IGCSE Accounting Paper-1: Specimen Questions with Answers 120 - 121 of 214

Question number: 120

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MCQ▾

Question

Stock in trades are to be recorded at cost or market price whichever is less.

Which accounting principle is being applied?

Choices

Choice (4) Response

a.

Consistency

b.

Money measurement

c.

Prudence

d.

Duality

Answer

c.

Explanation

All prospective losses are taken into consideration in the prudence principle. But in this principle all prospective profits are left in calculation. Hence Stock in trades are to be recorded at cost or market price whichever is less.

Question number: 121

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MCQ▾

Question

During the admission of the partner loss was incurred in the revaluation of assets and liability.

How is this shown in the accounts?

Choices

Choice (4) Response

a.

account to be debited account to be credited Revaluation Old Partners capital (Choice A)

Shows table in account to be debited and account to be credited

account to be debited

account to be credited

Old Partners’ capital

Revaluation

b.

account to be debited account to be credited Revaluation Old Partners capital (Choice B)

Shows table in account to be debited and account to be credited

account to be debited

account to be credited

New Partners’ capital

Revaluation

c.

account to be debited account to be credited Revaluation Old Partners capital (Choice C)

Shows table in account to be debited and account to be credited

account to be debited

account to be credited

Revaluation

New Partners Capital

d.

account to be debited account to be credited Revaluation Old Partners capital (Choice D)

Shows table in account to be debited and account to be credited

account to be debited

account to be credited

Revaluation

Old Partners’ capital

Answer

a.

Explanation

At the time of admission and retirement of partner it is necessary to revalue the assets and liability of the partnership firm. The liability will increase and values of assets are decreased in the case of loss on revaluation.