IGCSE Accounting Paper-1: Specimen Questions with Answers 253 - 254 of 338
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Question 253
Question
MCQ▾Where should the interest on partner՚s loan be recorded in the final accounts of a partnership?
Choices
| Choice (4) | |
|---|---|
a. | Manufacturing A/c |
b. | P&L A/c |
c. | P&L Appropriation A/c |
d. | Trading A/c |
Answer
b.Explanation
- Interest on any type of loan (whether advanced by a partner or any other party) is a charge on the profits of a business. So, it should be debited to profit & loss A/c.
- P&L Appropriation A/c records appropriation of divisible profits (the profits left after deducting all charges against it including interest) .
- Trading A/c records all direct expenses but interest on loan is an indirect expense.
- Manufacturing A/c records the expenses incurred until the production or manufacturing process.
Question 254
Edit
Write in Brief
One Liner▾(a) What is an imp rest system?
________. (1)
(b) State one advantage of triple column cash book
________. (1)
Explanation
- Imp rest system is a system of setting aside some fixed amount of cash for paying small, routine expenses and maintaining a petty cash book for the same. This amount is restored to the same level at the beginning of a new period.
- The triple column cash book contains both- the cash A/c as well as the bank A/c. So, the contra entry (the double entry involving both the cash A/c the bank A/c at the same time) is recorded in the cash book itself. These contra entry can easily be cross checked in the triple column cash book.