IGCSE Accounting Paper-2: Specimen Questions with Answers 107 - 109 of 189

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Passage

Arpita is a sole trader who made the following cash transactions during the month of August 2019.

2019

Aug 3. Further Capital introduced $ 2000 out of which $ 1600 deposited in the bank

Aug 5. Goods purchased for cash $ 400, trade discount received $ 25.

Aug 7. Received a Cheque of $ 200 from Siddharth, a credit customer for settlement of his account of $ 220.

Aug 10. Cash Sales $ 700 out of which $ 420 paid directly into the bank

Aug 14. Settled the account of Superstar Printers $ 750 by paying Cheque of $ 680.

Aug 17. An amount of $ 500 due from Pathan Brothers written off as Bad debts previous year, now recovered in cash.

Aug 23. Sale of an old furniture, payment received in cheque of $ 720.

Aug 31. Deposited with the bank the entire balance of cash after retaining $ 1500 at office.

Question 107 (3 of 3 Based on Passage)

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Write in Short

Short Answer▾

What are bad debts recovered? How are they recorded in final accounts? (Marks 3)

Explanation

  • Bad debts recovered is the payment received from a debtor after the same has been recognized as uncollectible and was therefore debited to Bad debts a/c as a loss.
  • Since, bad debts recovery produces a kind of indirect income, bad debts recovered a/c is credited to the Profit & Loss A/c

Question 108

Write in Short

Short Answer▾

Compute the value of debtors from the following information-

Compute the Value of Debtors
$
(I) Amount receivable until the last day of the year2000
(II) Credit sales on the last day of the year100
(III) Cash Sales on the last day of the year500

Explanation

Computation of Debtors

Computation of Debtors
$
Amount receivable until the last day of the year2000
Add: Credit sales on the last day of the year100
Debtors2100

Note-

Cash sales do not increase debtors.

Question 109

Write in Short

Short Answer▾

Indicate with a tick which type of expenditures are the followings- (Marks 3)

Indicate with a Tick Which Type of Expenditures
RevenueCapital
(I) Expenditure of $ 4000 by a cinema theatre for additional features
(II) Customs duty paid for import of raw material
(III) Wages paid for the extension of building

Explanation

Indicate with a Tick Which Type of Expenditures
RevenueCapital
(I) Expenditure of $ 4000 by a cinema theatre for additional features
Image Show of the Right
(II) Customs duty paid for import of raw material
Image Show of the Right
(III) Wages paid for the extension of building
Image Show of the Right
  • The expenditure is not increasing the earning capacity of the cinema. So, it is a revenue expenditure.
  • Raw materials are current assets (not fixed assets) . All expenditures related to the purchase of current assets are revenue expenditures.
  • Building is a fixed asset. Any expenditure related to the extension of a fixed asset is a capital expenditure.

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