* 0000800000001 * , , Cambridge International AS & A Level ¬O> 4mHuOªE]|5W ¬iutY¨ZDc\u ¥E5u5¥¥EuEEU * 3 4 9 2 2 3 6 1 8 1 * ACCOUNTING 9706/22 Paper 2 Fundamentals of Accounting February/March 2025 1 hour 45 minutes You must answer on the question paper. No additional materials are needed. INSTRUCTIONS ● Answer all questions. ● Use a black or dark blue pen. ● Write your name, centre number and candidate number 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. ● Do not write on any bar codes. ● You may use an HB pencil for any rough working. ● You may use a calculator. ● You should present all accounting statements in good style. ● International accounting terms and formats should be used as appropriate. ● You should show your workings. INFORMATION ● The total mark for this paper is 90. ● The number of marks for each question or part question is shown in brackets [ ]. This document has 24 pages. Any blank pages are indicated. DC (SL) 340345/3 © UCLES 2025 [Turn over

* 0000800000001 *
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Cambridge International AS & A Level
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* 3 4 9 2 2 3 6 1 8 1 *
ACCOUNTING 9706/22
Paper 2 Fundamentals of Accounting February/March 2025
1 hour 45 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
● Answer all questions.
● Use a black or dark blue pen.
● Write your name, centre number and candidate number 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.
● Do not write on any bar codes.
● You may use an HB pencil for any rough working.
● You may use a calculator.
● You should present all accounting statements in good style.
● International accounting terms and formats should be used as appropriate.
● You should show your workings.
INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].
This document has 24 pages. Any blank pages are indicated.
DC (SL) 340345/3
© UCLES 2025 [Turn over

* 0000800000002 * 2 , , 1 Sara and Viraj are in partnership and own a wholesale business. At 1 January 2024, the partners had the following balances. Sara Viraj $ $ Capital 80 000 112 000 DO NOT WRITE IN THIS MARGIN Current account 1 840 debit 2 730 credit During the year ended 31 December 2024, the following drawings had been recorded. $ Sara 22 960 Viraj 18 930 The following balances were also available at 31 December 2024. DO NOT WRITE IN THIS MARGIN $ Bank overdraft 4 970 Non‑current assets at carrying amount 150 700 Inventory 18 400 Other payables 410 Other receivables 300 Trade payables 16 300 Trade receivables 19 980 DO NOT WRITE IN THIS MARGIN The draft profit for the year ended 31 December 2024 was $9400 before accounting for the following: 1 Wages, $850, were owing. 2 A credit customer, owing $1200, had gone out of business. The partners believe that 20% of the amount outstanding will be recovered, and the remaining 80% is to be written off. 3 The partners have decided to create an allowance for irrecoverable debts of 5% of trade receivables. 4 Viraj had taken goods for own use valued at cost, $550. DO NOT WRITE IN THIS MARGIN 5 Viraj had provided a loan to the partnership on 1 May 2024 of $7200 at 8% interest per annum. The loan is repayable in full at the end of five years. Interest on the loan had not been accounted for. 6 Closing inventory had been understated by $3000. 7 Sara had introduced into the business a motor vehicle, valued at $20 400, on 1 September 2024. Motor vehicles are depreciated by 20% per annum using the straight‑line method on a month‑by‑month basis. ĬÍĊ¾Ġ´íÈõÏĪÅĊàú·þ× © UCLES 2025 Ĭé÷óÜĤĪüáùíß³ÙμĤíĂ 9706/22/F/M/25 ĥĕåĕμÕåõμåĕÅąμåÕĥÕ DO NOT WRITE IN THIS MARGIN

