AS & A Level Accounting 9706 · Topic 3

Financial accounting (A Level): past paper questions

247 real questionsasked in 10 of the last 10 exam series2019–2025usually: Explain, State, Justify, Calculate, Use

Real questions on financial accounting (a level)

The newest 20 of 223 written questions, plus 24 multiple-choice. Open one to see it on the real paper.

9706/22 · October/November 2025 · Q1a[15]
Prepare, on page 5, a revised statement of profit or loss for the year ended 31 December 2024. Workings: Revenue Cost of sales Depreciation Distribution costs Administrative expenses Finance costs R Limited Revised statement of profit or loss for the year ended 31 December 2024 $ Revenue Cost of sales Gross profit Dist...
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9706/22 · October/November 2025 · Q1b[8]
Complete the statement of changes in equity for the year ended 31 December 2024. At 31 December 2024 General reserve $ Retained earnings $ 65 000 28 000 105 000 Total $ At 1 January 2024 Share premium $ 700 000 Workings: Share capital $ R Limited Statement of changes in equity for the year ended 31 December 2024 Additi...
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9706/23 · October/November 2025 · Q1a[9]
Prepare the statement of profit or loss for the year ended 31 December 2024. Use the space provided on page 4 to show your workings. Fazal and Naseem Statement of profit or loss for the year ended 31 December 2024 Workings: The partners share profits and losses equally after providing for: 1 interest on drawings of 5%...
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9706/23 · October/November 2025 · Q1b[5]
Prepare each partner’s current account for the year ended 31 December 2024. Dates are not required. Current accounts Details Fazal $ Naseem $ Details Fazal $ Naseem $ Workings:
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9706/23 · October/November 2025 · Q1c[5]
Prepare the equity and liabilities section of the partnership’s statement of financial position at 31 December 2024. Fazal and Naseem Statement of financial position at 31 December 2024 Equity and liabilities Additional information The partners wish to improve the performance of their business. They are considering two...
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9706/31 · October/November 2025 · Q1a(i)[2]
statement of profit or loss
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9706/31 · October/November 2025 · Q1a(ii)[2]
balance c/d.
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9706/31 · October/November 2025 · Q1b(i)[1]
ordinary share capital (i)
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9706/31 · October/November 2025 · Q1b(ii)[1]
statement of profit or loss. (ii) Additional information Depreciation of delivery vehicles for the year amounted to $16 100. After this had been provided, an impairment review of delivery vehicles was undertaken on 31 December 2024. This showed the following: value in use $ potential sales value $ estimated selling cos...
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9706/31 · October/November 2025 · Q1c[6]
Complete the following table to show the recoverable amount and any impairment loss for each vehicle. carrying amount $ Vehicle A 16 800 Vehicle B 24 100 Vehicle C 22 800 recoverable amount $ impairment loss $ Additional information Other information for the year ended 31 December 2024 was as follows: Revenue Decrease...
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9706/31 · October/November 2025 · Q1d[8]
Prepare the statement of profit or loss for the year ended 31 December 2024 in accordance with IAS 1. Workings: Additional information One of the directors has suggested that in the coming year the company should pay a dividend.
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9706/31 · October/November 2025 · Q3a[2]
Explain why a statement of cash flows usually starts with profit.
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9706/31 · October/November 2025 · Q3e[2]
State why it is important that the financial statements of PI plc are prepared with professional competence and due care.
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9706/31 · October/November 2025 · Q3f[2]
State the main difference between the responsibilities of the directors and the responsibilities of the auditor regarding the financial statements.
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9706/32 · October/November 2025 · Q1e[5]
Assess both options put forward by QW plc for the acquisition, recommending the better option for the partners. Your answer should cover both financial and non-financial factors. Additional information One of the directors of QW plc has said that if the partners adopt option 2, then the company should record a provisio...
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9706/32 · October/November 2025 · Q1f[5]
Discuss this statement made by the director. Support your answer by referring to the relevant international accounting standard (IAS).
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9706/32 · October/November 2025 · Q2a(i)[1]
dividend per share
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9706/32 · October/November 2025 · Q2a(ii)[1]
dividend cover.
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9706/32 · October/November 2025 · Q2b[4]
Describe the type of investor who might prefer to invest in Company AZ rather than Company BY after considering these ratios. Give a reason for your answer. description reason
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9706/32 · October/November 2025 · Q2c[4]
Explain how the investor’s decision might be different if Company AZ was paying interest of 12% per annum on a long-term loan of $440 000, while Company BY had interest cover of 9 times. Support your answer with relevant calculations.
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What examiners said

