IGCSE Accounting Paper-1: Specimen Questions with Answers 215 - 216 of 338
Question number: 215
MCQ▾
Question
Mahira 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
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.