IGCSE Accounting Paper-1: Specimen Questions with Answers 263 - 263 of 338

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Question 263

Write in Short

Short Answer▾

Indicate with a tick where each of the following item appear in the final accounts of Akram. (Marks 4)

Item Appear in the Final Accounts
P & L A/cBalance Sheet
Purchase of a motor bike
Petrol for motor bike
Insurance for motor bike
Delivery charge of the motor bike

Explanation

Item Appear in the Final Accounts
P & L A/cBalance Sheet
Purchase of a motor bike
The Right
Petrol for motor bike
The Right
Insurance for motor bike
The Right
Delivery charge of the motor bike
The Right
  • The revenue expenditures are debited to P&L A/c whereas the capital expenditures are shown as assets in the balance sheet.
  • Purchase of a motor bike is a capital expenditure for Akram as it is going to provide economic benefits to Akram for more than one accounting year. Delivery charge is incurred at the time of purchase of the motor bike so, it will also be treated as capital expenditure.
  • The purchase of petrol and insurance expense of motor bike is of recurring nature. The insurance charges and cost of petrol paid in one accounting year will give benefits in that year alone. So, these are revenue expenditures.

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