Accounting 9706/12 October/November 2025: question paper and mark scheme

Question

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

Question

Which items appear in the credit column of a trial balance? A discounts allowed, returns inwards B discounts allowed, returns outwards C discounts received, returns inwards D discounts received, returns outwards

Question

A trader sells goods for $6600 to a customer on 31 March 2025, the last day of his financial year. He does not produce an invoice until three days later. He is advised that the sales of $6600 should be entered in the financial statements for the year ended 31 March 2025. Which accounting concepts are being applied? 1 consistency 2 prudence 3 realisation A 1 and 2 B 2 and 3 C 2 only D 3 only

Question

An item of capital expenditure has been treated as revenue expenditure. What is the effect on the non-current assets and on the loss for the year? non-current assets loss for the year A overstated overstated B overstated understated C understated overstated D understated understated

Question

Y Limited purchased a motor van and incurred the following expenditure at the beginning of the year. $ motor van 50 000 delivery of motor van 4 500 upgrading the engine 6 000 2-year maintenance 4 000 contract annual licence fee 1 200 The motor van is to be depreciated at 20% using the straight-line method. What is the total amount of expenses to be included in the statement of profit or loss for the year? A $14 340 B $15 300 C $17 300 D $20 100

Question

A business charges depreciation on its property using the straight-line method. At the start of the year, the business revalued its property upwards with the useful life remaining unchanged. What is the change to the expenses and carrying value of the property at the end of the current year compared to the previous year? carrying value expenses of property A decrease decrease B decrease increase C increase decrease D increase increase

Question

X Limited purchased a property for $100 000 on 1 January 2010. The property had an expected useful life of 50 years. On 1 January 2024, the property was revalued at $119 000. The total estimated useful life still remained 50 years from 1 January 2010. What is the charge for depreciation for the year ended 31 December 2024? A $2000 B $2380 C $2778 D $3306

Question

The totals of a trial balance did not agree. As a result, a suspense account was opened with a credit balance of $1720. So far, two errors have been discovered: 1 The balance of the purchases returns account of $440 was omitted from the trial balance. 2 The bank overdraft balance was understated by $90. What will be the updated credit balance of the suspense account after these errors are corrected? A $1190 B $1370 C $2070 D $2250

Question

The total of the discount column on the debit side of the cash book had been debited to the discount received account. Which accounts will be used to correct this error? 1 discount allowed 2 discount received 3 suspense A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 only

Question

At 31 December, the following information is available about a company’s banking transactions. $ balance at bank per bank statement 22 650 uncleared deposits 3 110 unpresented cheques 6 290 bank credit recorded twice by bank in error 650 Which value for bank should be recorded in the statement of financial position at 31 December? A $18 820 B $20 120 C $25 180 D $26 480

Question

A business maintains control accounts as a part of its double entry system. The balance of the purchases ledger control account is $8232. However, this does not agree with the total of balances in the purchases ledger. The following account for the difference. 1 An entry in the purchases returns journal for $72 has been posted to the credit side of the individual trade payable’s account in the purchases ledger. 2 An entry for discounts received in the cash book for $54 has been debited to the individual trade payable’s account in the purchases ledger as $45. What is the total of balances in the purchases ledger before these errors are corrected? A $8079 B $8097 C $8367 D $8385

Question

A sales ledger control account included the following entries: 1 contra with the purchases ledger control account $500, debit 2 discount allowed $600, debit 3 irrecoverable debts written off $1200, debit Which entries must be corrected? A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 only

Question

Which item would result in a credit entry in a statement of profit or loss? A a reduction in the allowance for irrecoverable debts B an increase in the allowance for irrecoverable debts C the creation of an allowance for irrecoverable debts D the writing off of a trade receivable

Question

A sole trader rented out part of his business office on 1 January 2024 at $500 per month for 24 months. During the year ended 31 December 2024, he received the following amounts: • rent of $5500 • rent deposit of $500 refundable at the end of month 24. Which amounts should be shown in the statement of financial position at 31 December 2024? current assets current liabilities A nil $500 B $500 nil C $500 $500 D $1000 nil

