IGCSE Accounting Paper-1: Specimen Questions with Answers 215 - 216 of 338

Question number: 215

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MCQ▾

Question

Mahira has the following Assets and Liabilities-

Mahira has the following Assets and LiabilitiesMahira has the following Assets and Liabilities

$

Machinery

18000

Inventory

12000

Receivables

7000

Payables

11200

Cash

6000

She has invested fresh capital $5000 in the business. What is her new capital now?

Choices

Choice (4)

a.

$48000

b.

$16200

c.

$26800

d.

$21800

Answer

c.

Explanation

Question number: 216

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MCQ▾

Question

A machinery purchased for cash should be recorded in both Machinery A/c as well as Cash A/c. Which accounting concept is being followed here?

Choices

Choice (4)

a.

Dual Aspect Concept

b.

Money Measurement Concept

c.

Matching Concept

d.

Separate Entity Concept

Answer

a.

Explanation

  • Dual Aspect Concept says that every transaction of a business has two aspects. So, every transaction should affect at least two accounts. If one of them is debited, the other has to be credited.

  • Purchase of Machinery for cash affects two accounts: Machinery A/c and Cash A/c. Being assets both normally have a debit balance. When machinery is purchased for cash, machinery is increased whereas cash is decreased. So, Machinery A/c should be debited to record its increase whereas Cash A/c should be credited to record its decrease.

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