Preparation of Financial Statements

Worked examples (10)

• 1Prepare an appropriation account (6 marks)
• 2Share the residual profit (4 marks)
• 3Interest on capital (4 marks)
• 4Prepare a current account (6 marks)
• 5Apply the Partnership Act 1890 (5 marks)
• 6Appropriation with a loss (5 marks)
• 7Partnership capital section (5 marks)
• 8Why keep capital and current accounts (4 marks)
• 9Loan vs capital interest (4 marks)
• 10Full appropriation and shares (7 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 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2 style

Worked examples (10)

• 1Calculate cost of sales (4 marks)
• 2Gross profit and profit for the year (5 marks)
• 3Statement of profit or loss with adjustments (7 marks)
• 4Statement of financial position (7 marks)
• 5Find sales from mark-up (5 marks)
• 6Convert margin and find cost of sales (5 marks)
• 7Find credit purchases (incomplete records) (5 marks)
• 8Profit from the capital equation (5 marks)
• 9Service business profit (4 marks)
• 10Full profit with adjustments (8 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 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style

Worked examples (10)

• 1Profit from operations (4 marks)
• 2Down to profit for the year (5 marks)
• 3Debenture interest charged in full (5 marks)
• 4Split a share issue (4 marks)
• 5Complete a statement of changes in equity (6 marks)
• 6Equity section of the SOFP (5 marks)
• 7Dividends are not an expense (4 marks)
• 8Tax and the current liability (4 marks)
• 9Capital vs revenue reserves (4 marks)
• 10Full statement of profit or loss (8 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 (mirrors 9706/22 Feb-Mar 2024 Q1(b))
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2 style

Worked examples (10)

• 1Split a share issue (4 marks)
• 2Capital or revenue reserve? (4 marks)
• 3Which reserves can pay a dividend (4 marks)
• 4Movement on retained earnings (5 marks)
• 5Revaluation reserve (5 marks)
• 6Equity section (5 marks)
• 7Capital vs revenue reserve (4 marks)
• 8Transfer to general reserve (4 marks)
• 9Authorised vs issued capital (3 marks)
• 10Maximum dividend and cash (5 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 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2 style

Worked examples (10)

• 1Shares or debentures? (5 marks)
• 2Record a share issue at a premium (4 marks)
• 3Record a share issue at par (3 marks)
• 4Record a debenture issue and interest (5 marks)
• 5Treatment of returns (4 marks)
• 6Advise: shares or debentures (7 marks)
• 7Effect on gearing (5 marks)
• 8Risk on winding up (4 marks)
• 9Where they appear (4 marks)
• 10Discuss issuing shares to fund expansion (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 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 2 style

Worked examples (10)

• 1Rights or bonus issue? (4 marks)
• 2Record a rights issue (5 marks)
• 3Record a bonus issue (5 marks)
• 4The revaluation reserve rule (4 marks)
• 5Effect on total equity (4 marks)
• 6Compare the two issues (5 marks)
• 7Why the share price falls after a bonus issue (5 marks)
• 8Advise on a rights issue (6 marks)
• 9Show a rights issue in the SOCE (5 marks)
• 10Show a bonus issue in the SOCE (5 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 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 3 style