Question 1

At the time of dissolution all the assets of firm are transferred to the realization A/c:
A)market value
B)book value
C)cost value
D)bale value

Accepted Answer

At the time of dissolution, all the assets of a firm are transferred to the realization account at their book value, not at market, cost, or sale value. This is because the book value represents the value of the assets as recorded in the firm's accounting records, which is used for the purpose of settling accounts among the partners and determining the financial position of the firm at dissolution.

Question 2

Balance of realization A/c is transferred to the capital A/c of the partners in:
A)capital ratio
B)profit sharing ratio
C)interest ratio
D)equally

Accepted Answer

The balance of the realization account, which reflects the profit or loss from the realization of assets and payment of liabilities during the dissolution of a partnership, is transferred to the partners' capital accounts in their profit-sharing ratio. This is because the profit or loss from such transactions is shared among the partners according to the agreed-upon ratio in which they share profits and losses during the operation of the partnership.

Question 3

The decision is Garner Vs Murray was given in:
A)1904
B)1905
C)1933
D)1804

Accepted Answer

The decision in Garner Vs Murray was given in 1904.

Question 4

When an asset is acquired on hire purchase system, the asset account is debited with _______ of the assets in the books of the hire purchaser.
A)hire purchase price
B)cash price
C)instalment price
D)none of these

Accepted Answer

When an asset is acquired on a hire purchase system, the asset account is debited with the cash price of the asset in the books of the hire purchaser. This is because the cash price represents the fair value of the asset at the time of acquisition.

Question 5

If the firm stops making repayments and the goods or assets are taken away from them as a result, this is known as:
A)cancellation
B)forfeiture
C)repossession
D)annulment

Accepted Answer

Repossession is the correct term used when goods or assets are taken away from a firm or individual because they have failed to make repayments.

Question 6

On the balance sheet of a company, the value of the asset bought through hire purchase will appear as:
A)cost less depreciation to date less amount owing on hire purchase less interest owing
B)cost less amounts owing on hire purchase
C)cost less depreciation to date less amount owing on hire purchase
D)cost less depreciation to date

Accepted Answer

The answer of On the balance sheet of a company,...

Question 7

The depreciation on an asset purchased through hire purchase should be:
A)should be straight line only
B)based on the cost price of the asset only
C)based on the total cost including interest
D)no depreciation should be provide until the final payment is made

Accepted Answer

Depreciation on an asset purchased through hire purchase should be based on the cost price of the asset only. The interest component is treated separately as a finance cost and does not affect the depreciable amount of the asset.

Question 8

The interest charged on the hire purchase should appear in the profit and loss account in what manner?
A)the total interest levied should be divided equally over the total period the for purchase agreement
B)the interest charged in that period only should be included
C)interest should instead be capitalised on the balance sheet
D)interest should be apportioned in proportion to the repayment totals

Accepted Answer

The interest charged in the specific period only should be included in the profit and loss account. This is because the profit and loss account reflects the expenses and revenues for a particular accounting period, and only the interest relevant to that period should be recognized as an expense.

Question 9

Ownership of goods under hire purchase agreement is transferred at the time of:
A)payment of down payment
B)payment of first instalment
C)payment of last instalment
D)none of the above

Accepted Answer

Ownership of goods under a hire purchase agreement is transferred to the hirer upon payment of the last instalment, as this completes the purchase agreement.

Question 10

Which of the following does not give a difference between a hire purchase and a normal purchase?
A)timing of payment for asset
B)legal ownership of asset
C)quality of asset purchased
D)total cost of asset.

Accepted Answer

The quality of the asset purchased is not a factor that differentiates a hire purchase from a normal purchase. Both hire purchase and normal purchase can involve assets of the same quality; the key differences lie in the timing of payments, legal ownership, and potentially the total cost.

Question 11

The act of buying an asset without having to make full payment in the immediate future is known as:
A)hire purchase
B)finance lease
C)operating lease
D)sale and leaseback

Accepted Answer

In a hire purchase agreement, the buyer can take possession of an asset by paying an initial installment and then paying the remaining balance in installments over time, without having to make full payment immediately.

Question 12

The amount of interest is credited by the buyer to ________
A)hire purchase account
B)hire vendor account
C)interest account
D)cash account

Accepted Answer

The answer of The amount of interest is credited by...

Question 13

The depreciation in the books of buyer is charged on _________
A)hire purchase price
B)market price
C)total instalment amount
D)cash price

Accepted Answer

Depreciation in the books of the buyer is charged on the cash price of the asset, as it represents the actual cost of the asset to the buyer.

Question 14

Hirer charges depreciation on:
A)hire purchase price
B)cash price
C)lower of the two
D)none of these

Accepted Answer

Depreciation is charged on the asset's cash price, as it represents the actual cost of the asset to the hirer.

Question 15

What is transferred to Hirer under hire purchase system:
A)ownership of assets
B)possession of asset
C)ownership and possession of asset
D)none of these

Accepted Answer

Under a hire purchase system, the hirer gains possession of the asset but does not obtain ownership until all payments are made. Ownership remains with the seller until the final payment.

Question 16

The Sale of Goods Act is applicable in:
A)credit purchases
B)cash purchases
C)cash sales
D)none of these

Accepted Answer

The Sale of Goods Act is applicable to credit purchases, as it defines the rights and obligations of the buyer and seller in a contract for the sale of goods.

Question 17

Under which system, ownership is transferred on payment of final installment
A)installment system
B)credit system
C)hire purchase system
D)cash system

Accepted Answer

The answer of Under which system, ownership is transferred on...

Question 18

Under hire purchase system the buyer is called _________
A)buyer
B)hirer
C)hire vendor
D)debtor.

Accepted Answer

The answer of Under hire purchase system the buyer is...

Question 19

Under hire purchase system who has the right of sell __________
A)buyer
B)hirer
C)hire vendor
D)debtor

Accepted Answer

Under a hire purchase system, the right to sell the item remains with the hire vendor until all the payments have been made by the hirer. The hirer has the option to buy, but until the final payment, the ownership and thus the right to sell the item belongs to the hire vendor.

Question 20

Under hire purchase system, the agreement can be _________
A)renewed
B)registered
C)terminated
D)endorsed.

Accepted Answer

Under a hire purchase system, the agreement can be terminated. This allows either party to end the agreement under certain conditions specified within the contract.

Quiz 7: Hire Purchase System and Dissolution of Assets in a Firm

At the time of dissolution all the assets of firm are transferred to the realization A/c:

Balance of realization A/c is transferred to the capital A/c of the partners in:

The decision is Garner Vs Murray was given in:

When an asset is acquired on hire purchase system, the asset account is debited with _______ of the assets in the books of the hire purchaser.

If the firm stops making repayments and the goods or assets are taken away from them as a result, this is known as:

On the balance sheet of a company, the value of the asset bought through hire purchase will appear as:

The depreciation on an asset purchased through hire purchase should be:

The interest charged on the hire purchase should appear in the profit and loss account in what manner?

Ownership of goods under hire purchase agreement is transferred at the time of:

Which of the following does not give a difference between a hire purchase and a normal purchase?

The act of buying an asset without having to make full payment in the immediate future is known as:

The amount of interest is credited by the buyer to ________

The depreciation in the books of buyer is charged on _________

Hirer charges depreciation on:

What is transferred to Hirer under hire purchase system:

The Sale of Goods Act is applicable in:

Under which system, ownership is transferred on payment of final installment

Under hire purchase system the buyer is called _________

Under hire purchase system who has the right of sell __________

Under hire purchase system, the agreement can be _________