Cambridge International AS & A Level ACCOUNTING 9706/12 Paper 1 Multiple Choice February/March 2025 1 hour You must answer on the multiple choice answer sheet. *4280102598* You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS  There are thirty questions on this paper. Answer all questions.  For each question there are four possible answers A , B , C and D . Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet.  Follow the instructions on the multiple choice answer sheet.  Write in soft pencil.  Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you.  Do not use correction fluid.  Do not write on any bar codes.  You may use a calculator. INFORMATION  The total mark for this paper is 30.  Each correct answer will score one mark.  Any rough working should be done on this question paper. This document has 12 pages. Any blank pages are indicated. 03_9706_12_2025_1.15 a © UCLES 2025 [Turn over

Cambridge International AS & A Level
ACCOUNTING 9706/12
Paper 1 Multiple Choice February/March 2025
1 hour
*4280102598* You must answer on the multiple choice answer sheet.
You will need: Multiple choice answer sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)
INSTRUCTIONS
 There are thirty questions on this paper. Answer all questions.
 For each question there are four possible answers A , B , C and D . Choose the one you consider correct
and record your choice in soft pencil on the multiple choice answer sheet.
 Follow the instructions on the multiple choice answer sheet.
 Write in soft pencil.
 Write your name, centre number and candidate number on the multiple choice answer sheet in the
spaces provided unless this has been done for you.
 Do not use correction fluid.
 Do not write on any bar codes.
 You may use a calculator.
INFORMATION
 The total mark for this paper is 30.
 Each correct answer will score one mark.
 Any rough working should be done on this question paper.
This document has 12 pages. Any blank pages are indicated.
03_9706_12_2025_1.15 a
© UCLES 2025 [Turn over

2 1 Which statement explains the realisation concept? A A business recognises sales revenue when it delivers the goods to a credit customer. B A business recognises sales revenue when it receives an order from a credit customer. C A business recognises sales revenue when it receives cash from a credit customer. D A business recognises sales revenue when the customer sells the goods onwards. 2 On the first day of a financial period, before trading started, a business owner introduced her personal items to the business , consisting of goods costing $5000. Which entries should have been made to record this? account debited account credited A drawings purchases B inventory capital C inventory drawings D purchases capital 3 Why might a business adopt a computerised accounting system? 1 to ensure that the accounting records are free from error 2 to ensure that the accounting records are free from fraud 3 to ensure that the accounting records are arithmetically accurate A 1 and 2 B 1 and 3 C 2 and 3 D 3 only 4 A company’s profit for the year is $20 000. Capital income of $5000 has been treated as revenue income. Capital expenditure of $4000 has been treated as revenue expenditure. What is the correct profit for the year? A $11 000 B $19 000 C $21 000 D $29 000 © UCLES 2025 03_9706_12_2025_1.15 a

2
1 Which statement explains the realisation concept?
A A business recognises sales revenue when it delivers the goods to a credit customer.
B A business recognises sales revenue when it receives an order from a credit customer.
C A business recognises sales revenue when it receives cash from a credit customer.
D A business recognises sales revenue when the customer sells the goods onwards.
2 On the first day of a financial period, before trading started, a business owner introduced her
personal items to the business , consisting of goods costing $5000.
Which entries should have been made to record this?
account debited account credited
A drawings purchases
B inventory capital
C inventory drawings
D purchases capital
3 Why might a business adopt a computerised accounting system?
1 to ensure that the accounting records are free from error
2 to ensure that the accounting records are free from fraud
3 to ensure that the accounting records are arithmetically accurate
A 1 and 2 B 1 and 3 C 2 and 3 D 3 only
4 A company’s profit for the year is $20 000. Capital income of $5000 has been treated as revenue
income. Capital expenditure of $4000 has been treated as revenue expenditure.
What is the correct profit for the year?
A $11 000 B $19 000 C $21 000 D $29 000
© UCLES 2025 03_9706_12_2025_1.15 a

