IGCSE Accounting Paper-1: Specimen Questions with Answers 253 - 254 of 338

Question number: 253

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MCQ▾

Question

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 number: 254

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One Liner Question▾

Write in Brief

(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.

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