IGCSE Accounting Paper-1: Specimen Questions with Answers 255 - 255 of 338

Question number: 255

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Short Answer Question▾

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State the double entry for each of the following transaction in the books of Akram who sells mobile phones. (Marks 10)

Transaction in the books Transaction in the books

Transactions

Debit

Credit

Obtained loan from a friend

Purchased shop furniture for cash

Sold a mobile phone to Shyam on credit

Took a mobile phone for personal use.

Purchased phones for cash

Explanation

Transaction in the books Transaction in the books

Transactions

Debit

Credit

(I) Obtained loan from a friend (Aqsa)

Cash A/c

Aqsa’s Loan A/c

(II) Purchased shop furniture for cash

Furniture A/c

Cash A/c

(III) Sold a mobile phone to Shyam on credit

Shyam

Sales A/c

(IV) Took a mobile phone for personal use.

Drawings A/c

Purchases A/c

(V) Purchased phones for cash

Purchases A/c

Cash A/c

  • Cash is an Asset and Assets have a debit balance. When loan is taken, the balance of cash increases. To record its increase, Cash A/c should be debited.

  • Aqsa’s Loan is a liability and liabilities have a credit balance. When loan is taken, liability increases. To record its increase, Aqsa’s Loan A/c c should be credited.

  • Furniture & Cash are asset and assets have a debit balance. When furniture is purchased for cash, furniture increase whereas cash balance decreases. Therefore, Furniture A/c should be debited to record its increase. At the same time the cash A/c should be credited to record its decrease.

  • Sales is an income so it has a credit balance. To record a sale, sales A/c should be credited. Since the sale is on credit, Shyam becomes the debtor so Shyam should be debited.

  • Taking anything from the business for personal use is drawing. Drawing reduces the Capital so it has a debit balance. Therefore, Drawings A/c should be debited.

  • Drawing of goods (mobile phone) reduces the purchases, so Purchases A/c should be credited.

  • Purchase of goods are entered under Purchases A/c and Purchase being an expense has a debit balance. So, purchases A/c should be debited and Cash A/c should be credited to record the decrease in cash balance.

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