IGCSE Accounting Paper-1: Specimen Questions with Answers 294 - 295 of 338

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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.

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