Joinpdf PDF

Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

* 8 3 2 3 9 2 0 8 4 9 *
FIRST LANGUAGE ENGLISH 0500/21

Paper 2 Reading Passages (Extended) May/June 2015
2 hours
Candidates answer on the Question Paper.
READ THESE INSTRUCTIONS FIRST
Write your Centre number, candidate number and name in the spaces provided.
Write in dark blue or black pen.
Do not use staples, paper clips, glue or correction fluid.
DO NOT WRITE IN ANY BARCODES.
Answer all questions in the space provided. If additional space is required, you should use the lined pages at
the end of this booklet. The question number(s) must be clearly shown.
Dictionaries are not permitted.
The Reading Booklet Insert contains the reading passages for use with all questions on the Question paper.
The Insert is not assessed by the Examiner.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 12 printed pages and 1 Insert.
DC RCL (JDA) 96892/2

© UCLES 2015 [Turn over
2
Read carefully Passage A, Common Land, in the Reading Booklet Insert and then answer Questions
1 and 2 on this Question Paper.
Question 1
Imagine you are the journalist from the local newspaper at the meeting.
Write a newspaper report about the meeting.
In your newspaper report you should:
• describe the atmosphere and reactions of the crowd at the meeting

• give your impression of the two speakers and the arguments that they made
• suggest what you think might happen in the future.
Base your newspaper report on what you have read in Passage A, but be careful to use your own
words. Address each of the three bullet points.
Begin your newspaper report: ‘Yesterday the local community met together to debate a proposal
which has implications for all of us…’.
Write about 250 to 350 words.
Up to 15 marks are available for the content of your answer, and up to 5 marks for the
quality of your writing.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
© UCLES 2015 0500/21/M/J/15

3
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
© UCLES 2015 0500/21/M/J/15 [Turn over
4
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
[Total: 20]
© UCLES 2015 0500/21/M/J/15
5
[Turn over for Question 2]

6
Question 2
Re-read the descriptions of:
(a) the common land in paragraph 6, beginning ‘The meeting resumed…’;
(b) Rufus Carmichael in paragraph 13, beginning ‘Rufus’ face tightened…’.
Select four powerful words or phrases from each paragraph. Your choices should include imagery.
Explain how each word or phrase is used effectively in the context.
Up to 10 marks are available for the content of your answer.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
© UCLES 2015 0500/21/M/J/15
7
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
[Total: 10]
8
Read carefully Passage B, Ospreys, in the Reading Booklet Insert and then answer Questions 3(a)
and 3(b) on this Question Paper.
Question 3
Answer the questions in the order set.
(a) Notes
How is the osprey adapted to ensure its survival and what threatens its continued existence,
according to Passage B?
Write your answer using short notes. Write one point per line.
You do not need to use your own words.
How is the osprey adapted to ensure its survival and what threatens its continued
existence?
1...........................................................................................................................................
2...........................................................................................................................................
3...........................................................................................................................................
4...........................................................................................................................................
5...........................................................................................................................................
6...........................................................................................................................................
7...........................................................................................................................................
8...........................................................................................................................................
9...........................................................................................................................................
10.........................................................................................................................................
11.........................................................................................................................................
12.........................................................................................................................................
13.........................................................................................................................................
14.........................................................................................................................................
15.........................................................................................................................................
[Total: 15]
© UCLES 2015 0500/21/M/J/15

9
(b) Summary
Now use your notes to write a summary of what Passage B tells you about how the osprey is
adapted to ensure its survival and what threatens its continued existence.
You must use continuous writing (not note form) and use your own words as far as
possible.
Your summary should include all 15 of your points in Question 3(a) and must be 200 to 250
words.
Up to 5 marks are available for the quality of your writing.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
10
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
[Total: 5]
© UCLES 2015 0500/21/M/J/15

11
ADDITIONAL PAGE
If you use the following lined page to complete the answer(s) to any question(s), the question number(s)
must be clearly shown.
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
© UCLES 2015 0500/21/M/J/15
12
ADDITIONAL PAGE
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
© UCLES 2015 0500/21/M/J/15

Cambridge International General Certificate of Secondary Education
* 4 2 0 4 6 8 2 7 1 1 *
FIRST LANGUAGE ENGLISH 0500/22

Paper 2 Reading Passages (Extended) May/June 2015
2 hours
Write your Centre number, candidate number and name in the spaces provided.
Answer all questions in the space provided. If additional space is required. you should use the lined pages at
the end of this booklet. The question number(s) must be clearly shown.
Dictionaries are not permitted.
The Reading Booklet Insert contains the reading passages for use with all questions on the Question paper.
The Insert is not assessed by the Examiner.
This document consists of 12 printed pages and 1 Insert.
DC (RCL (JDA)) 96886/3

2
Read carefully Passage A, Canal Holiday, in the Reading Booklet Insert and then answer Questions
1 and 2 on this Question Paper.
Question 1
Imagine you are Zelda’s husband, Bob.
Write a letter to your brother who lives abroad telling him about your holiday.
In your letter you should comment on:
• your expectations of the trip

• your feelings about Zelda’s behaviour on the first two days of the holiday
• what happened during the rest of the trip.
Base your letter on what you have read in Passage A, but be careful to use your own words.
Address each of the three bullet points.
Begin your letter: ‘Dear Brian, We’ve just come back from a trip I arranged for Zelda as a surprise…’.
Up to 15 marks are available for the content of your answer, and up to 5 marks for the
quality of your writing.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
© UCLES 2015 0500/22/M/J/15
3
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
4
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
[Total: 20]
© UCLES 2015 0500/22/M/J/15
5
[Turn over for Question 2]

6
Question 2
Re-read the descriptions of:
(a) the storm and its effects in paragraph 6, beginning ‘No sooner were we inside…’;
(b) what Zelda enjoys about the morning in paragraph 7, beginning ‘Having only managed…’.
Select four powerful words or phrases from each paragraph. Your choices should include imagery.
Explain how each word or phrase selected is used effectively in the context.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
© UCLES 2015 0500/22/M/J/15
7
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
[Total: 10]
8
Read carefully Passage B, The Panama Canal, in the Reading Booklet Insert and then answer
Questions 3(a) and 3(b) on this Question Paper.
Question 3
Answer the questions in the order set.
(a) Notes
What were the challenges faced during the entire construction of the Panama Canal,
according to Passage B?
Write your answer using short notes. Write one point per line.
You do not need to use your own words.
The challenges faced during the entire construction of the Panama Canal:
1...........................................................................................................................................
2...........................................................................................................................................
3...........................................................................................................................................
4...........................................................................................................................................
5...........................................................................................................................................
6...........................................................................................................................................
7...........................................................................................................................................
8...........................................................................................................................................
9...........................................................................................................................................
10.........................................................................................................................................
11.........................................................................................................................................
12.........................................................................................................................................
13.........................................................................................................................................
14.........................................................................................................................................
15.........................................................................................................................................
[Total: 15]
© UCLES 2015 0500/22/M/J/15

9
(b) Summary
Now use your notes to write a summary of what Passage B tells you about the challenges
faced during the entire construction of the Panama Canal.
You must use continuous writing (not note form) and use your own words as far as
possible.
Your summary should include all 15 of your points in Question 3(a) and must be 200 to 250
words.
Up to 5 marks are available for the quality of your writing.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
10
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
[Total: 5]
© UCLES 2015 0500/22/M/J/15

11
ADDITIONAL PAGE
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
© UCLES 2015 0500/22/M/J/15
12
ADDITIONAL PAGE
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
© UCLES 2015 0500/22/M/J/15

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education
Advanced Subsidiary Level and Advanced Level
*7802200239*
ACCOUNTING 9706/22
Paper 2 Structured Questions May/June 2012
1 hour 30 minutes
No Additional Materials are required.
Write your Centre number, candidate number and name on all the work you hand in.
You may use a soft pencil for rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.

All accounting statements are to be presented in good style.
International accounting terms and formats should be used as appropriate.
Workings must be shown.
You may use a calculator.
At the end of the examination, fasten all your work securely together.
For Examiner's Use
Total
This document consists of 13 printed pages and 3 blank pages.

IB12 06_9706_22/RP

2
1 Bart, a sole trader, provided the following trial balance for the year ended 30 April 2012.
$ $
Sales Revenue 799 000

Inventory at 1 May 2011 (at cost)
Raw materials 20 000
Work-in-progress 52 000
Finished goods 78 000
Purchase of raw materials 238 000
Purchase returns 10 000
Manufacturing wages 265 000
Indirect factory wages 46 000
Factory buildings at cost 600 000
Factory machinery at cost 260 000
Office equipment at cost 148 000
Provision for depreciation:
Factory machinery 60 000
Office equipment 44 000
Insurance 14 000
General factory expenses 6 000
Factory supervision salaries 15 000
Heat and light 6 000
Administrative expenses 33 000
Office salaries 55 000
Trade receivables 40 000
Provision for doubtful debts 2 000
Trade payables 32 000
Bank 3 000
Capital 932 000
1 879 000 1 879 000
.
Additional Information:
1 Inventory at 30 April 2012 (at cost): $
Raw materials 56 000

Work-in-progress 58 000
Finished goods 72 000
2 Depreciation is provided on non-current assets at a rate of 20% per year using

the reducing balance method.
3 The following expenses should be apportioned as follows:

Factory Office
Insurance 70% 30%
Heat and light 80% 20%
4 On 30 April 2012 indirect factory wages of $5000 were unpaid and insurance of
$7000 had been paid in advance.
5 Provision for doubtful debts is to be maintained at 3% of trade receivables.
© UCLES 2012 9706/22/M/J/12

3
REQUIRED For
Examiner's
Use
(a) Prepare Bart’s manufacturing account for the year ended 30 April 2012.
[19]

4
(b) Prepare Bart’s income statement for the year ended 30 April 2012. For
Examiner's
Use
[8]
© UCLES 2012 9706/22/M/J/12

5
(c) State three examples of how the prudence concept has been applied in the For
preparation of Bart’s manufacturing account and income statement. Examiner's
Use
[3]
[Total: 30]

6
2 The following statement of financial position of Mhairi, a sole trader, was drawn up at
30 April 2012.
Statement of Financial Position at 30 April 2012
$ $ $
Non-current assets
Equipment 232 000
Fixtures and fittings 160 000
392 000
Current assets
Inventory 86 000
Trade receivables 16 000 102 000
Current liabilities
Bank 14 000 52 000
Net current assets 50 000

442 000
Financed by
Capital 400 000
Add Profit for the year 86 000
486 000
Less Drawings 44 000
442 000
.
Additional information:
1 On 1 May 2012 Mhairi admitted Aiden as a partner.
2 The profit sharing ratio between Mhairi and Aiden was agreed at 3:2.
3 Aiden agreed to pay a cheque to the partnership for $200 000 and bring in
vehicles valued at $94 000 and inventory valued at $26 000.
4 It was agreed that goodwill be valued at 2 times the average net profit earned
over the past 4 years. Goodwill is not to be retained in the books.
The following figures were available:
Year ended 30 April Net sales income Net profit percentage

$ %
2009 200 000 6
2010 400 000 8
2011 500 000 8
2012 860 000 10
© UCLES 2012 9706/22/M/J/12

7
REQUIRED For
Examiner's
Use
(a) Calculate the value of the goodwill.
[3]
(b) Prepare the capital accounts of Mhairi and Aiden after the admission of Aiden
as a partner.
[11]

8
(c) Prepare the statement of financial position of the new partnership at 1 May 2012. For
Examiner's
Use
[8]
© UCLES 2012 9706/22/M/J/12

9
(d) Outline four advantages to Mhairi of forming a partnership with Aiden. For
Examiner's
Use
1
[8]
[Total: 30]

10
3 Winston Ltd had estimated the following factory indirect costs for its financial year
ended 30 April 2012.
$
Indirect wages 2 120 000
Repairs and maintenance of machinery 410 000
Rent and rates 53 000
Machinery insurance 24 000
Premises insurance 28 000
Electricity – power 48 000
Depreciation of machinery 14 000
Consumables 21 150
The company calculated a suitable overhead absorption rate for each of its two
production departments using the following information.
Production departments Service departments

Machining Assembly Maintenance Canteen
Machine cost ($) 617 500 332 500 – –
Direct machine hours 202 500 22 500 – –
Direct labour hours 55 500 314 500 – –
Floor area (square metres) 9 000 8 000 2 000 1 000
Power usage (%) 55 35 5 5
Number of employees 70 104 16 10
Consumables ($) 9 550 9 800 550 1 250
The proportion of work done by each service department was:
Machining Assembly Maintenance
Canteen (%) 35 60 5
Maintenance (%) 80 20 –
© UCLES 2012 9706/22/M/J/12

11
REQUIRED For
Examiner's
Use
(a) Complete the following table to calculate the total overheads for each production
cost centre.
Cost Basis Machining Assembly Maintenance Canteen
[12]
(b) Calculate the appropriate overhead absorption rate for each production
department.
Machining
Assembly
[4]

12
The actual results for the year ended 30 April 2012 were as follows: For
Examiner's
Use
Machining Assembly
Factory indirect costs ($) 1 410 000 1 312 000

Direct machine hours 195 000 21 000
Direct labour hours 57 000 318 000
REQUIRED
(c) Calculate the amount of overhead which would be over or under-absorbed by

each production department.
[4]
(d) Explain how the results in (c) could have occurred.
[4]
© UCLES 2012 9706/22/M/J/12

13
(e) Explain the problems associated with using predetermined overhead absorption For
rates in calculating the price of a product. Examiner's
Use
[6]
[Total: 30]
© UCLES 2012 9706/22/M/J/12

14
BLANK PAGE
© UCLES 2012 9706/22/M/J/12

15
BLANK PAGE
© UCLES 2012 9706/22/M/J/12

16
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
© UCLES 2012 9706/22/M/J/12

Cambridge International Advanced Subsidiary and Advanced Level
*1257680194*
ACCOUNTING 9706/22
Paper 2 Structured Questions February/March 2016
1 hour 30 minutes
You may use an HB pencil for rough working.

This document consists of 19 printed pages and 1 blank page.
IB16 03_9706_22/4RP
2
1 The trial balance of Seema Limited for the year ended 30 June 2015 shows these figures:
Debit Credit
$ $
Revenue 526 000

Purchases 342 000
Inventory at 1 July 2014 37 500
Selling and distribution expenses 37 510
Administrative expenses 36 130
Provision for doubtful debts 125
Interest paid 625
Non-current assets at cost
Warehouse buildings 300 000
Motor vehicles 70 000
Provision for depreciation
Warehouse buildings 12 000
Cash and cash equivalents 27 200
140 000 Ordinary shares of $1 each 140 000
5% Debentures (2021 – 2025) 25 000
General reserve 25 000
Retained earnings 140 990
Interim ordinary dividends paid 8 400
889 385 889 385
Additional information
1 Inventory on 30 June 2015 was valued at $29 400.
2 Depreciation is to be charged as follows:
Warehouse buildings 4% using straight line method

Motor vehicles 25% using straight line method
Office equipment 10% using reducing balance method.
3 The provision for doubtful debts is to be maintained at 5% of the trade receivables.
4 An irrecoverable debt of $200 should be written off.
5 The directors have decided to transfer $25 000 to the general reserve.
6 The directors have proposed a final dividend of $0.07 per share.
7 The debentures were issued in 2011.
8 The motor vehicles were used by the sales team.
© UCLES 2016 9706/22/F/M/16

3
REQUIRED
(a) Prepare the income statement for the year ended 30 June 2015.
[10]
© UCLES 2016 9706/22/F/M/16 [Turn over

4
(b) Prepare the statement of financial position at 30 June 2015.
[8]
© UCLES 2016 9706/22/F/M/16

5
(c) Explain the importance to a business of the current ratio.
[4]

6
The directors of Seema Limited have calculated the current ratio to be 8.87 : 1.
They regard the ratio calculated to be too high and are considering repaying the debentures.
REQUIRED
(d) Discuss the effect of this course of action on:
(i) working capital
[2]
(ii) the return on capital employed
[2]
© UCLES 2016 9706/22/F/M/16

7
(e) Advise the directors on whether they should repay the debentures early. Justify your answer.
[4]
[Total: 30]

8
2 James and Lewis have been in partnership for some years sharing profits and losses equally.
They had no partnership agreement. Their statement of financial position at 30 September 2015
showed the following information.
$
Non-current assets 230 000
290 000
Capital accounts
James 200 000
Lewis 70 000
270 000
Current accounts
James Lewis
$ $
Opening balance 31 000 17 000
Share of profit 15 000 15 000
Drawings (21 000) (37 000)
Closing balance 25 000 (5 000) 20 000
290 000
On 1 October 2015 Ahmed joined the partnership. A partnership agreement was drawn up. The
terms set out in the agreement were:
1 Profits and losses are to be shared equally.
2 Interest is to be charged at 5% on drawings.
3 Interest is to be allowed at 10% on capital.
The following also took place:
1 Ahmed introduced capital of $80 000, which he paid into the business bank account.
2 Goodwill was valued at $60 000 but no goodwill account is to be maintained in the books of
account.
3 Non-current assets were revalued at $270 000.
4 The inventory value was to be reduced by $4000.
© UCLES 2016 9706/22/F/M/16

9
REQUIRED
(a) Prepare the revaluation account.
[3]
(b) Prepare the capital accounts of the partners to record the admission of Ahmed.
[4]

10
(c) State the advantages of interest on capital and interest on drawings.
(i) Advantage of interest on capital
to the partners
to the partnership
[2]
(ii) Advantage of interest on drawings
to the partners
to the partnership
[2]
© UCLES 2016 9706/22/F/M/16

11
(d) Explain how the terms of the partnership agreement will affect James and Lewis.
(i) James
[2]
(ii) Lewis
[2]
[Total: 15]

12
3 The equity and reserves section of Howard Limited’s statement of financial position at
31 December 2014 was as follows:
$000
Ordinary shares of $0.50 each 1400
Share premium 260
Retained earnings 195
1855
During the year ended 31 December 2015, the following transactions took place:
February 1 Issued 200 000 ordinary shares at $0.70 each.
Paid final dividend of $0.04 per ordinary share on all shares in issue at
May 1
31 December 2014.
Made a bonus issue of ordinary shares on the basis of two ordinary
June 1
shares for every fifteen ordinary shares held at that date.
REQUIRED
(a) State the double entry to record each of these transactions. Dates and narratives are not
required.
Dr Cr
Name of the account
$000 $000
[6]
© UCLES 2016 9706/22/F/M/16

13
On 1 August 2015, Howard Limited also made a rights issue of one ordinary share for every ten
ordinary shares held at a price of $0.60. All shareholders took up their rights.
REQUIRED
(b) Prepare a schedule showing the movement in the share premium account during the year
ended 31 December 2015.
[3]
(c) State three reasons why a company may make a bonus issue of shares.
[3]
(d) State three differences between ordinary shares and preference shares.
[3]
[Total: 15]

14
4 Lin, a manufacturer, makes three products: X, Y and Z. He uses cost-volume-profit (CVP) analysis
in his business.
He has prepared the following profit/volume (P / V) chart for product X for the year ending
31 December 2016.
$ 000s
80
60
40
20
A
0
20 40 60
– 20
– 40
B – 60
– 80
Sales units 000s
REQUIRED
(a) Identify from the P / V chart for the year ending 31 December 2016:
(i) what point A 20 000 represents
[1]
(ii) what point B ($60 000) represents
[1]
(b) State what is meant by P / V ratio.
[1]
© UCLES 2016 9706/22/F/M/16

15
(c) State two benefits and two drawbacks of CVP analysis.
Benefits
Drawbacks
[4]
Lin has provided you with the following budgeted information for the year ending
31 December 2016.
X Y Z
Annual sales (units) 15 000 5 000 8 000
$ $ $
Selling price (per unit) 8 10 7
Variable cost (per unit) 5 4 2
Annual allocated fixed costs 60 000 25 000 30 000
Lin is considering stopping production of X.

