Cambridge International AS & A Level

ACCOUNTING 9706/23
Paper 2 Fundamentals of Accounting October/November 2024
MARK SCHEME
Maximum Mark: 90

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the October/November 2024 series for most
Cambridge IGCSE, Cambridge International A and AS Level components, and some Cambridge O Level
components.

This document consists of 17 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level
descriptions for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

• the specific content of the mark scheme or the generic level descriptors for the question
• the specific skills defined in the mark scheme or in the generic level descriptors for the question
• the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

• marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
• marks are awarded when candidates clearly demonstrate what they know and can do
• marks are not deducted for errors
• marks are not deducted for omissions
• answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

• Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

• Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
• Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
• Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
• The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
• If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
• Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
• Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
• For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
• For levels of response marking, the level awarded should be annotated on the script.
• Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

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ANNOTATIONS
The following annotations are used in marking this paper and should be used by examiners.

Annotation Use or meaning

 Correct and relevant point made in answering the question.

× Incorrect point or error made.

LNK Two statements are linked.

REP Repeat

A An extraneous figure

BOD Benefit of the doubt given.

SEEN Noted but no credit given

OF Own figure

Highlight Highlight

Off page Off page comment

Comment

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Abbreviations and guidance

The following abbreviations may be used in the mark scheme:

OF = own figure. The answer will be marked correct if a candidate has correctly used their own
figure from a previous part or calculation.

W = working. The working for a figure is given below. Where the figure has more than one mark
associated with it, the working will show where individual marks are to be awarded.

CF = correct figure. The figure has to be correct i.e. no extraneous items have been included in the
calculation

Extraneous item = an item that should not have been included in a calculation, including indirect
expenses such as salaries in calculation of gross profit when there is one OF mark for gross profit’

Curly brackets, }, are used to show where one mark is given for more than one figure. If the
figures are not adjacent, each is marked with a curly bracket and a symbol e.g. }*

row = all figures in the row must be correct for this mark to be awarded

Marks for figures are dependent on correct sign/direction

Accept other valid responses. This statement indicates that marks may be awarded for answers
that are not listed in the mark scheme but are equally
valid.

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Question Answer Marks

1(a) Calculate the corrected carrying value of Property at 30 June 2024. 2

$56 400 (2)

Workings
$60 000 – $3 600 (1) = $56 400 (1) OF

1(b) Calculate the revised profit for the year ended 30 June 2024. 7

$97 410 (7)

Workings

Draft profit 83 250 (1)

Closing inventory 2 000 (1)

Interim dividend 2 100 (1)

Distribution costs 2 500 (1)

Property depreciation 4 560 (1)

Taxation 3 000 (1)

Revised profit for the year 97 410 (1)OF

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Question Answer Marks

1(c) Prepare the statement of financial position at 30 June 2024. 10

J plc
Statement of financial position at 30 June 2024

Assets

Non-current assets

Property, plant and equipment 126 460 (1)

126 460

Current assets

Inventory 85 900 (1)

Trade and other receivables 39 250 (1)

125 150

Total assets 251 610 (1) OF

Equity and liabilities

Equity

Share capital 70 000

Share premium 4 280

Retained earnings 134 360 (1) OF

Total equity 208 640 (1)

Liabilities

Current liabilities

Bank overdraft 9 020 (1)

Trade and other payables 23 350 (1)

Taxation 10 600 (1)

Total liabilities 42 970

Total equity and liabilities 251 610 (1) OF

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Question Answer Marks

1(d) State two other factors that may cause the value of plant and equipment 2
to depreciate.

• obsolescence (1)
• usage (1)
• time factor (1)
• technological change (1)

Max 2 marks

Accept other valid responses

1(e) State the formula for each of the following ratios. 2

Ratio Formula

Profit margin Profit for the year

 100 (1)
Revenue

Return on capital employed Profit from operations

 100 (1)
Capital employed

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Question Answer Marks

1(f) Advise the directors which option they should choose. Justify your 7
advice by considering both financial and non-financial factors.

Option 1 Bank loan

• The company would have ownership of the asset (1)

• Would the bank be prepared to approve such a large loan? (1)
• Would the bank wish to take security for the loan (1)
• Interest payments would reduce profits (1)
• Depreciation would reduce profits (1)
• Likely to have a negative effect on the return on capital employed (1)
• May have a negative effect on profit margin unless significant increase in
revenue (1)

Option 2 Lease

• The company would not own the asset (1)

• Would not be obliged to retain the asset at the end of the agreement if not
suitable (1)
• Lease payments would reduce profits (1)
• Less vulnerable to business downturn (1)
• Less likely to have a negative effect on return on capital employed (1)
• May have a negative effect on profit margin unless significant increase in
revenue (1)

Max 6 for comments

Decision supported with a comment (1)

Accept other valid responses

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Question Answer Marks

2(a) Prepare the sales ledger control account for September 2024. 8

Sales ledger control account

$ $

Balance b/d 64 280 Balance b/d 215

(1)

Sales journal 188 740 Sales returns journal 2 560

(1) (1)

Bank 215 Bank 196 380

(1) (1)

Discounts allowed 2 440

(1)

Contra 1 150
(1)

Balance c/d 50 490

253 235 253 235

Balance b/d 50 490

(1)OF

2(b)(i) Calculate the corrected total of balances in the purchases ledger. 3

Original total 41 350

Overstated balance (80) (1)

Refund (640) (1)

Corrected total 40 630 (1)

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Question Answer Marks

2(b)(ii) Calculate the corrected balance of the purchases ledger control 4

account.

Original balance 40 592

Purchases returns journal 90 (1)

Discounts received (68) (1)

Interest charged 16 (1)

Corrected balance 40 630 (1)

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Question Answer Marks

3(a) Prepare the following accounts for the year ended 30 September 2024. 11
Dates are not required.

Share Capital

Details $ Details $

Balance c/d 371 250 Balance b/d 250 000

Bank / Cash Book 25 000 (1)

Bank / Cash Book 55 000 (1)

Share premium 39 900 (1)

Retained earnings 1 350

371 250 371 250

Balance b/d 371 250 (1)OF

Share premium

Details $ Details $

Share capital 39 900 (1)OF Balance b/d 13 400

Bank / Cash Book 10 000 (1)

Bank / Cash Book 16 500 (1)

39 900 39 900

Retained earnings

Details $ Details $

Bank / Cash Book 13 200 (1) Balance b/d 71 800

Share capital 1 350 (1)OF Statement of profit 41 800 (1)

or loss

Balance c/d 99 050

113 600 113 600

Balance b/d 99 050 (1)OF

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Question Answer Marks

3(b) State two features of a debenture. 2

• Long term loan (1)

• Fixed interest rate (1)
• Repayable at specified date (1)
• No voting rights (1)

Max 2 marks

Accept other valid responses.

3(c) State two features of ordinary shares. 2

• Variable rate of dividend (1)

• Dividend not guaranteed (1)
• Voting rights (1)

Max 2 marks

Accept other valid responses.

Question Answer Marks

4(a)(i) Calculate for the Payroll services department only: 1

the total number of chargeable hours available for the year ending 31
December 2025

5 employees  48 weeks  40 hours = 9600 hours (1)

4(a)(ii) Calculate for the Payroll services department only: 3

the break-even point in hours.

7422 hours (3) OF W

Workings
Contribution: $35 – $7 = $28 (1)
Fixed costs: 9600  18 = $172 800 + $35 000 = $207 800 (1)
Breakeven point – $207 800 / $28 = 7422 hours (1) OF

4(a)(iii) Calculate for the Payroll services department only: 1

the number of chargeable hours required to produce a profit of $45 000

for the year ending 31 December 2025.

9029 hours (1) W

Working

$207 800 (OF) + $45 000 = $252 800/$28 (OF) = 9029 hours (1) OF

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Question Answer Marks

4(b) Prepare a budgeted marginal cost statement to show the Payroll 4

services department profit for the year ending 31 December 2025.

H Limited Payroll services department

Budgeted marginal cost statement for the year ending 31 December 2025

Revenue 8160  $35 285 600 (1)

Variable costs 8160  $7 (57 120)

Contribution 228 480 (1)

Fixed costs 207 800 (1) OF

Profit for the year 20 680 (1) OF

4(c) Calculate the number of overtime hours required for the payroll services 3
department for the year ending 31 December 2025 if the directors chose
Option 1.

340 hours (3)

Workings
Hours

Available 9 600

Additional required 4 180

Total required 13 780 (1)

Now available (7  48  40) 13 440 (1)

Overtime required 340 (1)

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Question Answer Marks

4(d) Prepare a budgeted marginal cost statement to show the Payroll 7

services department profit for the year ending 31 December 2025 if the
directors choose Option 1.

H Limited Payroll department

Budgeted marginal cost statement for the year ending 31 December 2025

Revenue 13 780  $35 482 300 (1) OF

Variable costs 13 780  $7 (96 460) (1) OF

Overtime payments 340  $31.50 (10 710) (1) OF

Contribution 375 130 (1) OF

Fixed costs salaries 13 440  $21 (282 240) (1) OF

Fixed costs other (35 000) (1)

Profit for the year 57 890 (1) OF

4(e) Calculate the Payroll services department contribution for the year 1
ended 31 December 2025 if the directors choose Option 2.

$390 000  22% = $85 800 (1)

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Question Answer Marks

4(f) Advise the directors which option they should choose. Justify your 7
answer by considering both financial and non-financial factors.

Financial

Option 1
• Exceeds the target profit by $12 890 (1)
• Results in total company profit of $107 690 (1)
• Will Accountancy department staff demand increased salary? (1)

Option 2
• Achieves positive contribution of $85 800 (1)
• Additional fixed costs must be borne leaving profit of $50 800 (1)
• Results in total company profit of $108 690 (1)
• Possible redundancy costs incurred (1)

Non-financial
• Will quality of work meet company’s requirements? (1)
• Will there be confidentiality issues? (1)
• Will deadlines be met? (1)
• Will staff be prepared to work overtime? (1)
• Will closure of payroll department result in loss of Accountancy clients?
(1)

Overall comments max 6 marks

Decision supported with a comment(1)

Accept other valid responses

4(g) State three limitations of cost-volume-profit analysis. 3

• Only relevant for single product or constant mix of products (1)

• Assumes that all variable costs per unit remain constant (1)
• Assumes that selling price remains constant (1)
• Fixed costs remain constant over the relevant range (1)
• All production is sold (1)

Max 3 marks

Accept other valid responses

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