IGCSE Accounting Paper-1: Specimen Questions with Answers 237 - 238 of 338

Question number: 237

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Fill-Blanks▾

The capital needed to meet the day to day expenses of a business is known as________. (Marks 2)

Answer

Explanation

  • Working Capital is the capital that is required to meet the expenses on day to day trading operations of business such as purchase of raw materials, payment of wages, maintaining inventory etc. It is calculated as the surplus of total current assets over total current liabilities.

Question number: 238

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MCQ▾

Question

Which of the following is shown as a current liability in the balance sheet?

Choices

Choice (4)

a.

A credit balance on the Securities Premium A/c

b.

A debit balance on the P&L A/c

c.

A credit balance on a suppliers’ A/c

d.

A debit balance on a customer’s A/c

Answer

c.

Explanation

  • A credit balance on a suppliers’ A/c would mean that the firm owes that amount to that supplier. It would be shown as Trade creditors under the current liability section of the balance sheet.

  • A debit balance on a customer’s A/c would mean that the firm owns that amount to that customer. It would be shown as Trade debtors under the current assets section of the balance sheet.

  • A debit balance on the P&L A/c would mean loss and losses are deducted from capital.

  • A credit balance on the Securities Premium A/c will be shown as capital reserve under ‘Reserves & Surplus’.

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