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

Question number: 295

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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

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.

Question number: 296

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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

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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.

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