IGCSE Accounting Paper-2: Specimen Questions with Answers 15 - 18 of 189

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Passage

ABC & Co. started business on 1st January 2014 with a capital of £ 240000.

During the month, the following transactions took place:

2nd Bought goods from XYZ on credit £ 60000

5th Sold goods to MNO £ 75000

5th Cash Purchases £ 75000

8th Cash Sales £ 45000

9th Goods returned to XYZ £ 6000

15th Bought Furniture £ 45000

16th Cash paid to XYZ £ 36000

16th Loan taken from Mr. K £ 90000

17th Goods Returned by MNO £ 9000

20th ABC takes stock for personal use £ 9000

21st Cash received from MNO £ 36000

25th Salary paid £ 15000

28th Purchase of Stationery £ 3000

29th Amount paid to Mr. K on loan Account £ 54000

30th Interest received £ 12000

Question 15 (5 of 5 Based on Passage)

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Describe in Detail

Essay▾

Prepare the stock ledger A/C

Explanation

Table Title: Stock Ledger a/C in the Books of ABC & Co
DATEPARTICUALRSJFAMOUNT

£

DATEPARTICUALRSJFAMOUNT

£

02.01. 2014To XYZ A/C6000005.01. 2014By MNO A/C75000
05.01. 2014To cash A/C7500008.01. 2014By Cash A/C45000
17.01. 2014To MNO A/C900009.01. 2014By XYZ A/C6000
20.01. 2014By drawings A/C9000
31.01. 2014By balance C/D9000
144000144000
01.02. 2014To balance B/D9000

Passage

Mr. Jack purchases machinery at a cost of £ 100000. The life of the machinery is said to be 3 years At the end of 3 years the machinery is sold as scrap at £ 20000.

Question 16 (1 of 5 Based on Passage)

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Write in Short

Short Answer▾

Why should Mr. Jack depreciate his machinery before selling it as scrap?

Explanation

Any asset over a period of time becomes old and incurs wear and tear expenditure. Hence Mr. Jack should depreciate his machinery to know the book value of it in order to ascertain whether he sold the asset at profit or loss.

Question 17 (2 of 5 Based on Passage)

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Short Answer▾

How will Mr. Jack ascertain the percentage of written down value on the machinery?

Explanation

Mr. Jack can ascertain the percentage of written down value using the formula

Where R = Percentage rate, N = Years, RV = Residual/Scrap value

Question 18 (3 of 5 Based on Passage)

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Write in Short

Short Answer▾

What are the methods available to Mr. Jack to calculate depreciation on the machinery?

Explanation

Mr. Jack can use any of the two widely used methods to calculate depreciation on his machinery. The methods are:

(i) Straight Line Method

(ii) Written down value Method

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