Podcast
Questions and Answers
A not-for-profit organization has a building with an original cost of $500,000. Accumulated depreciation is $150,000. If the organization uses the declining balance method at a rate of 20%, what is the depreciation expense for the current year?
A not-for-profit organization has a building with an original cost of $500,000. Accumulated depreciation is $150,000. If the organization uses the declining balance method at a rate of 20%, what is the depreciation expense for the current year?
- $350,000
- $70,000 (correct)
- $30,000
- $100,000
A company's trial balance shows accounts receivable of $200,000 and an existing allowance for doubtful accounts of $5,000. The company estimates that 3% of accounts receivable will be uncollectible. What amount of bad debt expense should be recorded?
A company's trial balance shows accounts receivable of $200,000 and an existing allowance for doubtful accounts of $5,000. The company estimates that 3% of accounts receivable will be uncollectible. What amount of bad debt expense should be recorded?
- $5,000
- $6,000
- $1,000 (correct)
- $11,000
A partnership agreement stipulates that interest on capital should be calculated at 10% per annum. Partner A's capital balance is $50,000 and Partner B's capital balance is $30,000. If the partnership's profit before interest is $10,000, what is the total amount of interest on capital that will be allocated to the partners?
A partnership agreement stipulates that interest on capital should be calculated at 10% per annum. Partner A's capital balance is $50,000 and Partner B's capital balance is $30,000. If the partnership's profit before interest is $10,000, what is the total amount of interest on capital that will be allocated to the partners?
- $10,000
- $5,000
- $3,000
- $8,000 (correct)
A company receives $12,000 in advance rent on October 1, 2024, for a six-month period. The company's fiscal year ends on December 31. What amount of rent revenue should be recognized on the income statement for the year ended December 31, 2024?
A company receives $12,000 in advance rent on October 1, 2024, for a six-month period. The company's fiscal year ends on December 31. What amount of rent revenue should be recognized on the income statement for the year ended December 31, 2024?
Which accounting principle dictates that revenue should be recognized when it is earned, regardless of when cash is received?
Which accounting principle dictates that revenue should be recognized when it is earned, regardless of when cash is received?
A partnership deed specifies that interest on capital will be allowed at 6% per annum. If a partner withdraws half of their capital during the year, how does this impact the calculation of interest on their capital?
A partnership deed specifies that interest on capital will be allowed at 6% per annum. If a partner withdraws half of their capital during the year, how does this impact the calculation of interest on their capital?
When a new partner is admitted, the existing goodwill is written off among the old partners. What is the primary reason for this adjustment?
When a new partner is admitted, the existing goodwill is written off among the old partners. What is the primary reason for this adjustment?
A company forfeits shares due to non-payment of allotment money. Which account is credited when these forfeited shares are reissued at a discount?
A company forfeits shares due to non-payment of allotment money. Which account is credited when these forfeited shares are reissued at a discount?
A company redeems its debentures by purchasing them in the open market. If the purchase price is lower than the face value, what is the accounting treatment for the difference?
A company redeems its debentures by purchasing them in the open market. If the purchase price is lower than the face value, what is the accounting treatment for the difference?
In preparing a Cash Flow Statement, which of the following would be classified as a financing activity?
In preparing a Cash Flow Statement, which of the following would be classified as a financing activity?
Which ratio is most useful in assessing a company's ability to meet its short-term obligations?
Which ratio is most useful in assessing a company's ability to meet its short-term obligations?
In a not-for-profit organization, how are capital expenditures typically treated when preparing the Income and Expenditure Account?
In a not-for-profit organization, how are capital expenditures typically treated when preparing the Income and Expenditure Account?
A partnership firm is dissolved and an unrecorded asset is discovered during the dissolution process. How should this asset be accounted for?
A partnership firm is dissolved and an unrecorded asset is discovered during the dissolution process. How should this asset be accounted for?
Flashcards
Balance Sheet (NPO)
Balance Sheet (NPO)
A financial statement showing a not-for-profit's assets, liabilities, and capital fund at a specific point in time.
Depreciation
Depreciation
The systematic allocation of the cost of an asset over its useful life.
Outstanding Expense
Outstanding Expense
An expense that has been incurred but not yet paid.
