Question 1

An increase in one liability may lead to

Accepted Answer

An increase in one liability can lead to an increase in another asset (for example, taking out a loan increases cash assets) or a decrease in another liability (for example, using a new loan to pay off an existing loan). Therefore, the effect can be either an increase in an asset or a decrease in another liability, depending on the specific financial transaction.

Question 2

X draws a 3 months bill of exchange for ` 25,000 upon Y on 23-10-12. Find the due date of the bill.

Accepted Answer

The answer of X draws a 3 months bill of...

Question 3

A is entitled to 10% partner's commission before charging such commission. Find the commission payable to A if the net profit before charging such commission amounted to ` 60,000

Accepted Answer

The commission is calculated as 10% of the net profit before the commission is deducted. Therefore, 10% of 60,000 is 6,000.

Question 4

Over statement of sales may lead to-

Accepted Answer

Overstating sales will lead to an overstatement of profit for the current year because the reported revenue will be higher than the actual revenue earned, thus artificially inflating the profit figure.

Question 5

When Bills Receivable is returned dishonoured by the drawee, which of these A/c is debited by the drawee

Accepted Answer

When a Bills Receivable (BR) is returned dishonoured, the BP (Bills Payable) account is debited by the drawee to record the failure of the drawee to honor the bill. This reflects the drawee's obligation to pay the bill, which has not been fulfilled.

Question 6

A second hand truck was purchased for `75,000, `10,000 was spent on its repair, `2,000 to get the truck registered in the name of the firm and `1,000 as dealers commission. The capitalized value of truck will be-

Accepted Answer

The capitalized value of the truck includes the purchase price, repair costs, registration fees, and dealer's commission, totaling `75,000 + `10,000 + `2,000 + `1,000 = `88,000.

Question 7

Narrations are usually given at the end of

Accepted Answer

Narrations are typically provided at the end of each journal entry to explain the reason for the entry, making it easier to understand the purpose and context of the transaction recorded.

Question 8

Under which method of depreciation annual depreciation goes on decreasing

Accepted Answer

The reducing balance method, also known as the declining balance method, results in decreasing annual depreciation amounts. This method applies a constant depreciation rate to the asset's book value each year, causing the depreciation expense to decrease over time.

Question 9

Choose the true statement-

Accepted Answer

The answer of Choose the true statement-
...

Question 10

Which of these is an example of accelerate method of depreciation

Accepted Answer

The Written Down Value Method, also known as the Declining Balance Method, is an example of an accelerated depreciation method. It accelerates the depreciation expense, resulting in higher depreciation charges in the early years of an asset's life and lower charges in the later years.

Question 11

Which of these items will not be capitalized along with the Asset

Accepted Answer

Annual repair and maintenance costs are considered operating expenses rather than capital expenditures. They are not capitalized along with the asset because they are incurred to maintain the asset's current condition rather than to enhance its value or extend its life.

Question 12

On the debit side of a Sales A/c entry can be for which of these reasons

Accepted Answer

The debit side of a Sales Account can include entries for sales returns and discounts allowed, as both are deductions from the total sales figure. Sales returns reduce the revenue because goods are returned by the customer, and discounts allowed decrease the amount received from sales.

Question 13

The term Imprest system is related to………

Accepted Answer

The Imprest system is specifically related to the management of petty cash. It is a financial accounting system used to maintain control over the petty cash fund by ensuring that the amount of cash on hand is replenished only by the amount spent.

Question 14

An office equipment is purchased on 1.1.12 for `1,10,000 having working life of 4 years at the end of which it is expected to have a scrap value of `10,000. Find the difference in depreciation as per Sum of years digit methods and reducing balance method (25% WDV) for the year ending on 31st December 12

Accepted Answer

The depreciation for the first year using the Sum of Years Digit method is `40,000, while using the reducing balance method (25% WDV) is `27,500. The difference is `40,000 - `27,500 = `12,500, which is closest to `15,000.

Question 15

M draw a 3 months bill of exchange of ` 20,000 on T on 1st April 07. On due date T paid ` 4,000 and requested M to draw another bill of exchange for 2 months. On the due date of second bill of exchange T is declared insolvement and a dividend of 25 paisa in a rupee is expedited to be realized from his assets. Find the amount receivable from T in respect of the outstanding bill of exchange

Accepted Answer

The answer of M draw a 3 months bill of...

Question 16

A sends goods costing ` 1,00,000 on consignment to yield a profit of 20% on cost. What is the invoice price

Accepted Answer

The invoice price is calculated as the cost plus the desired profit. Here, the cost is `1,00,000 and the desired profit is 20% of the cost. So, the profit is `20,000 (20% of 1,00,000). Therefore, the invoice price is `1,00,000 + `20,000 = `1,20,000.

Question 17

Under which method of depreciation annual depreciation fluctuate with the volume of production

Accepted Answer

The Production Method, also known as the Units of Production Method, calculates depreciation based on the actual usage or production volume of the asset, causing the annual depreciation expense to fluctuate with the volume of production.

Question 18

Who bears noting charges in case of dishonor of a bill of exchange.

Accepted Answer

The drawee, who is the party directed to pay the bill, bears the noting charges in case of dishonor of a bill of exchange. Noting charges are the fees charged by a notary for recording the fact of non-payment.

Question 19

When the goods are returned by the customers within the specified time, they are recorded

Accepted Answer

Goods returned by customers within the specified time are initially recorded in the Sale or Return Day Book, which is a journal for recording such transactions. Thereafter, these transactions are posted to the Sale or Return Ledger, which is an account that keeps track of these returns.

Question 20

Long term assets being `3,00,000, current Assets `80,000, outside liabilities `1,20,000. Find owners equity-

Accepted Answer

Owners equity can be calculated using the formula: Total Assets - Outside Liabilities. Here, Total Assets = Long term assets + Current Assets = 3,00,000 + 80,000 = 3,80,000. Therefore, Owners Equity = 3,80,000 - 1,20,000 = 2,60,000.

Quiz 40: Accounting and Financial Management : Part A