Financial Statements 2 Test 23

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Financial Statements 2 Test 23

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Weekly Quiz Competition

Question 1
1 / -0

The net profits after tax of Z & Co. for the past 5 years are as follows:
Year Profit
2010-2011 2,56,000
2011-2012 2,64,000
2012-2013 3,76,000
2013-2014 4,86,000
2014-2015 5,30,500
The capital employed is Rs 16,00,000. Rate of normal return is 15%. Calculate the value of the goodwill on the basis of annuity method on super-profits basis, taking the present value of an annuity of Rs 1 for 4 years at 15% as Rs 2.855.

A
Rs 7,65,000

B
Rs 8,67,800

C
Rs 5,70,000

D
Rs 4,06,838
Question 2
1 / -0

If the insurance Rs.premium paid is Rs.$$1,000$$ and prepaid insurance is Rs.$$300$$, the amount of Insurance premium shown in profit and loss account will be _____________.

A
Rs.$$1,300$$

B
Rs.$$700$$

C
Rs.$$1,000$$

D
Rs.$$300$$
Question 3
1 / -0

Obsolescence of a depreciable assets may be caused by___________
(I) technological changes.
(II) improvement in production method.
(III) changes in market demand for the product or service output.
(IV) legal or other restrictions.
The correct answer is ______________.

A
Only (I) above

B
Both (I) & (II) above

C
All (I), (II), (iii) & (IV) above

D
Only (IV) above
Question 4
1 / -0

P/L A/c balance (before commission) is Rs.$$1,320$$; manager's commission is $$10\%$$. Find the amount of manager's commission.

A
$$120$$

B
$$0$$

C
$$132$$

D
$$110$$

Solution

On Profits before charging such commission:
Manager's commission = Net Profits X (Percentage of commission/ $$100$$)
Amount of manager's commission = $$\frac{1,320\times10}{100} = 132$$
Question 5
1 / -0

Insurance paid in advance would be treated in the Balance sheet as _________________.

A
Non current asset

B
Current asset

C
Intangible sheet

D
Deferred expense

Solution

Prepaid insurance is payments made to insurers in advance for insurance coverage. Insurance companies carry prepaid insurance as current assets on their balance sheets because it's not consumed.
Therefore, B is the correct option.
Question 6
1 / -0

Pick the odd one ________.

A
Reserve for discount on creditors is credited to profit & loss account.

B
Provision for discount on creditors is always made.

C
Discount on creditors should be deducted from Sunday creditors in balance sheet.

D
Both A & C.

Solution

Provision for Discount on Creditors. When the business makes prompt payments of its debts, it is bound to receive Discounts from its creditors. A Provision for such discount is made in the current year itself so that that the discounts thus earned may be credited to the Profit and Loss Account of the current year.
Question 7
1 / -0

A partner claims interest on capital _____________.

A
even if there is loss

B
if there is profit

C
if there is profit and there is an agreement to pay it

D
even if there loss and there is an agreement to pay it

Solution

Interest on capital is the amount received by partners for their invested capitals and it is not a charge against profit. It means that interest is depended upon the profit situation.
A partner can thus claim interest on capital only when it is mentioned in the agreement and firm has enough profits to provide the interest. If the interest in not mentioned in agreement or there is no agreement, partner cannot claim for interest on capital.
Question 8
1 / -0

In case of unexpired entry following entry should be made ______________.

A
It should be shown as an asset in the balance sheet

B
It is shown as a expense in profit and loss account

C
Both a & b

D
None of the above
Question 9
1 / -0

If a company has the word limited at the end of its name, this means that_______.

A
The shareholder's liability for the debts of the business is restricted

B
The number of shareholders have fixed upper limit

C
The number of members can never be increased

D
There is a limit to the number of shares that can be issued
Question 10
1 / -0

Accrued Interest is an example of _________.

A
Increase in asset & decrease in owner's liability

B
Increase in liability & decrease in owner's liability

C
Decrease in liability & owner's liability

D
Increase in asset & owner's liability

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Year	Profit
2010-2011	2,56,000
2011-2012	2,64,000
2012-2013	3,76,000
2013-2014	4,86,000
2014-2015	5,30,500

Financial Statements 2 Test 23

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Financial Statements 2 Test 23

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SHARING IS CARING

Question 1

Rs 7,65,000

Rs 8,67,800

Rs 5,70,000

Rs 4,06,838

Question 2

Rs.$$1,300$$

Rs.$$700$$

Rs.$$1,000$$

Rs.$$300$$

Question 3

Only (I) above

Both (I) & (II) above

All (I), (II), (iii) & (IV) above

Only (IV) above

Question 4

$$120$$

$$0$$

$$132$$

$$110$$

Solution

Question 5

Non current asset

Current asset

Intangible sheet

Deferred expense

Solution

Question 6

Reserve for discount on creditors is credited to profit & loss account.

Provision for discount on creditors is always made.

Discount on creditors should be deducted from Sunday creditors in balance sheet.

Both A & C.

Solution

Question 7

even if there is loss

if there is profit

if there is profit and there is an agreement to pay it

even if there loss and there is an agreement to pay it

Solution

Question 8

It should be shown as an asset in the balance sheet

It is shown as a expense in profit and loss account

Both a & b

None of the above

Question 9

The shareholder's liability for the debts of the business is restricted

The number of shareholders have fixed upper limit

The number of members can never be increased

There is a limit to the number of shares that can be issued

Question 10

Increase in asset & decrease in owner's liability

Increase in liability & decrease in owner's liability

Decrease in liability & owner's liability

Increase in asset & owner's liability

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