IGCSE Accounting Paper-2: Specimen Questions with Answers 132 - 135 of 189

Question 132

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One Liner▾

State the effect on net profit when opening stock is undervalued. (Marks 1)

Explanation

Net profit will be overstated

When opening stock is undervalued, cost of goods would be lesser than actual, gross profit would be overstated and so the net profit.

Question 133

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One Liner▾

Give one example of a current asset. ________ (Marks 1)

Explanation

Bills Receivables

  • Current Assets are those which can be sold, encashed, consumed or utilized within a year.
  • Bills Receivables are current assets as they can be converted into cash within 30 to 90 days.

Question 134

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Question

Fill-Blanks▾

A________ and an ________ always have a credit balance

Answer

Explanation

Liability; Income

  • The normal balance of a liability A/c and an income a/c is credit.
  • On the contrary, an asset A/c and an expense A/c normally have a debit balance.

Passage

Fiza and Sara are in partnership. Their financial year ends on 30 September. The following balances remained on the books After the preparation of their Trading and Profit and Loss Account for the year ended 30 September 2019-

Trading and Profit and Loss Account for the Year Ended 30 September 2019-
$
Capital Accounts:
Fiza10000
Sara6000
Current Accounts:
Fiza3000
Sara1000 (Dr)
Fixed assets at cost17000
Provision for depreciation of fixed assets2000
Inventory1400
Receivables2800
Bank balance1000 (Dr)
Payables2400
Cash?

Question 135 (1 of 3 Based on Passage)

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Short Answer▾

Calculate the current ratio of Fiza and Sara on the given date and state whether it is below or above the ideal ratio. (Marks 4)

Explanation

The ideal current ratio is 2: 1, but the current ratio of Fiza and Sara is 1.88: 1. Thus, it is below the ideal standard.

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