OxfordAQA IGCSE Accounting: Internal financial statements of limited companies (9215) – 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 are aligned to the OxfordAQA International GCSE Accounting (9215) specification, version 1.2, for exams from May/June 2026 onwards. They cover the limited companies row of section 3.4, Preparation of financial statements, which is assessed in Paper 2: Financial Statements. Learn the content from the study guide and the revision notes first. See the course hub, the checklist and the free diagnostics. All amounts are in dollars and all businesses are invented.

Questions

1. Distinguish between share capital and loan capital. [2]

2. State the sub-heading of the statement of financial position in which each item appears. [5]

(i) bank overdraft; (ii) 7% loan repayable in 2031; (iii) retained earnings; (iv) insurance paid in advance; (v) the net book value of plant.

3. At 31 December 2025 a company’s loan of 30,000 was repayable on 31 October 2027. At 31 December 2026 it is still unpaid. Explain how its classification changes in the statement of financial position at 31 December 2026. [3]

4. Brexley Games Ltd has 400,000 ordinary shares. Retained earnings at the start of the year were 62,000 and profit for the year was 48,500. A dividend of 6 cents a share was paid.

(a) Calculate the total dividend paid. [2] (b) Calculate retained earnings at the end of the year. [2]

5. A company has an 8% loan of 25,000 for the whole year. Only 1,000 of interest was paid during the year. State the interest to be shown in the income statement and the amount owing, and say where the amount owing appears in the statement of financial position. [3]

6. State three items that the specification says will not be examined for limited companies. [3]

7. Give two advantages and two disadvantages of trading as a limited company rather than as a sole trader. [4]

8. Two companies sell similar goods. Compare their results.

	Hartlow Bakeries Ltd	Fenwith Tools Ltd
Revenue	500,000	520,000
Gross profit	200,000	208,000
Profit for the year	60,000	31,200
Current assets	90,000	96,000
Current liabilities	60,000	40,000
Loan capital	0	250,000
Equity	400,000	300,000

Calculate the gross profit margin, the profit for the year as a percentage of revenue and the current ratio for each company, and comment on the position of each. [6]

9. Osmerton Print Ltd prepares internal statements for the year ended 30 June 2026. The trial balance is below.

Account	Debit	Credit
Machinery at cost	150,000
Provision for depreciation of machinery		45,000
Land	200,000
Inventory at 1 July 2025	22,000
Purchases	205,000
Revenue		380,000
Trade receivables	31,000
Trade payables		18,000
Bank	15,000
Wages	64,000
Rent	12,000
Other expenses	21,000
Loan interest paid	1,600
Dividends paid	10,000
8% loan repayable in 2031		40,000
Ordinary share capital		200,000
Retained earnings at 1 July 2025		48,600

Adjustments: closing inventory is 26,500; wages owing are 4,000; rent paid in advance is 1,000; loan interest owing is 1,600; machinery is depreciated at 20% a year on the reducing balance (net book value at the start of the year).

(a) Prepare the income statement for the year, including retained earnings at the end. [10] (b) Prepare the statement of financial position at 30 June 2026. [9]

10. Osmerton Print Ltd’s accountant forgot to record the wages owing of 4,000. State the effect of the omission on profit for the year, on current liabilities and on equity. [3]

Answers

1. Share capital is money put in by the owners (shareholders), who receive a dividend that depends on profit [1]. Loan capital is borrowed from lenders, who are paid fixed interest and repaid on an agreed date [1]. [2] Examiner insight: A distinction needs both sides compared. Describing only shares, or only loans, leaves the contrast unsupported.

2. (i) Current liabilities [1]. (ii) Non-current liabilities [1]. (iii) Equity [1]. (iv) Current assets [1]. (v) Non-current assets [1]. [5] Examiner insight: Use the exact sub-heading names from the specification. A heading such as “fixed assets” or “long-term” may not be accepted in place of the board’s wording.

3. At 2025 the loan was due after more than one year, so it was a non-current liability [1]. At 31 December 2026 it falls due within the next year (October 2027) [1]. It is therefore moved into current liabilities, which increases current liabilities and reduces non-current liabilities by 30,000 [1]. [3] Examiner insight: Give the reason as well as the move. The test is the time left until repayment, not the size of the loan.

4. (a) 400,000 x 0.06 [1] = 24,000 [1]. (b) 62,000 + 48,500 [1] - 24,000 = 86,500 [1]. [4] Examiner insight: Show the working lines for the roll-forward. Dividends are subtracted from retained earnings, and deducting them from profit for the year in the income statement expenses is a common slip.

5. Interest for the year is 8% of 25,000 = 2,000 shown in the income statement [1]. Owing = 2,000 - 1,000 = 1,000 [1]. The amount owing is an accrual in current liabilities [1]. [3] Examiner insight: State the full-year charge, not only the amount paid. Writing “accrual” without the sub-heading is less complete than naming current liabilities.

6. Any three of: statement of changes in equity [1]; preference shares [1]; general reserves [1]; rights issues; bonus issues; revaluation of non-current assets (one mark for each of any three). [3] Examiner insight: Give three separate items. Repeating one item in different words, such as “bonus shares” and “bonus issues”, will not add a second point.

