9706 m19 Ms 32

Cambridge Assessment International Education
Cambridge International Advanced Subsidiary and Advanced Level
ACCOUNTING 9706/32
Paper 3 A Level Structured Questions March 2019
MARK SCHEME
Maximum Mark: 150
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 March 2019 series for most Cambridge
IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.
This document consists of 22 printed pages.
© UCLES 2019 [Turn over

9706/32 Cambridge International AS/A Level – Mark Scheme March 2019
PUBLISHED
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.
Marks awarded are always whole marks (not half marks, or other fractions).
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.
Rules must be applied consistently e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.
© UCLES 2019 Page 2 of 22

PUBLISHED
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).
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.

PUBLISHED
Question Answer Marks
1(a) Income and expenditure account for year ended 30 June 2018 7
$ $
Subscription fee
($544 000 + ($3400 + $8200) (1) – ($7000 + $2400) (1)) 546 200
Restaurant profit ($12 600 – $3300) 9 300 (1)
555 500
Depreciation clubhouse $300 000 × 4% 12 000 (1)
Depreciation equipment ($140 000 – $64 000) × 15% 11 400 (1)
Club operating expenses 192 000
Club staff salaries 326 000
6
Loan interest $10 000 × 10% ×
12 500 (1)
541 900
Surplus of income over expenditure 13 600 (1) OF

PUBLISHED
1(b) Responses could include: 2
receipts and payments account is a summary of cash book while income and expenditure account is of same nature as an
income statement; (1)
receipts and payments account applies cash basis accounting while income and expenditure account applies accrual
accounting; (1)
receipts and payments account records only cash transactions while income and expenditure also records non-cash
transactions such as depreciation; (1)
receipts and payments account looks for the increase / decrease in cash during the year while income and expenditure
account looks for the surplus / deficit; (1)
the opening balance of receipts and payments account represents cash balance at bank and in hand while there is no
opening balance for income and expenditure account. (1)
Accept other valid points.

(1 mark) × 2 differences

PUBLISHED
1(c) Statement of financial position at 30 June 2018 7
$ $ $
Accumulated
Cost depreciation NBV
Non-current assets
Clubhouse 300 000 168 000 132 000 (1) OF
Equipment 140 000 75 400 64 600 (1) OF
440 000 243 400 196 600
Current assets
Inventory 23 400
Subscriptions in arrears 8 200
Cash and cash equivalents 7 700
39 300 (1)
Total assets 235 900
Accumulated fund at 1 July 2017 194 000

Surplus for the year 13 600 (1) OF
Non-current liability
Loan from member 10 000 (1)
Current liabilities
Trade payables 12 100
Subscriptions in advance 2 400 (1)
Accrued wages 3 300 }
Accrued interest 500 } (1) OF
18 300
Total accumulated fund and
liabilities 235 900

PUBLISHED
1(d) $ 4
Restaurant profit 9 300
Increase in inventory (23 400 – 15 700) (7 700) (1)
Decrease in trade payables (12 100 – 13 900) (1 800) (1)
Increase in accrued wages 3 300 (1)
Net cash surplus from restaurant 3 100 (1) OF
1(e) Responses could include: 5
less paper work and procedures (than bank loan)
quicker to obtain loan (than bank loan)
may not require collateral (vs. bank loan)
however:
still may have to pay interest
still may have to repay the loan
already has a loan from a member $10 000; members may refuse to lend more

(2 marks) for explaining one reason for obtaining members’ loan and (2 marks) for explaining one reason against members’
loan. (1 mark) for decision.

PUBLISHED
2(a) 137 500 5

Trade receivables turnover = × 365 = 51 days (1)
994 000
220 000
Inventory turnover ratio = × 365 = 126 days (1) OF
640 000 (1)
52 100
Trade payables turnover = × 365 = 28 days (1)
680 000
Working capital cycle = 51 + 126 – 28 = 149 days (1) OF
2(b) The company is receiving payments and making payments within the agreed period. (1) 5
Payments are being made before receipt (1) so there will be an adverse effect on cash flow. (1)
Inventory turnover ratio has worsened from the previous year. (1) OF
Liquidity could be improved by reducing receivable days and inventory turnover ratio whilst increasing payables days. (1)
2(c) The ratio has worsened from the previous year (1) because a greater proportion of the revenue is being used to fund the 6
working capital cycle. (1)
The increase in the closing inventory has contributed to this (1) and indicates greater inefficiency. (1)
The fall in trade payables (1) and rise in trade receivables (1) have also had the same effect.

PUBLISHED
2(d) The gearing of F Limited is lower which indicates less risk (1) although both are low geared companies. (1) 9
Earnings per share of C Limited is higher which is better (1) indicating greater profits for each share held. (1)
Dividend cover of C Limited is higher which is better (1) indicating that there is a greater proportion of profits available for the
payment of dividends. (1)
Dividend per share of C Limited is higher which is better (1) showing that a higher dividend is paid for each share owned. (1)
From the limited information available, I would advise Blair to invest in C Limited. (1)
Award 1 mark for decision and max 2 marks for each ratio.
3(a) The closing inventory is valued at: 4

$
unsold containers 6 × 7 200 43 200 (1)
1
shipping expenses × 11 600 2 320 (1)
5
1
customs charges × 7 800 1 560 (1)
5
closing inventory valuation. 47 080 (1) OF

PUBLISHED
3(b)(i) Consignment account 7
$ $
Goods on consignment 216 000 (1) Sales 244 800 (1)
Shipping expenses 11 600 (1)
Commission 12 240 (1)
Customs charges 7 800 (1)
Income statement 44 240 (1) OF Balance c/d 47 080
291 880 291 880
Balance b/d 47 080 (1) OF
3(b)(ii) Maureen account 5
$ $
Consignment a/c -sales 244 800 (1)
Consignment a/c-commission 12 240 (1) OF
Bank 220 320 (1)
Consignment a/c- customs 7 800 (1)
Balance c/d 4 440
244 800 244 800
Balance b/d 4 440 (1) OF
3(c) 44 240 / 24 (1) = $1843.33 (1) OF 2
3(d) The debit balance (1) on Maureen’s account shows the amount payable by Maureen (trade receivable – the consignee) (1) to 3
SH Limited (the consignor). (1)

PUBLISHED
3(e) 4
Consignment Joint venture
Long-term trading relation (1) Short-term, specific purpose (1)
Profit usually commission (1) Joint venture total profit shared (1)
Involves consigner and consignee (1) Involves co-venturers (1)
Control exercised by consignor (1) Both parties have control over decisions (1)

Max 4
4(a)(i) No movement of funds is involved. (1) 1
4(a)(ii) Revaluation of non-current asset. (1) 1

PUBLISHED
4(b) T plc Schedule of non-current assets 9
Land and Machinery Fixtures Total

buildings and
fittings
$000 $000 $000 $000
Cost at 1 January 2018 400 214 82 696 (1) for row
Purchases 262 10 272 (1) for row
Disposals (100) (100) (1) for row
Cost at 31 December 2018 400 376 92 868
Accumulated depreciation at 1
January 2018 12 112 17 141 (1) for row
Charge for the year 4 84 9 97 (1) for row
Eliminated on disposals (70) (70) (2) for row*
Accumulated depreciation at
31 December 2018 16 126 26 168
NBV at 31 December 2018 384 250 66 700 (1) OF for row
NBV at 1 January 2018 388 102 65 555 (1) for row
* depreciation eliminated = 100 + 12 – 42 = 70 (2) for correct answer in correct column

(1) for other answer based on 100 in correct column

PUBLISHED
4(c) T plc Statement of Changes in Equity for the year ended 31 December 2018 9
Share Share Retained General Total

capital premium earnings reserve
$000 $000 $000 $000 $000
Balance at 1
January 2018 500 105 40 645 (1) for row
Share issue 400 (1) 80 (1) 480
Profit for the 167 (3)*W1 167

year
Dividend paid (80) (1) (80)
Transfer (10) 10 0 (1) for row
(1) OF for
Balance at 31 900 80 182 50 1212 row
December 2018 _________ ________ ________ _______ _______
W1 profit for the year = 288 – 21 (1) interest – 100 (1) tax = 167 (1) OF

