OxfordAQA A-Level Accounting: Accounting concepts used in the preparation of accounting records (9615) – 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 section 3.1.5 Accounting concepts used in the preparation of accounting records of the OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards. It is International AS content, assessed on Paper 1: Introduction to Financial Accounting. Amounts are in US dollars.

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Questions

1. State the accounting concept applied in each situation. (a) A bakery’s brand name, built up by word of mouth over ten years, is not recorded in its books. (b) Every purchase on credit increases inventory and increases trade payables by the same amount. (c) A business uses the reducing balance method for its vehicles every year. (d) A machine is still recorded at the $8,500 paid three years ago, although the same model now costs more new. [4]

2. Marigold Wholesale’s year ends on 30 June. On 15 June it receives a signed order for goods priced at $4,500. The goods are delivered and accepted on 8 July, and the customer pays on 20 August. Explain, with reference to the realisation concept, when the revenue should be recognised. [3]

3. Kestrelmoor Textiles holds the following inventory at its year end.

Line	Units	Cost per unit	Selling price per unit	Costs to sell per unit
Silk rolls	30	85.00	120.00	10.00
Linen rolls (stained)	45	40.00	42.00	9.00 (cleaning)
Cotton remnants	200	3.20	3.50	0.60 (packaging)

Calculate the value of closing inventory and the amount of the write-down. [5]

4. Vantrel Stationers recorded a consignment sent on sale or return, selling price $8,400, as a credit sale in full. It prices goods at cost plus 35%. At the year end, goods priced at $3,000 had been accepted; the remainder were still on approval with the return date not yet reached.

(a) Calculate the cost of the goods still held on approval. [2] (b) State the correcting entry and the effect on profit for the year. [3]

5. Saffron Deli buys a refrigerated display unit. Costs: purchase price $9,750; delivery $220; electrical connection before first use $380; electricity for the first month $65; cleaning materials $40. Calculate the amount to be debited to the non-current asset account, and state the concept that requires delivery and connection to be included. [5]

6. For each transaction, give the double entry and name the concept that decides the treatment. (a) The owner pays $2,300 of private savings into the business bank account. (b) The owner takes $340 from the till for personal use. (c) The business buys a computer for $1,800 on credit from Byte Supplies. [6]

7. A delivery van cost $32,000. It is expected to last 5 years and have a residual value of $6,000. The business uses the straight-line method. The owner proposes stretching the useful life to 8 years so that this year’s profit looks stronger, although the van’s condition and expected use are unchanged.

(a) Calculate the annual depreciation charge on the current basis and on the proposed basis. [2] (b) Explain whether the change is acceptable, referring to one accounting concept. [3]

8. Explain the materiality concept, using an example of an item that a business could reasonably charge as an expense even though it will last several years. [3]

9. A trader owns a shop bought for $120,000. Its market value is now $185,000. Explain why the shop is not shown at $185,000, and how its valuation would change if the trader decided to close the business. [4]

10. Alderbank Joinery’s year ends on 31 December 2025. Its draft profit for the year is $48,750. The following matters have not been dealt with correctly. (i) Goods with a selling price of $2,600 were sent on sale or return and recorded as sales. They had not been accepted by the year end. Mark-up is 30% on cost. (ii) Rent of $7,200 for the year to 31 March 2026 was paid on 1 April 2025 and charged in full as an expense. (iii) The owner’s private gym membership of $460 was debited to general expenses. (iv) Closing inventory includes timber at its cost of $1,150. Its net realisable value is $820. (v) A dust extraction unit costing $1,900, bought on 1 October 2025, was debited to repairs. Equipment is depreciated at 20% a year on cost, charged month by month from the date of purchase.

Prepare a statement showing the corrected profit for the year, naming the concept applied to each adjustment. [11]

11. Rosa, who runs a garden centre, is applying for a bank loan. Her accountant has written damaged plants down to net realisable value and made a provision for doubtful debts. Rosa says this will hurt her application. Evaluate whether applying prudence is in her interests. [8]

Answers

1. (a) Money measurement [1] (b) Duality [1] (c) Consistency [1] (d) Historic cost [1] [4] Examiner insight: A “state” question needs only the name; use the specification’s wording, so “historic cost” for (d).

2. Revenue is recognised when it is earned, which is when the goods pass to the customer and are accepted [1]. Neither the order date (15 June) nor the payment date (20 August) is the trigger [1], so the $4,500 is revenue in the year beginning 1 July, not the year to 30 June [1]. [3] Examiner insight: A bare definition of realisation gains little; tie it to the dates given.

3. Silk: NRV = 120 - 10 = 110, above cost, so 30 × 85 = 2,550 [1] Linen: NRV = 42 - 9 = 33, below cost, so 45 × 33 = 1,485 [1] Cotton: NRV = 3.50 - 0.60 = 2.90, below cost, so 200 × 2.90 = 580 [1] Closing inventory = 2,550 + 1,485 + 580 = $4,615 [1] Total cost = 2,550 + 1,800 + 640 = 4,990, so write-down = $375 [1] [5] Examiner insight: Show NRV for each line before choosing; comparing totals (NRV 5,365 against cost 4,990) would hide the linen and cotton losses.

