Accounting 9706/12 May/June 2025: question paper and mark scheme

Question

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.

Question

What is the correct double entry to record goods taken for own use by the owner of a business? debit credit A drawings inventory B drawings purchases C inventory drawings D purchases drawings

Question

Which accounting concepts are applied when depreciating non-current assets? 1 consistency 2 matching / accruals 3 objectivity 4 prudence A 1 and 2 only B 1 and 3 C 1, 2 and 4 D 2, 3 and 4

Question

Which account balance will be in the credit column of a trial balance? A carriage inwards B carriage outwards C purchases returns D sales returns

Question

The financial statements were prepared using the following details. $ purchase cost of machinery (included $450 for 16 950 repairs to the machinery) lighting and heating (included $250 for wiring in 1 780 the factory extension) carriage inwards (included $45 for delivery of new 230 machinery) What will be the amount of the decrease in non-current assets when capital and revenue items are treated correctly (ignore depreciation)? A $155 B $200 C $405 D $450

Question

What is the purpose of depreciating a non-current asset? A to allocate its cost over its useful life B to reflect its market value C to reflect its replacement cost D to reserve funds for its future replacement

Question

The non-current assets of a business are shown in the table. end of the year start of the year $ $ cost 360 000 300 000 accumulated depreciation 120 000 75 000 carrying value 240 000 225 000 During the year, non-current assets costing $110 000 were bought, and non-current assets, with a carrying value of $20 000, were sold. What was the depreciation charge for the year? A $35 000 B $45 000 C $50 000 D $75 000

Question

After the profit for the year was calculated, the following errors were discovered. 1 Discount allowed of $550 was recorded as discount received. 2 Rental income of $3500 was recorded as an expense. 3 Wages of $4500 were recorded as $5400. What will be the effect on the profit for the year after correcting these errors? A decrease by $3850 B decrease by $6800 C increase by $3850 D increase by $6800

Question

A business’s suspense account appears as follows: $ $ discount allowed 150 opening balance 100 sales 50 150 150 Which statements are correct? 1 Total debits had been $100 less than total credits in the trial balance. 2 The sales account had been overcast by $50. 3 The discount allowed account had been overcast by $150. A 1 and 2 B 1 only C 2 and 3 D 3 only

Question

Why does a business prepare a bank reconciliation statement? A to determine the cash in hand balance B to explain the difference between the cash book balance and the bank statement balance C to identify dishonoured cheques from trade payables D to prepare a statement of profit or loss

Question

A debit balance of $2600 was shown for the bank in the cash book of a business at the end of the month. The bank statement included bank charges of $1200 and interest received of $500, both of which had not been entered in the cash book. The bank column of the cash book had been overcast by $200. The cash book included a payment of $800 which had not yet appeared on the bank statement. What was the credit balance shown on the bank statement at the end of the month? A $900 B $1700 C $2500 D $2700

Question

Why is a sales ledger control account used? 1 to control discounts received 2 to ensure credit customers pay promptly 3 to provide a trial balance figure for trade receivables A 1 and 2 B 1 only C 2 and 3 D 3 only

Question

A bookkeeper is given the task of reconciling the sales ledger control account with balances in the sales ledger at the end of each month. The sales ledger control account showed a debit balance of $26 000 before the bookkeeper discovered the following: 1 Contra entries of $1800 in the sales ledger had been omitted from the control account. 2 Discounts allowed of $3600 had been debited to the sales ledger control account. 3 The allowance for irrecoverable debts had been increased by $1200. What is the correct figure for trade receivables at the end of the month? A $15 800 B $17 000 C $18 800 D $20 600

Question

A business paid $5750 during its trading year for advertising. This amount included $500 in respect of the next financial year. How would the correct treatment of the $500 affect the financial statements? profit for the year net current assets A decrease decrease B decrease increase C increase decrease D increase increase

Question

The books of a business showed the following balances at the end of the financial year on 31 December. $ trade receivables 18 820 allowance for irrecoverable debts 760 The following adjustments need to be made. 1 An irrecoverable debt of $470, which was written off in the previous year, has been recovered. No entries for this have been made in the financial statements. 2 Irrecoverable debts of $680 need to be written off. 3 The allowance for irrecoverable debts is to be 5% of trade receivables. How will the total of these adjustments be recorded in the statement of profit or loss for the year ended 31 December? A $63 expense B $63 income C $357 expense D $357 income

