CIE Accounting Paper-1: Specimen Questions 29 - 31 of 214

Question number: 29

MCQ▾

Question

On the admission of new partner, in which ratio profit and loss adjustment A/C should be transferred to the capital account?

Choices

Choice (4) Response
a.

Old partners in their old profit – Sharing ratio

b.

All partner in the new profit – Sharing ratio

c.

All partner in the old profit – Sharing ratio

d.

Old partner in their new profit – Sharing ratio

Answer

a.

Explanation

On the admission of new partner’s profit and loss adjustment A/C should be transferred to the capital account in the following ratio:

Onadmission=OldpartnersintheiroldprofitSharingratio

Question number: 30

MCQ▾

Question

What will be found in the financial statements of a business?

Choices

Choice (4) Response
a.

the income and running costs of the business

b.

the amount the business owes to suppliers

c.

the value of the assets owned by the business

d. All a. , b. and c. are correct

Answer

d.

Explanation

The financial statements of a business are comprises of the amount the business owes to suppliers, the income and running costs of the business and the value of the assets owned by the business.

Question number: 31

MCQ▾

Question

Two businesses, A and B, are of a similar size and are in the same industry. They provide the following information.

Percentage of gross profit and net profit on sales of two business A and B

Percentage of gross profit and net profit on sales of two business A and B in detail

A

B

%

%

gross profit as a percentage of sales

30

27

net profit as a percentage of sales

11

14

Choices

Choice (4) Response
a.

B controlled expenses better than A.

b.

B’s sales were greater than A’s.

c.

A’s sales were greater than B’s.

d.

A controlled expenses better than B.

Answer

a.

Explanation

Gross profit is calculated before incurring the operating expenses whereas the net profit is calculated after considering the operating expenses. Hence the B controlled expenses better than A due to the increase percentage of sales on net profit.

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