Cambridge AS & A Level Accounting 9706/32 is the May/June 2026 Paper 3 (Financial Accounting), variant 2. It is an A Level component worth 75 marks, it lasts 1 hour 30 minutes, and you answer all three 25-mark questions. The data for each question is in an insert (Sources A, B and C). The biggest single part is the 18-mark statement of cash flows in Question 2(b), where most of the marks sit on the workings. This guide goes through every part, with the final figures and key workings from the official mark scheme. The paper and its mark scheme are free on the Tutopiya Learning Portal.

For an overview of all four 9706 papers from this series, see A Level Accounting 9706 May/June 2026 past papers: what came up and how it was marked.

9706/32 at a glance

The rubric is: answer all questions.

Question	Source	Topics	Marks
1	A	A club with a café: club and trading differences, life membership, café statement of profit or loss, income and expenditure account, accumulated fund and liabilities	25
2	B	W plc: uses of a statement of cash flows, statement of cash flows under IAS 7, advise on a new office building	25
3	C	G Limited takes over the Andy and Ben partnership: purchase consideration, capitals, realisation, capital accounts, G Limited’s journal, advise on buying a leather supplier	25
Total			75

Question-by-question walkthrough

The mark scheme’s key applies throughout. OF (own figure) means a mark is given for using your own earlier figure correctly with a complete method. W marks a working, a curly bracket means one mark for a group of figures, and marks for figures depend on the correct sign or direction, so outflows need brackets.

Question 1: the club and its café (25 marks)

• 1(a) Two differences between club and trading business statements (2 marks): 1 mark for each correct pair. Credited pairs: income and expenditure account against statement of profit or loss; revenue mainly from subscriptions against sales revenue; surplus or deficit against profit or loss; accumulated fund against capital.

• 1(b) Life membership fees and an accounting concept (5 marks): name the accruals (matching) concept (1); explain that the fee is not recognised in full in the year it is received (1); it is credited to a life membership fund (1) and released to the income and expenditure account over 10 years, the club’s policy (1); and the fund is a non-current liability in the statement of financial position (1).

• 1(c) Café statement of profit or loss (5 marks): profit $8600. Takings were $57 600. The scheme found gross profit as $57 600 × 60/160 = $21 600, so cost of sales was $36 000. Purchases were $36 500 paid + $8400 closing payables − $7700 opening payables = $37 200. With opening inventory of $5800, closing inventory is $7000. Deduct café wages of $13 000 to reach $8600. Marks went on opening inventory (OF), purchases, cost of sales, gross profit and profit for the year (OF).

• 1(d) Income and expenditure account (8 marks): surplus $3985. Income was $306 400:

  • Subscriptions $292 000: receipts of $288 000, less opening arrears of $11 200, plus closing arrears of $9600, plus opening subscriptions in advance of $8800, less closing subscriptions in advance of $3200.
  • Life membership released, $5000.
  • Profit on sale of club equipment, $800 ($6700 proceeds less $5900 carrying value).
  • Profit from the café, $8600 (OF).

  Expenditure was $302 415: activities expenses $54 300; administrative expenses $224 400 ($212 200 + $7500 + $4700); depreciation of the building $6000; and depreciation of club equipment $17 715, which is 15% × ($92 000 + $32 000 − $5900). The surplus of $3985 was marked OF.

• 1(e) Accumulated fund and liabilities (5 marks): total $411 285. The opening accumulated fund was $346 000 (OF), the club’s opening assets less its opening liabilities (subscriptions in advance of $8800 and café payables of $7700). Adding the surplus gives $349 985 (OF). The life membership fund of $45 000 is a non-current liability. Current liabilities are subscriptions in advance $3200, café payables $8400 and accrued expenses $4700, which together earned 1 mark ($16 300). The total, $411 285, was the fifth mark (OF).

