IGCSE Accounting Paper-1: Specimen Questions with Answers 328 - 330 of 338
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Question 328
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Write in Brief
One Liner▾Mention any two possible reasons of the dishonour of Zara՚s cheque. (Marks 2)
Explanation
- Insufficient Funds: Zara՚s account may not have balance sufficient to make the payment of the aforesaid cheque.
- Improper Signature: The signature on the cheque should match with the specimen submitted to the bank. Zara might not have signed the cheque properly.
Question 329
Question
MCQ▾Showing purchased office equipments in financial statements is the application of which accounting concept?
Choices
| Choice (4) | |
|---|---|
a. | Materiality |
b. | Matching Concept |
c. | Historical Cost Convention |
d. | Prudence |
Answer
a.Explanation
- Materiality concept says that only material or significant events should be disclosed in the books of accounts and not the immaterial ones. What is a material event should depend on whether or not it will influence the decision of users of financial statements.
- Ex- A large business concern that has a closing stock of $ 200,000 in its Godown and if stock worth 10 cents is damaged on accounts closing date, this damage will not be recorded as it is very trivial.
Question 330
Explanation
Goodwill
- Intangible Assets are those which do not have any physical existence. That is, they cannot be seen or touched.
- Goodwill is the good name or reputation earned by a business through years of hard work, excellence, customer loyalty, brand recognition etc.