Cambridge O Level

ACCOUNTING 7707/22
Paper 2 October/November 2022
MARK SCHEME
Maximum Mark: 100

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 2022 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.

This document consists of 16 printed pages.

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7707/22 Cambridge O Level – Mark Scheme October/November 2022
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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.

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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).

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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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Question Answer Marks

1(a) BC 12
Income Statement for the year ended 31 August 2022

$ $
Revenue 231 500
Sales returns 3 600
227 900 (1)
Cost of sales
Opening inventory 11 100
Purchases 120 000
Carriage inwards 400 (1)
131 500
Closing inventory 12 000 119 500 (1) OF
Gross profit 108 400 (1) OF
Commission receivable (2 200 + 800) 3 000 (1)
Discount received 1 400 **
112 800
Discount allowed 600 (1) ** both
Insurance (9 600 – 700) 8 900 (1)
Repairs (12 400 – 4 000) 8 400 (1)
Salaries (53 900 + 4 900) 58 800 (1)
Rates (6 000 – 300) 5 700 (1)
Depreciation machinery (27 600 x 20%) 5 520 (1) 87 920
Profit for the year 24 880 (1) OF

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Question Answer Marks

1(b) $ $ 3
Current assets
Inventory 12 000
Trade receivables 19 200
Commission received 800
Rates prepaid 300
32 300 (1)
Current liabilities
Trade payables 7 300
Salaries owing 4 900
Bank 4 100
16 300 (1)

Working capital 16 000 (1) OF

1(c) Option 1 Credit 5

Only payback the original amount of $6000/no interest (1)
Credit may not be granted as already has an overdraft (1)
Working capital/funds may be adequate provided trade receivables pay on time (1)
Consider whether adequate funds will be available in 60 days (1)
Working capital will be reduced (1)
Accept other valid points

Max (2)

Option 2 Loan
Interest each year will have to be paid (1)
Interest will reduce profit each year (1)
Consider whether funds will be available to repay the loan (1)
Loan may not be granted as already has an overdraft (1)
Accept other valid points

Max (2)

Recommendation (1)

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Question Answer Marks

2(a) 4
Item Book of prime entry

Discount received from credit suppliers Cash book (1)

Purchases returns Purchase returns journal (1)

Contra entries General journal (1)

Interest charged by credit suppliers General journal (1)

2(b) A balance on a purchase ledger account is transferred to an account for the same business in the sales ledger (1) 2
Purchase ledger account is debited, and the sales ledger is credited (1)

2(c) MC 9
Purchase ledger control account

Date Date
2022 Details $ 2022 Details $
Jul 1 Balance b/d 130 * Jul 1 Balance b/d 21 400 (1)* both
31 Purchase returns 9 800 (1) 31 Purchases 259 600 (1)
Bank 228 200 (1) Interest charges 150 (1)
Discount received 12 900 (1) Balance c/d 180
Cash 500 (1)
Contra 2 260 (1)
Balance c/d 27 540 _______
281 330 281 330
Aug 1 Balance b/d 180 ** Aug 1 Balance b/d 27 540 (1) OF** both

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Question Answer Marks

2(d) Reduce cost of goods/increase gross profit/lower selling price (1) 5

Reliability of new supplier/guaranteed supplier (1)
Must consider whether low price will be maintained/currency fluctuations (1)
Must consider whether goods will be of an acceptable quality (1)
Possible language differences/difficulty of communications (1)
May be more difficult in case of problems/disputes (1)
May experience delivery problems (1)
Contract is binding for one year (1)
Accept other valid points
Max (4)

Recommendation (1)

3(a) MG 5
Cash book (bank columns only)

Date Details $ Date Details $

2022 2022
Aug 31 Balance b/d 25 600 Aug 31 RJ (dis cheque) 420 (1)
Rates (SO) 50 (1) Insurance (DD) 110 (1)
Bank charges 75 (1)
______ Balance c/d 25 045
25 650 25 650
Sep 1 Balance b/d 25 045 (1) OF

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Question Answer Marks

3(b) MG 4
Bank reconciliation statement at 31 August 2022
$
Balance shown in cash book 25 045 (1) OF
Add unpresented cheques JW 680 (1)
25 725
Less uncredited deposits TH (910) (1)
Balance shown on bank statement 24 815 (1)

Alternative presentation:
$
Balance shown on bank statement 24 815 (1)
Add uncredited deposits TH 910 (1)
25 725
Less unpresented cheques JW (680) (1)
Balance shown in cash book 25 045 (1) OF

3(c) Identify/correct either errors or omissions in the cash book (1)

Identify errors on the bank statement (1)
Update the cash book/obtain correct bank balance (1)
Assist in discovering fraud/deter or reduce risk of fraud (1)
Identify amounts not credited (1)
Identify cheques not presented (1)
Identify out-of-date (stale) and dishonoured cheques (1)
Accept other valid points