Question 2: W plc (25 marks)

• 2(a) Two uses of a statement of cash flows (2 marks): for example, it shows cash inflows and outflows; explains why profit differs from the change in cash; shows internal and external sources of finance; shows how cash was used for operations, investment and repaying loans; helps assess liquidity; and supports applications for funding.
• 2(b) Statement of cash flows for the year ended 31 March 2026 (18 marks):

Line	$	Marks
Profit from operations	134 000	2
Depreciation: office building	24 500	2
Depreciation: motor vehicles	28 200	3
Loss on disposal of motor vehicle	3400	1
Decrease in inventory, increase in receivables, increase in payables	17 000, (21 000), 18 000	1
Interest paid	(6000)	1
Tax paid	(24 500)	1
Net cash from operating activities	173 600
Net cash used in investing activities (sale proceeds 11 000, purchase (56 000))	(45 000)	1
Proceeds from issue of shares	117 000	2
Dividends paid	(70 400)	2
Net cash from financing activities	46 600	1 (OF)
Net increase in cash and cash equivalents	175 200	1
Total		18

Cash and cash equivalents rose from $88 100 to $263 300. The key workings:

• Profit from operations: profit for the year $103 000 + tax $27 000 + finance cost of $4000 (8% × $50 000) = $134 000. The finance cost earned 1 mark and the total another (OF).

• Building depreciation: opening $228 000 + revaluation of $66 000 − closing $269 500 = $24 500. Leaving out the revaluation is the trap.

• Motor vehicle depreciation: opening $74 400 + additions $56 000 − disposal at carrying value $14 400 ($36 000 − $21 600) − closing $87 800 = $28 200. The additions, the disposal and the answer were a mark each.

• Loss on disposal: carrying value $14 400 less proceeds $11 000 = $3400.

• Interest paid: $2000 owing at the start + $4000 charged = $6000. Tax paid: $24 500 owing at the start + $27 000 for the year − $27 000 owing at the end = $24 500.

• Share issue: share capital up from $320 000 to $420 000 and share premium from $62 000 to $79 000, so $117 000 (1 mark for each pair).

• Dividends paid: $320 000 ÷ $5 = 64 000 shares. The final dividend at $0.75 was $48 000 and the interim at $0.35 was $22 400, a mark each, for $70 400.

• 2(c) Advise on the new office building (5 marks): W plc could buy an adjacent building twice the size for $600 000, then either move in and sell its present building, or let the new one. Up to 2 marks per option plus 1 for the decision with a comment. Option 1: the $66 000 revaluation gain on the existing building would be realised and a bigger scale could bring more profit, but the sale might not raise enough cash and the expected growth might not justify a building twice the size. Option 2: rent gives an extra, regular income stream, but the company must still raise finance to buy the building, may want the space later for its own expansion, and faces risks such as tenants not paying or high interest rates.

Question 3: G Limited and the Andy and Ben partnership (25 marks)

• 3(a) Purchase consideration (4 marks): $684 000. Assets taken over were $511 700 − $30 000 − $37 700 = $444 000 (1 mark). Goodwill is twice the average profit of the last three years: ($154 000 + $110 000 + $96 000) ÷ 3 = $120 000 (1 mark), × 2 = $240 000 (1 mark, OF). Consideration is $444 000 + $240 000 (OF).
• 3(b)(i) Capitals before the takeover (3 marks): net assets are $530 700 − $78 000 = $452 700 (1 mark). Taking out the current account balances (subtract Ben’s $12 500 credit, add back Andy’s $9800 debit) leaves capital of $450 000 (1 mark, OF). Split 2:1, that is Andy $300 000 and Ben $150 000 (1 mark, OF for both).
• 3(b)(ii) Realisation profit shares (4 marks): Andy $149 000, Ben $74 500. Credits to realisation: the purchase consideration of $684 000 and motor vehicle A at $30 000 (1 mark together), plus a discount received of $2500, 5% of $50 000 (1 mark). Less the net assets transferred, $530 700 − $37 700 = $493 000 (1 mark). The profit of $223 500 is split 2:1 (1 mark, OF).
• 3(b)(iii) Capital accounts and final settlement (5 marks): Andy’s account is debited with his $9800 current account balance, motor vehicle A ($30 000) and $342 000 of G Limited shares, and credited with his capital and realisation profit. That leaves $67 200 paid to Andy from the bank. Ben is credited with his capital, his $12 500 current account and his realisation profit, and debited with $342 000 of shares, so Ben pays in $105 000. Marks went on the current account transfers, the motor vehicle, the shares, and each bank figure (OF). The shares were split equally, $342 000 each, which is more than Ben’s credits of $237 000, so Ben has to pay in the difference.
• 3(c) G Limited’s journal entry (4 marks): debit machinery $103 000, equipment $50 000, motor vehicle $46 000, inventory $137 000 and trade receivables $108 000 (1 mark for all five, which total the $444 000 from 3(a)), goodwill $240 000 (OF); credit share capital $480 000 (1 mark) and share premium $204 000 (OF).
• 3(d) Advise on Calvin’s request (5 marks): Calvin, a leather supplier, wants 80 000 ordinary shares and a directorship as the price for his business. Up to 2 marks for, up to 2 against, plus the decision with a comment. For: vertical integration may raise profit or make leather cheaper, a secure supply of leather, and Calvin’s trade knowledge. Against: a culture clash, diluted control and possible conflict or slower decisions on the board, and lower earnings or dividends per share from issuing 80 000 more shares.

