Question 1

If indemnity period is six months, Standard turnover Rs. 30000, Annual trunover Rs. 75000, Turnover during indemnity period Rs. 12000, then short sales will amount to -

Accepted Answer

Short sales = Standard turnover for the indemnity period - Actual turnover during the indemnity period. Standard turnover for the indemnity period = (Rs. 30000/12) * 6 = Rs. 15000. Short sales = Rs. 15000 - Rs. 12000 = Rs. 3000. The calculation provided in the explanation was incorrect, leading to an incorrect conclusion. The correct approach to find the short sales should involve comparing the expected turnover during the indemnity period based on the annual turnover to the actual turnover during the indemnity period.

Question 2

Opening stock Rs. 25000, Purchases Rs. 125000, Sales Rs. 150000, Goods salvaged Rrs. 10000 and Gross Profit is 50% on cost, then the cost of the goods burnt by fire is -

Accepted Answer

The cost of goods sold (COGS) can be calculated as follows: Opening stock + Purchases - Closing stock. Given that Gross Profit is 50% on cost, we can infer that the Sales are 150% of the COGS. Therefore, COGS = Sales / 1.5 = Rs. 150,000 / 1.5 = Rs. 100,000. The value of goods available for sale is Opening stock + Purchases = Rs. 25,000 + Rs. 125,000 = Rs. 150,000. The goods salvaged are Rs. 10,000. Therefore, the cost of goods burnt by fire = Goods available for sale - COGS - Goods salvaged = Rs. 150,000 - Rs. 100,000 - Rs. 10,000 = Rs. 40,000.

Question 3

Consequential loss policy for fire insurance gives insurance againest -

Accepted Answer

Consequential loss policy for fire insurance is designed to cover the loss of profits that a business suffers as a result of a fire, not the direct damage to physical assets, stock, or budgeted losses.

Question 4

Contract of Insurance is a contract between the trader and the insurance Company to -

Accepted Answer

Insurance contracts are designed to provide financial compensation to the insured party (the trader, in this context) in the event of specified losses or damages, thereby mitigating the financial impact of those losses.

Quiz 2: Accounting and Insurance

If indemnity period is six months, Standard turnover Rs. 30000, Annual trunover Rs. 75000, Turnover during indemnity period Rs. 12000, then short sales will amount to -

Opening stock Rs. 25000, Purchases Rs. 125000, Sales Rs. 150000, Goods salvaged Rrs. 10000 and Gross Profit is 50% on cost, then the cost of the goods burnt by fire is -

Consequential loss policy for fire insurance gives insurance againest -

Contract of Insurance is a contract between the trader and the insurance Company to -