9706 - May June 2010 - All Mark Scheme PDF

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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
GCE Advanced Subsidiary Level and GCE Advanced Level
MARK SCHEME for the May/June 2010 question paper

for the guidance of teachers
9706 ACCOUNTING
9706/11
Paper 11 (Multiple Choice Core), maximum raw mark 30
Mark schemes must be read in conjunction with the question papers and the report on the
examination.
CIE will not enter into discussions or correspondence in connection with these mark schemes.
CIE is publishing the mark schemes for the May/June 2010 question papers for most IGCSE, GCE
Advanced Level and Advanced Subsidiary Level syllabuses and some Ordinary Level syllabuses.
Page 2
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Mark Scheme: Teachers version

GCE A/AS LEVEL May/June 2010
Syllabus
9706
Question
Number
Key
Question
Number
Key
1
2
A
D
16
17
C
C
3
4
5
B
C
A
18
19
20
B
A
A
6
7
D
B
21
22
C
B
8
9
10
B
D
A
23
24
25
C
D
D
11
12
D
C
26
27
C
A
13
14
15
B
C
C
28
29
30
C
D
D
UCLES 2010
Paper
11
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9706 ACCOUNTING
9706/12
examination.
Page 2
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Syllabus
9706
Question
Number
Key
Question
Number
Key
1
2
D
B
16
17
C
B
3
4
5
C
A
D
18
19
20
A
A
C
6
7
B
B
21
22
B
C
8
9
10
D
A
D
23
24
25
D
D
C
11
12
C
B
26
27
A
C
13
14
15
C
C
C
28
29
30
D
D
A
UCLES 2010
Paper
12
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9706 ACCOUNTING
9706/13
examination.
Page 2
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Syllabus
9706
Question
Number
Key
Question
Number
Key
1
2
B
C
16
17
B
A
3
4
5
A
D
B
18
19
20
A
C
B
6
7
B
D
21
22
C
D
8
9
10
A
D
C
23
24
25
D
C
A
11
12
B
C
26
27
C
D
13
14
15
C
C
C
28
29
30
D
A
D
UCLES 2010
Paper
13
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9706 ACCOUNTING
9706/21
Paper 21 (Structured Questions (Core)),

maximum raw mark 90
This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of
the examination. It shows the basis on which Examiners were instructed to award marks. It does not
indicate the details of the discussions that took place at an Examiners meeting before marking began,
which would have considered the acceptability of alternative answers.
examination.
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Page 2
1
(a)

GCE AS/A LEVEL May/June 2010
Syllabus
9706
Paper
21
Income statement (Trading and Profit and Loss Account)

for the year ended 30 April 2010
$000
Revenue (sales)
Cost of sales
Inventory (stock) at 1 May 2009
Ordinary goods purchased (Purchases)
$000
1600
124
946
1070
219
Inventory (stock) at 30 April 2010

Gross Profit
Operating expenses:
Wages
Distribution expenses
Business rates
Insurance
Advertising
Depreciation
Buildings (Property)
Warehouse fittings
Loss on sale
Profit from operations (Operating profit)
Loan interest
Profit for the year (Net profit)
1
1
851
749
172
48
50
28
79
30
35
1
1
1of
1
1
1
1
1
443
306
12
294
2of
3of
1
1of
1
1of
see
below
[19]
Workings for depreciation:
Balance on Warehouse fittings per trial balance
Less cost of fittings sold
Depreciation for year = (296 156) 25% =
Total depreciation for balance sheet
Balance on Property (buildings) per trial balance
Add back per note (ii)
Depreciation for year = 1500 2%
Total depreciation for balance sheet
UCLES 2010
$000
Cost
348
52
296
$000
Depn
197
41
156
35
191
1490
10
1500
320
1
1
30
350
Marks
for
dep'n
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Page 3

(b)
Syllabus
9706
Paper
21
Balance Sheet at 30 April 2010

Assets
Non-current (fixed) assets
Property (Buildings)
Warehouse fittings
$000
Cost
$000
Dep'n
$000
NBV
1500
296
1796
350
191
541
1150
105
1255
Current Assets
Stock
Trade receivables (debtors)
Other receivables
Cash and cash equivalents (bank)
Total assets
219
360
2
48
Equity and liabilities

Equity:
Capital at 1 May 2009
Net profit
1
1
629
1884
1400
294
1694
25
1669
Drawings
Current liabilities
Trade payables (creditors)
Other payables (accruals) (12 + 5 + 6)
Non-current liabilities
12% Loan repayable 2015
92
23
1
1
1of
1of
1
115
100
1884
1
[11]
[Total: 30]
UCLES 2010
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Page 4

Syllabus
9706
(a) (ii)
Net profit
100
Sales
45 000
100
375 000
12%
(iii)
Net profit
100
Capital
45 000
100
450 000
10%
(iv)
Net profit
100
Total Assets
45 000
100
480 000
9.40%
(v)
Current Assets
Current Liabilities
52 000
30 000
1.7:1
(vi)
Current Assets - Stock

Current Liabilities
24 000
30 000
0.8:1
(vii)
Debtors
365
Sales
22 500
365
375 000
22 days (or 21.9)
(viii)
Creditors
365
Purchases
30 000
365
281 250
39 days (or 38.9)
Cost of Goods Sold

