IGCSE Accounting Paper-1: Specimen Questions with Answers 178 - 180 of 338

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Question 178

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Explain what is meant by “Petty Cash Book” ?

Explanation

The word Petty means “small” . The small recurring payments are maintained in the Petty cash book. Small recurring payments like carriage, postage and telegram, printing and stationery are recorded and maintained by the petty cashier. Petty cashier is a person other than main cashier.

Question 179

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From the following table tick the correct heading under which the item is income or expense:

The Item of Income or Expense
IncomeExpense
Outstanding expenses
Rates and insurance Premium
Bank interest

Explanation

Shows the Item of Income or Expense
IncomeExpense
Outstanding expenses
Rates and insurance Premium
Bank interest

An income and expenditure account is similar in form of the Profit and Loss account of a business account. The revenue incomes for the period are shown on the credit side of the income and expenditure account. Hence, outstanding expenses and rates and insurance premium are expenses in nature and bank interest is income of the particular period.

Question 180

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Complete the following statement: Gross Profit is defined as

Explanation

Solution: Gross Profit is calculated on the basis of net sales and cost of goods sold. The net sales are calculated by finding the difference between the sales and return inwards. The cost of goods sold includes opening stock, net purchases and direct expenses and excludes from closing stock

Formula for Finding Gross Profit of the Year

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