CIE Accounting Paper-2: Specimen Questions with Answers 100 - 101 of 103

Passage

The following entries are found in the books of Mr. Iyer for the year ending 31.12. 2010.

Purchases £1500000, Sales £2500000, Opening stock £500000, Returns Outward £45000, Returns Inward £20000, Carriage Inwards £ 45000, Cash in hand £778000, Cash at bank £608000, Wages £24000, Printing & Stationery £45000, Discount allowed £4000, Bad debts £15000, Insurance £25000, Investments £320000, Debtors £530000, Bills receivable £200000, Postage £4000, Commission £2000, Interest £10000, Repairs £4400, Lighting Charges £5000, Telephone £ 1000, Carriage outwards £4000, Car £250000, Interest received £35000, Discount received £4000, Creditors £1250000, Bills Payable £60400, Capital £1000000

He also stated the below mentioned adjustments, which are to be taken into consideration.

(i) Further bad debts £10000, Provision for doubtful debts@5 % and discount on debtors £5000

(ii) Interest is received on investments@5%

(iii) Depreciation on car was@5%

(iv) Interest and wages was outstanding at £2000 and £1000 respectively

(v) Closing stock was valued at £325000

Question number: 100 (2 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

State any 3 differences between a trial balance and a balance sheet?

Explanation

The three differences between the trial balance and balance sheet are as follows:

(i) Trial balance is prepared to verify the arithmetical accuracy of the books, while balance sheet is prepared to find out the financial position of the business.

(ii) Valuation of closing stock is not essential in the preparation of a trial balance, while closing stock value plays an important role in the preparation of balance sheet.

(iii) Real, Nominal and personal accounts are considered in the preparation of trial balance, but a balance sheet considers only the personal and real accounts in its preparation.

Question number: 101 (3 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Help Mr. Iyer in preparing the Final balance sheet as on 31.12. 2010?

Explanation

Balance sheet of Mr. Iyer as on 31.12. 2010

Table of Balance sheet of Mr. Iyer as on 31.12. 2010

LIABILITIES

AMOUNT

AMOUNT

ASSETS

AMOUNT

AMOUNT

Capital

1000000

Cash in hand

778000

Add: Net profit

660100

1660100

Cash at bank

608000

Creditors

1250000

Bills receivable

200000

Bills Payable

60400

Clsoing stock

325000

O/S Wages

1000

Car

250000

O/S Interest

2000

Less: Depreciation@5%

12500

237500

Investments

320000

Add: Interest@5%

16000

336000

Debtors

530000

Less: Bad debts

10000

520000

Less: Provision for doubtful debts@5%

26000

494000

Less: Discount on debtors

5000

489000

2973500

2973500