Average Stock
285 250
30 000
9.5 times
(ix)
2 marks each to a total of 16

1 mark for correct formula or working or 2 for correct answer.
(b) Chikkadea
Paper
21
[16]
[2]
(c) C's gross profit margin shows that she makes more gross profit for every dollar of sales.
C's net profit margin shows that she makes more net profit for every dollar of sales.
C's return on total assets shows that for every dollar's worth of total assets in the business
she receives a better return than D does.
C's return on capital employed shows that for every dollar she has invested in the business
she receives more profit in return.
C's current ratio shows that she is more able to pay her short term debts.
C's liquid ratio shows that she is more able to pay her immediate debts.
C's debtors' turnover shows that she collects debt faster so that cash becomes available
sooner.
C's creditors' turnover shows that she is given longer to pay her debts and has more time to
make use of her creditors' cash.
C's inventory return rate (rate of stockturn) shows that she sells her goods faster and should
therefore make her profits faster.
Any four of the above answers for a maximum of 3 marks each.
[12]
[Total: 30]
UCLES 2010
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Page 5
3

(a)
$
12 410 2
Sales (365 $34.00)

Cost of production
Direct material 380 (1.00 + 3.00 + 7.00)
Direct labour (380 4 8)
Variable overhead (380 4 14)
less stock increase (15 16.50)
add sales commission 365 1
3 040
1 250
(b) Absorption costing

Sales
4 180
760
1 330
6 270
248
6 023
365
6 388
6 023
2
2
2
4
2
6
4
1
1
1
1
[16]
4 290 1
1 733 1
[16]
$
12 410 1
4 180
760 1
1 330
3 040 2
9 310
less closing stock (15 (11 + 2 + 3.5 + 8))
368 3
Production cost of sales
8 943
(c) Reconciliation of profit

Absorption costing profit
Marginal costing profit
Difference
$
Sales
12 410
Cost of sales
Prod costs 6270 W1
Clos stock
248 W2 6 022
6 388
Commission
365
Contribution
6 023
Fixed costs
4 290
Net profit
1 733
Cost of production
Direct material
Direct labour
Variable overhead
Fixed overhead (380 3040 380)
Gross profit
less sales commission
Less fixed admin expenses
Net profit
Paper
21
Alternative methods
Marginal costing
Marginal costing
Contribution
less fixed factory overhead
less fixed admin expenses
Net profit
Syllabus
9706
Absorption costing
$
Sales
12 410 1
Cost of sales
Prod costs 9310 W3
3
Clos stock
368 W4 8 943 3
Gross Profit
3 468 1
Commission 365
Admin
1250
1 615 1
Net profit
1 853 1
[10]
3 468 1
365
1 250
1 615 1
1 853 1
[10]
1 853
1 733
120 1
Being value of closing stock 15 units 1 @ 8 1, the fixed factory overhead 1 is not included in
marginal costing.
[4]
The alternative methods use the following workings:
W1
W2
W3
W4
380(1.00 + 3.00 + 7.00 + 2.00 + 3.50)

15(1.00 + 3.00 + 7.00 + 2.00 + 3.50)
380(1.00 + 3.00 + 7.00 + 2.00 + 3.50 + 8.00)
15(1.00 + 3.00 + 7.00 + 2.00 + 3.50 + 8.00)
6270
247.5 (rounded to 248)
9310
367.5 (rounded to 368)
[Total: 30]
UCLES 2010
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9706 ACCOUNTING
9706/22

maximum raw mark 90
examination.
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Page 2
1
(a)
(b)

Syllabus
9706
Manufacturing Account for the year ended 30 April 2010

$000
$000
Raw materials
Stock at 1 May 2009
164
Purchases
2628
2792
Stock at 30 April 2010
202
Cost of raw materials consumed
2590
Manufacturing wages
520
Prime cost
3110
Factory overheads
Factory expenses
432
Factory depreciation
700
1132
4242
Work in progress
Stock at 1 May 2009
146
Stock at 30 April 2010
128
18
Factory cost of production
4260
Income Statement (Trading and Profit and Loss Account)
for year ended 30 April 2010
$000
$000
Sales
5684
Stock of finished goods at 1 May 2009
292
Cost of production
4260
4552
Inventory (stock) of finished goods at 30 April 2010
252
4300
Gross profit
1384
Reduction in provision for doubtful debts
6
Income from rent
48
54
1438
Depreciation
238
Bank charges
12
Bank interest
38
Office expenses
348
Salaries
222
Sales expenses
248
Bad debt written off
14
1120
Net profit
318
UCLES 2010
Paper
22
1
1
1
1
1
1
1
1
[8]
1
1
1
1
1
1
1
1
1
1
[11]
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Page 3

(c)
Syllabus
9706

$000
$000
Cost
Deprec
Factory
Office
2800
952
3752
Current assets
Inventories (stocks)
Raw materials
Finished goods
Work in progress
Trade receivables
prov for d debts
Current Liabilities
Trade payables
Bank
1800
618
2418
$000
NBV
1000
334
1334
202
252
128
582
466
10
456
1038
426
290
716

Net profit
Paper
22
2
2
1
1
1
322
1656
1338
318
1656
1
1
1
1
[11]
[Total: 30]
UCLES 2010
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Page 4
2

Syllabus
9706
Data
Machinery
Cost 1 May 2008

Additions during year
Less disposals during year
Cost 30 April 2009
$000
4200
1200
-700
4700
Motor
Vehicles
$000
3200
800
-1000
3000
Depreciation balance at 1 May 2008

