O-LevelAccountingPreparation of financial statementsOct/Nov 2018Paper 1 Q161 Mark

Michael's financial year ends on 31 August. On 30 August 2018 he purchased a motor vehicle using a bank loan which is repayable on 30 August 2020. On 31 August 2018 Michael had a bank overdraft. In which sections of Michael's statement of financial position on 31 August 2018 did these items appear?

Q: What topic does this question test?

This question tests Preparation of financial statements in O-Level Accounting (syllabus code 7707). It is worth 1 mark.

Amotor vehicle: current asset; bank loan: current liability; bank overdraft: non-current liability

Bmotor vehicle: current asset; bank loan: non-current liability; bank overdraft: current liability

Cmotor vehicle: non-current asset; bank loan: current liability; bank overdraft: non-current liability

Dmotor vehicle: non-current asset; bank loan: non-current liability; bank overdraft: current liability

✓ Correct Answer

The correct answer is D: motor vehicle: non-current asset; bank loan: non-current liability; bank overdraft: current liability

📋 Examiner Report & Trap Analysis

Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...

🎯 Mark Scheme Breakdown

Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.

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About This O-Level Accounting Question

Topic

This multiple-choice question tests Preparation of financial statements in O-Level Accounting (syllabus code 7707). It is worth 1 mark.

Source

This question appeared in the Cambridge O-Level Accounting Oct/Nov 2018 examination, Paper 1 Variant 2.

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