IGCSE Accounting Paper-1: Specimen Questions with Answers 48 - 49 of 338

Question 48

Question

MCQ▾

Gama Limited made a profit of $ 582 800 for the year. $ 54 000 was transferred to general reserve. A dividend on ordinary shares of $ 253 000 was paid. What was the retained profit for the year?

Choices

Choice (4)

a.

$ 275 800

b.

$ 228 800

c.

$ 215 800

d.

$ 258 800

Answer

a.

Explanation

Retained earnings are the profit kept with the company apart from dividend paid to the shareholders. Hence it is calculated as

Question 49

Question

MCQ▾

A plant shop receives an invoice for 500 plants at $ 10each, less 10% trade discount, from X. Field. The plants were bought on credit and for resale. Which entry records the transaction in the plant shop’s books?

Choices

Choice (4)

a.

Entry of Credit Sales in the Plant Shops Books
Account to be debited

Account to be credited

X. Field 5,000

Purchases 5,000

b.

Entry of Credit Sales in the Plant Shops Books
Account to be debited

Account to be credited

Purchases 4,500

X. Field 4,500

c.

Entry of Credit Sales in the Plant Shops Books
Account to be debited

Account to be credited

Purchase 5,000

X. Field 5,000

d.

Entry of Credit Sales in the Plant Shops Books
Account to be debited

Account to be credited

X. Field 4,500

Purchases 4,500

Answer

b.

Explanation

Trade discount is provided on the credit purchase and cash discount is provided on the cash purchase.

Hence the discount is calculated as 5,000 – [5,000 X 10 % ] = 4,500.

Plant shop purchased plant worth $ 5,000 at trade discount of $ 500.

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