# 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

### 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

 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

 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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