Financial Statements 2 Test 1

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Financial Statements 2 Test 1

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Weekly Quiz Competition

Question 1
1 / -0

Provision for cash discount on debtors is a percentage of _________________.

A
Debtors

B
Net debtors

C
Net debtors less provision for doubtful debts

D
Net sales

Solution

Discounts allowed to the existing debtors in the next year are debited to the Provision for Discount Account and not to the Profit and loss Account.In other words, the amount of the provision for discount is calculated after deducting bad debts and provision for doubtful debts from sundry debtors.
Question 2
1 / -0

If value of final sales is 48000 and net realizab levalue is 48000 and net realizab levalue is35000, then value of sales costs would be ____________.

A
$35, 000

B
$13, 000

C
$83, 000

D
$48, 000
Question 3
1 / -0

After all closing entries have been posted, the balance of the P & L Account will be ________________.

A
A debit if a net income has been earned

B
A debit if a net loss has been incurred

C
A credit if a net loss has been incurred

D
Zero
Question 4
1 / -0

If there is no partnership deed then interest on capital will be charged at ______p.a.

A
6%

B
8%

C
9%

D
NIL

Solution

When there is no partnership deed then interest on capital will not be charged. There will be no interest provided on the capital.
Question 5
1 / -0

Interest on partners capital is___________.

A
An Expenditure

B
An appropriation

C
A Gain

D
None of these

Solution

Interest on capital account is an appropriation. Appropriation means it is paid only and only if there is profit. It is not a charge and hence, will not be provided if there is loss or if there are profits will be provided only till the extent of profits.
Question 6
1 / -0

Short cut method for determination of cost of debt:

A
$${ k }_{ d }=\cfrac { 1 }{ { S }_{ v } } \left( 1-t \right) $$

B
$${ k }_{ d }=\cfrac { I(1-t)+(f+d+{ p }_{ r }-{ p }_{ i })/{ N }_{ m } }{ (Rv+Sv)/2 } $$

C
$${ k }_{ d }=\cfrac { { S }_{ v } }{ (1-t) } $$

D
None of the above
Question 7
1 / -0

Del Credere commission is allowed to the consignee to bear __________.

A
Normal loss

B
Abnormal loss

C
Risk of bad debts

D
Profit on account of sender

Solution

Its a special commission given by the consignor to the consignee. When the del credere commission is given, the consignee undertakes the risk of bad debts arising out of the credit sale.
Question 8
1 / -0

While making an adjustment entry in respect of interest on capital, credit is made to _______________.

A
Capital account

B
Interest on capital account

C
Profit & loss account

D
Interest account

Solution

Interest on Capital has the following two effects on final accounts: It is an expense of the business, therefore; it will be recorded on the debit side of Profit and Loss Account. On the other hand, it is an income of the owner, therefore; it will be added in the Capital Account in Balance Sheet.
Question 9
1 / -0

Bad debt amount should be credited to the _________ account.

A
Debtors

B
Bad debts

C
Sales

D
Creditors

Solution

Bad debts are the amount due from the debtors which are either declared as bad or doubtful. Bad debt is a loss to the organization and should be debited to profit & loss account as indirect expenses by reducing the amount of debtors.
Accounting entry to be passed on account of bad debt is as under:

Bad Debts A/c Dr.
To sundry Debtors
Question 10
1 / -0

Consider the following statements.
I. Incase of the marine insurance, the insurable interest must exist at the time the loss occurs.
II. Incase of fire insurance, insurable interest must exist both at the time of the contract and at the time of loss.
Which of the statements given is/are correct?

A
I only

B
II only

C
Both I and II

D
Neither I nor II
Solution
1. In a marine insurance contract the presence of insurable interest is necessary only at the time of the loss. It is immaterial whether he has or does not have any insurable interest at the time when the marine insurance policy was taken.
2. A person cannot insure the property of a third party, because he does not have an insurable interest in it. In case of fire insurance, insurable interest must exist both at the time of contract and at the time of loss.
3. It is not necessary that he should have insurable interest at the time of maturity also.

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Re-Attempt Weekly Quiz Competition

Financial Statements 2 Test 1

Result

Financial Statements 2 Test 1

Score

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Rank

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SHARING IS CARING

Question 1

Debtors

Net debtors

Net debtors less provision for doubtful debts

Net sales

Solution

Question 2

$35, 000

$13, 000

$83, 000

$48, 000

Question 3

A debit if a net income has been earned

A debit if a net loss has been incurred

A credit if a net loss has been incurred

Zero

Question 4

6%

8%

9%

NIL

Solution

Question 5

An Expenditure

An appropriation

A Gain

None of these

Solution

Question 6

$${ k }_{ d }=\cfrac { 1 }{ { S }_{ v } } \left( 1-t \right) $$

$${ k }_{ d }=\cfrac { I(1-t)+(f+d+{ p }_{ r }-{ p }_{ i })/{ N }_{ m } }{ (Rv+Sv)/2 } $$

$${ k }_{ d }=\cfrac { { S }_{ v } }{ (1-t) } $$

None of the above

Question 7

Normal loss

Abnormal loss

Risk of bad debts

Profit on account of sender

Solution

Question 8

Capital account

Interest on capital account

Profit & loss account

Interest account

Solution

Question 9

Debtors

Bad debts

Sales

Creditors

Solution

Question 10

I only

II only

Both I and II

Neither I nor II

Solution

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