# CIE Accounting Paper-2: Specimen Questions with Answers 100 - 102 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

What is the Gross profit of Mr. Iyer for the year ending 31.12. 2010?

### Explanation

 PARTICULARS AMOUNT AMOUT PARTICULARS AMOUNT AMOUNT To Opening Stock 500000 By Sales 2500000 To Purchases 1500000 Less: Returns Inwards 20000 2480000 Less: Returns Outwards 45000 1455000 By Closing Stock 325000 To Carriage inwards 45000 To Wages 24000 Add: O/S Wages 1000 25000 To Lighting Charges 5000 To Gross Profit 775000 2805000 2805000

## 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

 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

## Question number: 102 (4 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.