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Questions and Answers

What is the total interest amount calculated in this payment structure?

  • Rs. 2,200 (correct)
  • Rs. 6,910
  • Rs. 1,090
  • Rs. 8,000

    • How much is the down payment in this financial arrangement?

  • Rs. 6,910
  • Rs. 29,800
  • Rs. 8,000 (correct)
  • Rs. 21,800

    • What does the term 'Instalment amount' refer to in this context?

  • The total cash price minus the down payment
  • The total cash price after adding interest
  • The final payment after all instalments are paid
  • The fixed payment made over a specified number of years (correct)

    • What is the total amount payable calculated in this payment scheme?

    <p>Rs. 32,000</p> Signup and view all the answers

    How is the first instalment payment calculated?

    <p>6,910.00 + interest</p> Signup and view all the answers

    If the total cash price is Rs. 29,800, what is the remainder amount after the down payment and first instalment?

    <p>Rs. 14,890</p> Signup and view all the answers

    What is the implication of the statement 'The total payable amount is more than the total cash price payable'?

    <p>Interest is included in the total payable amount</p> Signup and view all the answers

    Which instalment payment corresponds to the second payment period?

    <p>Rs. 7,255.50</p> Signup and view all the answers

    What is the primary purpose of preparing departmental accounts?

    <p>To find out the profit or loss of each department</p> Signup and view all the answers

    Which of the following is NOT a purpose of preparing departmental accounts?

    <p>To maximize departmental employee salaries</p> Signup and view all the answers

    Departmental accounts are particularly useful for which type of business?

    <p>Large businesses with multiple departments</p> Signup and view all the answers

    By preparing departmental accounts, a business can measure profitability for which of the following?

    <p>Each department individually</p> Signup and view all the answers

    How can the preparation of departmental accounts assist managers?

    <p>By providing data for commission based on departmental profits</p> Signup and view all the answers

    Which aspect of departmental accounts allows for comparative analysis?

    <p>Comparing trading activities between different departments</p> Signup and view all the answers

    What can be a reason for discontinuing a department based on departmental accounts?

    <p>Consistent operational losses</p> Signup and view all the answers

    Which factor is essential for comparing departmental performance over time?

    <p>Comparative results with previous years' accounts</p> Signup and view all the answers

    What is the primary reason for forming a partnership?

    <p>To increase capital and improve decision-making</p> Signup and view all the answers

    Which Act regulates partnerships in India?

    <p>Indian Partnership Act, 1932</p> Signup and view all the answers

    According to the Indian Partnership Act, how many partners are required to start a partnership?

    <p>At least two partners</p> Signup and view all the answers

    Which of the following types of partners actively participates in the business?

    <p>Active partner</p> Signup and view all the answers

    What is the maximum number of partners allowed in a partnership for regular business?

    <p>20 partners</p> Signup and view all the answers

    What defines the relationship in a partnership?

    <p>Shared profits from business operations</p> Signup and view all the answers

    Which type of partner does not actively participate in the business operations?

    <p>Sleeping partner</p> Signup and view all the answers

    What happens to the ownership of goods in an instalment purchase system?

    <p>Ownership is transferred to the buyer immediately upon signing the agreement.</p> Signup and view all the answers

    What is an essential characteristic of a partnership agreement?

    <p>It must aim for profit-sharing among partners</p> Signup and view all the answers

    In what way does the relationship between parties differ in an instalment purchase compared to a hire purchase system?

    <p>In hire purchase, the relationship is of hirer and hire vendor.</p> Signup and view all the answers

    What can a seller do in the case of default in an instalment purchase system?

    <p>File a lawsuit to recover the unpaid amount.</p> Signup and view all the answers

    Which statement accurately represents the nature of the agreement in an instalment purchase system?

    <p>It is an agreement of sale from the beginning.</p> Signup and view all the answers

    What type of relationship exists between the parties in an instalment purchase system until the last instalment is paid?

    <p>Debtor and creditor.</p> Signup and view all the answers

    What is a key difference in the treatment of unpaid balances between the instalment system and hire purchase system?

