IGCSE Accounting Paper-2: Specimen Questions with Answers 83 - 85 of 103

Passage

Royal cosmetics have the following cash transactions during the month of January 2016.

Find out amount of Royal cosmetics have the following cash transactions

Royal cosmetics have the following cash transactions during the month of January 2016.

Date

Particulars

Amount

Date

Particulars

Amount

1

Opening balance (imprest System)

1000

9

Cartage

100

2

Stamps

120

10

travelling expenses

250

3

Wages for cleaner

150

11

Courier sent

150

4

Taxi fare

160

12

Entertainment of salesman

200

5

Office tea

150

13

Repair of cycle

100

6

Repairs of cycle

100

14

Printing

50

7

Advertisement

300

15

Stationery

30

8

Drew imprest from head cashier

16

Drew imprest from head cashier

Question number: 83 (5 of 5 Based on Passage) Show Passage

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Short Answer Question▾

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What disadvantages do Royal cosmetics have to face while maintaining their records under this system?

Explanation

The disadvantages which Royal cosmetics faces under this system is as follows:

(i) The cashier has to have a check over the petty cash book apart from the main cash book.

(ii) The imprest amount is to be reimbursed on regular basis failing which; the petty cashier may not be able to meet the petty expenses.

Passage

Mr. Norway starts a small business & maintains his records under single entry system. Following information was obtained from his books: Plant & Machinery £60000; Stock £10000; Cash in hand £200; Debtors £34000; Loan from Mr. Rock £2000@4 % interest; Bank Overdraft £2200; Creditors £24240

On 31.12. 2015, he owed to his creditors £18340 and paid Mr. Rock £1000 on 1.07. 2015, however interest on loan was not paid. Additional machinery worth £26000 was brought in. Debtors were £46000 out of which £1800 are bad. Cash balance was £8200 and stock was £9000. Drawings for the year were £16600 and £20000 was introduced as additional capital during the year.

Question number: 84 (1 of 5 Based on Passage) Show Passage

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Short Answer Question▾

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What is the initial capital Mr. Norway invests in starting the business on Jan 1st 2015?

Explanation

The initial Capital invested by Mr. Norway on Jan 1st 2015 is £75760

Statement of affairs of Mr. Norway as on 1st Jan 2015

Table of Statement of affairs of Mr. Norway as on 1st Jan 2015

LIABILITIES

AMOUNT

AMOUNT

ASSETS

AMOUNT

AMOUNT

Loan from Mr. Rock

2000

Plant & Machinery

60000

Bank Overdraft

2200

Stock

10000

Creditors

24240

Cash in hand

200

Debtors

34000

CAPITAL (Bal Figure)

75760

104200

104200

Question number: 85 (2 of 5 Based on Passage) Show Passage

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Short Answer Question▾

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What are the advantages and disadvantages Mr. Norway has while maintain books under single entry system?

Explanation

Mr. Norway enjoys advantages such as:

(i) Need not possess full knowledge in the principles of accounting.

(ii) Ascertainment of profit and loss becomes easier

However, the following disadvantages are suffered by him:

(i) There is no control over the assets

(ii) True profit is not known as the trading account is not prepared.