Add charge for year
Less on disposals for year
Depreciation balance at 30 April 2009
1560
470
-520
1510
840
750
-800
790
Percentage depreciation
470 100
Machinery
4700
750 100
Motor vehicles
3000
Paper
22
10%
25%
(a) (i) Disposal accounts

Machinery
$000
Cost
1
400
Depn 4 years
Cash
Loss
400
Vehicles (item 2)
Cost
1
400
Profit
1of
20
420
Vehicles (item 3)
Cost
1
360
$000
160
200
40
400
1
1
1of
Depn 3 years
Part exch
300
120
420
1
1
Depn 1 year
Bank
Loss
90
210
60
360
1
1
1of
360
[12]
DOES NOT NEED TO BE IN THE FORM OF ACCOUNTS

(ii) Non-current (fixed) asset schedule
Machinery
Cost at 1 May 2010
Additions during year
Less disposals during year
Cost at 30 April 2011
Depreciation at 1 May 2010
Add charge for year
Less on disposals during year
1
1
1of
1of
$000
4700
900
-400
5200
1510
520
-160
1870
UCLES 2010
Motor
Vehicles
$000
3000
840 1
-760 1
3080
790
770
-390
1170
1of
1of
[8]
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Page 5

Syllabus
9706
Paper
22
(b) (i) 1 Wear and tear

2 Obsolescence
3 Time
4 Depletion
No marks for methods. Any three correct for (3)
[3]
(ii) 1 Machinery, vehicles

2 Computers, any technological equipment
3 Lease
4 Quarry, oil well etc.
Any three correct for (3)
[3]
(c) 1 Cost or Market value

2 Useful life
3 Residual value at end of useful life
4 Expected length of ownership
5 Rate of usage
6 Method of depreciation
7 Type of asset
8 Machine hours
Any correct 4 for (4)
[4]
[Total: 30]
UCLES 2010
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Page 6
3

Syllabus
9706
Paper
22
(a) (i) The break-even point is the level of activity at which the business makes neither a profit
nor a loss i.e. total contribution = total fixed costs. (accept a relevant formula)
[2]
(ii) The margin of safety is the distance between the break-even point and the expected
level of activity. It is the amount by which actual activity can fall short of expected
activity before a loss is incurred.
[2]
[4]
DATA
Sales
Variable costs
Fixed costs
Sales - variable costs

(b)
100
Sales
Fixed costs
(c)
100
c/s ratio
460 000
299 000
90 000
1
1
460 - 299
100
460
1
1
90 000
100
35
1of
100
35
1of
100
(d) (Fixed costs + profit)
c/s ratio
(90 000 + 100 000)
(e) Sales c/s ratio - fixed costs
1of
1
1
35
(375 000
) - 90 000
100
OR 375 000 - (.65 375 000 + 90 000)
1of
UCLES 2010
35%
1of
[4]
$257 143
1of
[3]
$542 857
1of
[4]
$41 250
1of
[4]
$41 250
1of
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Page 7
(f)

Syllabus
9706
Paper
22
Revised contribution sales - 5% - variable costs
460 000 - 23 000 - 299 000

1
1
1
Revised c/s ratio
$138 000
1of
revised contribution
100
new sales
1 of
$138 000 100
460 000 0.95
1
1
Fixed costs + profit
1
1
(90 000 + 80 000)
31.57895%
100
c/s ratio
100
31.57895
1of
$538 333
1of
Accept answers between $531 250 and $548 387 answer depends on number of decimal
places revised c/s ratio is taken to.
[11]
ALTERNATIVE METHODS ACCEPTABLE THROUGHOUT
[Total: 30]
UCLES 2010
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9706 ACCOUNTING
9706/23

maximum raw mark 90
examination.
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Page 2
1

WORKINGS
1 Calculation for trade receivables (debtors)
$
$
Bal b/d
46 400
Bank
424 000
Sales
393 400
Trade rec.
15 800
439 800
439 800
2
Calculation of opening capital

Bank
Inventory (stock)
Machinery at net book value
Capital
$
Dr
$
Cr
29 200
15 000
46 400
24 400
206 400
Calculation of depreciation
Machinery at NBV 30/04/09
add machinery purchased
less NBV of Machinery sold
Machinery at NBV 30/04/10
Paper
23
1of
(awarded in (d))
277 200
3
Syllabus
9706
5 600
216 000
233 000
277 200
1 + 1of
(awarded in (d))
206 400
30 400
236 800
1
1
221 600
15 200
(a) Calculation of ordinary goods purchased for the year

$
Ordinary goods purchased for cash 228 000 1
less trade payables at start
29 200 1
198 800
add trade payables at end
32 200 1
231 000
1
1
(awarded in (c))
[3]
(b) Calculation for sales for the year

Cost of sales
Opening inventory (stock)
Ordinary goods purchased
Less closing inventory (stock)
Sales = 224 800 1.75 (mark-up)
24 400
231 000
255 400
30 600
224 800
393 400
UCLES 2010
1
1of
1
1
1
[5]
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Page 3

(c)
Paper
23
Income statement (trading and profit and loss account)

for the year ended 30 April 2010
$
$
393 400
224 800
168 600
Sales
cost of sales
Gross profit
Rent (24 200 6200)
Insurance (14 200 3400)
Wages (104 200 28 000)
Postage
Electricity
Sundries
Depreciation
Loss on disposal (5600 1000)
Profit for the year (net profit)
(d)
Syllabus
9706
18 000
10 800
76 200
800
8 400
4 200
15 200
4 600
138 200
30 400
1of
2
2
2
1
1
1
3 + 1of
2
[16]

