Free Practice Questions for CAPE Accounting Unit 2

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Key Facts: CAPE Accounting Unit 2 Exam

45 items

Paper 01 has 45 compulsory multiple-choice items, 15 from each Module

CXC CAPE Accounting Syllabus CXC A8/U2/22, Outline of Assessment

1 hour 30 minutes

Time allowed for CAPE Accounting Unit 2 Paper 01

CXC CAPE Accounting Syllabus, Paper 01

30%

Paper 01's contribution to the Unit 2 grade

CXC CAPE Accounting Syllabus, Outline of Assessment

3 Modules

Costing Principles; Costing Systems; Planning and Decision Making

CXC CAPE Accounting Syllabus, Structure of the Syllabus

80% / 20%

Split between external written papers and School-Based Assessment (or Paper 032)

CXC CAPE Accounting Syllabus, Outline of Assessment

150 hours

Guided learning hours intended for Unit 2 across its three Modules

CXC CAPE Accounting Syllabus / subject page

Free original practice questions in this bank

OpenExamPrep

CAPE Accounting Unit 2 (Cost and Management Accounting) is administered by the Caribbean Examinations Council across three Modules: Costing Principles, Costing Systems, and Planning and Decision Making. Paper 01 consists of 45 compulsory multiple-choice items (15 per Module) completed in 90 minutes, accounting for 30% of the total Unit grade. Paper 02 provides 50% via extended problem-solving, and School-Based Assessment or Paper 032 provides 20%. Results are awarded as Grades I–VII. These independent English-language MCQs are a study adaptation for Unit 2 topics, not an official-format simulation or a substitute for written calculations and research practice.

Sample CAPE Accounting Unit 2 Practice Questions

Try these sample questions to review concepts for the CAPE Accounting Unit 2 exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 98+ question experience with AI tutoring.

1Which statement best distinguishes management accounting from financial accounting?

A.Management accounting produces forward-looking internal reports tailored to managerial planning and decision making without mandatory adherence to IFRS

B.Management accounting produces historical financial statements primarily intended for external regulatory bodies and tax authorities

C.Management accounting is strictly governed by statutory presentation rules and requires mandatory annual external independent audits

D.Management accounting focuses solely on reporting double-entry ledger summaries to external equity investors and general creditors

Explanation: Management accounting focuses on providing relevant, timely, and often forward-looking information to internal managers for planning, controlling, and decision making. Unlike financial accounting, it is not constrained by IFRS, GAAP, or statutory audit requirements.

2How are costs classified according to their behavioral response to changes in activity level within the relevant range?

A.Fixed costs, variable costs, and semi-variable (mixed) costs

B.Direct materials, direct labour, and manufacturing overheads

C.Production costs, administrative costs, and selling costs

D.Sunk costs, opportunity costs, and committed costs

Explanation: Cost classification by behavior categorizes costs based on how they react to fluctuations in activity: fixed costs remain constant in total, variable costs vary in direct proportion to activity, and semi-variable (mixed) costs contain both fixed and variable elements.

3Within the relevant range of activity, what happens to fixed cost per unit as the production volume increases?

A.It decreases continuously as fixed overhead is spread over more units

B.It increases in direct proportion to the increase in production volume

C.It remains completely constant regardless of changes in output

D.It fluctuates erratically depending on raw material price movements

Explanation: Total fixed costs remain unchanged within the relevant range, which means that as production volume rises, the fixed cost per unit declines because the same total expenditure is distributed over a larger quantity of output.

4Which of the following costs is correctly classified as a direct cost of manufacturing wooden dining tables?

A.Mahogany timber cut specifically to construct the table tops

B.Factory building property insurance premium paid annually

C.Salary paid to the plant security guard monitoring the perimeter

D.Depreciation expense on central factory air conditioning units

Explanation: Direct costs can be economically and physically traced directly to a specific cost object. Mahogany lumber used directly in the fabrication of the table tops is an integral direct raw material.

5Conversion cost is best defined as the expenditure incurred to:

A.Transform raw materials into finished manufactured goods, comprising direct labour and manufacturing overhead

B.Acquire direct raw materials and transport them to the warehouse

C.Distribute finished products to wholesale and retail customer locations

D.Pay general corporate administrative salaries and legal audit fees

Explanation: Conversion cost represents the resources needed to convert raw materials into finished inventory. It comprises direct labour plus factory/manufacturing overhead.

6A factory observes total maintenance costs of $28,000 at an activity level of 3,000 machine hours, and $58,000 at 8,000 machine hours. Using the high-low method, what is the variable maintenance cost per machine hour?