    <p>Unpaid balances in both systems can lead to legal actions.</p> Signup and view all the answers

    What is true regarding the repossession of goods in the context of the instalment purchase system?

    <p>The seller has no right to repossess goods due to non-payment.</p> Signup and view all the answers

    How is interest on unpaid balance determined in an instalment purchase?

    <p>Interest is fixed at the signing of the agreement.</p> Signup and view all the answers

    How much goodwill is recognized for the new firm?

    <p>Rs. 10,000</p> Signup and view all the answers

    What is the percentage reduction applied to stock?

    <p>10%</p> Signup and view all the answers

    What amount is credited to the revaluation account from establishing a reserve for doubtful debts?

    <p>Rs. 800</p> Signup and view all the answers

    What is the appreciated value of buildings after the 20% increase?

    <p>Rs. 30,000</p> Signup and view all the answers

    What is the total liability amount after admitting Z into the partnership?

    <p>Rs. 87,500</p> Signup and view all the answers

    What fraction of profit share does Z acquire by investing Rs. 10,000?

    <p>1/5</p> Signup and view all the answers

    How much is credited to X’s Capital Account after revaluation?

    <p>Rs. 1,575</p> Signup and view all the answers

    What amount is deducted from the furniture in the revaluation account?

    <p>Rs. 100</p> Signup and view all the answers

    What happens in case of default by the hirer?

    <p>The seller can legally recover the dues.</p> Signup and view all the answers

    Which of the following statements about hire purchase and instalment purchase is NOT true?

    <p>Instalment purchase agreements can be terminated.</p> Signup and view all the answers

    In the case of hire purchase, what does the instalment consist of?

    <p>Capital part plus interest on the outstanding capital.</p> Signup and view all the answers

    What is the first journal entry in the buyer's books when goods are purchased?

    <p>Debit to Asset A/c and Interest Suspense A/c.</p> Signup and view all the answers

    What is the correct action when the interest is due for the year in the buyer's accounts?

    <p>Debit to Interest A/c.</p> Signup and view all the answers

    What does the labour of depreciation indicate in the buyer's accounting?

    <p>Decrease in the book value of the asset.</p> Signup and view all the answers

    Which of the following accounts is credited when depreciation and interest are transferred to the Profit and Loss Account?

    <p>Interest A/c.</p> Signup and view all the answers

    Under which Act does the hire purchase system operate?

    <p>Hire Purchase Act of 1972.</p> Signup and view all the answers

    Study Notes

    Academic Year 2023-24, Semester II, Study Material for B.Com, Financial Accounting -II

    • The study material is for students pursuing B.Com.
    • The course is Financial Accounting -II
    • The academic year is 2023-24
    • The semester is II
    • The material was prepared by the Commerce Department.

    Index

    • Hire Purchase Accounting (pages 3-14)
    • Branch Accounting (pages 15-22)
    • Partnership Accounting I (pages 23-36)
    • Partnership Accounting II (pages 37-54)
    • Accounting Standards (pages 55-63)

    Unit I: Hire Purchase and Installment System

    • Hire purchase and installment systems are special systems that make durable goods accessible to a wider range of people.
    • Goods are delivered immediately, but ownership passes only after the final installment is paid (and agreement terms are met)
    • Hire purchase agreement specifies details like payment periods and interest rates for deferred payments.
    • Cash price is the price for immediate payment
    • Hire purchase price includes cash price plus interest.
    • Hire vendor is the seller of the goods, and hirer is the buyer

    Unit II: Branch Accounting

    • Branch accounting involves maintaining separate accounts for each branch.
    • Dependent branches don't have separate accounts; the head office manages all accounts.
    • Independent branches maintain separate accounts for their profits and losses.
    • Branch accounting helps track each branch's performance and assess individual branch's profitability and cash/inventory position.
    • There are advantages and disadvantages:
      • Advantages: accurate profit/loss analysis for each branch, easier progress tracking, performance evaluation.
      • Disadvantages: more workload and personnel for branch management are needed.

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