Cambridge International AS & A Level

ACCOUNTING 9706/21
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 16 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) Prepare the statement of profit or loss for the year ended 30 June 2024. 15

T Limited
Statement of profit or loss for the year ended 30 June 2024

Revenue W1 693 100 (1)

Cost of sales W2 (292 000) (3)OF

Gross profit 401 100

Distribution costs W3 (125 152) (4)OF

Administrative expenses W4 (136 054) (5)OF

Profit from operations 139 894

Finance costs W5 (6 260) (1)

Profit before Taxation 133 634

Taxation (26 000)

Profit for the year 107 634 (1)OF

W1 – Revenue $705 100 – $12 000 = $693 100 (1)

W2 – Cost of sales $93 400 + 293 780 + $820 (1) – ($86 400 +
$9 600) (1) = $292 000 (1)OF

W3 – Distribution $114 870 – $1 300 (1) + $2 100 (1) + $9 482

costs (1)
= $125 152 (1)OF

W4 – Administrative $131 310 + $2 860 (1) + $680 (1) + $664 (1) +

expenses $540 (1)
= $136 054 (1)OF

W5 – Finance costs $5 180 + $1 080 = $6 260 (1)

1(b) Calculate the balance of cash and cash equivalents at 30 June 2024. 4

($240 – $12 380) (1) + $45 000 (1) – $28 080 (1) = $4 780 (1 )OF

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Question Answer Marks

1(c) Prepare an extract from the statement of financial position at 30 June 6

2024 to show the equity and liabilities section only.

T Limited
Statement of financial position at 30 June 2024

Equity

Share capital 80 000

Retained earnings W1 146 084 (1) OF

Total equity 226 084

Liabilities

Non-current liabilities

5% Debentures (2028-2029) 45 000 (1)

Current liabilities

Trade and other payables W2 32 840 (1)

Taxation 26 000

8% bank loan (2024) 27 000 (1)

Total liabilities 130 840 (1) OF

Total equity and liabilities 356 924 (1) OF

W1: $38 450 + 107 634 = 146 084 (1) OF

W2: $32 160 + 680 = 32 840 (1)

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Question Answer Marks

1(d) Assess the directors’ decision on 30 June 2024 to take out the 5% 5
debenture (2028-2029). Justify your assessment by considering both
advantages and disadvantages of the decision to the company.

Advantages (Max 2 marks)

• Removed the negative cash balance (1)
• Repaid one half of the 8% bank loan that was due for repayment with the
next six months (1)
• Beneficial interest rate compared to the bank loan (1)

Disadvantages (Max 2 marks)

• Tied the company into a further five years of debt (1)
• Weakened the immediate capital structure of the company (1)
• May cause longer-term cash flow problems to meet repayment terms (1)
• Security is required (1)

Decision supported with a comment (1)

Accept other valid responses

Question Answer Marks

2(a) Prepare journal entries to correct each error. Narratives are not required. 9

Journal
Debit. Credit
$ $

Sales ledger control account 610 (1)

Bank 610 (1)

Sales returns 240 (1)

Purchases 240 (1)

Suspense 300 (1)

Sales returns 150 (1)

Purchases returns 150 (1)

Suspense 987 (1)

Purchases ledger control account 987 (1)

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Question Answer Marks

2(b) Prepare the suspense account at 30 September 2024 clearly showing the 4
opening balance brought down. Dates are not required.

Suspense account
Details $ Details $

Sales returns 150 (1) Balance b/d 1 287 (1)OF

Purchases returns 150 (1)

Purchases ledger control 987 (1)

account

1 287 1 287

2(c)(i) Calculate the revised balances of the: 1

Purchases ledger control account

$8 640 + $987 = $9 627 (1)

2(c)(ii) Calculate the revised balances of the: 1

Sales ledger control account

$12 420 + $610 = $13 030 (1)

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Question Answer Marks

3(a) Prepare each account for the year ended 30 June 2024. 8

Motor vehicles at cost account

Date Details $ Date Details $

2023 Balance b/d 24 000 2023 Disposal 24 000

1 July (1) 30 Sept (1)

2023 Disposal 14 800 2024 Balance c/d 70 000

30 Sept (1) 30 June

Loan account 55 200

(1)

94 000 94 000

2024 Balance b/d 70 000

1 July (1)OF

Motor vehicles provision for depreciation account

Date Details $ Date Details $

2023 Disposal 7 500 2023 Balance b/d 6 000

30 Sept (1) 1 July

2024 Balance c/d 10 125 2024 Statement of 11 625

30 June 30 June profit or loss (1)

17 625 17 625

70 000 2024 Balance b/d 10 125

1 July (1)OF

3(b)(i) Calculate the outstanding balance on the interest-free loan at 30 June 1

2024.

