Question 12May/Jun 20269706/111 mark
Inventory is valued at the lower of cost and net realisable value. What is net realisable value?
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About Incomplete records: Further considerations
Further incomplete records: mark-ups and margins, missing figures, and reconstructing accounts to find sales, purchases and inventory.
51 past paper questions on this topic since 2020, across 13 exam sessions.
How often it comes up
| Year | Paper 1 | Paper 2 | Total | Chart |
|---|---|---|---|---|
| 2026 | 3 | 2 | 5 | |
| 2025 | 8 | 1 | 9 | |
| 2024 | 8 | 3 | 11 | |
| 2023 | 4 | 3 | 7 | |
| 2022 | 4 | 4 | 8 | |
| 2021 | 6 | 0 | 6 | |
| 2020 | 5 | 0 | 5 |
Every 2025–2026 question on Incomplete records: Further considerations
The whole topic on one page, with answers and mark schemes. Printing this page prints just this list.
Paper 1 · Multiple choice (11)
Question 2May/Jun 20269706/121 mark
Inventory is valued at the lower of cost and net realisable value. Which accounting principle is being applied?
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DCorrect answer
Question 12May/Jun 20269706/131 mark
Inventory is valued at the lower of cost and net realisable value. What is net realisable value?
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CCorrect answer
Question 24Oct/Nov 20259706/121 mark
J Limited makes individual pieces of furniture in customers’ homes. The business adds a mark-up of 40% when quoting for jobs. It received an enquiry from a prospective customer who lived 10 kilometres away. The materials would cost $400 and the labour $240. The business charges $2 per kilometre for each part of the journey. What price will the company quote for the job?
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DCorrect answer
Question 9Oct/Nov 20259706/131 mark
Closing inventory of $5000 at the end of the year on 31 December has been incorrectly entered in the financial statements as $3000. How does this affect the financial statements for the year?
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DCorrect answer
Question 14May/Jun 20259706/111 mark
Sam was unable to conduct a physical count of inventory at 31 December 2024. On 3 January 2025, inventory was sold to Abdul for $11950. The cost price of this inventory was $9560. On 4 January 2025, inventory had been returned by Sita. It had been sold on 21 December 2024 for $2390. The cost price of this inventory was $1912. Sam valued his inventory on 5 January 2025 at a cost of $59750. What was the value of inventory at 31 December 2024?
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Question 2May/Jun 20259706/121 mark
What is the correct double entry to record goods taken for own use by the owner of a business?
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Question 16May/Jun 20259706/121 mark
After preparing the financial statements of a sole trader, the following items were discovered. 1 Drawings consisted of goods taken for own use at their sales value of $12000. The owner applies a mark-up of 50% on all goods sold. 2 Profit for the year included an insurance expense of $7500. One-third was for the owner’s health insurance. What is the effect on the profit for the year after correcting these items?
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Question 14May/Jun 20259706/131 mark
Sam was unable to conduct a physical count of inventory at 31 December 2024. On 3 January 2025, inventory was sold to Abdul for $11950. The cost price of this inventory was $9560. On 4 January 2025, inventory had been returned by Sita. It had been sold on 21 December 2024 for $2390. The cost price of this inventory was $1912. Sam valued his inventory on 5 January 2025 at a cost of $59750. What was the value of inventory at 31 December 2024?
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CCorrect answer
Question 13Feb/Mar 20259706/121 mark
Which items will be included when valuing inventory?
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Question 14Feb/Mar 20259706/121 mark
The following financial information is available.
What are the values of gross profit and profit for the year?
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BCorrect answer
Paper 2 · Structured questions (3)
Question 1May/Jun 20269706/2230 marks
Zahir owns a service business, Airport Transfers, providing a taxi service for customers travelling to and from airports. He has not maintained full accounting records. Customers either pay by cash or they are allowed a 30‑day credit term. Credit customers who pay within 20 days are allowed a cash discount of 2.5%. The following are details of the revenue of the business for the year ended 31 December 2025.
One‑quarter of receipts from credit customers were received within 20 days. A debt of $145 was written off as irrecoverable during the year.
(a) Calculate the total revenue of the business for the year ended 31 December 2025. [7 marks]
(b) Calculate the amount of cash stolen. [3 marks]
Zahir has started to prepare a cash account as he is aware that some receipts from cash customers may have been stolen.
The balance of cash in hand has increased by $350 during the year. The amount of any cash stolen is not covered by insurance.
(c) Calculate the profit or loss made on the disposal of motor vehicle A. [3 marks]
The following information is available for motor vehicles. 1 The business owned two motor vehicles on 1 January 2025.
2 On 3 Motor vehicles are depreciated by 20% per annum using the straight‑line method on a month‑by‑month basis.
(d) Prepare the statement of profit or loss for the year ended 31 December 2025. [12 marks]
The business also owned some office equipment which should be depreciated by $380. The bank account of the business was used to pay the following expenses:
The following information is available about expenses:
(e) Advise Zahir whether or not he should introduce a computerised system of accounting. Justify your answer by considering the advantages and disadvantages of this proposal. [5 marks]
Zahir is concerned that some credit customers do not settle their accounts within the credit period of 30 days. He is proposing to introduce a computerised system of accounting.
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(a)
(b)
(c)
(d)
W1 Depreciation of vehicles: Vehicle A, $4 800 Vehicle B, 20% $36 000 = $7 200; Vehicle C, 20% ¼ $38 000 = $1 900, i.e. $13 900 W2 General expenses: $11 320 + $1 050 = 12 370 W3 Rent: $6 200 – $510 = $5 690 W4 Wages of drivers: $18 860 + closing owing $1 150 = $20 010
Question 1Feb/Mar 20269706/2230 marks
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:
- furniture and equipment was valued at $19 500
- rent of $510 was owing
- general expenses of $770 were prepaid
- the balance of trade payables was $5520
- inventory was valued at $11 434.
(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.
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(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
Question 1Feb/Mar 20259706/2230 marks
Sara and Viraj are in partnership and own a wholesale business. At 1 January 2024, the partners had the following balances.
During the year ended 31 December 2024, the following drawings had been recorded.
The following balances were also available at 31 December 2024.
The draft profit for the year ended 31 December 2024 was $9400 before accounting for the following: 1 Wages, $850, were owing. 2 A credit customer, owing $1200, had gone out of business. The partners believe that 20% of the amount outstanding will be recovered, and the remaining 80% is to be written off. 3 The partners have decided to create an allowance for irrecoverable debts of 5% of trade receivables. 4 Viraj had taken goods for own use valued at cost, $550. 5 Viraj had provided a loan to the partnership on 1 May 2024 of $7200 at 8% interest per annum. The loan is repayable in full at the end of five years. Interest on the loan had not been accounted for. 6 Closing inventory had been understated by $3000. 7 Sara had introduced into the business a motor vehicle, valued at $20 400, on 1 September 2024. Motor vehicles are depreciated by 20% per annum using the straight‑line method on a month‑by‑month basis.
(a) Calculate the revised profit for the year ended 31 December 2024. [8 marks]
(b) Prepare the appropriation account for the year ended 31 December 2024. [3 marks]
The partners share profits and losses in the ratio Sara : Viraj, 2 : 1, after providing for the following: 1 Interest is charged on each partner’s drawings at 5% on the total of drawings for the year in excess of $10 000. 2 Sara is entitled to a salary of $12 000 per annum.
(c) Prepare the current account of Viraj for the year ended 31 December 2024. Dates are not required. [4 marks]
(d) Prepare an extract from the statement of financial position at 31 December 2024 showing the capital and liabilities section only. [4 marks]
On 31 December 2024, the balance of Sara’s current account was $15 070 debit.
Capital and liabilities
(e)(i) Explain, with reference to an accounting concept, the correct treatment of: goods taken for own use by the owner of a business [2 marks]
(e)(ii) Explain, with reference to an accounting concept, the correct treatment of: irrecoverable debts. [2 marks]
(f) Advise the partners which option they should choose. Justify your answer by discussing both options. [7 marks]
The partners are concerned about the liquidity of the business. The current credit terms are 30 days for both credit suppliers and credit customers. They have noticed that some credit customers are delaying the settlement of their invoices, whilst credit suppliers are always paid within 30 days. They are considering two options: Option A: introducing a 5% cash discount for all credit customers’ invoices settled within 25 days. Option B: paying credit suppliers within 35 days.
Show mark scheme
(a)
(b)
(c)
(d)
(e)(i)
(i) goods taken for own use by the owner of a business Concept: business entity concept (1) Explanation: only transactions affecting the business are recorded in the business’s books of account (1). The business and owner are two separate (legal) entities (1) Max 1 mark for explanation Accept other valid responses.
(e)(ii)
(ii) irrecoverable debts Concept: prudence concept (1) Explanation: profits and assets OR trade receivables should not be overstated (1) losses should be accounted for as soon as they are recognised (1) Max 1 mark for explanation Accept other valid responses.
(f)
discussing both options. Option A (max 3) For The early settlement will improve the cash flow position/liquidity (1) May reduce possibility of irrecoverable debts (1) Might attract new customers so increasing revenue/sales (1) Trade receivables turnover will improve (1) Against Will reduce the amount of cash received (1) Expenses will increase due to higher discount allowed (1) Will reduce the amount of profit (1) Customers may not be encouraged to pay within 25 days (1) Customers may switch to other suppliers offering better terms so reduces revenue (1) Option B (max 3) For Improve the cash flow position/liquidity (1) Against It may damage the reputation of the business (1) It may result in the loss of cash discounts (1) It may cause a loss of suppliers/refuse credit terms (due to the extended settlement terms) (1) Suppliers may charge interest on late payment (1) Decision supported with a comment (1) Accept other valid responses
37 more questions from 2020–2024
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AS Level Accounting questions by topic
Each topic opens this practice tool with only that topic’s questions, plus how often it comes up and every question on it in one list.
- Ch 2Double-entry bookkeeping: Credit transactions
- Ch 3Books of prime entry
- Ch 5The classification of accounts and division of the ledger
- Ch 6The trial balance
- Ch 7Statement of profit or loss
- Ch 8Statements of financial position for sole traders
- Ch 9Accounting concepts
- Ch 10Accruals and prepayments (the matching concept)
- Ch 11Accounting for the depreciation of non-current assets
- Ch 12Irrecoverable debts
- Ch 13Bank reconciliation statements
- Ch 14Control accounts
- Ch 15The correction of errors
- Ch 16Incomplete records
- Ch 17Incomplete records: Further considerations
- Ch 18Partnership accounts
- Ch 19Partnership changes
- Ch 21An introduction to limited company accounts
- Ch 22Limited companies: Further considerations
- Ch 27Computerised accounting systems
- Ch 30Accounting information for stakeholders
- Ch 32Costing of materials and labour
- Ch 33Absorption costing
- Ch 34Unit, job and batch costing
- Ch 35Marginal costing
- Ch 37Budgeting and budgetary control