IGCSE Accounting Paper-2: Specimen Questions with Answers 121 - 123 of 189
Passage
Ananya, provides the following information about her business.
| At 1 April 2018 | At 31 March 2020 | |
| $ | $ | |
| Fixed assets | 10000 | 15000 |
| Current assets | 4000 | 6000 |
| Current liabilities | 3000 | 4000 |
Question 121 (2 of 3 Based on Passage)
Write in Short
Short Answer▾Prepare a Balance Sheet for Ananya as at 1 April 2018. (Marks 4)
Balance Sheet as at 1 April 2018
| Capital & Liabilities | $ | Assets | $ |
Explanation
Balance Sheet as at 1 April 2018
| Capital & Liabilities | $ | Assets | $ |
| Capital | 11000 | Fixed Assets | 10000 |
| Current Assets | 4000 | ||
| Current Liabilities | 3000 | ||
| 14000 | 14000 |
The following additional information is also provided for the year ended 31 March 2019.
(1) Ananya՚s drawings for the year ended 31 March 2019 were $ 2000.
(2) Fixed assets at 31 March 2019 are to be depreciated by 10 % .
Question 122 (3 of 3 Based on Passage)
Question 123
Edit
Write in Brief
One Liner▾State how the undervaluation of closing stock affects the net profit of a firm. (Marks 1)
Explanation
It will result into understatement of the net profits.
- Undervaluation of closing stock will lead to increased cost of goods sold because closing stock is deducted while calculating the cost of goods sold.
- Increased cost of goods sold will lead to understatement of gross profit and hence the net profits as well.