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Financial Statements 2 Test 10

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Financial Statements 2 Test 10
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  • Question 1
    1 / -0
    Commission due but not paid to the manager at d end of the years appears under __________ side.
    Solution

    The Outstanding Expense A/c appears on the liability side of the Balance Sheet. While preparing the Trading and Profit and Loss A/c we need to add the amount of outstanding expense to that particular expense.

  • Question 2
    1 / -0
    The Balance sheet will always reflect the _______ value of fixed assets after charging depreciation.
    Solution
    Written-down value is the value of an asset after accounting for depreciation or amortization. It reflects a previously purchased asset's present worth. Written down value appears on the balance sheet and is calculated by subtracting accumulated depreciation or amortization from the asset's original value.
  • Question 3
    1 / -0
    Depreciation is ____________ to Profit and loss Account.
    Solution
    When Depreciation is given as an adjustment, first the depreciation amount is calculated as per the rate and method specified in the question and then it is debited to the Profit and Loss Account.
  • Question 4
    1 / -0
    Bad debts after preparing trial balance are _______ from debtors.
    Solution
    Sometimes, bad debts may occur at the end of accounting period after the accounts are balanced and the trial balance is prepared. In such a case, bad debts should be brought into account by passing the adjusting entry, that is, debiting bad debts account and crediting sundry debtors' account.
  • Question 5
    1 / -0
    ________ is an amount the firm has not been able to realise firm its debtors.
    Solution
    Bad debts expense is related to a company's current asset accounts receivable. Bad debts expense is also referred to as uncollectible accounts expense or doubtful accounts expense. Bad debts expense results because a company delivered goods or services on credit and the customer did not pay the amount owed.
  • Question 6
    1 / -0
    Ascertain the amount of prepaid expense if insurance of Rs. 10000 paid for one year ending on 30.06.2018 and firm closes the books on 31.03.2018.
    Solution
    Amount of Prepaid expense for year ending 30th june ,2018 
     =  10000 * 3 / 6
    = 5000
  • Question 7
    1 / -0
    After deducting bad debts provision the debtors shows ___________ value.
    Solution
    Provision for bad debts is the amount earmarked or set apart from out of the profits of an accounting period. The amount to be earmarked is based on a percentage of the amount due from sundry debtors. The amount of sundry debtors for this purpose is the balance left on the account after deducting bad debts.
  • Question 8
    1 / -0
    Provision for bad debts are created by ____________ profit and loss account.
    Solution
    This provision is created by debiting the Profit and Loss Account for the period. The nature of various debts decides the amount of Doubtful Debts. The amount so debited in the Profit and Loss Account and an Account named “Provision for Doubtful Debts Account” is credited with the amount.
  • Question 9
    1 / -0
    A portion of benefits will be received in the ________ accounting year in case if expenses are prepaid.
  • Question 10
    1 / -0
    It may be noted that provision created at the end of the year will be carried forward to meet the _________ during next year.
    Solution
    Provision for bad debts is created because of the principle of conservatism. It is created to write off the loss that may arise due to failure on the part of some debtors to pay debts. Provision created at the end of the year is carried forward to meet the bad debts during next year because the provision is made to future losses due to bad debts.
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