IGCSE Accounting Paper-2: Specimen Questions with Answers 100 - 101 of 103

Passage

The following entries are found in the books of Mr. Iyer for the year ending 31.12. 2010.

Purchases £1500000, Sales £2500000, Opening stock £500000, Returns Outward £45000, Returns Inward £20000, Carriage Inwards £ 45000, Cash in hand £778000, Cash at bank £608000, Wages £24000, Printing & Stationery £45000, Discount allowed £4000, Bad debts £15000, Insurance £25000, Investments £320000, Debtors £530000, Bills receivable £200000, Postage £4000, Commission £2000, Interest £10000, Repairs £4400, Lighting Charges £5000, Telephone £ 1000, Carriage outwards £4000, Car £250000, Interest received £35000, Discount received £4000, Creditors £1250000, Bills Payable £60400, Capital £1000000

He also stated the below mentioned adjustments, which are to be taken into consideration.

(i) Further bad debts £10000, Provision for doubtful debts@5 % and discount on debtors £5000

(ii) Interest is received on investments@5%

(iii) Depreciation on car was@5%

(iv) Interest and wages was outstanding at £2000 and £1000 respectively

(v) Closing stock was valued at £325000

Question number: 100 (2 of 5 Based on Passage) Show Passage

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Essay Question▾

Describe in Detail

What is the Gross profit of Mr. Iyer for the year ending 31.12. 2010?

Explanation

 PARTICULARS AMOUNT AMOUT PARTICULARS AMOUNT AMOUNT To Opening Stock 500000 By Sales 2500000 To Purchases 1500000 Less: Returns Inwards 20000 2480000 Less: Returns Outwards 45000 1455000 By Closing Stock 325000 To Carriage inwards 45000 To Wages 24000 Add: O/S Wages 1000 25000 To Lighting Charges 5000 To Gross Profit 775000 2805000 2805000

Question number: 101 (3 of 5 Based on Passage) Show Passage

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Essay Question▾

Describe in Detail

What is the meaning of Final Accounts?

Explanation

Every business concern prepares final accounts in the year end in order to ascertain whether it has earned a profit or incurred a loss during the year. The term final accounts refers to the preparation of three main statements namely:

(i) Trading Account: - It is a nominal account prepared to calculate the gross profit or loss incurred in business due to trade related activities.

(ii) Profit & loss Account: - It is an account in which all expenses and incomes are recorded to calculate the net profit or loss for the year

(iii) Balance Sheet: - This is the statement which shows the financial position of a business on a particular day having assets on one side and liabilities on the other.