CIE Accounting Paper-2: Specimen Questions with Answers 24 - 27 of 103

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: 24 (4 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Pass the journal entry in the books of RK Industries to record the total purchases in the creditors control A/C in the general ledger?

Explanation

Journal entry in the books of RK Industries

shows Journal entry in the books of RK Industries

Date

Particulars

L. F

Debit Amt

Credit Amt

30-Jun

Purchases A/C Dr

780000

To Creditor’s control A/C

780000

(Being total purchases transferred to the creditors control A/C in the general ledger)

Question number: 25 (5 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

In Control A/C ‘s, the following are named as:

(i) Creditor’s ledger: …………………………. .

(ii) Debtor’s ledger: ………………………………

Explanation

(i) Purchase Ledger Control A/C (ii) Sales Ledger Control A/C

Passage

The following transactions are shown in the books of Mr. Ringon for the month of January 2007.

Jan 1st Received a cheque from Mr. Fatso to whom goods were sold for £20000, allowed him 1%

Jan 2nd Mr. Fatso’s cheque was deposited in bank

Jan 5th Mr. Fatso’s cheque was dishonored (bank charges £100)

Jan 8th Mr. Fatso settled his account by means of a cheque £20250, £150 being interest charged.

Question number: 26 (1 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Can Mr. Ringon be justified in not maintaining a separate ledger for cash?

Explanation

Yes, Mr. Ringon can justify himself in not maintaining a separate ledger account for cash. This is because; he maintains a three columnar cash book. Maintenance of cash book serves like a book of original entry. Here the transactions are recorded for the first time from the source documents. Receipts are recorded on one side and payments on the other. Hence cash book acts as both journal as well as ledger.

Question number: 27 (2 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

What are the advantages enjoyed by Mr. Ringon while maintaining a three columnar cash book?

Explanation

In a three columnar cash book three separate columns are maintained for cash, bank and discount on each side respectively Mr. Ringon, who has large volumes of business transactions has an advantage in maintaining a three columnar cash book, as the cash and bank balances of the business concern is known at a glance. A cash book is prepared periodically mostly monthly.