A Level Accounting: Accounting for non-current assets (Cambridge 9706) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions follow the Cambridge International AS & A Level Accounting 9706 syllabus for 2026, 2027 and 2028, section 1.3 Accounting for non-current assets (AS Level content). All businesses and figures are invented and all amounts are in dollars. Start with the study guide or the revision notes. See the course hub and printable checklist.

Questions

1. Sedgemoor Cabinets had five items in the year. State whether each is capital expenditure, revenue expenditure, capital income or revenue income, and give a reason. (i) Purchase of a new edge-banding machine. (ii) Fitting and testing charges to bring that machine into use. (iii) Replacement of a worn belt on an older machine. (iv) Cash from selling a delivery van the firm no longer needs. (v) Sales of cabinets to customers. [5]

2. Corbridge Print reported profit for the year of 41,500. Two errors were then found. Payment of 8,000 for a new workshop extension was debited to repairs expense. Payment of 1,200 for repainting the office was debited to the premises account. Ignore depreciation.

(a) Calculate the corrected profit. [3] (b) State the net effect of the errors on the carrying value of non-current assets. [2]

3. Brackenwood Couriers owns delivery vans.

(a) State two factors that cause the vans to lose value. [2] (b) Explain how charging depreciation applies the matching/accruals concept and the prudence concept. [4]

4. Garsby Laundry bought a press for 48,000. Its residual value is 6,000 and its useful life is 5 years.

(a) Calculate the annual straight-line depreciation. [2] (b) Calculate the reducing balance charge at 30% for each of years 1 to 3, and the carrying value at the end of year 3. [4]

5. Dunmorrow Studios owns a fitted reception desk, which gives the same service each year, and an editing computer that newer models quickly make obsolete. Recommend a depreciation method for each, with a reason, and give one reason the studio should then keep using the same methods. [5]

6. Hexworth Bakery’s year ends on 31 December. On 1 January 2025 it bought an oven for 36,000 and paid 2,400 installation, both by bank. Depreciation is straight line, residual value 3,000, life 5 years, charging a whole year in the year of purchase.

(a) Write the journal entry for the acquisition. [3] (b) Prepare the oven account and the provision for depreciation account for 2025. [3] (c) Show how the depreciation appears in the statement of profit or loss and in the statement of financial position. [2]

7. Rostrevor Storage holds premises at cost 240,000 with accumulated depreciation 48,000. It adopts the revaluation model and values the premises at 300,000, with 20 years of life remaining and no residual value.

(a) Distinguish the cost model from the revaluation model. [2] (b) Write the journal entry for the revaluation, removing the accumulated depreciation. [3] (c) State where the credit balance appears in the statement of financial position. [1] (d) Calculate the annual straight-line depreciation on the revalued amount. [2]

8. Strathmore Plumbing bought a van for 24,000 on 1 January 2023 and depreciates it at 25% reducing balance, with a whole year charged on purchase and nothing in the disposal year. On 30 June 2025 it sold the van for 9,500 cash.

(a) Calculate the accumulated depreciation at the date of sale. [2] (b) Prepare the disposal account. [4] (c) State where the result appears and what it suggests about earlier depreciation. [2]

9. Lowarth Print part-exchanged an old press (cost 42,000, accumulated depreciation 27,300) for a new press with a list price of 55,000. The supplier allowed 16,000 for the old press and the balance was paid by bank.

(a) Calculate the profit or loss on disposal. [3] (b) Prepare the disposal account. [4] (c) Write the journal entry for the new press. [3]

10. At 31 December 2026 Wickerley Foods held equipment (cost 60,000, accumulated depreciation brought forward 18,000), depreciated at 20% reducing balance, and fixtures (cost 15,000, accumulated depreciation brought forward 3,000), depreciated straight line with residual value 1,500 and a 9-year life.

