Accountancy- II VIVA Questions and Answers 2023-2024
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Questions and Answers

What is depreciation?

  • The reduction in the value of an asset over time (correct)
  • The elimination of the value of an asset over time
  • Increase in the value of an asset over time
  • The consistent value of an asset over time

    • What are the causes of depreciation?

  • Wear and tear, obsolescence, and usage (correct)
  • Enhancement and preservation
  • Static condition and modernization
  • Increase in value and non-usage

    • What is capital?

  • Long-term funding for a business (correct)
  • Income generated from a business's operations
  • Short-term funding for a business
  • Expenses incurred by a business

    • Why is a balance sheet prepared?

    <p>To show the true financial position of a company</p> Signup and view all the answers

    What is the need for depreciation?

    <p>To ascertain the correct profit and show the true financial position</p> Signup and view all the answers

    What is a non-trading concern?

    <p>A non-profit organization with charitable or educational goals</p> Signup and view all the answers

    What is the purpose of preparing an income & expenditure account?

    <p>To determine surplus or deficit of income over expenditures for a particular time frame</p> Signup and view all the answers

    What does a subscription refer to?

    <p>An advance prepayment by a customer for future goods or services</p> Signup and view all the answers

    What is the retirement of a partner in a business?

    <p>Every partner's right to retire from the firm as and when they desire</p> Signup and view all the answers

    What is the main characteristic of a private company?

    <p>Privately-owned organization with shares not publicly traded, making them unavailable for the general public to purchase on stock exchanges</p> Signup and view all the answers

    What is the meaning of goodwill in business?

    <p>An intangible asset that represents the positive reputation</p> Signup and view all the answers

    What is involved in a hire purchase system?

    <p>Rent-to-own; ownership after completing payments; risk of repossession if payments are missed</p> Signup and view all the answers

    What does the admission of a partner mean in a partnership business?

    <p>The process of adding a new member to a partnership, typically requiring the agreement of all existing partners</p> Signup and view all the answers

    Study Notes

    Depreciation

    • Depreciation is the decrease in value of an asset over time due to wear and tear, obsolescence, or other factors.
    • Causes of depreciation include physical deterioration, functional obsolescence, and external factors such as changes in market conditions.

    Capital

    • Capital refers to the owner's investment in a business, representing the business's net worth.

    Balance Sheet

    • A balance sheet is prepared to provide a snapshot of a company's financial position at a specific point in time.
    • The balance sheet presents the company's assets, liabilities, and equity in a structured format.

    Need for Depreciation

    • Depreciation is necessary to accurately reflect the decreasing value of assets over time, ensuring that financial statements accurately represent the company's financial position.

    Non-Trading Concern

    • A non-trading concern is an organization that does not engage in profit-oriented activities, such as a club or charity.

    Income and Expenditure Account

    • An income and expenditure account is prepared to record and classify revenues and expenses of a non-trading concern.
    • The purpose of this account is to provide a clear picture of the organization's financial performance over a specific period.

    Subscription

    • A subscription refers to a regular payment made by members of a non-trading concern, such as a club or charity, to support its activities.

    Retirement of a Partner

    • The retirement of a partner in a business occurs when one partner leaves the partnership, and their share of the business is taken over by the remaining partners.

    Admission of a Partner

    • The admission of a partner in a partnership business refers to the inclusion of a new partner into the existing partnership.

    Private Company

    • A private company is characterized by limited liability, and its ownership is restricted to its members.

    Goodwill

    • Goodwill in business represents the excess value of a business over its net tangible assets, often resulting from factors like reputation, customer loyalty, and brand recognition.

    Hire Purchase System

    • A hire purchase system is a financing arrangement where a buyer pays for a product in installments, taking possession of the product while making payments.

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    Description

    Prepare for your Accountancy-II VIVA with this set of questions and answers covering topics such as depreciation, its causes, and related formulas. Test your knowledge and be ready for your upcoming VIVA examination.

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