30 Questions
When a company decides to discontinue its business and dispose of its plants within a period of three months, how should the plants be valued on the Balance Sheet as of the date of discontinuation?
At historical cost
What is the primary purpose of preparing a Bank Reconciliation Statement?
To arrive at the bank balance
How should damaged inventory be valued?
At cost or market price, whichever is lower
What is the purpose of the reducing balance method of depreciation?
To provide a uniform charge for depreciation and repairs and maintenance together
What is the treatment of a discount at the time of retirement of a bill?
It is a gain for the drawee
Where a Non-Profit organization has a separate trading activity, how is the profit and loss from the trading account transferred?
To the Income and Expenditure Account
What is the amount of allotment money due to Kamal?
2,000
What is the net consideration at which the assets and liabilities are taken over?
8,80,000
What is the amount of securities premium?
8,000
What is the amount of excess money of application adjusted?
160
What is the total value of Assets as per the Statement of Affairs as on 31st March, 2024?
2,50,100
What is the correct entry to rectify the dishonoured bill receivable?
Dr. Customer A/c, Cr. Bills receivable A/c
What is the total number of shares applied by all applicants?
24,000
What is the amount of Provision for doubtful debts as per the Statement of Affairs as on 31st March, 2024?
3,500
What is the amount of Depreciation on Furniture and Fittings as per the Statement of Affairs as on 31st March, 2024?
6,500
What is the face value of each debenture issued?
100
What is the total amount of bank charges and dividends not entered in the cash book?
Rs. 73,400
What is the amount of profit on revaluation transferred to Partners' Capital Accounts?
21,000
What is the balance of Cash and Bank account as on 01.04.2023?
61,650
What is the ratio of partnership of Mr. X, Mr. Y, and Mr. Z?
2:3:2
What is the amount of provision for bad debts?
1,650
What is the amount of unsold stock out of goods received on consignment basis?
Rs. 2,400
What is the amount of Bank Overdraft as per the Statement of Affairs as on 31st March, 2024?
20,000
What is the profit on the settlement of the truck?
Rs. 1,75,000
What is the amount of appreciation in the value of Land and Building?
18,000
What is the amount of depreciation in the value of Plant and Machinery?
18,000
What is the value of the gross profit on the sales from 31st March to 15th April, 2023?
Rs. 8,000
What is the value of Goodwill of the firm?
42,000
What is the amount of cost of goods sent on approval basis?
Rs. 32,000
What is the total value of Partners' Capital accounts?
2,10,000
Study Notes
Accounting Concepts
- A concern that decides to discontinue its business and dispose of its plants within a period of three months should not value its plants at historical cost in the Balance Sheet as on 31st December 2023, since the assets will be disposed of after the Balance Sheet date.
- The Sales book is not used to record both cash and credit sales.
- Bank reconciliation statement is not prepared to arrive at the bank balance.
- Damaged Inventory should be valued at cost or market price, whichever is lower.
- Reducing balance method of depreciation is not followed to have a uniform charge for depreciation and repairs and maintenance together.
- Discount at the time of retirement of a bill is a gain for the drawee.
- A withdrawal of cash from the business by the proprietor for personal use should not be charged to the profit and loss account as an expense.
- In case of admission of a new partner in a partnership firm, the profit/loss on revaluation account is transferred to all partners in their new profit-sharing ratio.
Financial Statements
- The Balance Sheet of M/s Y & Z as on 01.04.2023 shows:
- Liabilities: Partners' accounts, Mr. X's Loan account, Sundry Creditors
- Assets: Land and Building, Plant & Machinery, Stock of goods, Sundry Debtors, Cash & Bank balances
- The Statement of Valuation of Stock on 31st March, 2023 shows:
- Value of stock as on 15th April, 2023
- Add: Cost of sales during the period from 31st March, 2023 to 15th April, 2023
- Less: Gross Profit (20% of ₹ 40,000)
- Cost of goods sent on approval basis (80% of ₹ 6,000)
- Less: Purchases during the period from 31st March, 2023 to 15th April, 2023
- Unsold stock out of goods received on consignment basis (30% of ₹ 8,000)
Partnership and Revaluation
- In the case of admission of a new partner in a partnership firm, the profit/loss on revaluation account is transferred to all partners in their new profit-sharing ratio.
- The revaluation account is used to transfer the profit/loss on revaluation to the partners' capital accounts.
- The surrender value of the joint life policy is transferred to the partners' capital accounts.
Journal Entries
- Journal entries are used to record the transactions related to the purchase of assets, issue of debentures, and payment of instalments.
- The journal entries are dated and show the debit and credit accounts, along with the amounts.
Test your knowledge of accounting concepts with this true and false quiz. Answer questions on accounting principles, asset valuation, and financial recording. Improve your understanding of accounting practices with this quiz.
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