(a) Calculate the depreciation charge for each asset. [4] (b) State the total charge shown in the statement of profit or loss. [1] (c) Prepare the non-current assets section of the statement of financial position. [3] (d) Explain why the charge reduces profit but does not reduce the bank balance. [2]

11. Maldrew Haulage bought vans for 90,000 a year ago. It uses 30% reducing balance and accumulated depreciation is 27,000. The owner proposes straight line instead, on cost less a residual value of 6,000 over 6 years.

(a) Calculate this year’s charge under each method and the effect of the change on profit. [3] (b) Evaluate the proposal. [7]

Answers

1. (i) Capital expenditure: it acquires a non-current asset. [1] (ii) Capital expenditure: a cost of getting the asset ready for use, so it joins the asset’s cost. [1] (iii) Revenue expenditure: it maintains an existing asset and benefits only this period. [1] (iv) Capital income: proceeds from disposing of a non-current asset. [1] (v) Revenue income: it comes from normal trading. [1] [5] Examiner insight: The question asks for a reason, so a bare label leaves little to credit.

2. (a) The extension is capital, so add back 8,000. [1] The repainting is revenue, so deduct 1,200. [1] Corrected profit 41,500 + 8,000 − 1,200 = 48,300. [1] (b) Premises were understated by 8,000 as the extension never reached the asset account. [1] They were overstated by 1,200, so the net effect is an understatement of 6,800. [1] [5] Examiner insight: Give each error its own direction before netting; one combined figure leaves little to credit if the arithmetic slips.

3. (a) Any two: wear and tear from use or mileage; obsolescence as newer models arrive; passing of time. [1] [1] (b) Matching/accruals: the van’s cost is spread over the years it helps earn revenue, [1] so each year’s profit bears a fair share. [1] Prudence: the asset is not left at full cost while losing value, [1] so profit and the asset are not overstated. [1] [6] Examiner insight: Naming a concept earns little unless you apply it to depreciation.

4. (a) (48,000 − 6,000) ÷ 5 [1] = 8,400 a year. [1] (b) Year 1: 30% × 48,000 = 14,400. [1] Year 2: 30% × (48,000 − 14,400) = 10,080. [1] Year 3: 30% × 23,520 = 7,056. [1] Carrying value 48,000 − 31,536 = 16,464. [1] [6] Examiner insight: Showing the value each percentage is applied to helps method gain credit if a figure slips.

5. Desk: straight line [1] because it gives the same benefit and loses value evenly. [1] Computer: reducing balance [1] because obsolescence makes it lose most value early. [1] Keep the methods because consistency lets profit be compared year to year. [1] [5] Examiner insight: A recommendation gains most when tied to how the asset loses value.

6. (a) Debit oven (machinery) account 38,400 [1] credit bank account 38,400 [1] with installation included in cost, 36,000 + 2,400. [1] (b) Depreciation = (38,400 − 3,000) ÷ 5 = 7,080. [1]

Oven account
1 Jan Bank	38,400	31 Dec Balance c/d	38,400

Provision for depreciation
31 Dec Balance c/d	7,080	31 Dec Depreciation expense	7,080

Oven account correct [1] and provision credited from depreciation expense, with the balance carried down. [1] (c) Statement of profit or loss: depreciation expense 7,080. [1] Statement of financial position: oven 38,400 less 7,080 = 31,320. [1] [8] Examiner insight: A journal needs account names, debit and credit sides and a narrative.

7. (a) Cost model: the asset stays at cost less accumulated depreciation. [1] Revaluation model: it is restated to current value, with any gain taken to a revaluation reserve. [1] (b) New carrying value 300,000 − (240,000 − 48,000) = 108,000 increase. [1] Debit provision for depreciation 48,000 and debit premises 60,000. [1] Credit revaluation reserve 108,000. [1] (c) In equity, as a capital reserve. [1] (d) 300,000 ÷ 20 [1] = 15,000 a year. [1] [8] Examiner insight: A revaluation gain is not credited to profit.