3 5 The following costs for a business relate to a newly purchased machine. 1 alterations to the factory building to install the machine 2 payment of insurance for the new machine 3 the final purchase price of the machine agreed with the supplier 4 the price of the machine before the discount from the supplier Which costs would be treated as capital expenditure? A 1, 2 and 3 B 1 and 3 only C 2 and 3 only D 2 and 4 6 Leandro has owned a delivery van for some years and has depreciated it each year. How should he record the provision for depreciation? in the statement of in the statement of in the general journal financial position profit or loss A accumulated depreciation accumulated depreciation charge for the year B accumulated depreciation charge for the year accumulated depreciation C charge for the year accumulated depreciation charge for the year D charge for the year charge for the year accumulated depreciation 7 A business depreciates its motor vehicles at 20% per annum using the straight-line method. Depreciation is charged on a month-by-month basis. On 30 June in the current financial year, a new van was purchased at a cost of $20 000. An old van which cost $18 000, bought at the beginning of the previous year on 1 January, was part exchanged for $14 000. The balance was paid by cheque. What is the total reduction in profit for the current financial year ended 31 December as a result of this? A $2400 B $3400 C $3800 D $5200 8 Which error will not affect the trial balance? A posting of $3000 purchases to the debit of the motor vehicle account B posting of $3000 purchases to the credit of the motor vehicle account C posting of $3000 road tax refund to the debit of the motor vehicle account D posting of $3000 sales to the debit of the motor vehicle account © UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

3
5 The following costs for a business relate to a newly purchased machine.
1 alterations to the factory building to install the machine
2 payment of insurance for the new machine
3 the final purchase price of the machine agreed with the supplier
4 the price of the machine before the discount from the supplier
Which costs would be treated as capital expenditure?
A 1, 2 and 3 B 1 and 3 only C 2 and 3 only D 2 and 4
6 Leandro has owned a delivery van for some years and has depreciated it each year.
How should he record the provision for depreciation?
in the statement of in the statement of
in the general journal
financial position profit or loss
A accumulated depreciation accumulated depreciation charge for the year
B accumulated depreciation charge for the year accumulated depreciation
C charge for the year accumulated depreciation charge for the year
D charge for the year charge for the year accumulated depreciation
7 A business depreciates its motor vehicles at 20% per annum using the straight-line method.
Depreciation is charged on a month-by-month basis.
On 30 June in the current financial year, a new van was purchased at a cost of $20 000. An old
van which cost $18 000, bought at the beginning of the previous year on 1 January, was part
exchanged for $14 000. The balance was paid by cheque.
What is the total reduction in profit for the current financial year ended 31 December as a result of
this?
A $2400 B $3400 C $3800 D $5200
8 Which error will not affect the trial balance?
A posting of $3000 purchases to the debit of the motor vehicle account
B posting of $3000 purchases to the credit of the motor vehicle account
C posting of $3000 road tax refund to the debit of the motor vehicle account
D posting of $3000 sales to the debit of the motor vehicle account
© UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

4 9 The totals of the trial balance of a business did not agree. A suspense account was opened for the difference. The following errors were then discovered. 1 The total of the sales journal of $16 000 had been posted to the debit of the purchases account. 2 $7000 had been correctly entered in the rent received account but had been debited as $700 in the cash book. After correcting these errors , the suspense account was eliminated and the trial balance totals agreed. Which amount appeared for the suspense account in the trial balance before the corrections were made? A $9700 credit B $22 300 credit C $25 700 credit D $38 300 credit 10 A bookkeeper compared the business bank statement with the cash book. He then updated the cash book and finally prepared a bank reconciliation statement. Why was the bank reconciliation statement prepared? A to ensure no transactions had been omitted from the cash book B to establish the value of unpresented cheques C to explain the difference between the cash book balance and the bank statement balance D to find out if any cheques had been dishonoured 11 Which statement is not correct about the benefit to a business of maintaining control accounts? A ensures that all types of errors can be detected B helps in the preparation of financial statements C provides immediate totals of trade receivables and trade payables D reduces risk of fraud as jobs are performed by different staff members © UCLES 2025 03_9706_12_2025_1.15 a

