IGCSE Accounting Paper-2: Specimen Questions with Answers 132 - 136 of 189

Question 132

Edit

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

Edit

Write in Brief

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

Edit

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 2,019-

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)

Edit

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)

Edit

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.

🎯 Choose Paper