* 0000800000002 *
2
, ,
1 Sara and Viraj are in partnership and own a wholesale business.
At 1 January 2024, the partners had the following balances.
Sara Viraj
$ $
Capital 80 000 112 000 DO NOT WRITE IN THIS MARGIN
Current account 1 840 debit 2 730 credit
During the year ended 31 December 2024, the following drawings had been recorded.
$
Sara 22 960
Viraj 18 930
The following balances were also available at 31 December 2024.
DO NOT WRITE IN THIS MARGIN
$
Bank overdraft 4 970
Non‑current assets at carrying amount 150 700
Inventory 18 400
Other payables 410
Other receivables 300
Trade payables 16 300
Trade receivables 19 980
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The draft profit for the year ended 31 December 2024 was $9400 before accounting for the
following:
1 Wages, $850, were owing.
2 A credit customer, owing $1200, had gone out of business. The partners believe that 20% of
the amount outstanding will be recovered, and the remaining 80% is to be written off.
3 The partners have decided to create an allowance for irrecoverable debts of 5% of trade
receivables.
4 Viraj had taken goods for own use valued at cost, $550.
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5 Viraj had provided a loan to the partnership on 1 May 2024 of $7200 at 8% interest per
annum. The loan is repayable in full at the end of five years. Interest on the loan had not
been accounted for.
6 Closing inventory had been understated by $3000.
7 Sara had introduced into the business a motor vehicle, valued at $20 400, on 1 September
2024.
Motor vehicles are depreciated by 20% per annum using the straight‑line method on a
month‑by‑month basis.
ĬÍĊ¾Ġ´íÈõÏĪÅĊàú·þ×
© UCLES 2025 Ĭé÷óÜĤĪüáùíß³ÙμĤíĂ 9706/22/F/M/25
ĥĕåĕμÕåõμåĕÅąμåÕĥÕ DO NOT WRITE IN THIS MARGIN

* 0000800000003 * 3 , , (a) Calculate the revised profit for the year ended 31 December 2024. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ............................................................................................................................................. [8] DO NOT WRITE IN THIS MARGIN ĬÏĊ¾Ġ´íÈõÏĪÅĊàü·þ× [Turn over © UCLES 2025 ĬéøôÔĦĦČØÿĄĪħáġĤýĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥĕÕÕõμÅĕåÕÅÅąÕÅĕõÕ

* 0000800000003 *
3
, ,
(a) Calculate the revised profit for the year ended 31 December 2024.
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ĬÏĊ¾Ġ´íÈõÏĪÅĊàü·þ× [Turn over
© UCLES 2025 ĬéøôÔĦĦČØÿĄĪħáġĤýĂ 9706/22/F/M/25
DO NOT WRITE IN THIS MARGIN ĥĕÕÕõμÅĕåÕÅÅąÕÅĕõÕ

* 0000800000004 * 4 , , Additional information The partners share profits and losses in the ratio Sara : Viraj, 2 : 1, after providing for the following: 1 Interest is charged on each partner’s drawings at 5% on the total of drawings for the year in excess of $10 000. DO NOT WRITE IN THIS MARGIN 2 Sara is entitled to a salary of $12 000 per annum. (b) Prepare the appropriation account for the year ended 31 December 2024. Appropriation account for the year ended 31 December 2024 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [3] DO NOT WRITE IN THIS MARGIN ĬÍĊ¾Ġ´íÈõÏĪÅĊÞú·Ā× © UCLES 2025 ĬéøñÔĠĘýãāċġÅýÃôõĂ 9706/22/F/M/25 ĥåąÕμμÅμÅõμÅÅÕĥĕĥÕ DO NOT WRITE IN THIS MARGIN

* 0000800000004 *
4
, ,
Additional information
The partners share profits and losses in the ratio Sara : Viraj, 2 : 1, after providing for the following:
1 Interest is charged on each partner’s drawings at 5% on the total of drawings for the year in
excess of $10 000.
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2 Sara is entitled to a salary of $12 000 per annum.
(b) Prepare the appropriation account for the year ended 31 December 2024.
Appropriation account for the year ended 31 December 2024
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ĬÍĊ¾Ġ´íÈõÏĪÅĊÞú·Ā×
© UCLES 2025 ĬéøñÔĠĘýãāċġÅýÃôõĂ 9706/22/F/M/25
ĥåąÕμμÅμÅõμÅÅÕĥĕĥÕ DO NOT WRITE IN THIS MARGIN

* 0000800000005 * 5 , , (c) Prepare the current account of Viraj for the year ended 31 December 2024. Dates are not required. Viraj Current account $ $ DO NOT WRITE IN THIS MARGIN [4] DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÏĊ¾Ġ´íÈõÏĪÅĊÞü·Ā× [Turn over © UCLES 2025 Ĭé÷òÜĪĜíÖ÷öèđõėôąĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥåõĕõÕåÕÕąĥÅÅμąÕõÕ

* 0000800000005 *
5
, ,
(c) Prepare the current account of Viraj for the year ended 31 December 2024.
Dates are not required.
Viraj Current account
$ $
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[4]
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ĬÏĊ¾Ġ´íÈõÏĪÅĊÞü·Ā× [Turn over
© UCLES 2025 Ĭé÷òÜĪĜíÖ÷öèđõėôąĂ 9706/22/F/M/25
DO NOT WRITE IN THIS MARGIN ĥåõĕõÕåÕÕąĥÅÅμąÕõÕ

