# CIE Accounting Paper-1: Specimen Questions 71 - 73 of 214

## Passage

Income statement of the Paul Jackson as on 31st march 2015.

 Particulars \$ \$ Revenue – Credit Sales Cash sales 135300 26800 162100 Less Cost Sales Opening stock Purchases Carriage inwards Closing stock 17800 95600 2800 116200 19200 ________ 97000 Gross Profit 65100 Rent Electricity Insurance Wages 6000 3600 5800 1370 29100 Net Profit 36000

## Question number: 71 (2 of 3 Based on Passage) Show Passage

### Write in Short

Paul Jackson did not include his additional credit sales of \$15000 which were, therefore, not included in his income statement.

Recalculate the new percentage of gross profit to sales.

### Explanation

45%

The revised gross profit includes gross profit with credit sale \$15000 and same amount will be added to the sales of during year.

## Question number: 72 (3 of 3 Based on Passage) Show Passage

### Write in Short

Calculate Paul Jackson’s percentage of net profit to sales for the year ended 31st March 2015. Show your calculation with exact percentage.

### Explanation

22%

Net profit is calculated after deducting the operation expenses and adding the operating income with the gross profit of the business.

## Question number: 73

### Write in Short

Classify the following items under capital or revenue:

(i) Purchase of furniture - ………………………………. .

(ii) Purchase of second hand machinery ………………………. .

(iii) Carriage on goods purchased ……………………. .

(iv) Wages paid for installation of plant………………

### Explanation

(i) Purchase of furniture – Capital

(ii) Purchase of second hand machinery – Capital

(iii) Carriage on goods purchased - Revenue

(iv) Wages paid for installation of plant – Capital

Purchase of furniture and Purchase of second hand machinery are the acquisition of fixed assets. Hence it is capital expenditure. The carriage on goods purchased is incurred on purchase of goods for sale. Hence, it is revenue in nature.

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