Cambridge 9706, Paper 1 & 2. 1,558 questions, 2020 to 2026.
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Accounting concepts such as going concern, consistency, prudence, materiality, realisation, money measurement and the business entity concept, and how they are applied.
20 past paper questions on this topic since 2020, across 8 exam sessions.
| Year | Paper 1 | Paper 2 | Total | Chart |
|---|---|---|---|---|
| 2026 | 0 | 1 | 1 | |
| 2025 | 2 | 2 | 4 | |
| 2024 | 4 | 3 | 7 | |
| 2023 | 3 | 0 | 3 | |
| 2021 | 2 | 2 | 4 | |
| 2020 | 0 | 1 | 1 |
The whole topic on one page, with answers and mark schemes. Printing this page prints just this list.
A trader sells goods for $6600 to a customer on 31 March 2025, the last day of his financial year. He does not produce an invoice until three days later. He is advised that the sales of $6600 should be entered in the financial statements for the year ended 31 March 2025. Which accounting concepts are being applied?
DCorrect answer
Which statements about the prudence concept are correct?
BCorrect answer
Houssam owns a retail business. He does not maintain full accounting records. All sales are made on a cash basis. Purchases of goods for resale are made in cash and on credit. At 1 January 2025, the business’s assets and liabilities included the following:
The following information is available for the year ended 31 December 2025. 1 The summary of receipts and payments shown on bank statements is as follows:
3 Payments to trade payables were made after deducting cash discounts of $390. 4 Cash takings were banked after making the following payments:
6 At 31 December 2025:
(a) Calculate the total purchases of goods for resale for the year ended 31 December 2025. [5 marks]
(b) Prepare the statement of profit or loss for the year ended 31 December 2025. Use the space provided to show your workings. [14 marks]
Workings: revenue cost of sales depreciation general expenses rent
(c) Explain, with reference to the relevant accounting concept, how drawings are treated in the financial statements of a business. [2 marks]
(d) State two reasons why Houssam may have chosen not to maintain full accounting records. [2 marks]
(e) Advise Houssam whether or not he should use a computerised accounting system. Justify your answer by considering the advantages and disadvantages of computerised accounting systems. [7 marks]
Houssam has now decided that he will need to maintain more detailed accounting records. He is considering using a computerised accounting system.
(a)
(b)
W1 Cash takings banked $79 320 + unbanked takings $19 882 = $99 202 (1) W2 Purchases $40 572 + carriage inwards $148 + [Opening inventory $8 792 – closing inventory $11 434] (1) = $38 078 (1) W3 $20 800 less disposal $800 (1) + purchase $3 200 = $23 200 – valuation $19 500 = $3 700 (1) OF W4 Paid $4 410 – opening due $183 (1) – closing prepaid $770 = $3 457 (1) OF W5 Paid $8 380 + $320 opening prepaid (1) + $510 closing due = $9 210 (1) OF
(d)
accounting records. The cost involved in employing/training someone OR purchasing software/computer (1) Does not have the skills (to maintain full accounting records) (1) Does not have the time (to maintain full accounting records) (1) Does not require the additional information a full accounting system would provide (1) Max 2 Accept other valid responses
J Limited’s non-current assets are as follows:
The company’s financial year ends on 31 December. Depreciation policy is as follows:
(a)(i) Calculate the balance of the provision for depreciation accounts at 31 December 2024 for each of the following categories of non-current assets. Machinery [2 marks]
(a)(ii) Calculate the balance of the provision for depreciation accounts at 31 December 2024 for each of the following categories of non-current assets. Motor vehicles [2 marks]
(b) Prepare a journal entry to record the revaluation of the freehold property. A narrative is not required. [4 marks]
On 1 January 2025, it was decided to revalue the freehold property to $925 000.
(c) Prepare the disposal account. [4 marks]
On 1 January 2025, Machine 1 was disposed of for $20 400 received by cheque.
(d) Explain, with reference to one accounting concept, why the suggestion should not be implemented. Concept: ................................................................................................................................... Explanation: .............................................................................................................................. [3 marks]
A director had suggested that in future it would be easier if the straight-line method of depreciation was used for all non-current assets. However, the company’s accountant disagrees and says this suggestion should not be implemented.
(b)
(c)
(d)
not be implemented. Consistency concept (1): requires the same policy/methods/principle/techniques to be used from year to year (1) to ensure that results are capable of valid comparison (1). Accept other valid responses.
A trainee accountant recently produced the financial statements for a business for the year ended 31 December 2024. However, the following errors were discovered. Error
The business sells all goods with a mark‑up of 20%. The draft profit for the year ended 31 December 2024 was $36 960.
(a) Complete the table to identify and describe the accounting concept which has been ignored in each of the errors. [8 marks]
(b) Calculate the revised profit for the year ended 31 December 2024. [6 marks]
The owner of the business wishes to correct the errors that the trainee accountant has made.
(c) State which accounting concept should be applied when deciding whether or not to record this asset in the statement of financial position. [1 marks]
The business has a highly skilled workforce, and the owner is of the opinion that this asset should be reflected in the statement of financial position.
(a)
(b)
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