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

Question number: 323

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MCQ▾

Question

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)Response

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 number: 324

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One Liner Question▾

Write in Brief

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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