations 240 bank interest payable 21 interest credited to current accounts 15 drawings 100 partnership salaries 95 What is the residual balance of profits to be appropriated between the partners? A $9000 B $104 000 C $109 000 D $204 000

1 marks

Answer: C

This question in 9706/12 May/June 2011

Q62 · The following summarised information has been taken from the balance sheet of a… 9706/13 May/June 2011

5 The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 36 000 current accounts (debit) 5 000 current liabilities 7 000 non-current liabilities 15 000 What is the amount of current assets? A $6000 B $11 000 C $17 000 D $21 000

1 marks

Answer: B

This question in 9706/13 May/June 2011

Q63 · A new business was established with opening capital of $20 000 9706/13 May/June 2011

13 A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The owner withdrew $7000 as drawings during the year and this resulted in a bank overdraft of $5000 at the end of the year. What was the profit during the first year? A $8000 B $12 000 C $13 000 D $18 000

1 marks

Answer: C

This question in 9706/13 May/June 2011

Q64 · X, Y and Z are in partnership, sharing profits in the ratio 2 : 2 : 1 9706/11 Oct/Nov 2011

11 X, Y and Z are in partnership, sharing profits in the ratio 2 : 2 : 1. X is allowed an annual salary of $10 000. Y has made a loan to the partnership on which the partnership pays interest of $5000 each year. Profit for the year before appropriations is $150 000. What is Z’s total appropriation of profit for the year? A $27 000 B $28 000 C $29 000 D $30 000

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2011

Q65 · What should companies not show as non-current assets in their balance sheets? 9706/12 Oct/Nov 2011

3 What should companies not show as non-current assets in their balance sheets? A plant bought on hire purchase B plant fully depreciated C plant held on finance leases D plant held on operating leases

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2011

Q66 · If partners do not draw up a partnership agreement, the provisions of the Partnership Act… 9706/12 Oct/Nov 2011

12 If partners do not draw up a partnership agreement, the provisions of the Partnership Act apply. Which statement is true as a provision of the Partnership Act? A Interest on drawings is charged at 5 % a year. B Interest on loans from partners is to be at 8 % a year. C Partners are not entitled to salaries. D Profits are to be shared in the ratio of fixed capitals.

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2011

Q67 · X and Y have been business partners for several years, sharing profits in the ratio of 2:1 9706/12 Oct/Nov 2011

13 X and Y have been business partners for several years, sharing profits in the ratio of 2:1. Y now wishes to retire and leave X to continue with a new business partner. Y’s capital account amounts to $15 800 and his current account shows a debit balance of $3500. Goodwill is valued at $6600. The book values of certain tangible assets are to be valued upwards by $3000. What is the amount due to Y on his retirement from the business? A $13 500 B $15 500 C $20 500 D $22 500

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2011

Q68 · What occurs in a rights issue of shares? 9706/12 Oct/Nov 2011

19 What occurs in a rights issue of shares? A Any premium on the issue is added to a capital reserve. B Any premium on the issue is added to a revenue reserve. C Any premium on the issue is written off to the income statement. D The nominal value of the issue is written off to the income statement.

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2011

Q69 · X, Y and Z are in partnership, sharing profits in the ratio 2 : 2 : 1 9706/13 Oct/Nov 2011

10 X, Y and Z are in partnership, sharing profits in the ratio 2 : 2 : 1. X is allowed an annual salary of $10 000. Y has made a loan to the partnership on which the partnership pays interest of $5000 each year. Profit for the year before appropriations is $150 000. What is Z’s total appropriation of profit for the year? A $27 000 B $28 000 C $29 000 D $30 000

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2011

Q70 · An investor owns 10 000 5 % preference shares in Howdo Limited 9706/13 Oct/Nov 2011

16 An investor owns 10 000 5 % preference shares in Howdo Limited. One year Howdo does not have enough profits to pay the preference dividend. The investor is not too worried as he expects the profits to improve and he thinks the directors will pay the missed dividend the following year. Which type of preference shares does the investor own? A cumulative B non-cumulative C participating D redeemable

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2011

Q71 · The table shows information about four partners in a partnership 9706/11 May/June 2012

9 The table shows information about four partners in a partnership. Which partner has the greatest net reward from interest on capital and interest on drawings? fixed capital annual drawings $ $ A 20 000 30 000 B 20 000 50 000 C 60 000 30 000 D 60 000 50 000

1 marks

Answer: C

This question in 9706/11 May/June 2012

Q72 · In which account should a partner’s drawings appear in the partnership’s end-of-year… 9706/11 May/June 2012

10 In which account should a partner’s drawings appear in the partnership’s end-of-year financial statements? A appropriation account B income statement C partner’s capital account D partner’s current account

1 marks

Answer: D

This question in 9706/11 May/June 2012

Q73 · A company has an issued share capital of 200 000 6 % cumulative preference shares of $1… 9706/11 May/June 2012

14 A company has an issued share capital of 200 000 6 % cumulative preference shares of $1 each fully paid and 800 000 ordinary shares of $1 each fully paid. Assuming that the company earns no profit in the year, which statement is correct? A Both preference and ordinary shares are paid a dividend in the year. B The unpaid dividends for both preference and ordinary shares are carried forward to a future year. C The unpaid preference dividend is carried forward to a future year. D The preference shares are paid a total dividend of $12 000 in the year.

1 marks

Answer: C

This question in 9706/11 May/June 2012

Q74 · A non-current asset costing $206 000, with a net book value of $131 000, is revalued to… 9706/12 May/June 2012

3 A non-current asset costing $206 000, with a net book value of $131 000, is revalued to $275 000. How should the revaluation be recorded? A Dr Asset at cost $69 000 Cr Revaluation reserve $69 000 B Dr Provision for depreciation $75 000 Dr Asset at cost $69 000 Cr Revaluation reserve $144 000 C Dr Provision for depreciation $144 000 Cr Revaluation reserve $144 000 D Dr Revaluation reserve $144 000 Cr Asset at cost $69 000 Cr Provision for depreciation $75 000

1 marks

Answer: B

This question in 9706/12 May/June 2012

Q75 · A sole trader owns a vehicle valued at $4000 for his own use and a vehicle valued at… 9706/12 May/June 2012

5 A sole trader owns a vehicle valued at $4000 for his own use and a vehicle valued at $2500 for business use. On 1 April 2012 he sold the business vehicle. On the same date he bought a new vehicle for $8000 for his own use and transferred his old vehicle to the business. What is the change in the value of vehicles in the business accounts? A $1500 B $4000 C $5500 D $6500

1 marks

Answer: A

This question in 9706/12 May/June 2012

Q76 · The table shows information about four partners in a partnership 9706/12 May/June 2012

10 The table shows information about four partners in a partnership. Which partner has the greatest net reward from interest on capital and interest on drawings? fixed capital annual drawings $ $ A 20 000 30 000 B 20 000 50 000 C 60 000 30 000 D 60 000 50 000

1 marks

Answer: C

This question in 9706/12 May/June 2012

Q77 · X and Y are in partnership sharing the profits equally 9706/12 May/June 2012

11 X and Y are in partnership sharing the profits equally. No goodwill account is maintained in the accounts. Z joins the partnership and pays $30 000 cash for his share of the goodwill. Profits are to be shared equally between X, Y and Z. What are the increases in the capital accounts on the admission of Z into the partnership? capital accounts X Y Z $ $ $ A 10 000 10 000 10 000 B – – 30 000 C 15 000 15 000 – D – – –

1 marks

Answer: C

This question in 9706/12 May/June 2012

Q78 · Which statements about non-profit making organisations are correct? 9706/12 May/June 2012

12 Which statements about non-profit making organisations are correct? 1 A club or society may engage in trading activities. 2 A club or society may suffer bad debts. 3 Subscriptions are credited to the income and expenditure account in the year in which they are received. 4 The term ‘excess of expenditure over income’ replaces ‘profit for the year’. A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4

1 marks

Answer: A

This question in 9706/12 May/June 2012

Q79 · A company has an issued share capital of 200 000 6 % cumulative preference shares of $1… 9706/12 May/June 2012

15 A company has an issued share capital of 200 000 6 % cumulative preference shares of $1 each fully paid and 800 000 ordinary shares of $1 each fully paid. Assuming that the company earns no profit in the year, which statement is correct? A Both preference and ordinary shares are paid a dividend in the year. B The unpaid dividends for both preference and ordinary shares are carried forward to a future year. C The unpaid preference dividend is carried forward to a future year. D The preference shares are paid a total dividend of $12 000 in the year.

1 marks

Answer: C

This question in 9706/12 May/June 2012

Q80 · The following items appear in the books of a builder 9706/13 May/June 2012

6 The following items appear in the books of a builder. $ rent of own home 3 000 rent of builder’s yard 2 500 housekeeping expenses 2 000 overalls 100 loose tools 300 equipment 3 000 lorries 1 500 rates on business premises 650 rent of business premises 3 500 assistant’s wages 3 000 What is the total business expenditure? A $11 250 B $14 550 C $16 550 D $19 550

1 marks

Answer: B

This question in 9706/13 May/June 2012

Q81 · Which statement is correct? 9706/11 Oct/Nov 2012

4 Which statement is correct? A All reserves are created by a transfer from retained earnings. B Revaluation reserves appear in the non-current assets section of the statement of financial position. C Some reserves are treated as current liabilities at the financial year end. D Total reserves form part of shareholders’ equity.

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2012

Q82 · A trader provided the following information 9706/11 Oct/Nov 2012

6 A trader provided the following information. $ gross profit 3 000 motor expenses for repairs to private motor car 500 wages paid to staff 1 000 rent paid for premises 600 interest on home loan 700 What is the profit for the year? A $200 B $700 C $900 D $1400

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2012

Q83 · In the absence of a partnership agreement partners are: 1 entitled to interest on the… 9706/11 Oct/Nov 2012

13 In the absence of a partnership agreement partners are: 1 entitled to interest on the capitals at 5 % per annum 2 entitled to interest on loans at 5 % per annum 3 entitled to interest on loans at 10 % per annum 4 not entitled to interest on capitals 5 not entitled to interest on loans Which statements are correct? A 1 and 2 B 2 and 4 C 3 and 4 D 4 and 5

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2012

Q84 · X and Y are in partnership 9706/11 Oct/Nov 2012

14 X and Y are in partnership. Their income statement and appropriation account shows the following. $ depreciation of non-current assets 5 000 interest on loan from Y 600 interest on capital 2 400 interest charged on drawings 900 partners’ salaries 5 000 residual profit 12 000 What is the profit for the year before any appropriations? A $18 500 B $19 100 C $20 300 D $25 900

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2012

Q85 · A company raises cash by issuing 8 % debentures 9706/11 Oct/Nov 2012

19 A company raises cash by issuing 8 % debentures. What is the effect on the company’s profits and net current assets in the year of issue? profits net current assets A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2012

Q86 · A company is financed by 25 000 $1 ordinary shares 9706/11 Oct/Nov 2012

20 A company is financed by 25 000 $1 ordinary shares. The company wishes to finance expansion by issuing 5000 $1 ordinary shares at a premium of $0.20 and $10 000 debentures. What will be the new equity figure in the statement of financial position? A $30 000 B $31 000 C $40 000 D $41 000

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2012

Q87 · Which item appears in the financial statements of a limited company but not in those of a… 9706/12 Oct/Nov 2012

13 Which item appears in the financial statements of a limited company but not in those of a sole trader or partnership? A dividends paid B other payables C other receivables D trade payables

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2012

Q88 · Which items would appear in a partnership’s appropriation account? 9706/12 Oct/Nov 2012

14 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

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2012

Q89 · A business does not keep complete accounting records 9706/12 Oct/Nov 2012

16 A business does not keep complete accounting records. The following information is known: $ capital at start of year 52 000 capital at end of year 55 000 owner’s drawings in year 13 000 capital introduced during the year 25 000 What is the profit/loss for the year? A loss $9000 B profit $9000 C loss $15 000 D profit $15 000

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2012

Q90 · A company has issued non-cumulative preference shares and ordinary shares 9706/12 Oct/Nov 2012

19 A company has issued non-cumulative preference shares and ordinary shares. Which statement is correct? A If no preference dividend is paid, it is carried forward to a future year. B Preference shareholders always get a dividend. C Preference shareholders and ordinary shareholders always get a dividend. D Preference shareholders may get a dividend.