16
REQUIRED
(d) Calculate for the year ending 31 December 2016:
(i) the total contribution for each product
[3]
(ii) the total profit or loss for each product
[1]
© UCLES 2016 9706/22/F/M/16

17
(e) Discuss whether or not Lin should continue to produce all three products. Justify your
answer.
[4]
Since preparing his budget, Lin has received two separate orders.
For order 1 the customer has offered an amount in total of $10 000.
For order 2 the customer has offered a price per unit for each separate product.
The details are as follows:
Order 1 Order 2
proposed price
units units per unit $
X 1000 X 1000 6
Y 1000 Y 1000 5
Z 1000 Z 1000 4
Proposed total order price $10 000
Lin has spare production capacity and the fixed costs will not be affected by the orders.

18
REQUIRED
(f) Calculate the contribution gained or lost on each order.
[5]
© UCLES 2016 9706/22/F/M/16

19
(g) Advise Lin whether or not each of the orders should be accepted. Justify your decision.
[6]
(h) Explain, giving two reasons, why a business needs to plan for the future.
[4]
[Total: 30]
© UCLES 2016 9706/22/F/M/16

20
BLANK PAGE
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cie.org.uk after the live examination series.
© UCLES 2016 9706/22/F/M/16

Location Entry Codes
As part of CIE’s continual commitment to maintaining best practice in assessment, CIE uses
different variants of some question papers for our most popular assessments with large and
widespread candidature. The question papers are closely related and the relationships between
them have been thoroughly established using our assessment expertise. All versions of the
paper give assessment of equal standard.
The content assessed by the examination papers and the type of questions is unchanged.
This change means that for this component there are now two variant Question Papers, Mark
Schemes and Principal Examiner’s Reports where previously there was only one. For any
individual country, it is intended that only one variant is used. This document contains both
variants which will give all Centres access to even more past examination material than is usually
the case.
The diagram shows the relationship between the Question Papers, Mark Schemes and Principal
Examiners’ Reports that are available.
Question Paper Mark Scheme Principal Examiner’s

Report
Introduction Introduction Introduction
First variant Question Paper First variant Mark Scheme First variant Principal
Examiner’s Report
Second variant Question Second variant Mark Second variant Principal

Paper Scheme Examiner’s Report
Who can I contact for further information on these changes?

Please direct any questions about this to CIE’s Customer Services team at:
international@cie.org.uk
The titles for the variant items should correspond with the table above, so that at the top of the
first page of the relevant part of the document and on the header, it has the words:
• First variant Question Paper / Mark Scheme / Principal Examiner’s Report
or
• Second variant Question Paper / Mark Scheme / Principal Examiner’s Report
as appropriate.
First Variant Question Paper

*9616242913*
ACCOUNTING 9706/21
1 hour 30 minutes

For Examiner's Use
Total
IB09 06_9706_21/6RP
2
1 Suhail is a sole trader who provides the following information. For

Examiner's
Use
Suhail's assets and liabilities, other than bank, were as follows:
1 April 2008 31 March 2009

$ $
Premises at cost 200 000 200 000
Fixtures at book value 24 000 18 000
Vehicles at book value 30 000 22 500
Stock 82 150 76 500
Debtors 66 340 60 870
Cash 510 510
Creditors 64 300 71 200
There were no purchases or sales of fixed assets during the year ended 31 March 2009.
A summary of Suhail's bank statement for the year ended 31 March 2009 is shown below.
Dr Cr Balance
$ $ $
Bank balance at 1 April 2008 61 000 overdrawn
Receipts from debtors 841 030 780 030
Payments to creditors 605 190 174 840
Rent and rates 12 590 162 250
Electricity 17 145 145 105
Advertising 19 325 125 780
Wages 65 100 60 680
Sales commission paid 14 250 46 430
Drawings 28 500 17 930
Suhail's creditors had allowed him discount of $19 000 during the year.
All purchases and sales are on credit.
© UCLES 2009 9706/21/M/J/09

3
REQUIRED For
Examiner's
Use
(a) Prepare Suhail's trading and profit and loss account for the year ended 31 March 2009.
[12]

4
(b) Prepare Suhail's balance sheet at 31 March 2009. For

Examiner's
Use
[9]
© UCLES 2009 9706/21/M/J/09

5
Suhail's capital at 1 April 2007 was $250 000. For

Examiner's
Use
The following were Suhail's trading figures for the year ended 31 March 2008:
$
Sales 820 000
Gross profit 161 000
Expenses other than depreciation 102 000
Drawings 22 000
Depreciation was provided for as follows:

Fixtures, 20 % straight line
Vehicles, 25 % reducing balance.
REQUIRED
(c) In order to compare Suhail's performance between the years ended 31 March 2008
and 31 March 2009, calculate, to two decimal places:
(i) two profitability ratios;
[2]
(ii) two liquidity ratios.
[2]

6
(iii) Using the ratios calculated in (c)(i) and (ii), comment briefly on Suhail's For
performance over the two years. Examiner's
Use
[5]
[Total: 30]
© UCLES 2009 9706/21/M/J/09

7
BLANK PAGE
Question 2 is on the next page.
9706/21/M/J/09 [Turn over

8
2 A During the year ended 31 March 2007 Jeremiah lost money through customers not For
paying the amounts due to him. On 1 April 2007 he set up a provision for doubtful Examiner's
Use
debts account.
REQUIRED
(a) (i) Give one reason why Jeremiah decided to set up this account.
[2]
(ii) Describe two factors Jeremiah might consider when deciding the amount to be
provided for in the provision for doubtful debts account.
[2]
(iii) Explain the difference between the accounting treatment of a bad debt and a
doubtful debt.
[2]
On 1 April 2008, Jeremiah’s provision for doubtful debts account had a balance of
$8000. This consisted of an anticipated loss of $2500 which was the total owed by a
debtor, Uriah, who had been declared bankrupt, and a general provision of $5500,
which was 2½ % of all of his debtors.
On 31 May 2008 Liew, who owed Jeremiah $1200, paid Jeremiah only $0.40 for every
dollar owed. The remainder was written off as a bad debt.
On 30 June 2008, Uriah paid Jeremiah $0.35 for every dollar owed, in final settlement
of his account.
On 28 February 2009 Jeremiah wrote off $300 of overdue debts from various debtors.
On 31 March 2009 Jeremiah’s total debtors amounted to $205 000 and he adjusted his
provision for doubtful debts account to 3 % of that amount.
© UCLES 2009 9706/21/M/J/09

9
REQUIRED For
Examiner's
Use
(b) Prepare in Jeremiah’s ledgers the following accounts for the year ended
31 March 2009.
(i) Provision for doubtful debts account;
[3]
(ii) Bad debts account.
[4]
On 31 March 2009 Khalil, whose debt of $3000 had been written off in 2007, after he
unexpectedly left the country, returned and paid the amount due.
REQUIRED
(iii) Prepare in Jeremiah’s ledgers the bad debts recovered account for the year ended
31 March 2009.
[2]

10
B Lari, a retailer whose financial year ends on 31 May, failed to check his stock until For
8 June in 2009. At that date his stock at cost was valued at $72 200. Lari's mark-up is Examiner's
Use
30 % on cost.
During the first 8 days of June, the following transactions took place:
$
(i) Purchases of goods for resale 21 200
(ii) Purchases returns 510
(iii) Sales 25 740
(iv) Sales returns (at selling price) 273
(v) Goods taken for personal use, at cost 700
After taking stock, Lari discovered that the following items had been included in the
valuation at 8 June:
(vi) A parcel of stock which had been water-damaged. This had been on sale for $390
but was now worthless.
(vii) Stock which had cost $1200 but was now out of fashion and would have to be sold
for $400 less than cost.
(viii) Goods costing $950 which Lari had acquired on a sale or return basis. He had not
decided whether or not to keep them.
(ix) Goods, sold during May for $1560, which were awaiting collection by a customer.
REQUIRED
(a) Explain the difference between mark-up and margin.
[2]
© UCLES 2009 9706/21/M/J/09

11
(b) Prepare a statement to calculate the correct value of stock at cost at 31 May 2009. For
Begin your calculation with the original stock valuation of $72 200. Show all workings. Examiner's
Use
[13]
[Total 30]

12
3 Gala Sounds Ltd manufactures DVD players which sell for $80 each. Production is 150 000 For
units per annum, all of which are sold. Examiner's
Use
Unit costs at that level of production are:
$
Direct materials 40
Direct labour 8
Variable overheads 10
Fixed overheads 11
REQUIRED
(a) Calculate one year's total profit or loss.
[7]
The sales manager believes that if the selling price could be reduced to $75 per unit, an
additional 50 000 units would be sold.
The existing production of 150 000 units is based on a single day shift working a full day
without overtime. The sales manager believes that an evening shift might also be
introduced, using one-third of the number of workers employed on the day shift. This would
mean that an annual total of 200 000 units could be produced.
As a result of the changes, the following would take place:
1 To compensate for unsocial hours, evening shift workers will be paid an additional $2
per unit.
2 Variable overheads for the evening shift increase by 10 %.
3 Economies of scale mean that a discount of 15 % will be received on purchase of all

direct materials.
4 Fixed costs increase by $1 000 000.
All production will continue to be sold.
© UCLES 2009 9706/21/M/J/09

13
REQUIRED For
Examiner's
Use
(b) Calculate the additional profit or loss on the introduction of the new shift system.
[17]

14
Other factors need to be taken into consideration before introducing a new shift system. For
Examiner's
Use
REQUIRED
(c) Discuss, briefly, three of these factors.
[6]
[Total: 30]
© UCLES 2009 9706/21/M/J/09

15
BLANK PAGE
9706/21/M/J/09
16
BLANK PAGE
9706/21/M/J/09
Second Variant Question Paper

*1480362445*
ACCOUNTING 9706/22
1 hour 30 minutes

For Examiner's Use
Total
IB09 06_9706_22/2RP
2
1 Suhail is a sole trader who provides the following information. For

Examiner's
Use
Suhail's assets and liabilities, other than bank, were as follows:
1 April 2008 31 March 2009

$ $
Premises at cost 200 000 200 000
Fixtures at book value 24 000 18 000
Vehicles at book value 30 000 22 500
Stock 82 150 76 500
Debtors 66 340 60 870
Cash 510 510
Creditors 64 300 71 200
There were no purchases or sales of fixed assets during the year ended 31 March 2009.
A summary of Suhail's bank statement for the year ended 31 March 2009 is shown below.
Dr Cr Balance
$ $ $
Bank balance at 1 April 2008 61 000 overdrawn
Receipts from debtors 841 030 780 030
Payments to creditors 605 190 174 840
Rent and rates 12 590 162 250
Electricity 17 145 145 105
Advertising 19 325 125 780
Wages 65 100 60 680
Sales commission paid 14 250 46 430
Drawings 28 500 17 930
Suhail's creditors had allowed him discount of $19 000 during the year.
All purchases and sales are on credit.
© UCLES 2009 9706/22/M/J/09

3
REQUIRED For
Examiner's
Use
(a) Prepare Suhail's trading and profit and loss account for the year ended 31 March 2009.
[12]

4
(b) Prepare Suhail's balance sheet at 31 March 2009. For

Examiner's
Use
[9]
© UCLES 2009 9706/22/M/J/09

5
Suhail's capital at 1 April 2007 was $250 000. For

Examiner's
Use
The following were Suhail's trading figures for the year ended 31 March 2008:
$
Sales 820 000
Gross profit 161 000
Expenses other than depreciation 102 000
Drawings 22 000
Depreciation was provided for as follows:

Fixtures, 20 % straight line
Vehicles, 25 % reducing balance.
REQUIRED
(c) In order to compare Suhail's performance between the years ended 31 March 2008
and 31 March 2009, calculate, to two decimal places:
(i) two profitability ratios;
[2]
(ii) two liquidity ratios.
[2]

6
(iii) Using the ratios calculated in (c)(i) and (ii), comment briefly on Suhail's For
performance over the two years. Examiner's
Use
[5]
[Total: 30]
© UCLES 2009 9706/22/M/J/09

7
BLANK PAGE

8
2 A During the year ended 31 March 2007 Jeremiah lost money through customers not For
paying the amounts due to him. On 1 April 2007 he set up a provision for doubtful Examiner's
Use
debts account.
REQUIRED
(a) (i) Give one reason why Jeremiah decided to set up this account.
[2]
(ii) Describe two factors Jeremiah might consider when deciding the amount to be
provided for in the provision for doubtful debts account.
[2]
(iii) Explain the difference between the accounting treatment of a bad debt and a
doubtful debt.
[2]
On 1 April 2008, Jeremiah’s provision for doubtful debts account had a balance of
$8000. This consisted of an anticipated loss of $2500 which was the total owed by a
debtor, Uriah, who had been declared bankrupt, and a general provision of $5500,
which was 2½ % of all of his debtors.
On 31 May 2008 Liew, who owed Jeremiah $1200, paid Jeremiah only $0.40 for every
dollar owed. The remainder was written off as a bad debt.
On 30 June 2008, Uriah paid Jeremiah $0.35 for every dollar owed, in final settlement
of his account.
On 28 February 2009 Jeremiah wrote off $300 of overdue debts from various debtors.
On 31 March 2009 Jeremiah’s total debtors amounted to $205 000 and he adjusted his
provision for doubtful debts account to 3 % of that amount.
© UCLES 2009 9706/22/M/J/09

9
REQUIRED For
Examiner's
Use
(b) Prepare in Jeremiah’s ledgers the following accounts for the year ended
31 March 2009.
(i) Provision for doubtful debts account;
[3]
(ii) Bad debts account.
[4]
On 31 March 2009 Khalil, whose debt of $3000 had been written off in 2007, after he
unexpectedly left the country, returned and paid the amount due.
REQUIRED
(iii) Prepare in Jeremiah’s ledgers the bad debts recovered account for the year ended
31 March 2009.
[2]

10
B Lari, a retailer whose financial year ends on 31 May, failed to check his stock until For
8 June in 2009. At that date his stock at cost was valued at $72 200. Lari's mark-up is Examiner's
Use
30 % on cost.
During the first 8 days of June, the following transactions took place:
$
(i) Purchases of goods for resale 21 200
(ii) Purchases returns 510
(iii) Sales 25 740
(iv) Sales returns (at selling price) 273
(v) Goods taken for personal use, at cost 700
After taking stock, Lari discovered that the following items had been included in the
valuation at 8 June:
(vi) A parcel of stock which had been water-damaged. This had been on sale for $390
but was now worthless.
(vii) Stock which had cost $1200 but was now out of fashion and would have to be sold
for $400 less than cost.
(viii) Goods costing $950 which Lari had acquired on a sale or return basis. He had not
decided whether or not to keep them.
(ix) Goods, sold during May for $1560, which were awaiting collection by a customer.
REQUIRED
(a) Explain the difference between mark-up and margin.
[2]
© UCLES 2009 9706/22/M/J/09

11
(b) Prepare a statement to calculate the correct value of stock at cost at 31 May 2009. For
Begin your calculation with the original stock valuation of $72 200. Show all workings. Examiner's
Use
[13]
[Total: 30]

12
3 Alberta Limited produces one product, plates, for which the following information is For
available. Examiner's
Use
$ per unit
Selling price 12.00
Direct materials 5.00
Direct labour 2.80
Variable overheads 2.20
Total fixed costs (per annum) $240 000

Sales per annum (units) 400 000
REQUIRED
(a) Using the information above, calculate the following:
(i) break-even point in units and sales value;
[6]
(ii) profit for one year, clearly showing the contribution per unit;
[4]
(iii) margin of safety in units and as a percentage of sales.
[4]
© UCLES 2009 9706/22/M/J/09

13
Alberta Limited is now considering extending the product range by adding two products, For
cups and saucers. The fixed costs would double to $480 000 if any new product was Examiner's
Use
introduced.
The following information is available for the additional products.
Cups Saucers
$ per unit $ per unit
Selling price 18.00 26.00
Direct materials 7.20 14.00
Direct labour 4.80 4.20
Variable overheads 3.00 1.80
Sales per annum (units) 100 000 60 000
The current workforce is operating at full capacity in the production of the plates. There is,
however, machine capacity available to undertake the production of both cups and saucers.
Alberta Limited extended their product range by adding both products.
REQUIRED
(b) Calculate the maximum profit for one year that Alberta Limited could achieve if it was to
produce plates, cups and saucers. Show the contribution per unit and total
contribution for each product.
[10]

14
(c) Explain the implications for the local community if Alberta Limited decides to extend its For
product range. Examiner's
Use
[6]
[Total: 30]
© UCLES 2009 9706/22/M/J/09

15
BLANK PAGE
9706/22/M/J/09
16
BLANK PAGE
9706/22/M/J/09
*4875869639*
ACCOUNTING 9706/22
1 hour 30 minutes

This document consists of 12 printed pages.
IB13 06_9706_22/4RP
2
1 The following information relates to two businesses, one of which manufactures computers For
whilst the other is a food wholesaler. All sales and purchases are on credit. Examiner's
Use
Business X Business Y
Gross profit ratio 54% 30%

Net profit ratio 18% 6%
Current ratio 1.6:1 0.5:1
Trade receivables turnover 40 days 3 days
Return on capital employed 5.4% 12%
Cost of sales $248 400 $1 050 000
Closing inventory $38 000 $48 000
Cash and cash equivalents $30 000 $14 000
Long-term loan $1 000 000 $50 000
For calculations, assume a 360-day year.
REQUIRED
(a) State and explain which business is the computer manufacturer and which is the food
wholesaler.
[3]
© UCLES 2013 9706/22/M/J/13

