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Accounting — IGCSE

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Costs, break-even and accountsShow the break-even formula and the substitution; the unit is a separate mark.
Cash flow, profit and liquidityCash and profit are different things. Say which one the question asks about and why it changed.

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Define "contribution per unit" and calculate the total contribution for a business that sells 1,000 units with a selling price of P40 and variable costs of P25 per unit.

2 marks · Define and calculate · Costs, break-even and accounts

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Answer: Contribution per unit = selling price − variable cost per unit = P15; total contribution = 1,000 × P15 = P15,000

Definition: the amount each unit contributes towards fixed costs and profit
Per unit: 40 − 25 = P15
Total: 1,000 × 15 = P15,000

Definitions must not use the word being defined. "Contribution is what it contributes" is the most common reason a definition mark is not awarded.

Which of the following would NOT appear as a cash inflow in a cash-flow forecast?

1 mark · Identify · Cash flow, profit and liquidity

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Answer: Depreciation of the delivery van

Cash flow records money actually moving
Depreciation spreads the cost of an asset over time and involves no transfer of money

This is the classic distinction question. If no money changes hands, it belongs in the income statement, not the cash-flow forecast.