4
9 The totals of the trial balance of a business did not agree. A suspense account was opened for
the difference.
The following errors were then discovered.
1 The total of the sales journal of $16 000 had been posted to the debit of the
purchases account.
2 $7000 had been correctly entered in the rent received account but had been debited
as $700 in the cash book.
After correcting these errors , the suspense account was eliminated and the trial balance
totals agreed.
Which amount appeared for the suspense account in the trial balance before the corrections were
made?
A $9700 credit
B $22 300 credit
C $25 700 credit
D $38 300 credit
10 A bookkeeper compared the business bank statement with the cash book. He then updated the
cash book and finally prepared a bank reconciliation statement.
Why was the bank reconciliation statement prepared?
A to ensure no transactions had been omitted from the cash book
B to establish the value of unpresented cheques
C to explain the difference between the cash book balance and the bank statement balance
D to find out if any cheques had been dishonoured
11 Which statement is not correct about the benefit to a business of maintaining control accounts?
A ensures that all types of errors can be detected
B helps in the preparation of financial statements
C provides immediate totals of trade receivables and trade payables
D reduces risk of fraud as jobs are performed by different staff members
© UCLES 2025 03_9706_12_2025_1.15 a

5 12 A business maintains control accounts as part of the double entry. At the end of a financial period , the sales ledger control account balance of $64 200 did not agree with the total of the individual sales ledger balances of the business. The following errors were discovered. 1 An irrecoverable debt of $800, entered in the sales ledger control account, was omitted from the trade receivable account. 2 Discounts allowed of $950 were entered in the sales ledger accounts but were entered as $590 in the cash book. 3 A contra of $4100 between accounts in the sales and purchases ledgers w as reversed in the control accounts. There were no further errors. What was the total of the trade receivables at the end of the period after adjustments? A $54 840 B $55 640 C $56 360 D $59 740 13 Which items will be included when valuing inventory? 1 carriage inwards 2 costs of storage 3 purchase price 4 selling costs A 1 and 2 B 1 and 3 C 2 and 3 D 3 and 4 © UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

5
12 A business maintains control accounts as part of the double entry. At the end of a financial period ,
the sales ledger control account balance of $64 200 did not agree with the total of the individual
sales ledger balances of the business.
The following errors were discovered.
1 An irrecoverable debt of $800, entered in the sales ledger control account, was
omitted from the trade receivable account.
2 Discounts allowed of $950 were entered in the sales ledger accounts but were entered
as $590 in the cash book.
3 A contra of $4100 between accounts in the sales and purchases ledgers w as reversed in
the control accounts.
There were no further errors.
What was the total of the trade receivables at the end of the period after adjustments?
A $54 840 B $55 640 C $56 360 D $59 740
13 Which items will be included when valuing inventory?
1 carriage inwards
2 costs of storage
3 purchase price
4 selling costs
A 1 and 2 B 1 and 3 C 2 and 3 D 3 and 4
© UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

6 14 The following financial information is available. $ opening inventory 800 closing inventory 1 010 purchases 9 260 carriage inwards 130 revenue 18 000 discount received 700 other expenses 3 880 What are the values of gross profit and profit for the year? gross profit profit for the year $ $ A 8820 4240 B 8820 5640 C 9080 5900 D 9520 5640 15 X, Y and Z are in partnership. What would be shown in the partnership appropriation account? 1 goods taken for personal use of X 2 interest on a loan made by Y 3 interest on drawings made by Z A 1 and 2 B 1 and 3 C 2 only D 3 only © UCLES 2025 03_9706_12_2025_1.15 a

6
14 The following financial information is available.
$
opening inventory 800
closing inventory 1 010
purchases 9 260
carriage inwards 130
revenue 18 000
discount received 700
other expenses 3 880
What are the values of gross profit and profit for the year?
gross profit profit for the year
$ $
A 8820 4240
B 8820 5640
C 9080 5900
D 9520 5640
15 X, Y and Z are in partnership.
What would be shown in the partnership appropriation account?
1 goods taken for personal use of X
2 interest on a loan made by Y
3 interest on drawings made by Z
A 1 and 2 B 1 and 3 C 2 only D 3 only
© UCLES 2025 03_9706_12_2025_1.15 a

7 16 Bella and Charlie are in partnership, sharing profits and losses in the ratio 3 : 2. They have contributed capital in the same ratio. The partners provided the following information for the financial year. Bella Charlie $ $ interest on 850 550 drawings salary 16 900 − profit share 6 000 4 000 Profit for the year was $28 000. What is the interest on capital for Bella? A $660 B $1100 C $1500 D $2500 17 A company uses a revenue reserve to make a bonus issue of ordinary shares. Which accounts should be debited and credited to record this? account debited account credited A general reserve share capital B share capital general reserve C share capital retained earnings D share premium share capital 18 A company had an issued share capital of 400 000 ordinary shares of $1 each. It then made a bonus issue of one ordinary share for every five ordinary shares held. This was later followed by a rights issue of one ordinary share for every three ordinary shares held. What was the balance on the share capital account after these transactions? A $480 000 B $533 333 C $613 333 D $640 000 © UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