Where the marks are on 9706/32

Type of task	Parts	Marks
Prepare statements, accounts and journals	1(c), 1(d), 1(e), 2(b), 3(b)(iii), 3(c)	45
Calculations	3(a), 3(b)(i), 3(b)(ii)	11
Advise	2(c), 3(d)	10
State and explain	1(a), 1(b), 2(a)	9
Total		75

• Statements carried 45 of the 75 marks, and the cash flow statement alone was 18. Its marks sit mostly on the workings, so a correct layout with wrong figures scores little.
• Question 3 was a single chain. The consideration in 3(a) fed the realisation profit, which fed the capital accounts, which fed the journal. OF marks protect you only if every step is shown.
• The two advise parts had the same 2 + 2 + 1 structure, so a one-sided answer is capped at 3 of the 5.

How to self-mark 9706/32 with the mark scheme

1. Mark the workings first. On 2(b), check each working (profit from operations, both depreciation figures, the loss, tax, interest, shares and dividends) before the statement itself. Seven of the 18 marks sit inside the depreciation and profit workings.
2. Apply OF only where your method is complete. For example, your café profit from 1(c) carries into 1(d), and your consideration from 3(a) carries into 3(b)(ii), but only if the method in each later part is right.
3. Check signs. Outflows in the statement of cash flows and the increase in receivables need brackets; a figure on the wrong side scores nothing.
4. Check grouped marks strictly. The working capital line in 2(b), the current liabilities in 1(e) and the five assets in 3(c) each need every figure right for the single mark.
5. For 1(b), give a mark only for each distinct point: the concept, not recognising it all at once, the fund, the release over 10 years and the liability.
6. For the advise parts, cap each side at 2 and give the decision mark only with a reason.
7. Log each lost mark as a missed adjustment, a wrong sign, a missing working or a one-sided argument.

Sit 9706/32 as a timed mock

The paper allows 90 minutes for 75 marks, a little over a minute per mark, and the three questions are equal.

Block	Marks	Time
Question 1: the club and its café	25	28 minutes
Question 2: W plc’s statement of cash flows	25	28 minutes
Question 3: G Limited and the partnership	25	28 minutes
Check signs, totals and workings	–	6 minutes

Read each source once before you start the question it belongs to. In Question 2, do the workings before you write the statement out, so the statement goes down in one pass.

Other May/June 2026 9706 papers

• 9706 Paper 12 (Multiple Choice)
• 9706 Paper 22 (Fundamentals of Accounting)
• 9706 Paper 42 (Cost and Management Accounting)

Practise and download

• Download 9706/32 and its mark scheme on the Learning Portal →
• All 9706 May/June 2026 papers: overview and marking patterns
• Try a free A Level Accounting quiz

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Frequently asked questions

What topics were on 9706 Paper 32 May/June 2026? +

Three compulsory questions: a club with a café (club and trading differences, life membership, café profit, income and expenditure account, accumulated fund and liabilities), W plc's statement of cash flows under IAS 7, and G Limited's takeover of the Andy and Ben partnership.

How many marks is 9706/32 and how long is it? +

It is out of 75 marks and lasts 1 hour 30 minutes. Each of the three questions is worth 25 marks, and the data for each is in Sources A, B and C in the insert.

Is 9706/32 an AS or A Level paper? +

It is Paper 3, an A Level component. Full A Level candidates sit it with Papers 1, 2 and 4.

What was the net increase in cash on 9706/32 Question 2? +

$175 200. Net cash from operating activities was $173 600, investing activities used $45 000 and financing activities brought in $46 600, taking cash from $88 100 to $263 300.

How was the life membership fee treated on 9706/32 Question 1? +

Under the accruals (matching) concept it is not all income in the year received. It is credited to a life membership fund, released to the income and expenditure account over 10 years ($5000 in 2025), and the rest ($45 000) is a non-current liability.

Where can I download 9706/32 May/June 2026 and its mark scheme? +

Both are free to download and print on the Tutopiya Learning Portal, on the Cambridge AS & A Level Accounting 9706 past papers page.

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