IGCSE Accounting Paper-1: Specimen Questions with Answers 115 - 116 of 338
Passage
Ryno has a business selling spare parts for cars. He lost many of his financial records in a flood but has been able to provide the following information.
1 November 2015 31 October 2015
$ $
Non-current (fixed) assets 10 000 12 000
Current assets 100 000 90 500
Current liabilities 25 000 23 000
Question number: 115 (1 of 4 Based on Passage) Show Passage
Short Answer Question▾
Write in Short
In the table below, place a tick (√) under the correct heading to show the effect which taking the loan will have on each of the following items. If Ryno has decided to take a 10-year business loan from the bank. The money will be paid in to his business bank account.
Increase | Decrease | No change | |
Current Liability | |||
Long term liabilities | |||
Current Assets | |||
Fixed Assets |
Explanation
Increase | Decrease | No change | |
Current Liability | √ | ||
Long term liabilities | √ | ||
Current Assets | √ | ||
Fixed Assets | √ |
The Long term liabilities and cash in current assets will increase while the loan is taken by the Ryno for a long period of 10 years. The short term loan will be affected in the Current liabilities and the value of fixed assets will be changes when purchase of fixed assets took place during the year.
Question number: 116 (2 of 4 Based on Passage) Show Passage
Short Answer Question▾
Write in Short
Prepare Ryno’s capital account for the year ended 31 October 2015. If he took drawings of $500 each month.
Explanation
Ryno’s capital account
Date | Particulars | Amount $ | Date | Particulars | Amount $ |
October 31 | Drawings | 6000 | November 1 | Balance | 85000 |
October 31 | Balance | 79500 |
The capital account of the Ryno’s reflects his financial position towards the business and his capital value at the end of the October 31st 2015. The balance on each month is carried forward from the statement of affairs of respective months.