IGCSE Accounting Paper-1: Specimen Questions with Answers 281 - 282 of 338

Question number: 281

Edit
Essay Question▾

Describe in Detail

Show the effect of each of the above on the profit for the year. Write “no effect” for the error which does not affect the profit. (Marks 5)

Sudhanshu

Statement of corrected profit for the year ended 31 March 2019

Statement of corrected profit for the year ended 31 March 2019Statement of corrected profit for the year ended 31 March 2019

Increase in Profit $

Decrease in Profit

$

Profit

$

Profit for the year before rectification

6520

Error 1

Error 2

Error 3

Error 4

Corrected Profit for the year

Explanation

Sudhanshu

Statement of corrected profit for the year ended 31 March 2019

Statement of corrected profit for the year ended 31 March 2019Statement of corrected profit for the year ended 31 March 2019

Increase in Profit $

Decrease in Profit

$

Profit

$

Profit for the year before rectification

6520

Error 1

90

Error 2 No Effect

×

×

Error 3

2000

Error 4

270

2000

360

1640

Corrected Profit for the year

8160

Question number: 282

Edit
Short Answer Question▾

Write in Short

What do you mean by the term ‘Reserves’? (Marks 1)

Explanation

  • Reserves are a part of profits set aside for a particular purpose. Reserves are made so as to save the cash from being used in any other purpose.

  • They can be made to buy fixed assets, pay bonus, pay off debts etc. For Ex- Debenture Redemption Reserves are made to pay off debentures.

  • Similarly, Valuation reserves are set up to offset the loss of value of assets like machinery, receivables etc.

Developed by: