Final Accounts Test 14

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Final Accounts Test 14

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Weekly Quiz Competition

Question 1
1 / -0

Apprentice premium is the amount ________________.

A
Given to the employees in appreciation of their services

B
Charged from the person to whom training is imparted by the business

C
Paid to the insurance company to obtain the insurance cover

D
All of the above
Question 2
1 / -0

The total cost of goods available for sale with a company during the current year is Rs. $$12,00,000$$ and the total sales during the period are Rs. $$13,00,000$$. If the gross profit margin of the company is $$33$$ $$1/3\%$$ on cost, the closing inventory during the current year is __________?

A
Rs. $$4,00,000$$

B
Rs. $$3,00,000$$

C
Rs. $$2,25,000$$

D
Rs. $$2,60,000$$
Question 3
1 / -0

Which of the following is not a condition for issue of shares at a discount?

A
The Memorandum of Association must authorise the company for issue of shares at a discount

B
The issue must be authorised by passing an ordinary resolution in the General Meeting and must be confirmed by the Company Law Board

C
The shares should be a class of shares already issued

D
At least one year must have elapsed since the company was entitled to commence business
Solution
Conditions for Issue of Shares at Discount
1. In order to issue the shares at a price less than the face value, the company has to get permission from the relevant authority. For seeking permission, they should call and upon a general meeting and discuss and authorize the matter in that meeting.
2. There is a cap on the rate of discount. A company cannot issue any shares at more than 10% discount.
3. The company should issue the shares within 60 days of receiving permission from the relevant authority. In certain cases, the company can extend this time frame after getting permission in the permission.
4. The company cannot issue these shares before passing of 1 year from the date of commencement of business.
5. The shares must belong to the same class of shares which are already available in the market. For example, if the has previously issued Equity shares then this time also, the company has to issue Equity shares only.
6. Also, the company has to acquire the sanction by the Central Government after getting approval from the general meeting.
Question 4
1 / -0

Goods given as charity should be credited to _______________.

A
Purchases account

B
Charity account

C
Sales account

D
Trading A/c

Solution

Purchases will be credited if goods are given as charity. When accounting for goods given as charity, purchases are reduced with the exact cost of goods contributed. The amount is reduced from purchases in the trading account. It is shown as an expense on the debit side of the income statement and the purchase account is credited.
Question 5
1 / -0

While making an adjusting entry in respect of closing stock, we debit ______________.

A
Closing stock

B
Trading account

C
Purchases account

D
Sales account

Solution

The closing stock is the unsold goods lying in the concern. Generally, the firm takes out a list of all stocks, remaining unsold along with their value. The stock is always valued at cost or market price whichever is lower. Generally, the closing stock will not appear in the Trial Balance and it lies in the adjustment. When it lies in the adjustment, adjustment entry has to be passed before the preparation of Final Accounts. The Entry will be

Closing stock A/c Dr. xx

To Trading A/c xx
Question 6
1 / -0

Linux Ltd. maintains the inventory records under perpetual system of inventory. Consider the following data pertaining to inventory of Linux Ltd. held for the month of March 2005:
Date Particulars Quantity Cost per unit
Mar. 1 Opening inventory $$15$$ $$400$$
Mar. 4 Purchases $$20$$ $$450$$
Mar. 6 Purchases $$10$$ $$460$$
If the company sold $$32$$ units on March 24, 2005, closing inventory under FIFO method is:

A
Rs. $$5,200$$

B
Rs. $$5,681$$

C
Rs. $$5,800$$

D
Rs. $$5,950$$
Question 7
1 / -0

Net realizable value means _______________.

A
Sales less sales returns

B
Sales less cost incurred necessarily to make the sale

C
Sales less gross profit margin

D
Sales less cost of purchase

Solution

In the context of inventory, net realizable value is the expected selling price in the ordinary course of business minus any cost of completion, disposal and transportation.
Hence, option B is correct.
Question 8
1 / -0

If sales revenues are Rs. $$4,00,000$$; cost of goods sold is Rs. $$3,10,000$$ and operating expenses are Rs. $$60,000$$ the gross profit is ____________.

A
Rs. $$30,000$$

B
Rs. $$90,000$$

C
Rs. $$3,40,000$$

D
Rs. $$60,000$$

Solution

Gross Profit= Revenue - Cost of goods sold
= Rs. 400000 - 310000
= Rs. 90000
Therefore, B is the correct answer.
Question 9
1 / -0

A Trial Balance contains the following information:
I. 15% Bank Loan Rs. 40,000
II. Interest Paid Rs. 4,500
Interest debited to P & L A/c will be:

A
Rs. 6,000

B
Rs. 3,000

C
Rs. 4,500

D
Rs. 1,500

Solution

Interest on bank loan= Rs. 40000 x 15/100= Rs. 6000
Interest paid = Rs. 4500
According to accrual concept, Interest charged on bank loan of Rs. 6000 will be debited in P&L A/c.
Therefore, A is the correct option.
Question 10
1 / -0

In the Trial Balance, Debtors are Rs. 2,400, Bad Debts Rs. 221, Reserve for Doubtful Debts Rs. 324. For creating a Reserve for Doubtful Debts @10% on debtors, the P & L A/c will be debited by __________.

A
137

B
240

C
343

D
9

Solution

The required Reserve for Doubt Debts = 10% of Debtors = 10% x Rs. 2400 = Rs. 240.
The amount to be debited to the Profit and Loss A/c = Reserve required - Existing reserve + Bad Debts
= Rs. 240 - 324 + 221
= Rs. 137

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Date	Particulars	Quantity	Cost per unit
Mar. 1	Opening inventory	$$15$$	$$400$$
Mar. 4	Purchases	$$20$$	$$450$$
Mar. 6	Purchases	$$10$$	$$460$$

Final Accounts Test 14

Result

Final Accounts Test 14

Score

-

Rank

-

SHARING IS CARING

Question 1

Given to the employees in appreciation of their services

Charged from the person to whom training is imparted by the business

Paid to the insurance company to obtain the insurance cover

All of the above

Question 2

Rs. $$4,00,000$$

Rs. $$3,00,000$$

Rs. $$2,25,000$$

Rs. $$2,60,000$$

Question 3

The Memorandum of Association must authorise the company for issue of shares at a discount

The issue must be authorised by passing an ordinary resolution in the General Meeting and must be confirmed by the Company Law Board

The shares should be a class of shares already issued

At least one year must have elapsed since the company was entitled to commence business

Solution

Conditions for Issue of Shares at Discount

Question 4

Purchases account

Charity account

Sales account

Trading A/c

Solution

Question 5

Closing stock

Trading account

Purchases account

Sales account

Solution

Question 6

Rs. $$5,200$$

Rs. $$5,681$$

Rs. $$5,800$$

Rs. $$5,950$$

Question 7

Sales less sales returns

Sales less cost incurred necessarily to make the sale

Sales less gross profit margin

Sales less cost of purchase

Solution

Question 8

Rs. $$30,000$$

Rs. $$90,000$$

Rs. $$3,40,000$$

Rs. $$60,000$$

Solution

Question 9

Rs. 6,000

Rs. 3,000

Rs. 4,500

Rs. 1,500

Solution

Question 10

137

240

343

9

Solution

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