IGCSE Accounting Paper-1: Specimen Questions with Answers 12 - 14 of 214

Question number: 12

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MCQ▾

Question

Anything owned by or owed to the business ________

Choices

Choice (4) Response

a.

Liabilities

b.

Assets

c.

Capital

d.

Question does not provide sufficient data or is vague

Answer

b.

Explanation

Anything owned by or owed to the business are known as assets.

It shows the fixed as well as fluctuated assets of the company.

Capital is an amount introduced or invested by the shareholder of the company.

Question number: 13

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MCQ▾

Question

When a claim against a debtor becomes irrecoverable it is called bad debt.

How is this recorded in the ledger?

Choices

Choice (4) Response

a.

Debit Bad debts, credit Creditor’s

b.

Debit Bad debts, credit Debtor’s

c.

Debit Creditors, credit Bad Debts

d.

Debit Debtor’s, credit Bad debts

Answer

b.

Explanation

When a claim against a debtor becomes irrecoverable it is called bad debt. Bad debts is always shown on the debit side of Profit and Loss account and also deducted from the debtors in the balance sheet.

Question number: 14

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MCQ▾

Question

How will partners’ interest on capital be shown in the partnership’s financial statements?

Choices

Choice (4) Response

a.

Credit appropriation account

b.

Debit income statement

c.

Debit appropriation account

d.

Credit income statement

Answer

c.

Explanation

Interest on capital will be allowed to the partners when the partnership deed provides so. Profit and Loss appropriation account is simple extension of the profit and loss account. Interest on capital will be shown in the debit of the appropriation account.