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2012

Q91 · A company has an authorised share capital of 1 000 000 $0.50 ordinary shares 9706/12 Oct/Nov 2012

20 A company has an authorised share capital of 1 000 000 $0.50 ordinary shares. Its issued share capital is 800 000 shares. An ordinary dividend of 7½ % is declared. How much is payable to the shareholders? A $30 000 B $37 500 C $60 000 D $75 000

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2012

Q92 · Which of these statements are correct? 9706/13 Oct/Nov 2012

4 Which of these statements are correct? 1 A share premium account is classified as a reserve. 2 A revaluation reserve may be negative if a non-current asset decreases in value. A 1 only B 2 only C both 1 and 2 D neither 1 nor 2

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2012

Q93 · Which statement regarding partnerships, constituted under a partnership agreement, is… 9706/13 Oct/Nov 2012

14 Which statement regarding partnerships, constituted under a partnership agreement, is always correct? A Each partner is paid interest on capital. B Each partner must introduce the same amount of capital. C Each partner must share profits and losses equally. D Each partner receives a salary only if set out in the agreement.

1 marks

Answer: D

This question in 9706/13 Oct/Nov 2012

Q94 · X and Y are in partnership, sharing profits and losses in the ratio of 2:1 9706/13 Oct/Nov 2012

15 X and Y are in partnership, sharing profits and losses in the ratio of 2:1. X had taken goods costing $1500 from the business for his own use. The goods had been treated as a sale and credited to the sales account at their normal selling price of $2400. It was agreed that the goods should have been credited to the purchases account and not to sales and the records were corrected accordingly. Which entries should be made in the partners’ current accounts to make the correction? current accounts X Y $ $ A credit 300 debit 300 B debit 600 debit 300 C debit 1000 debit 500 D debit 1600 debit 800

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2012

Q95 · Which statements about debentures and ordinary shares are correct? 9706/13 Oct/Nov 2012

20 Which statements about debentures and ordinary shares are correct? debentures ordinary shares A can be issued at a premium are never issued at a premium B holders are owners of a company holders are creditors of a company C interest is a charge against profit dividends are an appropriation of profit D interest varies from year to year dividends are paid at the same rate each year

1 marks

Answer: C

This question in 9706/13 Oct/Nov 2012

Q96 · A club’s income and expenditure account for 2012 showed rent and rates of $4000 9706/11 May/June 2013

4 A club’s income and expenditure account for 2012 showed rent and rates of $4000. On 31 December 2012 rent owing was $600 and rates paid in advance was $800. What was the amount shown in the receipts and payments account for rent and rates for the year ended 31 December 2012? A $3800 B $4000 C $4200 D $5400

1 marks

Answer: C

This question in 9706/11 May/June 2013

Q97 · X and Y are in partnership sharing profits equally 9706/11 May/June 2013

17 X and Y are in partnership sharing profits equally. They have capital account balances of $30 000 and $80 000 respectively. Z joins the partnership and pays $10 000 for his share of goodwill. The new profit-sharing ratio is 2 : 2 : 1. What is the balance on Y’s capital account after Z joins? A $70 000 B $75 000 C $85 000 D $90 000

1 marks

Answer: C

This question in 9706/11 May/June 2013

Q98 · What do the reserves of limited companies include? 9706/11 May/June 2013

20 What do the reserves of limited companies include? A debentures B ordinary shares C preference shares D share premium

1 marks

Answer: D

This question in 9706/11 May/June 2013

Q99 · Which stakeholder in a limited company has a voting right? 9706/11 May/June 2013

21 Which stakeholder in a limited company has a voting right? A company accountant B debenture holder C ordinary shareholder D preference shareholder

1 marks

Answer: C

This question in 9706/11 May/June 2013

Q100 · The summarised statements of financial position for a business for two years are as… 9706/12 May/June 2013

12 The summarised statements of financial position for a business for two years are as follows. year 1 year 2 $ $ non-current assets 9 000 12 000 current assets 6 000 8 000 less current liabilities (5 000) (6 000) net assets 10 000 14 000 The drawings in year 1 were $5000 and in year 2 $3000. What is the profit for year 2? A $1000 B $4000 C $5000 D $7000

1 marks

Answer: D

This question in 9706/12 May/June 2013

Q101 · During the year ended 31 December 2012 a business made a profit of $31 000 9706/12 May/June 2013

14 During the year ended 31 December 2012 a business made a profit of $31 000. A dividend of 8% was paid on the 200 000 ordinary shares of $0.50 each, and $12 000 was transferred to general reserve. The retained earnings of the business on 31 December 2012 amounted to $68 000. What was the balance of retained earnings on 1 January 2012? A $41 000 B $57 000 C $65 000 D $79 000

1 marks

Answer: B

This question in 9706/12 May/June 2013

Q102 · X and Y have been in partnership for some years sharing profits in the ratio of 3 : 2 9706/12 May/June 2013

15 X and Y have been in partnership for some years sharing profits in the ratio of 3 : 2. Z joins the partnership and introduces cash of $40 000. The profit-sharing will now be X - 40%, Y - 30% and Z - 30%. Goodwill is valued at $60 000. After joining the partnership, what is the balance of Z’s capital account? A $18 000 credit B $22 000 debit C $22 000 credit D $40 000 credit

1 marks

Answer: C

This question in 9706/12 May/June 2013

Q103 · Which statement about a receipts and payments account is correct? 9706/12 May/June 2013

16 Which statement about a receipts and payments account is correct? A Capital expenditure is not included. B Figures are adjusted for prepayments and accruals. C Income appears on the debit side. D It is like an income statement for a limited company.

1 marks

Answer: C

This question in 9706/12 May/June 2013

Q104 · An extract from a statement of financial position is as follows 9706/12 May/June 2013

20 An extract from a statement of financial position is as follows. $ ordinary share capital 50 000 general reserve 10 000 retained earnings 4 000 10% debentures 20 000 What is the value of the shareholders’ funds? A $50 000 B $54 000 C $64 000 D $80 000

1 marks

Answer: C

This question in 9706/12 May/June 2013

Q105 · The table shows balances at the end of a year 9706/13 May/June 2013

5 The table shows balances at the end of a year. $ expenses prepaid 6 000 expenses accrued 4 000 bank overdraft 11 500 trade payables 13 400 trade receivables 10 500 loan (2017) 20 000 What is the total of current liabilities? A $16 500 B $17 400 C $28 900 D $48 900

1 marks

Answer: C

This question in 9706/13 May/June 2013

Q106 · L and M are in partnership 9706/13 May/June 2013

13 L and M are in partnership. Which item should appear in the partnership appropriation account? A additional capital contributed by M B cash drawings of L and M during the year C salary due to L D salary paid to M’s wife

1 marks

Answer: C

This question in 9706/13 May/June 2013

Q107 · A new business was established with opening capital of $15 000 9706/13 May/June 2013

14 A new business was established with opening capital of $15 000. At the end of the year net assets were $20 000. During the year the proprietor’s drawings were $3000 and this resulted in an overdraft at the end of the year of $4000. What was the profit for the year? A $2000 B $5000 C $7000 D $8000

1 marks

Answer: D

This question in 9706/13 May/June 2013

Q108 · S and T are in partnership sharing profits and losses in the ratio 3 : 2 9706/13 May/June 2013

16 S and T are in partnership sharing profits and losses in the ratio 3 : 2. Their fixed capital accounts have balances of S $80 000 and T $60 000. Interest is allowed on these at the rate of 6% per year. Profit for the year was $100 000. What is the division of profits between the partners? S T $ $ A 49 400 50 600 B 50 600 49 400 C 59 760 40 240 D 60 000 40 000

1 marks

Answer: C

This question in 9706/13 May/June 2013

Q109 · Which account is adjusted for the valuation of goodwill? 9706/13 May/June 2013

17 Which account is adjusted for the valuation of goodwill? A appropriation B bank C capital D premises

1 marks

Answer: C

This question in 9706/13 May/June 2013

Q110 · A shareholder in a company sells his shares to another person 9706/13 May/June 2013

21 A shareholder in a company sells his shares to another person. What is the effect on the share capital account of the company? A It is increased by any premium paid for the shares. B It is increased by the selling price of the shares. C It is reduced by the value of shares sold. D It remains unaltered.

1 marks

Answer: D

This question in 9706/13 May/June 2013

Q111 · A business sells computers 9706/11 Oct/Nov 2013

7 A business sells computers. When they value their inventory they exclude the value of the inventory that is over one year old, as they may be obsolete. Which accounting principle does this demonstrate? A going concern B historical cost C prudence D realisation

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2013

Q112 · X and Y are in partnership sharing residual profits and losses in the ratio 7 : 3 9706/11 Oct/Nov 2013

14 X and Y are in partnership sharing residual profits and losses in the ratio 7 : 3. Their fixed capital accounts have balances of X $40 000; Y $60 000. Interest is allowed on these at the rate of 10% per year. X is paid a salary of $40 000 per year. Profit for the year was $200 000. What was the division of profits between the partners? X Y $ $ A 137 000 63 000 B 140 000 60 000 C 149 000 51 000 D 152 000 48 000

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2013

Q113 · X, Y and Z are in partnership, sharing profits, X 40%, Y 20% and Z 40% 9706/11 Oct/Nov 2013

15 X, Y and Z are in partnership, sharing profits, X 40%, Y 20% and Z 40%. Existing goodwill is shown in the ledger as $10 000. The partners agree that the goodwill is now worth $40 000 and they agree to share future profits equally. They also agree that, in future, goodwill is not to appear in the ledger. Which journal entry will record this change? debit credit $ $ A X 1 334 Y 7 333 Z 1 333 goodwill 10 000 B X 10 000 Y 10 000 Z 10 000 goodwill 30 000 C X 12 000 Y 6 000 Z 12 000 goodwill 30 000 D X 13 334 Y 13 333 Z 13 333 goodwill 40 000

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2013

Q114 · X becomes a partner in a business receiving a 25% share in the profits 9706/12 Oct/Nov 2013

17 X becomes a partner in a business receiving a 25% share in the profits. He pays in $60 000 as his capital. The goodwill of the business is valued at $40 000. What is the balance on X’s capital account, if goodwill is not included in the books? A $20 000 B $50 000 C $60 000 D $70 000

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2013

Q115 · The following information relates to a company’s non-current assets at 31 December 9706/13 Oct/Nov 2013

10 The following information relates to a company’s non-current assets at 31 December. cost price disposal value $ $ motor vehicles 25 000 18 000 equipment 48 000 36 000 fixtures and fittings 12 000 5 000 The company has a serious cash shortage and will cease to trade within the next two months. What is the total value for non-current assets in the company’s statement of financial position at 31 December? A $26 000 B $59 000 C $85 000 D $144 000

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2013

Q116 · W, X, Y and Z are in partnership 9706/13 Oct/Nov 2013

18 W, X, Y and Z are in partnership. What would be shown in the partnership appropriation account? A drawings made by W B goods taken for the personal use of Y C interest on a loan made by Z D interest on drawings made by X

1 marks

Answer: D

This question in 9706/13 Oct/Nov 2013

Q117 · When is a share premium account opened? 9706/13 Oct/Nov 2013

21 When is a share premium account opened? A when shares are issued at a price above nominal value B when shares are issued at a price below nominal value C when shares are sold by a shareholder at a price above their nominal value D when shares are sold by a shareholder at a price below their nominal value

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2013

Q118 · Fred and Perry are in business sharing profits and losses in the ratio 3 : 1 9706/11 May/June 2014

15 Fred and Perry are in business sharing profits and losses in the ratio 3 : 1. Fred’s capital account balance is $90 000 and Perry’s is $60 000. Bill is introduced as a new partner and invests $50 000 as capital. Goodwill is valued at $20 000 and is not to be retained in the books of account. The new profit sharing ratio will be 2 : 2 : 1. What is the capital account balance of Fred after making the goodwill adjustments? A $5700 B $83 000 C $97 000 D $105 000

1 marks

Answer: C

This question in 9706/11 May/June 2014

Q119 · A company issues 500 000 ordinary shares of $1 each for $3 each and $250 000 6% debentures 9706/11 May/June 2014

18 A company issues 500 000 ordinary shares of $1 each for $3 each and $250 000 6% debentures. By which amount will the net assets of the company increase? A no increase B $750 000 C $1 500 000 D $1 750 000

