IGCSE Accounting Paper-1: Specimen Questions with Answers 290 - 292 of 338

Passage

Anand depreciates his furniture using the straight line method of depreciation. He provides a full year depreciation in the year of purchase and none in the year of disposal. He provided the following information:

furniture using the straight line method of depreciationfurniture using the straight line method of depreciation
Furniture
Cost$Accumulated Depreciation$
At 31 Dec 20165500011000
At 31 Dec 20175500016500

There were no new purchase or disposal during the year ended 31 Dec 2017.

Question 290 (4 of 5 Based on Passage)

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Short Answer▾

Calculate the rate of depreciation being applied by Anand? (Marks 3)

Explanation

Annual Depreciation charge for the year ended 31 December 2017: $

Accumulated Dep. as at 31 Dec 2017 16500

Less: Accumulated Dep. as at 31 Dec 2016 (11000)

Depreciation charge 5500

Further Information:

On 1 April 2018, Anand purchased a new furniture, cost $15000.

On 15 June 2019, he sold old furniture costing $6000 and on which three years’ depreciation had been provided.

Question 291 (5 of 5 Based on Passage)

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One Liner▾

Give the journal entry for eliminating the accumulated depreciation on the furniture sold on 15 June 2019. (Marks 2)

Explanation

State the necessary double entry to record the depreciation charge State the necessary double entry to record the depreciation charge
DateDr$Cr$
2019 June 15Provision for depreciation on Furniture A/c1800
Disposal A/c1800

Question 292

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Question

MCQ▾

ABC Ltd. bought a building at a cost of $2,00,000 in 2010, the fair market value of which stands at $4,50,000 on 31 December 2019. ABC Ltd. shows the building at $4,50,000 in his balance sheet on 31 December 2019. Which accounting principle is violated here?

Choices

Choice (4)
a.Going Concern Principle
b.Conservatism Principle
c.Cost Principle
d.Realization Principle

Answer

c.

Explanation

  • Cost Principle says that the fixed assets of a business should always be recorded at their original cost regardless of their current market price. The original cost is the amount actually paid for its acquisition.
  • The building in this case should be shown at the price paid by ABC Ltd. to acquire it i. e. at $2,00,000.

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