IGCSE Accounting Paper-2: Specimen Questions with Answers 183 - 184 of 189

Passage

The Lion Club was formed in 2015. The club has 50 members. The annual subscription is $100. The club rents a clubhouse. The monthly rent is $200.

The following information was available on 1 Jan 2018.

The following information was available on 1 Jan 2018The following information was available on 1 Jan 2018

$

Accumulated fund

8720

Furniture at book value

4500

5 % Bank loan

4000

Cash at bank

6540

Insurance prepaid to 31 January 2018

100

Clubhouse rent accrued

200

Subscriptions prepaid

1500

The amounts received and paid during the year ended 31 December 2018 were as follows.

The amounts received and paid during the year ended 31 December 2018 The amounts received and paid during the year ended 31 December 2018

$

Subscriptions for the year ended 31 December 2018

2520

Purchase of new Furniture

2500

Proceeds of sale of old furniture (book value $2000)

1800

General expenses

8610

Loan interest paid

600

Rent of clubhouse

3000

Net receipts from open day

850

Bank charges

50

All receipts were paid into the bank and all payments were made by cheque.

Question number: 183 (2 of 2 Based on Passage) Show Passage

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Short Answer Question▾

Write in Short

Write up the subscriptions account for the year ended 31 December 2018. Balance the account and bring down the balance on 1 Jan 2019. (Marks 5)

Lions Club

Subscriptions account

Subscriptions accountSubscriptions account

Date

Details

$

Date

Details

$

Explanation

Lions Club

Subscriptions account

Subscriptions accountSubscriptions account

Date

Details

$

Date

Details

$

2018

Dec 31

Income & Expenditure

5000 (I)

2018

Jan 1

Balance b/d

1500

Dec 31

Bank

2520

Dec 31

Balance c/d

980

5000

5000

2019

Jan 1

Balance b/d

980

Workings-

(I) Annual Total Subscription for the year

Question number: 184

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Essay Question▾

Describe in Detail

Devoleena owns a cyber cafe. Indicate with a tick mark each item belonging to the kind of expenditure. (Marks 3)

(I) Monthly rent for the building used for cafe

(II) Expenses incurred for installing computers in the cafe

(III) Repair of a second hand purchased computer to bring it into working condition

(IV) Regular High Speed internet charges

(V) Salary of a cafe manager

Devoleena owns a cyber cafeDevoleena owns a cyber cafe

Capital

Revenue

(I)

(II)

(III)

(IV)

(V)

Explanation

Devoleena owns a cyber cafeDevoleena owns a cyber cafe

Capital

Revenue

(I)

The Monthly rent for the building used for cafe

The Monthly Rent for the Building Used for Cafe

(II)

The Expenses incurred for installing computers in cafe

The Expenses Incurred for Installing Computers in Cafe

(III)

The Repair of a second hand purchased computer

The Repair of a Second Hand Purchased Computer

(IV)

The Regular High Speed internet charges

The Regular High Speed Internet Charges

(v)

The Salary of a cafe manager

The Salary of a Cafe Manager

  • Monthly rent, regular internet charges and salary are recurring nature whose benefits will be fully utilized in the same accounting year in which it is incurred. So, these are revenue expenditures.

  • Computers are fixed assets for a cyber café. Expenses incurred for the installation computers are non-recurring in nature and its benefits will continue to be utilized in subsequent accounting years. So, this is a capital expenditure.

  • All additional expenses incurred at the time of purchasing a fixed asset are also treated as capital expenditure. Further, expense incurred to bring a fixed asset into working condition is also treated as capital expenditure.

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