Cambridge International AS & A Level ACCOUNTING 9706/32 Paper 3 Financial Accounting February/March 2025 INSERT 1 hour 30 minutes * 7 2 4 0 9 8 8 9 9 0 - I * INFORMATION ● This insert contains all of the sources referred to in the questions. ● You may annotate this insert and use the blank spaces for planning. Do not write your answers on the insert. This document has 8 pages. Any blank pages are indicated. DC (WW) 340729/3 © UCLES 2025 [Turn over

Cambridge International AS & A Level
ACCOUNTING 9706/32
Paper 3 Financial Accounting February/March 2025
INSERT 1 hour 30 minutes
* 7 2 4 0 9 8 8 9 9 0 - I *
INFORMATION
● This insert contains all of the sources referred to in the questions.
● You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 8 pages. Any blank pages are indicated.
DC (WW) 340729/3
© UCLES 2025 [Turn over

2 Source A for Question 1 The statements of financial position of CF Limited were as follows: At 31 December At 31 December 2024 2023 $ $ Non-current assets Office premises 418 000 320 000 Office equipment 214 000 235 000 Motor vehicles 116 000 – 748 000 555 000 Current assets Inventories 88 000 54 000 Trade receivables 143 000 153 000 Cash at bank – 4 800 231 000 211 800 Total assets 979 000 766 800 Equity and liabilities Equity Ordinary share capital ($1 shares) 400 000 300 000 Share premium – 80 000 General reserve 30 000 – Revaluation reserve 120 000 – Retained earnings 207 000 245 800 757 000 625 800 Non-current liabilities 8% debenture (2030) 80 000 – Current liabilities Trade payables 104 000 81 000 Bank overdraft 38 000 – 12% debenture (2024) – 60 000 142 000 141 000 Total equity and liabilities 979 000 766 800 © UCLES 2025 9706/32/INSERT/F/M/25

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Source A for Question 1
The statements of financial position of CF Limited were as follows:
At 31 December At 31 December
2024 2023
$ $
Non-current assets
Office premises 418 000 320 000
Office equipment 214 000 235 000
Motor vehicles 116 000 –
748 000 555 000
Current assets
Inventories 88 000 54 000
Trade receivables 143 000 153 000
Cash at bank – 4 800
231 000 211 800
Total assets 979 000 766 800
Equity and liabilities
Equity
Ordinary share capital ($1 shares) 400 000 300 000
Share premium – 80 000
General reserve 30 000 –
Revaluation reserve 120 000 –
Retained earnings 207 000 245 800
757 000 625 800
Non-current liabilities
8% debenture (2030) 80 000 –
Current liabilities
Trade payables 104 000 81 000
Bank overdraft 38 000 –
12% debenture (2024) – 60 000
142 000 141 000
Total equity and liabilities 979 000 766 800
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3 The following information is available. 1 On 1 January 2024, the office premises had been revalued upwards by $120 000. 2 On 1 September 2024, an old photocopier, with a carrying value of $8400, was part exchanged for a new one with the cost of $25 000. A loss on disposal of $3500 was recorded. 3 Motor vehicles are depreciated at the rate of 20% per annum using the straight-line method. 4 Depreciation on non-current assets for the year ended 31 December 2024 had been made. A full year’s depreciation is provided in the year of acquisition and none in the year of disposal. 5 On 1 February 2024, a bonus issue of shares was made of one ordinary share for every three shares held. Reserves were maintained in their most flexible form. 6 Dividends paid during 2024: 1 March Final dividend of $0.11 per share on all shares in issue at 31 December 2023 1 August Interim dividend of $0.06 per share on all shares in issue at 31 July 2024 7 The 12% debenture (2024) of $60 000 was fully repaid on 30 June 2024. The 8% debenture (2030) of $80 000 was issued on 1 July 2024. Debenture interest was paid every six months. 8 The general reserve was created on 31 December 2024. [Turn over © UCLES 2025 9706/32/INSERT/F/M/25

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The following information is available.
1 On 1 January 2024, the office premises had been revalued upwards by $120 000.
2 On 1 September 2024, an old photocopier, with a carrying value of $8400, was part exchanged for
a new one with the cost of $25 000. A loss on disposal of $3500 was recorded.
3 Motor vehicles are depreciated at the rate of 20% per annum using the straight-line method.
4 Depreciation on non-current assets for the year ended 31 December 2024 had been made.
A full year’s depreciation is provided in the year of acquisition and none in the year of disposal.
5 On 1 February 2024, a bonus issue of shares was made of one ordinary share for every three
shares held. Reserves were maintained in their most flexible form.
6 Dividends paid during 2024:
1 March Final dividend of $0.11 per share on all shares in issue at 31 December 2023
1 August Interim dividend of $0.06 per share on all shares in issue at 31 July 2024
7 The 12% debenture (2024) of $60 000 was fully repaid on 30 June 2024. The 8% debenture (2030)
of $80 000 was issued on 1 July 2024. Debenture interest was paid every six months.
8 The general reserve was created on 31 December 2024.
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4 Source B for Question 2 Ada and Brian had been in partnership for thirty years, sharing profits and losses in the ratio of 3 : 2 respectively. They agreed to sell their business to W Limited on 1 January 2025. W Limited took over all the assets except cash at bank. Trade payables were fully settled by the partnership at $76 000. The statement of financial position immediately prior to the sale of the partnership business was as follows: Statement of financial position at 31 December 2024 $ $ Non-current assets Equipment 186 000 Motor vehicles 55 000 241 000 Current assets Inventory 73 000 Trade receivables 94 000 Cash at bank 14 000 181 000 Total assets 422 000 Capital account Ada 200 000 Brian 150 000 350 000 Current account Ada (10 000) Brian 5 000 (5 000) Current liabilities Trade payables 77 000 Total equity and liabilities 422 000 The following information is also available. 1 The value of assets taken over by W Limited was agreed upon as: $ Equipment 174 000 Motor vehicles 48 000 Inventory 89 000 Trade receivables 91 000 2 The value of goodwill of the partnership was agreed at three times the average profit for the past three years. The profits of the partnership for the past three years were: Year $ 2024 37 100 2023 41 300 2022 44 600 3 The purchase consideration was fully satisfied by the issue of new ordinary shares of W Limited at a value of $1.75 per share. The shares were to be allocated to the partners according to their profit and loss sharing ratio. Before the takeover, W Limited had five million $1 ordinary shares in issue. © UCLES 2025 9706/32/INSERT/F/M/25

