IGCSE Accounting Paper-2: Specimen Questions with Answers 89 - 91 of 189

Passage

For the year ended 31st March 2014, the receipts and payments account of Enjoyment Club was as follows:

Find Out Payment Account Details
RECEIPTSAMOUNTAMOUNTPAYMENTSAMOUNTAMOUNT
To balance b/d5125By salaries10400
To subscriptionsBy stationery2000
2013 - 2014225By rent3000
2014 - 201510500By telephone500
2015 - 201637511150By investment6250
To profit on sports meet7750By sundry expenses4625
To income from investments5000By balance c/d2250
2902529025

The club provided additional information such as

(i) There are 450 members paying subscription of £ 25, £ 250 were in arrears for 2013 - 2014 as on 1st April 2014

(ii) As on 31st march 2015, the rents were prepaid till June 30th2015, the amount paid every year being £ 3000

(iii) Outstanding telephone bill £ 175 on march 31st 2015

(iv) Outstanding sundry expenses on 31st march 2015 amounted to £ 350

(v) Stock of stationery on 31st march 2014 was £ 250 and on 31st march 2015 is £ 450

(vi) As on 31st march 2014 - 2015 building was valued at £ 50000, subject to depreciation at a rate of 5% per annum

(vii) Investments on 31st march 2014 was £ 100000

(viii) On 31st march 2015 income accrued on investments purchased during the year amounted to £ 187

Question 89 (1 of 5 Based on Passage)

Write in Brief One Liner▾

What does Enjoyment club mean by outstanding bills and expenses?

Edit

Explanation

Outstanding expenses refer to those expenses which have been incurred during the year and its benefits have also been enjoyed during the year, but the payment is not made during the year. It is essential to bring into account such expenses at the year end, as if ignored these expenses will overstate the profit.

Question 90 (2 of 5 Based on Passage)

Write in Brief One Liner▾

Income accrued on investments, state how does enjoyment club deal with this adjustment?

Edit

Explanation

Accrued income refers to income which has been earned but not yet received. Enjoyment club will add the income accrued on investments in the income side of its income and expenditure account.

Question 91 (3 of 5 Based on Passage)

Describe in Detail Subjective▾

Does Enjoyment club have a surplus or deficit during the year ended 31st march 2015?

Edit

Explanation

Enjoyment club has a surplus of £ 1537

Income & Expenditure a/C of Enjoyment Club for the Year Ended 31st March 2015
EXPENDITUREAMOUNTAMOUNTINCOMEAMOUNTAMOUNT
To salaries10400By subscriptions10500
To stationery2000Add outstanding75011250
Add opening stock250
2250
Less Closing stock4501800By profit on sports meet7750
To rent3000By income from investment5000
Less prepaid rent750Add income accrued187
22505187
Add outstanding rent7503000
To telephone500
Add outstanding175675
To sundry expenses4625
Less Outstanding of previous year3504275
To depreciation on building2500
To Surplus1537
2418724187

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