CIE Accounting Paper-1: Specimen Questions 155 - 157 of 214

Question number: 155

MCQ▾

Question

Which expenditure is incurred to increase the operational efficiency of the business concern?

Choices

Choice (4) Response
a.

Revenue Expenditure

b.

Deferred Revenue Expenditure

c.

Capital Expenditure

d.

Capital Receipt

Answer

c.

Explanation

Capital expenditure is incurred to increase the operational efficiency of the business concern. This kind of expenditure is non-recurring in nature and it is not acquired for sale purpose of the business.

Question number: 156

Short Answer Question▾

Write in Short

Leon sells three type of home appliances and provides the following information about the inventory in his business as on 30th April 2015.

Items of inventory as on 30th April 2015

Findina a all items in given table.

Home Appliances

Unit of stock

Cost per unit

$

Selling price per unit $

Iron boxes

25

50

60

Grinders

30

30

25

Mixie

40

20

22

Calculate the value of Leon’s inventory at 30 April 2015.

Explanation

$2800

Calculation of Leon’s inventory as on 30th April 2015

finding Items of inventory as on 30th April 2015

Findina a all items in given table.

Home Appliances

Unit of stock

Cost or net realisable value per unit$

Selling price per unit $

Iron boxes

25

50

1250

Grinders

30

25

750

Mixie

40

20

800

Total

2800

Question number: 157

MCQ▾

Question

What is gross profit?

Choices

Choice (4) Response
a.

Excess of sale proceeds over cost of goods sold.

b.

Sales proceeds over Costs of goods sold are equal

c.

Costs of goods sold over sale proceeds are equal.

d.

Excess of cost of goods sold over sale proceeds

Answer

a.

Explanation

Gross profit or gross loss is the difference between actual sale proceeds and the cost of goods sold. The cost of goods sold includes the purchase value plus buying and bringing expenses. Thus

Costofgoods=Openingstockofgoods+netpurchasesclosingstock

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