IGCSE Accounting Paper-2: Specimen Questions with Answers 62 - 64 of 189
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Passage
Fancy dresses show the following information as on 31.12. 2012.
Debtors- £ 164000, Bad debts during the year 2012 amounts to £ 4000, Bad debts for the year 2013 amounts to £ 2000. Provision for bad and doubtful debts in 2012 is £ 5000 and for the year 2013 is@5 % . Discount allowed in 2012 is £ 2000 and for the year 2013 a provision for discount on debtors is created@2 % .
Question 62 (5 of 5 Based on Passage)
Describe in Detail
Essay▾What are the adjustment entries that Fancy dresses would pass in their books of accounts?
Explanation
| DATE | PARTICULARS | LF | DEBIT AMT | CREDIT AMT |
| 31.12. 2012 | Profit & Loss A/c Dr | 2000 | ||
| To New Bad debts A/c | 2000 | |||
| (Being new bad debts accounted for) | ||||
| 31.12. 2012 | Profit & Loss A/c Dr | 8100 | ||
| To Provision for doubtful debts A/c | 8100 | |||
| (Being provision for doubtful debts created) | ||||
| 31.12. 2012 | Profit & Loss A/c Dr | 3078 | ||
| To provision for discount on Debtors | 3078 | |||
| (Being provision for discount on debtors created) |
Passage
The following information is provided by Micromax Ltd:
Net Sales £ 100000; Cost of goods sold £ 60000; operating expenses £ 15000; Current assets £ 30000; Current liabilities £ 15000; Capital employed 120000; Long term debts £ 80000
Question 63 (1 of 6 Based on Passage)
Write in Short
Short Answer▾How can Micromax classify the various ratios based on the requirements of various users?
Explanation
Classification of ratios is done by Micromax Ltd based on the requirement of its users such as given below:
(i) Liquidity ratios – This is helpful for short term creditors.
(ii) Solvency ratios – this is helpful for long term creditors.
(iii) Activity ratios – This is helpful to the management.
(iv) Profitability ratios – These are helpful for the investors.
Question 64 (2 of 6 Based on Passage)
Explanation
(iii)
(ii)