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

Question 123

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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 2020.

Hemlata is a Sole Trader Who Buys All Her Goods for Resale on Credit
1st April 2019

Dollar $

31st March 2020

Dollar $

Stock40007000
Debtors800010000
Creditors60008000
Hemlata is a Sole Trader Who Buys All Her Goods for Resale on Credit
Dollar $
Receipt from debtors40000
Payment to Creditors35000
Cash Sales8000
Carriage Inward4000

Question 124 (1 of 3 Based on Passage)

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Write in Short

Short Answer▾

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 2020
Credit sales is calculated as follows-$
Receipt from Debtors40000
Add: Closing Debtors10000
50000
Less: Opening Debtors8000
Credit Sales42000

(II)

Calculate Hemlata՚S Sales and Purchases for the Year Ended 31st March 2020
Purchases:$
Payment to Creditors35000
Add: Closing Creditors8000
43000
Less: Opening Creditors6000
Purchases37000

Question 125 (2 of 3 Based on Passage)

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Write in Short

Short Answer▾

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 2020
Dollar $Dollar $
Opening Stock4000Sales50000
Purchases37000Closing Stock7000
Carriage Inward4000
Gross Profit12000
5700057000

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