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

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

Write in Short

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

Explanation

 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 = =40

[email protected] % for 6 months = =20

40 + 20 = 60