PUBLISHED
4(d) The directors should continue with the statement of cash flows. (1) 5
A statement of cash flows is a requirement of IAS 1. (1)

It shows how cash has been acquired and applied. (1)
It is a link between two statements of financial position. (1)
A cash budget is a management tool. (1)

It deals with the future, not historical data. (1)
If published, it could be of use to competitors. (1)

(1) for decision + (Max 2) for comments on statement of cash flows at (1) mark each and (Max 2) for comments on cash
budgets.
5(a) Premier Standard 3

$ $
Direct materials 80 50 }
Direct labour 90 50 }(1) for all
Fixed overheads 36 24 (1) for both
Cost per unit 206 124 (1) OF for both
$480 000
Fixed overhead per unit = $12
40 000
5(b) Cost driver is the factor that causes the change (1) in the cost of an activity. (1) 2

PUBLISHED
5(c) Advantages 5
ABC provides more reliable information for product costing, i.e. it is based on activity cost driver. (1)
ABC facilitates pricing decision. (1)
Disadvantages
It is time consuming to implement ABC. (1)
Determining the cost driver may be difficult. (1)
Measuring the quantity of each cost driver consumed may be difficult. (1)
It is costly because it may be necessary to employ a specialist to implement the ABC system. (1)
Max 2 for advantages, Max 3 for disadvantages

PUBLISHED
5(d) Premier Standard 8

$ $
Direct materials 80 50 }
Direct labour 90 50 } (1) OF for all
Fixed overheads 28 36
Cost per unit 198 (1) OF 136 (1) OF
Premier Standard
$ $
Materials requisition
2 × $1200* 2 400 )
6 × $1200 7 200 )(1)
Machine setup
2 × $4000* 8 000 )
3 × $4000 12 000 )(1)
Inspection
120 × $30* 3 600 )
320 × $30 9 600 )(1)
Total for June 2019 14 000 28 800
Units produced ÷ 500 ÷ 800
Per unit $28 (1) OF $36 (1) OF
$90000
* = $1200 per requisition
75
$240 000
* = $4000 per setup
60
150 000
* = $30 per inspection hour
5000

PUBLISHED
5(e)(i) Premier Standard 4

$ $
Absorption costing method
Cost per unit 206.00 124.00
Cost plus 40% 82.40 49.60
Unit selling price 288.40 (1) OF 173.60 (1) OF
5(e)(ii) Premier Standard

$ $
ABC costing method
Cost per unit 198.00 136.00
Cost plus 40% 79.20 54.40
Unit selling price 277.20 (1) OF 190.40 (1) OF
5(e)(iii) Difference in price of Premier ($288.40 − $277.20) = $11.20 3

Difference in price of Standard ($173.60 − $190.40) = $16.80
The difference in selling price is caused by the fixed overhead charged to each product (1)
For Premier ($36 − $28) × 140% = $11.20 (1) OF
For Standard ($36 − $24) × 140% = $16.80 (1) OF
6(a)(i) Material price 2

$
standard 2800 kilos × $6 16 800
actual 17 350
$550 (1) A (1)

PUBLISHED
6(a)(ii) Material usage 2

standard 5900 units × 0.5 kilos 2 950
actual 2 800
150 kilos
× $6
$900 (1) F (1)
6(a)(iii) Labour rate 2

$
standard 9500 hours × $4.50 42 750
actual 42 275
$475 (1) F (1)
6(a)(iv) Labour efficiency 2

standard 5900 units × 1.5 hours 8 850
actual 9 500
650 hours
× $4.50
$2 925 (1) A (1)
1 mark for calculation plus 1 mark for direction

PUBLISHED
6(b) Material price variance – adverse 4
Unexpected price increase.
Loss of previous discount from supplier.
Better quality materials purchased.
(1 mark) × any 1 reason OF
Material usage variance – favourable
Less wastage due to better quality material.
Less wastage due to better skilled/experienced workforce.
Labour rate – favourable
A planned pay increase was not given.
Use of lower skilled labour.
Greater supply of labour.

