# IGCSE Accounting Paper-2: Specimen Questions with Answers 136 - 139 of 189

### 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 (3 of 3 Based on Passage)

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### Write in Short

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 137

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### Write in Short

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)

## Question 138

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### Write in Short

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.

## Question 139

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### Write in Brief

One Liner▾

In which final account would furniture purchased by a furniture seller for his office use appear? (Marks 1)

### Explanation

Balance Sheet

• Furniture purchased by the furniture seller is a capital expenditure as it is for his office use not for resale. So, this furniture will be treated as a fixed assets and not as goods.
• Being a fixed asset, it would appear in the balance sheet.
• Depreciation on this furniture would be debited to P&L A/c.