1 marks

Answer: C

This question in 9706/11 May/June 2014

Q120 · An investor owns 10 000 5% preference shares in Howdo Limited 9706/11 May/June 2014

19 An investor owns 10 000 5% preference shares in Howdo Limited. One year Howdo Limited does not have enough profits to pay the preference dividend. The investor expects the profits to improve and he thinks the directors will pay the missed dividend the following year. Which type of preference shares does the investor own? A cumulative B non-cumulative C participating D redeemable

1 marks

Answer: A

This question in 9706/11 May/June 2014

Q121 · Which items would appear in a partnership’s appropriation account, in the absence of a… 9706/12 May/June 2014

15 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 2 B 1 and 4 C 2 and 3 D 3 and 4

1 marks

Answer: B

This question in 9706/12 May/June 2014

Q122 · A partnership makes a profit for the year of $108 000 before taking account of… 9706/12 May/June 2014

16 A partnership makes a profit for the year of $108 000 before taking account of appropriations. Other financial information is as follows. X Y Z salary – – $10 000 capital balance $50 000 $40 000 $10 000 profit sharing ratio 5 3 2 Interest on capital is allowed at 8% per annum. What is Z’s share of the profit for the year? A $18 000 B $18 800 C $28 000 D $28 800

1 marks

Answer: D

This question in 9706/12 May/June 2014

Q123 · A shareholder sells some shares for less than he paid for them 9706/12 May/June 2014

19 A shareholder sells some shares for less than he paid for them. What happens to the share capital of the company? A decreases by the nominal value of the shares sold B decreases by the sales proceeds of the shares sold C increases by the amount received from the sale of the shares D remains the same as before

1 marks

Answer: D

This question in 9706/12 May/June 2014

Q124 · Which shares are entitled to have arrears of dividend carried forward to future years? 9706/12 May/June 2014

20 Which shares are entitled to have arrears of dividend carried forward to future years? A cumulative preference shares B non-cumulative preference shares C ordinary shares D redeemable shares

1 marks

Answer: A

This question in 9706/12 May/June 2014

Q125 · A company issues shares at a premium 9706/12 May/June 2014

21 A company issues shares at a premium. Which effect does the issue have on the company’s statement of financial position? net assets share capital A decrease decrease B decrease no effect C increase increase D increase no effect

1 marks

Answer: C

This question in 9706/12 May/June 2014

Q126 · A company’s financial statements include the following 9706/12 May/June 2014

22 A company’s financial statements include the following. $ profit before interest 200 000 profit for the year 140 000 issued share capital 500 000 reserves 160 000 non-current liabilities 380 000 What is the return on capital employed? A 19.2% B 21.2% C 30.3% D 40.0%

1 marks

Answer: A

This question in 9706/12 May/June 2014

Q127 · A sports club maintains a life subscriptions account 9706/13 May/June 2014

13 A sports club maintains a life subscriptions account. How should the balance on the account appear in the financial statements? A asset in the statement of financial position B expenditure in the income and expenditure account C income in the income and expenditure account D liability in the statement of financial position

1 marks

Answer: D

This question in 9706/13 May/June 2014

Q128 · X and Y are in partnership sharing profits equally 9706/13 May/June 2014

14 X and Y are in partnership sharing profits equally. They admit Z who brings in $10 000 capital and takes 3 1 share of the profit. Goodwill is valued at $9000 but goodwill is not to be retained in the books of account. What is the balance on Z’s capital account immediately after his introduction? A $1000 credit B $5500 credit C $7000 credit D $10 000 credit

1 marks

Answer: C

This question in 9706/13 May/June 2014

Q129 · A company has ordinary share capital of $80 000 9706/13 May/June 2014

17 A company has ordinary share capital of $80 000. Each share has a nominal value of $0.25. A dividend of $0.06 per share is paid. What is the total dividend paid? A $1200 B $4800 C $15 200 D $19 200

1 marks

Answer: D

This question in 9706/13 May/June 2014

Q130 · A company issues for cash 50 000 shares of $5 each at a premium of $15 each and $300 000… 9706/13 May/June 2014

19 A company issues for cash 50 000 shares of $5 each at a premium of $15 each and $300 000 4% debentures. By which amount will the net assets of the company increase? A $250 000 B $550 000 C $1 000 000 D $1 300 000

1 marks

Answer: C

This question in 9706/13 May/June 2014

Q131 · A shareholder sells some ordinary shares for more than he paid for them 9706/13 May/June 2014

20 A shareholder sells some ordinary shares for more than he paid for them. What is the effect on the company statement of financial position? ordinary share capital share premium account A decrease decrease B decrease increase C no effect decrease D no effect no effect

1 marks

Answer: D

This question in 9706/13 May/June 2014

Q132 · Frank and George have been in partnership for a number of years, sharing profits and… 9706/11 Oct/Nov 2014

10 Frank and George have been in partnership for a number of years, sharing profits and losses in the ratio 2 : 1. They decide to admit Harry into the partnership. The new profit and loss sharing ratio between Frank, George and Harry will be 3 : 2 : 1. Goodwill is to be valued but will not remain in the books of account. How does the introduction of Harry to the partnership affect the capital accounts of Frank and George? Frank capital account George capital account A increase decrease B increase no change C no change increase D no change no change

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2014

Q133 · Which item will not appear in the income statement of a sole trader? 9706/11 Oct/Nov 2014

11 Which item will not appear in the income statement of a sole trader? A accounting charges B bank loan interest C director’s fee D hire charge for leased machinery

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2014

Q134 · What is not part of a company’s equity? 9706/11 Oct/Nov 2014

12 What is not part of a company’s equity? A debentures B ordinary share capital C retained earnings D share premium

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2014

Q135 · Partnership capitals are $60 000 for X and $90 000 for Y 9706/11 Oct/Nov 2014

15 Partnership capitals are $60 000 for X and $90 000 for Y. The partnership agreement provides for interest on capitals at 10% per annum, but makes no other financial provisions. Profits for the current year total $75 000. How will the total profits be divided between the partners? X Y $ $ A 30 000 45 000 B 36 000 39 000 C 37 500 37 500 D 39 000 36 000

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2014

Q136 · Z is admitted as a new partner in the partnership of X and Y 9706/11 Oct/Nov 2014

18 Z is admitted as a new partner in the partnership of X and Y. He brings the following into the business. $ cash 20 000 inventory 6 000 vehicle 11 000 Interest on capital is calculated at 10% per annum. There is no goodwill on Z’s admission. What will be Z’s interest on capital? A $1700 B $2000 C $3100 D $3700

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2014

Q137 · Radis Limited pays dividends on ordinary shares in the range of 8% to 12% each year 9706/11 Oct/Nov 2014

19 Radis Limited pays dividends on ordinary shares in the range of 8% to 12% each year. The current dividend is $20 000. The directors do not wish to increase this by more than 25% in the coming year. There are currently 400 000 ordinary shares of $0.50 each in issue. The company now wishes to issue more shares. What is the maximum number of shares it can issue while keeping its dividend in the usual range? A 8333 shares B 16 667 shares C 12 500 shares D 225 000 shares

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2014

Q138 · Why are debentures usually secured on a company’s assets? 9706/11 Oct/Nov 2014

20 Why are debentures usually secured on a company’s assets? A so that debenture holders can be certain of receiving their interest B so that debenture holders can receive the profits earned by the use of those assets C to enable debenture holders to get their money back if the business is sold D to entitle debenture holders to vote at the Annual General Meeting

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2014

Q139 · Goodwill is adjusted in partners’ accounts when there is a change in the profit sharing… 9706/12 Oct/Nov 2014

9 Goodwill is adjusted in partners’ accounts when there is a change in the profit sharing ratio. How is this recorded? debit credit A capital accounts in new profit sharing ratio capital accounts in old profit sharing ratio B capital accounts in old profit sharing ratio capital accounts in new profit sharing ratio C current accounts in new profit sharing ratio current accounts in old profit sharing ratio D current accounts in old profit sharing ratio current accounts in new profit sharing ratio

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2014

Q140 · The following information is available for a partnership at 31 December 2013 9706/12 Oct/Nov 2014

13 The following information is available for a partnership at 31 December 2013. $ residual loss 3 000 total salaries to partners 5 000 total interest on capital 27 000 total drawings 14 000 total interest on drawings 700 How much is the profit for the year? A $14 300 B $20 300 C $28 300 D $34 300

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2014

Q141 · The following balances are extracted from the books of Juno Limited 9706/12 Oct/Nov 2014

15 The following balances are extracted from the books of Juno Limited. 30 April 2014 30 April 2013 $ $ ordinary shares of $0.50 each 700 000 500 000 share premium 90 000 50 000 How many ordinary shares have been issued during the year ended 30 April 2014? A 200 000 B 240 000 C 400 000 D 480 000

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2014

Q142 · A company issues 1 000 000 ordinary shares of $1 each at a premium of 20% 9706/12 Oct/Nov 2014

16 A company issues 1 000 000 ordinary shares of $1 each at a premium of 20%. Which value will be shown for ordinary shares in the statement of financial position? A $200 000 B $800 000 C $1 000 000 D $1 200 000

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2014

Q143 · Which items increase when a company issues new shares? 9706/12 Oct/Nov 2014

17 Which items increase when a company issues new shares? A equity and bank B equity and current liabilities C intangible assets and current liabilities D intangible assets and equity

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2014

Q144 · X Limited and Y Limited both started trading on 1 January 2001 9706/12 Oct/Nov 2014

22 X Limited and Y Limited both started trading on 1 January 2001. Each year, both businesses had a profit from operations of $20 000. On 31 December 2013 retained earnings were as follows: $ X Limited 145 000 Y Limited 95 000 Which statement explains the difference? A X Limited has transferred higher amounts to general reserve. B X Limited pays a higher dividend per share. C Y Limited has fewer shares in issue. D Y Limited has a higher level of debt.

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2014

Q145 · Which rule does not apply in the absence of a partnership agreement? 9706/13 Oct/Nov 2014

12 Which rule does not apply in the absence of a partnership agreement? A interest on 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

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2014

Q146 · The equity of a limited company is as follows 9706/13 Oct/Nov 2014

15 The equity of a limited company is as follows. at 31 December 2012 at 31 December 2013 $ $ ordinary shares of $0.50 each 400 000 400 000 7% preference shares of $1 each 200 000 200 000 retained earnings 4 000 ? Profit for the year 2013 was $300 000. Dividends paid in 2013 were as follows: ordinary shares: $0.20 per share preference shares: half-year dividend What were the retained earnings at 31 December 2013? A $133 000 B $144 000 C $210 000 D $217 000

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2014

Q147 · X is admitted to a partnership sharing 20% of its profits and losses 9706/13 Oct/Nov 2014

19 X is admitted to a partnership sharing 20% of its profits and losses. The goodwill of the firm is valued at $30 000. X is to pay $25 000 into the partnership. What will be the balance on X’s capital account after adjusting for goodwill? A $5000 Cr B $19 000 Cr C $25 000 Cr D $31 000 Cr

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2014

Q148 · The table shows an extract from the statement of financial position of a limited company… 9706/13 Oct/Nov 2014

22 The table shows an extract from the statement of financial position of a limited company at 30 June 2014. $ 4% debenture (2018 – 2019) 30 000 5% preference share capital 20 000 ordinary shares of $1 each 80 000 The company declared a dividend of $0.05 per share. This was paid on 31 March 2014. What is the total amount of equity dividends paid for the year ended 30 June 2014? A $1000 B $4000 C $5000 D $6200

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2014

Q149 · The following information is available at the end of the financial year 9706/11 May/June 2015

5 The following information is available at the end of the financial year. $ net assets 850 000 drawings 47 300 loss for the year 135 600 What is the value of capital at the start of the year? A $667 100 B $761 700 C $938 300 D $1 032 900

1 marks

Answer: D

This question in 9706/11 May/June 2015

Q150 · The following information has been taken from a summarised statement of financial position 9706/11 May/June 2015

11 The following information has been taken from a summarised statement of financial position. $ non-current assets 175 000 current assets 45 000 current liabilities ? 100 000 ordinary shares of $1 each 100 000 share premium 65 000 retained earnings 35 000 What is the value of the current liabilities? A $20 000 B $55 000 C $70 000 D $120 000

1 marks

Answer: A

This question in 9706/11 May/June 2015

Q151 · Which item appears as a credit entry in the appropriation account of a partnership? 9706/11 May/June 2015