3
(b) Prepare, as fully as the given information allows, income statements for both businesses. For
Examiner's
Use
Income Statements
$ $
Revenue
Less Cost of sales
Gross profit
Expenses
Profit for the year [8]
(c) Prepare, as fully as the given information allows, statements of financial position for
both businesses.
Statements of Financial Position
$ $ $ $
Non-current assets
Current assets
Inventory
Trade receivables
Cash and cash

equivalents
Total assets
Current liabilities
Trade payables
Net assets
Capital
Non-current liabilities
Loan
Capital employed [12]

4
(d) (i) Define the term liquidity. For

Examiner's
Use
[2]
(ii) State which business is more likely to have liquidity problems.
[1]
(iii) State which ratio gives most concern and why it does so.
[4]
[Total: 30]
© UCLES 2013 9706/22/M/J/13

5

6
2 The following is the draft statement of financial position of George Grosz, a sole trader, at
30 June 2012.
Statement of Financial Position at 30 June 2012

$ $ $
Non-current assets
Buildings at valuation 108 000
Equipment at net book value 7 000
Motor vehicles at net book value 35 000
150 000
Current assets
Inventory 21 000
Other receivables 13 000 60 000
Current liabilities
18 000
168 000
Loan 50 000
118 000
Capital at 1 July 2011 90 000

Add Draft profit for the year 30 000
120 000
Less Drawings 2 000
118 000
1 Provision for depreciation on motor vehicles for the year ended 30 June 2012 had not
yet been charged. Depreciation is charged at 10% on the net book value at the year
end.
2 Items included in inventory and valued at their cost price of $9500 were damaged and
had an estimated net realisable value of $2000.
3 A purchase invoice for goods valued at $2000 had been omitted from the books.
4 Sales invoices for goods valued at $4000 had been omitted from the books.
5 The loan was received at 1 March 2012. Loan interest of 6% due at the year end had
not yet been paid.
© UCLES 2013 9706/22/M/J/13

7
REQUIRED For
Examiner's
Use
(a) Prepare a statement to show the corrected profit for the year ended 30 June 2012.
[7]
(b) Calculate Grosz’s capital at 30 June 2012.
[2]

8
Grosz decided to form a partnership with Omar Kayal with effect from 1 July 2012, sharing For
the profits and losses in the ratio of 3:2 respectively. Examiner's
Use
Goodwill was to be valued at double the amount of the corrected profit for the year. Kayal
was to contribute cash of $30 000, inventory of $24 000 and equipment of $60 000.
(c) State two reasons why goodwill has arisen.
[4]
(d) Prepare the capital accounts of Grosz and Kayal immediately after the formation of the
partnership.
[7]
© UCLES 2013 9706/22/M/J/13

9
The following conditions were included in the partnership agreement: For

Examiner's
Use
1 A partnership salary of $10 500 is payable to Kayal.
2 Maximum drawings permitted each year – Grosz $20 000; Kayal $10 000.
3 Interest is to be charged on drawings at 10% per annum.
4 Interest on capital is payable at the rate of 5% per annum.
5 The first 40% of any residual profits is to be shared equally and transferred to the
partners’ capital accounts.
In the first year of the partnership the profit for the year was $88 600.
Grosz and Kayal both withdrew the maximum amount allowable during the year.
REQUIRED
(e) Prepare the appropriation account for the year ended 30 June 2013.
[10]
[Total: 30]

10
3 Clarke Limited manufactures one product, the Apex. The following forecast information for For
the Apex is available for the year ending 31 December 2014: Examiner's
Use
Per unit:
Selling price $45.50
Direct material ($4 per metre) $14.00
Direct labour ($12 per hour) $18.00
Variable production overhead $ 3.00
Sales demand 4 000 units
Fixed overheads are forecast to be $23 100 for the year.
REQUIRED
(a) Calculate the breakeven point in units for the sales of the Apex.
[4]
(b) Calculate the margin of safety for the Apex in terms of revenue.
[3]
© UCLES 2013 9706/22/M/J/13

11
Clarke Limited has decided to introduce two new products in addition to the Apex; the Bond For
and the Cord. Both products use the same direct material and the same grade of direct Examiner's
Use
labour as the Apex. The following forecast information is available for the year ending
31 December 2014:
Per unit: Bond Cord

Selling price $52.00 $67.50
Direct material ($4 per metre) $16.00 $20.00
Direct labour ($12 per hour) $24.00 $30.00
Variable production overhead $ 4.00 $ 5.00
Sales demand 6 000 units 2 000 units
Fixed overheads are expected to double as a result of producing all three products.
REQUIRED
(c) Calculate the contribution per unit of the Bond and the Cord.
[2]
(d) Calculate the total quantity of direct material required by Clarke Limited for the year
ending 31 December 2014.
[4]
(e) Clarke Limited has been told that due to a shortage of direct material, only 40 000
metres will be available for the year. Calculate the maximum forecast profit for Clarke
Limited for the year ending 31 December 2014 using 40 000 metres of direct material.

12
For
Examiner's
Use
[13]
(f) Explain why profit calculated using marginal costing would be different to that calculated
using absorption costing.
[4]
[Total: 30]
© UCLES 2013 9706/22/M/J/13

Candidate
Centre Number Number
Candidate Name
CAMBRIDGE INTERNATIONAL EXAMINATIONS

ACCOUNTING 9706/2
PAPER 2 Structured Questions
MAY/JUNE SESSION 2002
1 hour 30 minutes
Candidates answer on the question paper.

No additional materials are required.
TIME 1 hour 30 minutes
INSTRUCTIONS TO CANDIDATES
Write your name, Centre number and candidate number in the spaces at the top of this page.
Write your answers in the spaces provided on the question paper. If you require extra space for your
answers or workings, use pages 15 and 16.
INFORMATION FOR CANDIDATES

FOR EXAMINER’S USE
TOTAL
This question paper consists of 14 printed pages and 2 lined pages.

SP (SLC) S17343/2
© CIE 2002 [Turn over
2 For
Examiner’s
Use
1 The Happy Elephant Warehousing Company Ltd is an old family-run business which is
expanding its operations and has therefore purchased premises to add to its existing rented
warehouses.
The following figures are end of the year balances.
Years ended 31 August

1999 2000 2001
$000 $000 $000
Fittings at cost 33 40 173
Provision for depreciation on fittings 10 14 31
Depreciation for the year on fittings 3 4 7
Net sales 450 510 640
Cost of sales 350 423 577
Trade debtors 18 25 21
Trade creditors 36 47 73
Long term loan (from 1 June 2001) – – 68
Cash at bank 51 45 –
Bank overdraft – – 52
Stock 44 49 107
Rent paid 10 11 12
General expenditure 53 60 66
Loan interest due and paid – – 5
Share capital 60 60 80
Proposed dividends 14 14 –
Profit and Loss Account balance of $6000 (Cr) was brought forward on 1 September 1998.
(a) Prepare, in columnar format, the Profit and Loss and Appropriation Accounts for each of
the three years ended 31 August 1999, 2000 and 2001.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
9706/2/M/J/02
3 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
4 For
Examiner’s
Use
(b) Prepare, in columnar format, Balance Sheets as at 31 August 1999, 2000 and 2001.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
9706/2/M/J/02
5 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
6 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[14]
(c) Identify and comment on four trends shown in the company’s results for the three years.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
9706/2/M/J/02
7 For
Examiner’s
Use
2 Janice Jersey’s first 6 months of trading showed the following purchases and sales of stock:
1990 Purchases Sales

January 280 @ $65 each
February 140 @ $82 each
March 100 @ $69 each
April 190 @ $85 each
May 220 @ $72 each
June 200 @ $90 each
Calculate Janice’s profit for the 6 months ended 30 June 1990 using the following methods
of stock valuation:
(a) FIFO (First In First Out)
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]

8 For
Examiner’s
Use
(b) LIFO (Last In First Out)
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
(c) AVCO (Weighted Average Cost). Calculate to 2 decimal places.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[5]
9706/2/M/J/02
9 For
Examiner’s
Use
Janice’s Trading and Profit and Loss Account for the year ended 30 April 2001 was as
follows:
$ $
Sales 290 000
less Cost of Sales
Opening Stock 31 000
Purchases 169 000
_______
200 000
less Closing Stock 26 000
_______ 174 000
_______
116 000
Expenses 87 000
_______
Net Profit 29 000
_______
At 1 May 2001 Janice reduced all selling prices by 10%, which increased her sales volume
for the following year by 71–2 %. She also decreased her expenses by 2 1–2 %. Her purchases
for the year ended 30 April 2002 were $170 000 and closing stock was valued at $21 000.
(d) Calculate Janice’s net profit ratio for the year ended 30 April 2001 and for year ended
30 April 2002. Show all calculations.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
(e) Discuss the consequences of the changes in Janice’s policy.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]

10 For
Examiner’s
Use
(f) Janice achieved her decrease in expenses by altering her method of depreciation.
Comment on this change.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
9706/2/M/J/02
11 For
Examiner’s
Use
3 Barkis & Co Ltd manufacture specialised containers for use under water. The business uses
two machines. These machines have different levels of efficiency.
The following information applies to production and costs:
Machine X Y
Hourly rate of production 160 250
Material cost per unit $5.00 $4.60
Hourly labour rate $10 $10
Number of operatives 4 5
Fixed costs per order $200 $500
Variable unit costs $2.40 $2.60
Orders have been received from different customers for (a) 800 and (b) 1000 containers.
Which machine should be used for each order, in order to minimise cost? Orders may
not be split between machines, but the same machine may be used for more than one
order.
(a) Order 123/P for 800 containers
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[9]

12 For
Examiner’s
Use
(b) Order 382/Q for 1000 containers
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
9706/2/M/J/02
13 For
Examiner’s
Use
(c) Calculate the contribution to be made for order number 123/P to make a profit of 25%
on total cost, using each machine.
(i) Machine X .................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
(ii) Machine Y .................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
[8]

14 For
Examiner’s
Use
(d) Barkis & Co Ltd require more funds to purchase an additional machine to complete
further orders. Three methods of doing so have been discussed:
(i) a rights issue;

(ii) an issue of shares to the public;
(iii) an issue of debentures.
Give one advantage and one disadvantage of each method.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]
9706/2/M/J/02
15
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
9706/2/M/J/02
16
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
9706/2/M/J/02
Cambridge International Advanced Subsidiary and Advanced Level

ACCOUNTING 9706/22
Paper 2 Structured Questions February/March 2017
1 hour 30 minutes
You may use an HB pencil for any diagrams or graphs or for rough working.

IB17 03_9706_22/4RP
2
1 Razia, a sole trader, started her business on 1 July 2015 selling ladies’ clothing. Razia did not
keep proper books of account, but was able to provide the following information.
Summary of bank account for the year ended 30 June 2016
$ $
Capital introduced 36 340 Payments to trade payables 80 690
Cash banked 78 780 Shop rental 25 200
Balance c/d 4 330 Shop fixtures and fittings 3 600
Purchase of motor vehicle 5 800
Motor expenses 3 140
Light and heat 1 020
119 450 119 450
1 Total revenue for the year was $92 600. All sales were made for cash.
2 Razia kept no record of her cash drawings.
3 The following expenses were paid from cash takings before the money was banked:
$
General expenses 950
Assistants’ wages 2870
4 Cash in hand at 30 June 2016 was $1250.
REQUIRED
(a) Prepare the cash account, showing clearly the value of Razia’s drawings for the year.
[4]
© UCLES 2017 9706/22/F/M/17

3
1 All sales made a gross margin of 40%.
2 During the year, Razia had taken goods, $640 at cost price, for her own use.
3 Inventory at 30 June 2016 had been counted and was valued at cost price $31 900. Razia
was aware that some goods had been stolen during the year.
4 Razia owed $8940 to trade suppliers at 30 June 2016.
REQUIRED
(b) Calculate the value of inventory stolen during the year ended 30 June 2016 at cost price.
[4]
1 At 30 June 2016, the following expenses were accrued:
$
Assistants’ wages 120
Light and heat 150
2 Non-current assets should be depreciated as follows:
Shop fixtures and fittings at 15% per annum using the reducing balance method
Motor vehicle using the straight-line method over five years. The estimated residual
value of the motor vehicle after five years is $400.
3 The annual charge for shop rental is $21 600.

4
REQUIRED
(c) Prepare the income statement for the year ended 30 June 2016.
[8]
© UCLES 2017 9706/22/F/M/17

5
(d) Calculate, to two decimal places, the following ratios at 30 June 2016. State the formula
used in each case.
(i) Current ratio
Formula
Calculation
[2]
(ii) Liquid (acid test) ratio
Formula
Calculation
[2]
(e) (i) Name two other ratios a business could calculate to explain its liquidity position.
2 [2]
(ii) State two limitations of using ratio analysis.
[2]

6
Razia’s brother has suggested that Razia should increase the mark-up on her goods.
REQUIRED
(f) Advise Razia whether or not she should increase the mark-up on her goods. Justify your
answer by discussing advantages and disadvantages of doing this.
[6]
[Total: 30]
© UCLES 2017 9706/22/F/M/17

7

8
2 Sturgess has provided the following information:
1 The provision for doubtful debts at 1 August 2015 was $1940.
2 Trade receivables at 31 July 2016 were $48 500.
3 A customer owing $2100 has been declared bankrupt. This amount is to be written off.
4 A customer owing $900 did not pay within the agreed credit terms. There are concerns about
the recovery of this debt.
5 The business policy is to make a 5% provision for doubtful debts on remaining trade
receivables.
REQUIRED
(a) (i) State one reason why a business may make a provision for doubtful debts.
[1]
(ii) State one accounting concept applied while making the provision for doubtful debts.
[1]
(iii) Prepare the provision for doubtful debts account for the year ended 31 July 2016.
[5]
© UCLES 2017 9706/22/F/M/17

9
(b) Explain how a provision for doubtful debts is treated in:
(i) the statement of financial position
(ii) the income statement
[3]
1 Accrued telephone expenses at 1 August 2015 were $275.
2 Prepaid telephone expenses at 1 August 2015 were $380.
3 The total amounts paid for telephone expenses during the year were $4750. This included a
rental charge of $2980 covering the period from 1 November 2015 to 31 October 2016.
4 Telephone call charges of $840 were paid on 12 September 2016 covering the period from
1 June 2016 to 31 August 2016.
REQUIRED
(c) Prepare the telephone expenses account for the year ended 31 July 2016.
[5]
[Total: 15]

10
3 King provided the following information for non-current assets at 1 April 2015.
$
Property plant and machinery
Land and buildings – cost 252 000
Plant and machinery – cost 123 000
Accumulated depreciation
Buildings 21 000
Plant and machinery 49 000
During the year ended 31 March 2016, the following took place:
1 Land was revalued to $202 500. It had originally cost $182 000.
2 A machine was sold on 30 November 2015. It had a net book value on 1 April 2015 of $46 350
and an original cost of $76 200.
3 A machine was purchased on 1 December 2015 at a cost of $62 850.
The depreciation policy for non-current assets is as follows:
Buildings 2% per annum using the straight-line method
Plant and machinery 20% per annum using the reducing balance method
Depreciation is charged on a month-by-month basis.
REQUIRED
(a) Calculate the total depreciation charge for buildings for the year ended 31 March 2016.
[1]
(b) Calculate the total depreciation charge for plant and machinery for the year ended
31 March 2016.
[3]
© UCLES 2017 9706/22/F/M/17

11
(c) Prepare an extract from the statement of financial position at 31 March 2016 for non-current
assets.
King
Extract from Statement of Financial Position at 31 March 2016
Accumulated
Cost / Valuation Depreciation Net Book Value
$ $ $
Workings:
[8]

12
(d) State three causes of depreciation.
[3]
[Total: 15]
© UCLES 2017 9706/22/F/M/17

13
4 Miu owns a manufacturing business making a single product.
REQUIRED
(a) State the difference between a cost unit and a cost centre.
[2]
(b) State the difference between a production cost centre and a service cost centre.
[2]
(c) State what is meant by contribution.
[2]

14
Miu currently uses marginal costing to value her inventory. The following budgeted information is
available for the months of January and February:
Per unit $
Selling price 12
Variable production cost 5
January February
$ $
Fixed production overhead costs 9000 9000
Fixed administrative costs 800 800
Units Units
Sales 3600 5400
Production 4500 4500
There was no opening inventory in January.
Production is expected to be 54 000 units for the year.
© UCLES 2017 9706/22/F/M/17

15
REQUIRED
(d) Prepare a budgeted profit statement for each of the two months, January and February,
using marginal costing. Clearly show the opening and closing inventories each month.
Budgeted Profit Statement
January February
$ $ $ $
[7]

16
Miu is considering using absorption costing to value her inventory.
REQUIRED
(e) Calculate the production overhead absorption rate per unit.
[1]
(f) Prepare a budgeted profit statement for each of the two months, January and February,
using absorption costing. Clearly show the opening and closing inventories each month.
Budgeted Profit Statement
January February
$ $ $ $
[8]
© UCLES 2017 9706/22/F/M/17

17
(g) Reconcile the difference in budgeted profit figures in parts (d) and (f).
January February
$ $
[3]
(h) Advise Miu whether or not she should change from marginal costing to absorption costing.
Give reasons to justify your answer.
[5]
[Total: 30]
© UCLES 2017 9706/22/F/M/17

18
BLANK PAGE
© UCLES 2017 9706/22/F/M/17

19
BLANK PAGE
© UCLES 2017 9706/22/F/M/17

20
BLANK PAGE
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cie.org.uk after the live examination series.
© UCLES 2017 9706/22/F/M/17

*2947950926*
ACCOUNTING 9706/23
1 hour 30 minutes

For Examiner’s Use
Total
DC (LEO) 19592/3
2
1 Jasper, a sole trader, has provided the following summary of his bank receipts and payments For
for the year ended 30 April 2010. Examiner’s
Use
Dr Cr
$ $
Cash and cheques 424 000 Machinery 30 400
Payments to creditors 228 000
Rent 24 200
Insurance 14 200
Wages 104 200
Postage 800
Electricity 8 400
Sundries 4 200
Jasper’s year-end balances were as follows:
At 30 April
2009 2010
$ $
Trade receivables (debtors) 46 400 ?
Inventory (stock) 24 400 30 600
Trade payables (creditors) 29 200 32 200
Machinery at net book value 206 400 216 000
Rent prepaid – 6 200
Insurance prepaid – 3 400
Bank ? 5 400 Cr
During the year machinery with a net book value of $5600 was sold for $1000, which was
paid into Jasper’s private bank account.
Jasper took a salary of $28 000 which was included in the wages account.
Mark-up is calculated as 75% on cost.
© UCLES 2010 9706/23/M/J/10

