CIE Accounting Paper-1: Specimen Questions 6 - 8 of 214

Question number: 6

MCQ▾

Question

Which group contains only intangible fixed assets?

Choices

Choice (4) Response
a.

Debtors, Bills Receivable, inventory and Cash

b. Preliminary expenses, Debit balance of P&L, Expenses on issue of shares and debentures and Discount on issue of shares and debentures.
c.

Patent, Goodwill, Trade Marks and Copy rights.

d.

Plant and Machinery, Loose tools, Building and Furniture

Answer

c.

Explanation

The intangible fixed assets do not have any physical existence. Patent, Goodwill, Trade Marks and Copy rights are some of the examples of intangible assets in the organization. They possess certain values hence known as fixed assets.

Question number: 7

MCQ▾

Question

Among the following which accounts in the nominal (general) ledger would be entered in the trading account section of the income statement?

Choices

Choice (4) Response
a.

Purchases

b.

Office rent

c.

Carriage outwards

d.

Insurance Premium

Answer

a.

Explanation

Sales, purchases, sales return, purchase returns, stock at the beginning, stock at the end carriage inwards and all manufacturing expenses will appear in the trading account. Trading account balancing figure will be carry forward to profit and loss account in the name of gross profit or gross loss.

Question number: 8

MCQ▾

Question

Which current assets will appear first in order of liquidity?

Choices

Choice (4) Response
a.

Cash

b.

Bank

c.

Trade receivable

d.

Inventory

Answer

a.

Explanation

The presentation of current assets in order of the amount of time it will convert into cash. The orders of current assets in the balance sheet have to be considered in order to find the order of liquidity. Hence cash is the first current assets will appear first in order of liquidity.

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