CIE Accounting Paper-1: Specimen Questions 188 - 192 of 214

Passage

Terry and Candy are partners of a firm sharing profit and loss in the ratio of 7: 5.

The Goodwill is to be valued at 2 years purchases of four years average profit which were $40000, $32000, $15000 and $13000 respectively.

Question number: 188 (2 of 2 Based on Passage) Show Passage

One Liner Question▾

Write in Brief

Calculate the goodwill for the above transaction:

Explanation

$50000

Solution:

AmountofGoodwill=2yearspurchases×Averageprofit

=2×25000

=$50000

Question number: 189

One Liner Question▾

Write in Brief

Write any two characteristics of a company.

Explanation

The following are characteristics of a company:

  1. Common Seal
  2. Freely transferable shares
  3. Limited liability of members
  4. Perpetual Succession
  5. Separate legal entity

Passage

The following transaction took place in the book of Raneesh.

shows following transaction took place in the book of Raneesh.

finding transaction took place in the book of Raneesh.

2015 July 5

Sold on credit to S. S. Traders [with 10 % Discount]

10 Chairs@$100

10 Tables@$150

2015 July 8

Sold to Rakesh for cash

15 Chairs@$100

Question number: 190 (1 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Prepare Sales Book of Raneesh for July 2015

Explanation

$2500

Sales book of Raneesh as on July 2015

calculate a Sales book of Raneesh as on July 2015

Date

Particulars

Invoice No.

Amount in $

Details

Amount in $

Total

2015 July 5

S. S. Traders & Co

10 Chairs@$100

10 Tables@$150

Total

1000

1500

2500

2500

Question number: 191 (2 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Mention the two transactions which are not entered in the Sales Book.

Explanation

The following two transactions are not recorded in the Sales Book:

  1. Cash Sales
  2. Cash sale of assets
  3. Credit sale of assets

Passage

Rahul and Husain are agreed to form the partnership from 1 April 2014 to sell Furnitures.

Question number: 192 (1 of 3 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Mention the clauses in partnership deed.

Explanation

Every partnership deed should contain the following clauses:

  1. Name of the firm and nature of the business
  2. Name and addresses of the partners.
  3. The duration, if any, of partnership firm.
  4. The total capital of the firm and the share of each partner.
  5. The ratio of sharing profits and losses
  6. Whether capitals are to be fixed or fluctuating
  7. Rate of interest on advances
  8. The audit of the accounts
  9. Admission of new partners and expulsion of the existing ones.
  10. The amount of salaries or some allowance, if any, payable to the partners.
  11. The method of ascertaining the share of goodwill of a partner on his retirement or death.
  12. The period after which the final accounts are to be prepared.
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