IGCSE Accounting Paper-2: Specimen Questions with Answers 123 - 126 of 189

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.

Passage

Hemlata is a sole trader who buys all her goods for resale on credit. She sells to cash and credit customers.

Hemlata does not keep full accounting records, but provides the following information for the year ended 31st March 2,020.

Hemlata is a Sole Trader Who Buys All Her Goods for Resale on Credit
1st April 2,019

$

31st March 2,020

$

Stock

4,000

7,000

Debtors

8,000

10,000

Creditors

6,000

8,000

Hemlata is a Sole Trader Who Buys All Her Goods for Resale on Credit

$

Receipt from debtors

40,000

Payment to Creditors

35,000

Cash Sales

8,000

Carriage Inward

4,000

Question 124 (1 of 3 Based on Passage)

Edit

Write in Short

Short Answer▾

Calculate Hemlata’s stock turnover ratio for the year ended 31st March 2,020. Show your calculations (Marks 3)

Explanation

times

Question 125 (2 of 3 Based on Passage)

Edit

Write in Short

Short Answer▾

Prepare Hemlata’s Trading Account below. (Marks 5)

Hemlata’s Trading A/c for the year ended 31st March 2,020

Explanation

Hemlata’s Trading A/c for the year ended 31st March 2,020

Hemlata’s Trading a/C for the Year Ended 31st March 2,020
$

$

Opening Stock

4,000

Sales

50,000

Purchases

37,000

Closing Stock

7,000

Carriage Inward

4,000

Gross Profit

12,000

57,000

57,000

Question 126 (3 of 3 Based on Passage)

Edit

Write in Short

Short Answer▾

Calculate Hemlata’s sales and purchases for the year ended 31st March 2,020. Also show your calculations. (Marks 9)

(I) Sales

(II) Purchases

Explanation

(I)

Calculate Hemlata’s Sales and Purchases for the Year Ended 31st March 2,020
Credit sales is calculated as follows-

$

Receipt from Debtors

40,000

Add: Closing Debtors

10,000

50,000

Less: Opening Debtors

8,000

Credit Sales

42,000

(II)

Calculate Hemlata’s Sales and Purchases for the Year Ended 31st March 2,020

Purchases:

$

Payment to Creditors

35,000

Add: Closing Creditors

8,000

43,000

Less: Opening Creditors

6,000

Purchases

37,000

🎯 Choose Paper