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

Preparation of financial statements — practice question

Q Limited has operated for several years. One director is uncertain about how a capital reserve differs from a revenue reserve.
(a)[2]

Explain one distinction between a capital reserve and a revenue reserve.

(b)[8]

For Q Limited, prepare the statement of changes in equity covering the year ended 30 June 2023.

(c)[5]

Advise the directors which option, if either, they ought to select. Support your decision with reasons.

Worked solution & mark scheme

This 15-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Capital reserves come from non-trading activities” …

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