IGCSE Accounting Paper-2: Specimen Questions with Answers 132 - 136 of 189
Question 132
Write in Brief
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
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
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 2,019-
| $ | |
Capital Accounts: | |
Fiza | 10,000 |
Sara | 6,000 |
Current Accounts: | |
Fiza | 3,000 |
Sara | 1,000 (Dr) |
Fixed assets at cost | 17,000 |
Provision for depreciation of fixed assets | 2,000 |
Inventory | 1,400 |
Receivables | 2,800 |
Bank balance | 1,000 (Dr) |
Payables | 2,400 |
Cash | ? |
Question 135 (1 of 3 Based on Passage)
Write in Brief
One Liner▾State the possible reason as to why Sara’s Current A/c has a debit balance (Marks 1)
Explanation
Sara’s drawings and interest on drawings for the year might be more than her interest on capital, salaries, share of profits for the year.
Question 136 (2 of 3 Based on Passage)
Write in Short
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.