Accounting 9706/12 February/March 2025: question paper and mark scheme

Question

Which statement explains the realisation concept? A A business recognises sales revenue when it delivers the goods to a credit customer. B A business recognises sales revenue when it receives an order from a credit customer. C A business recognises sales revenue when it receives cash from a credit customer. D A business recognises sales revenue when the customer sells the goods onwards.

Question

On the first day of a financial period, before trading started, a business owner introduced her personal items to the business, consisting of goods costing $5000. Which entries should have been made to record this? account debited account credited A drawings purchases B inventory capital C inventory drawings D purchases capital

Question

Why might a business adopt a computerised accounting system? 1 to ensure that the accounting records are free from error 2 to ensure that the accounting records are free from fraud 3 to ensure that the accounting records are arithmetically accurate A 1 and 2 B 1 and 3 C 2 and 3 D 3 only

Question

A company’s profit for the year is $20 000. Capital income of $5000 has been treated as revenue income. Capital expenditure of $4000 has been treated as revenue expenditure. What is the correct profit for the year? A $11 000 B $19 000 C $21 000 D $29 000

Question

The following costs for a business relate to a newly purchased machine. 1 alterations to the factory building to install the machine 2 payment of insurance for the new machine 3 the final purchase price of the machine agreed with the supplier 4 the price of the machine before the discount from the supplier Which costs would be treated as capital expenditure? A 1, 2 and 3 B 1 and 3 only C 2 and 3 only D 2 and 4

Question

Leandro has owned a delivery van for some years and has depreciated it each year. How should he record the provision for depreciation? in the statement of in the statement of in the general journal financial position profit or loss A accumulated depreciation accumulated depreciation charge for the year B accumulated depreciation charge for the year accumulated depreciation C charge for the year accumulated depreciation charge for the year D charge for the year charge for the year accumulated depreciation

Question

A business depreciates its motor vehicles at 20% per annum using the straight-line method. Depreciation is charged on a month-by-month basis. On 30 June in the current financial year, a new van was purchased at a cost of $20 000. An old van which cost $18 000, bought at the beginning of the previous year on 1 January, was part exchanged for $14 000. The balance was paid by cheque. What is the total reduction in profit for the current financial year ended 31 December as a result of this? A $2400 B $3400 C $3800 D $5200

Question

Which error will not affect the trial balance? A posting of $3000 purchases to the debit of the motor vehicle account B posting of $3000 purchases to the credit of the motor vehicle account C posting of $3000 road tax refund to the debit of the motor vehicle account D posting of $3000 sales to the debit of the motor vehicle account

Question

The totals of the trial balance of a business did not agree. A suspense account was opened for the difference. The following errors were then discovered. 1 The total of the sales journal of $16 000 had been posted to the debit of the purchases account. 2 $7000 had been correctly entered in the rent received account but had been debited as $700 in the cash book. After correcting these errors, the suspense account was eliminated and the trial balance totals agreed. Which amount appeared for the suspense account in the trial balance before the corrections were made? A $9700 credit B $22 300 credit C $25 700 credit D $38 300 credit

Question

A bookkeeper compared the business bank statement with the cash book. He then updated the cash book and finally prepared a bank reconciliation statement. Why was the bank reconciliation statement prepared? A to ensure no transactions had been omitted from the cash book B to establish the value of unpresented cheques C to explain the difference between the cash book balance and the bank statement balance D to find out if any cheques had been dishonoured

Question

Which statement is not correct about the benefit to a business of maintaining control accounts? A ensures that all types of errors can be detected B helps in the preparation of financial statements C provides immediate totals of trade receivables and trade payables D reduces risk of fraud as jobs are performed by different staff members

Question

A business maintains control accounts as part of the double entry. At the end of a financial period, the sales ledger control account balance of $64 200 did not agree with the total of the individual sales ledger balances of the business. The following errors were discovered. 1 An irrecoverable debt of $800, entered in the sales ledger control account, was omitted from the trade receivable account. 2 Discounts allowed of $950 were entered in the sales ledger accounts but were entered as $590 in the cash book. 3 A contra of $4100 between accounts in the sales and purchases ledgers was reversed in the control accounts. There were no further errors. What was the total of the trade receivables at the end of the period after adjustments? A $54 840 B $55 640 C $56 360 D $59 740

Question

Which items will be included when valuing inventory? 1 carriage inwards 2 costs of storage 3 purchase price 4 selling costs A 1 and 2 B 1 and 3 C 2 and 3 D 3 and 4

Question

The following financial information is available. $ opening inventory 800 closing inventory 1 010 purchases 9 260 carriage inwards 130 revenue 18 000 discount received 700 other expenses 3 880 What are the values of gross profit and profit for the year? gross profit profit for the year $ $ A 8820 4240 B 8820 5640 C 9080 5900 D 9520 5640