Max 2

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Question Answer Marks

3(d) Insufficient funds in the bank account (1) 2

No/incorrect signature (1)
No date (1)
No amount (1)
No payee (1)
Words and figures disagree (1)

Accept other valid points

Max 2

3(e) A standing order is when a person instructs their bank to pay a fixed sum at fixed intervals to another person (1) 2
A direct debit is when permission is given for a named person to collect an amount from their bank. The dates and amounts
can vary (1)

Max 2

3(f) Accept – Order 5

Sales/revenues will increase (1)
May lead to future orders (1)
Increase in profit for the year (1)
Could lose order if no discount given (1)
Accept other valid points

Max 2

Decline – Order
Existing customers may request a similar discount (1)
Reduction in profit if discount given to all existing customers (1)
May damage relationship of existing customers (1)
Reduction in gross margin (1)
Accept other valid points

Max 2

Recommendation (1)

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Question Answer Marks

4(a) PG 13
Sales account

Date Details $ Date Details $

2022 2022
Jul 31 Income statement 377 000 (1) OF Jul 31 Trade receivables 360 000 (1)
___ ___ Cash 17 000 (1)
377 000 377 000

Sales returns account

Date Details $ Date Details $

2022 2022
Jul 31 Trade receivables 13 300 (1) Jul 31 Income statement 13 300
13 300 13 300

Trade receivables account

Date Details $ Date Details $

2021 2022
Aug 1 Balance b/d 28 500 Jul 31 Sales returns 13 300*
2022 Bank 335 100*
Jul 31 Sales 360 000 (1) Discount allowed 6 500*
Bank 4 000 (1) Irrecoverable debts 900*
___ ___ Balance c/d 36 700
392 500 392 500
Aug 1 Balance b/d 36 700 (1) OF

*1 mark for 2 correct items and 2 marks for 4 correct items

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Question Answer Marks

4(a) Irrecoverable debts account

Date Details $ Date Details $

2022 2022
Jul 31 Trade receivables 900 Jul 31 Income statement 900 (1)
900 900

Provision for doubtful debts account

Date Details $ Date Details $

2022 2021
Jul 31 Balance c/d 1 468 Aug 1 Balance b/d 1 140 (1)
2022
____ Jul 31 Income statement 328 (1)
1 468 1 468
Aug 1 Balance b/d 1 468 (1) OF

4(b) PG 2
Extract from statement of financial position at 31 July 2022
Current assets** $
Trade receivables 36 700 (1) OF
less provision for doubtful debts 1 468 OF
35 232 OF **(1)
**For heading + OF total

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Question Answer Marks

4(c) Obtain (credit) references (1) 3

Set credit limit (1)
Sell for cash only / reduce credit sales (1)
Issue invoices / statements of account promptly (1)
Follow up with phone calls / emails etc (1)
Improve or introduce credit control / hire a credit controller (1)
Charge interest on late payment (1)
Refuse further supplies until outstanding balance is paid (1)
Increase level of cash discount (1)
Last resort take legal action (1)
Accept other valid points

Max 3

4(d) Experience of late / non-payment (1) 2

Specific knowledge of customers credit record / credit rating (1)
Length of time debts outstanding / ageing schedule / trade receivables turnover (1)
State of the local economy (1)
Accept other valid points

Max 2

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Question Answer Marks

5(a) Sian and Tom 8

Profit and loss appropriation account for the year ended 31 March 2022

$ $
Profit for the year 59 190
add interest on drawings
Sian [240(1) + 90(1)] 330
Tom [300(1) + 180(1)] 480
810
60 000
less interest on capital
Sian (150 000 x 6%) 9 000 (1)
Tom (100 000 x 6%) 6 000 (1)
15 000
45 000
less partners salary Sian 20 000 (1)
25 000
Share of profits: Sian 15 000 }
Tom 10 000 } (1) OF
25 000

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Question Answer Marks

5(b) 8
Sian and Tom
Statement of financial position (extract) at 31 March 2022

$ $ $
Capital Sian 150 000
Tom 100 000
250 000 (1)
Current Sian Tom
Balance b/d 3 000 (7 000) (1) both
Interest on capital 9 000 6 000 (1) OF both
Salary 20 000 (1) -
Profit 15 000 10 000 (1) OF
47 000 9 000
Drawings 14 000 22 000 (1)
Interest on drawings 330 480 (1) OF
14 330 22 480
32 670 (13 480)
19 190
269 190 (1) OF

5(c) The amount the partner owes to the partnership (1) 2

Indicates that the partner’s drawings are too high (1)
Indicates that the partner’s drawings are greater than the total profit share (1)

Max 2

5(d) Assumes the business will operate for an indefinite period of time (1) 2
Assumes there is no intention to close the business down / reduce the size of the business significantly (1)
Non-current assets are valued at net book value / not expected sales value (1)

Accept other valid points

Max 2

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