CIE Accounting Paper-1: Specimen Questions 202 - 205 of 214

Passage

The following balances were shown in the book Lawrence as on 31 - 03 - 2015.

The following balances were shown in the book Lawrence as on 31 - 03 - 2015

shows The following balances

$

Cash in hand

600

Capital

40000

Salaries

28000

Rent

2000

Commission

5000

Bad Debts

4400

Debtors

30000

Creditors

28000

Sales

2000

Question number: 202 (1 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Prepare trial balance of the Lawrence account as on 31 - 03 - 2015

Lawrence

Trial Balance as on 31 - 03 - 2015

Trial Balance of Mr. Lawrence as on 31 - 03 - 2015

shows The following balances

Details

DR

$

CR

$

Cash in hand

Capital

Salaries

Rent

Commission

Bad Debts

Debtors

Creditors

Sales

Total

Explanation

$70000

Lawrence

Trial Balance as on 31 - 03 - 2015

calculate value of DR $, CR $

shows the value of Details, DR $, CR $

Details

DR

$

CR

$

Cash in hand

600

Capital

40000

Salaries

28000

Rent

2000

Commission

5000

Bad Debts

4400

Debtors

30000

Creditors

28000

Sales

2000

Total

70000

70000

Question number: 203 (2 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Mention any one objective of preparing a trial balance.

Explanation

The objectives of preparing a trial balance are as follows:

  • To identify and locate the errors.
  • To check the arithmetic accuracy of the ledger accounts.
  • To facilitate the preparation of final account more easily.

Question number: 204

Short Answer Question▾

Write in Short

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

Question number: 205

Short Answer Question▾

Write in Short

Complete the following statement: Gross Profit is defined as

……………………. . less……………………………………

Explanation

Grossprofit=NetsalesCostofgoodssold

Gross Profit is calculated on the basis of net sales and cost of goods sold. The net sales are calculated by finding the difference between the sales and return inwards. The cost of goods sold includes opening stock, net purchases and direct expenses and excludes from closing stock

Formula for finding gross profit of the year

Formula for finding gross profit of the year

shows Formula for finding gross profit of the year

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