Edexcel International A Level Accounting: Capital and revenue expenditure and depreciation (YAC11) – 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 cover outcomes 1.1.11 to 1.1.20 of the Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting (XAC11/YAC11) specification, Issue 2, September 2018, Unit 1 topic 1.1. Businesses and figures are invented, and amounts are in dollars. Ignore taxation. Revise first with the study guide and revision notes. The course hub is Edexcel A-Level Accounting, and the printable list is the checklist.

Questions

1. Eskdale Bakery incurred five costs. State whether each is capital or revenue expenditure: (a) a new oven, 14,500; (b) fitting an extraction hood to the oven, 1,300; (c) replacing a worn door seal on an old oven, 240; (d) fuel for the delivery van, 380; (e) converting the van into a refrigerated van, 4,200. [5]

2. Meadowvale Joinery owns a computer-controlled router and a ten-year lease on its workshop. Explain one cause of depreciation for each asset. [4]

3. Explain two reasons why Meadowvale Joinery charges depreciation on its non-current assets. [4]

4. Meadowvale Joinery bought a machine on 1 January 2026 for 42,000. Its residual value is 6,000 and its life is 4 years.

(a) Calculate the annual straight line charge. [2] (b) Calculate the charge for 2026 and for 2027 using reducing balance at 30%. [3] (c) State the effect on 2026 profit of using reducing balance instead of straight line. [2]

5. Eskdale Bakery’s equipment cost 55,000 on 1 January 2026, and the provision for depreciation was 16,500. Equipment costing 15,000 was bought that day. Depreciation is 10% of cost each year, straight line.

(a) Prepare the provision for depreciation account for 2026. [3] (b) State the entry in the depreciation expense account. [1] (c) Calculate the carrying value of the equipment at 31 December 2026. [1]

6. Eskdale Bakery depreciates small utensils by the revaluation method. They were valued at 4,800 on 1 January 2026, utensils costing 700 were bought, and they are valued at 4,100 on 31 December 2026.

(a) Calculate the depreciation for the year. [2] (b) Prepare the utensils account for 2026. [3]

7. Meadowvale Joinery’s machine in question 4 was depreciated at 30% reducing balance in 2026 and 2027. At the start of 2028 the business changes to straight line over the remaining 2 years, keeping the residual value of 6,000.

(a) Calculate the carrying value at 1 January 2028. [1] (b) Calculate the 2028 charge under the new method. [2] (c) Calculate the 2028 charge if reducing balance had continued, and state the effect on profit of the change. [2] (d) State one accounting concept affected by the change. [1]

8. Meadowvale Joinery bought a van for 30,000 on 1 July 2024. Depreciation is 20% of cost a year, straight line by months, with no residual value. The year end is 31 December. The van was sold on 31 March 2026 for 17,000.

(a) Calculate the provision for depreciation at the date of sale. [3] (b) Prepare the disposals account. [4] (c) State where the balancing figure is shown. [1]

9. Eskdale Bakery part-exchanged a delivery van that cost 20,000 and had accumulated depreciation of 12,800. The dealer allowed 6,000 against a new van priced at 26,000.

(a) Prepare the disposals account. [4] (b) State the amount paid to the dealer. [1] (c) State the cost at which the new van is recorded. [1]

10. Meadowvale Joinery’s plant cost 60,000 and had accumulated depreciation of 24,000 at 1 January 2026. Vehicles cost 38,000 with accumulated depreciation of 15,200. During 2026 plant costing 20,000 was bought, and plant that cost 12,000 was sold when its accumulated depreciation was 7,200. The depreciation charge was 7,000 on plant and 5,700 on vehicles. Prepare the schedule of non-current assets for 2026, with columns for plant, vehicles and total, ending with carrying values. [9]

11. The owner of Eskdale Bakery wants to treat 3,000 of exterior repainting as capital expenditure to show a higher profit. (a) State the effect on profit and on non-current assets for 2026, ignoring depreciation. [2] (b) Explain two accounting concepts that argue against this treatment. [4]

Answers

1. (a) Capital, as it is an asset [1]. (b) Capital, as a cost of making the oven ready for use [1]. (c) Revenue, as a repair [1]. (d) Revenue, as a running cost [1]. (e) Capital, as it improves the van’s capability [1]. [5] Examiner insight: A bare label usually earns less than a label with a short reason, so give both even when only a classification is asked for.

2. Router: obsolescence, because newer machines make it out of date even if it still works [2]. Lease: passage of time, because the right to use the workshop runs out after ten years [2]. [4] Examiner insight: Naming a cause earns less than linking it to the asset in the question, so use the scenario.

3. Matching or accruals: the cost of an asset that serves several years is spread over those years against the revenue it helps earn [2]. Fair profit and asset value: otherwise profit is too low in the purchase year, and assets stay at cost [2]. Prudence is another valid reason. [4] Examiner insight: Each reason needs a developed point, so say what the reason achieves, not only its name.

4. (a) (42,000 − 6,000) ÷ 4 [1] = 9,000 [1]. (b) 2026: 30% × 42,000 = 12,600 [1]; carrying value 29,400 [1]; 2027: 30% × 29,400 = 8,820 [1]. (c) The charge is 12,600 against 9,000, a difference of 3,600 [1], so profit is 3,600 lower [1]. [7] Examiner insight: Show the carrying value that each reducing balance year starts from, as this lets your method be seen even if arithmetic slips.

