Financial Statements 1 Test 20

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Financial Statements 1 Test 20

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Question 1
1 / -0

Wages and salaries appearing in Trial Balance are shown_____________.

A
On the debit side of Profit and Loss Account

B
On the debit side of Trading Account

C
On the liabilities side of the Balance Sheet

D
None of these

Solution

Wages and salaries appearing in trial balance are expenses made on wages and salaries by the company during the year. They are to be shown in the debit side of Trading account as all expenses and losses are debited.
Wages and salaries is the remuneration paid to factory workers and hence, is to shown in Trading account.
Question 2
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X sends out 100 bags to Y costing Rs 1000 each. 60 bags were sold at 10% above cost price. Sale value will be ______________.

A
Rs 66,000

B
Rs 65,000

C
Rs 60,000

D
Rs 65,500
Question 3
1 / -0

The basic concepts related to P&L Account are _______________.

A
Realization concept

B
Matching concept

C
Cost concept

D
Both (a) and (b)

Solution

The matching concept is an accounting practice whereby firms recognize revenues and their related expenses in the same accounting period.
The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively.
Question 4
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If 'Prepaid Wages' is given in the Trial Balance, it is shown in _________________.

A
debit side of Trading A/c

B
debit side of Trading A/c and assets side of Balance Sheet

C
debit side of P & L A/c

D
assets side of the Balance Sheet

Solution

Prepaid expenses are treated as an asset for the business. Examples – Prepaid salary, prepaid rent, prepaid subscription, etc. They are also known as unexpired expenses or expenses paid in advance. When they appear in the trial balance, it implies that no further adjustment is needed in them.

Question 5

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Sales Rs.	Opening Stock Rs.	Purchases Rs.	Closing Stock Rs.	Cost of goods sold Rs.	Gross Profit Rs.	Trading Expenses Rs.	Net Profit Rs.
30,000	12,000	20,000	?	18,000	?	8,000	?

From the above answer following :
(i) Net profit will be

Rs.12,000

Rs.10,000

Rs.4,000

Rs.7,000

Solution

COGS=Opening stock + Purchase + Expenses - Closing Stock

18000 = 12000 + 20000 + 8000 - Closing stock

Closing stock = 40000 - 18000 = 22000

Gross Profit = (Sales + Cl stock) - (Opening stk + purchase + Expenses)

= 52000 - 40000 = 12000

Net Profit = Gross profit -indirect expenses

= 12000 - 0 = 12000

Question 6
1 / -0

Which of the following Accounts/ Statements shows the financial position of the business?

A
Profit and Loss Account.

B
Balance Sheet.

C
Funds Flow Statement.

D
Cash-Book.

Solution

Balance Sheet is prepared on a particular date and it shows the financial position of a concern.
The financial position or financial worth of a concern is indicated by its assets and liabilities (excluding capital) on a particular date.Excess of assets over liabilities (other than capital) represents capital and is indicative of the financial soundness of a concern.
Question 7
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In a firm, opening stock plus purchases minus closing stock is called ________________.

A
Cost of goods purchased

B
Cost of goods sold

C
Cost of goods in hand

D
Cost of goods produced

Solution

Closing stock is the amount of inventory that a business still has on hand at the end of a reporting period. This includes Raw material, work in process, and finished goods inventory. The amount of closing stock can be ascertained with a physical count of the inventory. It can also be determined by using a perceptual inventory system and cycle counting to continually adjust inventory records to arrive at ending balances.
The amount of closing stock (properly valued) is used to arrive at the cost of goods sold in a periodic inventory system with the following calculation:
Opening stock + Purchases - Closing stock = Cost of goods sold
Question 8
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Which of the following are/is a current asset?

A
Sundry debtors

B
Stock

C
Prepaid insurance

D
All of these
Question 9
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Particulars Rs
Opening Stock 10,000
Closing Stock 6,000
Purchases 5,000
Gross Profit 10% of sales
What is the amount of sales?

A
Rs 9,000

B
Rs 10,000

C
Rs 11,000

D
Rs 15,000

Solution

Step-1
Cost of goods sold = Opening stock + Purchases + Direct Expenses- Closing
= 10,000 + 5,000 - 6,000
= 9000
Step-2
Gross profit is 10% of sales
let sales be 100 the gross profit is 10
cost = 100-10 = 90
Gross profit on cost = 10/90*100 = 11.11%

Step-3
Gross Profit = 11.11% of Cost of goods Sold
= 11.11% x 9000
= 1000

Step-4
Sales = CGOS + GP
= 9000 + 1000
= 10,000
Question 10
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A new firm commenced business on 1st January, 2006, and purchased goods costing Rs. 90,000 during the year. A sum of Rs.6,000 was spent on freight inwards. At the end of the year the cost of goods still unsold was Rs. 12,000. Sales during the year was Rs.1,20,000 . What is the gross profit earned by the firm?

A
Rs.36,000

B
Rs.30,000

C
Rs.42,000

D
Rs.38,000

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Particulars	Rs
Opening Stock	10,000
Closing Stock	6,000
Purchases	5,000
Gross Profit	10% of sales

Financial Statements 1 Test 20

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Financial Statements 1 Test 20

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Question 1

On the debit side of Profit and Loss Account

On the debit side of Trading Account

On the liabilities side of the Balance Sheet

None of these

Solution

Question 2

Rs 66,000

Rs 65,000

Rs 60,000

Rs 65,500

Question 3

Realization concept

Matching concept

Cost concept

Both (a) and (b)

Solution

Question 4

debit side of Trading A/c

debit side of Trading A/c and assets side of Balance Sheet

debit side of P & L A/c

assets side of the Balance Sheet

Solution

Question 5

Rs.12,000

Rs.10,000

Rs.4,000

Rs.7,000

Solution

Question 6

Profit and Loss Account.

Balance Sheet.

Funds Flow Statement.

Cash-Book.

Solution

Question 7

Cost of goods purchased

Cost of goods sold

Cost of goods in hand

Cost of goods produced

Solution

Question 8

Sundry debtors

Stock

Prepaid insurance

All of these

Question 9

Rs 9,000

Rs 10,000

Rs 11,000

Rs 15,000

Solution

Question 10

Rs.36,000

Rs.30,000

Rs.42,000

Rs.38,000

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