OxfordAQA IGCSE Accounting: Limitations of financial statements and the use of computers in accounting (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 follow the OxfordAQA International GCSE Accounting (9215) specification, version 1.2, for exams from May/June 2026 onwards. They cover two content points in section 3.5: the limitations of financial statements and ratio analysis (financial and non-financial factors) and the use of computers in accounting. Section 3.5 is assessed in Paper 2. All amounts are in dollars, and every business and person is invented. Formulas are given in the questions; in the exam, use the OxfordAQA formulas for accounting ratios.

Learn the content from the study guide and revision notes. Course pages: the hub, the checklist and the free diagnostics.

Questions

1. State two non-financial factors that a reader would not find in a business’s financial statements. [2]

2. Explain why a ratio calculated for one year only is of limited use when assessing performance. [3]

3. Mistral Bakehouse has a year end that falls just after its busiest season. Cost of sales for the year was 270,000. Opening inventory was 45,000 and closing inventory was 15,000. Rate of inventory turnover = cost of sales divided by inventory.

(a) Calculate the rate of inventory turnover using closing inventory. [2] (b) Calculate the rate of inventory turnover using average inventory. [3] (c) Explain why the two answers differ and which is the better guide. [2]

4. Pinecroft Foods has inventory of 30,000, trade receivables of 25,000 and cash of 35,000. Its current liabilities are 60,000, all trade payables. Current ratio = current assets divided by current liabilities. Liquid capital ratio = (current assets less inventory) divided by current liabilities. Just before the year end, the owner uses 30,000 of cash to pay trade payables.

(a) Calculate both ratios before the payment. [3] (b) Calculate both ratios after the payment. [3] (c) Explain what this shows about the limitations of ratios taken from a statement of financial position. [2]

5. Bracken Books and Wynd Lane Books are identical in trade. Each had revenue of 240,000 and profit before depreciation of 36,000. Each bought equipment for 30,000 at the start of the year. Bracken Books depreciates it by 10% a year on cost. Wynd Lane Books uses 25% a year on the reducing balance.

(a) Calculate the first-year depreciation charge for each business. [2] (b) Calculate each business’s profit after depreciation. [2] (c) Calculate each business’s profit in relation to revenue as a percentage, to 1 decimal place. [2] (d) Explain what this shows about comparing the two businesses. [2]

6. Garnet Cycles records about 30 transactions a day by hand. Accounting software would cost 1,500 a year, plus 500 for training in the first year only. The owner estimates it would save 4 hours of bookkeeping time a week. Bookkeeping time costs 11 an hour, and the shop trades for 50 weeks a year.

(a) Calculate the value of the time saved in a year and the net saving or cost in year 1 and in year 2. [4] (b) Explain one risk of the software that is not shown in these figures. [2]

7. Elmcote Cycles’ figures for two years are below. Trade receivable days = trade receivables divided by revenue x 365.

	Year 1	Year 2
Revenue	360,000	400,000
Cost of sales	216,000	260,000
Other expenses	86,400	100,000
Trade receivables at year end	36,000	66,000

(a) Calculate the gross profit margin for each year. [2] (b) Calculate profit in relation to revenue (profit from operations divided by revenue; there is no loan interest) for each year. [2] (c) Calculate trade receivable days for each year, to 1 decimal place. [2] (d) Assess the change in performance, referring to limitations of the figures. [4]

8. Which two of the following are non-financial factors? Write the two letters. [2] A a new competitor opening nearby B an increase in the closing inventory figure C high staff morale D the depreciation charge for the year

9. Marren Fabrics earned a profit of 30,000. Its capital employed, with assets at historical cost less depreciation, is 150,000. If the same assets were shown at current value, capital employed would be 240,000. Return on capital employed = profit divided by capital employed x 100.

(a) Calculate the return on capital employed using historical cost figures. [2] (b) Calculate it using current values. [1] (c) Explain why historical cost limits the usefulness of the first answer. [2]

10. Dev Patel’s cafe has a gross profit margin of 52%. A rival cafe across town has 61%. Suggest two reasons why the comparison may not be fair. [4]

11. Aiden Okafor runs a print shop with about 25 transactions a day. He is deciding whether to replace his handwritten books with accounting software. Evaluate the move and make a recommendation. [8]

Answers

1. Any two from staff morale, reputation, competitors, changes in law or environmental conduct, one mark each [1] [1]. [2] Examiner insight: Name each factor; a vague phrase such as “the business environment” would be hard to credit.

2. One year gives nothing to compare with, so you cannot tell whether the figure is good or bad [1]. You need a previous year, a budget or a similar business to see a trend or a standard [1]. One year-end figure may also be unrepresentative and the ratio does not explain why it is what it is [1]. [3] Examiner insight: Three marks need three distinct ideas, so rewording the same point adds nothing.

3. (a) 270,000 / 15,000 [1] = 18.0 times [1] (b) Average inventory = (45,000 + 15,000) / 2 = 30,000 [1]. 270,000 / 30,000 [1] = 9.0 times [1] (c) Closing inventory is low because the year end falls after the busy season, so it is a snapshot that does not show typical holdings [1]. Average inventory is the better guide because it reflects stock held across the year [1]. [7] Examiner insight: Show the average inventory working, and in part (c) refer to the bakery’s season rather than making a general statement.

