Financial Statements 1 Test 41

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Financial Statements 1 Test 41

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Weekly Quiz Competition

Question 1
1 / -0

Closing stock appearing in the Trial Balance will be taken to __________.

A
Trading account only

B
Balance sheet only

C
Trading account and balance sheet

D
None of the above

Solution

Closing stock is that goods which is unsold stock at the end of the year. Normally closing stock appears out of the trial balance.
If an adjustment entry is already passed at the end of accounting year, the value of closing stock will appear in trial balance.
If closing stock appearing in trial balance, this will be taken to balance sheet only as adjustment entry is already passed.
Question 2
1 / -0

Cost of goods sold = Rs. 2,40,000; Gross loss $$-\dfrac{1}{4}$$ of sales. What is the amount of sales ?

A
Rs. 1,00,000

B
Rs. 1,92,000

C
Rs. 1,44,000

D
Rs. 1,50,000

Solution

This can be calculated with the below equation:

Sales - Cost of Goods Sold = Gross Profit / Loss

In the given situation

Cost of Goods sold = Rs.240000 and Gross Loss is 25% of Sales

Assume that Sales is 100, and the loss is 25

Than cost of goods sold = Sales + Gross Loss
= 100 + 25
= 125
Hence Sales will be:

Cost of Goods Sold / 125 *100

= Rs.240000 *100
125
Sales = Rs.192000
Question 3
1 / -0

'Manufacturing Account' is prepared by _________.

A
Pharma Industry

B
Cement Industry

C
Iron Industry

D
All of the above

Solution

Every business have to prepare financial statements at the end of every financial year to know the profitability and financial position of the business. In case of trading concern, business need to prepare trading account and Profit & Loss account and the Balance Sheet. In case of manufacturing concern, business need to prepare manufacturing account, trading account and Profit & Loss account and the Balance Sheet.
Question 4
1 / -0

How should the following assets be shown in the permanence order in the balance sheet of a company ?
1.Patents
2.Cash at bank
3. Stock in trade
4. Land and building
5. Cash in hand

A
1 , 4 , 3 , 2 , 5

B
4, 1 , 3, 2 , 5

C
4, 3, 5, 2, 1

D
5, 2, 1 , 3 , 4

Solution

Assets and Liabilities are to be shown in the Balance Sheet on the basis of permanency or liquidity order.

In the given case, below is the sequence of assets to be shown in balance sheet on permanency basis:

4. Land & Building
1. Patents
3. Stock in trade
2. Cash at Bank
5. Cash in Hand
Question 5
1 / -0

In a balance sheet, the assets and liabilities are arranged in the order of ___________.

A
Randomly

B
Permanence

C
Order of liquidity

D
Both B and C

Solution

The assets and the liabilities must be marshalled properly based on the requirement. There are two ways of presenting the assets and liabilities of the business.

Order of Liquidity: According to this, assets are arranged in the order of ease with which they can be converted in to cash and liabilities in the order in which they are to be discharged.

Order of liquidity
Liabilities Assets
Bills Payable Cash on Hand
Trade Creditors Cash at Bank
Loans Govt Securities
Outstanding Expenses Other Investments
Reserves & Surpluses Bills Receivables
Capital Sundry Debtors
Inventory
Furniture
Plant & Machinery
Land & Building

Order of Permanence: When items are arranged according to the the fixity or permanence, assets and liabilities are shown first, and then are listed floating assets and liabilities. On the liabilities side, the liabilities which will have to be discharged last.

Liabilities Assets
Capital Land & Building
Reserves & Surpluses Plant & Machinery
Outstanding Expenses Furniture
Loans Inventory
Trade creditors Sundry Debtors
Bills payable Bills Receivables Other Investments Govt Securities
Cash at Bank
Cash on Hand
Question 6
1 / -0

Stock-in-trade does NOT include ______________.

A
goods in the process of manufacture.

B
raw materials.

