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A-Level Accounting Past Papers & Drilling (Paper 1): Depreciation, Allowances and Ratios
TUTORZONE ORIGINAL DRILLING MOCK · CAMBRIDGE A-LEVEL ACCOUNTING (9706) PAPER 1
Written to the 9706 syllabus (2026-2028): Paper 1 Multiple Choice, 30 marks, 1 hour, 28% of AS / 14% of A Level – 22 of the official 30 questions are financial accounting and 8 are cost and management accounting. This 20-question drilling paper covers depreciation, accruals and prepayments, allowances, ratios, bonus and rights issues, FIFO/AVCO and overhead absorption, with answers and drilling technique.
What is in Cambridge A-Level Accounting (9706) Paper 1?
Direct answer: Paper 1 is multiple choice – 30 questions, 30 marks, 1 hour, worth 28% of the AS Level and 14% of the A Level: 22 financial accounting and 8 cost and management questions, with no ratio formulae supplied in the paper.
Assessment at a glance (2027)
| Component | Content | Weighting | Duration |
|---|---|---|---|
| Paper 1 (Multiple Choice) | 30 multiple-choice questions, 30 marks (22 financial accounting + 8 cost and management) | 30 · 28% AS / 14% A Level | 1 hour |
| Paper 2 (Fundamentals of Accounting) | four structured questions, 90 marks (Q1 30, Q2-Q3 15 each, Q4 30) | 90 · 72% AS / 36% A Level | 1 h 45 min |
| Paper 3 (Financial Accounting, A Level) | three structured questions of 25 marks, 75 marks; source material is on a separate insert | 75 · 30% A Level | 1 h 30 min |
| Paper 4 (Cost and Management Accounting, A Level) | two structured questions of 25 marks, 50 marks; source material is on a separate insert | 50 · 20% A Level | 1 hour |
Paper 1 technique: 30 questions in 1 hour is about 2 minutes each. Learn the ratio formulae first – gross profit margin = gross profit / revenue x 100, mark-up = gross profit / cost of sales x 100, current ratio = current assets / current liabilities, the acid test after removing inventory, and inventory turnover = average inventory / cost of sales x 365. For depreciation remember that reducing balance works on the carrying amount, and always separate capital from revenue expenditure.
How this paper was built
This is a TutorZone original drilling mock: the questions follow the Cambridge 9706 structure (Paper 1 multiple choice, 30 marks, 1 hour, 28% of AS) and the answers are our own, not Cambridge past papers or marking references.
Every numeric answer was recomputed programmatically. This paper has 20 questions; the official Paper 1 has 30 questions, 30 marks and 1 hour.
Pacing
| Section | Marks | Suggested time | What to do first |
|---|---|---|---|
| Paper 1 (Multiple Choice) | 30 · 28% AS / 14% A Level | about 2 min per question | concept items first, then ratio and cost calculations |
| Paper 2 (Fundamentals of Accounting) | 90 · 72% AS / 36% A Level | about 35 min on question 1 | statements first, decisions last |
| Paper 3 (Financial Accounting, A Level) | 75 · 30% A Level | about 30 min per question | notes and statements first, evaluation last |
| Paper 4 (Cost and Management Accounting, A Level) | 50 · 20% A Level | about 30 min per question | calculations before recommendations |
If the gross profit margin is 25%, what is the mark-up?
Direct answer: mark-up = margin / (100% – margin) = 25 / 75 x 100 = 33.3%.
Paper 1: multiple choice drilling (20 questions)
Questions 1-15 cover financial accounting and 16-20 cost and management accounting, one mark each; allow 40 minutes for the 20 items.
Question 1
Revenue is $250,000 and cost of sales is $150,000. What is the gross profit margin?
A. 40.0%B. 25.0%C. 66.7%D. 60.0%
Question 2
The gross profit margin is 25%. What is the mark-up?
A. 20.0%B. 75.0%C. 25.0%D. 33.3%
Question 3
A machine costing $40,000 is depreciated at 25% per year using the reducing balance method. What is the year 2 charge?
A. 10,000B. 6,000C. 7,000D. 7,500
Question 4
An asset costs $36,000 with an estimated residual value of $6,000 and a five-year life. What is the annual straight-line depreciation?
A. 12,000B. 6,000C. 4,800D. 7,200
Question 5
An asset costing $20,000 with accumulated depreciation of $14,000 is sold for $7,500. What is the profit or loss on disposal?
