CIE Accounting Paper-2: Specimen Questions 20 - 22 of 103

Passage

Mr. Jack purchases machinery at a cost of £100000. The life of the machinery is said to be 3 years At the end of 3 years the machinery is sold as scrap at £20000.

Question number: 20 (5 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Calculate the profit or loss of Mr. Jack if he depreciates the machinery on Written down value method

Explanation

Profit of £489

Deprecation in the books of Mr. Jack on the basis of written down value method

shows Deprecation in the books of Mr. Jack on the basis of written down value method

PARTICULARS

AMOUNT

Cost of asset in year 1

100000

Less [email protected]%

42000

Book value at the end of year 1

58000

Book value at the beginning of year 2

58000

Less [email protected]%

24360

Book value at the end of year 2

33640

Book value at the beginning of year 3

33640

Less [email protected]%

14129

Book value at the end of year 3

19511

Scrap value

20000

Profit = Scrap Value - Book Value

489

Passage

RK Industries closes its books of accounts every year on June 30th. During the year it made purchases from various suppliers amounting to £ 640000. The books were opened with a stock of £890000. During the year RK Industries made payments to its creditors £576000. Purchases worth £124000 did not meet the standards required by RK industries and were hence returned back to the suppliers Discounts received during the year was £50000

Question number: 21 (1 of 5 Based on Passage) Show Passage

One Liner Question▾

Write in Brief

What would be the closing balance in the creditors control A/C on June 30th?

Explanation

£780000

Creditors control A/C in the books of RK Industries

shows Creditors control A/C in the books of RK Industries

DATE

PARTICULARS

AMOUNT

DATE

PARTICULARS

AMOUNT

To purchase Returns

124000

1st July

By Balance B/F

890000

To Payments

576000

By Purchases

640000

To Discount received

50000

30th June

To Balance C/F

780000

1530000

1530000

Question number: 22 (2 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Why should RK Industries maintain control A/C’s?

Explanation

RK Industries has a huge turnover of business, and has many suppliers and clients. In such a case it becomes difficult to open a separate account for each creditor and debtor. Hence in order to simplify the accounting process, a single ledger as the creditors or debtors ledger is maintained. All the credit purchases and sales are recorded in these ledgers respectively. In the general ledger a separate account as creditors control account and debtors control account where the total purchases and sales record is maintained.

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