IGCSE Accounting Paper-2: Specimen Questions with Answers 94 - 96 of 103

Passage

Mrs. Anthony sold goods worth £10000 to Mrs. Barker on Jan 1st 2016. Mrs. Anthony drew a bill on Mrs. Barker at three months for the full amount. Mrs. Barker accepted the bill and returned to Mrs. Anthony, who discounted the bill with a bank on 5th Feb 2016.@15 %. The bill was duly honored on maturity.

Question number: 94 (1 of 5 Based on Passage) Show Passage

Edit
Short Answer Question▾

Write in Short

How will Mrs. Barker journalize the above transactions in her books of accounts?

Explanation

Journal entries in the books of Mrs. Barker

Table of Journal entries in the books of Mrs. Barker

DATE

PARTICULARS

LF

DEBIT AMT

CREDIT AMT

Jan 1st

Purchases A/c Dr

10000

To Mrs. Anthony A/c

10000

(Being goods purchased on credit)

Jan 1st

Mrs. Anthony A/c Dr

10000

To Bills Payable A/c

10000

(Being acceptance of bill received)

April 4th

Bills Payable A/c Dr

10000

To bank A/c

10000

(Being bill discharged)

Question number: 95 (2 of 5 Based on Passage) Show Passage

Edit
Short Answer Question▾

Write in Short

What is meant by discounting the bill?

Explanation

When the holder of a bill sells the bill to a bank or any other third party, before the maturity of the bill, it is called as discounting the bill. This is done b the holder when he needs the money on immediate basis. The bank or the third party usually charges a discount for the unexpired period of the bill.

Question number: 96 (3 of 5 Based on Passage) Show Passage

Edit
Short Answer Question▾

Write in Short

State any two differences between a bill of exchange and a promissory note?

Explanation

The differences between a bills of exchange and promissory note are as follows:

(i) There are 3 parties involved in a bill of exchange namely drawer, drawee and payee while only 2 parties maker and payee are involved in a promissory note.

(ii) The liability of the drawer is secondary in the bill of exchange while the liability of the maker is primary in a promissory note.