* 0000800000006 * 6 , , Additional information On 31 December 2024, the balance of Sara’s current account was $15 070 debit. (d) Prepare an extract from the statement of financial position at 31 December 2024 showing the capital and liabilities section only. DO NOT WRITE IN THIS MARGIN Statement of financial position at 31 December 2024 Capital and liabilities ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [4] ĬÑĊ¾Ġ´íÈõÏĪÅĊßü¶þ× © UCLES 2025 Ĭéøò×Ĥô÷ÎôćÍñýöÜõĂ 9706/22/F/M/25 ĥõÕĕõõåõĕĥÅÅąμåĕåÕ DO NOT WRITE IN THIS MARGIN

* 0000800000006 *
6
, ,
Additional information
On 31 December 2024, the balance of Sara’s current account was $15 070 debit.
(d) Prepare an extract from the statement of financial position at 31 December 2024 showing the
capital and liabilities section only.
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Statement of financial position at 31 December 2024
Capital and liabilities
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ĬÑĊ¾Ġ´íÈõÏĪÅĊßü¶þ×
© UCLES 2025 Ĭéøò×Ĥô÷ÎôćÍñýöÜõĂ 9706/22/F/M/25
ĥõÕĕõõåõĕĥÅÅąμåĕåÕ DO NOT WRITE IN THIS MARGIN

* 0000800000007 * 7 , , (e) Explain, with reference to an accounting concept, the correct treatment of: (i) goods taken for own use by the owner of a business Concept: ............................................................................................................................ Explanation: ...................................................................................................................... DO NOT WRITE IN THIS MARGIN ........................................................................................................................................... ........................................................................................................................................... [2] (ii) irrecoverable debts. Concept: ............................................................................................................................ Explanation: ...................................................................................................................... ........................................................................................................................................... DO NOT WRITE IN THIS MARGIN ........................................................................................................................................... [2] DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÓĊ¾Ġ´íÈõÏĪÅĊßú¶þ× [Turn over © UCLES 2025 Ĭé÷ñÏĦðćëĆúĜåõâÜąĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥõåÕμĕÅĕąĕĕÅąÕÅÕμÕ

* 0000800000007 *
7
, ,
(e) Explain, with reference to an accounting concept, the correct treatment of:
(i) goods taken for own use by the owner of a business
Concept: ............................................................................................................................
Explanation: ......................................................................................................................
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[2]
(ii) irrecoverable debts.
Concept: ............................................................................................................................
Explanation: ......................................................................................................................
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[2]
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ĬÓĊ¾Ġ´íÈõÏĪÅĊßú¶þ× [Turn over
© UCLES 2025 Ĭé÷ñÏĦðćëĆúĜåõâÜąĂ 9706/22/F/M/25
DO NOT WRITE IN THIS MARGIN ĥõåÕμĕÅĕąĕĕÅąÕÅÕμÕ

* 0000800000008 * 8 , , Additional information The partners are concerned about the liquidity of the business. The current credit terms are 30 days for both credit suppliers and credit customers. They have noticed that some credit customers are delaying the settlement of their invoices, whilst credit suppliers are always paid within 30 days. They are considering two options: DO NOT WRITE IN THIS MARGIN Option A: introducing a 5% cash discount for all credit customers’ invoices settled within 25 days. Option B: paying credit suppliers within 35 days. (f) Advise the partners which option they should choose. Justify your answer by discussing both options. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [7] [Total: 30] ĬÑĊ¾Ġ´íÈõÏĪÅĊÝü¶Ā× © UCLES 2025 Ĭé÷ôÏĠþĂÐČñēćÙĄÌíĂ 9706/22/F/M/25 ĥÅõÕõĕÅμĥμĥÅÅÕĥÕåÕ DO NOT WRITE IN THIS MARGIN

* 0000800000008 *
8
,  ,
Additional information
The partners are concerned about the liquidity of the business. The current credit terms are
30 days for both credit suppliers and credit customers.
They have noticed that some credit customers are delaying the settlement of their invoices, whilst
credit suppliers are always paid within 30 days. They are considering two options:
DO NOT WRITE IN THIS MARGIN
Option A: introducing a 5% cash discount for all credit customers’ invoices settled within 25 days.
Option B: paying credit suppliers within 35 days.
(f) Advise the partners which option they should choose. Justify your answer by discussing both
options.
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[Total: 30]
ĬÑĊ¾Ġ´íÈõÏĪÅĊÝü¶Ā×
© UCLES 2025 Ĭé÷ôÏĠþĂÐČñēćÙĄÌíĂ 9706/22/F/M/25
ĥÅõÕõĕÅμĥμĥÅÅÕĥÕåÕ DO NOT WRITE IN THIS MARGIN