A. 1,500B. 6,000C. 0D. 7,500
Question 6
A machine costs $50,000, with installation $3,000, first-year insurance $1,200 and repairs $800. What amount is capitalised in the cost of the machine?
A. 51,200B. 50,000C. 53,000D. 55,000
Question 7
Trade receivables are $80,000. An allowance for irrecoverable debts of 2% is required and the previous allowance was $1,200. What amount is charged to profit or loss this year?
A. 400B. 1,200C. 2,000D. 1,600
Question 8
$33,000 has been paid for 11 months of rent. What is the accrued rent at the year end?
A. 6,000B. 3,000C. 33,000D. 36,000
Question 9
Insurance of $4,800 was paid on 1 April 2026 for 12 months; the year end is 31 December 2026. What is the prepayment?
A. 1,200B. 900C. 4,800D. 3,600
Question 10
Closing inventory has been overstated by $3,000. By how much is this year’s profit overstated?
A. $1,500B. $3,000C. $0D. $6,000
Question 11
Current assets are $96,000 and current liabilities are $48,000. What is the current ratio?
A. 0.5:1B. 1.25:1C. 2:1D. 3:1
Question 12
Using the same figures, inventory is $36,000. What is the acid test ratio?
A. 1.5:1B. 1.25:1C. 0.75:1D. 2:1
Question 13
Average inventory is $30,000 and cost of sales is $240,000. What is the inventory turnover in days (use 365 days)?
A. 45.6B. 8.0C. 60.8D. 36.5
Question 14
A company has 400,000 ordinary shares of $0.50 each and makes a 1 for 4 bonus issue. By how much do retained earnings fall?
A. 100,000B. 50,000C. 200,000D. 400,000
Question 15
A 1 for 5 rights issue at $1.60 per share is made on 400,000 existing shares. How much cash is raised?
A. 100,000B. 80,000C. 128,000D. 64,000
Question 16
Fixed costs are $60,000, the selling price is $25 per unit and the variable cost is $15 per unit. What is the break-even quantity?
A. 4,000B. 2,400C. 15,000D. 6,000
Question 17
Using the same figures, budgeted sales are 8,000 units. What is the margin of safety?
A. 7.5%B. 75.0%C. 25.0%D. 33.3%
Question 18
Purchases are 100 units at $5 and 200 units at $6; 250 units are issued. Using FIFO, what is the closing inventory value?
A. 283B. 250C. 300D. 350
Question 19
Using the same data, apply the periodic weighted average cost method. What is the closing inventory value (to the nearest dollar)?
A. 340B. 283C. 250D. 300
Question 20
Budgeted overheads are $120,000 on 8,000 budgeted labour hours; actual hours are 7,500 and actual overheads are $118,000. What amount of overhead is absorbed?
A. $112,500B. $120,000C. $118,000D. $101,250
Why do absorption and marginal costing report different profits?
Direct answer: absorption costing leaves part of the fixed production overhead in closing inventory (2,000 units x $8 = $16,000) whereas marginal costing charges it all to the period; after the $6,000 under-absorption the difference is $10,000.
Paper 1 answers
Question 1
Answer: A (40.0%) Gross profit = 250,000 – 150,000 = 100,000; margin = 100,000 / 250,000 x 100 = 40.0%.
Question 2
Answer: D (33.3%) Mark-up = margin / (100% – margin) x 100 = 25 / 75 x 100 = 33.3%.
Question 3
Answer: D (7,500) Year 1 = 40,000 x 25% = 10,000, leaving 30,000; year 2 = 30,000 x 25% = 7,500.
Question 4
Answer: B (6,000) Straight line = (cost – residual value) / life = (36,000 – 6,000) / 5 = 6,000.
Question 5
Answer: A (1,500) Carrying amount = 20,000 – 14,000 = 6,000; profit = 7,500 – 6,000 = 1,500.
Question 6
Answer: C (53,000) Capital expenditure = cost 50,000 + installation 3,000 = 53,000; insurance and repairs are revenue expenditure and are not capitalised.
Question 7
Answer: A (400) New allowance = 80,000 x 2% = 1,600; the increase, 1,600 – 1,200 = 400, is charged to profit or loss.
Question 8
Answer: B (3,000) Full-year rent = 33,000 / 11 x 12 = 36,000; accrual = 36,000 – 33,000 = 3,000.
Question 9
Answer: A (1,200) Nine months are used, 4,800 x 9/12 = 3,600, leaving a three-month prepayment of 1,200.
Question 10
Answer: B ($3,000) An overstated closing inventory understates cost of sales by $3,000, so profit is overstated by $3,000.