$
Machinery at net book value
Current assets
Inventory (stock)
Trade receivables (drs)
Prepayments
Current liabilities
Trade payables (crs)
Bank
$
216 000
30 600
15 800
9 600
56 000
32 200
5 400
37 600

Profit for year (net profit)
Drawings (28 000 + 1000)
18 400
234 400
233 000
30 400
263 400
29 000
234 400
1 + 1of*
1of
1
[6]
* If capital is calculated as a residual value within the balance sheet, award 1of if wrong
value but correctly calculated.
[Total: 30]
UCLES 2010
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Page 4
2

(a)
Syllabus
9706
Paper
23
Sales Ledger Control Account

$
Balance 1 April 2009
29 040
Sales
499 892
Bank (dishonoured cheque)
662
529 594
24 969
Balance 1 April 2010

(b) (i)
1
1
1
Sales returns
Bank
Discount allowed
Bad debts
Contra
Balance 31 Mar 2010
$
9 878
462 680
21 404
9 510
1 153
24 969
529 594
1
1
1
1
1
1
1of
[10]
Amended sales ledger control account

Balance b/d
Dis all'd overstated
Sales omitted
Extra sales
Bal b/d
$
24 969
310
998
3 856
30 133
28 595
1
1
1
Credit note corrected

Debit bal transferred
to purchases ledger
Balance c/d
$
840
698
28 595
30 133
1
1
1
[6]
OR
If candidate draws up a new as opposed to an amended SLC account, accept as
follows.
$
$
Balance
29 040
Cr sales
499 892
Cr note corrected
420
Sales omitted
998 1
for
Extra sales
3 856 1
1 both
Sales returns
9 878
Cr note corrected
420
Bank (dis cheque)
662
Bank
462 680
Dis all overstated
310 1
Dis allowed
21 404
Bad debts
9 510
Contra
1 153
Contra
698 1
Balance
28 595 1
534 758
534 758
(ii)
Sales ledger total
Sales invoice omitted
Balance omitted
Entry omitted
Balance understated
$
add
998
2 102
816
200
Credit note corrected

Bankrupt
Entry omitted
$
less
UCLES 2010
$
26 845
4 116
30 961
840
896
630
[6]
2 366
28 595
1
1
1
1
1
1
1
1
[8]
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Page 5

Syllabus
9706
Paper
23
(c) Minimize fraud/make fraud easier to find.

Minimize time taken to find errors/make errors easier to find.
Figures for total creditors/debtors easily available.
Sectional ledgers make checking easier.
Control accounts not handled by sales/purchases ledger clerk.
Any three answers for 2 marks each.
[6]
[Total: 30]
DATA
Variable cost
Fixed cost
Cabinet 1
400
8 000 000
Cabinet 2
240
36 000 000
Cabinet 3
220
79 200 000
Selling price
500
480
520
ANSWERS
(a)
(i)
1 36 000 000
2 400 - 240
225 000
(ii)
1 79 200 000
2 400 - 220
440 000
[6]
(b) Difference in fixed costs divided by difference in unit contribution

1
1
79 200 000 - 36 000 000 43 200 000
720 000
(520 - 220) - (480 - 240)
60
1
1
1
1
(c)
Cabinet 1
Units
(i) 200 000 (500 400) 8M
= $12 000 000
(ii) 250 000 (500 400) 8M
= $17 000 000
(iii) 300 000 (500 400) 8M
= $22 000 000
Cabinet 2
[6]
Cabinet 3
(480 240) 44m
(520 220) 87.2m
= $4 000 000
= $27 200 000
(480 240) 44m
(520 220) 87.2m
= $16 000 000
= $12 200 000
(480 240) 44m
(520 220) 87.2m
= $28 000 000
= $2 800 000
1 each max 3
1 each max 3
1 each max 3
[9]
(d) Extra fixed cost divided by (unit contribution on cabinet 2 less contribution on cabinet 1)
1
36 000 000
= 257 143
(480 - 240) - (500 - 400)
1
1
1
1
UCLES 2010
[5]
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Page 6

Syllabus
9706
Paper
23
(e) Unit selling price remains constant.

Unit variable costs remain constant.
Sales mix remains constant.
Total fixed costs do not change.
There are no semi-variable costs.
All production is sold.
Any four correct for 1 mark each.
[4]
[Total: 30]
UCLES 2010
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GCE Advanced Level

9706 ACCOUNTING
9706/31
Paper 31 (Multiple Choice Supplement), maximum raw mark 30
examination.
Page 2
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GCE A LEVEL May/June 2010
Syllabus
9706
Question
Number
Key
Question
Number
Key
1
2
B
A
16
17
A
D
3
4
5
B
D
B
18
19
20
C
D
B
6
7
A
B
21
22
B
C
8
9
10
D
A
C
23
24
25
B
A
C
11
12
B
D
26
27
C
C
13
14
15
A
D
B
28
29
30
C
C
C
UCLES 2010
Paper
31
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GCE Advanced Level

9706 ACCOUNTING
9706/32
examination.
Page 2
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Syllabus
9706
Question
Number
Key
Question
Number
Key
1
2
B
A
16
17
A
D
3
4
5
B
D
B
18
19
20
C
D
B
6
7
A
B
21
22
B
C
8
9
10
D
A
C
23
24
25
B
A
C
11
12
B
D
26
27
C
C
13
14
15
A
D
B
28
29
30
C
C
C
UCLES 2010
Paper
32
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GCE Advanced Level