* 0000800000009 * 9 , , BLANK PAGE DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÓĊ¾Ġ´íÈõÏĪÅĊÝú¶Ā× [Turn over © UCLES 2025 Ĭéøó×ĪĂòéîĀÖÓáØÌýĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥÅąĕμõåÕõÅμÅÅμąĕμÕ

* 0000800000009 *
9
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BLANK PAGE
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ĬÓĊ¾Ġ´íÈõÏĪÅĊÝú¶Ā× [Turn over
© UCLES 2025 Ĭéøó×ĪĂòéîĀÖÓáØÌýĂ 9706/22/F/M/25
DO NOT WRITE IN THIS MARGIN ĥÅąĕμõåÕõÅμÅÅμąĕμÕ

* 0000800000010 * 10 , , 2 Moe runs a trading business and maintains control accounts as a part of the double entry. The following information is available for the month of November 2024. $ Balance of sales ledger control account at 1 November 2024 18 320 DO NOT WRITE IN THIS MARGIN Contra entry with purchases ledger control account 139 Credit sales 41 735 Discounts allowed 3 071 Interest charged on overdue accounts 84 Irrecoverable debt written off 478 Receipts from credit customers 39 202 Sales returns 883 (a) Prepare the sales ledger control account for November 2024. Dates are not required. DO NOT WRITE IN THIS MARGIN Sales ledger control account $ $ DO NOT WRITE IN THIS MARGIN [5] DO NOT WRITE IN THIS MARGIN ĬÑĊ¾Ġ´íÈõÏĪÅĊàü¸þ× © UCLES 2025 ĬéöôÖĞĆĘÒăú¹īÛĨôąĂ 9706/22/F/M/25 ĥĕĕĕõĕĥμÅąĥąÅõĥÕĕÕ DO NOT WRITE IN THIS MARGIN

* 0000800000010 *
10
, ,
2 Moe runs a trading business and maintains control accounts as a part of the double entry.
The following information is available for the month of November 2024.
$
Balance of sales ledger control account at 1 November 2024 18 320
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Contra entry with purchases ledger control account 139
Credit sales 41 735
Discounts allowed 3 071
Interest charged on overdue accounts 84
Irrecoverable debt written off 478
Receipts from credit customers 39 202
Sales returns 883
(a) Prepare the sales ledger control account for November 2024. Dates are not required. DO NOT WRITE IN THIS MARGIN
Sales ledger control account
$ $
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[5]
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ĬÑĊ¾Ġ´íÈõÏĪÅĊàü¸þ×
© UCLES 2025 ĬéöôÖĞĆĘÒăú¹īÛĨôąĂ 9706/22/F/M/25
ĥĕĕĕõĕĥμÅąĥąÅõĥÕĕÕ DO NOT WRITE IN THIS MARGIN

* 0000800000011 * 11 , , Additional information On 31 December 2024, the following information was available. $ Total of balances in the sales ledger 22 350 DO NOT WRITE IN THIS MARGIN Sales ledger control account balance 23 964 The following errors were discovered, which accounted for the difference. 1 The balance of a credit customer’s ledger account had been overstated by $189. 2 The total of the sales returns journal, $210, had been posted to the debit side of the control account as $120. 3 The discount column totals in the cash book had not been posted: column on debit side total $283 column on credit side total $319. DO NOT WRITE IN THIS MARGIN 4 No entries had been made in the books of account to record a dishonoured cheque for $640. 5 An irrecoverable debt of $892 had been recorded correctly in the customer’s ledger account but had been debited to the sales ledger control account as $298. (b) Calculate the corrected figure for: (i) the total of balances in the sales ledger $ Original total of balances in the sales ledger 22 350 DO NOT WRITE IN THIS MARGIN Corrected total of balances in the sales ledger [3] DO NOT WRITE IN THIS MARGIN ĬÓĊ¾Ġ´íÈõÏĪÅĊàú¸þ× [Turn over © UCLES 2025 ĬéõóÎĬĊĨçõćð¯ã´ôõĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥĕĥÕμõąÕÕõμąÅĕąĕąÕ