PUBLISHED
6(b) Labour efficiency - adverse
Use of lower quality material.
Use of lower skilled labour.
More idle time than budgeted.
Poor supervision

6(c)(i) Fixed overhead expenditure 2

$
standard 6500 units × 1.5 hours × $5 48 750
actual 52 100
$3 350 (1) A (1)
6(c)(ii) Fixed overhead volume 2

standard units 6 500
actual units 5 900
600 units
Standard OAR 1.5 hours × $5 × $7.50
$4 500 (1) A (1)

PUBLISHED
6(d) The fixed overhead volume variance is the difference between the actual and budgeted production and can be broken down 5
further (to show what caused this difference) into the fixed overhead efficiency (1) and fixed overhead capacity. (1)
If Jack calculated the fixed overhead efficiency he would know how much of the volume variance was due to the efficiency of
his workforce. (1) As the volume variance was adverse for Jack this could mean the workforce worked more slowly than
expected (1) due to lack of skills, poor material quality. (1)
If Jack calculated the fixed overhead capacity he would know how much of the volume variance was due to number of hours
worked. (1) As the volume variance was adverse for Jack this could mean the workforce worked fewer hours than expected (1)
due to strikes, machine breakdown or shortage of labour. (1)
Max 5

PUBLISHED
6(e) Advantages 4
Acting as a control device in variance analysis (1)
Assisting in budget setting (1)
Evaluating managers performance (1)
Predicting future costs to aid decision making (1)
Providing targets to motivate staff (1)
Suggesting ways to improve efficiency (1)
Enabling more accurate inventory valuation (1)
Disadvantages
Time consuming to collect data (1)
Standards based on estimates (1)
Unrealistic standards can demotivate staff (1)
Factors causing variances are outside his control (1)
Max 2 marks for advantages and Max 2 marks for disadvantages


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Cambridge Assessment International Education

Cambridge International Advanced Subsidiary and Advanced Level

This document consists of 22 printed pages.

© UCLES 2019 [Turn over

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

GENERIC MARKING PRINCIPLE 2:

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

GENERIC MARKING PRINCIPLE 4:

© UCLES 2019 Page 2 of 22

GENERIC MARKING PRINCIPLE 6:

© UCLES 2019 Page 3 of 22

© UCLES 2019 Page 4 of 22

1(b) Responses could include: 2

Accept other valid points.

© UCLES 2019 Page 5 of 22

1(c) Statement of financial position at 30 June 2018 7

Accumulated fund at 1 July 2017 194 000

© UCLES 2019 Page 6 of 22

1(e) Responses could include: 5

less paper work and procedures (than bank loan)

quicker to obtain loan (than bank loan)

may not require collateral (vs. bank loan)

still may have to pay interest

still may have to repay the loan

Accept other valid points.

© UCLES 2019 Page 7 of 22

2(a) 137 500 5

Working capital cycle = 51 + 126 – 28 = 149 days (1) OF

Accept other valid points.

Accept other valid points.

© UCLES 2019 Page 8 of 22

Accept other valid points.

Question Answer Marks

3(a) The closing inventory is valued at: 4

© UCLES 2019 Page 9 of 22

3(b)(i) Consignment account 7

3(b)(ii) Maureen account 5

3(c) 44 240 / 24 (1) = $1843.33 (1) OF 2

© UCLES 2019 Page 10 of 22

Long-term trading relation (1) Short-term, specific purpose (1)

Involves consigner and consignee (1) Involves co-venturers (1)

Accept other valid points.

Question Answer Marks

4(a)(i) No movement of funds is involved. (1) 1

4(a)(ii) Revaluation of non-current asset. (1) 1

Accept other valid points.

© UCLES 2019 Page 11 of 22

4(b) T plc Schedule of non-current assets 9

Land and Machinery Fixtures Total

NBV at 31 December 2018 384 250 66 700 (1) OF for row

NBV at 1 January 2018 388 102 65 555 (1) for row

* depreciation eliminated = 100 + 12 – 42 = 70 (2) for correct answer in correct column

© UCLES 2019 Page 12 of 22

Share Share Retained General Total

$000 $000 $000 $000 $000

Share issue 400 (1) 80 (1) 480

Profit for the 167 (3)*W1 167