13 Which item appears as a credit entry in the appropriation account of a partnership? A goodwill B interest on capital C partnership salaries D profit for the year

1 marks

Answer: D

This question in 9706/11 May/June 2015

Q152 · Alice and Bharti have been in partnership sharing profits and losses in the ratio of 3 : 2 9706/11 May/June 2015

14 Alice and Bharti have been in partnership sharing profits and losses in the ratio of 3 : 2. The balances on the partners’ capital accounts at 31 December 2014 are shown. $ Alice 32 000 Bharti 18 000 The partners decided to share profits and losses equally with effect from 1 January 2015. There was no goodwill account in the books. Goodwill is valued at $30 000 and is not to be retained in the books of account. What is the balance on Alice’s capital account after the adjustment for goodwill? A $15 000 B $18 000 C $35 000 D $50 000

1 marks

Answer: C

This question in 9706/11 May/June 2015

Q153 · How is any premium on an issue of shares treated? 9706/11 May/June 2015

16 How is any premium on an issue of shares treated? A added to a capital reserve B added to a revenue reserve C deducted from a capital reserve D deducted from a revenue reserve

1 marks

Answer: A

This question in 9706/11 May/June 2015

Q154 · The following statement describes a type of preference share 9706/11 May/June 2015

17 The following statement describes a type of preference share. ‘Shareholders are entitled to a fixed annual dividend with any unpaid dividends being paid out of future profits’. Which type of preference share does it describe? A cumulative B non-cumulative C participating D redeemable

1 marks

Answer: A

This question in 9706/11 May/June 2015

Q155 · How should interest charged on a partner’s drawings account be treated? 9706/12 May/June 2015

12 How should interest charged on a partner’s drawings account be treated? A credited to the appropriation account B credited to the income statement C debited to the appropriation account D debited to the income statement

1 marks

Answer: A

This question in 9706/12 May/June 2015

Q156 · Kay and Lay share profits and losses in the ratio of 3 : 1 9706/12 May/June 2015

13 Kay and Lay share profits and losses in the ratio of 3 : 1. Capital account balances are Kay $100 000 and Lay $84 000. There was no goodwill account in the books. The partners change the profit sharing ratio to 4 : 1. Goodwill is valued at $54 000 and is not to be retained in the books of account. What is the balance on Lay’s capital account after the adjustment for goodwill? A $70 500 B $81 300 C $86 700 D $97 500

1 marks

Answer: C

This question in 9706/12 May/June 2015

Q157 · A new business was established with opening capital of $20 000 9706/12 May/June 2015

19 A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The owner withdrew $7000 as drawings during the year and this resulted in a bank overdraft of $5000 at the end of the year. What was the profit during the first year? A $8000 B $12 000 C $13 000 D $18 000

1 marks

Answer: C

This question in 9706/12 May/June 2015

Q158 · A business has the following assets and liabilities at the start of the year 9706/13 May/June 2015

11 A business has the following assets and liabilities at the start of the year. a motor car valued at $2500 inventory which cost $4000 with a sale value of $5800 bank overdraft of $500 a loan to a friend from the business bank account $1000 What is the capital account balance at the start of the year? A $5000 B $7000 C $8000 D $8800

1 marks

Answer: B

This question in 9706/13 May/June 2015

Q159 · The provisions of the Partnership Act apply if partners do not draw up a partnership… 9706/13 May/June 2015

14 The provisions of the Partnership Act apply if partners do not draw up a partnership agreement. Which statement is true as a provision of the Partnership Act? A Interest on drawings is charged at 5% a year. B Interest on loans from partners is to be at 8% a year. C Partners are not entitled to salaries. D Profits are to be shared in the ratio of fixed capitals.

1 marks

Answer: C

This question in 9706/13 May/June 2015

Q160 · Adil and Bashir are in partnership sharing profits and losses in the ratio 2 : 1 9706/13 May/June 2015

15 Adil and Bashir are in partnership sharing profits and losses in the ratio 2 : 1. Chandra joins the partnership and profits and losses are now to be shared between Adil, Bashir and Chandra in the ratio 3 : 2 : 1. The balances of the partners’ capital accounts prior to the introduction of Chandra are as shown. $ Adil 20 000 Bashir 10 000 Goodwill is to be valued at $36 000 and is not to be retained in the books of account. What is the balance on Adil’s capital account after the introduction of Chandra? A $20 000 B $26 000 C $38 000 D $44 000

1 marks

Answer: B

This question in 9706/13 May/June 2015

Q161 · A motor vehicle retailer has the following transactions 9706/11 Oct/Nov 2015

7 A motor vehicle retailer has the following transactions. 1 issue of shares 2 sale of motor vehicles 3 sale of surplus premises Which transaction(s) are capital income? A 1 only B 1 and 3 C 2 only D 2 and 3

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2015

Q162 · Which item appears as a reserve in a statement of financial position? 9706/11 Oct/Nov 2015

8 Which item appears as a reserve in a statement of financial position? A bank overdraft B provision for depreciation C provision for doubtful debts D share premium

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2015

Q163 · Which entries are made to record interest on capital in partnership accounts? 9706/11 Oct/Nov 2015

16 Which entries are made to record interest on capital in partnership accounts? debit credit A appropriation account capital account B appropriation account current account C capital account appropriation account D current account appropriation account

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2015

Q164 · Two partners, X and Y, have a capital account of $10 000 each and share profits and… 9706/11 Oct/Nov 2015

17 Two partners, X and Y, have a capital account of $10 000 each and share profits and losses equally. They agree to admit Z to the partnership and continue to share profits and losses equally. There is no goodwill account in the books. At that time goodwill is valued at $15 000 but is not to be retained in the books of account. What will be the balance on X’s capital account after the admission of Z? A $10 000 B $12 500 C $15 000 D $17 500

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2015

Q165 · Information from a partnership’s accounts is shown 9706/11 Oct/Nov 2015

21 Information from a partnership’s accounts is shown. $ profit for the year before interest 15 000 interest on partner’s loan to the firm 1 000 interest on capital 2 000 drawings 10 000 Which profit figure is to be appropriated between the partners? A $3000 B $13 000 C $14 000 D $15 000

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2015

Q166 · Which item will not be shown as part of the equity in the statement of financial position… 9706/11 Oct/Nov 2015

24 Which item will not be shown as part of the equity in the statement of financial position of a limited company? A debentures B ordinary share capital C retained earnings D share premium

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2015

Q167 · Which items increase when a company issues new shares? 9706/12 Oct/Nov 2015

21 Which items increase when a company issues new shares? 1 cash (and cash equivalents) 2 equity 3 non-current liabilities 4 retained earnings A 1 and 2 B 1 and 3 C 2 and 3 D 2 and 4

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2015

Q168 · A depreciated non-current asset is revalued upwards 9706/13 Oct/Nov 2015

5 A depreciated non-current asset is revalued upwards. What is the effect of this on the statement of financial position? A Non-current assets increase, equity decreases. B Non-current assets increase, equity increases. C Non-current assets increase, retained earnings decrease. D Non-current assets increase, retained earnings increase.

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2015

Q169 · Omar wishes to become a trader 9706/12 Feb/March 2016

4 Omar wishes to become a trader. He decides to buy an existing business in a good location. He pays more for the business than its net asset value. How is the extra amount paid shown in the books of the new business? account to account to be debited be credited A capital goodwill B goodwill bank C goodwill capital D premises goodwill

1 marks

Answer: C

This question in 9706/12 Feb/March 2016

Q170 · P joined the partnership of G and H 9706/12 Feb/March 2016

13 P joined the partnership of G and H. He brought into the business the following assets. non-current assets cost $25 000, valued at $38 000 inventory cost $6000, valued at $4500 cash $20 000 There was no goodwill arising when P joined the partnership. What was the balance on P’s capital account? A $20 000 B $49 500 C $51 000 D $62 500

1 marks

Answer: D

This question in 9706/12 Feb/March 2016

Q171 · X and Y have capital accounts of $50 000 each and share profits equally 9706/12 Feb/March 2016

14 X and Y have capital accounts of $50 000 each and share profits equally. They plan to admit Z into partnership. The new profit sharing ratio will be 2 : 2 : 1. The balances on the capital accounts will also be in this ratio. Goodwill is valued at $20 000 and will not be retained in the books of account. How much cash will Z need to pay to join the partnership? A $25 000 B $26 000 C $29 000 D $30 000

1 marks

Answer: D

This question in 9706/12 Feb/March 2016

Q172 · David and Jane have been business partners for several years, sharing profits in the… 9706/12 Feb/March 2016

15 David and Jane have been business partners for several years, sharing profits in the ratio of 2 : 1. Jane now wishes to retire. Her capital account amounts to $15 800 and her current account shows a debit balance of $3500. Goodwill is valued at $6600. The book values of certain tangible assets are to be valued upwards by $3000. What is the amount due to Jane on her retirement from the business? A $15 500 B $18 700 C $22 500 D $25 700

1 marks

Answer: A

This question in 9706/12 Feb/March 2016

Q173 · Which is not an appropriation of partnership profit? 9706/12 Feb/March 2016

16 Which is not an appropriation of partnership profit? A interest on capital B interest on drawings C interest on loan D share of profit

1 marks

Answer: C

This question in 9706/12 Feb/March 2016

Q174 · A limited company intends to issue shares at a price above the nominal value 9706/12 Feb/March 2016

17 A limited company intends to issue shares at a price above the nominal value. Which items, apart from bank balance, will be affected by the share issue? A share capital, capital reserves and revenue reserves B share capital and capital reserves only C share capital and revenue reserves only D share capital only

1 marks

Answer: B

This question in 9706/12 Feb/March 2016

Q175 · A company issues one million ordinary shares of $1 each at $1.30 per share 9706/12 Feb/March 2016

18 A company issues one million ordinary shares of $1 each at $1.30 per share. It also issues a debenture for $500 000. What is the increase in the equity of the company? A $1 000 000 B $1 300 000 C $1 500 000 D $1 800 000

1 marks

Answer: B

This question in 9706/12 Feb/March 2016

Q176 · The statement of financial position showed the following balances at 31 December 2015 9706/11 May/June 2016

14 The statement of financial position showed the following balances at 31 December 2015. X Y $ $ capital accounts 20 000 10 000 current accounts 1 000 debit 2 500 credit Net assets at 1 January 2015 were $14 000. Property had been revalued upwards by $12 000 during the year ended 31 December 2015. No drawings had been made during the year. What was the profit for the year ended 31 December 2015? A $2500 B $5500 C $14 500 D $17 500

1 marks

Answer: B

This question in 9706/11 May/June 2016

Q177 · Smith and Jones are in partnership sharing profits and losses in the ratio 3 : 2… 9706/11 May/June 2016

15 Smith and Jones are in partnership sharing profits and losses in the ratio 3 : 2 respectively. Profit for the year was $152 000. Smith was charged interest on drawings of $1650. Jones had a partnership salary of $40 000. What was Smith’s share of residual profit? A $66 210 B $68 190 C $114 210 D $116 190

1 marks

Answer: B

This question in 9706/11 May/June 2016

Q178 · X, Y and Z have been in business sharing profits in the ratio 3 : 2 : 1 9706/11 May/June 2016

16 X, Y and Z have been in business sharing profits in the ratio 3 : 2 : 1. Y decided to retire at the end of the year when the balance on his capital account was $39 400. On that date the assets were revalued upwards by $57 000. The partnership does not account for goodwill. Y took a car valued at $4800 as part of the amount due to him. How much cash did Y receive? A $25 200 B $44 100 C $53 600 D $58 400

1 marks

Answer: C

This question in 9706/11 May/June 2016

Q179 · A company has a bank balance of $20 000 9706/11 May/June 2016

17 A company has a bank balance of $20 000. The company’s equity and reserves are shown. $ ordinary shares of $0.50 each 10 000 capital reserves 5 000 revenue reserves 3 000 The directors wish to pay the maximum dividend possible. How much of the bank balance will be used to pay the dividend? A $3000 B $5000 C $8000 D $20 000

1 marks

Answer: A

This question in 9706/11 May/June 2016

Q180 · Which statement about rights issues is true? 9706/11 May/June 2016

18 Which statement about rights issues is true? A Shares can be sold to anyone. B Shares can only be offered to existing shareholders. C Shares cannot be sold at a premium. D Shares cannot be sold at less than the market price.

