IGCSE Accounting Paper-2: Specimen Questions with Answers 184 - 186 of 189

Question 184

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Short Answer▾

Give one example of a fixed asset. (Marks 1)

Explanation

Building

  • Fixed Assets are those assets which are purchased for its continued long term use in business.
  • They give future economic benefit and are not supposed to be converted into cash within a year.
  • Building is a fixed asset as it has a life of more than a year and is used to generate revenue for the business for a number of years.

Question 185

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One Liner▾

What is the summary of similar transactions called? (Marks 1)

Explanation

Account

  • An account is a record in the ledger that keeps transactions of similar nature or transactions relating to one item- an asset, a liability, an expense or an income.
  • For Ex- businesses have Cash A/c to record transactions that either increase or decrease the cash balance.

Question 186

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Short Answer▾

A credit purchase from Abram was entered on the debit side of Abram’s A/c. Name the type of error made here. (Marks 1)

Explanation

Error of Commission

  • Entering a transaction on the wrong side of an account is an error of commission. Here, Abram is a creditor, so the entry was required to be made on the credit side of Abram’s A/c but it was made on the debit side.
  • Error of Commission constitutes the following-
    • Recording wrong amount in books of prime entry
    • Wrong totaling of the books
    • Posting wrong amount in ledger accounts
    • Wrong totaling of the ledger accounts
    • Posting at the wrong side of ledger accounts

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