IGCSE Accounting Paper-1: Specimen Questions with Answers 294 - 295 of 338
Question 294
Question
MCQ▾Goods Sold to Mr. A on credit shall be credited to________. (Marks 1)
Choices
| Choice (4) | |
|---|---|
a. | Goods A/c |
b. | Sales A/c |
c. | Mr. A՚s |
d. | Cash A/c |
Answer
b.Explanation
- Sales is a nominal account. Being an item of revenue its normal balance is credit. To record an increase in a revenue item, that item՚s A/c is credited. Sales A/c is credited in case of credit or cash sales.
- So far as the debit entry is concerned, in case of credit sales, the customer՚s A/c is debited as the customer is a debtor. Whereas, in case of cash sales, Cash A/c is debited because cash sales increases cash balance.
Question 295
Question
MCQ▾Which of the following is a liability?
Choices
| Choice (4) | |
|---|---|
a. | Cash |
b. | Loan from bank |
c. | Motor Vehicles |
d. | Machinery |
Answer
b.Explanation
- Liabilities are monetary obligations of a business. They are amounts owed to suppliers of goods, or lenders of money or outstanding expenses in the form of wages payable, salaries outstanding etc.
- Loan from bank is a liability as it is the money lent by the bank which a business is obliged to pay at a later date.
- Machinery, Motor Vehicles and Cash are assets not liabilities.