1 marks

Answer: B

This question in 9706/11 May/June 2016

Q181 · A limited company's financial statements contain the following items 9706/11 May/June 2016

19 A limited company's financial statements contain the following items. 1 bonus issue of ordinary shares 2 debenture interest 3 profit for the year 4 profit on disposal of non-current assets Which items would be found in the statement of changes in equity? A 1 and 2 B 1 and 3 C 2 and 3 D 2 and 4

1 marks

Answer: B

This question in 9706/11 May/June 2016

Q182 · A company issued 25 000 ordinary shares of $0.50 each at a premium of 25% 9706/11 May/June 2016

20 A company issued 25 000 ordinary shares of $0.50 each at a premium of 25%. They had a market value of $1.50 each. What is the value of ordinary share capital in the statement of financial position? A $12 500 B $15 625 C $31 250 D $37 500

1 marks

Answer: A

This question in 9706/11 May/June 2016

Q183 · X and Y were in partnership sharing profit and losses equally 9706/12 May/June 2016

13 X and Y were in partnership sharing profit and losses equally. They then admitted Z into the partnership and profits and losses were still shared equally. The following transactions took place. 1 Z introduced capital of $50 000. 2 Goodwill was valued at $30 000. No goodwill account is kept in the books of account. 3 X took a computer from the business at a value of $3000. After these transactions had taken place, the balance on X’s capital account was $60 000. What was the opening balance on X’s capital account? A $55 000 B $58 000 C $65 000 D $75 000

1 marks

Answer: B

This question in 9706/12 May/June 2016

Q184 · A and B were in partnership sharing profits and losses equally when they decided to retire 9706/12 May/June 2016

14 A and B were in partnership sharing profits and losses equally when they decided to retire. Details of the realisation are shown in the table. book value realised value $000 $000 non-current assets 50 65 current assets excluding cash and bank 25 23 cash and bank balances 4 – current liabilities 18 14 costs of realisation 1 – How much profit was each partner entitled to on realisation? A $8000 B $10 000 C $12 000 D $16 000

1 marks

Answer: A

This question in 9706/12 May/June 2016

Q185 · The statement of financial position showed the following balances at 31 December 2015 9706/13 May/June 2016

14 The statement of financial position showed the following balances at 31 December 2015. X Y $ $ capital accounts 20 000 10 000 current accounts 1 000 debit 2 500 credit Net assets at 1 January 2015 were $14 000. Property had been revalued upwards by $12 000 during the year ended 31 December 2015. No drawings had been made during the year. What was the profit for the year ended 31 December 2015? A $2500 B $5500 C $14 500 D $17 500

1 marks

Answer: B

This question in 9706/13 May/June 2016

Q186 · Smith and Jones are in partnership sharing profits and losses in the ratio 3 : 2… 9706/13 May/June 2016

15 Smith and Jones are in partnership sharing profits and losses in the ratio 3 : 2 respectively. Profit for the year was $152 000. Smith was charged interest on drawings of $1650. Jones had a partnership salary of $40 000. What was Smith’s share of residual profit? A $66 210 B $68 190 C $114 210 D $116 190

1 marks

Answer: B

This question in 9706/13 May/June 2016

Q187 · X, Y and Z have been in business sharing profits in the ratio 3 : 2 : 1 9706/13 May/June 2016

16 X, Y and Z have been in business sharing profits in the ratio 3 : 2 : 1. Y decided to retire at the end of the year when the balance on his capital account was $39 400. On that date the assets were revalued upwards by $57 000. The partnership does not account for goodwill. Y took a car valued at $4800 as part of the amount due to him. How much cash did Y receive? A $25 200 B $44 100 C $53 600 D $58 400

1 marks

Answer: C

This question in 9706/13 May/June 2016

Q188 · A company has a bank balance of $20 000 9706/13 May/June 2016

17 A company has a bank balance of $20 000. The company’s equity and reserves are shown. $ ordinary shares of $0.50 each 10 000 capital reserves 5 000 revenue reserves 3 000 The directors wish to pay the maximum dividend possible. How much of the bank balance will be used to pay the dividend? A $3000 B $5000 C $8000 D $20 000

1 marks

Answer: A

This question in 9706/13 May/June 2016

Q189 · Which statement about rights issues is true? 9706/13 May/June 2016

18 Which statement about rights issues is true? A Shares can be sold to anyone. B Shares can only be offered to existing shareholders. C Shares cannot be sold at a premium. D Shares cannot be sold at less than the market price.

1 marks

Answer: B

This question in 9706/13 May/June 2016

Q190 · A limited company's financial statements contain the following items 9706/13 May/June 2016

19 A limited company's financial statements contain the following items. 1 bonus issue of ordinary shares 2 debenture interest 3 profit for the year 4 profit on disposal of non-current assets Which items would be found in the statement of changes in equity? A 1 and 2 B 1 and 3 C 2 and 3 D 2 and 4

1 marks

Answer: B

This question in 9706/13 May/June 2016

Q191 · A company issued 25 000 ordinary shares of $0.50 each at a premium of 25% 9706/13 May/June 2016

20 A company issued 25 000 ordinary shares of $0.50 each at a premium of 25%. They had a market value of $1.50 each. What is the value of ordinary share capital in the statement of financial position? A $12 500 B $15 625 C $31 250 D $37 500

1 marks

Answer: A

This question in 9706/13 May/June 2016

Q192 · Abdul and Omar are in partnership 9706/11 Oct/Nov 2016

14 Abdul and Omar are in partnership. The following information has been extracted from their current accounts. Abdul Omar $ $ balances at 1 January 2015 2 000 debit 3 000 credit drawings for the year 15 000 18 000 balances at 1 January 2016 1 000 credit 4 000 debit What was the total profit for the year ended 31 December 2015? A $29 000 B $33 000 C $37 000 D $39 000

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2016

Q193 · J, H and P are in partnership 9706/11 Oct/Nov 2016

15 J, H and P are in partnership. The profit for the year was $80 000. J is entitled to a partnership salary of $5000. They share profits in the ratio of 2 : 2 : 1 but P has guaranteed minimum earnings of $20 000. Which total profit share did J receive? A $27 500 B $32 000 C $32 500 D $35 000

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2016

Q194 · X, Y and Z were partners sharing profits and losses equally 9706/11 Oct/Nov 2016

16 X, Y and Z were partners sharing profits and losses equally. On 31 March 2014 Z retired and the net asset valuation showed a loss of $15 000. Unrecorded goodwill was valued at $30 000. What was the net entry in Z’s capital account? A credit $5000 B credit $15 000 C debit $5000 D debit $15 000

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2016

Q195 · Which statement about ordinary shares is not correct? 9706/11 Oct/Nov 2016

17 Which statement about ordinary shares is not correct? A Shareholders receive return on investment before other investor groups. B They are the most risky form of investment. C They carry a variable rate of dividends. D They entitle the shareholder to part ownership.

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2016

Q196 · An investor owns 10 000 5% preference shares in Howdo Limited 9706/11 Oct/Nov 2016

18 An investor owns 10 000 5% preference shares in Howdo Limited. One year Howdo Limited does not have enough profits to pay the preference dividend. The investor expects the profits to improve and he thinks the directors will pay the outstanding dividend in the following year. Which type of preference shares does the investor own? A cumulative B non-cumulative C participating D redeemable

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2016

Q197 · The issued ordinary share capital of a company at the beginning of a period was $240 000… 9706/11 Oct/Nov 2016

19 The issued ordinary share capital of a company at the beginning of a period was $240 000 (nominal value $0.60 per share). A rights issue of one share for every five held was made during the period at a price of $0.90 per share. At that time the market price was $1.10 per share. What was the issued ordinary share capital after the rights issue? A $288 000 B $292 800 C $312 000 D $328 000

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2016

Q198 · In 2014 a company was entirely financed by its equity and reserves which total $1 000 000 9706/11 Oct/Nov 2016

20 In 2014 a company was entirely financed by its equity and reserves which total $1 000 000. Its return on capital employed was 28%. On 1 January 2015 the company issued a 10% debenture of $300 000. During 2015 the profit from operations increased by 20%. No dividends were paid. What was the return on capital employed for 2015? A 19.1% B 20.9% C 23.4% D 25.8%

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2016

Q199 · A sole trader provides the following information 9706/12 Oct/Nov 2016

10 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

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2016

Q200 · A partnership admits a new partner 9706/12 Oct/Nov 2016

12 A partnership admits a new partner. Which statement is correct? A Profits will always be shared equally following the new partner’s admission. B The new partner will always benefit if assets are later revalued upwards. C The new partner must always contribute capital to the partnership. D The new partner will always pay for a share of partnership goodwill.

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2016

Q201 · X, Y and Z are in partnership sharing the profits and losses in the ratio of 2 : 2 : 1 9706/12 Oct/Nov 2016

13 X, Y and Z are in partnership sharing the profits and losses in the ratio of 2 : 2 : 1. At 31 December the following information is available. X Y Z $ $ $ capital account balances 100 000 100 000 50 000 current account balances 20 000 15 000 (5 000) On 31 December Z retires from the partnership. Total assets are revalued upwards by $45 000. There is no goodwill. How much will Z be paid on his retirement? A $54 000 B $59 000 C $60 000 D $65 000

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2016

Q202 · The following information relates to a partnership 9706/12 Oct/Nov 2016

14 The following information relates to a partnership. $ profit from operation 90 000 loan interest 3 200 interest on drawings 6 000 drawings 40 000 interest on capital 11 000 What is the residual profit to be appropriated amongst the partners? A $41 800 B $69 800 C $81 800 D $91 800

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2016

Q203 · A partnership earned an average profit during the year of $15 000 per month 9706/12 Oct/Nov 2016

15 A partnership earned an average profit during the year of $15 000 per month. Halfway through the year D and E were joined by a new partner F and profits were shared equally before and after the change. In the first half of the year D transferred his private vehicle to the partnership at a valuation of $12 000. D’s drawings amounted to $60 000 during the year. What was the increase in D’s current account balance during the year? A $15 000 B $30 000 C $75 000 D $87 000

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2016

Q204 · Which statement regarding partnerships, constituted under a partnership agreement, is… 9706/13 Oct/Nov 2016

14 Which statement regarding partnerships, constituted under a partnership agreement, is always correct? A Each partner is always paid interest on capital. B Each partner must introduce the same amount of capital. C Each partner must share profits and losses equally. D Each partner receives a salary only if set out in the agreement.

1 marks

Answer: D

This question in 9706/13 Oct/Nov 2016

Q205 · X and Y are in partnership sharing profits and losses in the ratio 3 : 2 respectively 9706/13 Oct/Nov 2016

15 X and Y are in partnership sharing profits and losses in the ratio 3 : 2 respectively. Z was introduced as a partner. Goodwill was valued at $75 000 but is not to be retained in the books of account. Non-current assets were revalued from $300 000 to $250 000. The new profit sharing ratio will be 5 : 3 : 2 respectively. What was the net adjustment in Y’s capital account? A $12 500 credit B $12 500 debit C $27 500 credit D $27 500 debit

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2016

Q206 · A and B are in partnership 9706/13 Oct/Nov 2016

16 A and B are in partnership. The following information relates to 2015. $ profit before appropriation 88 000 interest on drawings: A 1 000 B 1 000 interest on capital: A 3 000 B 1 000 The profit sharing ratio is in accordance with the proportion of the capital account. What is A’s share of the residual profit? A $41 000 B $43 000 C $61 500 D $64 500

1 marks

Answer: D

This question in 9706/13 Oct/Nov 2016

Q207 · Which statement is correct? 9706/13 Oct/Nov 2016

17 Which statement is correct? A A bonus issue of shares will increase the amount of cash available to the company. B A rights issue of shares is always made at the nominal value of the shares. C A rights issue of shares will increase the amount of cash available to the company. D If shares are issued at an amount that is more than the nominal value of the shares, the excess must be debited to the share premium account.

