IGCSE Accounting Paper-2: Specimen Questions with Answers 157 - 158 of 189
Question number: 157
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.
$ | |
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
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:
$ | |
Closing Trade Creditors | 2200 |
Add: Payments to Trade Creditors | 42300 |
Purchases Returns | 1400 |
45900 | |
Less: Opening Trade Creditors | (1600) |
Credit Purchases | 44300 |