A.$6.00 per machine hour

B.$7.25 per machine hour

C.$9.33 per machine hour

D.$5.00 per machine hour

Explanation: Under the high-low method: Variable cost per unit = Change in cost / Change in activity = ($58,000 - $28,000) / (8,000 - 3,000) = $30,000 / 5,000 hours = $6.00 per machine hour.

7Based on maintenance costs of $28,000 at 3,000 machine hours and $58,000 at 8,000 machine hours, what is the total fixed maintenance cost per period?

A.$10,000

B.$12,000

C.$18,000

D.$28,000

Explanation: With variable cost = $6.00 per machine hour, Fixed cost = Total cost - (Variable cost per hour * Hours). At the high level: $58,000 - (8,000 * $6.00) = $58,000 - $48,000 = $10,000. At the low level: $28,000 - (3,000 * $6.00) = $28,000 - $18,000 = $10,000.

8Using the cost function derived from the high-low method (Fixed Cost = $10,000; Variable Cost = $6.00 per machine hour), what is the estimated total maintenance cost if the factory operates 6,500 machine hours next month?

A.$49,000

B.$39,000

C.$51,500

D.$45,500

Explanation: Total estimated cost = Fixed cost + (Variable rate * Activity) = $10,000 + ($6.00 * 6,500) = $10,000 + $39,000 = $49,000.

9Which document is prepared by the receiving department upon arrival of materials from an external vendor to verify quantities and physical condition?

A.Goods received note (GRN)

B.Purchase requisition

C.Purchase order

D.Materials requisition note

Explanation: A goods received note (GRN) is generated by the receiving department when shipments arrive, documenting the items, quantities received, and physical inspection condition before matching against the purchase order and vendor invoice.

10A manufacturing plant uses a component with a maximum daily usage of 400 units and a maximum lead time of 15 days. What is the re-order level for this component?

A.6,000 units

B.4,500 units

C.3,000 units

D.7,500 units

Explanation: Re-order level is set to protect against stockout during the replenishment cycle: Re-order level = Maximum usage * Maximum lead time = 400 units/day * 15 days = 6,000 units.

About the CAPE Accounting Unit 2 Exam

CAPE Accounting Unit 2, titled Cost and Management Accounting, is the second of two independent Units in the Caribbean Examinations Council's Caribbean Advanced Proficiency Examination in Accounting. It comprises three Modules: Module 1 Costing Principles; Module 2 Costing Systems; and Module 3 Planning and Decision Making. The Unit provides candidates with analytical frameworks to calculate product costs, assess operational performance, prepare budgets, and make managerial decisions. Paper 01 is a compulsory multiple-choice examination of 45 items, 15 from each Module, sat in 1 hour 30 minutes and contributing 30% to the final Unit grade. CAPE Accounting is pitched at post-16, GCE A-Level standard and prepares candidates for tertiary studies in business, accounting, and finance across the Caribbean and internationally.

Exam sponsor: Caribbean Examinations Council (CXC). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

Paper 01: 45 compulsory multiple-choice items, 15 from each of the three Modules, each worth 1 mark (45 marks weighted to 90; 30% of the Unit). Paper 02: three compulsory questions, one per Module (2 hours 45 minutes; 50%). School-Based Assessment Paper 031 or private-candidate Paper 032 (20%).

Time Limit

Paper 01 is 1 hour 30 minutes (90 minutes). Paper 02 is 2 hours 45 minutes. The May–June 2026 final timetable lists Paper 032 (private candidates) at 1 hour 30 minutes; confirm with your centre.

Passing Score

No fixed pass mark. CAPE results are reported as Grades I to VII (Grade I highest), combining external papers (80%) and School-Based Assessment or Paper 032 (20%). Paper 01 alone contributes 30% of the Unit grade.

Exam / Certification Fees

Effective May–June 2026: BBD $69.50 per CAPE Unit plus BBD $48.50 candidate entry in member territories. External-territory rates are BBD $139.00 per Unit plus BBD $97.00 entry. Local registrar charges may apply; confirm payment requirements with your school or Local Registrar.

Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

33%

Module 1: Costing Principles

Paper 01 draws 15 items here. Topics include the nature and role of cost and management accounting; manufacturing accounts and cost schedules; cost classifications and curves; material procurement, recording, valuation and EOQ; labour costs and remuneration; overhead allocation, service-cost apportionment and predetermined recovery rates; and short-term make-or-buy, add-or-drop, special-order and limiting-factor decisions.

