CIE Accounting Paper-2: Specimen Questions 30 - 32 of 103

Passage

The following transactions are shown in the books of Mr. Ringon for the month of January 2007.

Jan 1st Received a cheque from Mr. Fatso to whom goods were sold for £20000, allowed him 1%

Jan 2nd Mr. Fatso’s cheque was deposited in bank

Jan 5th Mr. Fatso‘s cheque was dishonored (bank charges £100)

Jan 8th Mr. Fatso settled his account by means of a cheque £20250, £150 being interest charged.

Question number: 30 (5 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Why does Mr. Ringon enter the letter C in his cash book, what does it imply?

Explanation

The term C in Mr. Ringon’s books refers to Contra entry. The term contra entry means an entry for which the debit and credit is simultaneously recorded in the three columnar cash book. Examples of such entry are: cash withdrawn or deposited in bank. . Hence such entries are marked with the letter C, to distinguish them from others.

Passage

  1. Mr. Stanley had 2 accounts with HSBC Bank named A/c 1 and A/c 2. As on 31.12. 2015, his cash book showed balances of £540 and £27040 in the two A/c’s respectively.

On examining the bank statements, the following were noticed:

(i) £2700 has been transferred from A/c 2 to A/c 1 by the bank without intimating Mr. Stanley.

(ii) £10 have been bank charges in both the accounts, which is not intimated to Mr. Stanley

(iii) Cheque for £542 issued on A/c 1 in November not yet presented in bank

(iv) A cheque of £427 deposited by Mr. Stanley in A/c 2 has been credited by bank in A/c 1

Question number: 31 (1 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

What is the balance in Mr. Stanley’s A/c 1 as per HSBC bank?

Explanation

The balance of Mr. Stanley’s A/c 1 as per bank pass book is £4199

Bank reconciliation statement of Mr. Stanley (A/c 1) as on 31.12. 2015

given this table in Table title: Bank reconciliation statement of Mr. Stanley (A/c 1) as on 31.12. 2015

Particulars

Amount

Amount

Bank balance as per cash book (Dr)

540

Add: Transfer from A/c 2 without notice

2700

Cheque issued but not presented

542

Cheque deposited in A/c 2 but wrong credit in A/c 1

427

3669

4209

Less: Bank charges in pass book but not in cash book

10

Bank Balance as per pass book (Cr)

4199

Question number: 32 (2 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

State any 3 differences between a bank statement and a bank reconciliation statement?

Explanation

The three differences between a bank statement and a bank reconciliation statement is as follows:

(i) Bank statement is prepared by the bank while the bank reconciliation statement is prepared by the account holder or customer.

(ii) It is compulsory for the bank to prepare the bank statement, while it is optional for the customer to prepare the reconciliation statement.

(iii) The bank prepares this statement to inform the customer about all the transactions that have taken place during a period. While the reconciliation is prepared by the customer to check the bank balance with the cash book balance.

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