* 0000800000011 *
11
, ,
Additional information
On 31 December 2024, the following information was available.
$
Total of balances in the sales ledger 22 350
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Sales ledger control account balance 23 964
The following errors were discovered, which accounted for the difference.
1 The balance of a credit customer’s ledger account had been overstated by $189.
2 The total of the sales returns journal, $210, had been posted to the debit side of the control
account as $120.
3 The discount column totals in the cash book had not been posted:
column on debit side total $283
column on credit side total $319.
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4 No entries had been made in the books of account to record a dishonoured cheque for $640.
5 An irrecoverable debt of $892 had been recorded correctly in the customer’s ledger account
but had been debited to the sales ledger control account as $298.
(b) Calculate the corrected figure for:
(i) the total of balances in the sales ledger
$
Original total of balances in the sales ledger 22 350
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Corrected total of balances in the sales ledger
[3]
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ĬÓĊ¾Ġ´íÈõÏĪÅĊàú¸þ× [Turn over
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DO NOT WRITE IN THIS MARGIN ĥĕĥÕμõąÕÕõμąÅĕąĕąÕ

* 0000800000012 * 12 , , (ii) the sales ledger control account balance $ Original sales ledger control account balance 23 964 DO NOT WRITE IN THIS MARGIN Corrected sales ledger control account balance [5] (c) State two benefits of preparing control accounts. 1 ................................................................................................................................................ DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... [2] [Total: 15] DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÑĊ¾Ġ´íÈõÏĪÅĊÞü¸Ā× © UCLES 2025 ĬéõòÎĢüġÔûĀ÷čÿĒĤýĂ 9706/22/F/M/25 ĥåμÕõõąõμÕÅąąĕåĕĕÕ DO NOT WRITE IN THIS MARGIN

* 0000800000012 *
12
, ,
(ii) the sales ledger control account balance
$
Original sales ledger control account balance 23 964
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Corrected sales ledger control account balance
[5]
(c) State two benefits of preparing control accounts.
1 ................................................................................................................................................
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2 ................................................................................................................................................
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[2]
[Total: 15]
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ĬÑĊ¾Ġ´íÈõÏĪÅĊÞü¸Ā×
© UCLES 2025 ĬéõòÎĢüġÔûĀ÷čÿĒĤýĂ 9706/22/F/M/25
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* 0000800000013 * 13 , , BLANK PAGE DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÓĊ¾Ġ´íÈõÏĪÅĊÞú¸Ā× [Turn over © UCLES 2025 ĬéöñÖĨøđåýñ²É÷ÆĤíĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥåÅĕμĕĥĕååĕąąõÅÕąÕ

* 0000800000013 *
13
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ĬÓĊ¾Ġ´íÈõÏĪÅĊÞú¸Ā× [Turn over
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* 0000800000014 * 14 , , 3 The following balances had been extracted from the books of W Limited on 1 January 2024. $ Share capital (ordinary shares of $0.50 each) 750 000 Share premium 145 000 DO NOT WRITE IN THIS MARGIN Retained earnings 154 000 Revaluation reserve 90 000 During the year ended 31 December 2024, the following occurred: Property was revalued at $690 000. Before this date, property was 1 April valued at $800 000. 30 June An interim dividend of $0.05 per share was paid. A rights issue of two ordinary shares for every three ordinary shares 1 October held at this date was made. The shares were issued at a premium of $0.20 per share. The rights issue was fully subscribed. DO NOT WRITE IN THIS MARGIN The profit for the year ended 31 December 2024 was $148 000. (a) Prepare the following ledger accounts for the year ended 31 December 2024. Ordinary share capital account $ $ DO NOT WRITE IN THIS MARGIN Share premium account $ $ DO NOT WRITE IN THIS MARGIN ĬÍĊ¾Ġ´íÈõÏĪÅĊÝùμĂ× © UCLES 2025 Ĭéõó×Īċĩ×ċöčĥÞÂÔõĂ 9706/22/F/M/25 ĥąÅÕõõåμÅμĕÅÅμĥĕÕÕ DO NOT WRITE IN THIS MARGIN