Question

What will have the effect of increasing the profits when entered in the statement of profit or loss for a sole trader? A carriage inwards B discounts allowed C goods taken for own use D sales returns

Question

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

Question

Lee and Mia are in partnership sharing profits and losses in the ratio 4 : 3 respectively. An error was made when their appropriation account for the year was prepared. Interest on drawings was omitted: Lee $90 and Mia $50. By what amount will the balance of Lee’s current account decrease when this error is corrected? A $10 B $30 C $150 D $170

Question

The following information is extracted from the draft statement of financial position of a limited company at 31 December. $ ordinary share capital 900 000 share premium 80 000 general reserve 96 000 retained earnings (opening) 230 000 profit for the year 145 000 What is the maximum amount of dividend that the limited company can declare? A $145 000 B $375 000 C $471 000 D $551 000

Question

Who are the internal users of financial information? 1 bank 2 directors 3 employees 4 potential investors A 1 and 2 B 2 and 3 C 2 and 4 D 3 and 4

Question

A trader calculates his trade receivables turnover as 89 days. What was the denominator (bottom figure) in his calculation? A credit purchases B credit sales C trade payables D trade receivables

Question

The following details have been extracted from the financial statements of a limited company. statement of profit or loss for the year $ profit from operations 59 800 finance costs 12 000 profit for the year 47 800 statement of financial position at the year end $ equity ordinary share capital 700 000 retained earnings 72 500 total equity 772 500 non-current liabilities 10% debentures 120 000 What was the return on capital employed? A 5.36% B 6.19% C 6.70% D 7.74%

Question

A business makes a single type of product. The following information is available. total cost production $ 600 units 4200 800 units 5200 What is the fixed cost per unit? for 600 units for 800 units $ $ A 2.00 1.50 B 2.00 2.00 C 5.00 5.00 D 7.00 6.50

Question

W Limited is unsure whether to use marginal costing or absorption costing. Which row is correct? charges overheads to gives higher profits expenses rather than when inventory levels to products are increasing A absorption absorption B absorption marginal C marginal absorption D marginal marginal

Question

J Limited makes individual pieces of furniture in customers’ homes. The business adds a mark-up of 40% when quoting for jobs. It received an enquiry from a prospective customer who lived 10 kilometres away. The materials would cost $400 and the labour $240. The business charges $2 per kilometre for each part of the journey. What price will the company quote for the job? A $916 B $924 C $936 D $952

Question

A manufacturing company uses absorption costing. The following information for one month is available for the cutting department. budget actual overheads $40 000 $44 000 machine hours 2 800 2 700 labour hours 2 600 2 900 What overhead absorption rate would have been used? A $14.29 per machine hour B $15.17 per labour hour C $15.38 per labour hour D $16.30 per machine hour

Question

A business provides the following information. number of units produced and sold 48 000 $ direct materials ($3 per kg) 298 000 direct labour ($4 per labour hour) 240 000 fixed selling costs 150 000 variable selling costs 24 000 Fixed production overheads are absorbed at $10 per labour hour. What is the total absorption cost per unit? A $14.83 B $23.71 C $26.83 D $27.33

Question

What is the correct definition of margin of safety in dollars? A the amount by which sales revenue exceeds total fixed and variable costs B the amount by which sales revenue exceeds total marginal costs C the amount by which sales revenue could fall before the break-even point is reached D the total fixed costs divided by contribution per unit sold

Question

A company had sales revenue of $500 000 and total costs of $400 000. Fixed costs were $120 000. What was the total contribution? A $100 000 B $220 000 C $280 000 D $380 000

Question

The following information is available. $ $ sales 250 000 variable production costs 150 000 fixed production costs 30 000 180 000 gross profit 70 000 fixed administrative costs 50 000 profit for the year 20 000 What is the break-even point? A $100 000 B $170 000 C $200 000 D $230 000

Question

What are the limitations of cost–volume–profit analysis? 1 It assumes fixed costs will remain constant. 2 It cannot be used if multiple products are produced in a constant mix. 3 It ignores the possibility of semi-variable costs. A 1, 2 and 3 B 1 and 2 only C 1 and 3 only D 2 and 3 only