5. (a) Charge: 10% × (55,000 + 15,000) = 7,000 [1].

	Dr		Cr
Balance c/d	23,500	Balance b/d	16,500
		Depreciation expense	7,000
	23,500		23,500

Opening balance and charge on the credit side [1]; closing balance 23,500 [1]. (b) Debit depreciation expense 7,000, then transfer it to the statement of profit or loss [1]. (c) 70,000 − 23,500 = 46,500 [1]. [5] Examiner insight: Charging 10% on only the opening cost of 55,000 is a common slip, so check which assets are held at the year end.

6. (a) 4,800 + 700 − 4,100 [1] = 1,400 [1]. (b) Debit side: balance b/d 4,800 and bank 700 [1]; credit side: depreciation 1,400 [1] and balance c/d 4,100, with both sides totalling 5,500 [1]. [5] Examiner insight: Under this method the valuation is the closing balance, so no provision account is needed.

7. (a) Carrying value: 20,580 (42,000 − 12,600 − 8,820) [1]. (b) (20,580 − 6,000) ÷ 2 [1] = 7,290 [1]. (c) Reducing balance would give 30% × 20,580 = 6,174 [1], so profit is 1,116 lower because of the change [1]. (d) Consistency [1]. [6] Examiner insight: State the direction of the profit change in words, as a bare difference does not say whether profit rises or falls.

8. (a) 2024: 30,000 × 20% × 6/12 = 3,000 [1]. 2025: 6,000, and 2026 to 31 March: 1,500 [1]. Total provision 10,500 [1]. (b) Carrying value is 19,500 and the loss is 2,500 (17,000 − 19,500) [1].

	Dr		Cr
Van (cost)	30,000	Provision for depreciation	10,500
		Bank	17,000
		Loss on disposal	2,500
	30,000		30,000

Cost on the debit side [1]; provision and proceeds on the credit side [1]; loss as the balancing figure [1]. (c) The statement of profit or loss, as an expense [1]. [8] Examiner insight: Depreciation for the months of ownership in the year of sale belongs in the provision, so leaving it out changes the answer.

9. (a) Carrying value 7,200, allowance 6,000, so a loss of 1,200 [1].

	Dr		Cr
Van (cost)	20,000	Provision for depreciation	12,800
		New van (allowance)	6,000
		Loss on disposal	1,200
	20,000		20,000

Cost and provision entries [1]; allowance [1]; loss balancing [1]. (b) 26,000 − 6,000 = 20,000 [1]. (c) 26,000, the full price [1]. [6] Examiner insight: The allowance is treated like sale proceeds, not as a reduction in the price of the new asset.

10.

2026	Plant	Vehicles	Total
Cost 1 January	60,000	38,000	98,000
Additions	20,000	0	20,000
Disposals	(12,000)	0	(12,000)
Cost 31 December	68,000	38,000	106,000
Accumulated depreciation 1 January	24,000	15,200	39,200
Charge	7,000	5,700	12,700
Disposals	(7,200)	0	(7,200)
Accumulated depreciation 31 December	23,800	20,900	44,700
Carrying value 31 December	44,200	17,100	61,300

Headings and layout [1]; plant cost section [2]; vehicles cost [1]; plant accumulated depreciation [2]; vehicles accumulated depreciation [1]; carrying values [1]; totals column [1]. [9] Examiner insight: Disposals reduce cost at the original cost and reduce depreciation at the accumulated figure, so use the correct figure in each section.

11. (a) Profit is overstated by 3,000 [1], and non-current assets are overstated by 3,000 [1]. (b) Prudence: profit and assets should not be overstated, and repainting only maintains the building [2]. Accruals: repainting gives no lasting added capacity, so the cost belongs to this year [2]. [6] Examiner insight: Link each concept to the repainting rather than just defining it, because the application earns the second mark.

Where marks are usually lost

• Naming capital or revenue without a reason.
• Using residual value in reducing balance.
• Charging a full year on an asset bought or sold part way through.
• Leaving the old asset’s provision in the ledger after disposal.
• Placing a disposal loss on the debit side of the disposals account.
• Mixing up the part-exchange allowance with the price paid.
• Giving the profit effect without saying higher or lower.
• Putting disposals at the wrong figure in the cost and depreciation sections of the schedule.

Frequently asked questions

Are these Edexcel YAC11 depreciation questions from past papers? No. They are original practice questions with worked answers on outcomes 1.1.11 to 1.1.20 of Pearson Edexcel International A Level Accounting (YAC11), written for revision. Use them alongside the official past papers.

Should I give a reason when classifying capital and revenue items? Yes. A bare label usually earns less than a label with a short reason, so give both even when only a classification is asked for.

How is a part-exchange allowance treated? The part-exchange allowance is treated like sale proceeds of the old asset in the disposal account, not as a reduction in the price of the new asset.

What are common mistakes in a schedule of non-current assets? Disposals must reduce cost at the original cost and reduce depreciation at the accumulated figure. Using the wrong figure in either section is a common error.

Next steps

• Review with the revision notes and the study guide.
• Open the Edexcel A-Level Accounting hub and the checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class at /trial/.

Official syllabus

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting (XAC11/YAC11), Specification, Issue 2, September 2018, Unit 1 topic 1.1, outcomes 1.1.11 to 1.1.20.