7
16 Bella and Charlie are in partnership, sharing profits and losses in the ratio 3 : 2. They have contributed
capital in the same ratio.
The partners provided the following information for the financial year.
Bella Charlie
$ $
interest on 850 550
drawings
salary 16 900 −
profit share 6 000 4 000
Profit for the year was $28 000.
What is the interest on capital for Bella?
A $660 B $1100 C $1500 D $2500
17 A company uses a revenue reserve to make a bonus issue of ordinary shares.
Which accounts should be debited and credited to record this?
account debited account credited
A general reserve share capital
B share capital general reserve
C share capital retained earnings
D share premium share capital
18 A company had an issued share capital of 400 000 ordinary shares of $1 each. It then made a
bonus issue of one ordinary share for every five ordinary shares held. This was later followed by a
rights issue of one ordinary share for every three ordinary shares held.
What was the balance on the share capital account after these transactions?
A $480 000 B $533 333 C $613 333 D $640 000
© UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

8 19 A company ’ s statement of financial position included the following details. $ bank (debit balance) 300 000 ordinary share capital 1 000 000 share premium 200 000 revaluation reserve 100 000 general reserve 100 000 retained earnings 400 000 What is the maximum total dividend that the directors can propose? A $300 000 B $400 000 C $500 000 D $700 000 20 Sunil was reviewing the statement of financial position of a business. The statement of profit or loss was not available. Why was Sunil interested in the current assets of the business? A to assess its future prospects B to be able to calculate efficiency ratios C to discover if it is profitable D to see if it is able to pay debts as they fall due 21 What is not a limitation of accounting information? A it can be compared with other years B it ignores non-financial factors C it ignores seasonality of trading D it is based on historic data © UCLES 2025 03_9706_12_2025_1.15 a

8
19 A company ’ s statement of financial position included the following details.
$
bank (debit balance) 300 000
ordinary share capital 1 000 000
share premium 200 000
revaluation reserve 100 000
general reserve 100 000
retained earnings 400 000
What is the maximum total dividend that the directors can propose?
A $300 000 B $400 000 C $500 000 D $700 000
20 Sunil was reviewing the statement of financial position of a business. The statement of profit or
loss was not available.
Why was Sunil interested in the current assets of the business?
A to assess its future prospects
B to be able to calculate efficiency ratios
C to discover if it is profitable
D to see if it is able to pay debts as they fall due
21 What is not a limitation of accounting information?
A it can be compared with other years
B it ignores non-financial factors
C it ignores seasonality of trading
D it is based on historic data
© UCLES 2025 03_9706_12_2025_1.15 a

9 22 The accounting year of a company ends on 31 December. At the end of Year 1, the company was financed by equity of $850 000 and there were no long-term borrowings. At the beginning of Year 2, a 6% debenture of $150 000 was issued. Profit for the year for Year 2 was $58 000 and dividends of $20 000 were paid. What was the return on capital employed for Year 2? A 5.59% B 6.33% C 6.45% D 7.55% 23 On 1 March, a business had an inventory of 3 items which had cost $8 each. The business uses the FIFO method of valuing inventory. During March the following transactions occurred. purchases issues March 10 16 units at $7 each 18 14 units at $6 each 27 24 units at $10 each What was the value of inventory at the end of March? A $36 B $42 C $54 D $63 24 A factory produces 1100 units per day. Daily machinery set - up costs are $2000. Direct material cost per unit is $3. Machine operators are paid $400 per day. Each can produce a maximum of 200 units per day. What is the average cost per unit? A $5.00 B $5.18 C $6.82 D $7.00 © UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

