CIE Accounting Paper-1: Specimen Questions 206 - 210 of 214

Question number: 206

Short Answer Question▾

Write in Short

Explain what is meant by “Petty Cash Book”?

Explanation

The word Petty means ‘small’. The small recurring payments are maintained in the Petty cash book. Small recurring payments like carriage, postage and telegram, printing and stationery are recorded and maintained by the petty cashier. Petty cashier is a person other than main cashier.

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: 207 (1 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Find the four years average profit:

Explanation

$50000

The four years average profit is as follows:

Profit for four years:

showing profit for the year

shows mantion year in given table

I year

40000

II Year

32000

III Year

15000

IV Year

13000

Total

100000

Averageprofit=1000004

=25000

Question number: 208 (2 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Calculate the goodwill for the above transaction:

Explanation

$50000

AmountofGoodwill=2yearspurchases×Averageprofit

=2×25000

=$50000

Passage

The following transaction were took place in the book of Manisha:

The following transaction were took place in the book of Manisha

given table in transaction were took place in the book of Manisha:

Sold goods to Angel on credit

$17500

Bought goods for cash from Charles

$22500

Met travelling expenses

$2000

Received $40000 from Santosh as loan

-

Paid wages to workers

$3000

Question number: 209 (1 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Mention any two sources of documents.

Explanation

The few examples of source documents are

  • Cash memo
  • Invoice or bill
  • Receipts
  • Debit note
  • Credit Note
  • Pay-in-slip
  • Cheque
  • Vouchers
  • Bills receivables
  • Bills payable
  • Wage sheet
  • Salary register
  • Correspondence

Question number: 210 (2 of 2 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

List out the items which will involve cash transaction

Explanation

  1. Purchases
  2. Travelling expenses
  3. Wages
  4. Santosh’s loan

The following transactions were involved in cash treatment:

transactions were involved in cash treatment

shows The following transactions were involved in cash treatment

transactions were involved in cash treatment

shows The following transactions were involved in cash treatment

Bought goods for cash from Charles

$22500

Met travelling expenses

$2000

Received $40000 from Santosh as loan

-

Paid wages to workers

$3000

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