CIE Accounting Paper-1: Specimen Questions 57 - 58 of 214
Question number: 57
John maintains a provision for doubtful debts at 5 % of the trade receivables (debtors) at the end of each financial year.
The Provision for Bad and Doubtful debts account shows a balance of $2000 on 1st January 2008. The Bad debts during the year 2008 amount to $1600. The Sundry debtors on 31st December 2008 are $32, 000.
How much will appear in John’s income statement (profit and loss account) for the year ended 31 December 2008?
The provision for bad and doubtful debts is generally a percentage on the debtors. In above question transaction will be
Dr Profit and Loss A/C for the year ended 31 - 12 - 2008 Cr
To Bad debts 1600
+ New Provision 1600
_ Existing provision 2000
Question number: 58
Which statement is correct?
Accounting can help to identify profit trends.
Accounting can help to monitor liquidity.
Accounting can help to control costs.
|d.||All a. , b. and c. are correct|
The accounting is a process in which financial activities are recorded according to the standard principles of accounting.
Thus accounting helps in controlling costs, identify profit trends and monitor liquidity.