Accounting from Incomplete Records Test 1

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Accounting from Incomplete Records Test 1

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Question 1
1 / -0

Rs. 19,500 debited to building repairs on 31 st Dec. 1993 inclined Rs. 9,500 as the cost of building a small room for the watch man. A bill of Rs. 800 for colour wash of the whole building during the year was not received till Dec. 1993. The amount to be debited to profit and loss account would be _____________.

A
Rs. 20,300

B
Rs. 19,500

C
Rs. 10,800

D
Rs. 9,500
Question 2
1 / -0

Excess of closing capital over opening capital of proprietor under single entry system.

A
Profit

B
Loss

C
No Profit No Loss

D
Capital

Solution

Profit or loss earned by the business under single entry system is based on the difference between its opening and closing capital.
Hence, if the sum of capital on the last day of the financial year is more then opening capital on the first day of financial year then it is considered as a Profit.
eg. if the opening capital is Rs . 1,00,000 and closing capital is Rs. 1,30,000 than Closing capital - Opening capital will give a Positive Rs.30,000 resulting a Profit.
Question 3
1 / -0

If closing capital is Rs.30000 and profit is Rs.5000; opening capital was Rs. ____________.

A
35000

B
30000

C
25000

D
15000

Solution

Profit = Closing capital - Opening capital
i.e 5,000 = 30,000 - Opening capital
i.e Opening Capital = 30000 - 5000 = 25,000
Question 4
1 / -0

Statement of affairs is just like ______________.

A
Balance sheet

B
Profit and loss account

C
Real account

D
Trading account

Solution

Under Single entry system Opening Capital is ascertained from the Accounting equation "CAPITAL = ASSET - LIABILITIES"
Such statement which makes use of equation is called opening statement of affairs.
Balance sheet is the statement which comprises of the assets, liabilities and the capital which also satisfies the accounting equation.
Therefore, statement of affairs is considered similar to the balance sheet.
Question 5
1 / -0

A statement of affairs is a summarised statement of an estimated _____________.

A
Financial position

B
Profit

C
Income

D
Loss

Solution

To ascertain the Capital, Statements of affairs are prepared.
Capital = Assets - Liabilities
The above equation under which statement of affairs are prepared reflects the financial position of the business.
Question 6
1 / -0

Excess of opening capital over closing capital of proprietor under single entry system is called __________.

A
Profit

B
Loss

C
No profit No loss

D
Revenue

Solution

Profit or loss earned by the business under single entry system is based on the difference between its opening and closing capital.
Hence, if the sum of capital from which the trader starts the year is less than closing capital on the last day of the financial year than it is considered a loss.
e.g. if the opening capital is Rs . 1,00,000 and closing capital is Rs. 90,000 then Closing capital - Opening capital will give a negative Rs.10,000 resulting a Loss.
Question 7
1 / -0

In order to find out the correct profit, drawings are ___________ to the closing capital.

A
Deducted

B
Added

C
Divided

D
Multiplied

Solution

As Drawing refers to withdrawal of capital, Due to drawings, closing capital is decreased resulting a reduced Profit.
Hence, to ascertain correct profit Drawings are added back to closing capital.
Question 8
1 / -0

Profit under single entry system of Book Keeping means ______________.

A
The difference between opening and closing cash balances and reduced by fresh capital introduced.

B
The difference between opening net assets and closing net assets as increased by drawings and reduced by new capital introduced.

C
Profit shown by Trading and Profit and Loss Account and Balance sheet.

D
The amount of closing cash balance as reduced by expenses.

Solution

When there is no double entry system of accounting is followed, the profits are calculated on the basis of comparing the opening and closing of capital/assets by giving the effect of drawings.
This can be represented as:

Closing Capital xxxxx
Add: Drawings xxxxx
Less: Fresh capital xxxxx
Less: Opening Capital xxxxx
Balance will be Profit xxxxx
Question 9
1 / -0

Profit as per accounts from incomplete records may be constructed as equivalent of _____________.

A
Excess of assets over liabilities at the close of the period

B
Excess of capital at the end over the capital at the beginning

C
Excess of assets over liabilities at the commencement of the period

D
Excess of capital at the beginning over the capital at the end

Solution

Incomplete records - Accounting records, which are not strictly kept according to double entry system are known as incomplete records. Many authors describe it as single entry system. However, single entry system is a misnomer because there is no such system of maintaining accounting records. It is also not a ‘short cut’ method as an alternative to double entry system.

In this system of accounting, profit is ascertained as :

Profit = Capital at the end + Drawings - Capital in the beginning.
Question 10
1 / -0

In statement of profit and loss interest on capital is shown as _________.

A
Addition

B
Subtraction

C
Ignored

D
Multiplied

Solution

Allowing interest on capital is an indirect expense for the business, an increase in expenses will lower the profit for the year. Hence, Interest on capital is deducted.

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Accounting from Incomplete Records Test 1

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Accounting from Incomplete Records Test 1

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Question 1

Rs. 20,300

Rs. 19,500

Rs. 10,800

Rs. 9,500

Question 2

Profit

Loss

No Profit No Loss

Capital

Solution

Question 3

35000

30000

25000

15000

Solution

Question 4

Balance sheet

Profit and loss account

Real account

Trading account

Solution

Question 5

Financial position

Profit

Income

Loss

Solution

Question 6

Profit

Loss

No profit No loss

Revenue

Solution

Question 7

Deducted

Added

Divided

Multiplied

Solution

Question 8

The difference between opening and closing cash balances and reduced by fresh capital introduced.

The difference between opening net assets and closing net assets as increased by drawings and reduced by new capital introduced.

Profit shown by Trading and Profit and Loss Account and Balance sheet.

The amount of closing cash balance as reduced by expenses.

Solution

Question 9

Excess of assets over liabilities at the close of the period

Excess of capital at the end over the capital at the beginning

Excess of assets over liabilities at the commencement of the period

Excess of capital at the beginning over the capital at the end

Solution

Question 10

Addition

Subtraction

Ignored

Multiplied

Solution

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