3.1. Preparation of financial statements
A subsection of Accounting, 9706, through 3. Financial accounting (A Level)
Listing 10 of 678 questions
The owner of a business does not keep a full set of accounting records for his business. The following information is available about assets and liabilities. current year end $ previous year end $ inventory 19 200 17 500 trade receivables 31 200 22 400 trade payables 14 300 16 600 All purchases and sales are on credit. During the current year: The business received $168 000 from customers after allowing them a discount of $3400. The business paid $74 000 to suppliers for inventory. No discounts were received. The owner took inventory of $3200 for personal use. What was the gross profit for the current year?
9706_s23_qp_11
MCQ
2023
Paper 1, Variant 1
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Mima is the owner of a wholesale business, Mima Supplies. During the year ended 31 December 2022 the business owned the following delivery vehicles. Date of purchase Cost $ Vehicle A 1 January 2019 28 000 Vehicle B 1 January 2020 30 000 Vehicle C 1 July 2022 32 000 Delivery vehicles are depreciated at 25% per annum using the straight‑line method on a month‑by‑month basis. No depreciation is provided in the year of sale. Vehicle A was sold for $5200 on 30 June 2022. REQUIRED Calculate the profit or loss on the disposal of Vehicle A. Calculate the total depreciation charge on delivery vehicles for the year ended 31 December 2022. REQUIRED Prepare the statement of profit or loss for the year ended 31 December 2022. Use the space provided on the next page to show your workings. Mima Supplies Statement of profit or loss for the year ended 31 December 2022 Workings: Explain the importance of making an allowance for irrecoverable debts in a business’s financial statements. Additional information Mima would like to assess her business’s liquidity position at 31 December 2022. REQUIRED Identify two ratios which could be used to assess a business’s liquidity position. Additional information Mima has noticed that her business’s rate of inventory turnover has decreased since last year. She is considering two options to increase the rate of inventory turnover. Option A: reduce inventory levels. Option B: reduce selling prices by 2% and increase the annual advertising budget by 5%. REQUIRED Advise Mima which option she should choose. Justify your choice by considering both options.
9706_s23_qp_21
THEORY
2023
Paper 2, Variant 1
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Khaled opened his business on 1 January 2021 with a capital of $41 000. He did not maintain a full set of accounting records. Khaled wishes to know his profit or loss for the year ended 31 December 2021. He has provided the following information. Assets and liabilities at 31 December 2021 $ Bank overdraft 3 470 Bank loan 8 500 Inventory 18 450 Non-current assets (carrying value) 27 500 Trade payables 9 940 Trade receivables 7 230 Non-current assets include a motor vehicle. This vehicle had been privately owned by Khaled but during 2021 it was transferred to the business at a valuation of $9000. During 2021 Khaled’s drawings were $14 870. REQUIRED Calculate the business’s profit or loss for the year ended 31 December 2021. Additional information During 2022 Khaled kept more detailed records but could not provide a figure for revenue. The following information is available at 31 December 2022. $ Inventory at 31 December 2022 16 250 Purchases 148 300 Khaled’s policy is to mark-up all goods by 50%. REQUIRED Calculate revenue for the year ended 31 December 2022. State two advantages to a business of maintaining a full set of accounting records. State two disadvantages to a business of maintaining a full set of accounting records.
9706_s23_qp_22
THEORY
2023
Paper 2, Variant 2
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Hamza owns a retail business with a financial year end of 31 December. On 31 December 2022 inventory was valued at $15 330. However, this figure included 30 damaged items which had a cost price of $32 each. Of the damaged items, 23 will be scrapped with no value. The remaining 7 items will require repairs costing a total of $126 before being sold at the normal price of $48 each. REQUIRED Explain, with reference to an accounting concept, how damaged inventory should be valued. Calculate the corrected valuation of inventory at 31 December 2022. REQUIRED Prepare the statement of profit or loss for the year ended 31 December 2022. Use the space provided on page 5 for your workings. Hamza Statement of profit or loss for the year ended 31 December 2022 $ $ Workings: State the double entry required to record goods withdrawn by an owner for personal use. Debit: Credit: Additional information Hamza is concerned that the performance of the business has declined in recent months. He is considering two options to increase the gross profit of the business. Option A: Purchase goods from a different supplier who is prepared to offer a large trade discount. Hamza would need to order in bulk, but less frequently than now. Option B: Increase selling prices and increase monthly expenditure on advertising. REQUIRED Advise Hamza which option he should choose. Justify your answer by considering both financial and non‑financial factors.
9706_s23_qp_23
THEORY
2023
Paper 2, Variant 3
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