Financial Statements 2 Test 26

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Financial Statements 2 Test 26

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Weekly Quiz Competition

Question 1
1 / -0

The provision for bad debts is made by crediting ________.

A
Trading A/c

B
Profit & Loss Account

C
Debtors Account

D
Provision for bad debts account
Question 2
1 / -0

What will be the treatment of "accrued income" if appearing in the Trial Balance.

A
It will be shown on the assets side as current assets in the balance sheet

B
It will be shown on the liabilities side as current liability in the balance sheet

C
It will be shown on the debit side of trading account as an expense

D
It will be shown on the credit side of profit and loss account as an income

Solution

Accrued Income is an income which is earned by the business in the current accounting year but it not received by the business till the end of current accounting year.
Accrued Income is treated as an asset for the company , hence it will be shown in Asset Side in the Balance Sheet.
Question 3
1 / -0

What will be the treatment of prepaid expenses if adjustment of it is appearing outside the trial Balance?

A
Prepaid Expenses account will be debited and respective expenses account will be credited

B
Respective expense account will be debited and prepaid expenses account will be credited

C
Prepaid expenses account will be debited and profit and loss account will be credited

D
Profit and loss account will be debited and prepaid expenses account will be credited

Solution

Prepaid expenses are deducted from the respective accounts in trading and P & L A/c and shown in asset side in the balance sheet.
Question 4
1 / -0

Total Debtors on $31.12.2009$ were Rs. $48,000$ before writing off bad debts but after allowing discounts. During the year bad-debts amounted to Rs. $2,000$ and discount allowed were Rs. $100$ . It is the firm's policy to maintain a provision of $5\%$ against bad and doubtful debts. Find out the amount of provision for Bad and Doubtful debts as an $31.12.09$ .

A
Rs. $2,400$

B
Rs. $2,305$

C
Rs. $2,300$

D
Rs. $2,000$
Question 5
1 / -0

Find out the corrected net profit.
Profit before taking into account following adjustments was Rs. $7,00,000$
$1$ . Rs. $1,00,000$ spent on purchase of motor car for business purpose, treated as expenses in profit & loss A/c
$2$ . Rs. $15,000$ p.m. rent outstanding for the month of February and March not taken into account.

A
Rs. $7,70,000$

B
Rs. $7,85,000$

C
Rs. $6,15,000$

D
Rs. $6,30,000$

Solution

Net profit before adjustment = 7,00,000
Add:- Capital expenditure wrongly debited =    1,00,000
Less:- Outstanding rent for 2 months (15,000 x 2)    = (30,000)
   -------------------
Net profit after adjustments =    7,70,000
Question 6
1 / -0

Prepaid Expense of a financial year is related with the ___________.

A
previous financial year

B
following financial year

C
current financial year

D
None

Solution

Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired. They are initially recorded as assets, but their value is expensed over time onto the income statement.
Question 7
1 / -0

A and B are partners having capital of Rs. 50,000 and Rs. 60,000 respectively. Interest on capital is given @ 5% p. a. Profits for the year before the appropriation is Rs. 4.600 provide interest on capital out of profits. Interest allocated to partners is:

A
Rs. 3,000 and Rs. 2,500

B
Rs. 2,091 and Rs. 2,509

C
Rs. 2,500 and Rs. 2,091

D
Rs. 600 and Rs. 300

Solution

Interest on capital = Capital x Rate of interest
A :-
= Rs.50,000 x 5/100
= RS-2,500.
B:-
= Rs. 60,000 x 5/100
= RS-3,000.

Total appropriation = Rs. 2,500 + Rs. 3,000 = Rs. 5,500.
Apportioned in the ratio of interest to be allowed to the extent of profits available:-
A:-
= 2,500
-------------- x 4,600
5,500
= RS-2,091.
B:-
= 3,000
------------- x 4,600
5,500
= RS-2,509.
Question 8
1 / -0

The manager of a firm is entitled to a commission of $10\%$ on net profit after his commission. If the net profit of the firm before charging commission is Rs. $4,40,000$ . The amount of manager's commission will be.

A
Rs. $44,000$

B
Rs. $40,000$

C
Rs. $37,000$

D
Rs. $33,000$

Solution
Question 9
1 / -0

At the end of the financial year accounts receivable has a balance of Rs. $1,00,000$ and provision for the bad & doubtful debts provided amounting to Rs. $7,000$ . Net realizable value of the accounts receivable is ________ .

A
Rs. $7,000$

B
Rs. $1,07,000$

C
Rs. $93,000$

D
Rs. $1,00,000$

Solution
Question 10
1 / -0

The debts written off as bad, subsequently collected by proprietor in his personal capacity and debt by him. What is accounting treatment for this transaction?

A
Debit- drawings A/c & credit- bad debtors. A/c

B
Debit - cash A/c & credit bad debts recovered A/c

C
Debit - drawings A/c & credit bad debts recovered A/c

D
Simply ignore the transaction.

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Financial Statements 2 Test 26

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Financial Statements 2 Test 26

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Question 1

Trading A/c

Profit & Loss Account

Debtors Account

Provision for bad debts account

Question 2

It will be shown on the assets side as current assets in the balance sheet

It will be shown on the liabilities side as current liability in the balance sheet

It will be shown on the debit side of trading account as an expense

It will be shown on the credit side of profit and loss account as an income

Solution

Question 3

Prepaid Expenses account will be debited and respective expenses account will be credited

Respective expense account will be debited and prepaid expenses account will be credited

Prepaid expenses account will be debited and profit and loss account will be credited

Profit and loss account will be debited and prepaid expenses account will be credited

Solution

Question 4

Rs. 2,4002,4002,400

Rs. 2,3052,3052,305

Rs. 2,3002,3002,300

Rs. 2,0002,0002,000

Question 5

Rs. 7,70,0007,70,0007,70,000

Rs. 7,85,0007,85,0007,85,000

Rs. 6,15,0006,15,0006,15,000

Rs. 6,30,0006,30,0006,30,000

Solution

Question 6

previous financial year

following financial year

current financial year

None

Solution

Question 7

Rs. 3,000 and Rs. 2,500

Rs. 2,091 and Rs. 2,509

Rs. 2,500 and Rs. 2,091

Rs. 600 and Rs. 300

Solution

Question 8

Rs. 44,00044,00044,000

Rs. 40,00040,00040,000

Rs. 37,00037,00037,000

Rs. 33,00033,00033,000

Solution

Question 9

Rs. 7,0007,0007,000

Rs. 1,07,0001,07,0001,07,000

Rs. 93,00093,00093,000

Rs. 1,00,0001,00,0001,00,000

Solution

Question 10

Debit- drawings A/c & credit- bad debtors. A/c

Debit - cash A/c & credit bad debts recovered A/c

Debit - drawings A/c & credit bad debts recovered A/c

Simply ignore the transaction.

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Rs. $2,400$

Rs. $2,305$

Rs. $2,300$

Rs. $2,000$

Rs. $7,70,000$

Rs. $7,85,000$

Rs. $6,15,000$

Rs. $6,30,000$

Rs. $44,000$

Rs. $40,000$

Rs. $37,000$

Rs. $33,000$

Rs. $7,000$

Rs. $1,07,000$

Rs. $93,000$

Rs. $1,00,000$