IGCSE Accounting Paper-2: Specimen Questions with Answers 173 - 174 of 189

Question 173

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Short Answer▾

Name the accounting concept stated in the below sentence.

“Everything a firm owns, it also owes out to someone” .

(Marks 1)

Explanation

Dual Aspect Concept

  • Dual Aspect recognizes that every transaction has two aspects defined in accounting terms as debits and credits. Debit records the increase in assets & expenses and decrease in liabilities & income. Credit records increase in liabilities & income and decrease in assets & expenses.
  • A single transaction results into equal debits and credits such that the accounting equation always holds true. i.e..

  • The things owned by a firm are ASSETS while things which are owed by the firm are LIABILITIES. So, for every asset, there is a corresponding liability of an equal amount and that keeps the accounting equation intact.

Question 174

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One Liner▾

Give an example of a transaction that will be recorded in the general journal. (Marks 1)

Explanation

Machinery (Fixed Assets) purchased on credit.

  • An item that does not belong to any of the subsidiary books: (Purchases Day book, Sales Day book, Cash book, Purchases Returns Day Book, Sales Return Day book, Receivables book, and Payables book) is recorded under General Journal.
  • Purchase of Fixed Assets on credit belongs neither of the former subsidiary books.

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