# 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.

 1st April 2019\$ 31st March 2020\$ Stock 4000 7000 Debtors 8000 10000 Creditors 6000 8000
 \$ 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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### 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

 \$ \$ 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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### 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)

 Credit sales is calculated as follows- \$ Receipt from Debtors 40000 Add: Closing Debtors 10000 50000 Less: Opening Debtors 8000 Credit Sales 42000

(II)

 Purchases: \$ Payment to Creditors 35000 Add: Closing Creditors 8000 43000 Less: Opening Creditors 6000 Purchases 37000

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