IGCSE Accounting Paper-1: Specimen Questions with Answers 283 - 284 of 338

Question 283

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Short Answer▾

Sudhanshu is a trader whose financial year ends on 31 March. On 31st March 2019 he opened a suspense account with a credit balance of $ 2225 .

Give two reasons of opening a suspense account. (Marks 2)

Explanation

Suspense A/c is opened when:

  • It is not sure as to which A/c an item should be posted to. The suspense A/c is then opened temporarily to keep that entry. For Ex- Payment received from an unidentified customer can be temporarily credited to Suspense A/c until the customer is identified.
  • The debit and credit columns trial balance do not match resulting from some one-sided errors in the books of accounts. In such a case, the amount of difference in the trial balance is transferred to the suspense A/c to balance the trial balance until the error is located.

Sudhanshu found some errors in his books of accounts

Question 284

Question

MCQ▾

Which of the following item would appear on the debit column of Trial Balance? (Marks 1)

Choices

Choice (4)

a.

Purchases Returns

b.

Bad debts

c.

Provision for Bad debts

d.

Trade Payables

Answer

b.

Explanation

  • Bad debts are that part of receivables which become irrecoverable because of bankruptcy of debtors etc. Bad debts is in nature of a loss/expense. So, it has a debit balance.
  • Purchases Returns reduces purchases. It is a contra purchases A/c so it has a credit balance.
  • Provision for bad debts is contra asset (receivables) a/c so it has a credit balance.
  • Trade Payable represents amount owed by the business to its credit suppliers of goods or services. It is a liability so it has a credit balance.

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