$55 200 – (9  2 300) = $34 500 (1)

3(b)(ii) State how the interest-free loan will be shown in the statement of 1
financial position at 30 June 2024.

Non-current liabilities 6 900 (1)

Current liabilities 27 600

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Question Answer Marks

3(c) Advise Clarissa whether or not she should change her method of 5
charging depreciation. Justify your advice by discussing both methods.

Straight line method (Max 2)

• Easier to calculate (1)

• Difficult to accurately predict estimated useful life (1)
• Difficult to predict residual value (1)

Reducing balance method (Max 2)

• More realistic (1)

• Recognises vehicle loses more value in the early years (1)
• Recognises increased maintenance costs as vehicle ages (1)
• Results in more realistic profit calculations (1)

Advice supported with a comment (1)

Accept other valid responses.

Question Answer Marks

4(a)(i) Define each term: 1

cost centre

A cost centre is a production location where costs may be attributed to cost

units (1)

Accept other valid responses

4(a)(ii) Define each term: 1

cost unit

A cost unit is a unit of production that absorbs the cost centre’s overhead
costs. (1)

Accept other valid responses

4(a)(iii) Define each term: 1

direct cost

A direct cost is one that can be specifically associated with the manufacture of
one unit of production. (1)

Accept other valid responses

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Question Answer Marks

4(a)(iv) Define each term: 1

indirect cost

An indirect cost is one that cannot economically be specifically associated

with the manufacture of one unit of production. (1)

Accept other valid responses

4(b) Complete the table to apportion costs to the production departments. 6

Total Production Service

$ departments departments

Machining Finishing Stores Canteen

Allocated 512 100 195 200 234 700 66 400 15 800

overheads

Light and heat 12 800 3 840 6 400 1 920 640

(1) for
row

Production 42 000 15 750 26 250 – –

supervisors’ (1) for
wages row

Total 566 900 214 790 267 350 68 320 16 440

overheads

Reapportion 4 932 8 220 3 288 (16 440)

Canteen (1) for
row

219 722 275 570 71 608 –

Reapportion 28 643 42 965 (71 608) –

Stores (1) for
row

248 365 318 535 – –

(1) OF (1) OF

4(c) Calculate, to two decimal places, a suitable overhead absorption rate for 2
each production department.

Machining department

$248 366 / 28 900 = $8.59 per machine hour (1) OF

Finishing department

$318 534 / 18 500 = $17.22 per labour hour (1) OF

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Question Answer Marks

4(d) Calculate the over-absorption or under-absorption of overheads for 4

each production department.

Machining department

$8.59  26 880 = $230 899 – $249 200 = $18 301 (1) OF under absorbed (1)
OF

Finishing department

$17.22  18 650 = $321 153 – $320 400 = $753 (1) OF over absorbed (1) OF

4(e)(i) Calculate the budgeted hourly direct labour rate for each department. 2

Machining department
$127 270 / 14 300 hours = $8.90 (1)

Finishing department
$183 150 / 18 500 hours = $9.90 (1)

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Question Answer Marks

4(e)(ii) Prepare a statement to show the total selling price that Alberto should 7
quote the customer.

Direct material 4 metres  3.85 15.40 (1)

Direct labour Machining 0.75  $8.90 6.68 (1) OF

department

Finishing department 1.5  $9.90 14.85 (1) OF

Overheads Machining 0.5  $8.59 4.30 (1) OF

department

Finishing department 1  $17.22 17.22 (1) OF

Total cost 58.45 (1) OF

Profit margin 38.97

Unit cost 97.42

Units 12

Quotation 1 169.04 (1) OF

Alternative answer

Direct material 4 mtrs  3.85  12 184.80 (1)

Direct labour Machining 0.75  $8.90  12 80.16 (1) OF

department

Finishing department 1.5  $9.90  12 178.20 (1) OF

Overheads Machining 0.5  $8.59  12 51.60 (1) OF

department

Finishing department 1  $17.22  12 206.64 (1) OF

Total cost 701.40 (1) OF

Profit margin 467.60

Quotation 1 169.00 (1) OF

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Question Answer Marks

4(f) Advise Alberto whether or not he should accept the proposed terms 5
offered by the customer. Justify your advice by discussing both
financial and non-financial matters.

Financial

• Will still make a profit on the work (1)

• Will achieve 25% margin on the work so fails to achieve target margin of
40% (1)
• Will result in an under absorption of fixed overheads incurred (1)

Non-financial

• Will increase capacity of the factory (1)

• May have negative effect on existing customers if they find out (1)
• May have a positive effect on employees to have less down-time (1)

Advice supported with a comment (1)

Accept other valid responses

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