CIE Accounting Paper-1: Specimen Questions 47 - 49 of 214

Question number: 47

MCQ▾

Question

Stephen returned faulty goods to his supplier, Lipton Limited. Name the business document which Lipton Limited issued to Stephen when the goods were supplied?

Choices

Choice (4) Response
a.

[Purchase] invoice

b.

Credit note

c. Debit note
d.

[Sales] invoice

Answer

d.

Explanation

Invoice is a commercial document which is issued by the seller to the person who purchased goods from him. The invoice shows the name of the products, quantities, price and agreed services provided by the seller.

Question number: 48

MCQ▾

Question

Gama Limited made a profit of $582 800 for the year. $54 000 was transferred to general reserve. A dividend on ordinary shares of $253 000 was paid. What was the retained profit for the year?

Choices

Choice (4) Response
a.

$275 800

b.

$228 800

c.

$258 800

d.

$215 800

Answer

a.

Explanation

Retained earnings are the profit kept with the company apart from dividend paid to the shareholders. Hence it is calculated as

RetainedProfit=ProfitfortheyearTransfertoGeneralreserveDividendpaid

=58280054000253000

=275800

Question number: 49

MCQ▾

Question

A plant shop receives an invoice for 500 plants at $10each, less 10 % trade discount, from X. Field. The plants were bought on credit and for resale. Which entry records the transaction in the plant shop’s books?

Choices

Choice (4) Response
a.

Entry of credit sales in the plant shops books.

Deatail of Entry of credit sales in the plant shops books.

Account to be debited

Account to be credited

Purchases 4500

X. Field 4500

b.

Entry of credit sales in the plant shops books.

Deatail of Entry of credit sales in the plant shops books.

Account to be debited

Account to be credited

X. Field 4500

Purchases 4500

c.

Entry of credit sales in the plant shops books.

Deatail of Entry of credit sales in the plant shops books.

Account to be debited

Account to be credited

Purchase 5000

X. Field 5000

d.

Entry of credit sales in the plant shops books.

Deatail of Entry of credit sales in the plant shops books.

Account to be debited

Account to be credited

X. Field 5000

Purchases 5000

Answer

a.

Explanation

Trade discount is provided on the credit purchase and cash discount is provided on the cash purchase.

Hence the discount is calculated as 5000 – [5000 X 10 %] = 4500.

Plant shop purchased plant worth $5000 at trade discount of $500.

Share