Cambridge International AS & A Level

ACCOUNTING 9706/22
Paper 2 Structured Questions May/June 2022
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 May/June 2022 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U 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 descriptors 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.

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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.

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)

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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.

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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Question Answer Marks

1(a) Karen and Lee 9

Income statement for the year ended 28 February 2022

$ $
Revenue 229 250
Less returns inwards (2200 + 410) (2 610)
226 640 (1)
Cost of sales
Opening inventory 8 250
Purchases 151 440
Less returns outwards (3930 – 410) (3 520)
156 170
Carriage inwards 3 880 (1)
160 050
Less closing inventory W1 (21 080) (1)
(138 970)
Gross profit 87 670 (1)OF
Less expenses
Administrative expenses 6020
Bank interest charges 180
Insurance W2 6 800 (1)
Loan interest (Lee) W3 200 (1)
Depreciation of non-current assets W4 20 800 (1)
Increase in provision for doubtful debts W5 50 (1)
(34 050)
Profit for year 53 620 (1)

W1 Closing inventory

$
Original valuation 21 220
Less reduction in valuation of damaged items
Cost 1320 less NRV 1180 (2480 – 1300) (140)
21 080

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Question Answer Marks

1(a) W2 Insurance
7740 less prepaid 940 (2/3  1410) = $6800

W3 Loan interest (Lee)

6%  $10 000  1/3 = 200

W4 Depreciation of non-current assets

20%  nbv $104 000 ($160 000 – $56 000) = $20 800

W5 Increase in provision for doubtful debts

$310 – $260 = $50

1(b) Lee 4
Current Account

$ $
Balance b/d 1 880 Loan interest 200 (1)OF
Drawings 19 900 (1) Share of profit 32 172 (1)OF
Balance c/d 10 592
32 372 32 372
Balance b/d 10 592 (1)OF

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Question Answer Marks

1(c) The current account balance will be reduced by $4786 (6) 6

Workings
Recalculation of Lee’s current account balance

Opening balance (1 880)

Loan interest 200 (1)OF

Drawings (19 900) (1)

Interest on drawings (10% x $19 900) (1 990) (1)

Share of residual profits W1 29 376 (1)OF

Revised current account balance 5 806 (1)OF

The current account balance will be reduced by ($10 592 – $5806 = $4786 (1)

W1 Share of profits
53 620 (OF) + 3740 – 8400 = 48 960
Lee’s share of residual profit: 3/5  $48 960 = $29 376

1(d)  Fewer legal requirements (1) which means it has fewer costs (1) 2
 No requirement to publish financial statements (1) which means the partnership can keep its affairs private (1).
 No risk of dilution of ownership (1) there are less owners in a partnership (1)

Max 1 advantage (1 mark for the basic point + 1 for development)

Accept other valid responses.

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Question Answer Marks

1(e)  Shareholders enjoy limited liability for debts In the case of a company being wound up (1), and they would only lose 4
their investment in the company (1).
 Limited companies can access larger amounts of finance (1) through the issue of additional shares/debentures (1).

Max 2 advantages (1 mark for the basic point + 1 for development)

Accept other valid responses.

1(f) Reasons for (Max 2) 5

 Will reduce cash outflows (1)
 Costs may be saved through less expenditure on storage/carriage inwards (1)
 Less chance of wastage/obsolescence of inventory (1)

Reasons against (Max 2)

 Business could lose valuable trade discounts (1)
 Risk of running out of inventory of popular products (stock-outs) (1)
 Limited inventory for customers may affect reputation (1)

Advice (1)

Accept other valid responses.

Question Answer Marks

2(a) Technological change (1) 2

Depletion (1)
Time factor (1)
Obsolescence (1)
Economic factors (1)
Inadequacy (1)

Max 2
Accept other valid responses.

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Question Answer Marks

2(b) Accounting methods are applied in the same way in each accounting period (1) enabling valid comparison from year to year 2
(1)

Accept other valid responses.