3
REQUIRED For
Examiner’s
For the year ended 30 April 2010: Use
(a) Calculate Jasper’s ordinary goods purchased (purchases).
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
(b) Calculate Jasper’s sales.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[5]

4
(c) Prepare Jasper’s income statement (trading and profit and loss account). For
Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[16]
© UCLES 2010 9706/23/M/J/10

5
(d) Prepare Jasper’s balance sheet at 30 April 2010. For

Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]
[Total: 30]

6
2 The following information has been extracted from the accounts of Harvey Rabbit for the For
year ended 31 March 2010. Examiner’s
Use
$
Sales ledger balance at 1 April 2009 29 040
Credit sales 499 892
Cash sales 14 634
Credit sales returns 9 878
Receipts from debtors, banked 462 680
Discount allowed on credit sales 21 404
Bad debts written off 9 510
Debtors’ cheques dishonoured 662
Contra entries 1 153
REQUIRED
(a) Prepare Harvey Rabbit’s sales ledger control account for the year ended 31 March 2010.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[10]
The total of Harvey Rabbit’s sales ledger balances at 31 March 2010 was $26 845, which
did not agree with the closing balance of his sales ledger control account. On checking his
accounts he discovered the following errors.
1 A credit note for $420 which had been sent to a debtor had been entered in the sales
journal (day book) and posted as a sale to both accounts.
2 A debit entry in the sales ledger for $698 had been set off as a contra entry in the
purchases ledger, but no entry had been made in the control accounts.
© UCLES 2010 9706/23/M/J/10

7
3 The discount allowed account had been overstated by $310. For

Examiner’s
4 A sales invoice for $998 had been completely omitted from the accounts. Use
5 A debit balance of $2102 had been omitted from the list of debtors.
6 A debtor who owed $896 had been declared bankrupt during March 2010. The debt
had been written off in the control account, but no entry had been made in the debtor’s
account.
7 A receipt for $630 had been debited to the bank account but omitted from the debtor’s
account.
8 An entry for $816 in the sales journal (day book) had not been posted to the debtor’s
account.
9 A sales ledger account had been understated by $200.
10 A page of the sales journal (day book) with entries totalling $3856 had been omitted
from total sales. The amounts had, however, been posted to the debtors’ accounts.
REQUIRED
(b) (i) Beginning with the closing balance which you have calculated in (a), prepare a
statement showing the amended balance on the control account.
Amendments to sales ledger control account
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[6]

8
(ii) Beginning with Harvey Rabbit’s sales ledger balance of $26 845, prepare a For
statement amending the total of the sales ledger balance to agree with the new Examiner’s
control account balance. Use
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[8]
(c) State three advantages of keeping control accounts.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]
[Total: 30]
© UCLES 2010 9706/23/M/J/10

9
BLANK PAGE

10
3 Garth Vader is a wholesaler who sells specialist cabinets. His fixed costs are $8 million. For
Examiner’s
He buys in cabinet 1 for $400 and sells it for $500. Use
As an alternative he is considering manufacturing the cabinets and has studied two methods
of production.
The manufacture of cabinet 2 relies more on labour whilst cabinet 3 relies more on machinery.
The costs would be as follows:
Cabinet 2 Cabinet 3
Variable costs per cabinet $240 $220
Additional fixed costs per production line $36 million $79.2 million
Proposed selling price per cabinet $480 $520
The additional fixed costs for cabinet 3 are higher as more expensive machinery has to be
leased and additional factory rent will be paid.
It is assumed, whichever option is chosen, that all production will be sold.
Only one type of cabinet will be sold.
REQUIRED
(a) (i) Calculate for cabinet 2 the number to be sold so that the total annual costs equal
the total purchase costs for cabinet 1.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[3]
(ii) Calculate for cabinet 3 the number to be sold so that the total annual costs equal
the total purchase costs for cabinet 1.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[3]
© UCLES 2010 9706/23/M/J/10

11
(b) Calculate the production levels in units at which the net profit for cabinet 2 would equal For
the net profit for cabinet 3. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]
(c) Calculate the profit or loss attainable for each of the three options at annual sales
levels of:
(i) 200 000 units Cabinet 1 Cabinet 2 Cabinet 3
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
(ii) 250 000 units Cabinet 1 Cabinet 2 Cabinet 3
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................

12
(iii) 300 000 units Cabinet 1 Cabinet 2 Cabinet 3 For

Examiner’s
Use
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.............................................................................................................................[9]
(d) Calculate the minimum production level in units at which it would pay Garth Vader to
manufacture the cabinets instead of buying in cabinet 1.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[5]
(e) State four assumptions made when using break-even analysis.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
[Total: 30]
© UCLES 2010 9706/23/M/J/10

* 8 3 8 8 0 9 8 3 9 3 *
ACCOUNTING 9706/23
1 hour 30 minutes

Total
DC (NH) 31868/4
2
1 The following is the draft balance sheet of Marshall Klingsman, a sole trader, at 30 April 2011. For
Examiner’s
Balance Sheet at 30 April 2011 Use
$ $ $
Non-current assets
Buildings at valuation 300 000
Equipment at book value 540 000
Motor vehicles at book value 330 000
1 170 000
Current assets
Inventories 70 000
Other receivables 2 000
95 000
Current liabilities
Other payables 3 000 60 000

1 205 000
Loan 200 000
Net assets 1 005 000
Financed by:
Capital at start 1 000 000
Add Profit for the year (net profit) 80 000
1 080 000
Less Drawings 75 000
Capital at end 1 005 000
After preparation of the draft balance sheet the following errors were found.
1 Goods in inventory at 30 April 2011, valued at cost $15 000, were found to be
damaged. The estimated net realisable value is $8 000.
2 Loan interest of 4% per annum had been omitted from the accounts.
3 No provision for depreciation on equipment had been made for the year. Depreciation
should have been provided at 5% per annum using the reducing balance method.
4 Motor vehicles are depreciated by 10% per annum. During the year vehicle repairs
of $10 000 had been incorrectly debited to the motor vehicles account.
5 On 28 April 2011 a credit customer, who owed $3600, was declared bankrupt. It
was decided to write off this amount in full. No record of this has been made in the
accounts.
© UCLES 2011 9706/23/M/J/11

3
REQUIRED For
Examiner’s
(a) Prepare a statement to show the corrected profit for the year (net profit) ended Use
30 April 2011.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[9]

4
(b) Prepare the corrected balance sheet at 30 April 2011. For

Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
© UCLES 2011 9706/23/M/J/11

5
(c) (i) Explain two differences between cost and net realisable value. For
Examiner’s
.................................................................................................................................. Use
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
(ii) Discuss the accounting treatment of the damaged inventory in item 1.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[4]
(d) Using your answers to (a) and (b) calculate the following ratios to two decimal places:
(i) current ratio
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(ii) liquid ratio (acid test).
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]

6
(e) State four ways in which Klingsman could improve his working capital. For
Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
(f) Explain why the liquid ratio (acid test) is a more reliable indicator of liquidity than the
current ratio.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
[Total: 30]
© UCLES 2011 9706/23/M/J/11

7
BLANK PAGE

8
2 Robbie and Liza are in partnership with capitals of $90 000 and $60 000 respectively. For
Examiner’s
The following information is available for the year ended 30 April 2011. Use
Revenue $240 000

Inventory (30 April 2011) $9 000
Gross profit as a percentage of turnover 35%
Inventory turnover 12 times
Expenses ratio 15%
All purchases and sales of inventory are on credit.
REQUIRED
(a) Prepare a detailed income statement (profit and loss account) showing gross profit and
profit for the year (net profit) for the year ended 30 April 2011.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
© UCLES 2011 9706/23/M/J/11

9
On 1 May 2010 the current account balances were Robbie $5000 (credit) and Liza $2000 For
(debit). Examiner’s
Use
The partnership agreement provides for the following:
1 Partners are permitted to withdraw up to a maximum of 20% of capital invested.
2 Interest is charged on drawings at 8% per year.
3 Interest on capital is payable at 5% per year.
4 Liza is to receive a salary of $1250 per month.
5 Profits and losses are shared in the ratio of capital invested.
Both partners withdrew the maximum amount of drawings permitted during the year.
REQUIRED
(b) Prepare the appropriation account of the partnership for the year ended 30 April 2011.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[9]

10
At 30 April 2011 Robbie and Liza had a debit balance in the bank column of their cash book For
of $12 000. Their bank statement, however, showed that the partnership had $9000 in the Examiner’s
bank at that date. Use
On comparing the cash book with the bank statement the following differences were found:
1 Bank charges of $250 appeared in the bank statement but had not been entered in
the cash book.
2 Cheques received from customers amounting to $3750 had been entered in the
cash book but had not been credited by the bank.
3 A cheque for $600 received from a debtor had been entered in the cash book but
had been returned by the bank marked ‘insufficient funds for payment’.
4 Cheques issued by the business amounting to $1600, recorded in the cash book,
did not appear in April’s bank statement.
REQUIRED
(c) (i) Update Robbie and Liza’s cash book for the month of April 2011.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[4]
(ii) Prepare a bank reconciliation statement at 30 April 2011 to reconcile the bank
statement balance with the updated cash book balance.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[4]
© UCLES 2011 9706/23/M/J/11

11
(d) Give three reasons why the bank column balance in the cash book does not always For
agree with the balance shown in the bank statement at the same date. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[6]
[Total: 30]

12
3 Paul owns two car wash businesses, called City Centre Car Wash and Suburban Car Wash. For
Examiner’s
City Centre Car Wash has the following monthly costs: Use
Per car $
Detergent 1.00
Electricity 0.50
Water costs 0.05
Wage costs 1.25
Per month $
Insurance of site 800
Lease of equipment 2040
Manager’s salary 1000
Both car wash businesses are open for 400 hours every month.
The cars are washed one at a time.
The average time taken to wash each car is 10 minutes.
City Centre Car Wash is currently operating at 80% capacity and Suburban Car Wash at
70% capacity.
REQUIRED
(a) For City Centre Car Wash, calculate the following correct to two decimal places:
(i) the total number of cars washed per month
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(ii) the total variable operating cost per month
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
© UCLES 2011 9706/23/M/J/11

13
(iii) the total operating cost per month For

Examiner’s
.................................................................................................................................. Use
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(iv) the average cost per car wash
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(v) the price to be charged per car to give a profit margin of 20%
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(vi) the total profit per month.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]

14
(b) Using the price calculated in (a)–(v) above, calculate the following for City Centre Car For
Wash, correct to two decimal places: Examiner’s
Use
(i) the contribution per car (per unit)
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(ii) the break-even point in units
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(iii) the margin of safety, in dollars, when operating at 80% capacity
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(iv) the margin of safety, in dollars, if operating efficiency falls to 60% capacity
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(v) the contribution/sales (C/S) ratio when operating at 80% capacity.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
© UCLES 2011 9706/23/M/J/11

15
Suburban Car Wash charges the same price as City Centre Car Wash. For
Examiner’s
At that price Suburban Car Wash shows a contribution to sales (C/S) ratio of 40%. Fixed Use
costs are $3240.
REQUIRED
(c) Calculate, for Suburban Car Wash
(i) the break-even point in units and in dollars
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[4]
(ii) the total monthly profit when operating at 70% capacity.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[4]
[Total: 30]
© UCLES 2011 9706/23/M/J/11

16
BLANK PAGE
© UCLES 2011 9706/23/M/J/11

Centre Number Candidate Number Name

ACCOUNTING 9706/02
Paper 2 Structured Questions
May/June 2006
1 hour 30 minutes

Total

IB06 06_9706_02/5RP
 UCLES 2006 [Turn over
2
For
Examiner's
1 After completion of the Trading Account, the following balances were extracted from the Use
books of Peter Jordan plc on 30 April 2006.
Authorised and issued share capital

Ordinary shares of $1 each fully paid 1 500 000
7 % Preference shares of $1 each fully paid 200 000
Premises 2 300 000
Provision for depreciation on motor vehicles 375 000
Provision for depreciation on fixtures and fittings 102 000
Gross profit 1 620 000
Stock 204 000
Office expenses 460 000
Selling and distribution expenses 486 000
6 % debentures – 2011 (issued in 2001) 100 000
Debenture interest paid 3 000
Profit on sale of motor vehicle 2 000
Profit and loss account balance – 1 May 2005 143 600 Cr
Debtors 132 000
Creditors 116 000
Bank 26 800 Cr
Cash 400
Share premium 150 000
Interim dividend paid – ordinary shares 75 000
preference shares 8 000
Provision for doubtful debts 3 000
Additional information at 30 April 2006:
Office expenses prepaid $8000

Selling and distribution expenses accrued $23 000
Provision for doubtful debts to be maintained at 2 % of debtors
Depreciation to be provided as follows:
Motor vehicles 50 % per annum reducing (diminishing) balance
Fixtures and fittings 20 % per annum on cost
The following are proposed:
Final dividend of $0.10 per share to be paid to ordinary shareholders
Remaining dividend due is to be paid to preference shareholders.
© UCLES 2006 9706/02/M/J/06

3
For
Examiner's
REQUIRED Use
(a) Prepare Peter Jordan plc’s Profit and Loss and Appropriation Account for the year
[11]

4
For
Examiner's
(b) Prepare Peter Jordan plc’s Balance Sheet at 30 April 2006. Use
[13]
© UCLES 2006 9706/02/M/J/06

5
For
Examiner's
(c) (i) Calculate the current ratio at 30 April 2006 to two decimal places. Use
(ii) Calculate the acid test (quick) ratio at 30 April 2006 to two decimal places.
(iii) Explain the uses of these two ratios, using Peter Jordan plc as an example.
[6]
[Total: 30]

6
For
Examiner's
2 The Netherdale Sports Club’s Receipts and Payments Account shows the following Use
transactions for the year ended 30 April 2006.
$ $
RECEIPTS PAYMENTS
Balance b/d 20 000 National club fees 3 000
Subscriptions 72 000 Restaurant supplies 51 000
Restaurant takings 108 000 Purchase of clubhouse 50 000
Annual dance 8 900 Loan interest 2 200
Sale of equipment 6 000 Purchase of equipment 14 000
Loan to purchase clubhouse 20 000 Restaurant wages 22 000
Repairs and maintenance 12 400
Annual dance 4 950
Administration of annual dance 320
Electricity 11 000
General wages 60 000
Balance c/d 4 030
234 900 234 900
Balance b/d 4 030
When the club’s bank statements for the year ended 30 April 2006 were studied, the
following were discovered.
(i) Bank interest of $100 for the year had been credited in the bank statement but no entry
appeared in the receipts and payments account.
(ii) Electricity was paid by direct debit at $1000 per month but the entry for January 2006
had been omitted from the receipts and payments account.
(iii) $4000 had been banked for restaurant takings on 30 April 2006. This had been entered
in the receipts and payments account but did not appear on the bank statement.
(iv) A cheque for $2800 for repairs and maintenance, posted on 29 April 2006, was
included in the receipts and payments account but had not yet been presented to the
bank for payment.
© UCLES 2006 9706/02/M/J/06

7
For
Examiner's
REQUIRED Use
(a) (i) Update the Netherdale Sports Club’s Receipts and Payments Account.
[2]
(ii) Prepare a bank reconciliation statement at 30 April 2006 to reconcile the bank
statement with the updated receipts and payments balance.
[2]

8
For
Examiner's
Additional information: Use
(i) Net book value of the equipment owned on 1 May 2005 was $56 000 and the equipment
sold during the year ended 30 April 2006 had a net book value of $4000.
(ii) Depreciation on equipment is provided at 20 % reducing (diminishing) balance, with a

full year’s depreciation written off in the year of purchase and none in the year of sale.
(iii) The club’s other assets and liabilities were as follows:
1 May 2005 30 April 2006

$ $
Restaurant stock 7 600 9 400
Creditors for restaurant supplies 4 400 5 200
Subscriptions in arrears - 1 800
Subscriptions in advance 2 000 1 400
Fixtures and fittings 21 400 20 800
There were no purchases or sales of fixtures and fittings during the year.
REQUIRED
(b) (i) Prepare a Restaurant Trading Account for the year ended 30 April 2006.
Depreciation, repairs and maintenance and electricity are not to be included in this
account.
[5]
© UCLES 2006 9706/02/M/J/06

9
For
Examiner's
(ii) Prepare an Income and Expenditure Account for the year ended 30 April 2006. Use
[18]

10
For
Examiner's
(c) State three reasons why, for most clubs, a Receipts and Payments Account is not Use
always a satisfactory record of the club’s activities.
[3]
[Total: 30]
© UCLES 2006 9706/02/M/J/06

11
BLANK PAGE

12
For
Examiner's
3 Hoi Poloi plc makes 3 types of filing cabinet, four-drawer, three-drawer and two-drawer. The Use
business uses general purpose machines which are equally suitable to be used in the
manufacture of all three products.
Data for the year ended 30 April 2005 was as follows:
four three two

drawer drawer drawer
$ $ $
Total sales 410 400 123 900 427 500
Total variable costs 304 000 88 500 285 000
Allocated fixed costs 98 000 48 000 135 000
Profit (Loss) 8 400 (12 600) 7 500
It had been proposed that the three-drawer cabinet be discontinued, as it was making a
loss.
REQUIRED
(a) State whether this proposal should have been agreed, giving your reasons.
[5]
Sales and cost data for the year ended 30 April 2006 were as follows:
four three two

drawer drawer drawer
Sales in units 15 000 6 000 30 000
Raw materials $12 $8 $4

Variable overheads $3 $2 $2
Unit contribution $7 $6 $5
Machine hours per unit 0.5 0.5 0.4
Machine operators are paid $10 per hour.
Allocation of fixed costs $98 000 $48 000 $135 000
© UCLES 2006 9706/02/M/J/06

13
For
Examiner's
REQUIRED Use
(b) Calculate the selling price per unit for each product.
[3]
(c) Calculate for each product the break-even point in both units and sales value.
[6]

14
For
Examiner's
(d) Calculate for each product the profit or loss for the year ended 30 April 2006. Use
[6]
© UCLES 2006 9706/02/M/J/06

15
For
Examiner's
To try to improve profits for the year ending 30 April 2007, it has been suggested that a Use
better quality, more easily worked, raw material be purchased. This would increase the cost
of raw materials by five percent (5 %) but would offer savings of ten percent (10 %) on
labour. Sales and other costs would remain unchanged.
REQUIRED
(e) Calculate for each product and in total the profit or loss if this suggestion is put into
effect.
[10]
[Total: 30]
© UCLES 2006 9706/02/M/J/06

16
BLANK PAGE
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department
of the University of Cambridge.
9706/02/M/J/06
CAMBRIDGE INTERNATIONAL EXAMINATIONS

ACCOUNTING 9706/02
May/June 2003
1 hour 30 minutes
Write in dark blue or black pen in the spaces provided on the Question Paper.


