Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Look at Source C in the insert.
(a)[2]

Explain why a manufacturing business might recognise a provision for unrealised profit.

(b)[6]

Prepare the manufacturing account for the year to 31 December 2022.

(c)[14]

Prepare the statement of profit or loss for the year to 31 December 2022.

(d)[3]

Explain why a true and fair view opinion matters in the auditor’s report.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Unrealised profit is deducted so inventory is valued at cost” …

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