IGCSE Accounting Paper-2: Specimen Questions with Answers 28 - 30 of 189

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Passage

The following transactions are shown in the books of Mr. Ringon for the month of January 2007.

Jan 1st Received a cheque from Mr. Fatso to whom goods were sold for £ 20000, allowed him 1 %

Jan 2nd Mr. Fatso՚s cheque was deposited in bank

Jan 5th Mr. Fatso՚s cheque was dishonored (bank charges £ 100)

Jan 8th Mr. Fatso settled his account by means of a cheque £ 20250, £ 150 being interest charged.

Question 28 (3 of 5 Based on Passage)

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Describe in Detail

Essay▾

What are the advantages enjoyed by Mr. Ringon while maintaining a three columnar cash book?

Explanation

In a three columnar cash book three separate columns are maintained for cash, bank and discount on each side respectively Mr. Ringon, who has large volumes of business transactions has an advantage in maintaining a three columnar cash book, as the cash and bank balances of the business concern is known at a glance. A cash book is prepared periodically mostly monthly.

Question 29 (4 of 5 Based on Passage)

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Write in Short

Short Answer▾

Can Mr. Ringon be justified in not maintaining a separate ledger for cash?

Explanation

Yes, Mr. Ringon can justify himself in not maintaining a separate ledger account for cash. This is because; he maintains a three columnar cash book. Maintenance of cash book serves like a book of original entry. Here the transactions are recorded for the first time from the source documents. Receipts are recorded on one side and payments on the other. Hence cash book acts as both journal as well as ledger.

Question 30 (5 of 5 Based on Passage)

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Describe in Detail

Essay▾

Prepare a three columnar cash book, for Mr. Ringon and show how these transactions will be entered.

Explanation

Three Columnar Cash Book in the Books of Mr. Ringon During the Month of January 2007
DATEPARTICULARSLFDISCOUNTCASHBANKDATEPARTICULARSLFDISCOUNTCASHBANK
Jan 1stTo Fatso A/c20019800Jan 2ndBy bank A/cC19800
Jan 2ndTo Cash A/cC19800jan 5thBy Fatso A/c20019900
Jan 8thTo Fatso A/c20250

Note: £ 19900 include bank charges of £ 100

£ 20000 discount@1 %= £ 200

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