9706 ACCOUNTING
9706/33
examination.
Page 2
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Syllabus
9706
Question
Number
Key
Question
Number
Key
1
2
A
B
16
17
D
C
3
4
5
D
B
A
18
19
20
D
B
B
6
7
B
D
21
22
C
B
8
9
10
A
C
B
23
24
25
A
C
C
11
12
D
A
26
27
C
C
13
14
15
D
B
A
28
29
30
C
C
B
UCLES 2010
Paper
33
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9706 ACCOUNTING
9706/41
Paper 41 (Problem Solving (Supplement)),

maximum raw mark 120
examination.
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Page 2
1

(a)
Syllabus
9706
Paper
41
Aneeqa and Emilita

Partnership balance sheet at 1 April 2010
$

Premises
Equipment
Fixtures
Motor vehicle
120 000) 1
36 000)
9 300) 1
12 100)
177 400
Current assets
Inventory (stock)
PDD
35 000
1 750
Current liabilities
23 000
1 800
19 900
33 250
53 150
24 800
1
28 350
205 750
Capital
Bal b/d
Revaluation
Goodwill
Bal c/d
Aneeqa
56 250
16 350
5 600
67 000
1
(3)
1
1of
Emilita
108 850
38 300
8 400
138 750
1
(3)
1
1of
205 750
[17]
Revaluation
Goodwill
Premises
Equipment
Fixtures
Vehicle
PDD
Stock
9 000 1
5 000 1
34 000
1 000
200
2*
900
600
38 300
4 000
500
3 900 2*
850
200
16 350
*or 1 for three components

(b)
New profit (16 + 34) 1.1
Salaries
IOC
Share of profit
Aneeqa
Emilita
$
55 000 1
20 000
20 575
14 425
0
Old profit
Change in profit
Partner with increased income is Aneeqa
10 000
6 700 1of
5 770 1of
22 470
16 000
6 470 1of
1
UCLES 2010
10 000
13 875
8 655
32 530
34 000
1 470
1 for both
1of
1of
1of
[9]
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Page 3

(c)
Aneeqa
Syllabus
9706
Emilita
Paper
41
Partnership
If candidate uses original figures

Current ratio
3.73 : 1
1.04 : 1
2.14 : 1
1of
Acid test
2.37 : 1
0.79 : 1
1.34 : 1
1of
Current ratio
3.64 : 1
0.97 : 1
2.14 : 1
1of
Acid test
2.29 : 1
0.75 : 1
1.34 : 1
1of
OR
If candidate uses revalued figures
Aneeqa's ratios are very high, suggesting working capital not well utilised.
Emilita's ratios are very low, suggesting a shortage of working capital.
Partnership's ratios are closer to average.
Both ladies have a lot of capital tied up in debtors and need to improve credit control.
Emilita was in danger of not being able to meet liabilities when they fell due.
[3 1]
Emilita is the partner benefitting from being no longer in danger of business insolvency.
[1]
[10]
(d) 1 470 5 3 =
2 450 1of
+ 55 000 1of
57 450
50 000 1
=1.149
14.9% increase 1of
[4]
[Total: 40]
UCLES 2010
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Page 4
2
(a)

Syllabus
9706
Paper
41
Income statement
(Trading and profit and loss account) for the year ended 30 April 2010
$
Sales
602 000
1
1
Finished goods at 1 May 2090 4 500 15 115
Transfer from manufacturing account
1
1of
Finished goods at 30 April 2010 4 800 15 115
Gross profit
Rent and rates
Electricity
Selling and admin
Manufacturing profit
Less increase in provision for unrealised profit
Total profit for the year (net profit)
(b) Value of inventory (stock):
Raw materials
Finished goods
Less PUP
(c) Engine
Carriage
Track
Painted engines
Damaged engine
(2)
1
36 800
480 700 (2)

121 300 1of
1
1
87 000
34 300
1
62 700 2
97 000 1of
[12]
18 000 1
1of
32 000 1
50 000 1of
[4]
30 000
18 000
39 000
63 000
300
36 800
4 800
7.00 + 0.80 + 10/2 = 12.80

5.00 + 0.50 + 10/5 = 7.50
2.00 + 0.25 + 10/10 = 3.25
(d) Plain engines
34 500
483 000
2
2
2
14 + 18 20 =
1
1 1
26 + 21 18 + 10 1 =
1
1
1
1 1
1
1
(e) lAS 2 2
[6]
12 @ 7.00
38 @ 12.80
1of
1 @ 4.00
1
84.00 1of
1
486.40 1of
4.00 1of
574.40 1of
[16]
[2]
[Total: 40]
UCLES 2010
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Page 5
3

(a) (i)
annual net cash flow
A
100 000
40 000
8 000
52 000
14 500
85 000
17.06%
Syllabus
9706
Paper
41
B
120 000
65 000
6 000
49 000
1of
1
1of
14 000
88 000
15.91%
1of
1
1of
(ii) ARR
average profit
average capital
ARR
(iii) payback period
outlay
y1
y2
bal
y3
150 000
1
52 000 )
1of
52 000 )
46 000
46 000/52 000 365
1of
1of
2 yrs 323 days
1of
140 000
1
49 000 )
1of
49 000 )
42 000
42 000/49 000 365
1of
1of
2 yrs 313 days
1of
[18]
(b) NPV of Project A

y0
y1
y2
y3
y4
total
CF
150 000
52 000
52 000
52 000
52 000
1
1of
1of
1of
1of
1
0.909
0.826
0.751
0.683
DCF
150 000
47 268
42 952
39 052
35 516
14 788
1
1of
1of
1of
1of
1of
[11]
(c) Limitations
(i) ARR
ignores timing of cash flows

ignores risk
average profit and average capital may be difficult to estimate
(ii) Payback
ignores length of project life

