Edexcel A-Level Accounting: Financial statements of organisations (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 topic 1.3, Financial statements of organisations, from Unit 1 of the Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting (XAC11/YAC11) specification, Issue 2 (September 2018). They test outcomes 1.3.1 to 1.3.22, all International AS content, for the January, June and October examinations. Learn the methods in the study guide and recap with the revision notes. The course hub, checklist and free diagnostics show what else to revise.

All businesses and figures are invented. Use IAS terminology in your answers.

Questions

1. State two differences between a receipts and payments account and an income and expenditure account. [2]

2. A business with a year end of 31 March 2026 paid insurance of 4,560 on 1 April 2025, covering the 15 months to 30 June 2026. Calculate the insurance expense for the year and state how the remaining amount is shown in the statement of financial position. [3]

3. At the year end, trade receivables are 28,600 before writing off an irrecoverable debt of 1,100. The allowance for irrecoverable debts is to be 5% of the remaining receivables; it currently stands at 1,600.

(a) Calculate the total effect of these items on profit for the year. [3] (b) Calculate the trade receivables figure in the statement of financial position. [1]

4. Tidemark Interiors has two departments. Kitchens: revenue 150,000, cost of sales 96,000, direct wages 18,500. Bathrooms: revenue 90,000, cost of sales 61,200, direct wages 13,900. Rent of 21,000 is apportioned by floor area (Kitchens 400 m², Bathrooms 300 m²) and insurance of 4,800 by revenue. Prepare a columnar statement showing the profit of each department. [5]

5. A trader keeps no double-entry records. Net assets were 34,800 at the start of the year and 41,350 at the end. Drawings were 18,200, and the trader paid an inheritance of 5,000 into the business bank account. Calculate profit for the year. [3]

6. A fire destroyed most of a shop’s inventory at the year end. Revenue for the year was 84,000 at a gross margin of 35%. Opening inventory was 6,900 and purchases were 55,100. Inventory saved from the fire was valued at 2,150. Calculate the cost of inventory lost. [4]

7. Selin and Teodor are partners with no partnership agreement. Their capitals are 50,000 and 20,000. Selin, who runs the shop daily, claims 10,000 a year for her work. Teodor advanced 12,000 to the firm, beyond his capital, at the start of the year. Profit before any interest on the advance was 43,800. Using Section 24 of the Partnership Act 1890, calculate each partner’s share of profit. [4]

8. Ffion and Tobias are partners with fixed capitals of 45,000 and 30,000. Their agreement provides interest on capital at 6%, a salary of 9,000 for Tobias, and residual profit shared Ffion 2 : Tobias 1. Interest on drawings is Ffion 520 and Tobias 380. Profit for the year was 47,700.

(a) Explain the difference between fixed and fluctuating (floating) capital accounts. [2] (b) Prepare the appropriation account. [5] (c) Tobias’s current account opened with a debit balance of 1,450 and his drawings were 21,600. Calculate the closing balance and state whether it is debit or credit. [3]

9. Dario, Lena and Ming share profits 2 : 2 : 1. Ming retires. Capitals are Dario 40,000, Lena 35,000, Ming 22,000; Ming’s current account has a credit balance of 3,400. Goodwill is valued at 25,000 and is not to remain in the books. Dario and Lena will share equally. Ming is paid 10,000 in cash, with the rest transferred to a loan account. Calculate the goodwill entries, the amount transferred to Ming’s loan account, and the capitals of Dario and Lena after the retirement. [6]

10. Ashgrove Cycling Club prepares accounts to 31 August 2026.

(a) Subscriptions at the start: 260 in arrears, 410 in advance. Received in the year: 11,850. At the end: 190 in arrears, 520 in advance. Calculate subscription income for the year. [4] (b) The life membership fund was 7,500 at the start, and 1,500 of life fees were received. The club transfers 10% of the fund, after adding new fees, to income each year. Calculate the transfer and the closing fund. [2] (c) The treasurer expected cash in hand of 1,385, but the count showed 1,240. State the treatment. [1] (d) Café takings 9,600; purchases 5,250; opening inventory 420; closing inventory 510; café wages 1,800. Calculate the café profit. [2]

11. Hesketh Joinery’s records for the year: raw materials opening 6,300, closing 5,900; purchases of raw materials 38,750; carriage inwards 650; direct wages 29,400; royalties 1,800; indirect factory wages 7,150; premises costs 18,400 (three-quarters to the factory); depreciation of factory machinery 4,600; work in progress opening 3,250, closing 3,900. Goods are transferred at production cost plus 25%.

(a) Prepare the manufacturing account, showing prime cost and production cost. [7] (b) Finished goods at transfer price were 10,000 at the start and 12,500 at the end. Calculate the adjustment for unrealised profit and the finished goods figure for the statement of financial position. [3]

Answers

1. A receipts and payments account is on a cash basis; an income and expenditure account applies the accruals concept [1]. A receipts and payments account includes capital items and ends with a cash balance; an income and expenditure account shows revenue items only and ends with a surplus or deficit [1]. [2] Examiner insight: Each difference needs both sides stated; describing only one account rarely earns the point.

2. Monthly cost = 4,560 ÷ 15 = 304 [1]. Expense = 12 × 304 = 3,648 [1]. The 912 prepaid is shown as other receivables under current assets [1]. [3] Examiner insight: Name the heading as well as the figure; a correct 912 placed under liabilities loses the point.

3. (a) Irrecoverable debts expense 1,100 [1]. Required allowance = 5% × 27,500 = 1,375, a decrease of 225 that increases profit [1]. Net effect = −1,100 + 225 = reduces profit by 875 [1]. (b) 27,500 − 1,375 = 26,125 [1]. [4] Examiner insight: Calculate the allowance on receivables after the write-off; using 28,600 gives the wrong change.

