IGCSE Accounting Paper-1: Specimen Questions with Answers 293 - 294 of 338

Question 293

Question

MCQ▾

X writes a cheque to his supplier of goods and his supplier sends this into his bank for collection. Which of the following is correct implication of this in X՚s books of accounts?

Choices

Choice (4)

a.

Banks- Decrease, Creditors- Decrease,

b.

Banks- Unchanged, Creditors- Decrease,

c.

Banks- Decrease, Creditors- Increase,

d.

Banks- Decrease, Creditors- Unchanged,

Answer

a.

Explanation

  • When X writes a cheque in favour of his supplier of goods, his bank balance will get reduced by the amount of cheque.
  • As the same time, the supplier is a creditor for X, so when X pays him, the amount standing to the credit of creditors ‘’ account will also get reduced as the supplier is no longer a creditor for X.

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.

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