Max 2

2(c) 3
Journal

Dr Cr
$ $

Property 350 000 (1)

Provision for depreciation W1 85 000 (1)

Revaluation reserve 435 000 (1)

W1 Provision for depreciation: 2  5%  $850 000 = $85 000

2(d) Depreciation charge: $9639 (4) 4

Workings

Provision for depreciation is: Year 1 $14 000; Year 2 (10%  $126 000), i.e. $12 600 = $26 600
Net value at time of sale: $140 000 – $26 600 = $113 400
Net value after sale: 113 400 (1) – 17 010 (1) = $96 390 (1)  10% = $9639 (1)

Accept alternative presentations

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Question Answer Marks

2(e) Motor vehicle disposal account 4

$ $
Motor vehicle 40 000 (1) Depreciation 8 000(1)
Motor vehicle 27 000(1)
Income statement 5 000(1)OF
40 000 40 000

Question Answer Marks

3(a)(i) Trade payables turnover 3

Formula Calculation

Trade payables  365/Credit purchases (1) 42000  365

= 32 days (1)
480000 (1)

3(a)(ii) Trade receivables turnover 3

Formula Calculation

Trade receivables  365/Credit sales (1)

Total sales 2.5  $420 000 = $1 050 000

30000  365
= 35 days (1)
315000 (1)

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Question Answer Marks

3(a)(iii) Return on capital employed (to two decimal places) 3

Formula Calculation

Profit before interest  100

Profit before interest = $182 000 + debenture interest
Capital employed (Equity + Debentures) (1) $20 000 = $202 000

202000 (1)
 100 = 13.19% (1)
1532000

3(a)(iv) 2
Formula Calculation

Net revenue/net book value of non-current 1 050 000 / 1 520 000 = 0.69 times (1)
assets (1)

3(b) The ratio will inform the directors how efficiently assets are being used by the company to generate revenue (1). The low 2
ratio is a cause for concern for the future growth of the business (1) OF
Accept other valid responses

3(c)  To assess the security of the investment (1) to decide whether to sell shares or make further investment (1) 2
 To assess the profitability of the company (1) to gauge future dividends (1)
 To compare results of different companies (1) to decide on investments (1)

Max 1 reason (1 mark for the basic point + 1 for development)

Accept other valid responses

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Question Answer Marks

4(a)(i) Charging overheads/costs to a specific cost centre (1) where those overheads are clearly identified with that cost centre (1) 2
OR
Overheads expenses are directly attributed (1) to a specific cost centre (1)

4(a)(ii) Charging overheads/costs that cannot be clearly identified with a specific cost centre (1) to cost centres on an appropriate 2
basis. (1)
OR
Overhead expenses are shared between different departments (1) by using a suitable basis (1)

4(b)  Useful for determining a selling price (1) 1

 Avoids separating fixed and variable costs (1)

Accept other valid responses

Max 1

4(c) Not useful for short-term decision-making (1) 1

Not appropriate for monitoring the performance of managers/responsibility accounting (1)

Accept other valid responses

Max 1

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Question Answer Marks

4(d) 3
Production departments Service departments

Assembly Finishing Stores Maintenance

department department department department

$ $ $ $

Total overhead costs 275 000 103 200 19 200 26 700

Maintenance 16 020 8 010 2 670 (26 700) (1)

Subtotal 291 020 111 210 21 870 --

Stores 16 403 5 467 (21 870) (1)OF

Total 307 423 116 677 -- (1)OF

4(e)(i) Assembly department: $307 422.5/1430, i.e. $214.98 (1) OF per machine hour (1) 2

4(e)(ii) Finishing department: $116 677.5/840, i.e. $138.90 (1) OF per labour hour (1) 2

4(f) Overheads absorbed: 1310  $214.98 = $281 623.8 (1) OF 3

Actual overheads $285 400 less absorbed $281 623.80 = $3776.2 (1) OF under-absorbed (1)

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Question Answer Marks

4(g)(i) Option A 4

$41 000 (4)

Workings

Contribution (12 000 (1)  $9 (1)) 108 000

Fixed costs ($40 000 + $24 000 + $3000) 67 000 (1)

Profit 41 000 (1)OF

Accept alternative approaches.

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Question Answer Marks

4(g)(ii) Option B 3

$46 400 (3)

Workings

Product X 8000 units  ($22.8 – Variable cost $15, i.e. $7.8) 62 400

Less fixed costs (40 000)

Profit 22 400 (1)

Product Z 4000 units  $12 48 000

Less fixed costs 24 000

24 000 (1)

Total profit 46 400 (1)

Accept alternative approaches.

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Question Answer Marks

4(h) Option A (Max 3) 7

 Will ensure major customer will continue to order in future (1)
 How will customers for Product Z react - will their future orders be lost? (1)
 Produces less profit (1)
 Can training be implemented in time without loss of production (1)

Option B (Max 3)
 Will enable orders of other regular customers to be met (1)
 Produces more profit (1)
 Will the price cut actually produce the required level of sales of product X now and in the future (1)?
 Reaction of competitors (1)
 Is there a danger of losing a regular customer (1)

Advice (1)
Accept other valid responses

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