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ACCOUNTING 9706/01
Paper 1 Multiple Choice For Examination from 2016
SPECIMEN PAPER
1 hour
*0123456789*
Write your Centre number, candidate number and name on the Answer Sheet in the spaces provided unless
this has been done for you.
Write in soft pencil.
Do not use staples, paper clips, glue or correction fluid.
DO NOT WRITE IN ANY BARCODES.
There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C and D.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
1 A business has a good reputation. The owner wishes to include goodwill in the financial
statements. An accountant advises against it.
A business entity
B going concern
C matching
D prudence
3 A non-current asset costs $250 000 and has a useful economic life of 25 years. The estimated
residual value is $10 000.
After 10 years the asset is sold for $120 000. Disposal costs of $20 000 are incurred.
5 Alfredo received his bank statement which showed a balance of $937 overdrawn. This did not
agree with his cash book.
Bank charges of $76 had not been entered in the cash book.
There was an unpresented cheque paid to suppliers of $214.
Alfredo had recorded $35 cash paid into his bank account, but this was not showing on the
statement.
At which value was the bank overdraft shown in the statement of financial position?
6 On 1 January 2012 a business had prepaid rent of $50. During 2012, it made three rent
payments of $250 each. On 31 December 2012, the business owed $200 rent for 2012.
The business owner only charged the rent payments made during 2012 in the income statement.
A $200 overstated
B $200 understated
C $250 overstated
D $250 understated
In which section of the statement of financial position would this item appear?
A capital
B current assets
C current liabilities
D non-current assets
9 The purchases ledger control account has a closing balance of $15 300. Discounts received of
$600 have been entered on the wrong side of the control account.
A dividends
B inventory
C trade payables
D transfer to reserves
11 In which account should a partner’s drawings appear in the partnership’s end-of-year financial
statements?
A appropriation account
B income statement
C partner’s capital account
D partner’s current account
12 X and Y are in partnership. Their income statement and appropriation account shows the
following.
13 X and Y are in partnership with combined capital and current account balances of $125 000.
Z is admitted as a partner, introducing capital of $40 000. At that time, the assets of the
partnership are revalued upwards by $50 000 and goodwill was valued at $18 000. Goodwill was
not to remain in the books of account.
What was the total capital employed of the partnership immediately after the admission of Z?
14 A business sells goods at a uniform gross profit margin of 30%. The following information is
available.
revenue 62 000
opening inventory 10 000
purchases 45 000
15 X, Y and Z are in partnership and they have the following assets and liabilities.
X took the property and half the fixtures and fittings at a valuation of $560 000.
The remaining fixtures and fittings and the entire inventory were sold for $140 000.
The trade receivables paid in full with the exception of one debt of $4700.
The total cost of dissolution was $2500.
What will be the total of share capital and reserves after these transactions are completed?
1 dividends proposed
2 interest paid on debentures
3 issues of share capital
4 transfers to reserves
A current ratio
B inventory turnover
C liquid (acid test) ratio
D trade receivables turnover
$000
How long does the company take to pay its trade suppliers (rounded to the nearest day)?
22 A company wishes to improve its current ratio and its liquid (acid test) ratio.
What is the gross profit for the year using the FIFO method of inventory valuation?
8 000 8.00
10 000 6.40
A fixed cost
B semi-variable cost
C stepped fixed cost
D variable cost
10 sales revenue
budget
8
total costs
costs
6
and
revenues
($m) 4
2 fixed costs
0
0 1 2 3 4 5
sales volume (millions of units)
A a costing method that calculates the cost of meeting a specific customer order
B a costing method that calculates the cost of producing a number of identical units for a
customer
C a costing method that enables overheads to be absorbed into the cost of the product
D a costing method that separates fixed costs from variable costs
A 1 and 2 only
B 1 and 3 only
C 1, 2 and 3
D 2 and 3 only
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