8. (a) Year 2023: 25% × 24,000 = 6,000. [1] Year 2024: 25% × 18,000 = 4,500, so accumulated depreciation 10,500. [1] (b)

Disposal account
Van (cost)	24,000	Provision for depreciation	10,500
		Bank	9,500
		Loss to statement of profit or loss	4,000
	24,000		24,000

Van cost debited [1] provision credited [1] bank credited [1] loss 4,000 as the balancing figure. [1] (c) The loss goes to the statement of profit or loss. [1] It suggests earlier depreciation was too low, because the van sold for less than its carrying value of 13,500. [1] [8] Examiner insight: Move both cost and accumulated depreciation to the disposal account, or it will not balance.

9. (a) Carrying value 42,000 − 27,300 = 14,700. [1] Allowance 16,000 is higher [1] so profit 1,300. [1] (b)

Disposal account
Press (cost)	42,000	Provision for depreciation	27,300
Profit to statement of profit or loss	1,300	Press (part-exchange allowance)	16,000
	43,300		43,300

Cost debited [1] provision credited [1] allowance credited [1] profit as balancing figure. [1] (c) Debit press 55,000. [1] Credit disposal 16,000. [1] Credit bank 39,000. [1] [10] Examiner insight: Record the new press at its full price, not the cash paid.

10. (a) Equipment: 20% × (60,000 − 18,000) = 8,400. [1] [1] Fixtures: (15,000 − 1,500) ÷ 9 = 1,500. [1] [1] (b) 8,400 + 1,500 = 9,900. [1] (c)

	Cost	Accumulated depreciation	Carrying value
Equipment	60,000	26,400	33,600
Fixtures	15,000	4,500	10,500
Total	75,000	30,900	44,100

Accumulated depreciation updated for both assets [1] correct carrying values [1] correct totals. [1] (d) Depreciation is a non-cash expense spreading a cost already paid. [1] The cash left when the assets were bought. [1] [10] Examiner insight: Show the opening balance and the year’s charge separately before adding them.

11. (a) Carrying value 90,000 − 27,000 = 63,000. Reducing balance 30% × 63,000 = 18,900. [1] Straight line (90,000 − 6,000) ÷ 6 = 14,000. [1] Profit would rise by 4,900. [1] (b) Any well-developed points, for example: For: straight line suits vans used evenly. [1] It is simple to apply. [1] Against: vans lose most value early, so reducing balance matches better; [1] changing only to raise profit breaks consistency; [1] a higher profit and carrying value is less prudent; [1] the change has no cash effect. [1] Judgement: change only if use has really changed. [1] [10] Examiner insight: Evaluation gains most from a reasoned judgement that weighs both sides and uses the figures.

Where marks are usually lost

• Giving a category without a reason when the question asks for a reason.
• Applying the reducing balance percentage to original cost instead of carrying value.
• Ignoring the stated policy for the year of purchase or disposal.
• Leaving the accumulated depreciation out of the disposal account, so the account does not balance.
• Recording the new asset at the cash paid rather than the full price after a part exchange.
• Taking a revaluation gain to profit instead of a revaluation reserve.

Frequently asked questions

What is section 1.3 of the Cambridge 9706 Accounting syllabus? Section 1.3 is Accounting for non-current assets, part of the AS Level content of the Cambridge International AS and A Level Accounting 9706 syllabus for 2026 to 2028. It covers capital and revenue items, depreciation, revaluation and disposal.

What is the most common mistake with reducing balance depreciation? Applying the percentage to the original cost every year instead of to the carrying value, which is cost less accumulated depreciation.

How are marks given when a question asks you to classify an item and give a reason? A bare label such as “capital expenditure” earns little on its own; the reason, such as the item acquiring a non-current asset, is what gains the credit.

Why does the depreciation policy in the question matter? Questions state a policy for the year of purchase or disposal, such as a full year’s charge on purchase and none in the year of sale. Ignoring it carries an error through every later calculation in the question.

Next steps

• Revision notes and study guide
• Course hub and checklist
• Take all free 10-minute diagnostics
• Book a free trial class at /trial/

Official syllabus

Cambridge International, AS & A Level Accounting 9706 syllabus for 2026, 2027 and 2028, section 1.3.