7. Advantages (any two from): limited liability, so owners cannot lose more than their shares; can raise more capital by selling shares; the business continues if one owner leaves [1] [1]. Disadvantages (any two from): more rules to follow than a sole trader; owners share control with other shareholders; profits are shared as dividends [1] [1]. [4] Examiner insight: Write each point as a full statement that compares with a sole trader. A bare word such as “regulation” is easy to lose credit on.

8. Gross profit margin: Hartlow 200,000 / 500,000 = 40.0% [1]; Fenwith 208,000 / 520,000 = 40.0%. Profit for the year as a percentage of revenue: Hartlow 60,000 / 500,000 = 12.0%; Fenwith 31,200 / 520,000 = 6.0% [1]. Current ratio: Hartlow 90,000 / 60,000 = 1.5; Fenwith 96,000 / 40,000 = 2.4 [1]. Comments: The two make the same margin on goods sold, but Fenwith keeps half as much of each dollar of revenue as profit, which may be because of its large loan interest [1]. Fenwith is more liquid, and its current assets cover its short-term debts 2.4 times [1]. Fenwith relies on loan capital for 45.5% of its finance (250,000 out of 550,000) while Hartlow has none, so Fenwith carries more risk [1]. [6] Examiner insight: A comment gains credit when it names the figure, compares and gives a reason. Say “may be due to” when the data does not prove the cause.

9. (a)

Osmerton Print Ltd
Income statement for the year ended 30 June 2026
Revenue                                   380,000
Opening inventory           22,000
Purchases                  205,000
                           227,000
Less closing inventory      26,500
Cost of sales                             200,500
Gross profit                              179,500
Wages (64,000 + 4,000)      68,000
Rent (12,000 - 1,000)       11,000
Other expenses              21,000
Depreciation of machinery   21,000        121,000
Operating profit                           58,500
Loan interest (1,600 + 1,600)               3,200
Profit for the year                        55,300
Retained earnings at 1 July 2025           48,600
Add profit for the year                    55,300
Less dividends paid                        10,000
Retained earnings at 30 June 2026          93,900

Marks: cost of sales 200,500 with closing inventory [2]; gross profit [1]; wages [1]; rent [1]; depreciation 20% x 105,000 = 21,000 [1]; operating profit 58,500 [1]; interest 3,200 [1]; profit for the year [1]; closing retained earnings [1]. [10]

(b)

Osmerton Print Ltd
Statement of financial position at 30 June 2026
Non-current assets      Cost   Acc. dep.     NBV
Land                 200,000           0   200,000
Machinery            150,000      66,000    84,000
                                           284,000
Current assets
Inventory                                   26,500
Trade receivables                           31,000
Prepayment                                   1,000
Bank                                        15,000
                                            73,500
Total assets                               357,500
Equity
Ordinary share capital                     200,000
Retained earnings                           93,900
                                           293,900
Non-current liabilities
8% loan repayable 2031                      40,000
Current liabilities
Trade payables                  18,000
Accruals (4,000 + 1,600)         5,600      23,600
Total equity and liabilities               357,500

Marks: land and machinery net book value 84,000 [1]; non-current assets total 284,000 [1]; current assets with inventory and prepayment [1]; current assets total 73,500 [1]; share capital and retained earnings, equity 293,900 [2]; loan in non-current liabilities [1]; current liabilities 23,600 [1]; both totals 357,500 [1]. [9] Examiner insight: Show accumulated depreciation of 66,000 (45,000 + 21,000), not only the charge. Use the closing figures for inventory and retained earnings, and check that both sides agree before you stop.

10. Profit for the year would be overstated by 4,000 (59,300 instead of 55,300) [1]. Current liabilities would be understated by 4,000 [1]. Retained earnings, and so equity, would be overstated by 4,000 [1]. [3] Examiner insight: Give the direction and the amount for each effect. An omitted expense raises profit, and the matching liability is missing from the statement of financial position.

Where marks are usually lost

• Placing dividends in the income statement expenses instead of in the retained earnings working.
• Treating interest paid as the full charge when some is still owing.
• Showing a loan repayable in several years as a current liability, or leaving a loan due within a year among non-current liabilities.
• Depreciating land, or applying the reducing balance rate to cost instead of net book value.
• Using the opening inventory figure in current assets.
• Omitting accumulated depreciation from the non-current asset table.
• Giving ratios without a comment, or a comment without any figure.
• Putting an item under the wrong sub-heading even though the total is right.
• Using retained earnings at the start of the year in the equity section.

Next steps

• Re-read the revision notes and the study guide.
• Visit the course hub and tick the checklist.
• Try the free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

Where do students usually lose marks on limited company statements in OxfordAQA 9215? Common losses are treating interest paid as the full charge when some is still owing, using the opening inventory figure in current assets, and using retained earnings at the start of the year in the equity section.

What mistakes are common with non-current assets in company statements? Depreciating land, applying the reducing balance rate to cost instead of net book value, and omitting accumulated depreciation from the non-current asset table.

Does putting an item under the wrong sub-heading lose marks if the total is right? Yes. Each item must sit under the correct one of the five sub-headings, so a right total with an item in the wrong place still loses marks.

How should I comment on company results? Give a figure, such as a ratio, together with a comment on what it shows. Ratios without a comment, or comments without any figure, lose marks.

Official syllabus

OxfordAQA International GCSE Accounting (9215), version 1.2, for International GCSE exams May/June 2026 onwards, published by OxfordAQA. Section 3.4, limited companies.