CIE Accounting Paper-1: Specimen Questions 132 - 134 of 214

Question number: 132

MCQ▾

Question

When will a business issue a credit note?

Choices

Choice (4) Response
a.

When goods are returned by a customer

b.

When goods are received from a supplier

c.

When goods are sent to a customer

d.

When goods are received from customer

Answer

a.

Explanation

Credit note is prepared by the seller when goods are returned by the customer. The credit note consist of

  • The date on which goods are returned
  • The name of the customer
  • The details of the goods returned
  • The amount of such goods etc. ,

Question number: 133

MCQ▾

Question

Which asset is termed as floating assets?

Choices

Choice (4) Response
a.

Liquid Asset

b.

Non- Current Asset

c.

Current Asset

d.

Fixed Asset

Answer

c.

Explanation

The assets which are easily converted into cash are known as current assets. These current assets are also termed as floating assets. This assets includes Cash in hand, cash at bank, sundry debtors and bills receivable etc. ,

Question number: 134

Short Answer Question▾

Write in Short

Give brief meaning of the following terms.

Drawings:

Explanation

When the owner withdraws money from the business for their personal use is known as drawings. It is almost amounts to temporary loan by the business to the owner. This should be treated on par with the loan to an outsider and interest is charged on the amount drawn by the owner. It will reflect in the capital account of the individuals.

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