3.1. Preparation of financial statements
A subsection of Accounting, 9706, through 3. Financial accounting (A Level)
Listing 10 of 678 questions
Suyin owns a small retail business. She has not maintained full accounting records. REQUIRED State two reasons why the owner of a small business may decide not to maintain full accounting records. Additional information Suyin has been informed that the accounting concepts of matching and prudence must be followed when preparing financial statements. REQUIRED Explain how these accounting concepts are applied when a business prepares financial statements. Matching Prudence REQUIRED Calculate total purchases for the year ended 31 July 2020. Prepare the income statement for the year ended 31 July 2020. Workings: Additional information Suyin has the opportunity to move her business to a busier location. The following information is available. The rent of the new shop premises will be three times the current annual charge. Annual sales could be increased by 10% on the figure for the year ended 31 July 2020. She intends to achieve a gross margin of 60%. She will need to apply for a bank loan of $16 000 at 8% per annum interest to cover the costs of changing location. The loan will be repayable over a two-year period. Discounts received will no longer be available. All other expenses will remain unchanged and there will be no sources of additional income. REQUIRED Calculate how much profit per annum will be made if Suyin moves her business to the new location. $ Revised gross profit Revised profit for the year Advise Suyin whether or not she should change her business’s location. Justify your answer considering both financial and non-financial factors.
9706_s21_qp_21
THEORY
2021
Paper 2, Variant 1
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Adam owns a retail business. He is aware that he must follow certain accounting concepts when preparing his business’s financial statements. REQUIRED Explain how each of the following concepts is applied when preparing a business’s financial statements. Consistency Realisation Materiality REQUIRED Calculate a revised figure for gross profit for the year ended 31 December 2020. REQUIRED Prepare the income statement for the year ended 31 December 2020. Start the statement with your gross profit figure in part . Income statement for the year ended 31 December 2020 $ $ Additional information Adam would like to improve his business’s profitability. He has been considering the following proposals. Proposal 1: Reducing inventory levels Proposal 2: Increasing mark-up by 5% on the current level REQUIRED Advise Adam which proposal he should choose. Justify your answer by considering both proposals.
9706_s21_qp_23
THEORY
2021
Paper 2, Variant 3
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