4. (a) Current assets = 30,000 + 25,000 + 35,000 = 90,000. Current ratio = 90,000 / 60,000 = 1.50 [1]. Liquid capital ratio = (90,000 - 30,000) / 60,000 [1] = 1.0 [1] (b) Current assets = 60,000 and current liabilities = 30,000 [1]. Current ratio = 2.00 [1]. Liquid capital ratio = (60,000 - 30,000) / 30,000 = 1.0 [1] (c) Trading has not changed, but the current ratio looks stronger because of the timing of the payment [1]. A ratio from one date can therefore be altered or may mislead a reader such as a lender [1]. [8] Examiner insight: Write the new totals before dividing, and note that the liquid capital ratio did not move.

5. (a) Bracken: 30,000 x 10% = 3,000 [1]. Wynd Lane: 30,000 x 25% = 7,500 [1] (b) Bracken: 36,000 - 3,000 = 33,000 [1]. Wynd Lane: 36,000 - 7,500 = 28,500 [1] (c) Bracken: 33,000 / 240,000 = 13.8% [1]. Wynd Lane: 28,500 / 240,000 = 11.9% [1] (d) The only difference is the depreciation method [1]. So the gap in the ratio comes from an accounting policy, not performance, and comparing profit-based ratios is misleading unless the policies are known [1]. [8] Examiner insight: Give 1 decimal place as asked, and in part (d) link the difference to policy rather than saying “one is better”.

6. (a) Time saved = 4 x 50 = 200 hours, worth 200 x 11 = 2,200 [1]. Year 1 cost = 1,500 + 500 = 2,000 [1], so net saving 200 [1]. Year 2 net saving = 2,200 - 1,500 = 700 [1] (b) Data could be lost or stolen, for example through a crash, virus or hacking [1]. The records would then be unavailable or exposed, so back-ups and passwords are needed, which adds cost and effort [1]. [6] Examiner insight: Part (b) asks for a risk not shown in the figures, so a point about cost gains no credit.

7. (a) Year 1: gross profit = 360,000 - 216,000 = 144,000, so 144,000 / 360,000 = 40.0% [1]. Year 2: 400,000 - 260,000 = 140,000, so 140,000 / 400,000 = 35.0% [1] (b) Year 1: profit = 144,000 - 86,400 = 57,600, so 57,600 / 360,000 = 16.0% [1]. Year 2: profit = 140,000 - 100,000 = 40,000, so 40,000 / 400,000 = 10.0% [1] (c) Year 1: 36,000 / 360,000 x 365 = 36.5 days [1]. Year 2: 66,000 / 400,000 x 365 = 60.2 days [1] (d) Revenue rose by 11.1% but both margins fell, so profitability weakened [1]. Customers take longer to pay, so more cash is tied up [1]. The ratios do not explain why, for example price cuts or dearer purchases [1]. Only two years and year-end receivables are used, and non-financial factors such as a new competitor are not shown [1]. [10] Examiner insight: For “assess”, use the figures in a conclusion and name a limitation, rather than listing calculations alone.

8. A [1] and C [1]. [2] Examiner insight: Options B and D come from the accounts, so they are financial.

9. (a) 30,000 / 150,000 [1] x 100 = 20.0% [1] (b) 30,000 / 240,000 x 100 = 12.5% [1] (c) Historical cost understates what the assets are worth now, so capital employed looks low [1]. The return appears higher than the current-value return, which could mislead an owner or a lender [1]. [5] Examiner insight: Use the percentages in part (c); a general explanation is less convincing.

10. The cafes may sell different products, so normal margins differ, for example one sells more expensive food [1]. A margin that suits one product mix may not suit the other [1]. They may use different accounting policies, such as valuing inventory differently [1], so cost of sales and profit are not measured the same way [1]. [4] Examiner insight: Each reason needs a short development, so a bare list such as “size, location” earns little.

11. Advantage: entries post automatically, so totals and a trial balance appear quickly, saving time over 25 daily entries [1], and a sale entered once updates several records, reducing copying errors [1]. Second advantage: statements can be produced at any date, so Aiden can see who owes him money now [1], and records are easy to search and back up [1]. Disadvantage: software, updates and training cost money that a small shop may struggle to recover [1], and data can be lost or hacked, so back-ups and passwords are needed [1]. Recommendation: at 25 transactions a day the time saved probably justifies the cost, if he trains staff and backs up [1], though wrong data entered is still posted wrongly, so he must still check inputs [1]. [8] Examiner insight: A one-sided answer cannot reach the top marks, and the recommendation must follow from the points made.

Where marks are usually lost

• Naming a limitation without linking it to the business in the question.
• Using year-end figures as if they represented the whole year.
• Giving only the advantages or only the disadvantages of computerised software.

Next steps

• Re-read the study guide and the revision notes.
• Use the hub and the checklist to plan what to revise next.
• Take the free 10-minute diagnostics.
• Book a free trial class at /trial/.

Frequently asked questions

Where do students usually lose marks on limitations questions in OxfordAQA International GCSE Accounting 9215? Common losses are naming a limitation without linking it to the business in the question, using year-end figures as if they represented the whole year, and giving only the advantages or only the disadvantages of computerised software.

How should I answer a question about whether a business should use accounting software? Give both advantages and disadvantages, use any figures in the question, such as the cost and the value of time saved, and reach a judgement for that business.

Which section of the 9215 specification do these questions cover? Section 3.5 of OxfordAQA International GCSE Accounting 9215, covering the limitations of financial statements and ratio analysis and the use of computers in accounting.

Official syllabus

OxfordAQA International GCSE Accounting (9215), specification version 1.2, section 3.5, published by OxfordAQA, for exams from May/June 2026 onwards.