Commerce

The person who is entitled to receive the money is the drawer.

It is correct answer, since if we add 4 months from 1st March ,it is 1st July. 1st July + 3 days of grace = 4th July.

Since this entry is not recorded at all of sales return, it is an error of omission. Error of omission is there, when a transaction is not recorded at all or partially omitted.

If the bill is not paid on due date, to give a proof that bill was dishonoured despite its due presentation has got to be noted by 'Notary Public'. A fees is charged for this.

A/c payee only refers to the amount of cheque that can be deposited in the account of that person only whose name is written on it.

A large number of small payments like conveyance, postage etc. are made in every organisation.The main cashier is overburdened if he handles all these payments. So one more cashier is appointed, and he maintains a petty cash book for these small expenses.

Source documents are the basis for recording a transaction in a books of account, which is a proof that a transaction has taken place. For ex- vouchers, invoices, cash memos etc.

It is an error of commission, since this error is made at the time of posting a wrong amount into a account or to the wrong side of an account etc. So in this cash account is debited by Rs 1,000 instead of Rs 5,000.

Depletion is the term which is concerned with the use and exhaustion of natural resources like oil, coal, gold, iron etc.

Bad debts recovered an indirect income, is to be shown in the credit side of profit and loss A/c.

Gross profit is = Sales - Cost of sales. (Sales - Cost of Purchase + Direct Expenses). Suppose the sales is Rs. 2,00,000 and cost of sales is Rs. 1,50,000 the gross profit is Rs. 50,000.

In a trading concern goods are purchased and sold. But in case of a manufacturing concern goods are manufactured and then sold.So a manufacturing A/c is also prepared. In the factory, goods are manufactured factory lighting is directly concerned with manufacturing of goods. Being a expenditure, it would be shown in debit side.

The writing off intangible assets such as patents, copyrights, leasehold mines etc is known as amortization.

Folioing is used for ready reference. It is for seeing the ledger page in the ledger folio column and the page of the journal in the journal folio column of ledger, so that we can see the transaction recorded quickly.

Special purpose books are meant for direct posting into the ledger, rather than to prepare the journal first. For ex- cash book, purchase, sales etc are maintained to record the transactions directly into them. This saves a lot of time and efforts and each entry is also recorded separately.

Acceptance is not required both in the promissory note and cheque. So it is the correct answer.

It is also known as 'dimnishing balance method', since depreciation is charged on the written down value. For ex a machinery is purchased for Rs 50,000 and scrap value is Rs 5,000 and the rate is 10%. The depreciation for 1st year would be 10% of Rs. 45,000 that is Rs. 4,500. For the 2nd year it would be calculated on 45,000-4,500 = Rs. 40,500 that is Rs. 4,050 and so on. Hence, the depreciation charged reduces every year.

Depreciation is not affected by a financial position of a business, since it does not affect the fixed assets.

It takes time to locate the errors, so in order to prepare the final accounts in time 'suspense account' is put in the trial balance, temporarily. When all the errors are rectified, suspense account is closed automatically.

The bills of exchange are send to bank for collection in order to ensure that bill is safe with the bank and the drawer would get its payment on the due date.

Contra transaction is in both cases, when cash is deposited in the bank as well as withdrawn from the bank. So the correct answer is option -3.

It is an error of compensation, since Sohan is being debited instead of Rohan. The net effect of this error on the debits and credits is nil.

Accomodation bills are drawn in absence of any consideration as well as for financial assistance to each other, as explained earlier. So this is the correct answer.

Deepak would bear this loss, since he is the consignor and owner of these goods and he has purchased these goods. He has the whole right on the profit earned by selling the goods.

If drawee feels that he would be not able to pay the bill on due date, he requests the drawer to cancel the old bill and accept a fresh one. This is known as a renewal of bill.