(iii) NPV
complex calculations
cash flows are estimates
difficulties in deciding on cost of capital
(d) Select B.
ARR better for A.
Payback better for B.
NPV better for B.
NPV indicator takes priority over the others.
[6]
[5]
[Total: 40]
UCLES 2010
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9706 ACCOUNTING
9706/42

examination.
www.maxpapers.com
Page 2
1

(a)
Syllabus
9706
Paper
42
Aneeqa and Emilita

Partnership balance sheet at 1 April 2010
$

Premises
Equipment
Fixtures
Motor vehicle
120 000) 1
36 000)
9 300) 1
12 100)
177 400
Current assets
Inventory (stock)
PDD
35 000
1 750
Current liabilities
23 000
1 800
19 900
33 250
53 150
24 800
1
28 350
205 750
Capital
Bal b/d
Revaluation
Goodwill
Bal c/d
Aneeqa
56 250
16 350
5 600
67 000
1
(3)
1
1of
Emilita
108 850
38 300
8 400
138 750
1
(3)
1
1of
205 750
[17]
Revaluation
Goodwill
Premises
Equipment
Fixtures
Vehicle
PDD
Stock
9 000 1
5 000 1
34 000
1 000
200
2*
900
600
38 300
4 000
500
3 900 2*
850
200
16 350
*or 1 for three components

(b)
New profit (16 + 34) 1.1
Salaries
IOC
Share of profit
Aneeqa
Emilita
$
55 000 1
20 000
20 575
14 425
0
Old profit
Change in profit
Partner with increased income is Aneeqa
10 000
6 700 1of
5 770 1of
22 470
16 000
6 470 1of
1
UCLES 2010
10 000
13 875
8 655
32 530
34 000
1 470
1 for both
1of
1of
1of
[9]
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Page 3

(c)
Aneeqa
Syllabus
9706
Emilita
Paper
42
Partnership
If candidate uses original figures

Current ratio
3.73 : 1
1.04 : 1
2.14 : 1
1of
Acid test
2.37 : 1
0.79 : 1
1.34 : 1
1of
Current ratio
3.64 : 1
0.97 : 1
2.14 : 1
1of
Acid test
2.29 : 1
0.75 : 1
1.34 : 1
1of
OR
If candidate uses revalued figures
Aneeqa's ratios are very high, suggesting working capital not well utilised.
Emilita's ratios are very low, suggesting a shortage of working capital.
Partnership's ratios are closer to average.
Both ladies have a lot of capital tied up in debtors and need to improve credit control.
Emilita was in danger of not being able to meet liabilities when they fell due.
[3 1]
Emilita is the partner benefitting from being no longer in danger of business insolvency.
[1]
[10]
(d) 1 470 5 3 =
2 450 1of
+ 55 000 1of
57 450
50 000 1
=1.149
14.9% increase 1of
[4]
[Total: 40]
UCLES 2010
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Page 4
2
(a)

Syllabus
9706
Paper
42
Income statement
(Trading and profit and loss account) for the year ended 30 April 2010
$
Sales
602 000
1
1
Finished goods at 1 May 2090 4 500 15 115
Transfer from manufacturing account
1
1of
Finished goods at 30 April 2010 4 800 15 115
Gross profit
Rent and rates
Electricity
Selling and admin
Manufacturing profit
Less increase in provision for unrealised profit
Total profit for the year (net profit)
(b) Value of inventory (stock):
Raw materials
Finished goods
Less PUP
(c) Engine
Carriage
Track
Painted engines
Damaged engine
(2)
1
36 800
480 700 (2)

121 300 1of
1
1
87 000
34 300
1
62 700 2
97 000 1of
[12]
18 000 1
1of
32 000 1
50 000 1of
[4]
30 000
18 000
39 000
63 000
300
36 800
4 800
7.00 + 0.80 + 10/2 = 12.80

5.00 + 0.50 + 10/5 = 7.50
2.00 + 0.25 + 10/10 = 3.25
(d) Plain engines
34 500
483 000
2
2
2
14 + 18 20 =
1
1 1
26 + 21 18 + 10 1 =
1
1
1
1 1
1
1
(e) lAS 2 2
[6]
12 @ 7.00
38 @ 12.80
1of
1 @ 4.00
1
84.00 1of
1
486.40 1of
4.00 1of
574.40 1of
[16]
[2]
[Total: 40]
UCLES 2010
www.maxpapers.com
Page 5
3

(a) (i)
annual net cash flow
A
100 000
40 000
8 000
52 000
14 500
85 000
17.06%
Syllabus
9706
Paper
42
B
120 000
65 000
6 000
49 000
1of
1
1of
14 000
88 000
15.91%
1of
1
1of
(ii) ARR
average profit
average capital
ARR
(iii) payback period
outlay
y1
y2
bal
y3
150 000
1
52 000 )
1of
52 000 )
46 000
46 000/52 000 365
1of
1of
2 yrs 323 days
1of
140 000
1
49 000 )
1of
49 000 )
42 000
42 000/49 000 365
1of
1of
2 yrs 313 days
1of
[18]
(b) NPV of Project A

y0
y1
y2
y3
y4
total
CF
150 000
52 000
52 000
52 000
52 000
1
1of
1of
1of
1of
1
0.909
0.826
0.751
0.683
DCF
150 000
47 268
42 952
39 052
35 516
14 788
1
1of
1of
1of
1of
1of
[11]
(c) Limitations
(i) ARR

ignores risk
average profit and average capital may be difficult to estimate
(ii) Payback
ignores length of project life

