IGCSE Accounting Paper-2: Specimen Questions with Answers 123 - 125 of 189

Question number: 123

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One Liner Question▾

Write in Brief

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 2020.

Hemlata is a sole trader who buys all her goods for resale on creditHemlata is a sole trader who buys all her goods for resale on credit

1st April 2019

$

31st March 2020

$

Stock

4000

7000

Debtors

8000

10000

Creditors

6000

8000

Hemlata is a sole trader who buys all her goods for resale on creditHemlata is a sole trader who buys all her goods for resale on credit

$

Receipt from debtors

40000

Payment to Creditors

35000

Cash Sales

8000

Carriage Inward

4000

Question number: 124 (1 of 3 Based on Passage) Show Passage

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Short Answer Question▾

Write in Short

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

Hemlata’s Trading A/c for the year ended 31st March 2020

Explanation

Hemlata’s Trading A/c for the year ended 31st March 2020

Hemlata’s Trading A/c for the year ended 31st March 2020Hemlata’s Trading A/c for the year ended 31st March 2020

$

$

Opening Stock

4000

Sales

50000

Purchases

37000

Closing Stock

7000

Carriage Inward

4000

Gross Profit

12000

57000

57000

Question number: 125 (2 of 3 Based on Passage) Show Passage

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Short Answer Question▾

Write in Short

Calculate Hemlata’s sales and purchases for the year ended 31st March 2020. Also show your calculations. (Marks 9)

(I) Sales

(II) Purchases

Explanation

(I)

Calculate Hemlata’s sales and purchases for the year ended 31st March 2020Calculate Hemlata’s sales and purchases for the year ended 31st March 2020

Credit sales is calculated as follows-

$

Receipt from Debtors

40000

Add: Closing Debtors

10000

50000

Less: Opening Debtors

8000

Credit Sales

42000

(II)

Calculate Hemlata’s sales and purchases for the year ended 31st March 2020Calculate Hemlata’s sales and purchases for the year ended 31st March 2020

Purchases:

$

Payment to Creditors

35000

Add: Closing Creditors

8000

43000

Less: Opening Creditors

6000

Purchases

37000

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