Question

After preparing the financial statements of a sole trader, the following items were discovered. 1 Drawings consisted of goods taken for own use at their sales value of $12 000. The owner applies a mark-up of 50% on all goods sold. 2 Profit for the year included an insurance expense of $7500. One-third was for the owner’s health insurance. What is the effect on the profit for the year after correcting these items? A $1500 decrease B $3500 decrease C $6500 increase D $8500 increase

Question

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 sister

Question

Valerie and Paul are in partnership, sharing profits and losses in the ratio of 5 : 3 respectively. The partnership profit for the year was $250 000. The appropriation account of the partnership for the year included the following information. $ total interest on partners’ drawings 12 000 total interest on partners’ capital contributions 18 000 What was Paul’s share of the residual profits? A $82 500 B $91 500 C $93 750 D $96 000

Question

Which items will be shown in a company’s statement of changes in equity? 1 a bonus issue of ordinary shares 2 an issue of debentures 3 a proposed dividend on ordinary shares 4 an upwards revaluation of the company’s non-current assets A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4

Question

The table shows a company’s equity. $ ordinary shares of $1.00 each 200 000 share premium account 80 000 revenue reserves 160 000 Changes now to be made to the equity (in the order given) are as follows: • a one-for-one bonus issue of ordinary shares • a rights issue of 100 000 ordinary shares of $1.00 each at $1.40 per share. The company wishes to maintain reserves in the most flexible form. What will be the equity 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

Question

A company had the following balances at 31 December. $ inventory 31 000 trade receivables 88 000 allowance for irrecoverable debts 2 000 bank overdraft 9 000 cash in hand 5 000 The current ratio is 2.5 : 1. What was the value of trade payables at 31 December? A $38 600 B $39 800 C $40 600 D $57 800

Question

The table shows year-end information for a company. statement of profit or loss statement of financial position $ $ profit for the year 55 200 total assets 350 000 finance costs 12 000 total current liabilities 70 000 What is the return on capital employed (ROCE)? A 16.00% B 19.20% C 19.71% D 24.00%

Question

A restaurant owner paid the following: 1 cost of food ingredients 2 maintenance of cooking appliances 3 wages to the chefs 4 wages to the restaurant manager. Which costs are indirect costs? A 1, 2, 3 and 4 B 1, 2 and 3 only C 2 and 4 only D 3 and 4 only

Question

Total costs for each of two months had been recorded. Variable cost per unit remained constant. Total fixed costs increased by $1000 in July. units produced total costs June 8 000 $76 000 July 10 000 $86 000 What was the total of the fixed costs in July? A $31 000 B $36 000 C $41 000 D $76 000

Question

P Limited uses an overhead absorption rate of $15 per machine hour, based on budgeted machine hours of 8000 per month. In July, production required 8500 machine hours, and the under-absorption of overheads amounted to $16 500. What were the actual overheads in July? A $103 500 B $111 000 C $136 500 D $144 000

Question

Which statement describes the purpose of overhead allocation? A assignment of specific costs to production departments B assignment of specific costs to service departments C sharing out common costs between production departments D sharing out common costs between service departments

Question

A manufacturing business provides the following budgeted annual information. $ direct wages ($12 per labour hour) 600 000 fixed overheads 160 000 Fixed overheads are absorbed on the basis of direct labour hours. A job requires direct materials costing $480 and needs 30 labour hours. The business wishes to make a profit margin of 25% for this job. What is the price to be quoted for this job? A $1170 B $1248 C $1270 D $1404

Question

Which factor would cause the variable cost line on a break-even chart not to be a straight line? A bulk-buying discounts from suppliers B employing an extra factory supervisor C plant and machinery depreciation D renting additional warehouse space

Question

The following information is available for a business. $ budgeted fixed costs per month 2000 target profit per month 3000 budget variable cost per unit 15 selling price per unit 40 Fixed costs are expected to increase by $500 per month, and variable costs are expected to increase by $5 per unit. Which value of revenue will be required to achieve the target profit? A $8000 B $8800 C $10 000 D $11 000

Question

What are the assumptions of cost−volume−profit analysis? 1 fixed cost per unit is constant 2 selling price per unit is constant 3 sales volume is constant 4 variable cost per unit is constant A 1 and 2 B 1 and 4 C 2 and 3 D 2 and 4