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:

Find out payment account details

calculate amout detalis in this table.

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

Short Answer Question▾

Write in Short

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

Explanation

Journal entries in the books of Mrs.

Table of Journal entries in the books of Mrs.

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

Short Answer Question▾

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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