# IGCSE Accounting Paper-2: Specimen Questions with Answers 85 - 87 of 103

## 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: 85 (2 of 5 Based on Passage) Show Passage

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### Write in Short

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.

## Question number: 86 (3 of 5 Based on Passage) Show Passage

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### Write in Short

What is the capital of Mr. Norway at the end of the financial year 31.12. 2015?

### Explanation

 LIABILITIES AMOUNT AMOUNT ASSETS AMOUNT AMOUNT Loan from Mr. Rock 1000 Plant & Machinery 60000 Interest on loan 60 Add: Adiditional Plant 26000 86000 Creditors 8340 Stock 9000 Cash in hand 8200 CAPITAL (Bal Figure) 128000 Debtors 46000 Less: Bad 1800 44200 147400 147400

Interest on loan:

2000@4 % for 6 months = =40

1000@4 % for 6 months = =20

40 + 20 = 60

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