If you have been given a label, look at the
details. If any details are incorrect or 1
missing, please fill in your correct details
in the space given at the top of this page. 2
Stick your personal label here, if 3

provided.
Total
This document consists of 10 printed pages, 1 lined page and 1 blank page.
SJF2731 S39592/4
© CIE 2003 [Turn over
2
1 The following is the summarised Balance Sheet of Bracket & Racket Ltd, a limited company wholly
owned by its two shareholders, Bracket and Racket.
Balance Sheet as at 31 March 2002
$000 $000 $000

Fixed Assets at Net Book Value
Buildings 250
Fixtures and fittings 100
350
Current Assets
Stock 1540
Debtors 820
Cash 3 2363
Current Liabilities
Creditors for supplies 1210
Accruals 192
Bank 203 1605 758
1108
Share capital – Ordinary shares 25

Retained profits 910
Loan accounts – Bracket 104
Racket 69 173
1108
The company accountant resigned at the beginning of April 2002 and proper records were not
kept for the six-month period 1 April to 30 September 2002.
The following information is available for that six-month period.
$000
Payments by cheque for purchases 1996
Payments by cheque for expenses 823
Interest charged on overdraft 20
Cash and cheques banked 2784
Included in the amount banked was $53 000 for the sale of an unused building, book value
$70 000.
Prior to banking the takings,
(i) $205 000 was used to pay wages for the six months;
(ii) Bracket and Racket each reduced their loans to the firm by $45 000.
Depreciation on all fixed assets which remain in the company’s books at the end of an accounting
period is calculated at 25% per annum on the net book value.
9706/02/M/J03
3 For
Examiner’s
Use
At 30 September 2002 the following figures were available.
$000
Creditors for supplies 510
Accruals 103
Debtors 420
Stock 704
Cash 8
Bank overdraft 195
Unpresented cheques 63
Doubtful debts are estimated at 5% at 30 September 2002 and a provision for doubtful debts
at that date is to be created.
REQUIRED
(a) A Trading and Profit and Loss Account for Bracket and Racket Ltd for the six months
ended 30 September 2002.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
9706/02/M/J03 [Turn over
4 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [16]
9706/02/M/J03
5 For
Examiner’s
Use
(b) A Balance Sheet for Bracket and Racket Ltd at 30 September 2002.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [8]

6 For
Examiner’s
Use
The Company needs to improve its premises but the bank refuses either to allow a further
increase in overdraft or to grant a loan.
REQUIRED
(c) State six other possible sources of finance.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [6]
9706/02/M/J03
7 For
Examiner’s
Use
2 The following are the summarised Profit Statements and Balance Sheets for Greenyards
Ltd, a manufacturing company, and Poynder Ltd, a retailer.
Greenyards Ltd Poynder Ltd
Profit Statements for the

years ended 31 March 2001 2002 2001 2002
$000 $000 $000 $000

Sales 500 610 425 460
Cost of sales (245) (355) (210) (230)
Operating costs (225) (230) (190) (200)
Loan interest paid (7) (10) (7) (3)
Net profit 23 15 18 27
Balance sheets at 31 March

Fixed Assets at Net Book Value 150 225 220 175
Stock 50 60 27 20
Debtors 20 30 – –
Bank 10 (35) 13 57
Creditors (25) (20) (35) (50)
205 260 225 202
Share capital 50 50 50 50
Retained profit 95 110 100 127
Long term loans 60 100 75 25
205 260 225 202
REQUIRED
(a) Use six ratios to compare the management’s performance from 2001 to 2002 for each
company.
Use year end figures, not averages, to calculate ratios.
Give answers to a maximum of one decimal place. Show all workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................

8 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [12]
(b) Comment on your findings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
9706/02/M/J03
9 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [12]
(c) State six shortcomings or dangers in using ratio analysis.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [6]

10 For
Examiner’s
Use
3 Angelicus and Co. manufactures three different qualities of lock, Domestic, Commercial and
Industrial. The company’s results for the year ended 31 March 2003 were as follows.
Domestic Commercial Industrial Total

Sales (units) 120 000 45 000 56 250 221 250
$000 $000 $000 $000

Sales (total value) 240 180 450 870
Total costs
Direct material 108 66 84 258
Direct labour 60 30 150 240
Variable overheads 24 54 120 198
Fixed overheads 54 33 42 129
246 183 396 825
Profit (loss) (6) (3) 54 45
Fixed overheads are absorbed on the basis of 50% of direct materials.
REQUIRED
(a) For the year ended 31 March 2003 calculate, for each type of lock,
(i) the contribution per unit;

(ii) the contribution as a percentage of sales.
Give answers to a maximum of three decimal places.
Show all workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [12]
9706/02/M/J03
11 For
Examiner’s
Use
(b) Calculate the break-even point for each type of lock in both units and dollars.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [12]
(c) Advise whether Angelicus should cease production of Domestic and Commercial locks.
Give your reasons.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [6]
9706/02/M/J03
12
BLANK PAGE
9706/02/M/J03
* 6 3 0 5 5 1 9 0 5 5 *
ACCOUNTING 9706/21
1 hour 30 minutes

Total
DC (NH) 31862/3
2
1 Henry and Robin are in partnership with capitals of $120 000 and $80 000 respectively. For
Examiner’s
On 1 June 2010 Henry had a debit balance on his current account of $6 600 and Robin had Use
a credit balance on his current account of $1 000.
On 31 May 2011 Henry had a credit balance on his current account of $10 400.
The partnership agreement stated:
1 Interest on capital is payable at 8% per annum.
2 The maximum drawings permitted in any one year is 10% of capital invested.
3 Interest on drawings is charged at 5% on total drawings for the year.
4 Annual partnership salaries were Henry: $5 000 and Robin: $4 000.
5 Profits and losses are to be shared in the ratio of capital invested.
Both partners withdrew the maximum amount permitted during the year.
REQUIRED
(a) Prepare the current account of each partner for the year ended 31 May 2011.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[14]
© UCLES 2011 9706/21/M/J/11
3
(b) Calculate the profit for the year (net profit) made by the partnership for the year ended For
31 May 2011. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
(c) Before forming a partnership both Henry and Robin were sole traders.
State four advantages of a partnership compared to a sole trader.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
[Total: 30]

4
2 The Welcome Cricket Club has the following assets and liabilities. For
Examiner’s
30 April 2011 1 May 2010 Use
$ $
Equipment (at cost) 104 000 40 000
Equipment – depreciation provision 14 400 4 000
Café inventory 4 800 6 500
Cash at bank ? 12 800
Subscriptions outstanding 3 600 2 200
Subscriptions paid in advance 3 500 5 000
Café staff wages accrued 4 000 500
Loan from cricket association 20 000 –nn
Loan interest ? –nn
The receipts and payments for the year ended 30 April 2011 are:
Receipts $
Café revenue (sales) 90 000
Subscriptions 34 000
Loan from cricket association 20 000
Donations 450
Ticket sales 14 560
Payments $
Equipment 64 000
Rent 21 000
Heating and lighting 18 000
Wages of café staff 28 800
Café purchases for resale 36 000
1 Wages are a direct cost of the café and are charged to the trading account.
2 The rent and heating and lighting are apportioned 40% to the café and 60% to the
rest of the club.
3 The loan from the cricket association was received on 1 November 2010. Interest is
payable at 10% per year.
4 Depreciation is charged to the income and expenditure account.
© UCLES 2011 9706/21/M/J/11

5
REQUIRED For
Examiner’s
(a) Prepare the café income statement to show the gross profit and the profit for the year Use
(net profit) made by the café during the year ended 30 April 2011.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]

6
(b) Prepare the income and expenditure account of the Welcome Cricket Club for the year For
ended 30 April 2011. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[14]
© UCLES 2011 9706/21/M/J/11

7
(c) Prepare the balance sheet of the Welcome Cricket Club at 30 April 2011. For
Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
[Total: 30]

8
3 Largos Ltd produces three types of security camera – Ojo 1, Ojo 2 and Ojo 3. For
Examiner’s
The following forecast data is available for the year ended 30 June 2012. Use
Ojo 1 Ojo 2 Ojo 3
Forecast demand (units) 1 000 700 400
Selling price (per unit) $400 $450 $550

Costs (per unit)
Raw materials $150 $170 $241
Direct labour $100 $150 $175
Variable overheads $50 $60 $70
Fixed overheads $50 $60 $60
Labour is highly skilled and may be used to produce any of the three types of security
camera.
REQUIRED
(a) Prepare a statement to show the forecast contribution and profit or loss made by one
unit of each type of camera produced.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[5]
© UCLES 2011 9706/21/M/J/11

9
(b) Prepare a statement to show the forecast total contribution and profit/loss made by For
each product for the year ended 30 June 2012. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[5]
(c) If the forecast output is produced, calculate the break-even point and the margin of
safety in units for each product. Show your workings.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]

10
Largos Ltd also operates a factory which manufactures and sells underwater cameras. For
Examiner’s
The following details per unit are available for the quarter ended 30 April 2011. Use
$0
Sales price 700
Variable costs 400
Fixed production overhead 100
Fixed production overhead is absorbed on forecast production of 40 cameras per month.
Actual production and sales (units)

February March April
Sales 30 40 45
Inventory at start of month 10 0 5
Inventory at end of month 0 5 10
REQUIRED
(d) Prepare an income statement to show the profit or loss in each month using marginal
costing.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
© UCLES 2011 9706/21/M/J/11

11
(e) Prepare an income statement to show the profit or loss in each month using absorption For
costing. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
[Total: 30]
© UCLES 2011 9706/21/M/J/11

12
BLANK PAGE
© UCLES 2011 9706/21/M/J/11


ACCOUNTING 9706/02
May/June 2004
1 hour 30 minutes



provided.
Total

SP (SJF2964) S53066/4
2
1 The final accounts of Jarvis, Cocker and Co Ltd for two years were as follows.
Trading and Profit and Loss Accounts for years ended 31 December
2002 2003
$000 $000 $000 $000
Sales 2700 3600
less Cost of Sales
Opening stock 110 120
Purchases 1900 3140
2010 3260
less Closing stock 120 1890 530 2730
Gross Profit 810 870
less Operating expenses 426 468
Profit before interest 384 402
Interest payable 84 84
Net Profit 300 318
Dividends payable 126 138
Transfer to General Reserve 162 288 174 312
Retained profit for year 12 6
Retained profit b/f 72 84
Retained profit c/f 84 90
Balance Sheets as at 31 December
2002 2003
$000 $000 $000 $000
Fixed Assets at Net Book Value 2790 3216
Current Assets
Stock 120 530
Debtors 456 882
Bank 192 768 - - - 1412
Current Liabilities
Creditors 192 730
Dividends due 126 138
Interest due 84 84
Bank --- 402 340 1292
Net Current Assets 366 120
3156 3336
Financed by
Ordinary Share Capital (Fully Paid) 1800 1800
General Reserve 432 606
Retained Profits 84 516 90 696
10% Debentures 840 840
3156 3336
All sales and purchases were on credit.
© UCLES 2004 9706/02/M/J04

3 For
Examiner’s
Use
REQUIRED
(a) For each year calculate the following to two decimal places (show your working in the
boxes):
2002 2003
(i) Acid test (liquid/quick) ratio
(ii) Stock turnover
(iii) Debtors collection period
(iv) Gross profit ratio
(v) Net profit ratio
(vi) Return on capital employed
[12]
© UCLES 2004 9706/02/M/J04 [Turn over

4 For
Examiner’s
Use
(b) Comment on the changes in the Company from 2002 to 2003, stating for each ratio
whether it is better or worse, and why.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [12]
© UCLES 2004 9706/02/M/J04
5 For
Examiner’s
Use
(c) Comment briefly on the advantages and disadvantages of using ratios.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [6]

6 For
Examiner’s
Use
2 Titus and Ronicus entered into partnership on 1 October 2003. Their partnership agreement
contained the following information:
1 Interest on partners’ capital accounts to be credited at 5% on the year end balance.

2 Interest on partners’ cash drawings to be charged at 5% on the year end balance.
3 The Profit or Loss sharing ratio to be in the same ratio as the agreed values of the
businesses transferred to the partnership, ie Titus, $45 000 and Ronicus, $30 000.
4 Ronicus is to be credited with a partnership salary of $20 000 per annum.
5 Capital accounts and Current accounts to be maintained for each partner.
6 A Goodwill account is not maintained in the firm’s books.
7 The following assets and liabilities were transferred to the partnership with effect from
1 October 2003:
Titus Ronicus
$ $
Fixtures and fittings 20 000 5 000
Motor vehicles 10 000 6 000
Stock 14 000
Debtors 4 700
Creditors 2 600
REQUIRED
(a) Prepare the partners’ Capital accounts for the year ended 30 September 2004, in
columnar format.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [8]
© UCLES 2004 9706/02/M/J04

7 For
Examiner’s
Use
The following information was extracted from the partnership accounts for the year ended
30 September 2004.
$
Net profit for the year 56 000
Partners’ drawings – Titus 9 000
Ronicus 5 000
Both partners had taken goods for their own use from the business, Titus, $600, and
Ronicus, $450, at cost. This had not been taken into account in the partnership books.
REQUIRED
(b) Prepare the Partnership Profit and Loss Appropriation account for the year ended
30 September 2004.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [9]

8 For
Examiner’s
Use
(c) Prepare the partners’ Current accounts for the year ended 30 September 2004, in
columnar format.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [13]
© UCLES 2004 9706/02/M/J04

9 For
Examiner’s
Use
3 Bilanben Ltd manufactures grass-cutting equipment. The following was the cost of
production for the year ended 31 December 2003, based on a normal capacity of 4500 units.
$
Direct Materials 157 500
Direct Labour 270 000
Variable Overheads 54 000
Fixed Overheads 125 000
606 500
There are 30 production workers who each work a 30-hour week and have two weeks
unpaid holiday per annum.
Additional costs, based on a production of 5000 units, are administrative overheads of

$140 000, of which 50% are fixed, and $150 000 for advertising.
Selling price is $250 per unit.
The Sales Director has suggested that during 2004 he can sell 5000 units at $250 each.
There are three options to fulfil this requirement.
Option 1
To introduce overtime. This would require a pay rise of 50% per hour after the normal
30 hours. There would also be an additional cash payment of $1.50 for each extra hour
worked.
Option 2
To hire new machinery for one year at a cost of $50 000. This would leave all variable costs
unchanged. This was already under consideration and $17 500 had been spent on market
research.
Option 3
To buy in the extra units at a cost of $200 each.
REQUIRED
(a) Calculate the net profit on the 2003 production of 4500 units, assuming all were sold.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................

10 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [10]
(b) Prepare statements showing the profitability of each of the three options.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
© UCLES 2004 9706/02/M/J04

11 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
................................................................................................................................... [17]
(c) Write a brief statement comparing the three options.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..................................................................................................................................... [3]
© UCLES 2004 9706/02/M/J04

12
BLANK PAGE
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES) which is itself a department of
the University of Cambridge.
9706/02/M/J04
*1858801816*
ACCOUNTING 9706/23
1 hour 30 minutes

IB13 06_9706_23/4RP
2
1 Eagle Manufacturing Limited produces components for cars and lorries. The following
figures have been taken from their books of account.
$000
Revenue 816
Inventories at 1 April 2012
Raw materials 17
Work in progress 19
Finished goods 32
Factory machinery – cost 420
– accumulated depreciation 52
Office equipment – cost 30
Motor vehicles – cost 60
Purchases of raw materials 194
Labour 153
Electricity 25
Carriage inwards 6
Carriage outwards 22
Rent 60
Salaries 14
Sundry expenses 12
Insurances 18
1 Inventories at 31 March 2013 were:

Raw materials $18 000
Work in progress $15 000
Finished goods $41 000
2 Factory machinery and motor vehicles are to be depreciated at 25% using the
reducing balance method.
Office equipment is to be depreciated at 10% on cost.
During the year a motor vehicle was sold for $4 000. The profit on disposal was
$1 000. A new motor vehicle was purchased for $9 000.
All motor vehicles are used by the sales staff.
A full year’s depreciation is charged in the year of purchase, no depreciation is
charged in the year of sale.
3 At 31 March 2013 electricity of $5 000 was accrued and rent of $10 000 was
prepaid.
4 Labour costs include $16 000 for indirect labour. The balance is direct labour.
5 Electricity is apportioned between the factory and office in the ratio 4:1.
6 Rent is apportioned between factory and offices in the ratio 3:2.
7 Sundry expenses are apportioned between factory and offices in the ratio 1:2.
8 Insurances are apportioned between factory and offices in the ratio 5:1.
© UCLES 2013 9706/23/M/J/13

3
REQUIRED For
Examiner's
Use
(a) Prepare the manufacturing account for the year ended 31 March 2013.
[12]

4
(b) Prepare the income statement for the year ended 31 March 2013. For
Examiner's
Use
[10]
© UCLES 2013 9706/23/M/J/13

5
(c) Explain how the following will be affected if the company makes a loss in the year: For
Examiner's
Use
(i) Dividend payable for cumulative preference shares
[2]
(ii) Dividend payable for ordinary shares
[2]
(iii) Dividend payable on non-cumulative preference shares
[2]
(iv) Interest payable on debentures.
[2]
[Total: 30]

6
2 B M Reid’s books of account showed the following figures for the year ended 31 December 2012: For
Examiner's
Use
$
Revenue 200 000
Ordinary goods purchased 145 000
Profit from operations 22 500
Reid’s balances at 31 December 2012 were:

Inventory 12 500
Finance costs (interest owing) 12 500
Non-current assets at net book value 60 000
1 80% of revenue was on credit

2 Inventory at 1 January 2012 was $17 500
3 Trade payables and trade receivables balances were unchanged since
1 January 2012.
REQUIRED
(a) Calculate the following ratios, correct to two decimal places, in each case stating the
formula used.
(i) Mark-up
[3]
(ii) Inventory turnover
[3]
(iii) Trade receivables turnover
[3]
© UCLES 2013 9706/23/M/J/13

7
(iv) Operating expenses to revenue ratio For

Examiner's
Use
[3]
(v) Current ratio
[3]
(vi) Acid test/liquid ratio
[3]
(vii) Non-current asset turnover.
[3]

8
For the year ended 31 December 2011 the following ratios were: For
Examiner's
Use
Inventory turnover 13 times
Trade receivables turnover 70 days
REQUIRED
(b) Use the above ratios to compare B M Reid’s performance with the year ended
31 December 2012. State possible reasons for the changes.
[5]
(c) State two limitations of the uses of ratios.
[4]
[Total: 30]
© UCLES 2013 9706/23/M/J/13

9
3 At 1 January 2013, Brahms had opening inventory of 50 teddy bears at a purchase price of For
$30 each. Examiner's
Use
His transactions for the first three months of 2013 were:
Date Purchases Purchase price Sales

(units) (per unit) (units)
Jan 8 30
10 100 $30.00
12 80
21 120 $30.50
28 90
Feb 1 50
14 150 $31.00
23 100
March 1 30
4 120 $31.50
19 120
23 100 $32.00
27 120
No other transactions took place during these months.

