Final Accounts Test 10

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Final Accounts Test 10

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Weekly Quiz Competition

Question 1
1 / -0

Profit on sale of old furniture is shown_________.

A
On the credit side of trading A/c

B
On the credit side of profit and loss, A/c

C
Directly added to capital A/c

D
Being non-operating item, ignored
Question 2
1 / -0

While preparing trading and profit and loss a/c _________ is made.

A
distinction between revenue and capital expenditure

B
distinction between cash and non cash outlay

C
materiality of transaction

D
market effect of the transaction

Solution

Revenue expenditure are those which are incurred for normal business operations. Salary, Rent, Insurance, wages etc are the examples of revenue expense.

Capital expenditure are those , of which the benefit is arises to the business for more than a year. Examples are plant, equipment, furniture etc. These are shown in balance sheet as asset.

Hence, while preparing trading and profit & loss account, distinction between revenue and captial expenditure is necessarily to be made.
Question 3
1 / -0

Carriage on goods sold is shown in______________.

A
profit and loss A/c

B
trading A/c

C
balance sheet

D
suspense A/c

Solution

Carriage are of two types.

Carriage Inward - It is the amount spent to bring the purchased material to the business location. Its an example of direct expenses, hence debited to Trading Account.

Carriage Outward- It is an amount spent on the sales of goods. Its an indirect expense and to be debited to Profit & Loss Account.
Question 4
1 / -0

________is a part of administrative expense.

A
Packing expense

B
Audit fee

C
Factory rent

D
Bad debts

Solution

Audit fees are payable to the auditors for conducting the audit of books of account of the firm. It is an item of indirect expenses, part of administrative expenses. All indirect expenses are debited to Profit & Loss Account.
Question 5
1 / -0

The respective normal balances of Purchases, Discount received, and Freight-in are_______.

A
Credit, credit, debit

B
Debit, credit, credit

C
Debit, credit, debit

D
Debit, debit, debit

Solution

Purchase is nominal account which represent the purchase of goods which always shows a debit balance.

Discount received is an income account which always have a credit balance as the rule of nominal account says : credit all the incomes.

Freight is an expense and classified as nominal account. Expense are always debited, hence freight account will have a debit balance.
Question 6
1 / -0

Loss on sale of old furniture and fitting is debited to__________.

A
Depreciation A/c

B
Profit and loss a/c

C
Trading A/c

D
Furniture and fitting A/c

Solution

Loss on sale of furniture is an indirect expense/loss to the firm, accordingly this has to be debited to Profit & Loss Account. Below is the journal entry passed for such case:

Profit & Loss A/c Dr. (with the amount of loss)
Cash/Bank A/c Dr. (with the amount of sale value)
To Asset A/c (with the book value of the asset)
Question 7
1 / -0

From the following details calculated Closing stock.
Opening stock = 15,000
Purchases = Rs. 1,80,000
Direct expenses = Rs. 35,000
Selling and distribution expenses = Rs. 20,000
Administrative expenses = Rs. 10,000
Financial expenses = Rs, 5,000
Sales Rs. 2,40,000
Gross profit on sale 25%

A
Rs. 45,000

B
Rs. 50,000

C
Rs. 55,000

D
Rs. 60,000
Question 8
1 / -0

Net purchases plus freight-in equals___________.

A
cost of goods sold

B
cost of goods available for sale

C
cost of goods purchased

D
cost of goods lying unsold
Question 9
1 / -0

________is a part of selling and distribution expenses.

A
Packing expense

B
Audit fee

C
Factory rent

D
Legal expense

Solution

Packing expenses are incurred for packing the material. It is an indirect cost as it is used to pack the product.
Packing expense are part of selling & distribution expenses and debited to profit & loss account.
Question 10
1 / -0

While calculating gross profit/loss, __________ is not considered.

A
Cash discount

B
Trade discount

C
Inward fright and insurance

D
Wages

Solution

Discount are classified as:

Trade Discount- Trade discount is allowed to the customers to push the sales. It is calculated on list price of the goods and not recorded in books of account.

Cash Discount- Cash discount is allowed to the customers to get the money back with faster mode. It is allowed to speed up the cash collection from the customers. Its indirect expenses debited to Profit & Loss account.

Hence, while calculating gross profit/loss, cash discount is not considered.

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Re-Attempt Weekly Quiz Competition

Final Accounts Test 10

Result

Final Accounts Test 10

Score

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Rank

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SHARING IS CARING

Question 1

On the credit side of trading A/c

On the credit side of profit and loss, A/c

Directly added to capital A/c

Being non-operating item, ignored

Question 2

distinction between revenue and capital expenditure

distinction between cash and non cash outlay

materiality of transaction

market effect of the transaction

Solution

Question 3

profit and loss A/c

trading A/c

balance sheet

suspense A/c

Solution

Question 4

Packing expense

Audit fee

Factory rent

Bad debts

Solution

Question 5

Credit, credit, debit

Debit, credit, credit

Debit, credit, debit

Debit, debit, debit

Solution

Question 6

Depreciation A/c

Profit and loss a/c

Trading A/c

Furniture and fitting A/c

Solution

Question 7

Rs. 45,000

Rs. 50,000

Rs. 55,000

Rs. 60,000

Question 8

cost of goods sold

cost of goods available for sale

cost of goods purchased

cost of goods lying unsold

Question 9

Packing expense

Audit fee

Factory rent

Legal expense

Solution

Question 10

Cash discount

Trade discount

Inward fright and insurance

Wages

Solution

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