IGCSE Accounting Paper-2: Specimen Questions with Answers 93 - 95 of 189

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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 93 (5 of 5 Based on Passage)

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Short Answer▾

State any 2 differences between the receipts & payments account and the Income & Expenditure account?

Explanation

The two difference between Receipts & Payments A/c and Income & Expenditure A/c is as follows:

(i) The former is a real account while the latter is a nominal account

(ii) The former՚s object is to present a summary of cash transactions during an accounting period, while the object of the latter is to ascertain the net results (Surplus or deficit) of the transactions during the accounting period.

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 94 (1 of 5 Based on Passage)

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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 95 (2 of 5 Based on Passage)

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Short Answer▾

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.

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