IGCSE Accounting Paper-1: Specimen Questions with Answers 295 - 297 of 338

Question number: 295

MCQ▾

Question

Which of the following is a liability?

Choices

Choice (4)		Response
a.	Cash
b.	Loan from bank
c.	Motor Vehicles
d.	Machinery

Answer

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.

Question number: 296

Short Answer Question▾

Write in Short

Have all the errors been discovered in Sudhanshu’s books? (Marks 2)

Why? /Why not?

Explanation

All the errors are not yet discovered in Sudhanshu’s books because the Suspense A/c still shows a credit balance of $495. When all the errors are discovered, there should be no balance in the suspense A/c. The suspense A/c is closed.

Suspense A/c

The suspense A/c is closedThe suspense A/c is closed
	$		$
Purchases A/c	2000	Balance b/d	2225
Balance c/d	495	Sales A/c	270
	2495		2495

Question number: 297

Short Answer Question▾

Write in Short

Name the final account in which ‘profits on sale of fixed assets’ appear. (Marks 1)

Explanation

P&L A/c

When the fixed assets of a business are sold and if any profit is earned out of the excess of sales proceeds over its cost, it is booked under profit on sale of fixed assets a/c.
This profit is in nature of indirect income because it is not earned from the main trading activity of the business. All the indirect incomes are credited to P&L A/c.