CIE Accounting Paper-1: Specimen Questions 27 - 28 of 214

Question number: 27

MCQ▾

Question

Which entries are made in Antony’s ledger to record the goods returned by James?

Choices

Choice (4) Response
a.

Antonys ledger account is given.

Here account detail is given.

account to be debited account to be credited

account to be debited account to be credited

James

Sales

b.

Antonys ledger account is given in this table.

Here account detail is given.

account to be debited account to be credited

account to be debited account to be credited

James

Purchase return

c.

Antonys ledger account

Here account detail is given.

account to be debited account to be credited

account to be debited account to be credited

Sales return

James

d.

The antonys ledger account is given in this table.

Here account detail is given.

account to be debited account to be credited

account to be debited account to be credited

Purchase

James

Answer

c.

Explanation

Goods which are returned by their customers were recorded in this type of book. Monthly totals of the sales return books shows the data on sales returns. These transactions took place only when there is a credit sale among the parties.

Question number: 28

MCQ▾

Question

The table shows information relating to two businesses trading in the same type of goods.

Two businesses trading in the same type of goods in term of ratio

Two businesses trading in the same type of goods in term of ratio in detail

Business

Rate of inventory turnover

Quick ratio

X

4 times a year

2.5: 2

Y

10 times a year

0.8: 1

Which statement is correct?

Choices

Choice (4) Response
a.

Business Y has a good rate of inventory turnover but has poor liquidity.

b.

Business Y has a poor rate of inventory turnover and has poor liquidity.

c.

Business X has a good rate of inventory turnover but has poor liquidity.

d.

Business X has a poor rate of inventory turnover and has poor liquidity.

Answer

a.

Explanation

The inventory ratio is calculated on the basis of turnover.

The liquidity ratio shows the liquidity among the liquid assets and liquid liability.

Hence Y has greater inventory turnover ratio where as poor liquidity ratio compare to the X

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