C
items held as fixed assets.

D
finished goods.

Solution

Stock in trade means the stock which is purchased in the business for resale purposes.

Fixed assets are purchased in the business for taking the benefits in the coming years ahead. This are not purchased for resale.

Hence Stock in trade does not include fixed assets.
Question 7
1 / -0

Vikas started business with a cash of Rs. 22,000 and stock of Rs. 3,000 on 1st Jan., 2014.During the year, he made a profit of Rs.6,000.His creditors were paid Rs.4,500 for Office furniture supplied. He tool goods worth Rs.3,500 for his daughter's wedding on 30th June,2014.The gross assets of his business on 31st Dec.,2014 is _____________.

A
Rs. 27,500

B
Rs. 26,500

C
Rs. 23,500

D
Rs. 20,500

Solution

Vikas's started business with Cash Rs.22000 and Stock of Rs.3000. His initial contribution to the capital will be Rs.25000 (Rs.22000 + Rs. 3000).

Calculation at the end of the year will be :

Capital introduced Rs.25000
Add; Profit during the year Rs. 6000
----------------
Rs.31000
Less: Drawings (Goods) Rs.3500
-----------------
Capital at the end of the year Rs.27500
-----------------
Therefore, Gross Assets of the business as on 31st Dec 2014 will be Rs.27500.
Question 8
1 / -0

A business entity has assets of $$Rs.28,000$$ and liabilities of $$Rs.8,000$$. Owner's equity in this case is _______________.

A
$$Rs.32,000$$

B
$$Rs.26,000$$

C
$$RS.20,000$$

D
$$Rs.6,000$$

Solution

Accounting Equation is defined as:
Owner's Equity + Total Liabilities = Total Assets

Therefore,
Owner's Equity = Total Assets - Total Liabilities
Owner's Equity = Rs.28000 - Rs.8000
Owner's Equity = Rs.20000
Question 9
1 / -0

Given that cost of goods amounts to Rs.18,000, Closing stock Rs. 7000, purchase will amount to_______.

A
$$Rs.18,000$$

B
$$Rs.20,000$$

C
$$Rs.25,000$$

D
$$Rs.10,000$$

Solution

Closing stock = Rs. 7,000; Cost of goods = Rs. 18,000
Purchases = Cost of goods + Closing stock
Purchases = Rs. 18,000 + Rs. 7,000
Purchases = Rs. 25,000
Question 10
1 / -0

Find cost of goods sold from the following details:
Opening stock Rs. 8,000
Direct expenses Rs. 5,000
Purchases Rs. 20,000
Indirect Expenses Rs. 5,500
Closing stock Rs. 2,000.

A
33,000

B
38,000

C
28,000

D
32,000

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Financial Statements 1 Test 41

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Financial Statements 1 Test 41

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Question 1

Trading account only

Balance sheet only

Trading account and balance sheet

None of the above

Solution

Question 2

Rs. 1,00,000

Rs. 1,92,000

Rs. 1,44,000

Rs. 1,50,000

Solution

Question 3

Pharma Industry

Cement Industry

Iron Industry

All of the above

Solution

Question 4

1 , 4 , 3 , 2 , 5

4, 1 , 3, 2 , 5

4, 3, 5, 2, 1

5, 2, 1 , 3 , 4

Solution

Question 5

Randomly

Permanence

Order of liquidity

Both B and C

Solution

Question 6

goods in the process of manufacture.

raw materials.

items held as fixed assets.

finished goods.

Solution

Question 7

Rs. 27,500

Rs. 26,500

Rs. 23,500

Rs. 20,500

Solution

Question 8

$$Rs.32,000$$

$$Rs.26,000$$

$$RS.20,000$$

$$Rs.6,000$$

Solution

Question 9

$$Rs.18,000$$

$$Rs.20,000$$

$$Rs.25,000$$

$$Rs.10,000$$

Solution

Question 10

33,000

38,000

28,000

32,000

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