Each teddy bear was sold for $50.
REQUIRED
(a) Calculate the value of the inventory at 31 March 2013 using the following methods of
valuation.
(i) FIFO
[3]

10
(ii) AVCO. For

Examiner's
Use
[3]
(b) Using each method of valuation, calculate the gross profit for the three months ending
31 March 2013.
(i) FIFO
[5]
(ii) AVCO.
[2]
© UCLES 2013 9706/23/M/J/13

11
(c) State one advantage and one disadvantage of using the following methods of inventory For
valuation: Examiner's
Use
(i) FIFO
[2]
(ii) AVCO.
[2]
(d) Brahms currently uses FIFO to value his inventory. He is considering changing the
method to show a lower profit each year. State two reasons why he should not do this.
Make reference to any relevant accounting principles, concepts and conventions.
[4]

12
Charlie runs a similar business and also completes his financial year on 31 March 2013. He For
is unable to value his inventory at that date. The stock count takes place on 7 April 2013. Examiner's
Use
The value at that date is $1000. Between the two dates the following transactions had
occurred.
Sold goods at a selling price of $120. (Charlie normally marks up his goods for sale at 25%.
These goods were in stock on 31 March 2013.)
Purchased goods at an invoice price of $70.
Goods sold to a customer for $80 had been returned by them. (The sale took place on
28 March 2013.)
Damaged goods were discovered which had been included at a cost of $30. Charlie could
only sell them for $20.
REQUIRED
(e) Calculate the value of Charlie’s closing inventory at 31 March 2013.
[9]
[Total: 30]
© UCLES 2013 9706/23/M/J/13

*8018806549*
ACCOUNTING 9706/02

1 hour 30 minutes

For Examiner's Use
Total
IB07 06_9706_02/5RP
2 For
Examiner's
Use
1 The following balances were extracted from Aurora’s accounts at 31 March 2007.
$000
Sales 3 200
Purchases of raw materials 450
Purchases returns 18
Carriage inwards 10
Direct labour 400
Direct overheads 60
Rent 40
Electricity 30
Insurance 55
Factory supervision salaries 65
Office salaries 70
Indirect factory wages 13
Factory cleaning 50
Office cleaning 50
Stocks at 1 April 2006:
Raw materials 110
Work in progress 55
Finished goods 80
Factory machinery at cost 640
Provision for depreciation on factory machinery 280
Additional information at 31 March 2007:

$000
Rent prepaid 5
Electricity accrued 15
Insurance prepaid 10
Stocks – Raw materials 140
Work in progress 75
Finished goods 170
Depreciation on factory machinery is to be provided at 25 % per annum reducing balance.
Rent, electricity and insurance are apportioned on the basis of 80 % to factory and 20 % to
office.
Finished goods are transferred to the trading account at total factory cost plus one third.
© UCLES 2007 9706/02/M/J/07

3 For
Examiner's
Use
REQUIRED
(a) Prepare Aurora’s manufacturing account for the year ended 31 March 2007.
[24]

4 For
Examiner's
Use
(b) Prepare Aurora’s trading account for the year ended 31 March 2007.
[6]
[Total: 30]
© UCLES 2007 9706/02/M/J/07

5 For
Examiner's
Use
2 Archie Pelago buys and sells a single product. His first three months of trading showed the
following purchases and sales.
2005 Purchases Sales

February 300 @ $25 150 @ $35
March 120 @ $27 210 @ $38
April 240 @ $29 205 @ $41
For the following requirements either perpetual or periodic inventory may be used.
Calculations should be taken to a maximum of two decimal places.
REQUIRED
(a) Calculate Archie’s closing stock at 30 April 2005 using the FIFO (first in first out)
method of stock valuation.
[5]

6 For
Examiner's
Use
(b) Calculate Archie’s closing stock at 30 April 2005 using the LIFO (last in first out)
method of stock valuation.
[2]
(c) Calculate Archie’s closing stock at 30 April 2005 using the AVCO (weighted average
cost) method of stock valuation.
[2]
© UCLES 2007 9706/02/M/J/07

7 For
Examiner's
Use
(d) Calculate Archie’s gross profit using each of the above methods of stock valuation.
[10]

8 For
Examiner's
Use
Archie Pelago’s balance sheets at 30 April 2006 and 2007 were as follows:
30 April 2006 30 April 2007

$ $ $ $ $ $
Fixed assets
(Net book value)
Premises 100 000 100 000
Equipment 75 000 56 500
175 000 156 500
Current assets
Stock 7 500 6 800
Debtors 10 800 8 900
Bank 2 000 -
Cash 400 20 700 400 16 100
Current liabilities
Creditors 6 200 7 300
Bank - 1 200
6 200 8 500
Net current assets 14 500 7 600
189 500 164 100
Capital at 1 May 2006 120 000 189 500

Net profit (loss) 83 500 (11 400)
203 500 178 100
Less drawings 14 000 14 000
189 500 164 100
REQUIRED
(e) For each year, calculate to a maximum of two decimal places:
(i) the current ratio;
(ii) the liquid ratio.
[8]
© UCLES 2007 9706/02/M/J/07

9 For
Examiner's
Use
(f) From your calculations in (e) and the balance sheets given in the question discuss
briefly Archie’s financial status on 30 April 2007 compared to 30 April 2006.
[3]
[Total: 30]

10 For
Examiner's
Use
3 Fernando manufactures 3 types of refrigerator for Household, Business and Factory use.
The following data apply to the year ended 30 April 2007.
Household Business Factory Total
Sales (units) 2 400 900 2 250 5 550

$ $ $ $
Total sales value 240 000 108 000 360 000 708 000
Total costs
Direct material 96 000 45 000 112 500 253 500
Direct labour 72 000 28 800 94 500 195 300
Variable overheads 24 000 13 500 45 000 82 500
Fixed overheads 57 600 27 000 67 500 152 100
249 600 114 300 319 500 683 400
Profit (loss) (9 600) (6 300) 40 500 24 600
REQUIRED
(a) For the year ended 30 April 2007 calculate for each type of refrigerator:
(i) the contribution per unit;
(ii) the contribution as a percentage of sales.
Give answers to a maximum of two decimal places. Workings must be shown.
[12]
© UCLES 2007 9706/02/M/J/07

11 For
Examiner's
Use
(b) Calculate the break-even point for each type of refrigerator in both units and dollars.
Give your answers to the nearest whole number. Workings must be shown.
[12]
(c) The table at the beginning of the question shows that both the Household and the
Business models appear to be making a loss. Explain why Fernando should not cease
production of these two types of refrigerator.
[6]
[Total: 30]
© UCLES 2007 9706/02/M/J/07

12
BLANK PAGE
9706/02/M/J/07
*1132581871*
ACCOUNTING 9706/23
1 hour 30 minutes

For Examiner's Use
Total

IB12 06_9706_23/RP

2
1 Shaun is a sole trader. He pays all the sales receipts into the business bank account.
He provided his accountant with the following information for the year ended
31 December 2011.
Bank account summary for the year ended 31 December 2011
Dr. $ Cr. $
Rent received 16 800 Balance b/d 5 620

Trade receivables 203 200 Trade payables 122 460
Cash sales 18 510 General expenses 22 000
Wages 32 560
Equipment 17 400
Drawings 27 560
Shaun’s remaining assets and liabilities were:
1 January 2011 31 December 2011
$ $
Inventory (at cost) 22 300 17 400

Premises (at cost) 100 000 100 000
Equipment (net book value) 28 400 27 600
Motor vehicles (net book value) 65 000 68 200
Trade payables 17 500 19 470
General expenses prepaid 1 100 900
Rent received prepaid 800 –
Rent received owing – 1 300
Wages owing 2 400 500
1 Shaun allowed his customers discounts of $4000.
2 Discounts received from suppliers were $3100.
3 Shaun has decided to create a provision for doubtful debts of 2% of the trade
receivables outstanding at 31 December 2011.
4 General expenses in the bank account summary include an amount of $660

which relates to the payment of Shaun’s private house insurance.
5 Shaun had taken goods at a cost price of $3700 for his personal use.
© UCLES 2012 9706/23/M/J/12

3
REQUIRED For
Examiner's
Use
(a) Calculate the value of Shaun’s sales and ordinary goods purchased for the year
ended 31 December 2011.
(i) Sales
[4]
(ii) Ordinary goods purchased
[4]

4
(b) Prepare Shaun’s income statement for the year ended 31 December 2011. For
Examiner's
Use
[10]
© UCLES 2012 9706/23/M/J/12

5
(c) Prepare Shaun's statement of financial position at 31 December 2011. For

Examiner's
Use
[12]
[Total: 30]

6
2 Amirtha commenced business on 1 January 2010. During the first two years of business For
the following non-current assets were purchased on the dates shown: Examiner's
Use
Motor vehicles
2010 $
1 January MV1 26 000
1 July MV2 18 000
2011
1 April MV3 24 000
Equipment
2010
1 January EQ1 30 000
2011
1 January EQ2 44 000
Amirtha has a policy to depreciate motor vehicles at 20% per annum on cost (straight
line method) and equipment at 15% per annum on cost (straight line method), rates
being charged for each month of ownership.
REQUIRED
(a) Calculate the total depreciation for each of the years 2010 and 2011.
(i) Motor vehicles
[3]
(ii) Equipment
[2]
© UCLES 2012 9706/23/M/J/12

7
Early in 2012, consideration was given to changing to the reducing (diminishing) For
balance method, with the following rates applying to the balance at the end of each Examiner's
Use
year.
Motor vehicles 25%

Equipment 20%
A full year’s depreciation would be charged irrespective of the date of purchase.
REQUIRED
(b) Calculate the total depreciation for each of the years 2010 and 2011, using the
reducing (diminishing) balance method for:
(i) Motor vehicles
[5]
(ii) Equipment.
[3]

8
The original profits for the first two years in business were: For
Examiner's
Use
2010 $86 000
2011 $94 000
REQUIRED
(c) Prepare a statement to show the revised profits for the years 2010 and 2011, if
the reducing (diminishing) balance method had been used.
[4]
(d) Explain why it is appropriate to use the reducing (diminishing) balance method for
motor vehicles.
[3]
© UCLES 2012 9706/23/M/J/12

9
For
Examiner's
The following information is also available from the books of Amirtha. Use
1 January 2011 31 December 2011

$ $
Wages 2 040 accrued 2 130 accrued

Insurance 130 accrued 610 prepaid
Rent received 1 490 prepaid 1 320 prepaid
During the year ended 31 December 2011 the following transactions took place.
$
Wages paid 24 100
Insurance paid 1 400
Rent received 14 000
All transactions are through the bank account.
REQUIRED
(e) Prepare the following ledger accounts for the year ended 31 December 2011,
showing the closing entry to the financial statements at the end of the year.
Dates are not required.
(i) Wages account
[3]

10
(ii) Insurance account For

Examiner's
Use
[3]
(iii) Rent received account
[4]
[Total: 30]
© UCLES 2012 9706/23/M/J/12

11
For
Examiner's
Use
3 Wigmore Ltd uses one factory overhead recovery rate which is a percentage of total
direct labour costs. The rate is calculated from the following budgeted data.
Department Factory Direct labour Direct labour Direct machine

overheads costs hours hours
$ $
Production 150 000 500 000 120 000 7 000
Assembly 450 000 1 000 000 225 000 10 000
Packing 360 000 900 000 200 000 –
The cost sheet for job 787 shows the following information.
Department Direct labour Direct labour Direct machine Direct material

costs hours hours costs
$ $
Production 2 400 400 80 180
Assembly 1 100 700 90 150
Packing 1 000 650 – 170
General administration expenses of 20% are added to the total factory cost. The selling
price to the customer is based on a 25% net profit margin.
REQUIRED
(a) Calculate the current factory overhead rate for Wigmore Ltd.
[3]

12
(b) Prepare a detailed cost statement to calculate the selling price for job 787. For
Examiner's
Use
[6]
(c) Calculate the overhead rate for each department using the following methods:
(i) Percentage of direct labour cost
Production
Assembly
Packing
[3]
© UCLES 2012 9706/23/M/J/12

13
(ii) Direct labour hour rate For

Examiner's
Use
Production
Assembly
Packing
[3]
(d) Using the direct labour hour rates calculated in (c) (ii), prepare a detailed cost
statement to calculate the new selling price for job 787.
[9]

14
(e) (i) Discuss the problems associated with using predetermined overhead For
absorption rates. Examiner's
Use
[2]
(ii) State the effect on profits if the factory does not operate at full capacity.
[4]
[Total: 30]
© UCLES 2012 9706/23/M/J/12

15
BLANK PAGE
© UCLES 2012 9706/23/M/J/12

16
BLANK PAGE
© UCLES 2012 9706/23/M/J/12

*9176788969*
ACCOUNTING 9706/21
1 hour 30 minutes

Total
DC (AT/MR) 17094/6
2
1 The following trial balance was extracted from the Mighty Wholesale Company’s books at For
30 April 2010. Examiner’s
Use
Dr Cr
$000 $000
Revenue (Sales) 1600
Ordinary goods purchased (Purchases) 946
Property (Buildings) at cost 1490
Warehouse fittings at cost 348
Inventory (Stock) at 1 May 2009 124
Capital 1400
12% loan repayable 2015 100
Wages 160
Provisions for depreciation at 1 May 2009:
Property (Buildings) 320
Warehouse fittings 197
Trade receivables (Debtors) 360
Trade payables (Creditors) 92
Cash and cash equivalents (Bank) 48
Distribution expenses 43
Business rates 50
Insurance 30
Advertising 79
Drawings 25
Loan interest 6
3709 3709
1 Inventory (stock) at 30 April 2010 cost $230 000. This includes inventory (stock) costing
$20 000 which has a net realisable value of $9000.
2 Warehouse fittings were sold during the year. The proceeds of $10 000 were debited to
the bank account and credited to the property (buildings) at cost account. No other entry
has been made regarding this transaction. The fittings sold had cost $52 000 and the
total depreciation charged to them by 1 May 2009 amounted to $41 000. No depreciation
is charged in the year of disposal.
3 Depreciation is to be provided for as follows:
Property (buildings) 2% on cost

Warehouse fittings 25% reducing (diminishing) balance
4 Other payables (accruals) at 30 April 2010 are:
Wages $12 000

Distribution expenses $5 000
Loan interest ? (The loan was taken out in 2005)
5 Other receivable (prepayment) at 30 April 2010 is:
Insurance $2000
© UCLES 2010 9706/21/M/J/10

3
REQUIRED For
Examiner’s
(a) Prepare the income statement (trading and profit and loss account) for the year ended Use
30 April 2010.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................. [19]

4
(b) Prepare the balance sheet at 30 April 2010. For

Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................. [11]
[Total: 30]
© UCLES 2010 9706/21/M/J/10

5
2 The following is an extract of Chikkadea’s financial statements (final accounts) for the year For
Use
Income Statement (Trading and Profit and Loss account)

for the year ended 30 April 2010
$ $
Revenue (Sales) 375 000
Less cost of sales:
Inventory (Stock) at 1 May 2009 32 000
Ordinary goods purchased (Purchases) 281 250
313 250
Inventory (Stock) at 30 April 2010 28 000 285 250
Gross profit 89 750
Less expenses 44 750
Profit for the year (Net Profit) 45 000
Balance Sheet at 30 April 2010

Assets $ $
Non-current (Fixed) assets 428 000
Current assets
Inventory (Stock) 28 000
Trade receivables (Debtors) 22 500
Cash and cash equivalents (Bank) 1 500 52 000
Total assets 480 000
Equity and liabilities

Equity:
Capital 450 000
Current Liabilities
Trade payables (Creditors) 30 000
480 000
The following have been calculated for Dakeeri, a competitor in the same type of business.
(i) Gross profit ratio 20.2%
(ii) Net profit ratio 10%
(iii) Return on capital employed 9%
(iv) Return on total assets 8%
(v) Current (working capital) ratio 1.5 : 1
(vi) Liquid (acid test) ratio 0.7 : 1
(vii) Receivable days (Debtors’ turnover) 28 days
(viii) Payable days (Creditors’ turnover) 35 days
(ix) Inventory turnover (Rate of stockturn) 8 times

6
REQUIRED For
Examiner’s
(a) Calculate the same ratios for Chikkadea’s business. In order to gain full marks you must Use
show the formula or your workings for each calculation.
Where possible show your answers to one decimal place.

