Cambridge International Examinations Cambridge International Advanced ...

Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level

ACCOUNTING Paper 3 Structured Questions MARK SCHEME Maximum Mark: 150

9706/31 May/June 2017

Published

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.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers.

Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the May/June 2017 series for most Cambridge IGCSE?, Cambridge International A and AS Level and Cambridge Pre-U components, and some Cambridge O Level components.

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This document consists of 16 printed pages.

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9706/31 Question

Cambridge International AS/A Level ? Mark Scheme PUBLISHED

Answer

1(a) Provide information about the financial position (1) and financial performance (1), and cash flows (1) of an entity. Useful to a wide range or users in making economic decisions. (1) Max 2

1(b) XY plc ? Income Statement for year ended 31 January 2017

Revenue

Cost of sales

W1

Gross profit

Distribution costs

W2

Administrative expenses

W3

Loss from operations

Finance cost

Loss for the year

$ 985000 448600 (3) 536400 201200 (5) 390428 (4) (55228) (1)OF

5000 (1) (60228) (1)OF

May/June 2017 Marks 2

15

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Page 2 of 16

9706/31 Question

? UCLES 2017

Cambridge International AS/A Level ? Mark Scheme PUBLISHED

Answer

Workings

W1 Cost of sales

Opening inventory Purchases Closing inventory 100 ? $65 + $36000

Machine depreciation Depreciation on buildings

W2 Distribution costs Per original Depreciation motor vehicles* Loss on disposal of motor vehicle 20 000 ? 48 000

$ 37100 428000 42500 (1) 422600 10000 (1) 16000 (1) 448600

144000 29200 28000 (1)

201200

*Motor vehicle at cost 230000 + 60000 ? 75000 Accumulated depreciation $96000 ? $27000

20% depreciation thereof

W3Administrative expenses

Per original Depreciation equipment 320000 ? 20% Irrecoverable debt Provision for doubtful debts (102000 ? 8800) ? 4% ? 2100 Less: cost of machine

215000 (1) 69000 (1)

146000 (1) OF

29200 (1) OF

$ 346000

64000 (1) 8800 (1)

1628 (1) (30000) 390428 (1)

Page 3 of 16

May/June 2017 Marks

9706/31 Question

Cambridge International AS/A Level ? Mark Scheme PUBLISHED

Answer

1(c)

XY plc

Statement of Changes in Equity for year ended 31 January 2017

Balance at start of year Loss for the year Dividend paid Bonus shares Balance at end of year

Share $

500000

50000 (1) 550 000

Share $

120000

(50000) (1) 70000

Retained $

125000 (60228) (1) OF (20000) (1)

44 772

1(d) Responses may include:

Bonus issue

Shareholders may be expecting a cash bonus each year. Stop giving return to shareholders may be a negative signal about the performance of the company Company retains cash for other investment opportunities The interest of shareholders is not diluted by receiving the proportionate number of bonus shares Transfer from reserves

Cash dividend

Company maintains the practice of giving out cash returns to shareholders constantly Company may have liquidity problem in paying out cash dividend Short term benefit (cash) vs long term benefit (shares value increase). Accept any reasonable alternatives

Advice 1 mark and 3 max for relevant points

For each valid point, 1 mark for basic explanation and 2 marks for developed explanation

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Page 4 of 16

May/June 2017 Marks 4

4

Total:

25

9706/31 Question

Cambridge International AS/A Level ? Mark Scheme PUBLISHED

Answer

2(a)

G Limited

Revised statement of financial position at 31 December 2016

Non-current assets Current assets

Inventory Trade receivables Other receivables Cash and cash equivalents

$ 642000

78000 179400 (2)

63000 (3) 54000 374 400

Total assets

1016400

Equity and liabilities Equity

Ordinary shares of $1 each Retained earnings

550000 258400 (4) 808 400

Current liabilities Trade payables Other payables

171000 37000 (1)

208 000

Total equity and liabilities

1016400

Working

Trade receivables Other receivables Other payables Retained earnings

$189000 ? ($12000 (1) ? 80% (1)) = $179400 $3000 + $20000 (1) + $40000 (1) = $63000 (1) $10000 + $27000 = $37000 (1) $235000 ? $9600(1) ? $27000(1) + $20000(1) + $40000 (1) = $258400

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Page 5 of 16

May/June 2017

Marks 10

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