# CIE Accounting Paper-2: Specimen Questions 92 - 95 of 103

## Passage

For the year ended 31st March 2014, the receipts and payments account of Enjoyment Club was as follows:

 RECEIPTS AMOUNT AMOUNT PAYMENTS AMOUNT AMOUNT To balance b/d 5125 By salaries 10400 To subscriptions By stationery 2000 2013 - 2014 225 By rent 3000 2014 - 2015 10500 By telephone 500 2015 - 2016 375 11150 By investment 6250 To profit on sports meet 7750 By sundry expenses 4625 To income from investments 5000 By balance c/d 2250 29025 29025

The club provided additional information such as

(i) There are 450 members paying subscription of £25, £250 were in arrears for 2013 - 2014 as on 1st April 2014

(ii) As on 31st march 2015, the rents were prepaid till June 30th2015, the amount paid every year being £3000

(iii) Outstanding telephone bill £175 on march 31st 2015

(iv) Outstanding sundry expenses on 31st march 2015 amounted to £350

(v) Stock of stationery on 31st march 2014 was £250 and on 31st march 2015 is £450

(vi) As on 31st march 2014 - 2015 building was valued at £50000, subject to depreciation at a rate of 5 % per annum

(vii) Investments on 31st march 2014 was £100000

(viii) On 31st march 2015 income accrued on investments purchased during the year amounted to £187

## Question number: 92 (4 of 5 Based on Passage) Show Passage

One Liner Question▾

### Write in Brief

What does Enjoyment club mean by outstanding bills and expenses?

### Explanation

Outstanding expenses refer to those expenses which have been incurred during the year and its benefits have also been enjoyed during the year, but the payment is not made during the year. It is essential to bring into account such expenses at the year end, as if ignored these expenses will overstate the profit.

## Question number: 93 (5 of 5 Based on Passage) Show Passage

One Liner Question▾

### Write in Brief

Income accrued on investments, state how does enjoyment club deal with this adjustment?

### Explanation

Accrued income refers to income which has been earned but not yet received. Enjoyment club will add the income accrued on investments in the income side of its income and expenditure account.

## Passage

Mrs. Anthony sold goods worth £10000 to Mrs. Barker on Jan 1st 2016. Mrs. Anthony drew a bill on Mrs. Barker at three months for the full amount. Mrs. Barker accepted the bill and returned to Mrs. Anthony, who discounted the bill with a bank on 5th Feb 2016.@15 %. The bill was duly honored on maturity.

## Question number: 94 (1 of 5 Based on Passage) Show Passage

### Write in Short

How will Mrs. Anthony journalize the above transactions in her books of accounts?

### Explanation

 DATE PARTICULARS LF DEBIT AMT CREDIT AMT Jan 1st Mrs. Barker A/c Dr 10000 To Sales 10000 (Being goods sold on credit) Jan 1st Bills receivable A/c Dr 10000 To Mrs. Barker A/c 10000 (Being acceptance of bill received) Feb 5th Bank A/c Dr 9750 Discount A/c Dr 250 To Bill receivable A/c 10000 (Being bill discounted with [email protected]%)

## Question number: 95 (2 of 5 Based on Passage) Show Passage

### Write in Short

State any two differences between a bill of exchange and a promissory note?

### Explanation

The differences between a bills of exchange and promissory note are as follows:

(i) There are 3 parties involved in a bill of exchange namely drawer, drawee and payee while only 2 parties maker and payee are involved in a promissory note.

(ii) The liability of the drawer is secondary in the bill of exchange while the liability of the maker is primary in a promissory note.

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