1 marks

Answer: C

This question in 9706/13 Oct/Nov 2016

Q208 · A limited company has an issued share capital of 300 000 $1 ordinary shares 9706/13 Oct/Nov 2016

18 A limited company has an issued share capital of 300 000 $1 ordinary shares. It makes a bonus issue of one share for every three held. This is followed by a rights issue of one share for every five held. What is the balance on the share capital account after these transactions? A $360 000 B $400 000 C $460 000 D $480 000

1 marks

Answer: D

This question in 9706/13 Oct/Nov 2016

Q209 · The following information is available for a limited company which has 280 000 ordinary… 9706/13 Oct/Nov 2016

19 The following information is available for a limited company which has 280 000 ordinary shares of $0.50 each. $ share premium 70 000 10% debentures 100 000 retained earnings 73 400 general reserve 62 700 What is the value of shareholders’ equity? A $346 100 B $446 100 C $486 100 D $586 100

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2016

Q210 · The following balances related to Ladha’s business 9706/12 Feb/March 2017

7 The following balances related to Ladha’s business. at 31 March 2016 at 31 March 2015 $ $ total assets 388 000 345 000 total liabilities 84 000 75 000 net assets 304 000 270 000 drawings during the year 22 000 20 000 What was Ladha’s profit for the year ended 31 March 2016? A $12 000 B $32 000 C $36 000 D $56 000

1 marks

Answer: D

This question in 9706/12 Feb/March 2017

Q211 · Why is goodwill adjusted in the books of account when a new partner is admitted? 9706/12 Feb/March 2017

13 Why is goodwill adjusted in the books of account when a new partner is admitted? A A more accurate value of non-current assets is shown in the statement of financial position. B Original partners can be credited for their efforts in building up the partnership business. C Partners can take higher drawings as a result of their share of the goodwill. D The new partner knows how much they have to introduce as capital.

1 marks

Answer: B

This question in 9706/12 Feb/March 2017

Q212 · A partnership revalues its non-current assets upwards 9706/12 Feb/March 2017

14 A partnership revalues its non-current assets upwards. What are the ledger entries to record this? account to debit account to credit A non-current assets bank B non-current assets partners’ capital accounts C non-current assets partners’ current accounts D non-current assets revaluation reserve

1 marks

Answer: B

This question in 9706/12 Feb/March 2017

Q213 · X and Y are in partnership 9706/12 Feb/March 2017

15 X and Y are in partnership. They admit Z as a new partner. The profit sharing ratio will be 2 : 1 : 1 respectively. Goodwill is valued at $100 000. Goodwill is not to be retained in the books of account. Other assets are revalued at $40 000 in excess of their net book value. Z introduces $250 000 cash and office equipment valued at $30 000. What is Z’s capital account balance after his admission? A $255 000 B $265 000 C $305 000 D $315 000

1 marks

Answer: A

This question in 9706/12 Feb/March 2017

Q214 · Which facts about preference shares are correct? 9706/12 Feb/March 2017

16 Which facts about preference shares are correct? rate of dividends voting rights A fixed no B fixed yes C variable no D variable yes

1 marks

Answer: A

This question in 9706/12 Feb/March 2017

Q215 · The assets of a partnership were revalued when a partner retired 9706/11 May/June 2017

12 The assets of a partnership were revalued when a partner retired. Which ratio is used to divide the surplus or deficit on revaluation? A new capital accounts B new profit sharing C old capital accounts D old profit sharing

1 marks

Answer: D

This question in 9706/11 May/June 2017

Q216 · X and Y are in partnership sharing profits and losses in the ratio 2 : 1 respectively 9706/11 May/June 2017

13 X and Y are in partnership sharing profits and losses in the ratio 2 : 1 respectively. Capital account balances are X $80 000 and Y $50 000. Z joins as a new partner and introduces capital of $30 000. Goodwill is valued at $18 000. Goodwill is not to remain in the books of account. The new profit sharing ratio will be 5 : 3 : 2 respectively. What is the balance on X’s capital account after the introduction of Z? A $59 000 B $77 000 C $83 000 D $101 000

1 marks

Answer: C

This question in 9706/11 May/June 2017

Q217 · L, M and N were in partnership sharing profit and losses in the ratio 4 : 3 : 1… 9706/11 May/June 2017

14 L, M and N were in partnership sharing profit and losses in the ratio 4 : 3 : 1 respectively. N retired from the partnership on 31 October 2016 when the balance on her capital account was $142 000. Goodwill was valued at $54 000 and would not remain in the books of account. Non-current assets were revalued from $180 000 to $144 000. N was paid all amounts due to her from the business bank account. How much was N paid on retirement from the partnership? A $130 750 B $139 750 C $144 250 D $153 250

1 marks

Answer: C

This question in 9706/11 May/June 2017

Q218 · A company makes a 1 for 4 bonus issue of ordinary shares 9706/11 May/June 2017

15 A company makes a 1 for 4 bonus issue of ordinary shares. What happens to share capital and total equity? share capital total equity A increase decrease B increase increase C increase no change D no change increase

1 marks

Answer: C

This question in 9706/11 May/June 2017

Q219 · A company has the following: 12 000 ordinary shares of $1 each 10% debenture $10 000 It… 9706/11 May/June 2017

16 A company has the following: 12 000 ordinary shares of $1 each 10% debenture $10 000 It made a loss of $15 000 for the year ended 31 December 2016. An interim ordinary dividend of $0.20 per ordinary share was paid on 30 September 2016. An ordinary dividend of $0.40 per ordinary share was proposed at 31 December 2016. The retained earnings balance in the statement of changes in equity at 31 December 2016 was $20 000. What was the retained earnings balance at 1 January 2016? A $37 400 B $38 400 C $42 200 D $43 200

1 marks

Answer: A

This question in 9706/11 May/June 2017

Q220 · Finn provides the following information 9706/12 May/June 2017

9 Finn provides the following information. $ capital at the start of the year 19 800 profit for the year 24 000 drawings (cash) 19 500 drawings (goods for own use) 1 100 private vehicle transferred to business use 6 000 What was Finn’s capital at the end of the year? A $23 200 B $24 300 C $29 200 D $31 400

1 marks

Answer: C

This question in 9706/12 May/June 2017

Q221 · Which item is not taken into account when a partner joins a partnership? 9706/12 May/June 2017

12 Which item is not taken into account when a partner joins a partnership? A balances on the partners’ current accounts B capital introduced by the new partner C changes in the profit sharing ratio D goodwill

1 marks

Answer: A

This question in 9706/12 May/June 2017

Q222 · Ali, Bharti and Chan were in partnership sharing profit and losses in the ratio 3 : 2 : 1 9706/12 May/June 2017

13 Ali, Bharti and Chan were in partnership sharing profit and losses in the ratio 3 : 2 : 1. Bharti retired from the partnership on 30 June 2016. The following were the balances available at 30 June 2016. Ali ($) Bharti ($) Chan ($) capital accounts 60 000 Cr 40 000 Cr 20 000 Cr current accounts 18 650 Cr 6 100 Dr 8 950 Cr On her retirement, Bharti retained a partnership motor vehicle at an agreed valuation of $4000. Goodwill was valued at $39 000. How much was payable to Bharti on her retirement? A $33 900 B $42 900 C $46 900 D $50 900

1 marks

Answer: B

This question in 9706/12 May/June 2017

Q223 · A partnership maintains both capital and current accounts for its partners 9706/12 May/June 2017

14 A partnership maintains both capital and current accounts for its partners. What is the correct accounting entry for recording interest on capital for partner X? account to account to be debited be credited A appropriation X’s capital B appropriation X’s current C X’s capital appropriation D X’s current appropriation

1 marks

Answer: B

This question in 9706/12 May/June 2017

Q224 · Which statement describes the treatment of purchased goodwill for a limited company? 9706/12 May/June 2017

15 Which statement describes the treatment of purchased goodwill for a limited company? A a tangible non-current asset that can be amortised B a tangible non-current asset that can be depreciated C an intangible non-current asset that can be amortised D an intangible non-current asset that can be depreciated

1 marks

Answer: C

This question in 9706/12 May/June 2017

Q225 · A company’s equity is made up as shown 9706/12 May/June 2017

16 A company’s equity is made up as shown. $ 100 000 ordinary shares of $0.25 each 25 000 share premium 3 000 retained earnings 8 000 The following took place. 1 A bonus issue of one ordinary share for every five held was made. 2 Six months later a rights issue of one ordinary share for every four held was made. The shares were issued at $0.30 each. By how much did the company’s equity increase as a result of these transactions? A $5000 B $6000 C $7500 D $9000

1 marks

Answer: D

This question in 9706/12 May/June 2017

Q226 · Which statement about ordinary shares is correct? 9706/12 May/June 2017

17 Which statement about ordinary shares is correct? A dividends on ordinary shares are an appropriation of profit B dividends on ordinary shares are paid at the same rate each year C ordinary shares are never issued at a premium D the holders of ordinary shares are creditors of a company

1 marks

Answer: A

This question in 9706/12 May/June 2017

Q227 · A company decided not to capitalise the purchase of a stapler for use in its office 9706/13 May/June 2017

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

1 marks

Answer: C

This question in 9706/13 May/June 2017

Q228 · Where should a partner’s drawings be recorded? 9706/13 May/June 2017

12 Where should a partner’s drawings be recorded? A appropriation account B income statement C partner’s capital account D partner’s current account

1 marks

Answer: D

This question in 9706/13 May/June 2017

Q229 · X and Y were in partnership sharing profits equally 9706/13 May/June 2017

14 X and Y were in partnership sharing profits equally. Z became a partner and all three partners shared profits equally. Goodwill was valued at $90 000. No goodwill account is to be retained in the books of account. Which statement describes the effect on capital accounts when Z was admitted? A The capital accounts of X and Y increase by $15 000 each, the capital account of Z will reduce by $30 000. B The capital accounts of X and Y increase by $30 000 each. C The capital accounts of X and Y increase by $45 000 each. D The capital account of Z reduces by $90 000.

1 marks

Answer: A

This question in 9706/13 May/June 2017

Q230 · The personal spending of the owner of a business is not recognised as a business expense 9706/11 Oct/Nov 2017

1 The personal spending of the owner of a business is not recognised as a business expense. Which accounting concept is being applied? A business entity B consistency C money measurement D prudence

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2017

Q231 · Why should non-current assets be revalued when a partner retires and a new partner is… 9706/11 Oct/Nov 2017

11 Why should non-current assets be revalued when a partner retires and a new partner is admitted? A so that the new partner gains from the increase in value B so that the old partners gain from building up the business C so that the old partners can increase their drawings D to calculate the amount the new partner must pay as capital

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2017

Q232 · The table shows information about four partners in a partnership 9706/11 Oct/Nov 2017

14 The table shows information about four partners in a partnership. Which partner has the greatest net reward from interest on capital and interest on drawings? fixed capital annual drawings $ $ A 20 000 30 000 B 20 000 50 000 C 60 000 30 000 D 60 000 50 000

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2017

Q233 · A business does not keep complete accounting records 9706/12 Oct/Nov 2017

10 A business does not keep complete accounting records. The following information is known for the year. $ capital at start 52 000 capital at end 55 000 drawings 13 000 capital introduced 25 000 What is the profit or loss for the year? A loss $9000 B profit $9000 C loss $15 000 D profit $15 000

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2017

Q234 · A partnership maintains capital accounts and current accounts 9706/12 Oct/Nov 2017

13 A partnership maintains capital accounts and current accounts. Which statements are correct? 1 The capital accounts show the total amount owed to each partner. 2 The capital accounts represent the retained earnings of the business. 3 The capital and current accounts equal the net assets. A 1 and 2 B 1 and 3 C 2 only D 3 only

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2017

Q235 · X, Y and Z had been in partnership, sharing profits and losses in the ratio of 2 : 2 : 1 9706/12 Oct/Nov 2017

14 X, Y and Z had been in partnership, sharing profits and losses in the ratio of 2 : 2 : 1. On 1 January 2017, Y retired. The balances of his capital and current accounts were as shown. capital account current account $50 000 $6400 debit Y took over a motor van at an agreed value of $3800. The net book value of the motor van was $4800. Goodwill was valued at $30 000. The value of all other assets at 1 January 2017 would remain unchanged. How much cash was Y entitled to when he retired? A $51 400 B $51 800 C $55 200 D $64 200

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2017

Q236 · S and T are in partnership, sharing profits and losses in the ratio 2 : 1 9706/12 Oct/Nov 2017

15 S and T are in partnership, sharing profits and losses in the ratio 2 : 1. The balances on their capital accounts at 31 March 2017 were: $ capital account S 40 000 capital account T 20 000 60 000 On 1 April 2017 the partners decide to change the profit-sharing ratio to 3 : 2. Goodwill is to be valued at $30 000 and is not to be retained in the books of account. What is the new balance of T’s capital account? A $18 000 B $20 000 C $22 000 D $30 000

