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A Question in FA1 CBE

Forums › FIA Forums › FA1 Recording Financial Transactions Forums › A Question in FA1 CBE

  • This topic has 4 replies, 2 voices, and was last updated 7 years ago by secondstar.
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  • Author
    Posts
  • October 23, 2015 at 11:34 am #278545
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    I appeared in my FA1 CBE on 14th Oct, and completed it with good marks. I came across this question, which i think, is of FA2, incorrectly included in FA1. I wanna know whats the answer.

    An A/c is given, name isn’t mentioned, and the following entries are given.
    Debit Side Credit Side
    b/d 6,000 Income St. 33,500
    Bank 15,000
    c/d 12,500

    a) The 33,500 is income
    b) The balance 12,500 is an asset
    c) The balance 12,500 is a liability
    d) The balance 6,000 is a liability.

    I thought it’s a question from Accruals & Prepayments. And probably an Expense account. Responses appreciated.

    October 24, 2015 at 7:40 am #278669
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10194
    • ☆☆☆☆☆

    It must be an expense account. The other side of the 35,000 credit here is to debit income statement.

    15000 would be a CR to cash, representing a payment.

    The 6000 b/d on the debit is an asset (prepayment)

    The 12500 is carried down to be a credit balance, so is a liability.

    Answer =c

    October 24, 2015 at 8:47 am #278688
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    @Gromit said:
    It must be an expense account. The other side of the 35,000 credit here is to debit income statement.

    15000 would be a CR to cash, representing a payment.

    The 6000 b/d on the debit is an asset (prepayment)

    The 12500 is carried down to be a credit balance, so is a liability.

    Answer =c

    Thanks for the response…
    I thought the same, and have answered it as well. Your answer has removed my query…. One last thing, as i’ve said, It should be from FA2, since Accruals & Prepayments are not part of the FA1 syllabus, what do you think sir??

    October 24, 2015 at 12:56 pm #278714
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10194
    • ☆☆☆☆☆

    The question doesn’t mention the terms ‘accrual’ or ‘prepayment’.

    It relies on you recognising that a balance carried down on the credit side must be a liability.

    October 25, 2015 at 7:35 am #278800
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    I see……
    Well, thanks very very much for the answer, it has removed my query completely… God Bless You & the whole team of Opentuition.

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