2005 - Oct - Nov - Paper - 3
2005 - Oct - Nov - Paper - 3
2005 - Oct - Nov - Paper - 3
ACCOUNTING 9706/03
Paper 3 Multiple Choice
October/November 2005
1 hour
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
Calculators may be used.
1 Which item would not appear under “Returns on investments and servicing of finance” in a cash
flow statement?
financed by:
issued share capital 10 000 15 000
share premium account – 2 500
revaluation reserve 500 800
Profit and Loss Account 3 500 4 200
debentures 2 000 1 500
16 000 24 000
What is the net cash movement from “Financing” for the year ended 30 September 2005?
$000
Ordinary share capital 600
Share Premium account 200
Retained profit 100
900
10% Debenture stock 2003/2005 120
The company has decided to redeem all its debenture stock at a premium of 10 %.
A Its cash reserves exceed its requirements for the foreseeable future.
B Its shareholders need the cash.
C Its shares are valued below their nominal value on the open market.
D It wishes to decrease its gearing.
9 A limited company purchases a business by issuing 320 000 ordinary shares of $1.00 each at a
premium of $0.75 per share. Goodwill of $150 000 arises on the purchase.
He agrees to sell his business to a limited company. The purchase consideration is $260 000
being made up of $60 000 cash
$80 000 debentures and
180 000 ordinary shares of $0.50 each.
Which amount will be credited to the share premium account of the limited company?
11 X Ltd buys the business of Y with an issue of 400 000 shares of $1.00 each at a premium of
$0.25 and $100 000 in cash.
$000
13 A company has issued $1 000 000 of 8 % convertible loan stock, which the holder can convert in
November 2007 into ordinary shares at a rate of 1 share for each $2.00 of loan stock held.
What is the correct presentation in the final accounts for the year ended 31 December 2004?
14 A company’s convertible loan stock will be converted into ordinary shares on 1 January 2007.
How should the company show it in its Balance Sheet at 31 December 2004?
A authorised capital
B creditors : amounts falling due after more than one year
C creditors : amounts falling due within one year
D issued share capital
16 A company has an authorised share capital of one million shares of $1.00 each and an issued
capital of 800 000 shares of $1.00 each. It pays a 10 % dividend. The current dividend yield is
5 %.
17 A company has ordinary share capital of $5 million in shares of $0.50 and has the following
results:
$000
19 Which of the following may be used to smooth distributable profits from one year to another?
number of units to selling price per unit variable cost per unit total fixed cost
product
be made $ $ of product $
The fixed cost of each product will be incurred only if the product is made.
There is sufficient capacity in the factory to make only three of the product lines.
A 1, 2 and 3
B 1, 2 and 4
C 1, 3 and 4
D 2, 3 and 4
22 When should a manufacturing company purchase its products from an outside supplier?
A less than the selling price but more than the total cost.
B less than the marginal cost of production.
C less than the marginal cost of sales but more than the marginal cost of production.
D less than the total cost but more than the marginal cost of sales.
23 A company makes 500 units and sells these units at $50 each. The direct materials cost $7500,
direct labour costs $2500 and fixed overheads are $8400.
How much profit will be made if the company increases the number of units to 600?
24 A company has forecast the following sales for the first three months of next year.
month units
1 2000
2 2100
3 2400
At the start of month 1 there were 300 units in stock. The company requires that the closing stock
at the end of each month should be equal to 1/3 of the sales for the following month.
A 2000 units
B 2200 units
C 2400 units
D 2900 units
25 A businessman starts trading with a bank balance of $124 000. The budget for the first three
months shows the following:
26 K Limited is planning an advertising campaign to promote its product. The campaign will cost
$14 000.
This is budgeted to increase sales volume in the second half of the year by 12 %. Sales for the
first half of the accounting year are budgeted at 30 000 units at a contribution of $4.20.
How much additional net profit should be budgeted as a result of the advertising campaign?
At the end of the year the hourly rate paid to workers and the production per worker are less than
budgeted.
A greater amount of lower priced materials than budgeted has been used.
29 Which method of investment appraisal uses profits as the basis for calculation?
30 The table shows the calculation of the net present value of a potential project.
Which cash inflow during Year 1 will give a net present value of zero for the project?
BLANK PAGE
9706/03/O/N/05
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department
of the University of Cambridge.
9706/03/O/N/05
Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.
Alternative Proxies: