Financial Statements 2 Test 15

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Financial Statements 2 Test 15

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Weekly Quiz Competition

Question 1
1 / -0

The capital of a sole trader would change as a result of ____________________.

A
A creditor being paid his account by cheque.

B
Raw materials being purchased on credit.

C
Fixed asset being purchased on credit.

D
Wages being paid in cash.

Solution

The amount of capital in the business is not fixed but changes in the normal course of business. It's increased by any profit or income earned and decreased by any drawing, loss, or expense made. The wages being paid in cash decreases cash and capital of the business as it is an expense. Hence, option (d) is correct.
Question 2
1 / -0

Which of the following statements is not true?

A
It is not true that all partners can have limited liability in a limited partnership

B
Capital contributions do not have to be equal from each partner

C
A minor has a right to access and inspect books of accounts of partnership firm in which he is partner

D
Interest on capital is a reward for the different amounts of work partners may perform

Solution

Interest will be allowed to each partner on the capital contributed by him . Interest on capital of the partners is calculated for the relevant period for which the amount of capital has been used in the business. Capital introduced or withdrawn by a partner during the accounting year has to be taken for the purpose of calculation and definitely is not a reward for the partners.
Question 3
1 / -0

Which of the following statement is not true ______________________.

A
If Del credere's commission is allowed, bad debt will not be recorded in the books of consignor

B
If Del credere's commission is allowed, bad debt will be debited in the Consignment Account

C
Del credere's commission is allowed by consignor to consignee

D
Del credere's commission is calculated on all sales by consignee

Solution

A del credere commission is a commission that is paid by the consignor to the Consignee for bearing loss on bad debts.
It is applicable in case of credit sales.
The incorrect option is
If Del credere's commission is allowed, bad debt will be debited in the Consignment Account
Question 4
1 / -0

A and B are two partners in a firm sharing profit and loss equally. C is admitted as a third partner for $$1_{/3}$$ share of profit for which he agreed to pay Rs. $$10,000$$ to each partner as his share of good will privately. How this will be accounted for in the books of the firm.

A
No entry being paid privately

B
Credit each partners capital by Rs. $$10,000$$ and debit C's Capital by Rs. $$20,000$$

C
Credit each partners capital by Rs. $$10,000$$ and debit goodwill a/c by Rs. $$20,000$$

D
Credit each partners capital by Rs. $$10,000$$ and debit C's current a/c by Rs. $$20,000$$
Question 5
1 / -0

Adjustment entries are necessary in accrual system of accounting because ____________.

A
Of existence of accounting period

B
Of matching revenue and expenses concept

C
Some transactions span more than one accounting period

D
All the three
Question 6
1 / -0

Consider the following adjusting entries:
1. Outstanding expenses : Expense A/c Dr To Outstanding Expenses A/c
2. Prepaid expenses : Expenses A/c Dr To Prepaid Expenses A/c
3. Income earned and not received : Income A/c Dr To Outstanding Income A/c
4. Income received in advance : Income A/c Dr To Prepaid Income A/c
Which of the adjusting entries given above is/are correct?

A
$$1$$ and $$4$$

B
$$2$$ and $$3$$

C
$$1$$ only

D
$$1, 2, 3$$ and $$4$$

Solution
Question 7
1 / -0

Non- provision for doubtful debts will lead to ......

A
Under valuation of closing stock

B
Over statement of profit

C
Over statement of working capital

D
Evasion of tax
Question 8
1 / -0

The adjustment to be made for interest on drawings is ________________.

A
Debit profit and loss account and add interest to drawings

B
Credit profit and loss account and add interest to drawings

C
Debit profit and loss account and deduct interest from drawings

D
Credit profit and loss account and deduct interest from drawings
Question 9
1 / -0

A and B are partners in a firm with profit sharing ratio of 2:3, they admit C as a partner for 1/3 share of profit. What would be the sacrificing ratio of A and B?

A
1:1

B
5:3

C
3:2

D
2:3
Question 10
1 / -0

The adjustment to be made for provision for doubtful debt is ___________________.

A
Credit profit and loss account and deduct the provision from the debtors

B
Debit profit and loss account deduct the provision from debtors

C
Credit profit and loss account and add the provision to debtors

D
Debit profit and loss account and add the provision to debtors

Solution

The adjustment for the provision for doubtful debt
Adjustment 1: Provision for doubtful debt is debited to Profit and loss A/c.
Adjustment 2: Provision for doubtful debt is deducted from debtors in balance sheet.
Therefore, B is the correct option.

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Re-Attempt Weekly Quiz Competition

Financial Statements 2 Test 15

Result

Financial Statements 2 Test 15

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Rank

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SHARING IS CARING

Question 1

A creditor being paid his account by cheque.

Raw materials being purchased on credit.

Fixed asset being purchased on credit.

Wages being paid in cash.

Solution

Question 2

It is not true that all partners can have limited liability in a limited partnership

Capital contributions do not have to be equal from each partner

A minor has a right to access and inspect books of accounts of partnership firm in which he is partner

Interest on capital is a reward for the different amounts of work partners may perform

Solution

Question 3

If Del credere's commission is allowed, bad debt will not be recorded in the books of consignor

If Del credere's commission is allowed, bad debt will be debited in the Consignment Account

Del credere's commission is allowed by consignor to consignee

Del credere's commission is calculated on all sales by consignee

Solution

Question 4

No entry being paid privately

Credit each partners capital by Rs. $$10,000$$ and debit C's Capital by Rs. $$20,000$$

Credit each partners capital by Rs. $$10,000$$ and debit goodwill a/c by Rs. $$20,000$$

Credit each partners capital by Rs. $$10,000$$ and debit C's current a/c by Rs. $$20,000$$

Question 5

Of existence of accounting period

Of matching revenue and expenses concept

Some transactions span more than one accounting period

All the three

Question 6

$$1$$ and $$4$$

$$2$$ and $$3$$

$$1$$ only

$$1, 2, 3$$ and $$4$$

Solution

Question 7

Under valuation of closing stock

Over statement of profit

Over statement of working capital

Evasion of tax

Question 8

Debit profit and loss account and add interest to drawings

Credit profit and loss account and add interest to drawings

Debit profit and loss account and deduct interest from drawings

Credit profit and loss account and deduct interest from drawings

Question 9

1:1

5:3

3:2

2:3

Question 10

Credit profit and loss account and deduct the provision from the debtors

Debit profit and loss account deduct the provision from debtors

Credit profit and loss account and add the provision to debtors

Debit profit and loss account and add the provision to debtors

Solution

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