Professional Documents
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IGCSE Grade 9th & 10th
IGCSE Grade 9th & 10th
Accounts
Theory Notes
Q.4. Define;
a. Capital: is the total resources provided by the owner and represents what the
business owes the owner.
b. Assets: represent anything owed by or owing to the business.
c. Liabilities: represent anything owed by the business.
d. Inventory: is the goods a business has available for resale.
e. Trade payables: represent the amount the business owes to the business owes to the
credit suppliers of goods (the trade creditors).
f. Trade receivables: represent the amount owed to the business by its credit
customers (the trade debtors).
Q.6. Carriage inwards- carriage inwards is the cost of bringing the goods to the business.
Q.7. Carriage outwards- carriage outwards is the cost of delivering the goods to the
customer.
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Ans The opening inventory is included in a trail balance. The closing inventory does not
appear on the books when a trail balance is prepared so cannot be included in a trail
balance.
Q.10. Different types of errors, which are not revealed by trail balance.
An
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Q.11. Division of ledger
Q.17. Define:
a. Invoice: An invoice is a document issued by the supplier of goods on credit
showing details, quantities and prices of goods supplied.
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b. Debit note: A debit note is a document issued by a purchaser of goods on credit to
request a reduction in the invoice received.
c. Credit note: A credit note is a document issued by a seller of goods on credit to
notify of a reduction in an invoice previously issued.
d. Statement of accounts: A statement of accounts I a document issued by the seller of
goods on credit to summarise the transactions for the month.
e. Cheque: a cheque is a written order to a bank to pay s stated sum of money to the
person or business named on the order.
f. Receipt: A receipt is a written acknowledgment of money received and acts as
proof of payment.
Q.25. Consistency.
Ans There are some areas of accounting where a choice of method is available. For
example, there are several different ways to calculate the depreciation of a non-
current asset. Where a choice of method is available, the one with the most realistic
outcome should be selected. Once a method has been selected. The method must be
used consistently from one accounting period to the next. This known as the
consistency principle.
Q.26. Duality.
Ans The principle of duality is also referred to as the dual aspect principle. Every
transaction has two aspects-a giving and a receiving.
Q.27. Materiality.
Ans The materiality principle means that individual items which will not significantly
affect either the profit or the assets of a business do not need to be recorded
separately.
Q.30. Realisation.
Ans The realisation principle emphasises the importance of not recording a profit until it
has actually been earned. This means that revenue is only regarded as being earned
when the legal title to goods or services passes from the seller to the buyer, who has
then an obligation (liability) to pay for those goods.
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