4. (a) Goods still on approval = 8,400 - 3,000 = 5,400 at selling price [1] Cost = 5,400 / 1.35 = $4,000 [1] (b) Debit revenue (sales) $5,400, credit trade receivables (the customer) 5,400 [1] Closing inventory increases by $4,000 [1] Profit falls by 5,400 - 4,000 = $1,400 [1] [5] Examiner insight: A mark-up on cost means divide by 1.35; multiplying 5,400 by 0.65 gives 3,510, a common slip.

5. Capital items: purchase price 9,750 [1], delivery 220 [1] and electrical connection 380 [1] Amount debited to the asset account = $10,350 [1]; the $105 of electricity and cleaning is revenue expenditure. Concept: historic cost, which records an asset at all the costs of getting it ready for use [1] [5] Examiner insight: List the items you included; a bare total that is wrong shows no correct choices.

6. (a) Debit bank $2,300, credit capital $2,300 [1]; business entity: money the owner introduces is capital, not income [1] (b) Debit drawings $340, credit cash $340 [1]; business entity: cash taken for private use is not a business expense [1] (c) Debit office equipment (computers) $1,800, credit Byte Supplies $1,800 [1]; duality, the two equal effects of one transaction (historic cost explains the amount recorded) [1] [6] Examiner insight: Name the accounts, not just “debit asset”, and check the direction of each entry.

7. (a) Current: (32,000 - 6,000) / 5 = $5,200 per year [1] Proposed: 26,000 / 8 = $3,250 per year [1] (b) The change is not acceptable [1]. The consistency concept requires the same method and estimates each year so that results can be compared [1]; here profit would rise by $1,950 only because of the change, not because the van’s life has altered [1]. [3] Examiner insight: Quote the $1,950 effect in (b) to show the concept applied, not just defined.

8. Materiality means an item can be treated in the simplest way if its size would not affect the decisions of users of the accounts [1]. Example: a $26 office wall clock lasts years but is charged to office expenses [1], because depreciating it would mislead no one and is not worth the effort [1]. [3] Examiner insight: An example that is clearly material, such as a vehicle, does not support the point.

9. Under historic cost the shop stays at the price paid, $120,000, an objective figure backed by purchase documents [1]. Showing $185,000 would record a gain that has not been realised [1]. The going concern concept assumes the trader will keep using the shop, so a sale value is not relevant [1]. If the business is to close, going concern no longer applies and the shop would be shown at the amount it is expected to raise on sale [1]. [4] Examiner insight: Two concepts are needed; historic cost alone cannot explain the closure point.

10.

Alderbank Joinery: statement of corrected profit for the year ended 31 December 2025
                                                                 $
Draft profit for the year                                     48,750
Less: sale or return goods  2,600 - 2,600/1.30 = 2,600 - 2,000  (600)   realisation
Add:  rent prepaid  3/12 x 7,200                               1,800   accruals
Add:  private gym membership                                     460   business entity
Less: timber written down  1,150 - 820                          (330)   prudence
Add:  dust extraction unit removed from repairs               1,900   historic cost (capital expenditure)
Less: depreciation  20% x 1,900 x 3/12                          (95)   accruals
Corrected profit for the year                                 51,885

Sale or return adjustment (600) [1], concept realisation [1] Rent prepaid 1,800 [1], concept accruals [1] Gym membership 460 added back [1], concept business entity [1] Timber write-down (330) [1], concept prudence [1] Unit 1,900 added back with depreciation (95) [1], concepts historic cost / accruals [1] Corrected profit $51,885 [1] [11] Examiner insight: Label every line “add” or “less”; a figure in the wrong direction spoils the total.

11. Prudence keeps assets and profit from being overstated: plants at NRV and receivables net of the provision show what they are likely to bring in [1]. A bank lends against the statement of financial position, so figures it can rely on support her case [1]. Overstated figures, once exposed, would put the bank’s trust and the loan at risk [1]. Prudent profit also stops Rosa drawing out profit that may never become cash, protecting the liquidity she needs for repayments [1]. Against this, lower profit and assets may reduce the amount the bank will lend or raise its price [1], and prudence pushed too far would understate her performance [1]; it allows realistic estimates, not deliberate understatement [1]. Judgement: it is in her interests if the write-down and provision are realistic, as reliable figures make a credible application [1]. [8] Examiner insight: “Evaluate” needs both sides and a reasoned judgement; a one-sided answer limits credit.

Where marks are usually lost

• Naming a concept without linking it to a figure or date in the question.
• Comparing total NRV with total cost instead of working line by line.
• Dividing and multiplying the wrong way when finding cost from a mark-up on cost.
• Forgetting depreciation after moving a capital item out of expenses.

Next steps

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Official syllabus

OxfordAQA, International AS and A-level Accounting (9615) Specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards: section 3.1.5 Accounting concepts used in the preparation of accounting records.