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Source B for Question 2
Ada and Brian had been in partnership for thirty years, sharing profits and losses in the ratio of 3 : 2
respectively. They agreed to sell their business to W Limited on 1 January 2025. W Limited took over
all the assets except cash at bank. Trade payables were fully settled by the partnership at $76 000.
The statement of financial position immediately prior to the sale of the partnership business was as
follows:
Statement of financial position at 31 December 2024
$ $
Non-current assets
Equipment 186 000
Motor vehicles 55 000 241 000
Current assets
Inventory 73 000
Trade receivables 94 000
Cash at bank 14 000 181 000
Total assets 422 000
Capital account
Ada 200 000
Brian 150 000 350 000
Current account
Ada (10 000)
Brian 5 000 (5 000)
Current liabilities
Trade payables 77 000
Total equity and liabilities 422 000
The following information is also available.
1 The value of assets taken over by W Limited was agreed upon as:
$
Equipment 174 000
Motor vehicles 48 000
Inventory 89 000
Trade receivables 91 000
2 The value of goodwill of the partnership was agreed at three times the average profit for the past
three years. The profits of the partnership for the past three years were:
Year $
2024 37 100
2023 41 300
2022 44 600
3 The purchase consideration was fully satisfied by the issue of new ordinary shares of W Limited at
a value of $1.75 per share. The shares were to be allocated to the partners according to their profit
and loss sharing ratio. Before the takeover, W Limited had five million $1 ordinary shares in issue.
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6 Source C for Question 3 B plc provided the following financial information for the year ended 31 December 2024. Statement of financial position at 31 December 2024 $ Non-current assets Property, plant and equipment 714 000 Current assets Inventory 78 000 Trade receivables 110 000 Cash at bank 24 500 212 500 Total assets 926 500 Equity Ordinary share capital ($1 shares) 500 000 Retained earnings 172 000 672 000 Non-current liabilities 10% debenture (2030) 200 000 Current liabilities Trade payables 54 500 Total equity and liabilities 926 500 Extract of statement of profit or loss for the year ended 31 December 2024 $ $ Revenue 988 000 Cost of sales Inventory 1 January 2024 56 000 Purchases 570 000 Inventory 31 December 2024 (78 000) 548 000 Gross profit 440 000 Profit for the year 190 000 © UCLES 2025 9706/32/INSERT/F/M/25

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Source C for Question 3
B plc provided the following financial information for the year ended 31 December 2024.
Statement of financial position at 31 December 2024
$
Non-current assets
Property, plant and equipment 714 000
Current assets
Inventory 78 000
Trade receivables 110 000
Cash at bank 24 500
212 500
Total assets 926 500
Equity
Ordinary share capital ($1 shares) 500 000
Retained earnings 172 000
672 000
Non-current liabilities
10% debenture (2030) 200 000
Current liabilities
Trade payables 54 500
Total equity and liabilities 926 500
Extract of statement of profit or loss for the year ended 31 December 2024
$ $
Revenue 988 000
Cost of sales
Inventory 1 January 2024 56 000
Purchases 570 000
Inventory 31 December 2024 (78 000)
548 000
Gross profit 440 000
Profit for the year 190 000
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7 The following information is also available. 1 All sales revenue and purchases are on credit. 2 Dividends paid during the year: $ 2023 final dividend 60 000 2024 interim dividend 35 000 The 2024 proposed final dividend will be 10% higher than that of last year. 3 The market price of one ordinary share on 31 December 2024 was $2.85. © UCLES 2025 9706/32/INSERT/F/M/25

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The following information is also available.
1 All sales revenue and purchases are on credit.
2 Dividends paid during the year:
$
2023 final dividend 60 000
2024 interim dividend 35 000
The 2024 proposed final dividend will be 10% higher than that of last year.
3 The market price of one ordinary share on 31 December 2024 was $2.85.
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8 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge. © UCLES 2025 9706/32/INSERT/F/M/25

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BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2025 9706/32/INSERT/F/M/25

9706_m25_in_32