IGCSE Accounting Paper-2: Specimen Questions with Answers 169 - 171 of 189

Question number: 169

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Short Answer Question▾

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What are Limited Liability Companies?

Explanation

  • A Limited Liability Company is US specific form of private limited company. It combines the feature of both of a partnership and that of a limited liability company.

  • An LLC is eligible for the pass through taxation as well as the limiting the liability of the owners.

Question number: 170

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One Liner Question▾

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Asim bought goods on credit from Siddharth. In Siddharth ledger, this transaction was entered on the credit side of Asim’s account. (Marks 1)

Asim returned some of the goods to Siddharth as faulty. Name the document which Asim sent to Siddharth.

Explanation

Debit note

Debit note is issued in case of Purchase Return.

Question number: 171

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One Liner Question▾

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Name the accounting principle explained in the below statement

‘In a given situation, an accountant should choose that accounting alternative that will report lesser profits, less asset amount or a greater liability amount. ’ (Marks 1)

Explanation

Principle of Prudence

  • Principle of Prudence is a policy of playing safe. Principle of Prudence says that an accountant should not overestimate the amount of revenues or underestimate the amount of expenses.

  • Further, assets too shouldn’t be overstated and the liabilities should not be underestimated.

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