The City School

Unified Mock Examination

2020 - 2021
A2 Level

CAMPUS /
BRANCH NAME

EXAMINATION
DATE
ROLL NUMBER

ACCOUNTING 9706/32
Paper 3 Structured Questions 3 hours

You must answer on the question paper.

You will need: Insert

INSTRUCTIONS
 Answer all questions.
 Use a black or dark blue pen.
 Write your Campus/Branch Name, Examination Roll Number and Date in the boxes at the
top of the page.
 Write your answer to each question in the space provided.
 Do not use an erasable pen or correction fluid.
 You may use an HB pencil for any diagrams, graphs or rough working.
 You may use a calculator.
 International accounting terms and formats should be used as appropriate.
 You should show your working.

INFORMATION
 The total mark for this paper is 150.
 The number of marks for each question or part question is shown in brackets [ ].
 The Insert contains all of the required information and questions.

Invigilated by: ___________ Marked by:____________ Marks tallied by: __________

This document has 22 pages. Blank page is indicated.

The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 1 of 22
 Section A: Financial Accounting
Answer all questions.

1 Read Source A1 in the Insert

(a) A café trading account for the year ended 31 December 2005

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(b) A Subscription account for the year ended 31 December 2005

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 2 of 22
 (c) An income and expenditure account for the year ended 31 December 2005

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 3 of 22
 (d) Explain three differences between the financial statements of a not-for-profit
organization and the financial statements of a public limited company.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 4 of 22
2 Read Source A2 in the Insert
(a) Prepare in the books of Naeem the following accounts at 31 March 2019:
(i) the goods sent on consignment

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(ii) the consignment to Haseeb account

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 5 of 22
 (iii) Haseeb account

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(b) Analyse the effect on profit of the irrecoverable debt incurred during the year.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 6 of 22
 Additional information
Naeem and Haseeb are now considering forming a partnership rather than continuing to
trade on a consignment basis.
REQUIRED
(c) Advise whether or not Naeem and Haseeb should enter into a partnership with each
other. Justify your answer

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 7 of 22
3 Read Source A3 in the Insert
(a) Calculate the gearing ratio, stating clearly the formula used.

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(b) Calculate the following ratios:
(i) Return on capital employed

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(ii) Earning per ordinary share

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 8 of 22
 (iii) Price/Earning ratio

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(iv) dividend per share

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(v) Dividend cover

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 9 of 22
 (vi) Dividend yield

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Additional information
Gas is supplied to households by two large companies, ABC Gas plc and Northern Gas
plc. At the Board meeting, you must report whether ABC Gas plc has performed better
or worse than the rival Northern Gas plc.
Information for Northern Gas plc for the financial year ended 31 December 2018 is
given below.
Gearing ratio 54%
Return on capital employed 3.94%
Earnings per ordinary share 3.7 pence

REQUIRED
(c) Evaluate the performance and position of ABC Gas plc as a business compared to
Northern Gas plc for the financial year ended 31 December 2018.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 10 of 22
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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 11 of 22
4 Read Source A4 in the Insert
(a) (i) Calculate the purchase price of Charlie business.

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(ii) Calculate the value of goodwill paid by Excel Construction plc in the purchase of
Charlie.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 12 of 22
 (iii) Prepare the Statement of Financial Position of Excel Construction plc as at
1st January 2019 after the purchase of Charlie business.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 13 of 22
 (b) (i) Explain the term ‘stewardship’.

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(ii) Explain the difference between the role of an external auditor and the role of an
internal auditor of a limited company.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 14 of 22
 BLANK PAGE

The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 15 of 22
 Section B: Cost and Management Accounting Answer all questions.
Answer all questions.

5 Read Source B1 in the Insert

(a) Prepare a Cash Budget, in columnar format, for the 3 months commencing July 2017.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 16 of 22
 (b) Explain two reasons why a business prepares a budget.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 17 of 22
6 Read Source B2 in the Insert
(a) Calculate the net present value of the contract at the end of year 4.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 18 of 22
 Additional information:
A table showing the discount factors is given.

Year 9%
1 0.917
2 0.842
3 0.772
4 0.708

(b) Calculate the Payback period for the contract.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 19 of 22
 (c) Evaluate the project for the company, using the calculations made in (a) and (b)
above and considering any other relevant factors.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 20 of 22
 Additional information:
The Chief Accountant for the company is also appraising the project using the
Internal Rate of Return method. She has calculated the following figures:
Discount Rate Net Present Value

16% £21 430

20% (£34 239)

REQUIRED
(d) (i) Complete the calculation, clearly stating any formula used, to find the exact
Internal Rate of Return, accurate to two decimal places.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 21 of 22
 (ii) Using your answer for the exact Internal Rate of Return calculated in (d)(i), decide
whether Linton Farms should invest in the project, giving a reason for your answer.

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The City School / Unified Mock Examination, Mar-Apr 2021 / Accounting / Paper 32 / A2 Level Page 22 of 22