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2017

Q237 · A partnership provides the following financial information for the year ended 30 June 2017 9706/12 Oct/Nov 2017

16 A partnership provides the following financial information for the year ended 30 June 2017. $ profit from operations 240 000 bank interest payable 21 000 interest on capital 15 000 drawings 50 000 partnership salaries 45 000 What is the residual balance of profits to be appropriated between the partners? A $109 000 B $154 000 C $159 000 D $204 000

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2017

Q238 · Which accounting entry could record the issue of bonus shares? 9706/12 Oct/Nov 2017

17 Which accounting entry could record the issue of bonus shares? debit credit A bank share capital B general reserve share capital C general reserve share premium D share capital general reserve

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2017

Q239 · From which accounts can a company pay dividends? 9706/12 Oct/Nov 2017

18 From which accounts can a company pay dividends? 1 general reserve 2 retained earnings 3 revaluation reserve 4 share capital A 1 and 2 B 1 and 3 C 2 and 3 D 2 and 4

1 marks

Answer: A

This question in 9706/12 Oct/Nov 2017

Q240 · Which rule does not apply in the absence of a partnership agreement? 9706/12 Feb/March 2018

11 Which rule does not apply in the absence of a partnership agreement? A interest on 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

1 marks

Answer: A

This question in 9706/12 Feb/March 2018

Q241 · The partnership of Ravi and Tania, who shared profits equally, was dissolved 9706/12 Feb/March 2018

12 The partnership of Ravi and Tania, who shared profits equally, was dissolved. The capital accounts prior to dissolution were Ravi $50 000 and Tania $60 000. The current accounts balances prior to dissolution were Ravi $35 000 credit and Tania $35 000 credit. The loss on disposal of partnership net assets was $10 000. How much money did each partner receive when the partnership was dissolved? Ravi Tania $ $ A 45 000 55 000 B 80 000 90 000 C 85 000 95 000 D 90 000 100 000

1 marks

Answer: B

This question in 9706/12 Feb/March 2018

Q242 · Partnership profit, $60 000, accrued evenly through the year ended 31 December 2017 9706/11 May/June 2018

13 Partnership profit, $60 000, accrued evenly through the year ended 31 December 2017. Jim became a third partner on 31 March 2017. The partners shared profits equally from that date. An irrecoverable debt of $12 000 in the financial statements would be ignored when calculating Jim’s share of the profit. What was Jim’s share of the profit for the year ended 31 December 2017? A $5000 B $12 000 C $15 000 D $18 000

1 marks

Answer: D

This question in 9706/11 May/June 2018

Q243 · X and Y are in partnership and revalue their assets as follows 9706/11 May/June 2018

14 X and Y are in partnership and revalue their assets as follows. revalued book value asset amount $ $ freehold property 50 000 71 000 fixtures and fittings 20 000 16 000 inventory 15 000 13 000 X and Y share profits and losses in the ratio of 2 : 1. What is X’s share of profit from revaluation? A $5000 B $10 000 C $14 000 D $15 000

1 marks

Answer: B

This question in 9706/11 May/June 2018

Q244 · The following statements relate to a revaluation account 9706/11 May/June 2018

15 The following statements relate to a revaluation account. 1 An entry on the credit side of the revaluation account means that a non-current asset has fallen in value. 2 If a credit entry is required to close off a revaluation account there is a profit on revaluation. Which row is correct regarding these statements? statement 1 statement 2 A false false B false true C true false D true true

1 marks

Answer: A

This question in 9706/11 May/June 2018

Q245 · X and Y were in partnership sharing profit and loss equally 9706/13 May/June 2018

12 X and Y were in partnership sharing profit and loss equally. Z was admitted to the partnership and it was agreed that profit and loss were to be shared equally. Goodwill was to be valued at the date of admission but was not to be retained in the books of account. How did the goodwill adjustment affect the partners’ capital accounts? X’s capital account Y’s capital account Z’s capital account A decrease decrease decrease B decrease decrease increase C increase increase decrease D increase increase increase

1 marks

Answer: C

This question in 9706/13 May/June 2018

Q246 · L, M and N were in partnership sharing profits and losses in the ratio 3 : 2 : 1 9706/13 May/June 2018

13 L, M and N were in partnership sharing profits and losses in the ratio 3 : 2 : 1. M retired on 31 December 2017. At that date the balance on M’s capital account was $37 000. No current accounts were maintained. The following were the terms of M’s retirement. Goodwill was valued at $24 000. Freehold property was revalued upwards by $30 000. M took over a motor vehicle at value of $7000. What was the final settlement due to M on his retirement? A $48 000 B $57 000 C $62 000 D $71 000

1 marks

Answer: A

This question in 9706/13 May/June 2018

Q247 · Which accounting concept is being applied when goods taken by an owner for own use are… 9706/11 Oct/Nov 2018

1 Which accounting concept is being applied when goods taken by an owner for own use are treated as drawings? A business entity B materiality C realisation D substance over form

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2018

Q248 · When is a revaluation account prepared? 9706/11 Oct/Nov 2018

11 When is a revaluation account prepared? 1 when a new partner is admitted 2 when an existing partner retires 3 when the partnership is sold A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 only

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2018

Q249 · Which items only appear on the credit side of a partner’s capital account? 9706/11 Oct/Nov 2018

14 Which items only appear on the credit side of a partner’s capital account? 1 goodwill in an agreed ratio split 2 opening balances 3 profit on revaluation of assets 4 transfers from current accounts A 1 and 2 B 1 and 3 C 2 and 3 D 2 and 4

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2018

Q250 · Why is the profit on revaluation credited to the capital accounts and not the current… 9706/13 Oct/Nov 2018

12 Why is the profit on revaluation credited to the capital accounts and not the current accounts of existing partners? A assets are long term and so are the capital accounts B profit on revaluation is an unrealised profit C so that partners can get more money when they retire from the partnership D to increase the capital accounts balances so that partners can earn a higher interest on capital

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2018

Q251 · X and Y were in partnership sharing profits and losses equally 9706/13 Oct/Nov 2018

13 X and Y were in partnership sharing profits and losses equally. When Z became a partner, profits continued to be shared equally and partnership goodwill was valued at $120 000. Goodwill was not retained in the partnership books of account. How is this recorded in the partners’ capital accounts? credit debit X and Y Z $ $ A 20 000 each 40 000 B 40 000 each 40 000 C 60 000 each no effect D 60 000 each 120 000

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2018

Q252 · An inexperienced book-keeper has prepared the following appropriation account for the… 9706/13 Oct/Nov 2018

14 An inexperienced book-keeper has prepared the following appropriation account for the partnership of P and Q. $ $ profit as per income statement 18 861 interest on capital P 1 000 Q 500 1 500 17 361 salary P 900 balance of profit 18 261 share of balance of profit P 12 174 Q 6 087 18 261 nil What should be the correct share of residual profit due to P? A $10 974 B $11 574 C $12 974 D $14 174

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2018

Q253 · L and M are in partnership 9706/13 Oct/Nov 2018

15 L and M are in partnership. The following information relates to the year ended 31 December 2017. L M $ $ drawings 20 000 30 000 interest on drawings 1 200 1 800 loan interest on partner’s loan 8 000 salary 20 000 residual profit share 36 000 18 000 What was the profit for the year ended 31 December 2017? A $71 000 B $77 000 C $79 000 D $121 000

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2018

Q254 · Joe is a sole trader 9706/11 Oct/Nov 2019

11 Joe is a sole trader. Which statement(s) relating to his business are not correct? 1 Joe can receive a bank loan for the business. 2 Joe’s drawings are transferred to his capital account. 3 Joe’s personal expenses are included in his income statement. A 1 and 2 B 1 only C 2 and 3 D 3 only

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2019

Q255 · The provisions of the Partnership Act apply if partners do not draw up a partnership… 9706/11 Oct/Nov 2019

12 The provisions of the Partnership Act apply if partners do not draw up a partnership agreement. Which statement is true as a provision of the Partnership Act? A Interest on drawings is charged at 5% a year. B Interest on loans from partners is to be at 8% a year. C Partners are not entitled to salaries. D Profits are to be shared in the ratio of fixed capitals.

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2019

Q256 · X and Y are in partnership 9706/11 Oct/Nov 2019

14 X and Y are in partnership. Z was admitted to the partnership on 1 July 2018. It was also agreed that at that date: 1 Assets of the partnership would be valued upwards by $48 000. 2 Value of goodwill would be $20 000, but no goodwill account would be retained in the books of account. 3 Z would introduce $80 000 cash. 4 Profit and loss sharing ratio would be X, Y and Z, 2 : 1 : 1 respectively. What was Z’s capital account balance immediately after the admission? A $63 000 B $75 000 C $87 000 D $97 000

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2019

Q257 · F and P are in business sharing profits and losses in the ratio 3 : 1 9706/12 Feb/March 2020

13 F and P are in business sharing profits and losses in the ratio 3 : 1. Their capital account balances are: $ F 90 000 P 60 000 B is introduced as a new partner and invests $50 000 as capital. Goodwill is valued at $20 000 and is not to be retained in the books of account. The new profit sharing ratio will be 2 : 2 : 1 for F, P and B respectively. What is the new capital account balance of F following B’s admission? A $57 000 B $83 000 C $97 000 D $105 000

1 marks

Answer: C

This question in 9706/12 Feb/March 2020

Q258 · Which item is capital income? 9706/12 May/June 2020

2 Which item is capital income? A bank interest received B proceeds from sale of business premises C rental income from property D sale of inventory to a customer

1 marks

Answer: B

This question in 9706/12 May/June 2020

Q259 · An investor owns 5% preference shares in H Limited 9706/11 Oct/Nov 2020

16 An investor owns 5% preference shares in H Limited. One year H Limited does not have enough profits to pay the preference dividend. The investor expects the profits to improve and thinks the directors will pay the outstanding dividend in the following year. Which type of preference shares does the investor own? A cumulative B non-cumulative C participating D redeemable

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2020

Q260 · Adil and Bashir were in partnership sharing profits and losses in the ratio 2 : 1 9706/12 Oct/Nov 2020

12 Adil and Bashir were in partnership sharing profits and losses in the ratio 2 : 1. Chandra joins the partnership and profits and losses are now to be shared between Adil, Bashir and Chandra in the ratio 3 : 2 : 1. The balances of the partners’ capital accounts prior to Chandra joining the partnership are as follows: $ Adil 20 000 Bashir 10 000 Goodwill is to be valued at $36 000 and is not to be retained in the books of account. What is the balance on Adil’s capital account after Chandra joined the partnership? A $20 000 B $26 000 C $38 000 D $44 000

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2020

Q261 · How is a loss on realisation recorded when a partnership is dissolved? 9706/12 Oct/Nov 2020

13 How is a loss on realisation recorded when a partnership is dissolved? A Credit each partner’s capital account equally. B Debit each partner’s capital account equally. C Credit each partner’s capital account in the profit-sharing ratio. D Debit each partner’s capital account in the profit-sharing ratio.

1 marks

Answer: D

This question in 9706/12 Oct/Nov 2020

Q262 · John and Brian are in partnership sharing profits and losses equally 9706/12 Oct/Nov 2020

14 John and Brian are in partnership sharing profits and losses equally. John receives a salary of $2000 per annum. Brian loaned the business $5000. He is entitled to interest of 5% per annum. The profit for the year before appropriation was $24 000. During the year John took drawings of $3000. What will be the amount of residual profit Brian will receive for the year? A $9375 B $10 875 C $11 000 D $11 250

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2020

Q263 · X is a sole trader 9706/13 May/June 2021

11 X is a sole trader. Which statement about X is correct? A Her accounts include both a capital and a current account. B She can receive an annual salary. C She can receive interest on the capital she has invested in the business. D She can take drawings in excess of the profit for the year.

1 marks

Answer: D

This question in 9706/13 May/June 2021

Q264 · Why might a sole trader form a partnership? 9706/11 Oct/Nov 2021

12 Why might a sole trader form a partnership? 1 to enable the revaluation of business assets 2 to have the protection of limited liability 3 to gain additional capital for the business A 1 and 2 B 1 and 3 C 2 only D 3 only

1 marks

Answer: D

This question in 9706/11 Oct/Nov 2021

Q265 · Which statement is correct in the absence of a partnership agreement? 9706/12 Oct/Nov 2021

14 Which statement is correct in the absence of a partnership agreement? A Interest is charged on drawings at 5%. B Only one partner can have a salary. C Partners are not entitled to interest on capital. D Profits and losses are shared in the ratio of partners’ capital contribution.

