Paper 2 · November 2014 · Manufacturing Accounts

D. Dlodlo, a retailer, sold goods with a cost price of $8 500 on credit to A. Mashamba for $9 500. What is the effect of this transaction on working capital: increase, decrease, or no effect?

Model answer

increase

Explanation

A credit sale converts inventory (an existing current asset) into a debtor for a higher amount, and profit on the sale increases net current assets, so working capital increases.

Derived from ZIMSEC Principles of Accounts 7112/2 Paper 2, November 2014 Specimen Paper, Q3

View this paper's sittings and topics→

More questions from this paper

Chiedza Fashion Boutique's Income Statement for the year ended 31 December 2014 showed an adjusted gross profit plus other income of $499 848, and total expenses of $226 294. What was the net profit for the year?
In Chiedza Fashion Boutique's Statement of Financial Position as at 31 December 2014, non-current assets totalled $331 480 and current assets totalled $112 130. What was the total assets figure?
In S. Saka's sales ledger, T. Tasara's account was credited with $1 050 for 'Bad debts' on 28 December 2012, writing off the remaining balance owed. In which subsidiary book (book of original entry) would this write-off first have been recorded?
In S. Saka's sales ledger, T. Tasara's account shows a 'Balance b/d' entry of $1 800 on 1 December 2012. What does this entry represent?
Thokozani Sibanda's Furniture department had a turnover (sales less returns inwards) of $900 000 and cost of sales of $600 000 for the year ended 31 December 2014. What was the Furniture department's gross profit?

Get the full paper, not just one question

Danho has every sitting for this paper, with your progress tracked question by question, offline.

Get it on Google Play Download on the App Store