Marking Scheme

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CAMBRIDGE INTERNATIONAL EXAMINATIONS
GCE Advanced Level

MARK SCHEME for the October/November 2012 series

9706 ACCOUNTING
9706/41 Paper 4(Problem Solving – Supplement), maximum raw mark 120

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 October/November 2012 series for most IGCSE, GCE Advanced Level and Advanced Subsidiary Level components and some Ordinary Level components.

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Page 2 1 Mark Scheme GCE A LEVEL – October/November 2012 Syllabus 9706 Paper 41 [2] [2] [2] (a) (i) 5.04 times (ii) 35.35 days (iii) 28.16 days

(b) The company gives more credit to customers than it takes. (1)of. It is more desirable to take more credit from suppliers. (1) This could have cash flow implications. (1) [Max 2] (c) (i) 50 000 (1) – 10 000 (1) – 8000 (1) = 32 000 (ii) 26 000 (1) – 200 (1) = 25 800 (iii) Year Discount factor Cash Flow $ 1 2 3 4 0.909 0.826 0.751 0.683 9 681 9 080 8 122 6 589 (1) (1) (1) (1) $ 8 800 7 500 6 100 4 500 26 900 (1)of (1)of (1)of (1)of (1)of [9] (d) (i ) $26 900 (ii) $26 900 (2)of (2)of [2] [2] [2] [2] [2] (2) (2) (2) (2) (2) Discounted cash flow [3] [2]

(e) (i) 32 000 (1) of – 26 900 (1) of = 5100 (ii) 420 800 (1) – 5100 (1) of = 415 700 (iii) 10% (2) (f) (i) Technological change Economic downturn Damage to asset Fall in market value Change in demand (ii) IAS36 (g) Legal costs Architect’s fees Any reasonable answer accepted

[Max 4] [2]

[2] [Total: 40]

© Cambridge International Examinations 2012

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Page 3 Mark Scheme GCE A LEVEL – October/November 2012 Syllabus 9706 Paper 41 [2] [3]

2

(a) (i) (319 – 272) (1) + 140 (1) = 187 (ii) 187 (1)of + (46 + 16) (1) + 15.5 (1) = 264.5 (b) Statement of recognised income and expenses for the year ended 31 March 2012 $000 Gain on revaluation of property Profit for the year 350 187 (2) (2)of 2011 $000 – 99 (1) (1)

[6] (c) Only purchased goodwill is shown in the financial statements. (2) Goodwill has increased so expansion must have involved the purchase of another business. (2) [4] (d) 2012 (1) 31.51 × 100 = 11.91% (1) of 264.5 (1)of 2011 20 (1) × 100 = 12.9% (1) of 155 (1)

Income gearing

Gearing

610 (1) × 100 = 21.19% (1) of 2879 (1)

300 (1) × 100 = 19.08% (1) of 1572 (1)

(e) (i) EPS =

(187 − 18) (1) of = $ 0.0768 (1) of 1600 (1) + (800 x 9 ÷ 12) (1)

[4] (ii) DPS =
122 (1) = $0.0508 (1) of 2400 (1)

[3]

(f) (i) Gearing has increased slightly (1), but is still very low (1). Income gearing has decreased slightly (1), as profit has increased more than interest. (1) The company now has more liquid funds available to pay debenture interest. (1) [Max 3] [Total: 40]

© Cambridge International Examinations 2012

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Page 4 3 Mark Scheme GCE A LEVEL – October/November 2012 = 15 000 units [3] Process 1 Bank (scrap) 150 000 (1)of 3000 × 5 270 000 (1)of 90 000 (1)of 112 500 (1)of 622 500 Process 2 Trading 607 500 (1)of account Process 1 RM 92 000 DL VO FO 264 000 Work-inprogress Process 1 66 000 RM DL 75 000 (1) VO 1 104 500 Process 2 Syllabus 9706 Paper 41 (a) 10 000 (1) + 2000 (1) 0.8 (1) (b) (i) Raw materials 15 000 × 10 Direct labour 15 000 × 18 Variable overhead 15 000 × 6 Fixed overhead 15 000 × 7.5

15 000 (1)of 607 500 (1)of

622 500 [6]

(ii) Process 1 Raw materials 10 000 × 8 2 000 × 8 × .75 Direct labour 10 000 × 24 2 000 × 24 × .5 Variable overhead 10 000 × 6 2 000 × 6 × .5 Fixed...
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