Capital and Revenue Income and Expenditure

Worked examples (10)

• 1Classify the receipt (4 marks)
• 2Income from selling an asset (5 marks)
• 3Effect of misclassifying a loan (5 marks)
• 4Classify a list of receipts (6 marks)
• 5Rent received with timing (5 marks)
• 6Why distinguish income types (5 marks)
• 7Combined misclassification (6 marks)
• 8Capital introduced is not income (4 marks)
• 9Sundry income classification (6 marks)
• 10Inflating profit via income (6 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 3 evaluation style

Worked examples (10)

• 1Classify the expenditure (4 marks)
• 2Build the capital cost of an asset (5 marks)
• 3Split a mixed cost (5 marks)
• 4Effect of treating capital as revenue (5 marks)
• 5Effect of treating revenue as capital (6 marks)
• 6Carriage: capital or revenue? (4 marks)
• 7Classify a list of items (6 marks)
• 8Explain why the distinction matters (5 marks)
• 9Capitalising own construction (6 marks)
• 10Borderline judgement (6 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 3 evaluation style

Worked examples (10)

• 1Direction of the profit effect (4 marks)
• 2Effect ignoring depreciation (4 marks)
• 3Effect with depreciation knock-on (6 marks)
• 4Capital wrongly expensed, with depreciation (6 marks)
• 5Statement of corrected profit (6 marks)
• 6Effect on net assets (5 marks)
• 7Combined effect of two errors (6 marks)
• 8Why the trial balance still balances (4 marks)
• 9Corrected profit with several items (7 marks)
• 10Why correct classification matters (6 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 3 style