A-AS Level (CIE) Accounting Paper-2: Specimen Questions with Answers 9 - 10 of 53

Question 9

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Short Answer▾

Explain two types of accounts.

Explanation

  • Personal Account: these persons could be natural person like Smith a/c. The person could also be artificial persons like companies, bodies corporate or association of persons or partnerships etc. Example ABC a/c.
    • There could be representative personal account as well. The identity of persons related to this account is known, the convention is to reflect them as collective accounts. E. g. , when salary is payable to employees, we know how much is payable to each of them, but collectively the account is called as salary payable a/c.
  • Real accounts: These are accounts related to assets or properties or possession. Depending on their physical existence or otherwise. They are further classified as follows:
    • Tangible Real account: Assets that have physical existence and can be seen and touched.
    • Intangible Real account: These represent possession of properties that have no physical existence but can be measured in terms of money and have value attached to them.

Question 10

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Short Answer▾

What are calls in arrears and interest on them?

Explanation

Some shareholders fail to pay the amount of allotment or call when it becomes due. This is known as calls in arrears. At the end of the accounting period, the amount outstanding on calls transferred to “call in arrears A/c.”

  • The company is authorized to charge interest on call in arrears at a specified rate mentioned in its articles, from due date to the date of actual payment. But if the articles are silent, Table A shall apply according to which interest at the rate of shall be charged.
  • Normally it is not necessary to open a separate account for call in arrears. In such a case the actual amount received from the shareholders is credited to the call account and call account will show debit balance equal to unpaid amount of the call. Such debit balance of calls in arrear will be shown as a deduction from the amount of the subscribed capital on the liabilities side of balance sheet.

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