IGCSE Accounting Paper-1: Specimen Questions with Answers 323 - 324 of 338

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Question 323

Question

MCQ▾

The list price of a product is $ 15 000 and a trade discount of 10 % is offered to the customer. The customer pays his invoice within a week and also avails a cash discount of 3 % .

By what amount the Discount Received A/c be credited in the customer՚s ledger? (Marks 1)

Choices

Choice (4)

a.

$ 1905

b.

$ 405

c.

$ 1950

d.

$ 1500

Answer

b.

Explanation

Trade Discount is not recorded. In accounts, only cash discount is recorded. So, discount received A/c will be credited by the amount of cash discount only.

Question 324

Edit

Write in Brief

One Liner▾

Explain with an example each of the following types of error. (Marks 4)

(I) Error of Commission

(II) Error of Principle

Explanation

  • Error of Commission: Error of Commission is made when a transaction is entered in a wrong account or with a wrong amount or when a transaction is partially omitted. Such errors arise due to the carelessness or ignorance of the accountant. For Example- Sales of $ 360 entered as $ 630 in Sales Day book is an error of commission. Here, although the transaction is recorded at the right place but the amount is not right.
  • Error of Principle: Errors of Principle when any of the accounting principles is violated while entering the transaction. For Example- Paid $ 40 for the repair of an old machinery debited to Machinery A/c. Here, repair is a revenue item (recurring expense) but is wrongly treated as a capital item and violates the accounting principle.

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