(iii) NPV
complex calculations
cash flows are estimates
difficulties in deciding on cost of capital
(d) Select B.
ARR better for A.
Payback better for B.
NPV better for B.
NPV indicator takes priority over the others.
[6]
[5]
[Total: 40]
UCLES 2010
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9706 ACCOUNTING
9706/43

examination.
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Page 2
1

(a)
Syllabus
9706
Paper
43
Capital accounts
D
N
A
D
N
A
$
$
$
$
$
$
1.7.09 Goodwill (1) 6 000 6 000 6 000 1.1.09 bals b/d (1) 24 000 18 000
31.12.09 bals c/d
27 000 21 000 94 000 1.7.09 Premises (1)
100 000
(1)of
(1)of
(1)of 1.7.09 Goodwill (1) 9 000 9 000
33 000 27 000 100 000
33 000 27 000 100 000
1.1.10 bals b/d
27 000 21 000 94 000
Ofs if no extraneous items and balances carried down correctly.
[7]
(b) Income statements (Trading and profit and loss accounts) and appropriation accounts
for the 6 months ended
30 June 2009
$
Sales (1 mark for 188 000)
Opening inventory (stock)
Purchases
Closing inventory (stock)
Gross profit
Loss of disposal (10-2.5-6.5)
Other costs
Rent
Depreciation
equipment
premises
Interest
Bad debts
Profit for the period (net profit)
Salary A
Interest D
Interest N
Interest A
Share of profit D
Share of profit N
Share of profit A
(2)
22 000
105 000 (1)
21 000
$
189 000
106 000
83 000
1 000 (1)
51 000
3 000 (1)
2 500 (1)
1 000 (1)
$
(1)
21 000
127 000 (1)
28 000
$
247 000
120 000
127 000
57 000
58 500
24 500
600 ) (1)
450 )
31 December 2009
1 050
11 725 ) (1)of
11 725 )
23 450
0
3 100 (1)
350 (1)
1 200 (1)
61 650
65 350
8 000 (1)
8 000
1 080 (1)of
840 (1)of
3 760 (1)of
5 680
17 223 )
17 223 ) (1)of
17 224 )
51 670
0
[19]
UCLES 2010
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Page 3

(c)
Syllabus
9706
Paper
43
Current accounts
D
$
1.1.09 bal b/d

30.6.09 Drawings
30.6.09 bal c/d
N
$
3 500
(1) 11 000 15 000
8 325
A
$
19 325 18 500
0
1.7.09 bal b/d
6 325
31.12.09 Drawings (1) 12 000 14 000 18 000
31.12.09 bal c/d
14 628
10 984
1.1.10 bal b/d
26 628 20 325 28 984

2 262
(1)of
D
N
A
$
$
$
1.1.09 bal b/d
7 000
30.6.09 IOC
(1)of
600
450
30.6.09 Sh profit (1)of 11 725 11 725
30.6.09 bal c/d
6 325
19 325 18 500
0
1.7.09 bal b/d
8 325
31.12.09 Salary (1)of
8 000
31.12.09 IOC
(1)of 1 080
840 3 760
31.12.09 Sh profit (1)of 17 223 17 223 17 224
31.12.09 bal c/d
2 262
26 628 20 325 28 984
1.1.10 bals b/d
14 628
10 984
(1)of
(1)of
[10]
For illustration only

Balance sheet at 31 December 2009
Premises (100 000 350)
Equipment (62 000 3 100)
Stock
Debtors
Bank
Creditors
Loan
Accrued interest
Capital accounts
Current accounts
99 650
58 900
28 000
24 000
16 000
20 000
40 000
1 200
165 350
D
N
A
27 000 21 000 94 000 142 000
14 628 2 262 10 984 23 350
165 350
Bank = 6 000 + 428 000 + 6 500 + 40 000 221 000 3 500 62 000 108 000 70 000 = 16 000
(d) Any reasonable answers, e.g.
Advantage strengthening of asset base with an increase in fixed assets in balance sheet.
Disadvantage increased risk of debt. (2 2)
[4]
[Total: 40]
UCLES 2010
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Page 4
2

Syllabus
9706
Paper
43
(a)Income statement (profit and loss account) and appropriation account for the year ended
31 December 2009
$
192 000
12 000
180 000
36 000
144 000
54 000
12 000
30 000
48 000
Operating profit
Interest
Profit before tax
Tax
Net profit
Ordinary dividend
Preference dividend
General reserve
Retained profit
(1)of
(1)
(1)of
(1)of
(1)of
(1)
(3)
(1)
(1)of
Interest 16
PBT 20%
(0.22 600 000) 144 000 = 12 000

(1)of
(1)of
(1)of
(b)
[11]
Balance sheet at 31 December 2009

Net current assets
6% debentures 2018
$
610 000
420 000
1030 000
200 000
830 000
300 000
(1)
(1)of
(1)
600 000 ordinary shares of $0.50