* 0000800000014 *
14
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3 The following balances had been extracted from the books of W Limited on 1 January 2024.
$
Share capital (ordinary shares of $0.50 each) 750 000
Share premium 145 000
Retained earnings 154 000 DO NOT WRITE IN THIS MARGIN
Revaluation reserve 90 000
During the year ended 31 December 2024, the following occurred:
Property was revalued at $690 000. Before this date, property was
1 April
valued at $800 000.
30 June An interim dividend of $0.05 per share was paid.
A rights issue of two ordinary shares for every three ordinary shares
1 October held at this date was made. The shares were issued at a premium of
$0.20 per share. The rights issue was fully subscribed. DO NOT WRITE IN THIS MARGIN
The profit for the year ended 31 December 2024 was $148 000.
(a) Prepare the following ledger accounts for the year ended 31 December 2024.
Ordinary share capital account
$ $
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Share premium account
$ $
DO NOT WRITE IN THIS MARGIN
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* 0000800000015 * 15 , , Retained earnings account $ $ DO NOT WRITE IN THIS MARGIN Revaluation reserve account $ $ DO NOT WRITE IN THIS MARGIN Workings: DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN [9] ĬÏĊ¾Ġ´íÈõÏĪÅĊÝûμĂ× [Turn over © UCLES 2025 ĬéöôÏĠćęâíċÜ±ÖĖÔąĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥąμĕμĕÅÕÕÅÅÅÅÕąÕÅÕ

* 0000800000015 *
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Retained earnings account
$ $
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Revaluation reserve account
$ $
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Workings:
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[9]
ĬÏĊ¾Ġ´íÈõÏĪÅĊÝûμĂ× [Turn over
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* 0000800000016 * 16 , , (b) State two features of capital reserves. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... [2] (c) State two differences between a rights issue of shares and an issue of debentures. 1 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN 2 ................................................................................................................................................ ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... [4] [Total: 15] DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÍĊ¾Ġ´íÈõÏĪÅĊßùμĄ× © UCLES 2025 ĬéöñÏĦõĐÕóĄÓēú¸ÄíĂ 9706/22/F/M/25 ĥμĥĕõĕÅõμĥμÅąÕåÕÕÕ DO NOT WRITE IN THIS MARGIN

* 0000800000016 *
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(b) State two features of capital reserves.
1 ................................................................................................................................................
...................................................................................................................................................
2 ................................................................................................................................................
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...................................................................................................................................................
[2]
(c) State two differences between a rights issue of shares and an issue of debentures.
1 ................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
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2 ................................................................................................................................................
...................................................................................................................................................
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...................................................................................................................................................
[4]
[Total: 15]
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* 0000800000017 * 17 , , BLANK PAGE DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÏĊ¾Ġ´íÈõÏĪÅĊßûμĄ× [Turn over © UCLES 2025 Ĭéõò×ĤùĠäąíĖÇĂĤÄýĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥμĕÕμõåĕåĕĥÅąμÅĕÅÕ

* 0000800000017 *
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* 0000800000018 * 18 , , 4 D Limited is a manufacturing company which uses absorption costing. The factory has two production departments, Cutting and Finishing. It also has two service departments, Stores and Canteen. Some budgeted overheads have been allocated to departments as follows: DO NOT WRITE IN THIS MARGIN Production departments Service departments Total Cutting Finishing Stores Canteen $ $ $ $ $ Overheads 424 560 183 270 145 990 45 380 49 920 allocated The following budgeted overheads have yet to be allocated or apportioned. $ Supervisor’s salary: Cutting department 28 200 DO NOT WRITE IN THIS MARGIN Supervisor’s salary: Finishing department 26 300 Depreciation of machinery 87 000 Rent 48 000 Apportionment is based on the following information. Cutting Finishing Stores Canteen Cost of machinery ($) 220 000 152 000 37 000 26 000 Floor area (m 2 ) 1500 890 280 330 DO NOT WRITE IN THIS MARGIN Issues from stores 84 43 ‑ ‑ Number of employees 45 31 6 ‑ DO NOT WRITE IN THIS MARGIN ĬÍĊ¾Ġ´íÈõÏĪÅĊÞù·Ă× © UCLES 2025 Ĭé÷ñÖĨíĊÛüċùïüÔüąĂ 9706/22/F/M/25 ĥĥąÕõĕĥõĕÕμąąõåÕĥÕ DO NOT WRITE IN THIS MARGIN