9
22 The accounting year of a company ends on 31 December.
At the end of Year 1, the company was financed by equity of $850 000 and there were no long-term
borrowings.
At the beginning of Year 2, a 6% debenture of $150 000 was issued.
Profit for the year for Year 2 was $58 000 and dividends of $20 000 were paid.
What was the return on capital employed for Year 2?
A 5.59% B 6.33% C 6.45% D 7.55%
23 On 1 March, a business had an inventory of 3 items which had cost $8 each.
The business uses the FIFO method of valuing inventory.
During March the following transactions occurred.
purchases issues
March 10 16 units at $7 each
18 14 units at $6 each
27 24 units at $10 each
What was the value of inventory at the end of March?
A $36 B $42 C $54 D $63
24 A factory produces 1100 units per day. Daily machinery set - up costs are $2000.
Direct material cost per unit is $3.
Machine operators are paid $400 per day. Each can produce a maximum of 200 units per day.
What is the average cost per unit?
A $5.00 B $5.18 C $6.82 D $7.00
© UCLES 2025 03_9706_12_2025_1.15 a [Turn o ver

10 25 A business uses absorption costing. Which costs will be charged to production? A direct material s , direct labour, variable overhead s and fixed overhead s B direct materials, direct labour and fixed overhead s only C direct materials, direct labour and variable overhead s only D direct materials and direct labour only 26 The following data applies to a business. budgeted direct labour hours 20 000 budgeted overheads $300 000 actual direct labour hours 19 000 under-absorption of overheads $35 000 What were the actual overheads for the period? A $250 000 B $265 000 C $320 000 D $335 000 27 A business prepared its statement of profit or loss for its first year of trading. It used marginal costing to value the inventory. The finance director wants to prepare the statement , using absorption costing. What will be the effect on inventory valuation and profit for the year due to this change? effect on effect on profit for inventory valuation the year A decrease decrease B decrease increase C increase decrease D increase increase © UCLES 2025 03_9706_12_2025_1.15 a

10
25 A business uses absorption costing.
Which costs will be charged to production?
A direct material s , direct labour, variable overhead s and fixed overhead s
B direct materials, direct labour and fixed overhead s only
C direct materials, direct labour and variable overhead s only
D direct materials and direct labour only
26 The following data applies to a business.
budgeted direct labour hours 20 000
budgeted overheads $300 000
actual direct labour hours 19 000
under-absorption of overheads $35 000
What were the actual overheads for the period?
A $250 000 B $265 000 C $320 000 D $335 000
27 A business prepared its statement of profit or loss for its first year of trading. It used marginal costing
to value the inventory.
The finance director wants to prepare the statement , using absorption costing.
What will be the effect on inventory valuation and profit for the year due to this change?
effect on effect on profit for
inventory valuation the year
A decrease decrease
B decrease increase
C increase decrease
D increase increase
© UCLES 2025 03_9706_12_2025_1.15 a

11 28 The following information was provided about a product. selling price per unit $50 variable cost per unit $26 total fixed costs $10 000 demand 1800 units If the selling price increases, only demand changes. When the selling price increased by $4, profit fell by $1200. What was the decrease in demand? A 214 units B 300 units C 571 units D 657 units 29 A manufacturing business provided the following information. per unit $ selling price 80 variable production costs 44 variable selling costs 6 fixed production costs 12 fixed selling costs 10 What was the contribution to sales ratio? A 10% B 22.5% C 37.5% D 45% 30 Which assumptions are true about cost–volume–profit analysis? 1 costs are classified into fixed, semi-variable and variable 2 selling price per unit remains constant 3 total fixed costs remain constant 4 volume is the only factor affecting variable costs A 1 and 2 B 1 and 3 C 2, 3 and 4 D 3 and 4 only © UCLES 2025 03_9706_12_2025_1.15 a

11
28 The following information was provided about a product.
selling price per unit $50
variable cost per unit $26
total fixed costs $10 000
demand 1800 units
If the selling price increases, only demand changes.
When the selling price increased by $4, profit fell by $1200.
What was the decrease in demand?
A 214 units
B 300 units
C 571 units
D 657 units
29 A manufacturing business provided the following information.
per unit
$
selling price 80
variable production costs 44
variable selling costs 6
fixed production costs 12
fixed selling costs 10
What was the contribution to sales ratio?
A 10% B 22.5% C 37.5% D 45%
30 Which assumptions are true about cost–volume–profit analysis?
1 costs are classified into fixed, semi-variable and variable
2 selling price per unit remains constant
3 total fixed costs remain constant
4 volume is the only factor affecting variable costs
A 1 and 2 B 1 and 3 C 2, 3 and 4 D 3 and 4 only
© UCLES 2025 03_9706_12_2025_1.15 a

12 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 03_9706_12_2025_1.15 a

12
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 03_9706_12_2025_1.15 a

9706_m25_qp_12