(1)
(1)
240 000 5% preference shares of $1 240 000 (1)of
(1)of
Share premium
150 000 (1)of
General reserve
30 000 (1)
Profit and loss
110 000 (1)of
830 000
62 000 + 48 000
[10]
144 - 12
54
2.44 times
(2)of
(ii) PER
2.50
0.22
11.36:1
(2)
(iii) Dividend yield
9
100
250
3.60%
(2)
(c) (i) Dividend cover
(iv) Gearing ratio
(v) ROCE
200 + 240
300 + 200 + 240 + 150 + 30 + 110
440
42.7%
(5) (1 mark for any two
1030
components plus 1 for answer)
192 (1)of
100
1 030 (1)of
18.64%
UCLES 2010
(1)of
[14]
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Page 5

Syllabus
9706
(d) V has higher gearing, higher risk.

ROCE of V is higher, but return after interest may not be better.
V may pay interest at a higher rate with a premium for the added risk.
V has lower dividend cover, hence less assurance of dividends continuing.
Vs profits, otherwise available for dividend, are being diverted to pay interest.
Other reasonable comment.
Paper
43
[5]
[Total: 40]
(a) Overhead absorption rate
(i) by machine hour
(ii) by labour hour
(iii) by total DM cost
42 760
2 800 + 3 000
(1)
(1)
$7.37 per m/hr

(1)of
42 760
2 100 + 1 800
(1)
(1)
$10.96 per lab/hr

(1)of
42 760
34 440 + 30 800
(1) for both
$0.66 per $
(1)of
[8]
(b) DM
DL
Ohds
Profit
3.5 $8.8
1.8 $10
3 $7.37
50%
30.80
18.00
22.11
70.91
35.46
106.37
(1)
(1)
(1)of
(1)of
(1)of
[5]
(c) Overabsorption of overheads:

This means that the amount of overheads added to production costs exceeds the total
amount of overheads, because actual production was higher than anticipated when the OAR
was calculated.
Underabsorption of overheads:
This means that the amount of overheads added to production costs is less than the total
amount of overheads, because actual production was lower than anticipated when the OAR
was calculated. (2 2)
[4]
(d) (i) MPV
2 760 A
(2)
(ii) MUV
1 640 F
(2)
(iii) Total material variance
1 120 A
(2)of
(iv) LRV
440
(2)
(v) LEV
2 000 F
(2)
(vi) Total labour variance
1 560 F
(2)of
UCLES 2010
[12]
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Page 6
(e) 4 672/1 600
125 760/1 600
Std price

Syllabus
9706
Paper
43
$2.92 (1)
$78.60 (1)
$81.52 (1)of
(f) Advantages:
Budgets are easier to prepare.
Budgets are more realistic.
Needed for responsibility accounting.
Enables management to understand why actual performance differs from budgets.
Facilitates preparation of quotes etc. (4 2)
[3]
[8]
[Total: 40]
UCLES 2010

9706 - May June 2010 - All Mark Scheme PDF

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MARK SCHEME for the May/June 2010 question paper

Paper 11 (Multiple Choice Core), maximum raw mark 30

Mark Scheme: Teachers version

MARK SCHEME for the May/June 2010 question paper

Paper 12 (Multiple Choice Core), maximum raw mark 30

Mark Scheme: Teachers version

MARK SCHEME for the May/June 2010 question paper

Paper 13 (Multiple Choice Core), maximum raw mark 30

Mark Scheme: Teachers version

MARK SCHEME for the May/June 2010 question paper

Paper 21 (Structured Questions (Core)),

Mark Scheme: Teachers version

Income statement (Trading and Profit and Loss Account)

Inventory (stock) at 30 April 2010

Mark Scheme: Teachers version

Balance Sheet at 30 April 2010

Equity and liabilities

Mark Scheme: Teachers version

Current Assets - Stock

22 days (or 21.9)

39 days (or 38.9)

Cost of Goods Sold

2 marks each to a total of 16

Mark Scheme: Teachers version

Sales (365 $34.00)

(b) Absorption costing

(c) Reconciliation of profit

380(1.00 + 3.00 + 7.00 + 2.00 + 3.50)

MARK SCHEME for the May/June 2010 question paper

Paper 22 (Structured Questions (Core)),

Mark Scheme: Teachers version

Manufacturing Account for the year ended 30 April 2010

Mark Scheme: Teachers version

Balance Sheet at 30 April 2010

Capital at 1 May 2009

Mark Scheme: Teachers version

Cost 1 May 2008

Depreciation balance at 1 May 2008

(a) (i) Disposal accounts

DOES NOT NEED TO BE IN THE FORM OF ACCOUNTS

Mark Scheme: Teachers version

(b) (i) 1 Wear and tear

(ii) 1 Machinery, vehicles

(c) 1 Cost or Market value

Mark Scheme: Teachers version

Sales - variable costs

(90 000 + 100 000)

(e) Sales c/s ratio - fixed costs

OR 375 000 - (.65 375 000 + 90 000)

Mark Scheme: Teachers version

Revised contribution sales - 5% - variable costs

460 000 - 23 000 - 299 000

Fixed costs + profit

MARK SCHEME for the May/June 2010 question paper

Paper 23 (Structured Questions (Core)),

Mark Scheme: Teachers version

Calculation of opening capital

(a) Calculation of ordinary goods purchased for the year

(b) Calculation for sales for the year

Mark Scheme: Teachers version

Income statement (trading and profit and loss account)