IGCSE Accounting Paper-2: Specimen Questions with Answers 117 - 119 of 189
Passage
The following trial balance was extracted from the books of Asmita & Sons as at 31 December 2,019-
| Debit Balances $ | Credit Balance $ | |
Capital | 56,000 | |
Drawings | 6,000 | |
Premises | 35,000 | |
Opening Stock | 10,000 | |
Purchases | 55,000 | |
Plant & Machinery | 21,000 | |
Insurance | 700 | |
Cash | 2,800 | |
Direct Wages | 14,000 | |
Salaries | 11,000 | |
Discount Received | 1,000 | |
Sales | 120,000 | |
Trade Debtors | 36,000 | |
Trade Creditors | 12,000 | |
Carriage Inward | 1,500 | |
Bank Overdraft | 7,200 | |
General Expenses | 3,200 | |
196,200 | 196,200 |
Additional Information:
(I) Closing Stock is valued at $ 15,000 (cost) , (market value $ 20,000)
(II) Wages amounting to $ 4,000 and salaries amounting to $ 1,600 are outstanding
(III) Prepaid Insurance amounted to $ 300
(IV) Plant & machinery is to be depreciated@10% pa
Question 117 (2 of 4 Based on Passage)
Write in Short
Short Answer▾Calculate correct to two decimal places inventory turnover ratio of Asmita & Sons for the year ended 31 December 2,019. (Marks 2)
Explanation
Question 118 (3 of 4 Based on Passage)
Write in Short
Short Answer▾Prepare the Balance Sheet of Asmita & Sons as at 31 December 2,019.
Asmita & Sons
Balance Sheet as at 31 December 2,019
| Assets | $ | $ |
Capital & Liabilities | $ | $ |
(Marks 12)
Explanation
Asmita & Sons
Balance Sheet as at 31 December 2,019
| Assets | $ | $ |
Non-Current Assets: | ||
Premises | 35,000 | |
Plant & Machinery $ 21,000 Less: Provision for Dep $ 2,100 | 18,900 | 53,900 |
Current Assets: | ||
Closing Stock | 15,000 | |
Trade Debtors | 36,000 | |
Prepaid Insurance | 300 | |
Cash | 2,800 | 54,100 |
Total Assets | 108,000 | |
Capital & Liabilities | $ | $ |
Capital $ 56,000 Less: Drawings $ 6,000 $ 50,000 Add: Net Profit $ 33,200 | 83,200 | |
Current Liabilities: | ||
Trade Creditors | 12,000 | |
Outstanding Expenses (Wages+ Salaries) | 5,600 | |
Bank Overdraft | 7,200 | 24,800 |
Total Liabilities | 108,000 |
Question 119 (4 of 4 Based on Passage)
Explanation
- Closing Stock is valued at cost because of the application of prudence concept. As per the prudence concept the closing stock should be valued at cost or market price whichever is lower.
Prudence Concept says that one should be conservative while recording assets. i. e. Assets should never be overstated. An accountant should not overestimate the amount of revenues or underestimate the amount of expenses. Further, assets too shouldn’t be overstated and the liabilities should not be underestimated.