CIE Accounting Paper-2: Specimen Questions 86 - 88 of 103

Passage

Mr. Norway starts a small business & maintains his records under single entry system. Following information was obtained from his books: Plant & Machinery £60000; Stock £10000; Cash in hand £200; Debtors £34000; Loan from Mr. Rock £[email protected] % interest; Bank Overdraft £2200; Creditors £24240

On 31.12. 2015, he owed to his creditors £18340 and paid Mr. Rock £1000 on 1.07. 2015, however interest on loan was not paid. Additional machinery worth £26000 was brought in. Debtors were £46000 out of which £1800 are bad. Cash balance was £8200 and stock was £9000. Drawings for the year were £16600 and £20000 was introduced as additional capital during the year.

Question number: 86 (3 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

State any 2 differences between single entry and double entry system of book keeping?

Explanation

The differences between single entry and double entry system of book keeping are as follows:

(i) Single entry system is an incomplete system of book keeping, while double entry system is a complete system.

(ii) Single entry system of book keeping is not accepted for the assessment of taxation, while double entry system is accepted for ascertainment of tax.

Question number: 87 (4 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

What is the capital of Mr. Norway at the end of the financial year 31.12. 2015?

Explanation

Statement of affairs of Mr. Norway as on 31st Dec 2015

Table of Statement of affairs of Mr. Norway as on 31st Dec 2015

LIABILITIES

AMOUNT

AMOUNT

ASSETS

AMOUNT

AMOUNT

Loan from Mr. Rock

1000

Plant & Machinery

60000

Interest on loan

60

Add: Adiditional Plant

26000

86000

Creditors

8340

Stock

9000

Cash in hand

8200

CAPITAL (Bal Figure)

128000

Debtors

46000

Less: Bad

1800

44200

147400

147400

Interest on loan:

[email protected] % for 6 months = 2000*4100*612 =40

[email protected] % for 6 months = 1000*4100*612 =20

40 + 20 = 60

Question number: 88 (5 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Does Mr. Norway earn a profit or suffer a loss during the year?

Explanation

Mr. Norway earned a profit during the year amounting to £48840

Statement of Profit or loss for the year ended 31.12. 2015

Calculate values of particulars and amount

PARTICULARS

AMOUNT

Capital as on 31.12. 2015

128000

Add: Drawings

16600

144600

Less: Capital introduced

20000

124600

Less: Capital as on 01.01. 2015

75760

Profit for the year 2015

48840

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