The first answer has been given as an example.
Gross Profit 89 750 × 100

(i) × 100 = = 23.9%
Sales 375 000
(ii) ..................................................................................................................................
(iii) ..................................................................................................................................
(iv) ..................................................................................................................................
(v) ..................................................................................................................................
(vi) ..................................................................................................................................
(vii) ..................................................................................................................................
(viii) ..................................................................................................................................
(ix) ..................................................................................................................................
[16]
© UCLES 2010 9706/21/M/J/10

7
(b) (i) Name the business which performed better during the year ended For
30 April 2010. Examiner’s
Use
............................................................................................................................ [2]
(ii) Justify your answer to (b) (i) by comparing four of the ratios which you have
calculated with the same four ratios given for Dakeeri.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
.......................................................................................................................... [12]
[Total: 30]

8
3 Poynder and Park plan to manufacture a new product for use in the underwater construction For
industry. This product will be sold for $34.00 per unit. Examiner’s
Use
The following are the unit costs of the product:
Direct Materials
1 waterproof container $1.00
Chemical P 3 kilograms at $1.00 per kilogram
Chemical Q 4 kilograms at $1.75 per kilogram
Direct labour
15 minutes at $8 per hour
Variable factory overhead

Absorbed at $14.00 per direct labour hour.
Fixed factory overhead

$3040 for the 6 months ended 30 June 2011. To be absorbed at a rate per unit.
Expected production and sales for the 6 months ended 30 June 2011 are:
January February March April May June

Production (units) 50 50 60 60 80 80
Sales (units) 40 45 60 70 75 75
Additional costs will be:
Sales commission per unit sold $1.00

Fixed administrative costs $2500 per annum
REQUIRED
(a) Prepare a detailed forecast income statement (profit and loss account) for the six months
ended 30 June 2011, using marginal costing. Write your answer on the next page.
You may use the space below for your workings.
© UCLES 2010 9706/21/M/J/10

9
Forecast income statement (profit and loss account) for the six months For
ended 30 June 2011, using marginal costing. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................. [16]

10
REQUIRED For
Examiner’s
(b) Prepare a detailed forecast income statement (profit and loss account) for the six months Use
ended 30 June 2011, using absorption costing.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................. [10]
© UCLES 2010 9706/21/M/J/10

11
(c) Prepare a statement to reconcile the profit in (a) with the profit in (b). For
Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
.................................................................................................................................... [4]
[Total: 30]
© UCLES 2010 9706/21/M/J/10

12
BLANK PAGE
© UCLES 2010 9706/21/M/J/10

*4122114519*
ACCOUNTING 9706/21
1 hour 30 minutes

For Examiner's Use
Total

IB12 06_9706_21/RP

2
1 Alana owns and manages a shop with three separate departments selling food, clothing
and toys. The following trial balance is available for the year ended 30 April 2012.
$ 000 $ 000
Inventory at 1 May 2011:

Food 10
Clothing 12
Toys 31
Purchases and sales
Food 67 250
Clothing 50 150
Toys 57 100
Sales staff wages 80
Advertising 8
Heat and light 30
Insurance 5
Fixtures and fittings at cost 120
Provision for depreciation, fixtures and fittings 12
Property 200
Trade receivables 95
Bank 55
Trade payables 40
Capital 268
820 820
1 Inventory at 30 April 2012: $

Food 17 000
Clothing 12 000
Toys 43 000
2 The shop has 2 floors with the food department on the ground floor and both the
clothing and toys departments taking up equal floor space on the floor above.
3 At 30 April 2012:
an invoice for advertising amounting to $2000 remained unpaid;
$6000 had been paid in advance for heating and lighting.
4 Expenses are apportioned between departments as follows:
Apportioned on the basis of sales income:

sales staff wages; advertising.
Apportioned on the basis of floor area:

heat and light; insurance; depreciation.
5 Straight line depreciation is charged on fixtures and fittings at 10% per annum.
© UCLES 2012 9706/21/M/J/12

3
REQUIRED For
Examiner's
Use
(a) Prepare, in columnar format, a departmental income statement for the year
Food Dept Clothing Dept Toys Dept
$000 $000 $000 $000 $000 $000
[18]

4
(b) Explain how the preparation of a departmental income statement might assist For
Alana in managing the business. Examiner's
Use
[6]
(c) Alana’s accountant values some inventory at cost of purchase and some at
net realisable value.
Explain these terms to Alana:
(i) cost of purchase
[3]
(ii) net realisable value.
[3]
[Total: 30]
© UCLES 2012 9706/21/M/J/12

5
2 Jackie and Kim are in partnership sharing profits and losses in the ratio of 3:2. The following
statement of financial position was provided on 30 April 2012.
Statement of Financial Position at 30 April 2012

$ $ $
Non-current assets at net book value

Premises 120 000
192 000
Current assets
Inventory 30 000
Bank 16 000
66 000
Current liabilities
Wages accrued 1 000
13 000

Net assets 245 000
Capital accounts
Jackie 141 000
Kim 94 000 235 000
Current accounts
Jackie 6 000
Kim 4 000 10 000
245 000
Maura is a long-term employee of the partnership. Her current annual salary is $16 500.
She recently inherited a sum of $60 000 and is considering an invitation from Jackie and
Kim to invest $50 000 in the business in return for becoming a partner on 1 May 2012.
If she agrees, the following terms would apply:
1 Maura is to be paid a partnership salary of $11 000 per year.
2 All partners are to receive interest on capital of 3% per year.
3 All partners are permitted to withdraw up to $10 000 per year.
4 All partners are to pay interest on annual drawings at 5% per year.
5 Maura is to receive a 10% residual share of profits and losses. The remaining profit or
loss is to be divided between the other partners in ratio to their capital.
6 Jackie and Kim will withdraw the full amount available to them while Maura will withdraw
$5 500.
The profit for the year ended 30 April 2013 is forecast to be $121 000.

6
REQUIRED For
Examiner's
Use
(a) Prepare an estimated profit and loss appropriation account for the year ended
30 April 2013, assuming Maura accepts the invitation to join the partnership.
[11]
© UCLES 2012 9706/21/M/J/12

7
(b) Prepare Maura’s current account for the year ended 30 April 2013. For
Examiner's
Use
[5]
(c) Instead of investing in the partnership Maura could bank her $50 000 at an annual
interest rate of 5%.
Using appropriate figures calculated in (a) and (b), advise Maura whether or not to
accept the offer of a partnership.
[6]

8
Jackie and Kim provided the following accounting ratios: For

Examiner's
Use
Year ended Year ended
30 April 2011 30 April 2012
Percentage of gross profit to sales 21% 24%

Percentage of net profit to sales 10% 11%
REQUIRED
(d) Suggest two reasons for the change in the percentage of gross profit to sales.
[4]
(e) Suggest two reasons for the change in the percentage of net profit to sales.
[4]
[Total: 30]
© UCLES 2012 9706/21/M/J/12

9
3 Blue Skies Ltd manufactures three types of tent: Beach, Explorer and Family. For
Examiner's
Use
The company provides the following forecast data for the year ending 30 April 2013:
Beach Explorer Family

Forecast demand (units) 30 000 40 000 24 000
Per Unit $ $ $
Selling price 70 130 200
Raw materials 30 36 54
Direct labour 8 20 38
Variable overhead 6 26 48
The same waterproof material is used in the manufacture of each tent.
The cost of material is estimated to be $6 per square metre.
Fixed costs for the year ending 30 April 2013 are estimated to be $3 500 000.
.
REQUIRED
(a) (i) Calculate the unit contribution for each product.
[5]

10
(ii) Calculate the total contribution and profit for the year based on forecast For
demand. Examiner's
Use
[5]
There is only one supplier capable of producing waterproof tent material of the
required quality.
They have informed Blue Skies Ltd that the maximum amount they can supply in the
year will be 546 000 square metres.
REQUIRED
(b) Calculate the contribution per square metre for each product produced.
[3]
© UCLES 2012 9706/21/M/J/12

11
(c) Using the quantity of material that is available for production, calculate the For
number of each type of tent that should be produced so that total profit is Examiner's
Use
maximised.
[7]
(d) Using the quantity of material that is available, prepare a marginal cost profit
statement.
Clearly show the contribution made by each type of tent and the total profit
made in the year.
[5]

12
(e) The directors determine that at least 27 000 units of the Beach tent have to be For
produced in the coming year. Examiner's
Use
Prepare a revised marginal cost statement to show the contribution made by

each type of tent and total profit made in the year.
[5]
[Total: 30]
© UCLES 2012 9706/21/M/J/12

*8546370640*
ACCOUNTING 9706/22
1 hour 30 minutes
No Additional Materials are required

Total
DC (LEO) 19590/5
2
1 The following trial balance was extracted from Hickory’s books of account at 30 April 2010. For
Examiner’s
Use
Dr Cr
$000 $000
Revenue (sales) 5684

Raw materials purchased 2628
Trade receivables (debtors) 480
Provision for doubtful debts 16
Trade payables (creditors) 426
Factory non-current (fixed) assets at cost 2800
Office non-current (fixed) assets at cost 952
Accumulated depreciation at 1 May 2009
Factory non-current (fixed) assets 1100
Office non-current (fixed) assets 380
Bank 290
Bank charges 12
Bank interest 38
Factory expenses 432
Manufacturing wages 548
Office expenses 348
Office salaries 194
Sales expenses 248
Rent 48
Inventory (stocks) at 1 May 2009
Raw materials 164
Finished goods 292
Work in progress 146
Capital 1338
9282 9282
1 Inventory (stocks) at 30 April 2010

Raw materials $202 000
Finished goods $252 000
Work in progress $128 000
2 All depreciation for the year is to be 25% on cost.
3 $28 000 which had been charged to manufacturing wages should have been charged to
office salaries.
4 Bad debts of $14 000 are to be written off.
5 The provision for doubtful debts is to be reduced by $6000.
© UCLES 2010 9706/22/M/J/10

3
REQUIRED For
Examiner’s
(a) Prepare Hickory’s manufacturing account for the year ended 30 April 2010. Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]

4
(b) Prepare Hickory’s income statement (trading and profit and loss account) for the year For
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[11]
© UCLES 2010 9706/22/M/J/10

5
(c) Prepare Hickory’s balance sheet at 30 April 2010. For

Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[11]
[Total: 30]

6
2 Depreciation may be thought of as the difference between the cost of an asset and the For
amount received from it on disposal. Examiner’s
Use
The following extract from the schedule of non-current (fixed) assets applies to the year
Non-current (fixed) assets Machinery Motor vehicles

$000 $000
Cost at 1 May 2008 4200 3200
Additions during year 1200 800
Disposals during year (700) (1000)
Cost at 30 April 2009 4700 3000
Depreciation at 1 May 2008 1560 840

Add charge for year 470 750
Less disposals for year (520) (800)
Depreciation at 30 April 2009 1510 790
Net book value at 30 April 2009 3190 2210
During the year ended 30 April 2010 the following took place:
1 New machinery costing $900 000 was purchased on 1 November 2009. Machinery,
which had cost $400 000 on 1 July 2005, was sold for $200 000 in December 2009.
2 Three new motor vehicles were purchased on 1 April 2010 for $280 000 each. Two motor
vehicles, which had been purchased on 1 March 2007, for $200 000 each, were taken in
part-exchange. The part-exchange allowance for each vehicle was $60 000.
3 One vehicle which had been purchased for $360 000 on 31 January 2009 was involved
in an accident on 2 December 2009. The insurance company decided that it could not
be repaired and gave compensation of $210 000.
Depreciation is charged for the full year on all non-current (fixed) assets held at the year-
end, using the straight-line method.
No depreciation is charged on a non-current (fixed) asset in the year of disposal.
Rates of depreciation have remained constant since the business began trading.
© UCLES 2010 9706/22/M/J/10

7
REQUIRED For
Examiner’s
(a) (i) Calculate the profits or losses on disposals during the year ended 30 April 2010. Use
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
............................................................................................................................[12]
8
(ii) Prepare a schedule of non-current (fixed) assets for the year ended 30 April 2010, For
using the layout given at the beginning of the question. Examiner’s
Use
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[8]
© UCLES 2010 9706/22/M/J/10

9
(b) (i) State three causes of depreciation. For

Examiner’s
.................................................................................................................................. Use
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[3]
(ii) Give an example of a non-current (fixed) asset for which each cause given in (b)(i)
above might be appropriate.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[3]
(c) State four factors which must be taken into account when deciding how much
depreciation to charge.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
[Total: 30]

10
3 Break-even analysis has been described as a useful tool for the accountant. For
Examiner’s
REQUIRED Use
(a) (i) Define the break-even point.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(ii) Define the margin of safety.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
The following figures have been extracted from Katerina’s books of account for the
month of April 2010:
$ $
Sales 460 000
Total variable costs 299 000
Total fixed costs 90 000 389 000
Profit 71 000
© UCLES 2010 9706/22/M/J/10

11
REQUIRED For
Examiner’s
(b) Calculate Katerina’s contribution as a percentage of sales (c/s ratio). Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
(c) Calculate Katerina’s break-even point.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[3]
(d) Calculate the sales in dollars necessary to make a profit of $100 000.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]

12
(e) Calculate the profit or loss if sales for the month are $375 000. For
Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
(f) If the original sales prices are reduced by 5% but costs do not change, calculate the
value of sales needed to achieve a profit of $80 000.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[11]
[Total: 30]
© UCLES 2010 9706/22/M/J/10


ACCOUNTING 9706/02
May/June 2005
1 hour 30 minutes



provided.
Total

SP (SM) S72509/6
2 For
Examiner’s
Use
1 John, Georgina and Paul are in partnership but have no written partnership agreement.
The partners wish to expand the partnership, and require additional funds.
Their capital accounts at 1 May 2005 were as follows.
$
John 60 000
Georgina 45 000
Paul 45 000
Under the existing circumstances, profit of $67 500 is anticipated for the year ended
30 April 2006. There are two options for expanding the business, either of which is acceptable
to all three partners. The selected option would take effect from 1 May 2005.
The two options are:
(i) Borrow $75 000 from the bank at 12% interest per annum. The bank would require
repayment of $6750 at the end of each financial year, in addition to interest.
A manager would have to be employed at a wage of $15 000 per annum and profits
should increase by $27 000 before taking into account bank interest and the manager’s
salary.
(ii) Bring Ringo in as a partner. He would take on the role of manager and would provide
$75 000 of capital. Ringo would join the partnership, provided an agreement was drawn
up requiring interest on capital to be paid at 7.5% per annum.
Remaining profits would be split in the ratio 3:3:2:2, with John and Ringo receiving the
larger shares. Goodwill would be ignored and net profit would increase by $27 000.
REQUIRED
(a) For the year ended 30 April 2006, calculate the profit to be received by each partner
under option (i).
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
© UCLES 2005 9706/02/M/J05

3 For
Examiner’s
Use
(b) For the year ending 30 April 2006, calculate the amount to be received by each partner
under option (ii).
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[18]
(c) Make a brief comparison of options (i) and (ii).
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[4]
[Total: 30]

4 For
Examiner’s
Use
2 After completion of the Trading, Profit and Loss and Appropriation Account for the year
ended 31 May 2005, the following balances were extracted from the books of James Defirst
Ltd.
$
Motor vehicles at cost 60 000
Equipment at cost 30 000
Goodwill 15 000
Stock 45 750
Debtors 78 000
Bank 13 125 (Dr)
General reserve 15 000
Creditors 30 075
Retained profit ?
1 Authorised share capital of the company is 100 000 ordinary shares of $1 each, of which
75 000 were issued and fully paid at $1.15 per share.
2 All fixed assets were bought on 1 June 2002, the date the company was incorporated.
Depreciation is applied as follows.
(i) Motor vehicles – 40% reducing balance.
(ii) Equipment – 20% straight line, after taking into account a 10% residual balance.
3 A dividend of $0.12 per share has been proposed for the year ended 31 May 2005.
4 A provision for doubtful debts of 5% of debtors at 31 May 2005 is to be created.
5 Stock costing $2500 had been sent to a customer on a sale or return basis on
25 May 2005. It had been neither returned nor sold by the year end, and no entries
regarding it had been made in the accounts.
© UCLES 2005 9706/02/M/J05

5 For
Examiner’s
Use
REQUIRED
(a) James Defirst Ltd’s balance sheet at 31 May 2005 in vertical format.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................

6 For
Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[20]
(b) Calculate the following for the year ended 31 May 2005 to two decimal places. Show
your working in the boxes.
(i) Working capital (current) ratio
(ii) Liquid (acid test) ratio
[4]
© UCLES 2005 9706/02/M/J05

7 For
Examiner’s
Use
(c) Explain the function of an Appropriation Account in:
(i) a Partnership
(ii) a Limited Company
(i) a Partnership ............................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
(ii) a Limited Company ...................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...............................................................................................................................[6]
[Total: 30]

8 For
Examiner’s
Use
3 Quango Ltd produces four types of lamp – Platinum, Gold, Silver and Bronze. Unit selling
prices and costs are as follows:
Product Platinum Gold Silver Bronze

$ $ $ $
Selling price 184 148 142 138
Costs
Direct materials 24 21 30 18
Direct labour 30 27 24 27
Overheads 30 25 20 25
Direct material and Direct labour are variable costs.

Overheads are 40% variable and 60% fixed.
Quango’s intention was to produce and sell the following quantities during the year ended
31 May 2005.
Product Quantity
(units)
Platinum 2000
Gold 1800
Silver 1600
Bronze 2400
REQUIRED
(a) A statement, in marginal costing format, of profitability for each product, and in total.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[15]
© UCLES 2005 9706/02/M/J05

9 For
Examiner’s
Use
It was then discovered that fixed overheads were likely to rise by 8% and the total amount
available to pay overheads could not be increased.
REQUIRED
(b) A statement, taking into account the possibility of the increase in fixed overheads, and
maximising profit, showing the quantity of each product to be produced.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[8]
(c) A statement in marginal costing format of profitability for each product and in total,
based on your answer to (b).
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
[Total: 30]
© UCLES 2005 9706/02/M/J05

10
BLANK PAGE
9706/02/M/J05
11
BLANK PAGE
9706/02/M/J05
12
BLANK PAGE
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of
the University of Cambridge.
9706/02/M/J05
*9065049186*
ACCOUNTING 9706/02
1 hour 30 minutes

For Examiner's Use
Total
IB08 06_9706_02/3RP
2
1 Amah Retto's ledger accounts for the year ended 30 April 2008 showed the following
balances: For
Examiner's
Use
$
Premises at cost 250 000
Machinery at cost 52 000
Provision for depreciation on machinery at 1 May 2007 15 600
Provision for doubtful debts at 1 May 2007 500
Sales 243 000
Purchases 184 000
Sales returns 2 040
Purchases returns 1 980
Carriage inwards 350
Carriage outwards 800
Rent received 2 420
Discount allowed 1 800
Discount received 1 300
Electricity 2 100
General expenses 9 340
Stock at 1 May 2007 13 500
Debtors 9 000
Creditors 11 460
Bank (Credit) 8 260
Cash 990
Drawings 18 600
Long-term loan at 11 % per annum 60 000
Capital ?
Additional information at 30 April 2008
1 Stock was valued at $15 100.
2 No interest had been paid or provided for on the loan, which had been taken out on
1 November 2007.
3 Amah Retto's tenant had paid only eleven months' rent; one month's rent was due and
unpaid.
4 Electricity prepaid amounted to $40.
5 General expenses accrued amounted to $50.
6 Debts of $200 were to be written off.
Depreciation was to be provided on machinery at 40 % using the reducing (diminishing)

balance method.
Doubtful debts provision was to be 3 % of debtors at the end of the year.
© UCLES 2008 9706/02/M/J/08

3
REQUIRED For
Examiner's
Use
(a) Prepare Amah Retto's trading and profit and loss account for the year ended
30 April 2008.
[8]

4
(b) Prepare Amah Retto's balance sheet at 30 April 2008. For

Examiner's
Use
© UCLES 2008 9706/02/M/J/08

5
For
Examiner's
Use
[11]
(c) Use the answers to (a) and (b) to calculate the following ratios to two decimal places.
(i) Current ratio;
(ii) Liquid ratio;
(iii) Rate of stock turnover;
(iv) Gross profit as a percentage of sales;
(v) Net profit as a percentage of sales.
[5]

6
(d) (i) State two reasons for calculating ratios. For

Examiner's
Use
[2]
(ii) State four user groups who might be interested in or make use of accounting
ratios.
[4]
[Total: 30]
© UCLES 2008 9706/02/M/J/08