Accrued Income
Accrued Income
Signup and view all the flashcards
Accounting Principles
Accounting Principles
Signup and view all the flashcards
Partnership Deed
Partnership Deed
Signup and view all the flashcards
Profit and Loss Appropriation Account
Profit and Loss Appropriation Account
Signup and view all the flashcards
Admission of a Partner
Admission of a Partner
Signup and view all the flashcards
Retirement/Death of a Partner
Retirement/Death of a Partner
Signup and view all the flashcards
Realization Account
Realization Account
Signup and view all the flashcards
Issue of Shares at Premium
Issue of Shares at Premium
Signup and view all the flashcards
Cash Flow Statement
Cash Flow Statement
Signup and view all the flashcards
Receipts and Payments Account
Receipts and Payments Account
Signup and view all the flashcards
Study Notes
Partnership Accounts
- The Partnership Deed establishes the foundation of a partnership.
- The Partnership Deed outlines terms such as profit/loss sharing ratios, partner salaries, and interest on capital and drawings.
- The Profit and Loss Appropriation Account distributes profits among partners by the Partnership Deed.
- Accounting for Admission of a Partner requires adjustments.
- Revaluation of assets, liabilities, goodwill treatment (including hidden goodwill), and capital accounts adjustments are key when accounting for the admission of a partner.
- Upon a Partner's Retirement/Death, focus on calculating amounts due to the retiring/deceased partner.
- A retiring/deceased partners share of goodwill, revaluation profit, and accumulated profits/losses need to be calculated.
- Payment modes should be understood and accounted for when a partner retires/dies.
- Dissolution of a Partnership Firm requires study of the realization, partner's loan, and capital accounts.
- Realization, partner's loan, and capital accounts show the complete closure of the firm.
- Treatment of Goodwill needs a comprehensive understanding of accounting for goodwill in various scenarios.
- Scenarios where goodwill accounting is important are admission, retirement/death, and dissolution.
Company Accounts
- Issue of Shares involves understanding different share types.
- Issue of Shares involves accounting for shares at par, premium, and discount, including calls in arrears and calls in advance.
- Forfeiture and Reissue of Shares requires learning the accounting treatment for forfeited shares and their reissue.
- Issue of Debentures requires understanding different types of debentures.
- Issue of Debentures requires accounting for debentures at par, premium, and discount.
- Redemption of Debentures involves studying different redemption methods.
- Redemption methods include lump sum payment, draw of lots, purchase in the open market, and conversion.
- Financial Statements of a Company should adhere to Schedule III of the Companies Act, 2013 for the Balance Sheet and Statement of Profit and Loss.
- Cash Flow Statement preparation should use both direct and indirect methods.
- Cash flows are classified into operating, investing, and financing activities.
- Accounting Ratios include profitability, solvency, liquidity, and activity ratios for analyzing financial performance.
Not-for-Profit Organizations
- Receipts and Payments Account summarizes all cash transactions.
- Income and Expenditure Account preparation involves adjusting the Receipts and Payments Account for accruals and prepayments.
- Balance Sheet preparation includes capital funds, specific funds, assets, and liabilities.
Important Adjustments
- Depreciation methods and their applications should be understood.
- Bad Debts and Provision for Doubtful Debts requires accounting treatment for bad debts and creating/maintaining a provision for doubtful debts.
- Outstanding Expenses and Prepaid Expenses require adjustments for expenses that are outstanding or paid in advance.
- Accrued Income and Income Received in Advance need accounting for income earned but not received and income received in advance.
- Interest on Capital and Drawings involves calculation and accounting treatment as per the partnership deed.
Conceptual Understanding
- Accounting Principles and Concepts require a thorough understanding of basic accounting principles.
- Basic accounting principles include going concern, accrual, and matching.
- Accounting Standards require familiarity with the relevant standards.
Exam Strategies
- Allocate time for each question during the exam for Time Management.
- Ensure neat and clear presentation of solutions for Presentation.
- Carefully read and understand what each question is asking for by Understanding Question Requirements.
- Solve previous years' question papers and sample papers when Practicing.
- Undertake Regular revision of concepts and formulas.
Expected Question Types
- Numerical Problems often deal with partnership accounts (admission, retirement, dissolution), company accounts (issue of shares/debentures, redemption of debentures), and financial statement analysis.
- Theory Questions test understanding of accounting principles, concepts, and procedures.
- Case Studies are application-based questions that require analyzing a given situation and applying accounting knowledge.
- Short Answer Questions require brief explanations of specific topics.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Comprehensive guide to partnership accounts for Class 12 Accountancy exams. Covers partnership deeds, profit and loss appropriation, admission/retirement of partners, and firm dissolution. Learn about accounting adjustments, goodwill, and capital distribution.
