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:
RECEIPTS | AMOUNT | AMOUNT | PAYMENTS | AMOUNT | AMOUNT |
To balance b/d | 5125 | By salaries | 10400 | ||
To subscriptions | By stationery | 2000 | |||
2013 - 2014 | 225 | By rent | 3000 | ||
2014 - 2015 | 10500 | By telephone | 500 | ||
2015 - 2016 | 375 | 11150 | By investment | 6250 | |
To profit on sports meet | 7750 | By sundry expenses | 4625 | ||
To income from investments | 5000 | By balance c/d | 2250 | ||
29025 | 29025 |
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)
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?
EditExplanation
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?
EditExplanation
Enjoyment club has a surplus of £ 1537
EXPENDITURE | AMOUNT | AMOUNT | INCOME | AMOUNT | AMOUNT |
To salaries | 10400 | By subscriptions | 10500 | ||
To stationery | 2000 | Add outstanding | 750 | 11250 | |
Add opening stock | 250 | ||||
2250 | |||||
Less Closing stock | 450 | 1800 | By profit on sports meet | 7750 | |
To rent | 3000 | By income from investment | 5000 | ||
Less prepaid rent | 750 | Add income accrued | 187 | ||
2250 | 5187 | ||||
Add outstanding rent | 750 | 3000 | |||
To telephone | 500 | ||||
Add outstanding | 175 | 675 | |||
To sundry expenses | 4625 | ||||
Less Outstanding of previous year | 350 | 4275 | |||
To depreciation on building | 2500 | ||||
To Surplus | 1537 | ||||
24187 | 24187 |