Accounting 9706/04 May June 2003 | Cambridge AS Level Past Papers With Mark Scheme

1. Capital structure adjustments and financial ratios: Preparation of Omicron Ltd’s revised balance sheet post-redemption of debentures and preference shares, calculation of gearing, dividend cover, earnings per share (EPS), price earnings ratio (PER), and dividend yield before and after the transactions.
2. Financial statement analysis and investment decisions: Commentary on changes in financial ratios, assessment of capital raising options (debentures, rights issue, public share issue), and recommendation for Omicron Ltd’s factory project based on financial implications.
3. Reconstruction of historical financial statements: Preparation of Pie Ltd’s balance sheet as at 30 April 2002, based on provided financial statements and cash flow data, including reconciliation of operating profit to net cash inflow.
4. Budgeting and financial planning for production: Preparation of Roh Ltd’s production, purchases, and sales budgets for August 2003, calculation of cash book balance, and development of a cash budget for the same period.
5. Budgetary control and principal budget factors: Explanation of the advantages and uses of budgets in business management, and discussion of how principal budget factors (such as sales volume, production capacity) influence the preparation and effectiveness of budgets.
6. Depreciation and capital expenditure management: Analysis of Pie Ltd's capital expenditure, sale of assets, and impact on financial statements, including depreciation policies for tangible fixed assets and the effect of asset sales on cash flow.