IGCSE Accounting Paper-2: Specimen Questions with Answers 136 - 139 of 189
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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-
| $ | |
| Capital Accounts: | |
| Fiza | 10000 |
| Sara | 6000 |
| Current Accounts: | |
| Fiza | 3000 |
| Sara | 1000 (Dr) |
| Fixed assets at cost | 17000 |
| Provision for depreciation of fixed assets | 2000 |
| Inventory | 1400 |
| Receivables | 2800 |
| Bank balance | 1000 (Dr) |
| Payables | 2400 |
| Cash | ? |
Question 136 (2 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 137 (3 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.
Question 138
Write in Short
Short Answer▾A fixed asset was purchased for $ 25000 on 1st April 2019. Depreciation was charged on the machine at the rate of 20 % using the diminishing balance method.
Calculate the machine՚s net book value on 31 March 2021. (Marks 3)
Explanation
Question 139
Write in Short
Short Answer▾State any two differences between equity shares and preference shares.
Explanation
The two differences between equity shares and preference shares are-
- Equity shares don՚t carry a fixed rate of dividend whereas preference shares carry a fixed rate of dividend.
- The holders of preference shares have a preferential rights regarding the payment of dividend as well as repayment of the principle amount in the event of winding up. On the other hand, equity shareholders do not have such rights.