7
BLANK PAGE

8
2 A Marie Motiwala’s draft profit and loss account for the year ended 30 April 2008 was For
prepared by her new book-keeper and showed a loss of $100 000. The following errors Examiner's
Use
were then discovered.
1 Capital of $80 000 contributed by Marie Motiwala had been included in sales.
2 Sales returns of $20 000 had been debited to purchases returns.
3 No provision for depreciation on equipment had been charged for the year.
Depreciation should have been provided for using the reducing balance method at
40 % per annum. The book value of equipment at 1 May 2007 was $240 000.
4 Accrued bank interest of $10 000 payable at 30 April 2008 had been omitted from
the accounts.
5 Marie Motiwala’s drawings of $50 000 had been debited to wages.
6 Stock valued at $10 000 at 30 April 2008 should have been valued at $1000.
7 Stock costing $11 000 taken for Marie Motiwala’s personal use during the year had
not been recorded in the accounts.
8 A $20 000 interest free loan to an employee had been debited to the wages
account.
9 $100 000 had been debited to the equipment account. Of this amount, $25 000
should have been debited to equipment repairs.
10 Stock costing $22 000 was delivered to the business on 28 April 2008 and was
included in the end-of-year stocktaking. The invoice was received and entered
into the accounting records on 3 May 2008.
© UCLES 2008 9706/02/M/J/08

9
REQUIRED For
Examiner's
Use
Prepare a detailed financial statement showing Marie Motiwala’s corrected profit or loss for
the year ended 30 April 2008.
[12]

10
B JR's sales ledger control account balances at 1 March 2008 were as follows. For
Examiner's
Use
Dr $340 600 Cr $1 960
During March 2008 the following transactions took place.
$
Credit sales 295 000
Cash sales 219 750
Sales returns from credit customers 6 480
Receipts from debtors 238 600
Discounts allowed 3 500
Additional information for the month of March 2008
1 The receipts from debtors included a cheque for $3600 in full settlement of a debt
of $3800. This was returned by the bank on 28 March marked "insufficient funds".
2 Eva Little and JR both buy from and sell to each other. At 31 March 2008 Eva
owed JR $5000 and JR owed $8600 to Eva. They agreed to offset balances, the
net amount being payable by JR on 31 March 2008.
3 It was agreed that a debt of $2300 from Alice Springs was bad and it was written
off.
4 The total credit balances in the sales ledger control account at 31 March 2008
were $8340.
© UCLES 2008 9706/02/M/J/08

11
REQUIRED For
Examiner's
Use
(a) Prepare JR's sales ledger control account for the month of March 2008.
[12]

12
(b) State three possible reasons why a debtor's account might have a credit balance. For
Examiner's
Use
[3]
(c) State three reasons for keeping control accounts.
[3]
[Total: 30]
© UCLES 2008 9706/02/M/J/08

13
BLANK PAGE

14
3 Aloysius Dixon of Dixon's Tableworks anticipates that in 2009 he will be able to sell 10 000 For
tables at $1100 each. However, his works manager has already produced the following Examiner's
Use
figures for 2009 based on the factory's current production of 8000 tables per annum.
$ $
Sales (8000 x $1100) 8 800 000
Direct materials 1 024 000

Direct wages 5 000 000
Production overhead 640 000
Sales overhead 480 000 7 144 000
Profit 1 656 000
All overheads are 50 % fixed, 50 % variable.
250 000 labour hours are worked.
There are 3 options under consideration which allow sales to increase to 10 000 tables.
Option 1
Purchase 2000 tables from another manufacturer at $920 each.
Option 2
Lease new and improved machinery at a cost of $260 000 for the year. This would allow
production of 10 000 tables per annum with no change in unit variable costs. This was
previously under consideration and $40 000 had been spent on a feasibility study.
Option 3
Using the existing machinery, introduce an evening shift thus providing an additional 62 500
labour hours. Wage rates for this shift would have to increase by 15 % to take into account
unsocial hours to be worked. Also the additional staff needed would have to be trained at a
cost of $50 000 - this cost to be absorbed in 2009.
REQUIRED
(a) Calculate the original unit contribution.
[5]
© UCLES 2008 9706/02/M/J/08

15
(b) Prepare financial statements showing in detail the calculations for the additional profits For
or losses arising from each of the three options. Examiner's
Use
[22]

16
(c) State which option should be accepted, giving one advantage and one disadvantage, For
of that option. Examiner's
Use
[3]
[Total: 30]
© UCLES 2008 9706/02/M/J/08

*0827092880*
ACCOUNTING 9706/21
1 hour 30 minutes

IB13 06_9706_21/5RP
2
1 The Klassik Music Society produced the following receipts and payments summary for the
year ended 31 March 2013.
Receipts $
Subscriptions 30 000
Sales of food and drink 50 000
Bank loan 30 000
Income from concerts 116 800
Sale of surplus equipment 30 000
Payments
Balance, 1 April 2012 12 000
Purchase of new equipment 10 000
Hire of hall for concerts 27 000
Printing 14 000
Equipment maintenance and repairs 8 000
Purchases of food and drink 23 000
Salaries 45 000
Cost of concerts 83 500
Sundry expenses 760
Sponsorship 1 000
Balance, 31 March 2013 ?
31 March 2012 31 March 2013

$ $
1 Salaries in arrears 2 800 1 600
Subscriptions owing 1 600 2 600
Subscriptions prepaid 1 000 400
Printing accrued 2 600 2 800
Equipment (cost $200 000), at NBV 160 000 ?
Food and drink inventory 15 400 13 200
2 The bank loan was received on 1 July 2012. Interest is charged at 12% per annum. No
interest had been paid by the year end.
3 The equipment sold was purchased on 1 June 2011 and had a NBV of $32 000.
4 Depreciation is provided at 20% on cost for equipment in use at the year end.
© UCLES 2013 9706/21/M/J/13

3
REQUIRED For
Examiner's
Use
(a) Prepare the trading section of the income statement for the year ended 31 March 2013.
[2]
(b) Calculate the gross profit percentage, to one decimal place, made on sales of food and
drink.
[2]
(c) The prices of food and drink sold had been planned to obtain a gross margin of 70%.
Compare this figure with the figure calculated in (b) and state two reasons why these
figures may differ.
[4]

4
(d) Prepare the income and expenditure account of the Klassik Music Society for the year For
ended 31 March 2013. Examiner's
Use
[12]
© UCLES 2013 9706/21/M/J/13

5
(e) Prepare the statement of financial position of the Klassik Music Society at 31 March 2013. For
Examiner's
Use
[10]
[Total: 30]

6
2 Bach runs a manufacturing business. An extract from his statement of financial position at
1 January 2012 is shown below:
Non-current Accumulated
assets Cost depreciation Net book value
$ $ $
Factory premises 220 000 26 400 193 600
Machinery 138 600 52 200 86 400
During 2012 the following transactions took place for machinery.
Disposals
Machinery Year of Disposal

Date reference purchase Initial cost proceeds
$ $
26 March M12 2009 14 000 7 100
17 August M18 2008 8 000 1 320
13 December M20 2007 9 600 850
Additions
Machinery
Date reference Cost
$
20 April M27 11 500
25 October M31 16 200
All receipts and payments for these transactions are processed through the business bank
account.
All of the remaining machinery at 31 December 2012 was purchased after 2008.
Depreciation on the factory premises is charged on a straight line basis based on a 50 year
life, with no residual value.
Depreciation on machinery is charged on a straight line basis based on a five year life and
an estimated residual value of 10% of the original cost.
It is the company policy to charge a full year’s depreciation in the year of purchase but none
in the year of disposal.
© UCLES 2013 9706/21/M/J/13

7
REQUIRED For
Examiner's
Use
(a) Prepare the following ledger accounts for the year ended 31 December 2012.
(i) Machinery account
[5]
(ii) Provision for depreciation of machinery account
[6]

8
(iii) Machinery disposals account For

Examiner's
Use
[6]
(b) Identify two alternative methods of providing for depreciation.
[2]
(c) State three causes of depreciation.
[3]
© UCLES 2013 9706/21/M/J/13

9
Bach’s statement of financial position showed the following at 1 January 2013: For
Examiner's
Use
Trade receivables $12 000
Trade payables $10 000
Bank balance $800 Dr
Sales are paid in full one month after the sale
Purchases are payable 50% in the month of purchase, the remainder one month later
Other expenses are paid in the month they occur
Budgeted sales, purchases and other expenses for the period January to March 2013 are
as follows:
January February March

$ $ $
Sales 10 000 12 000 14 000
Purchases 8 000 12 000 16 000
Other expenses 5 000 5 000 5 000
(d) Complete the following table to show the budgeted closing bank balance on
31 March 2013.
Receipts January February March
Receipts from customers
Payments
Payments to suppliers
Other expenses
Opening bank balance
Net cash flow
Closing bank balance

[6]

10
(e) Suggest two ways Bach could improve his budgeted bank balance at 31 March 2013. For
Examiner's
Use
1
[2]
[Total: 30]
© UCLES 2013 9706/21/M/J/13

11

12
3 Bazeri Limited manufactures a range of components and the directors provide the following For
forecast information for the year ended 31 December 2014. Examiner's
Use
Direct material 125 000 kilos @ $2.48 per kilo

Direct labour – Department A 32 000 hours @ $10.00 per hour
Direct labour – Department B 20 000 hours @ $9.00 per hour
Production overhead – Department A $520 000
Production overhead – Department B $480 000
Administration overhead $405 000
Profit margin 20%
REQUIRED
(a) Calculate the forecast profit for Bazeri Limited for the year ended 31 December 2014.
[9]
Production overheads are to be recovered for both departments A and B on the basis of
direct labour hours.
Administration overheads are to be recovered as a percentage of direct production costs.
© UCLES 2013 9706/21/M/J/13

13
REQUIRED
For
(b) Calculate the following forecast overhead absorption rates: Examiner's
Use
(i) Production overhead – Department A
[2]
(ii) Production overhead – Department B
[2]
(iii) Administration overhead
[2]

14
Bazeri Limited has been asked to quote for a job, reference J316, that would use the For
following: Examiner's
Use
Direct material 5625 kilos

Direct labour – Department A 1500 hours
Direct labour – Department B 1200 hours
REQUIRED
(c) Calculate the total costs of job J316.
[11]
(d) Calculate the price Bazeri Limited will quote for job J316.
[4]
[Total: 30]
© UCLES 2013 9706/21/M/J/13

15
BLANK PAGE
© UCLES 2013 9706/21/M/J/13

16
BLANK PAGE
© UCLES 2013 9706/21/M/J/13

* 2 1 2 0 4 3 7 0 8 5 *
ACCOUNTING 9706/22
1 hour 30 minutes

Total
DC (NH) 31866/3
2
1 Marcel owns a wholesale business supplying shops, hotels and restaurants with tea and For
coffee. He does not keep formal accounting records but is able to supply the following Examiner’s
information for the year ended 30 April 2011. Use
30 April 2011 1 May 2010

$ $
Trade payables 14 800 16 600
Inventories 20 600 33 000
Wages accrued 9 350 9 200
General expenses prepaid – 900
General expenses owing 800 –
Transactions during the year ended 30 April 2011 were as follows:

$
Cash received from credit customers 103 160
Cash paid to credit suppliers 88 400
Cash sales to staff 10 750
Sales returns from credit customers 9 200
Discounts allowed 9 540
Discounts received 9 000
Bad debts 8 200
Wages 13 650
General expenses 12 300
REQUIRED
(a) (i) Prepare a purchases ledger control account to find out the total amount of credit
purchases for the year ended 30 April 2011.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[5]
© UCLES 2011 9706/22/M/J/11

3
(ii) Prepare a sales ledger control account to find out the amount of credit sales for the For
year ended 30 April 2011. Examiner’s
Use
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[7]
1 The normal gross profit to sales margin is 33.33%.
2 Staff are permitted to buy goods at cost plus 25%.
3 Goods sold in the annual clearance sale, $29 700, were sold at cost price.
4 On 8 March 2011 an unknown quantity of goods was destroyed by fire.

4
REQUIRED For
Examiner’s
(b) There were no further losses of goods during the year. Starting with the opening Use
inventory, calculate the value of the goods destroyed by the fire on 8 March 2011.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[11]
© UCLES 2011 9706/22/M/J/11

5
(c) Prepare the income statement (trading account only) for the year ended 30 April 2011. For
Examiner’s
.......................................................................................................................................... Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[7]
[Total: 30]

6
2 The following information is available for the Northern Division of Blackford Industrial Ltd: For
Examiner’s
Statement of financial position at 30 April 2011 Use
$000 $000 $000
Non-current assets at net book value 180
Current assets
Inventory 40
Trade receivables 35
Bank 43
118
Current liabilities
Trade payables 55
Other payables 23
78
Net current assets 40
Capital employed 220
Equity
Ordinary share capital – $1 each 190
Share premium 10
Retained earnings 20
30
Total shareholders’ funds 220
Additional information for year ended 30 April 2011

$000
Total revenue (sales) 480
Cash purchases 240
Cash paid to credit suppliers 60
Operating expenses 120
At 30 April 2010, the following balances were reported: $000

Inventory 28
Trade payables 15
REQUIRED
(a) Calculate the following amounts for the year ended 30 April 2011:
(i) cost of sales
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[4]
© UCLES 2011 9706/22/M/J/11

7
(ii) gross profit and profit for the year (net profit). For
Examiner’s
.................................................................................................................................. Use
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
An analysis of the Southern Division of Blackford Industrial Ltd for the year ended 30 April
2011 yielded the following results.
Southern Division
1 Mark-up 40%
2 Gross profit percentage 28.57%
3 Expenses to sales 20%
4 Net profit percentage 8.57%
5 Return on capital employed 18.00%
6 Rate of inventory (stock) turnover 8.95 times
7 Liquid ratio (acid test) 1.1:1
REQUIRED
Northern Division
(b) Calculate each of the same ratios for the Northern Division of Blackford Industrial Ltd,
for the year ended 30 April 2011. The calculations should be correct to two decimal
places.
(i) Mark-up
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(ii) Gross profit percentage
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]

8
(iii) Expenses to sales For

Examiner’s
.................................................................................................................................. Use
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(iv) Net profit percentage
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(v) Return on capital employed
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(vi) Rate of inventory (stock) turnover
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
(vii) Liquid ratio (acid test)
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
© UCLES 2011 9706/22/M/J/11

9
(c) Using the profitability ratios (i) – (v) compare the performance of the Northern and For
Southern Divisions of Blackford Industries and explain the significance of each ratio. Examiner’s
Use
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[10]
[Total: 30]
10
3 Ventana Ltd produce three different types of slatted wooden blinds, Pine, Teak and Oak. The For
company’s forecast figures for the year ended 30 April 2012 were: Examiner’s
Use
Pine Teak Oak

$ $ $
Selling price (per unit) 61 158 170
Costs (per unit)

Direct material 30 60 80
Direct labour 15 46 24
Variable overhead 6 12 16
Fixed overhead is absorbed on the basis of 50% of direct material cost.
Annual production and sales are forecast to be:
Pine 2000 units

Teak 1600 units
Oak 1000 units
REQUIRED
(a) For the year ended 30 April 2012:
(i) Prepare a statement to show the contribution per unit for each product.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[3]
(ii) Calculate the total forecast fixed cost for the year.
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[2]
© UCLES 2011 9706/22/M/J/11

11
(iii) Prepare a statement to show the break-even point for each type of blind in units For
and dollars. Examiner’s
Use
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..................................................................................................................................
..............................................................................................................................[6]
(b) Prepare a statement, using the contribution per unit, to show the total profit or loss
made by each type of blind for the year.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[9]

12
One of the directors wishes to stop production of the pine blinds. For
Examiner’s
This would increase the total forecast fixed costs by 25%. However, the director estimates Use
that sales of the teak and the oak blinds would increase by 50%.
REQUIRED
(c) Prepare a detailed marginal cost statement, using the contribution per unit, to show the
effect on total profit of stopping production of the pine blinds.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
....................................................................................................................................[10]
[Total: 30]
© UCLES 2011 9706/22/M/J/11

Joinpdf PDF

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Joinpdf PDF

Caricato da

Copyright:

Formati disponibili

Cambridge International Examinations

Cambridge International General Certificate of Secondary Education

FIRST LANGUAGE ENGLISH 0500/21

READ THESE INSTRUCTIONS FIRST

Dictionaries are not permitted.

This document consists of 12 printed pages and 1 Insert.

DC RCL (JDA) 96892/2

Write a newspaper report about the meeting.

In your newspaper report you should:

• describe the atmosphere and reactions of the crowd at the meeting

Write about 250 to 350 words.

© UCLES 2015 0500/21/M/J/15

[Turn over for Question 2]

© UCLES 2015 0500/21/M/J/15 [Turn over

Re-read the descriptions of:

(a) the common land in paragraph 6, beginning ‘The meeting resumed…’;

(b) Rufus Carmichael in paragraph 13, beginning ‘Rufus’ face tightened…’.

Write about 200 to 300 words.

Up to 10 marks are available for the content of your answer.

Answer the questions in the order set.

You do not need to use your own words.

Up to 15 marks are available for the content of your answer.

© UCLES 2015 0500/21/M/J/15

Up to 5 marks are available for the quality of your writing.

© UCLES 2015 0500/21/M/J/15

© UCLES 2015 0500/21/M/J/15

FIRST LANGUAGE ENGLISH 0500/22

READ THESE INSTRUCTIONS FIRST

Dictionaries are not permitted.

This document consists of 12 printed pages and 1 Insert.

DC (RCL (JDA)) 96886/3

Imagine you are Zelda’s husband, Bob.

In your letter you should comment on:

• your expectations of the trip

Write about 250 to 350 words.

[Turn over for Question 2]

© UCLES 2015 0500/22/M/J/15 [Turn over

Re-read the descriptions of:

Write about 200 to 300 words.

Up to 10 marks are available for the content of your answer.

Answer the questions in the order set.

You do not need to use your own words.

Up to 15 marks are available for the content of your answer.

© UCLES 2015 0500/22/M/J/15

Up to 5 marks are available for the quality of your writing.

© UCLES 2015 0500/22/M/J/15

© UCLES 2015 0500/22/M/J/15

READ THESE INSTRUCTIONS FIRST

Answer all questions.

For Examiner's Use

This document consists of 13 printed pages and 3 blank pages.

© UCLES 2012 [Turn over

Sales Revenue 799 000

1 Inventory at 30 April 2012 (at cost): $

Raw materials 56 000

2 Depreciation is provided on non-current assets at a rate of 20% per year using

3 The following expenses should be apportioned as follows:

5 Provision for doubtful debts is to be maintained at 3% of trade receivables.

© UCLES 2012 9706/22/M/J/12

© UCLES 2012 9706/22/M/J/12 [Turn over

© UCLES 2012 9706/22/M/J/12

© UCLES 2012 9706/22/M/J/12 [Turn over

Statement of Financial Position at 30 April 2012