Question

X, Y and Z are in partnership. What would be shown in the partnership appropriation account? 1 goods taken for personal use of X 2 interest on a loan made by Y 3 interest on drawings made by Z A 1 and 2 B 1 and 3 C 2 only D 3 only

Question

Bella and Charlie are in partnership, sharing profits and losses in the ratio 3 : 2. They have contributed capital in the same ratio. The partners provided the following information for the financial year. Bella Charlie $ $ interest on 850 550 drawings salary 16 900 − profit share 6 000 4 000 Profit for the year was $28 000. What is the interest on capital for Bella? A $660 B $1100 C $1500 D $2500

Question

A company uses a revenue reserve to make a bonus issue of ordinary shares. Which accounts should be debited and credited to record this? account debited account credited A general reserve share capital B share capital general reserve C share capital retained earnings D share premium share capital

Question

A company had an issued share capital of 400 000 ordinary shares of $1 each. It then made a bonus issue of one ordinary share for every five ordinary shares held. This was later followed by a rights issue of one ordinary share for every three ordinary shares held. What was the balance on the share capital account after these transactions? A $480 000 B $533 333 C $613 333 D $640 000

Question

A company’s statement of financial position included the following details. $ bank (debit balance) 300 000 ordinary share capital 1 000 000 share premium 200 000 revaluation reserve 100 000 general reserve 100 000 retained earnings 400 000 What is the maximum total dividend that the directors can propose? A $300 000 B $400 000 C $500 000 D $700 000

Question

Sunil was reviewing the statement of financial position of a business. The statement of profit or loss was not available. Why was Sunil interested in the current assets of the business? A to assess its future prospects B to be able to calculate efficiency ratios C to discover if it is profitable D to see if it is able to pay debts as they fall due

Question

What is not a limitation of accounting information? A it can be compared with other years B it ignores non-financial factors C it ignores seasonality of trading D it is based on historic data

Question

The accounting year of a company ends on 31 December. At the end of Year 1, the company was financed by equity of $850 000 and there were no long-term borrowings. At the beginning of Year 2, a 6% debenture of $150 000 was issued. Profit for the year for Year 2 was $58 000 and dividends of $20 000 were paid. What was the return on capital employed for Year 2? A 5.59% B 6.33% C 6.45% D 7.55%

Question

On 1 March, a business had an inventory of 3 items which had cost $8 each. The business uses the FIFO method of valuing inventory. During March the following transactions occurred. purchases issues March 10 16 units at $7 each 18 14 units at $6 each 27 24 units at $10 each What was the value of inventory at the end of March? A $36 B $42 C $54 D $63

Question

A factory produces 1100 units per day. Daily machinery set-up costs are $2000. Direct material cost per unit is $3. Machine operators are paid $400 per day. Each can produce a maximum of 200 units per day. What is the average cost per unit? A $5.00 B $5.18 C $6.82 D $7.00

Question

A business uses absorption costing. Which costs will be charged to production? A direct materials, direct labour, variable overheads and fixed overheads B direct materials, direct labour and fixed overheads only C direct materials, direct labour and variable overheads only D direct materials and direct labour only

Question

The following data applies to a business. budgeted direct labour hours 20 000 budgeted overheads $300 000 actual direct labour hours 19 000 under-absorption of overheads $35 000 What were the actual overheads for the period? A $250 000 B $265 000 C $320 000 D $335 000

Question

A business prepared its statement of profit or loss for its first year of trading. It used marginal costing to value the inventory. The finance director wants to prepare the statement, using absorption costing. What will be the effect on inventory valuation and profit for the year due to this change? effect on effect on profit for inventory valuation the year A decrease decrease B decrease increase C increase decrease D increase increase

Question

The following information was provided about a product. selling price per unit $50 variable cost per unit $26 total fixed costs $10 000 demand 1800 units If the selling price increases, only demand changes. When the selling price increased by $4, profit fell by $1200. What was the decrease in demand? A 214 units B 300 units C 571 units D 657 units

Question

A manufacturing business provided the following information. per unit $ selling price 80 variable production costs 44 variable selling costs 6 fixed production costs 12 fixed selling costs 10 What was the contribution to sales ratio? A 10% B 22.5% C 37.5% D 45%

Question

Which assumptions are true about cost–volume–profit analysis? 1 costs are classified into fixed, semi-variable and variable 2 selling price per unit remains constant 3 total fixed costs remain constant 4 volume is the only factor affecting variable costs A 1 and 2 B 1 and 3 C 2, 3 and 4 D 3 and 4 only