UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education Advanced Level
ACCOUNTING
9706/03
Paper 3 Multiple Choice
May/June 2006
1 hour
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)
READ THESE INSTRUCTIONS FIRST
Write in soft pencil.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless
this has been done for you.
There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.
Read the instructions on the Answer Sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
Calculators may be used.
This document consists of 11 printed pages and 1 blank page.
IB06 06_9706_03/2RP
UCLES 2006
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© UCLES 2006
9706/03/M/J/06
1
In cash flow analysis, which item is a cash inflow?
A a decrease in stock
B a bonus issue of shares
C a decrease in trade creditors
D an increase in debtors
2
A company issued 10 000 $10 ordinary shares at a price of $20 each.
A month after the issue, the company used $156 000 of the proceeds to repay an 8 % Loan Stock
including six months’ accrued interest due. The company prepared a cash flow statement just
after repayment of the Loan Stock.
What amount of net cash inflow will appear under the heading ‘Financing’ in the cash flow
statement?
A $38 000
B $44 000
C $50 000
D $56 000
3 Why would convertible loan stock be issued by a company?
A
to obtain low-cost finance when equity m