OxfordAQA A-Level Accounting: Budgeting (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 3.1.9, Budgeting, 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. Section 3.1.9 is International AS content on Paper 2: Financial & Management Accounting. The specification states that cash, sales, purchases, production and labour budgets “will be assessed at A-level”, so questions on them are labelled (Assessed at A-level).

Read the study guide or revision notes first, and try the free 10-minute diagnostics. Course pages: hub and printable checklist. All figures are invented.

Questions

1. Which one of these reduces budgeted profit but is never entered in a cash budget? [1]

A Payment for a new delivery van B Drawings C Depreciation of equipment D Wages paid in the month

2. State two benefits to a manufacturer of preparing a purchases budget. [2]

3. (Assessed at A-level) Sorrel Lane Pottery plans to sell 2,000 bowls in April, 2,600 in May, 2,300 in June and 2,500 in July. Closing inventory of finished bowls each month is 10% of the next month’s sales. Opening inventory on 1 April is 180 bowls. Prepare the production budget for April, May and June. [4]

4. (Assessed at A-level) Each bowl in question 3 needs 2 kg of clay at 0.50 per kg. Each month ends with clay equal to 20% of the following month’s usage; April starts with 600 kg. Prepare the purchases budget, in kg and in value, for April and May. [5]

5. (Assessed at A-level) Yarrowby Cycles plans to assemble 420 bicycles in June and 480 in July. Each bicycle takes 3.5 labour hours. The wage rate is 18 an hour, rising by 5% from 1 July. Prepare the labour budget, in hours and in value, for June and July. [4]

6. (Assessed at A-level) Tallowmere Candles plans to sell 800 boxes in July, 900 in August and 1,100 in September. The price is 12 a box, rising to 13 from 1 September. 20% of sales are for cash; credit customers pay in the month after sale.

(a) Prepare the sales budget in value for July, August and September. [2] (b) Calculate the budgeted receipts from sales for August and September. [3]

7. (Assessed at A-level) Imogen Saldanha owns Saldanha Florists. The bank balance on 1 October 2027 is 4,600. Sales: August 18,000, September 21,000, October 19,000, November 24,000, December 35,000. Customers pay cash for 40% of sales; the rest pay two months later. Purchases each month are 50% of that month’s sales and are paid for in the following month. Wages are 4,800 a month (December 6,200). Insurance of 2,400 for the year is paid in October. A van costing 16,000 is bought in November: a 4,000 deposit is paid in November and the balance in January 2028. Shop fittings are depreciated at 300 a month. Drawings are 1,800 a month.

(a) Prepare the cash budget for October, November and December 2027. [9] (b) Explain why two of the items listed above do not appear in your cash budget. [2]

8. Hamish Oyelaran owns Tamberline Print Studio. His statement of financial position at 1 April 2027 showed: machinery at cost 60,000, accumulated depreciation 18,000; inventory 3,400; trade receivables 7,200; bank 1,900; trade payables 2,600; capital 51,900. The budget for the year ending 31 March 2028 is:

• revenue 140,000, all on credit; closing trade receivables 8,400
• purchases 46,000, all on credit; closing trade payables 3,100; closing inventory 4,200
• wages paid 38,500; other expenses paid 16,300, of which 900 relates to the following year
• machinery depreciated at 20% a year on the reducing balance; drawings 24,000; no new non-current assets.

(a) Prepare the budgeted income statement for the year ending 31 March 2028. [5] (b) Calculate the budgeted bank balance at 31 March 2028. [3] (c) Prepare Hamish’s budgeted statement of financial position as at 31 March 2028. [4]

9. Explain two limitations of a cash budget as a planning tool. [4]

10. Haddonvale Fitness prepared this budget for March. Actual results are also shown.

	Budget	Actual
Membership income	42,000	39,600
Staff costs	18,500	19,240
Utilities	4,200	3,850
Marketing	3,000	3,000

(a) Calculate the difference for each line and for profit, labelling each favourable or adverse. [4] (b) State one action the owner could take as a result of this comparison. [1]

11. The owner of Haddonvale Fitness says: “Preparing budgets is a waste of time for a business of our size. We just increase last year’s figures a little.” Evaluate this view. [12]

Answers

1. C – depreciation is an expense but no cash moves [1] [1] Examiner insight: Check each option: does it reduce profit, and does cash move? A and B fail the first test; D fails the second.

2. Materials are ordered in time for planned production, so output is not stopped by shortages [1]. Excess inventory is avoided, so cash is not tied up and storage costs stay low [1]. [2] Examiner insight: A benefit of budgeting in general, such as motivation, does not answer a question about a specific budget.

3. Closing inventory: April 260, May 230, June 250 [1]. April 2,000 + 260 - 180 = 2,080 [1]; May 2,600 + 230 - 260 = 2,570 [1]; June 2,300 + 250 - 230 = 2,320 [1] [4] Examiner insight: Lay each month out as sales, add closing, less opening, so your method shows.

4. Usage: April 4,160 kg, May 5,140 kg, June 4,640 kg [1]. Closing: April 1,028 kg, May 928 kg [1]. April purchases 4,160 + 1,028 - 600 = 4,588 kg [1]; May 5,140 + 928 - 1,028 = 5,040 kg [1]. Value: April 2,294; May 2,520 [1] [5] Examiner insight: Usage comes from production in question 3, not sales; write the usage line out so your method is visible.