33%

Module 2: Costing Systems

Paper 01 draws 15 items here. Topics include job and batch costing, job-cost sheets, cost flows and overhead absorption; ABC activity levels, drivers, rates and costs; FIFO and weighted-average process-costing worksheets and equivalent units, excluding transferred-in costs and loss accounting; costing services and their practical difficulties; marginal and absorption income statements and profit reconciliation; and technology in cost and management accounting.

34%

Module 3: Planning and Decision Making

Paper 01 draws 15 items here. Topics include budgeting objectives and control; cash, purchases, sales and production budgets; standard setting and material, labour, variable- and fixed-overhead variances; CVP, contribution, break-even, margin of safety and target profit excluding taxation; and capital budgeting using payback, ARR, present/future values, NPV, discounted payback, PI and IRR. Investment decisions also consider employment, environmental effects and corporate image.

Preparing for the CAPE Accounting Unit 2 Exam

What You Need to Know

Passing score: No fixed pass mark. CAPE results are reported as Grades I to VII (Grade I highest), combining external papers (80%) and School-Based Assessment or Paper 032 (20%). Paper 01 alone contributes 30% of the Unit grade.
Assessment: Paper 01: 45 compulsory multiple-choice items, 15 from each of the three Modules, each worth 1 mark (45 marks weighted to 90; 30% of the Unit). Paper 02: three compulsory questions, one per Module (2 hours 45 minutes; 50%). School-Based Assessment Paper 031 or private-candidate Paper 032 (20%).
Time limit: Paper 01 is 1 hour 30 minutes (90 minutes). Paper 02 is 2 hours 45 minutes. The May–June 2026 final timetable lists Paper 032 (private candidates) at 1 hour 30 minutes; confirm with your centre.
Exam / certification fees: Effective May–June 2026: BBD $69.50 per CAPE Unit plus BBD $48.50 candidate entry in member territories. External-territory rates are BBD $139.00 per Unit plus BBD $97.00 entry. Local registrar charges may apply; confirm payment requirements with your school or Local Registrar. Official sources

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CAPE Accounting Unit 2: Suggested Study Strategy

1Work through all three Modules systematically; Paper 01 allocates 15 questions to each Module, meaning balanced preparation across the entire syllabus is essential.

2In Module 1, master the high-low method, inventory valuation (FIFO, LIFO, AVCO), EOQ calculations, and overhead apportionment/absorption steps including under- and over-absorption adjustments.

3In Module 2, practise job-cost sheets, ABC driver rates and FIFO/weighted-average equivalent units; reconcile marginal and absorption profits. CXC's process worksheets exclude transferred-in costs and loss accounting.

4In Module 3, practise budgets, CVP and variance formulas alongside payback, ARR, NPV, discounted payback, PI and IRR. Include qualitative factors when evaluating long-term investment decisions.

5Time your practice at 2 minutes per question to comfortably finish the 45 items within the 90-minute examination limit.

6Always double-check arithmetic on multi-step computational questions and keep a neat sheet of workings.

Frequently Asked Questions

How many questions are on CAPE Accounting Unit 2 Paper 01?

Paper 01 has 45 compulsory multiple-choice items, with 15 drawn from each of the three Modules. Each item is worth 1 mark (45 marks, weighted to 90).

How long is CAPE Accounting Unit 2 Paper 01?

Paper 01 lasts 1 hour 30 minutes (90 minutes). Paper 02 is a separate 2-hour-and-45-minute written problem-solving paper.

What is the difference between CAPE Accounting Unit 1 and Unit 2?

Unit 1 focuses on Financial Accounting (accounting theory, recording, preparation of financial statements under IFRS for SMEs, and financial reporting). Unit 2 focuses on Cost and Management Accounting (costing principles, costing systems like job/process/ABC, and planning and decision-making including budgeting and variance analysis).

How is CAPE Accounting Unit 2 graded?

Results are awarded on a seven-point scale from Grade I (highest) to Grade VII. External examinations contribute 80% (Paper 01 is 30%, Paper 02 is 50%) and School-Based Assessment or private-candidate Paper 032 contributes 20%.

Can I use a calculator on CAPE Accounting Unit 2 Paper 01?

Yes. Candidates are permitted to bring a silent, non-programmable electronic calculator. Financial and programmable calculators are prohibited.

Are these official CXC past paper questions?

No. These independent English-language MCQs are a study adaptation by OpenExamPrep, not official CXC questions, an official-format simulation, or a substitute for written responses and research practice. Obtain official past papers and syllabuses from CXC or the CXC Store.