Tag: accountancy

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Questions Related to accountancy

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

X, Y and Z are partners in a firm.At the time of division of profit for the year there was dispute between the partners.Profits before interest on partner's capital was Rs.15,000 and Y demands interest at 24%p.a. on his loan of Rs.80,000. There was no agreement on this point.Calculate the amount payable to X, Y and Z respectively.

  1. Rs. 5,000 to each partner

  2. Loss of Rs. 4,200 for X and Z & Y will take home Rs.15,000

  3. Rs.3,400 for X, Rs. 8,200 for Y and Rs. 3,400 for Z

  4. Rs. 5,000 to each partner.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In the absence of partnership deed, Interest on loan at 6% will be calculated and also profit will be shared equally.

Interest on loan = 80000*6/100 = 4800. 
Profit available for distribution = 15000 - 4800 = 10200 
Profit distributed = 10200/ 3 = 3400.
Share of X = 3400.
Share of Y = 3400+4800 = 8200
share of Z = 3400. 

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

The provision for discount on debtors is calculated on the amount of debtors ______________.

  1. before deducting the provision for doubtful debts

  2. left after deducting the provision for doubtful debts

  3. before deducting the actual bad debts and the provision for doubtful debts

  4. that is available at the time of calculating provisions
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Provision for discount on debtors is calculated on the net amount of debtors, which is the total debtors minus the provision for doubtful debts.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Debtor's A/c shows debit balance.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An asset is a resource with economic value that will provide benefit in future. Debtors are an assets for organisation because they will provide cash in future. All assets have debit balance according to real account rule. That's why Debtors's a/c shows debit balance. 

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Provision for doubtful debts is _________________.

  1. Debited to Sundry Debtors Account

  2. Credited to Sundry Debtors Account

  3. Debited to Bad Debts Account

  4. Debited to Profit & Loss Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. Later, when you identify a specific customer invoice that is not going to be paid, eliminate it against the provision for doubtful debts.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Match List I (Provision of Partnership Act) with List II (Matters with which the provision are related) and select the correct answer using the codes given below the lists:

List I List II
Interest must be allowed at 6% p.a Drawings of Partners
No interest shall be allowed Net loss of the firm for an accounting year
No interest shall be charged Capitals contributed by the partners
Must be shared equally by all the partners unless otherwise agreed Loan given by a partner to the firm

  1. A - 1, B-3, C-2, D-4

  2. A - 4, B-3, C-2, D-1

  3. A - 3, B-2, C-4, D-1

  4. A - 4, B-3, C-1, D-2
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to the Indian Partnership Act: Interest on loan is 6% (D-1), net loss is shared equally (A-4), no interest on capital (B-3), and no interest on drawings (C-2).

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Rebate on bills discounted is shown in the Balance Sheet as _______.

  1. Advances

  2. Other liabilities and provisions

  3. Other income

  4. Reserves & surplus
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option B is correct one.

Rebate on Bills Discounted is also known as Discount Received in Advance, or, Unexpired Discount or, Discount Received but not earned. In bank balance sheet it shown under the head Other liability and provision.


Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Provision for income tax is shown in bank's Balance Sheet as _______.

  1. Contingent liability

  2. Contingent asset

  3. