Financial Statements 1 Test 28

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Financial Statements 1 Test 28

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Weekly Quiz Competition

Question 1
1 / -0

If the rate of gross profit increases in the current financial year, the same may happen due to which of the following reason?

A
There is omission of purchases which was not accounted for

B
Closing stock was valued at higher price

C
Selling price has been increase without corresponding increase in cost

D
All of the above
Question 2
1 / -0

While preparing final account, to make provision for bad debts which of the following adjustment entry will be passed?

A
Debtors A/c Dr.

To Profit and Loss A/c

B
Provision for Bad Debts A/c Dr.

To Debtors A/c

C
Provision for Bad Debts A/c Dr.

To Trading A/c

D
Profit and Loss A/c Dr.

To Provision for Bad Debts A/c
Question 3
1 / -0

Cost of goods sold excludes.

A
Opening Stock

B
Carriage inward

C
Wages and Salary

D
Postage and Stamps
Question 4
1 / -0

Arrange the following assets as per liquidity order.
I. Debtors
II. Building
III. Cash and Bank
IV. Stock
Select the correct answer from the options given below.

A
II, III, I, IV

B
III, I, IV, II

C
I, IV, III, II

D
I, IV, II, III

Solution

Order of liquidity is the presentation of asset in the balance sheet in the order of the amount of the time it would take to convert them into cash. Thus cash is presented first. After that debtors, then stock comes.
Debtors generally takes 2 to 3 months for payment. Stock requires multiple months to convert to cash. Stock is sometimes sold for credit. That's why it comes after debtors. Buildings are purchased for a long period of time.
Question 5
1 / -0

Arrange the following assets as per liquidity order.
I. Cash and Bank
II. Building
III. Investment
IV. Stock
Select the correct answer from the options given below.

A
II, III, I, IV

B
I, II, III, IV

C
I, IV, III, II

D
I, IV, II, III
Question 6
1 / -0

Opening stock $$Rs. 15,000$$, Closing stock $$Rs. 6,000$$, Total purchase during the year $$Rs. 30,000$$. Given that opening stock inadvertently includes postage stamps of $$Rs. 1,500$$. Find the cost of goods sold.

A
$$Rs. 40,000$$

B
$$Rs. 39,000$$

C
$$RS. 37,500$$

D
$$Rs. 36,000$$

Solution

Opening stock $$+$$ Purchases $$-$$ Closing stock $$=$$ Cost of goods sold;
$$15000 - 1500 + 30,000 - 6,000 = 37,500$$.
Question 7
1 / -0

Arrange the following assets as per permanence order.
I. Cash and Bank
II. Building
III. Investment
IV. Stock
Select the correct answer from the options given below.

A
II, III, I, IV

B
I, II, III, IV

C
I, IV, III, II

D
II, III, IV, I
Question 8
1 / -0

While preparing final account, to make provision for discount on debtors, which of the following adjustment entry will be passed?

A
Provision for Discount on Debtors A/c Dr.

To Debtors A/c

B
Profit and Loss A/c Dr

To Provision for Discount on Debtors A/c

C
Provision for Discount on Debtors A/c Dr.

To Trading A/c

D
Debtors A/c Dr.

To Provision for Discount on Debtors A/c
Question 9
1 / -0

In _______, approach assets which are to be used for long term in the business and are not meant to be sold are presented first and assets which are most liquid such as cash in hand, are presented at the bottom.

A
Alphabetical order

B
Permanence order

C
Liquidity order

D
None of the above

Solution

There are two orders followed in Marshalling of assets and liabilities:
1. Order of Liquidity
2. Order of Permanence.
In order of permanence assets and liabilities are shown in the order of how permanent they are. The asset with the highest permanence is placed first and the asset with least permanence is placed last. Liabilities also with higher permanence are placed first and the liabilities with lesser permanence are placed last.
Question 10
1 / -0

While preparing final account, to adjust prepaid expenses which of the following adjustment entry will be passed?

A
Prepaid Expenses A/c Dr.

To Expenses A/c

B
Outstanding Expenses A/c Dr.

To Prepaid Expenses A/c

C
Prepaid Expenses A/c Dr.

To Outstanding Expenses A/c

D
Prepaid Expenses A/c Dr.

To Profit and Loss A/c

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Financial Statements 1 Test 28

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Financial Statements 1 Test 28

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Rank

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SHARING IS CARING

Question 1

There is omission of purchases which was not accounted for

Closing stock was valued at higher price

Selling price has been increase without corresponding increase in cost

All of the above

Question 2

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

Provision for Bad Debts A/c Dr.To Debtors A/c

Provision for Bad Debts A/c Dr.To Trading A/c

Profit and Loss A/c Dr.To Provision for Bad Debts A/c

Question 3

Opening Stock

Carriage inward

Wages and Salary

Postage and Stamps

Question 4

II, III, I, IV

III, I, IV, II

I, IV, III, II

I, IV, II, III

Solution

Question 5

II, III, I, IV

I, II, III, IV

I, IV, III, II

I, IV, II, III

Question 6

$$Rs. 40,000$$

$$Rs. 39,000$$

$$RS. 37,500$$

$$Rs. 36,000$$

Solution

Question 7

II, III, I, IV

I, II, III, IV

I, IV, III, II

II, III, IV, I

Question 8

Provision for Discount on Debtors A/c Dr.To Debtors A/c

Profit and Loss A/c DrTo Provision for Discount on Debtors A/c

Provision for Discount on Debtors A/c Dr.To Trading A/c

Debtors A/c Dr.To Provision for Discount on Debtors A/c

Question 9

Alphabetical order

Permanence order

Liquidity order

None of the above

Solution

Question 10

Prepaid Expenses A/c Dr.To Expenses A/c

Outstanding Expenses A/c Dr.To Prepaid Expenses A/c

Prepaid Expenses A/c Dr.To Outstanding Expenses A/c

Prepaid Expenses A/c Dr.To Profit and Loss A/c

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Debtors A/c Dr.

To Profit and Loss A/c

Provision for Bad Debts A/c Dr.

To Debtors A/c

Provision for Bad Debts A/c Dr.

To Trading A/c

Profit and Loss A/c Dr.

To Provision for Bad Debts A/c

Provision for Discount on Debtors A/c Dr.

To Debtors A/c

Profit and Loss A/c Dr

To Provision for Discount on Debtors A/c

Provision for Discount on Debtors A/c Dr.

To Trading A/c

Debtors A/c Dr.

To Provision for Discount on Debtors A/c

Prepaid Expenses A/c Dr.

To Expenses A/c

Outstanding Expenses A/c Dr.

To Prepaid Expenses A/c

Prepaid Expenses A/c Dr.

To Outstanding Expenses A/c

Prepaid Expenses A/c Dr.

To Profit and Loss A/c