Financial Statements 2 Test 24

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Financial Statements 2 Test 24

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Question 1
1 / -0

If del-credere commission is not allowed for bad debt, consignee will debit the bad debt amount to _______________.

A
Commission Earned A/c

B
Consignor A/c

C
Debtors A/c

D
General Profit & Loss

Solution

When the del credere commission is provided to the consignee the bad debts are borne by him. Hence, it will be recorded in the books of consignee and will be debited to commission earned account as commission is paid to the consignee for covering the risk of bad debts.
When such commission is not provided bad debt is to be borne by the consignor hence debited to consignor A/c.
Therefore, B is the correct answer.
Question 2
1 / -0

Unaccrued Interest is an example of __________.

A
Increase in asset & decrease in owner's liability

B
Increase in liability & Increase in asset

C
Decrease in liability & owner's liability

D
Increase in asset & owner's liability

Solution

Unaccrued or Unearned interest is the interest that has been collected on a loan by a lending institution but has not yet been recognized as income (or earnings). Instead, it is initially recorded as a liability. It also increases the assets as interest money is already received by the institution. Hence, option B is correct.
Question 3
1 / -0

If del-credere commission is allowed for bad debt, consignee will debit the bad debt amount to:

A
Commission Earned A/c

B
Consignor A/c

C
Debtors A/c

D
General Profit & Loss A/c

Solution

When the del credere commission is provided to the consignee the bad debts are borne by him. Hence, it will be recorded in the books of consignee and will be debited to commission earned account as commission is paid to the consignee for covering the risk of bad debts.
Question 4
1 / -0

Prepaid Insurance is an example of __________.

A
Increase in asset & owner's liability

B
Increase in liability & decrease in owner's liability

C
Decrease in liability & owner's liability

D
Increase in one asset & decrease in another asset

Solution

Prepaid insurance is the advance payments made to insurer for insurance coverage before it has become due. Such prepaid insurance is recorded as a current asset in the books of the business. Also, such prepaid insurance decreases the cash as it has been paid in advance. So, option D is correct.
Question 5
1 / -0

Unless otherwise agreed, Del-credere and Over-riding Commission are allowed on _________________.

A
Cash Sales

B
Gross Credit Sales

C
Net Credit Sales

D
Net Sales

Solution

Del credere commission is related to credit sales. It is a type of commission which a consignor offers to the consignee who guarantees the collection of payment from credit customers.

Overriding Commission is the extra commission allowed to the consignee in addition to the normal commission usually for making extra efforts to sell a new product in the market.

Where any of these commissions are given as a % and in the absence of information to the contrary, it is conventionally calculated as a % of gross sale proceeds.
Question 6
1 / -0

Which of the following statement is not true:

A
If del-credere commission is allowed, bad debt will not be recorded in the books of consignor

B
If del-credere commission is allowed, bad debt will be debited in Consignment Account

C
Del-credere commission is allowed by consignor to consignee

D
Del-credere commission is generally relevant for credit sales.
Question 7
1 / -0

Del-credere commission is allowed -

A
to effect sales in the normal course of business.

B
to bear the bad debts on account of credit sales.

C
to effect sales at prices higher than the price fixed

D
None of these

Solution

Consignee not receiving Del Credere commission Where the consignee is not in receipt of Del credere commission he would not be responsible for the non payment of dues by the consignment debtors and thus the consignor would have to bear the loss on account of bad debts.
Question 8
1 / -0

If the consignee is not authorized to get del-credere commission, then ___________________.

A
he is liable for ail losses on account of non-recovery of debts due to insolvency of customers

B
he is not liable for all losses on account of non-recovery of debts due to dispute.

C
he is not liable for all losses on account of non-recovery of debts due to insolvency of customers

D
none of these
Question 9
1 / -0

Net profit before charging commission to General & Sales manager Rs. 1,65.920 The General Manager is entitled to commission of 10% on net profit after charging such commission and commission of sales manager.
The Sales Manager is entitled to commission of 5% on net profit after charging such commission and commission of General Manager.
Commission payable to General Manager.

A
7,214 & 14,428

B
14,428 & 7,214

C
16,592 & 8,296

D
8,296 & 16,592
Question 10
1 / -0

Interest on capital will be paid to the partners if provided for in the agreement but only from __________.

A
profits

B
reserves

C
accumulated profits

D
goodwill

Solution

Interest on capital will be paid to the partners if provided for in the agreement but only from profits. Interest on capital is an appropriation and not a charge against profit hence, is provided only to the extent of profits.

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Re-Attempt Weekly Quiz Competition

Financial Statements 2 Test 24

Result

Financial Statements 2 Test 24

Score

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Rank

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SHARING IS CARING

Question 1

Commission Earned A/c

Consignor A/c

Debtors A/c

General Profit & Loss

Solution

Question 2

Increase in asset & decrease in owner's liability

Increase in liability & Increase in asset

Decrease in liability & owner's liability

Increase in asset & owner's liability

Solution

Question 3

Commission Earned A/c

Consignor A/c

Debtors A/c

General Profit & Loss A/c

Solution

Question 4

Increase in asset & owner's liability

Increase in liability & decrease in owner's liability

Decrease in liability & owner's liability

Increase in one asset & decrease in another asset

Solution

Question 5

Cash Sales

Gross Credit Sales

Net Credit Sales

Net Sales

Solution

Question 6

If del-credere commission is allowed, bad debt will not be recorded in the books of consignor

If del-credere commission is allowed, bad debt will be debited in Consignment Account

Del-credere commission is allowed by consignor to consignee

Del-credere commission is generally relevant for credit sales.

Question 7

to effect sales in the normal course of business.

to bear the bad debts on account of credit sales.

to effect sales at prices higher than the price fixed

None of these

Solution

Question 8

he is liable for ail losses on account of non-recovery of debts due to insolvency of customers

he is not liable for all losses on account of non-recovery of debts due to dispute.

he is not liable for all losses on account of non-recovery of debts due to insolvency of customers

none of these

Question 9

7,214 & 14,428

14,428 & 7,214

16,592 & 8,296

8,296 & 16,592

Question 10

profits

reserves

accumulated profits

goodwill

Solution

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