* 0000800000018 *
18
,  ,
4 D Limited is a manufacturing company which uses absorption costing.
The factory has two production departments, Cutting and Finishing. It also has two service
departments, Stores and Canteen.
Some budgeted overheads have been allocated to departments as follows:
DO NOT WRITE IN THIS MARGIN
Production departments Service departments
Total Cutting Finishing Stores Canteen
$ $ $ $ $
Overheads
424 560 183 270 145 990 45 380 49 920
allocated
The following budgeted overheads have yet to be allocated or apportioned.
$
Supervisor’s salary: Cutting department 28 200
DO NOT WRITE IN THIS MARGIN
Supervisor’s salary: Finishing department 26 300
Depreciation of machinery 87 000
Rent 48 000
Apportionment is based on the following information.
Cutting Finishing Stores Canteen
Cost of machinery ($) 220 000 152 000 37 000 26 000
Floor area (m 2 ) 1500 890 280 330
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Issues from stores 84 43 ‑ ‑
Number of employees 45 31 6 ‑
DO NOT WRITE IN THIS MARGIN
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* 0000800000019 * 19 , , (a) Complete the following table to show the apportionment of overheads and the reapportionment of service department overheads. Production departments Service departments Total Cutting Finishing Stores Canteen $ $ $ $ $ DO NOT WRITE IN THIS MARGIN Overheads 424 560 183 270 145 990 45 380 49 920 allocated Subtotal Reapportionment Canteen DO NOT WRITE IN THIS MARGIN department Subtotal Reapportionment Stores department Total overheads [5] DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN ĬÏĊ¾Ġ´íÈõÏĪÅĊÞû·Ă× [Turn over © UCLES 2025 ĬéøòÎĢñúÞþö°ëĄĈüõĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥĥõĕμõąĕąåĥąąĕÅĕõÕ

* 0000800000019 *
19
,  ,
(a) Complete the following table to show the apportionment of overheads and the reapportionment
of service department overheads.
Production departments Service departments
Total Cutting Finishing Stores Canteen
$ $ $ $ $
DO NOT WRITE IN THIS MARGIN
Overheads
424 560 183 270 145 990 45 380 49 920
allocated
Subtotal
Reapportionment
Canteen
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department
Subtotal
Reapportionment
Stores
department
Total overheads
[5]
DO NOT WRITE IN THIS MARGIN
DO NOT WRITE IN THIS MARGIN
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* 0000800000020 * 20 , , Additional information Budgeted hours for each production department were as follows: Cutting Finishing Labour hours 6350 7144 DO NOT WRITE IN THIS MARGIN Machine hours 8220 5172 (b) Calculate, to two decimal places, an overhead absorption rate for each production department, using a suitable basis. Cutting department ................................................................................................................................................... ................................................................................................................................................... Finishing department DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... [4] Additional information The Stores department issues component X to the Finishing department. The weighted average cost (AVCO) method of inventory control is used by the Stores department. The following details about this component are available for January 2025. DO NOT WRITE IN THIS MARGIN On 1 January 2025, the Stores department held six component X in inventory which had cost $8 each. Receipts of X Issues of X 6 Jan 12 at $8 each 9 Jan 7 16 Jan 8 at $9 each 21 Jan 13 27 Jan 10 at $10 each DO NOT WRITE IN THIS MARGIN ĬÍĊ¾Ġ´íÈõÏĪÅĊàù·Ą× © UCLES 2025 ĬéøóÎĬăïÙĄí·ĉàæĬýĂ 9706/22/F/M/25 ĥÕåĕõõąμĥąĕąÅĕĥĕĥÕ DO NOT WRITE IN THIS MARGIN

* 0000800000020 *
20
, ,
Additional information
Budgeted hours for each production department were as follows:
Cutting Finishing
Labour hours 6350 7144
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Machine hours 8220 5172
(b) Calculate, to two decimal places, an overhead absorption rate for each production
department, using a suitable basis.
Cutting department
...................................................................................................................................................
...................................................................................................................................................
Finishing department
DO NOT WRITE IN THIS MARGIN
...................................................................................................................................................
...................................................................................................................................................
[4]
Additional information
The Stores department issues component X to the Finishing department. The weighted average
cost (AVCO) method of inventory control is used by the Stores department.
The following details about this component are available for January 2025.
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On 1 January 2025, the Stores department held six component X in inventory which had cost
$8 each.
Receipts of X Issues of X
6 Jan 12 at $8 each
9 Jan 7
16 Jan 8 at $9 each
21 Jan 13
27 Jan 10 at $10 each
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* 0000800000021 * 21 , , (c) Complete the following table to show the value of the closing inventory of component X, using AVCO. Inventory valuation $ 1 Jan 48 DO NOT WRITE IN THIS MARGIN 6 Jan 9 Jan 16 Jan 21 Jan 27 Jan Workings: DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN [5] DO NOT WRITE IN THIS MARGIN ĬÏĊ¾Ġ´íÈõÏĪÅĊàû·Ą× [Turn over © UCLES 2025 Ĭé÷ôÖĞÿÿàöĄòÍØòĬíĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥÕÕÕμĕĥÕõõÅąÅõąÕõÕ