Question 11
Answer: C (2:1) Current ratio = current assets / current liabilities = 96,000 / 48,000 = 2:1.
Question 12
Answer: B (1.25:1) Acid test = (96,000 – 36,000) / 48,000 = 1.25:1.
Question 13
Answer: A (45.6) Inventory turnover = average inventory / cost of sales x 365 = 30,000 / 240,000 x 365 = 45.6 days.
Question 14
Answer: B (50,000) Bonus shares = 400,000 / 4 = 100,000; the transfer from retained earnings is 100,000 x $0.50 = $50,000.
Question 15
Answer: C (128,000) New shares = 400,000 / 5 = 80,000; cash raised = 80,000 x $1.60 = $128,000.
Question 16
Answer: D (6,000) Contribution per unit = 25 – 15 = 10; break-even = 60,000 / 10 = 6,000 units.
Question 17
Answer: C (25.0%) Margin of safety = (8,000 – 6,000) / 8,000 x 100 = 25.0%.
Question 18
Answer: C (300) FIFO issues the 100 units at $5 and 150 at $6, leaving 50 units at $6, worth $300.
Question 19
Answer: B (283) Weighted average cost = 1,700 / 300 = $5.67; closing inventory = 50 x 5.67, about $283.
Question 20
Answer: A ($112,500) Absorption rate = 120,000 / 8,000 = $15 per hour; absorbed = 7,500 x 15 = 112,500, so the overhead is under-absorbed by 5,500.
How many questions does this paper have and what does it cover?
Direct answer: 20 questions (15 financial accounting, 5 cost and management) covering depreciation, disposal, capital versus revenue expenditure, allowances, accruals and prepayments, overstated inventory, current and acid test ratios, inventory turnover, bonus and rights issues, break-even, margin of safety, FIFO, weighted average and overhead absorption.
Where these marks are usually lost
| Mistake | What it looks like | What it costs | Instead |
|---|---|---|---|
| Margin used as mark-up | Applying 25% directly as the mark-up | Mark-up = gross profit / cost of sales | 33.3% |
| Reducing balance on original cost | Charging 40,000 x 25% every year | Year 2 works on the carrying amount of 30,000 | 7,500 |
| Overstated inventory treated as harmless | Adjusting only the statement of financial position | Closing inventory enters cost of sales, so profit is overstated by 3,000 | profit overstated by 3,000 |
| Bonus issue treated as fundraising | Expecting cash from a bonus issue | A bonus issue moves retained earnings into share capital with no cash | retained earnings fall by 50,000 |
| Under-absorption read as over-absorption | Assuming higher actual overhead means over-absorption | Absorbed 112,500 is below actual 118,000 | under-absorbed by 5,500 |
How to use this paper
First drill: 20 questions in 40 minutes, starting with the concept and ratio items.
Mark it: check every formula, especially the depreciation method and the basis of the absorption rate.
Second drill: redo three to seven days later, aiming to finish inside 30 minutes with full marks.
What should I do after drilling this paper?
Direct answer: log every item you got wrong because of a formula, redo the paper in three to seven days, then move to Paper 2 structured questions to practise statement formats and adjustments.
FAQ
Is this a Cambridge past paper?
No. This is not a Cambridge past paper: the questions and answers are TutorZone originals, not marking references.
What is in Cambridge A-Level Accounting 9706 Paper 1?
Multiple choice: 30 questions, 30 marks and 1 hour, worth 28% of the AS Level and 14% of the A Level, with 22 financial accounting and 8 cost and management items.
Are ratio formulae given in Paper 1?
No. The formulae appear only in the appendix to the syllabus, so they have to be memorised.
When can I sit Paper 1?
The AS Level route requires Papers 1 and 2 in the same series; for the A Level you can take Papers 1 and 2 in year one and Papers 3 and 4 in year two, or all four components together.
Official references
| Resource | What to check |
|---|---|
| Cambridge A-Level Accounting 9706 syllabus (2026-2028) | Confirm the marks, times and weightings of Papers 1-4 and the ratio formulae appendix |
| https://www.tutorzone.com.hk/en-alevel-accounting-9706-paper-2-mock-2027/ | A-Level Accounting 9706 Paper 2 drilling mock |
Related: practice area · · A-Level Accounting 9706 drilling guideA-Level Accounting Paper 2 drilling mock · A-Level Accounting Paper 3 drilling mock · IGCSE Accounting 0452 drilling mock
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