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JUNE 2003

GCE A AND AS LEVEL

MARK SCHEME MAXIMUM MARK: 30

SYLLABUS/COMPONENT: 9706/01 ACCOUNTING Paper 1 (Multiple Choice)

Page 1

Mark Scheme A AND AS LEVEL – JUNE 2003

Syllabus 9706

Paper 1

Question Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Key D A A A C D A B B B B C B C C

Question Number 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Key B A A D B C C C D A C D A D D

TOTAL 30

© University of Cambridge Local Examinations Syndicate 2003

JUNE 2003

GCE A AND AS LEVEL

MARK SCHEME MAXIMUM MARK: 90

SYLLABUS/COMPONENT: 9706/02 ACCOUNTING Paper 2 (Structured Questions)

Page 1

Mark Scheme A AND AS LEVEL – JUNE 2003

Syllabus 9706

Paper 2

All amounts in $000 1. Working for sales Cash-banked = 2784 - 53 Expenses Loan accounts Opening balance Closing balance 2731 205 90 (3) 8 3031 (1) (1) (1) (1) (1)

Bank – takings Buildings Balance (195 + 63)

2731 B/fwd 53 Crs (purchases) 258 Expenses Int on overdraft 3042

203 1996 823 20 3042

Trading and Profit and Loss Account For 6 months ended 30 September 2002 (a) Sales = 3031 + 420 (1) – 820 (1) less cost of sales Opening stock + purchases 1996 – 1210 (1) + 510 (1) 2631 1540 1296 2836 704 2132 499 (4 if netted)

- Closing stock Gross profit less Expenses = 823 (1) + 205 (1) – 192 (1) + 103 (1) Interest paid Depreciation (70/2) (1) Doubtful Debts provision (1) Loss on sale of fixtures (1) Net loss

939 20 35 21 17

1032 (533) [16]

Award marks where candidates have identified correct figures and have treated these figures correctly – up to 7 marks.

© University of Cambridge Local Examinations Syndicate 2003

Page 2

Mark Scheme A AND AS LEVEL – JUNE 2003

Syllabus 9706

Paper 2

(b) Balance Sheet as at 30 September 2002 Fixed assets less depreciation 280 (1) 35 (1) (OF from Trading P & L)

245 Current assets Stock Debtors - provision Cash Current liabilities Creditors Accruals Bank

704 (1) 420 21 399 8 510 103 258

1111

(1)

871

240 485 25 377

Share capital Retained profits = 910 – 533 (OF) Loan account – Bracket Loan account – Racket

104 - 45 69 - 45

59 24

83 485

(1 + 1) (1) (1)

[8] (c) Mention of any 6 of the following, for 1 mark each: Factoring Leasing Hire purchase (H.P.) Creditors Money lenders - friends/relatives Mortgage/credit union Another (merchant) bank Shareholders Etc. [6]

© University of Cambridge Local Examinations Syndicate 2003

Page 3

Mark Scheme A AND AS LEVEL – JUNE 2003

Syllabus 9706

Paper 2

2 (a) GREENYARDS LTD 2001 2002 GP Ratio 255 51% 255 42% 500 610 NP Ratio 30 6% 25 4.1% 500 610 ROCE 30 14.6% 25 9.6% 205 260 Current Ratio 80 3.2:1 90 1.6:1 25 55 Quick Ratio 30 1.2:1 30 0.5:1 25 55 Stock Turnover – times 245 4.9 355 5.9 – days 50 74 60 62 Debtors Turnover – days 20x365 30x365 500 15 610 18 Any other relevant ratios acceptable 1 for each pair correctly calculated to maximum [12] (b) Greenyards’ GP, NP and ROCE ratios have worsened, whilst its current and quick ratios have improved – they were too high in 2001. Stock turnover is faster – good, provided it is not at the expense of profit – but debtors’ payments has lengthened which means that cash is slower coming in – not good, although it may encourage credit customers to continue buying from Greenyards. (Candidates should state whether the ratio is better or worse, and not just ‘up’ or ‘down’, as the ratios must be analysed.) Although Poynder’s GP ratio has worsened slightly, its NP ratio has improved, showing a better net profit for every $ of sales. Current ratio is at a reasonable level, but quick ratio looks as if it is improving. Stock turnover rate has, unfortunately, decreased, but this is counteracted by improved ROCE. 1 for each point to maximum [12] (c) Shortcomings and dangers of ratio analysis: (i) Requires a basis of comparison – one ratio on its own no use – must compare to, e.g., last year’s figures, other companies’...
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