1 marks

Answer: C

This question in 9706/12 Oct/Nov 2021

Q266 · How would the following transactions affect the owner’s equity of a sole trader? 9706/13 Oct/Nov 2021

13 How would the following transactions affect the owner’s equity of a sole trader? paying the owner’s personal taking a long-term loan to motoring costs from the finance the purchase of business bank account new business machinery A decrease no effect B decrease increase C increase no effect D no effect decrease

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2021

Q267 · Which rule does not apply in the absence of a partnership agreement? 9706/12 Feb/March 2022

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.

1 marks

Answer: A

This question in 9706/12 Feb/March 2022

Q268 · What will apply to a partnership where there is no partnership agreement? 9706/11 May/June 2022

13 What will apply to a partnership where there is no partnership agreement? A Partners are entitled to interest on the capital they have contributed to the partnership. B Partners are not charged interest on their drawings. C Partners are entitled to salaries. D Partners are not entitled to interest on loans they make to the partnership.

1 marks

Answer: B

This question in 9706/11 May/June 2022

Q269 · The provisions of the Partnership Act apply if partners do not draw up a partnership… 9706/12 May/June 2022

14 The provisions of the Partnership Act apply if partners do not draw up a partnership agreement. Which statement is true as a provision of the Partnership Act? A Interest on drawings is charged at 5% a year. B Interest on loans from partners is to be at 8% a year. C Partners are not entitled to salaries. D Profits are to be shared in the ratio of fixed capitals.

1 marks

Answer: C

This question in 9706/12 May/June 2022

Q270 · X and Y are in partnership but do not have a partnership agreement 9706/11 Oct/Nov 2022

14 X and Y are in partnership but do not have a partnership agreement. X had introduced twice as much capital as Y and made a loan to the partnership. X insists he is entitled to the following: 1 interest on the extra capital he has invested 2 interest on the loan he has made to the partnership 3 a profit share of double that of Y 4 not to pay interest on his drawings. What is X entitled to? A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4

1 marks

Answer: C

This question in 9706/11 Oct/Nov 2022

Q271 · Owing to an issue with Question 16, it has been removed from the question paper 9706/12 Oct/Nov 2022

16 Owing to an issue with Question 16, it has been removed from the question paper.

1 marks

This question in 9706/12 Oct/Nov 2022

Q272 · Owing to an issue with Question 8, it has been removed from the question paper 9706/13 Oct/Nov 2022

8 Owing to an issue with Question 8, it has been removed from the question paper.

1 marks

This question in 9706/13 Oct/Nov 2022

Q273 · Why did Amitav prefer to form a partnership with Lennie rather than set up as a sole… 9706/12 Feb/March 2023

1 Why did Amitav prefer to form a partnership with Lennie rather than set up as a sole trader? A Amitav was certain they could work without disagreements. B Lennie had a different area of expertise to Amitav. C The financial statements of a partnership are not shared publicly. D The legal requirements in setting up the business would be reduced.

1 marks

Answer: B

This question in 9706/12 Feb/March 2023

Q274 · Joe is a sole trader 9706/11 May/June 2023

14 Joe is a sole trader. Which statements relating to his business are not correct? 1 Joe can receive a bank loan for the business. 2 Joe’s drawings are transferred to his capital account. 3 Joe’s personal expenses are included in his statement of profit or loss. A 1 and 2 B 1 only C 2 and 3 D 3 only

1 marks

Answer: D

This question in 9706/11 May/June 2023

Q275 · Which row correctly describes an advantage and a disadvantage of a partnership? 9706/12 May/June 2023

1 Which row correctly describes an advantage and a disadvantage of a partnership? advantage disadvantage A limited liability risk of disagreements B access to more expertise unlimited liability C limited liability joint responsibility for debts D indefinite lifetime of business each partner bound by decisions of other partners

1 marks

Answer: B

This question in 9706/12 May/June 2023

Q276 · A partnership maintains separate capital accounts and current accounts 9706/12 May/June 2023

15 A partnership maintains separate capital accounts and current accounts. Which statements are correct? 1 The capital accounts represent the retained earnings of the business. 2 The capital accounts show the total amount owed to each partner. 3 The capital accounts and current accounts equal the net assets. A 1 and 2 B 1 and 3 C 2 only D 3 only

1 marks

Answer: D

This question in 9706/12 May/June 2023

Q277 · What are advantages of being in a partnership? 9706/13 May/June 2023

1 What are advantages of being in a partnership? 1 All partners have limited liability. 2 Responsibility for running the business is shared. 3 Shares can be sold. 4 The business has access to more sources of capital than a sole trader. A 1 and 2 B 1 and 3 C 2 and 3 D 2 and 4

1 marks

Answer: D

This question in 9706/13 May/June 2023

Q278 · In the absence of a partnership agreement, the Partnership Act 1890 might apply 9706/13 May/June 2023

15 In the absence of a partnership agreement, the Partnership Act 1890 might apply. Which statement is not correct about the provisions of the Partnership Act 1890? A Drawings are not allowed. B Interest on capital is not allowed. C Profits and losses are to be shared equally. D Salaries are not allowed.

1 marks

Answer: A

This question in 9706/13 May/June 2023

Q279 · Which sources are external short-term sources of finance for a limited company? 9706/11 Oct/Nov 2023

1 Which sources are external short-term sources of finance for a limited company? 1 bank overdraft 2 retained earnings 3 share capital 4 trade credit A 1 and 2 B 1 and 4 C 2 and 3 D 2 and 4

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2023

Q280 · Which statements describe the advantages of a rights issue of shares? 9706/11 Oct/Nov 2023

17 Which statements describe the advantages of a rights issue of shares? 1 Additional funds for a company can be raised cheaply. 2 Control of the company remains with existing shareholders if all rights are taken up. 3 It is an alternative to dividends as a way of rewarding existing shareholders. A 1 and 2 B 1 and 3 C 2 and 3 D 2 only

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2023

Q281 · Which list is a long-term source of additional funds for a limited company? 9706/12 Oct/Nov 2023

1 Which list is a long-term source of additional funds for a limited company? A bank loan, bonus issue of shares, debenture issue B bank loan, leasing of premises, rights issue of shares C bonus issue of shares, leasing of premises, trade credit D debenture issue, rights issue of shares, trade credit

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2023

Q282 · A partnership agreement only provides for interest on capital at a rate of 6% and… 9706/13 Oct/Nov 2023

17 A partnership agreement only provides for interest on capital at a rate of 6% and interest on drawings at a rate of 8%. What will be the interest payable on a loan from a partner? A 0% B 5% C 6% D 8%

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2023

Q283 · L and M are in partnership 9706/13 Oct/Nov 2023

18 L and M are in partnership. The following information relates to the financial year. L M $ $ drawings 20 000 30 000 interest on drawings 1 200 1 800 interest on partner’s loan 8 000 salary 20 000 residual profit share 36 000 18 000 What was the profit for the year? A $71 000 B $77 000 C $79 000 D $121 000

1 marks

Answer: A

This question in 9706/13 Oct/Nov 2023

Q284 · Which statement about sole traders is correct? 9706/12 Feb/March 2024

1 Which statement about sole traders is correct? A They always trade by buying and selling goods. B They do not employ any staff. C They keep all their profit themselves. D They maintain a retained earnings account.

1 marks

Answer: C

This question in 9706/12 Feb/March 2024

Q285 · Which source of finance would be available to a public limited company but not to a… 9706/12 Feb/March 2024

2 Which source of finance would be available to a public limited company but not to a partnership? A bank overdraft B debentures C leasing D trade credit

1 marks

Answer: B

This question in 9706/12 Feb/March 2024

Q286 · Which provision of the Partnership Act 1890 applies when there is no partnership… 9706/12 Feb/March 2024

16 Which provision of the Partnership Act 1890 applies when there is no partnership agreement? A Partners receive 5% interest per annum on their capital contributions. B Partners are charged 5% interest per annum on their drawings. C Partners receive interest of 5% per annum on loans to the partnership. D Partners are entitled to equal amounts of salary.

1 marks

Answer: C

This question in 9706/12 Feb/March 2024

Q287 · Jamie is setting up a business 9706/11 May/June 2024

1 Jamie is setting up a business. There are three details which are important to Jamie. 1 Jamie wants to have a salary for his work in managing the business. 2 Jamie wants full ownership of the business. 3 Jamie wants to avoid the risk of losing personal assets. Which type of business should Jamie choose? A sole trader B partnership C private limited company D public limited company

1 marks

Answer: C

This question in 9706/11 May/June 2024

Q288 · What are the advantages of being a sole trader? 9706/13 May/June 2024

1 What are the advantages of being a sole trader? 1 ability to make quick decisions 2 no bank borrowings are needed 3 owner keeps all the profits 4 unlimited liability for debts A 1 and 2 B 1 and 3 C 1 and 4 D 2 and 3

1 marks

Answer: B

This question in 9706/13 May/June 2024

Q289 · X and Y are in partnership 9706/13 May/June 2024

16 X and Y are in partnership. They do not have a partnership agreement. Which statement is correct? A Interest on capital is earned at 5%. B Interest on drawings is charged at 5%. C Interest on partners' loans is earned at 5%. D Profits and losses are shared in the ratio of capital contributed.

1 marks

Answer: C

This question in 9706/13 May/June 2024

Q290 · Anne and Margaret have formed a partnership but have not made a partnership agreement 9706/11 Oct/Nov 2024

16 Anne and Margaret have formed a partnership but have not made a partnership agreement. Which statement is correct for this situation? A any loan made to the partnership by a partner will carry interest at the rate of 5% per annum B interest will be charged on drawings at the rate of 5% per annum C partners will be entitled to interest on capital at the rate of 5% per annum D partners will be entitled to salaries in proportion to the capital contributed

1 marks

Answer: A

This question in 9706/11 Oct/Nov 2024

Q291 · What are disadvantages of operating as a partnership compared to operating as a sole… 9706/11 May/June 2025

1 What are disadvantages of operating as a partnership compared to operating as a sole trader? 1 Partners may be liable for the actions of the other partners. 2 Profits have to be shared between partners. 3 There is a risk of disputes between partners. A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 only

1 marks

Answer: A

This question in 9706/11 May/June 2025

Q292 · Ahmed and Betty are in partnership 9706/12 May/June 2025

1 Ahmed and Betty are in partnership. They plan to convert the business from a partnership to a limited company. Ahmed and Betty will be shareholders. What is the benefit to Ahmed and Betty as shareholders? A Disputes between them will be resolved in the annual general meeting. B Their personal assets are protected. C Their personal finances are not separate from those of the company. D The value of their shares will increase.

1 marks

Answer: B

This question in 9706/12 May/June 2025

Q293 · What are disadvantages of operating as a partnership compared to operating as a sole… 9706/13 May/June 2025

1 What are disadvantages of operating as a partnership compared to operating as a sole trader? 1 Partners may be liable for the actions of the other partners. 2 Profits have to be shared between partners. 3 There is a risk of disputes between partners. A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 only

1 marks

Answer: A

This question in 9706/13 May/June 2025

Q294 · Which row describes an advantage and a disadvantage of operating as a sole trader? 9706/11 Oct/Nov 2025

1 Which row describes an advantage and a disadvantage of operating as a sole trader? advantage disadvantage A complete control over financial statements business operations must be published B easy to set up no one to share ideas with C separate legal identity no one to share workload with D unlimited liability for limited opportunities business debts to increase capital

1 marks

Answer: B

This question in 9706/11 Oct/Nov 2025

Q295 · A company needs to raise finance to build a factory 9706/12 Oct/Nov 2025

1 A company needs to raise finance to build a factory. Which action is suitable to protect the existing shareholders’ interest? A bonus issue of shares B fully subscribed rights issue of shares C issue of debentures D general issue of ordinary shares

1 marks

Answer: B

This question in 9706/12 Oct/Nov 2025

Q296 · What are advantages of operating as a partnership? 9706/13 Oct/Nov 2025

1 What are advantages of operating as a partnership? 1 ideas and workload can be shared 2 no requirement to publish financial statements 3 separate legal identity A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 only

1 marks

Answer: B

This question in 9706/13 Oct/Nov 2025