* 0000800000021 *
21
, ,
(c) Complete the following table to show the value of the closing inventory of component X, using
AVCO.
Inventory valuation
$
1 Jan 48
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6 Jan
9 Jan
16 Jan
21 Jan
27 Jan
Workings:
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[5]
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* 0000800000022 * 22 , , Additional information D Limited uses marginal costing at another factory where two products, Bee and Cee, are made. The following forecast information is available for August 2025. Bee Cee Selling price per unit $173 $156 DO NOT WRITE IN THIS MARGIN Direct materials (at $4 per kg) 7 kg 9 kg Direct labour hours (at $9 per hour) 14 hours 11 hours Contribution per unit $19 $21 Production and sales (units) 60 50 Fixed costs are $1100 per month. The supplier of direct materials has notified the directors that delivery problems will mean that in August 2025 only 70% of the forecast requirement for direct materials will be available. DO NOT WRITE IN THIS MARGIN The directors are considering two options for August 2025. Option A: Organise production in order to produce the maximum profit with the available materials. Option B: Purchase additional materials from a new overseas supplier to make up the shortfall. The supplier charges $5 per kg. (d) Calculate the profit to be made in August 2025 for each option. (i) Option A ........................................................................................................................................... DO NOT WRITE IN THIS MARGIN ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... DO NOT WRITE IN THIS MARGIN ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [6] ĬÑĊ¾Ġ´íÈõÏĪÅĊÝû¶Ă× © UCLES 2025 ĬéøôÙĨħąèññċàēÄýĂ 9706/22/F/M/25 ĥąõÕμμĥõμĕĥąąõåĕåÕ DO NOT WRITE IN THIS MARGIN

* 0000800000022 *
22
, ,
Additional information
D Limited uses marginal costing at another factory where two products, Bee and Cee, are made.
The following forecast information is available for August 2025.
Bee Cee
Selling price per unit $173 $156 DO NOT WRITE IN THIS MARGIN
Direct materials (at $4 per kg) 7 kg 9 kg
Direct labour hours (at $9 per hour) 14 hours 11 hours
Contribution per unit $19 $21
Production and sales (units) 60 50
Fixed costs are $1100 per month.
The supplier of direct materials has notified the directors that delivery problems will mean that in
August 2025 only 70% of the forecast requirement for direct materials will be available.
DO NOT WRITE IN THIS MARGIN
The directors are considering two options for August 2025.
Option A: Organise production in order to produce the maximum profit with the available materials.
Option B: Purchase additional materials from a new overseas supplier to make up the shortfall.
The supplier charges $5 per kg.
(d) Calculate the profit to be made in August 2025 for each option.
(i) Option A
........................................................................................................................................... DO NOT WRITE IN THIS MARGIN
...........................................................................................................................................
...........................................................................................................................................
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..................................................................................................................................... [6]
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* 0000800000023 * 23 , , (ii) Option B ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... DO NOT WRITE IN THIS MARGIN ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [3] (e) Advise the directors which option they should choose. Justify your answer. ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... DO NOT WRITE IN THIS MARGIN ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [7] [Total: 30] ĬÓĊ¾Ġ´íÈõÏĪÅĊÝù¶Ă× © UCLES 2025 Ĭé÷óÑĢīõÑćĀ¾ĩØÇÄíĂ 9706/22/F/M/25 DO NOT WRITE IN THIS MARGIN ĥąąĕõÕąĕåĥμąąĕÅÕμÕ

* 0000800000023 *
23
, ,
(ii) Option B
...........................................................................................................................................
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...........................................................................................................................................
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..................................................................................................................................... [3]
(e) Advise the directors which option they should choose. Justify your answer.
...................................................................................................................................................
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...................................................................................................................................................
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............................................................................................................................................. [7]
[Total: 30]
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* 0000800000024 * 24 , , BLANK PAGE DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN DO NOT WRITE IN THIS MARGIN 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. ĬÑĊ¾Ġ´íÈõÏĪÅĊßû¶Ą× © UCLES 2025 Ĭé÷òÑĬęôæĉćÅËüĥÔąĂ 9706/22/F/M/25 ĥμÕĕμÕąμÅÅÅąÅĕĥÕåÕ DO NOT WRITE IN THIS MARGIN

* 0000800000024 *
24
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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.
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