# 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 £2000@4 % 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:

2000@4 % for 6 months = =40

1000@4 % for 6 months = =20

40 + 20 = 60