An extract of the capital and liabilities section from the statement of financial position was required and few candidates performed well on this question. The partner loan, in many cases, was incorrectly labelled as a bank loan. The current liabilities were often incomplete. The layout was generally good and most appropriately labelled the sections and they were in the correct order. Only a minor...
— Examiner report, February/March 2025, 9706/22 Q1(d) (Cambridge)

A high number of candidates were able to state how a business would create a general reserve, but considerably fewer provided an acceptable explanation as to why the reserve would be created.
— Examiner report, February/March 2025, 9706/32 Q1(a) (Cambridge)

Practise this topic

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In the syllabus

3.1.1 Financial statements

the need for and purpose of financial statements for specific types of business

3.1.2 Partnerships

goodwill and the difference between purchased goodwill and inherent goodwill
how to prepare partners’ capital and current accounts to record changes required in respect of goodwill and revaluation of assets on: – a change in the partners’ profit-sharing ratio – the introduction of a new partner – the retirement of an existing partner – the dissolution of a partnership
how to prepare the partnership appropriation account, statement of profit or loss and statement of financial position including changes in a partnership occurring part-way through an accounting year
how to prepare a realisation account and a revaluation account

3.1.3 Clubs and societies

the distinction between a receipts and payments account and an income and expenditure account
how to define and calculate the accumulated fund
how to prepare, from full or incomplete accounting records: – a receipts and payments account – accounts for trading and revenue-generating activities – a subscriptions account – an income and expenditure account – a statement of financial position
how to account for other receipts, including life memberships and donations
how to make adjustments to financial statements (as detailed in 1.5.1)
how to evaluate possible sources of finance and methods of fundraising

3.1.4 Manufacturing businesses

how to prepare a manufacturing account, to differentiate between direct and indirect expenses and to include factory profit
how to prepare, for a manufacturing business, a statement of profit or loss and a statement of financial position
how to account for manufacturing profit and the elimination of unrealised profit from unsold inventory
the reasons why a business may account for manufacturing profit

3.1.5 Limited companies

how to prepare for a limited company in line with the relevant international accounting standards and legal requirements: – statement of profit or loss – statement of financial position – statement of cash flows – statement of changes in equity – schedule of non-current assets

3.2.1 International Accounting Standards

the main provisions of each of the following International Accounting Standards (IAS): – IAS 1 Presentation of financial statements – IAS 2 Inventories – IAS 7 Statement of cash flows – IAS 8 Accounting policies, changes in accounting estimates and errors – IAS 10 Events after the reporting period – IAS 16 Property, plant and equipment – IAS 36 Impairment of assets – IAS 37 Provisions, contingent liabilities and contingent assets – IAS 38 Intangible assets

3.2.2 Ethical considerations

the need for an ethical framework in accounting
the fundamental principles of: – integrity – objectivity – professional competence and due care – confidentiality – professional behaviour
how the ethical behaviour of accountants and auditors impacts the business and other stakeholders
the social implications of decision-making

3.2.3 Auditing and stewardship of limited companies

the role and responsibilities of the auditor
the differences between an external audit and an internal audit
the difference between a qualified and unqualified audit report
stewardship and the role of directors and their responsibilities to shareholders
the importance of a true and fair view in respect of financial statements

3.3.1 Business acquisition and merger

the nature and purpose of the merger of different types of businesses to form a new business entity
how to prepare journal entries and make entries in the relevant ledger accounts to record the: – merger of two or more sole trader businesses to form a partnership or a limited company – merger of a sole trader’s business with an existing partnership to form a new partnership – acquisition of a sole trader’s business or partnership by a limited company
how to calculate the value of goodwill on the acquisition of a business by another entity
how to prepare statements of profit or loss and statements of financial position for the newly formed business entity following the acquisition or merger, for example the limited company acquiring the partnership
the advantages and disadvantages of the acquisition or merger

3.4.1 Computerised accounting systems

the process of transferring the business accounts to a computerised accounting system
ways in which the integrity of the accounting data can be ensured during the transfer to a computerised accounting system

3.5.1 Analysis and communication of accounting information

how to calculate the following ratios: – working capital cycle (in days) – net working assets to revenue (sales) – interest cover – gearing ratio – earnings per share – price/earnings ratio – dividend per share – dividend yield – dividend cover Note: Candidates must use the formula given in the appendix to section 3. These are the only formulae accepted in candidate responses.
how to analyse and evaluate the results of the ratios and draw conclusions
how to make appropriate recommendations to stakeholders on the basis of the analysis undertaken
the interrelationships between ratios

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