IGCSE Accounting Paper-2: Specimen Questions with Answers 157 - 158 of 189

Question number: 157

Edit

Short Answer Question▾

Write in Short

Explain the straight line method of depreciation. Also show through an example how annual depreciation is worked out under this method. (Marks 4)

Explanation

Under straight line method, an equal amount of depreciation as a fixed percentage of the cost of the asset is charged to the P&L A/c over the years till the balance of the asset gets zero or reduced to its scrap value. The annual depreciation under this method is worked out through the following formula-

For Example, if a machine costing $4200 is estimated to have a life of 10 years and its scrap value is estimated to be $200 at the end of the tenth year. Then the annual depreciation on the machine would be

Passage

Mohan Bhagwat’s is a businessman who closes his accounts on 30 June every year. He does not maintain a full set of accounting records.

All goods are bought and sold on credit terms.

He provided the following information.

Businessman who closes his accounts on 30 June every yearBusinessman who closes his accounts on 30 June every year

$

For the year ended 30 June 2019:

Payments to Trade creditors

42300

Receipts from Trade debtors

55200

Discount allowed to Trade debtors

700

Purchases Returns

1400

Bad debts written off

70

Carriage inwards

3000

On 1 July 2018:

Trade Creditors

1600

Trade Debtors

3500

Inventory

1100

On 30 June 2019:

Trade Creditors

2200

Trade Debtors

4130

Question number: 158 (1 of 3 Based on Passage) Show Passage

Edit

Short Answer Question▾

Write in Short

Calculate the credit purchases for the year ended 30 June 2019 (Marks 6)

Explanation

Calculation of Credit Purchases for the year:

Calculation of Credit Purchases for the yearCalculation of Credit Purchases for the year

$

Closing Trade Creditors

2200

Add: Payments to Trade Creditors

42300

Purchases Returns

1400

45900

Less: Opening Trade Creditors

(1600)

Credit Purchases

44300

Choose Paper