5. June: 420 x 3.5 = 1,470 hours [1]; 1,470 x 18 = 26,460 [1]. July rate 18 x 1.05 = 18.90 [1]; 480 x 3.5 = 1,680 hours; 1,680 x 18.90 = 31,752 [1] [4] Examiner insight: Show the new rate as a separate step, so an error in it can be traced rather than leaving only a wrong final figure.

6. (a) July 9,600; August 10,800 [1]; September 1,100 x 13 = 14,300 [1] [2] (b) August: cash 2,160 + credit from July 7,680 [1] = 9,840 [1]. September: 2,860 + 8,640 = 11,500 [1] [3] Examiner insight: The price rise affects September’s sales only; August’s credit receipts use the old price.

7. (a)

	October	November	December
Cash sales	7,600	9,600	14,000
Credit customers	10,800	12,600	11,400
Total receipts	18,400	22,200	25,400
Suppliers	10,500	9,500	12,000
Wages	4,800	4,800	6,200
Insurance	2,400
Van deposit		4,000
Drawings	1,800	1,800	1,800
Total payments	19,500	20,100	20,000
Net cash flow	(1,100)	2,100	5,400
Opening balance	4,600	3,500	5,600
Closing balance	3,500	5,600	11,000

Cash sales [1]; credit receipts [1]; total receipts [1]; suppliers [1]; wages [1]; insurance, deposit and drawings [1]; total payments [1]; net cash flow [1]; balances [1] [9] (b) Depreciation is a non-cash expense, so no cash leaves the business [1]. The van balance of 12,000 is paid in January 2028, outside the budget period [1] [2] Examiner insight: Show every total and carry each closing balance forward visibly, so your method shows even if an earlier line is wrong.

8. (a)

Tamberline Print Studio
Budgeted income statement for the year ending 31 March 2028
Revenue                                       140,000
Cost of sales (3,400 + 46,000 - 4,200)        (45,200)
Gross profit                                   94,800
Wages                                38,500
Other expenses (16,300 - 900)        15,400
Depreciation (20% x 42,000)           8,400   (62,300)
Profit for the year                            32,500

Cost of sales [1]; gross profit [1]; other expenses 15,400 [1]; depreciation 8,400 [1]; profit 32,500 [1] [5] (b) Receipts 7,200 + 140,000 - 8,400 = 138,800 [1]; supplier payments 2,600 + 46,000 - 3,100 = 45,500 [1]; bank 1,900 + 138,800 - 45,500 - 38,500 - 16,300 - 24,000 = 16,400 [1] [3] (c)

Budgeted statement of financial position at 31 March 2028
Machinery (60,000 - 26,400)                    33,600
Inventory 4,200; trade receivables 8,400;
other receivables 900; bank 16,400             29,900
Trade payables                                 (3,100)
Net current assets                             26,800
Net assets                                     60,400
Capital 51,900 + 32,500 - 24,000               60,400

Machinery at carrying amount [1]; current assets including the prepayment [1]; net current assets [1]; capital 60,400 [1] [4] Examiner insight: The bank figure uses the 16,300 paid; the income statement uses only 15,400. Mixing them unbalances the statement.

9. It depends on forecasts of sales and payment patterns [1]; if customers pay later than planned, the predicted balance is wrong and finance may be arranged too late [1]. It ignores profitability [1], so a business can show a healthy cash balance while making losses, for example by delaying supplier payments [1] [4] Examiner insight: “Explain” needs each limitation developed into its effect on the business; a bare statement of a limitation is only half an answer.

10. (a) Income 2,400 adverse [1]; staff costs 740 adverse [1]; utilities 350 favourable, marketing nil [1]; profit 16,300 budget and 13,510 actual, 2,790 adverse [1] [4] (b) Investigate why membership income fell, for example by checking cancellations [1] [1] Examiner insight: A difference without the word favourable or adverse is incomplete.

11. For the view: a small gym has few income and cost lines, which the owner may know well [1]. Detailed budgets take time from customers and staff [1]. Adding a little to last year’s figures, incremental budgeting, is quick and cheap [1] and suits stable costs such as rent [1]. Against: question 10 shows profit 2,790 below plan; without a budget the owner would not have spotted this so clearly [1]. A budget names who is responsible for staff costs, which ran 740 over [1]. A cash budget would warn early if falling memberships threatened cash [1]. Incremental budgeting carries past waste forward [1]; zero-based budgeting of discretionary spending such as marketing would test whether its 3,000 brings in members [1]. However, membership forecasts are uncertain [1], and over-ambitious targets could demotivate staff [1]. Judgement: the view is mostly wrong; a simple budget with monthly comparison is cheap and gave useful warnings here, and ZBB could be used occasionally for marketing while routine costs stay incremental [1] [12] Examiner insight: An “evaluate” answer needs points on both sides, applied to the gym’s own figures, and a justified conclusion; a generic list of benefits is much weaker.

Where marks are usually lost

• Working materials or labour from sales instead of production.
• Receiving credit sales in the wrong month.
• Including depreciation, or a payment outside the period, in the cash budget.
• Charging cash paid, not the expense incurred, in the income statement.
• Writing an evaluation with no judgement.

Next steps

• Revision notes for this topic
• Study guide for this topic
• OxfordAQA A-level Accounting hub
• Printable checklist
• All free 10-minute diagnostics
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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, published by OxfordAQA. Section 3.1.9, Budgeting.