4. Rent 4 : 3 = 12,000 and 9,000 [1]. Insurance by revenue 5 : 3 = 3,000 and 1,800 [1]. Gross profit 54,000 and 28,800 [1].

	Kitchens	Bathrooms	Total
Gross profit	54,000	28,800	82,800
Wages	18,500	13,900	32,400
Rent	12,000	9,000	21,000
Insurance	3,000	1,800	4,800
Profit	20,500	4,100	24,600

Correct columnar layout with total column [1]; both profits correct [1]. [5] Examiner insight: Show the apportionment working beside the statement; a column of unexplained figures gives the examiner nothing to credit if one is wrong.

5. Increase in net assets = 41,350 − 34,800 = 6,550 [1]. Add drawings, subtract capital introduced [1]. Profit = 6,550 + 18,200 − 5,000 = 19,750 [1]. [3] Examiner insight: An inheritance paid in is capital introduced, not profit; adding it is a common sign error.

6. Gross profit = 35% × 84,000 = 29,400, so cost of sales = 54,600 [1]. Expected closing inventory = 6,900 + 55,100 − 54,600 [1] = 7,400 [1]. Inventory lost = 7,400 − 2,150 = 5,250 [1]. [4] Examiner insight: A 35% margin is on revenue; treating it as a mark-up on cost changes every later figure.

7. Loan interest = 5% × 12,000 = 600, charged against profit [1]. Profit to share = 43,800 − 600 = 43,200 [1]. No salary and no interest on capital under Section 24 [1]. Shared equally: Selin 21,600, Teodor 21,600 [1]. [4] Examiner insight: Unequal capitals do not change the equal split when there is no agreement.

8. (a) Fixed: capital accounts change only for capital introduced or withdrawn, and appropriations and drawings go to current accounts [1]. Fluctuating: all these items go through the capital account, so its balance changes every year [1]. (b)

Profit for the year                              47,700
Interest on drawings (520 + 380)                    900   [1]
                                                 48,600
Interest on capital: Ffion 2,700, Tobias 1,800   (4,500)  [1]
Salary: Tobias                                   (9,000)  [1]
Residual profit                                  35,100   [1]
Ffion 2/3 23,400; Tobias 1/3 11,700                       [1]

(c) Credits: salary 9,000 + interest 1,800 + share 11,700 [1]. Debits: opening 1,450 + drawings 21,600 + interest on drawings 380 [1]. Closing balance 930 debit [1]. [10] Examiner insight: A debit balance on a current account is valid; say so clearly rather than forcing the answer to a credit.

9. Credit goodwill in the old ratio: Dario 10,000, Lena 10,000, Ming 5,000 [1]. Debit in the new ratio: Dario 12,500, Lena 12,500 [1]. Ming’s total = 22,000 + 3,400 + 5,000 = 30,400 [1]. Paid in cash 10,000 [1]; loan account 20,400 [1]. Capitals: Dario 37,500, Lena 32,500 [1]. [6] Examiner insight: Ming takes no part in the new ratio, so no goodwill is debited to his account.

10. (a) Credits: advance b/d 410 + bank 11,850 + arrears c/d 190 = 12,450 [1]. Debits other than income: arrears b/d 260 + advance c/d 520 = 780 [1]. Income = 12,450 − 780 [1] = 11,670 [1]. (b) Transfer = 10% × 9,000 = 900 [1]; closing fund 8,100 [1]. (c) Loss of 145, charged as expenditure in the income and expenditure account [1]. (d) Cost of sales = 420 + 5,250 − 510 = 5,160 [1]; café profit = 9,600 − 5,160 − 1,800 = 2,640 [1]. [9] Examiner insight: Lay out the subscriptions account in full; a single net figure without the ledger gives no route to partial credit.

11. (a)

Raw materials: 6,300 + 38,750 + 650 - 5,900     39,800   [1]
Direct wages 29,400; royalties 1,800
Prime cost                                      71,000   [1]
Indirect wages                                   7,150
Premises (3/4 of 18,400)                        13,800   [1]
Depreciation of machinery                        4,600
Factory overheads                               25,550   [1]
                                                96,550
Work in progress: + 3,250 - 3,900                 (650)  [1]
Production cost                                 95,900   [1]
Manufacturing profit 25%                        23,975
Transfer to statement of profit or loss        119,875   [1]

(b) Closing unrealised profit = 12,500 × 25/125 = 2,500; opening = 10,000 × 25/125 = 2,000 [1]. Deduct the increase of 500 from profit [1]. Finished goods shown at 12,500 − 2,500 = 10,000 [1]. [10] Examiner insight: Use 25/125, not 25%, because finished goods are already at transfer price.

Where marks are usually lost

• Writing up an adjustment in only one statement.
• Charging the full allowance for irrecoverable debts instead of the change.
• Treating a margin as a mark-up when rebuilding cost of sales.
• Adding capital introduced to profit in a net assets calculation.
• Charging partners’ loan interest in the appropriation account.
• Applying an agreement’s terms when the question says there is none.
• Debiting goodwill to a retiring partner.
• Netting subscriptions without the arrears and advances.
• Leaving work in progress out, or adjusting it the wrong way.
• Applying the mark-up percentage directly to finished goods at transfer price.

Next steps

• Recap with the revision notes
• Re-read the study guide
• Practise topic 1.1 with the principles practice questions
• Course hub: Edexcel A-Level Accounting
• Printable checklist
• Try all free 10-minute diagnostics
• Book a free trial class

Official syllabus

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting (XAC11/YAC11) specification, Issue 2, September 2018, first teaching September 2015 (Pearson Education Limited). Unit 1, topic 1.3.