IGCSE Accounting Paper-1: Specimen Questions with Answers 298 - 299 of 338

Question number: 298

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One Liner Question▾

Write in Brief

Explain any two types of reserves. (Marks 1)

Explanation

  • General Reserve: It is created from profits to only strengthen the financial position of the business and can be used for many purposes. For Ex- It can be used to meet unforeseen losses.

  • Specific Reserve: This reserve is secured for a particular purpose and it cannot be used for any other reason. For Ex- Dividend Equalization Reserve is set up for maintaining a stable rate of dividend despite fluctuations in earnings.

Question number: 299

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MCQ▾

Question

Mr. Adil owns a grocery shop. He bought vegetables from a farmer for $500 on 20 March 2020. Payment for the same has not been done until the end of his financial year i. e. 31 March 2020. In the balance sheet of Mr. Adil, the farmer will be shown as- (Marks 1)

Choices

Choice (4)

a.

Lender

b.

Debtor

c.

Assets

d.

Trade Creditor

Answer

d.

Explanation

  • Trade Creditors are persons or entities who have to be paid by an enterprise an amount for providing goods or services on credited.

  • The total amount standing to the credit of such persons or entities on accounts closing date should be shown as Trade Creditors.

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