A-LevelAccountingPreparation of financial statements9706/12 · May/June 2025 · Q141 Mark

A business paid $5750 during its trading year for advertising. This amount included $500 in respect of the next financial year. How would the correct treatment of the $500 affect the financial statements?

Aprofit for the year: decrease, net current assets: decrease

Bprofit for the year: decrease, net current assets: increase

Cprofit for the year: increase, net current assets: decrease

Dprofit for the year: increase, net current assets: increase

✓ Correct answer

D: profit for the year: increase, net current assets: increase

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Topic: Preparation of financial statements, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, May/June 2025 Paper 1 Variant 2, question 14.

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A business paid $5750 during its trading year for advertising. This amount included $500 in respect of the next financial year. How would the correct treatment of the $500 affect the financial statements?

✓ Correct answer

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