Final Accounts Test 4

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Final Accounts Test 4

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Weekly Quiz Competition

Question 1
1 / -0

Carriage outwards are shown in the _________.

A
Trading account

B
Profit and loss account

C
Balance sheet

D
None of the Above

Solution

Carriage is termed as loading and unloading charges for goods. There are two kinds of carriage i.e. carriage inward and carriage outwards.
Carriage inward is paid against the goods purchased and to be debited to trading account.
Carriage outward is paid against goods sold and treated as indirect expenses. This is shown in profit & loss account.
Question 2
1 / -0

Accounting entry for interest on drawings is __________.

A
Profit and Loss A/c Dr.
To Capital A/c

B
Capital A/c Dr.
To Profit and Loss A/c

C
Interest A/c Dr.
To Capital A/c

D
None of the above

Solution

According to separate entity concept, owner of the business is treated as other creditors for the business. If any amount is withdrawn by the owner for personal use, this will be treated as drawings.
Interest on drawing is an income for the business and it reduces the capital of the owner.

Accounting entry will be as under:

Capital A/c Dr,
To Profit & Loss A/c
Question 3
1 / -0

If the rate of gross profit is $$20\%$$ on the cost of goods sold and the sales are Rs.1,50,000, then the total gross profit would be__________.

A
Rs.25,000

B
Rs.30,000

C
Rs.37,500

D
None of these

Solution

Gross Profit is calculated by the below equation:

Gross Profit = Sales - Cost of goods sold

In the given situation, gross profit is 20% on the cost of goods sold.

Hence, assume cost of goods sold is 100, than the sales will be Rs.100+ Rs.20 i.e. Rs.120

Accordingly

Cost of goods sold will be = Rs.150000 * 100
120
Cost of goods sold = Rs. 125000

Therefore Gross Profit = Cost of Goods sold * 20%
Gross Profit = Rs.125000 * 20%
Gross Profit = Rs.25000
Question 4
1 / -0

The General Manager gets $$\dfrac{1}{4}$$ of the profit as commission after charging such commission of Works Manager, which is 10% of profits after charging such commission. If profit is Rs. 2,200, the commission of General manager is:

A
Rs.495

B
Rs.384

C
Rs.500

D
Rs.400
Question 5
1 / -0

Indicate which of the following is not correct ?

A
Sales - Gross profit - Cost of goods sold = Zero

B
Net profit - Operating expenses = Gross profit

C
Sales - Cost of goods sold - Operating expenses = Net profit

D
Sales - Net profit - Operating expense = Cost of goods sold

E
All of the above

Solution

The correct equation is:
Net profit + Operating Expenses = Gross Profit

Hence equation:
Net Profit - Operating Expenses = Gross Profit is not correct.
Question 6
1 / -0

Accounting entry for Manager's Commission (outstanding) on net profits will be made as _______________.

A
Outstanding Manager's Commission A/c To Commission A/c

B
Outstanding Manager's Commission A/c To Profit and Loss A/c

C
Profit and Loss A/c To Outstanding Manager's Commission A/c

D
None of the above

Solution

Outstanding expenses are those expenses which are due but not paid. At the end of the financial year, an adjustment entry need to be passed in books of account by debiting the respective expenses account and crediting the outstanding expenses account.

In case of outstanding Manager's commission, the accounting entry will be as under:

Profit & Loss A/c Dr. (To be shown in debit of P&L)
To Outstanding Manager's Commission (To be shown as liability)
Question 7
1 / -0

The loss on sale of old scooter is debited to __________.

A
Depreciation Account

B
Scooter Account

C
Profit and Loss Account

D
None of the above

Solution

Loss on account of sale of any asset is an indirect expense and need to be debited to profit & loss account.

Accounting entry will be as under:

Cash/Bank A/c Dr. (with the value of sale price)
Profit & Loss A/c Dr. (with the difference of wdv-sale price)
To scooter A/c (with the WDV)
Question 8
1 / -0

The Manufacturing Account is closed by transferring its balance to the debit side of the _____________.

A
Profit and Loss Account

B
Trading Account

C
Balance Sheet

D
None of the above

Solution

Manufacturing account is prepared in the organization which are having manufacturing activity. Accumulated cost of manufacturing the goods is transferred to the debit side of Trading A/c.
All Raw Material and direct factory expenses are debited to manufacturing account.
Question 9
1 / -0

The works manager gets commission of 10% on the profit after charging such commission. If the profit is Rs.2,200 what is the amount of his commission ?

A
Rs.220

B
Rs.200

C
Rs.240

D
Rs.244.44

Solution

Commission payable = 10% on Net Profit (after charging the commission)
If Net Profit is Rs. 100, Commission payable = Rs. 10
Thus profit before charging the commission = 100 + 10 = 110
Of Rs. 110, Rs. 10 is commission payable and the balance Rs. 110- Rs. 10 = Rs. 100 is the profit, left after charging the commission.
Here Rs. 2.200 is equal to 110%
Therefore 10% = 2,200/110 x 10 =Rs. 200
Question 10
1 / -0

If profits are $$25\%$$ of selling price, what is the percentage of profit to cost ?

A
$$20\%$$

B
$$25\%$$

C
$$30\%$$

D
$$33 \, 1/3\%$$

Solution

This can be understood as below:

If the Selling price is Rs.100
Profit will be 25 % i.e. Rs.25
Hence the cost will become Rs.75 i.e. (Rs.100 - Rs. 25)

Therefore the profit on cost will become = Profit / Cost *100

Profit on cost = Rs.25 *100
Rs.75
Profit on cost will be = 33.33%

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Final Accounts Test 4

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Final Accounts Test 4

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Question 1

Trading account

Profit and loss account

Balance sheet

None of the Above

Solution

Question 2

Profit and Loss A/c Dr. To Capital A/c

Capital A/c Dr. To Profit and Loss A/c

Interest A/c Dr. To Capital A/c

None of the above

Solution

Question 3

Rs.25,000

Rs.30,000

Rs.37,500

None of these

Solution

Question 4

Rs.495

Rs.384

Rs.500

Rs.400

Question 5

Sales - Gross profit - Cost of goods sold = Zero

Net profit - Operating expenses = Gross profit

Sales - Cost of goods sold - Operating expenses = Net profit

Sales - Net profit - Operating expense = Cost of goods sold

All of the above

Solution

Question 6

Outstanding Manager's Commission A/c To Commission A/c

Outstanding Manager's Commission A/c To Profit and Loss A/c

Profit and Loss A/c To Outstanding Manager's Commission A/c

None of the above

Solution

Question 7

Depreciation Account

Scooter Account

Profit and Loss Account

None of the above

Solution

Question 8

Profit and Loss Account

Trading Account

Balance Sheet

None of the above

Solution

Question 9

Rs.220

Rs.200

Rs.240

Rs.244.44

Solution

Question 10

$$20\%$$

$$25\%$$

$$30\%$$

$$33 \, 1/3\%$$

Solution

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Profit and Loss A/c Dr.
To Capital A/c

Capital A/c Dr.
To Profit and Loss A/c

Interest A/c Dr.
To Capital A/c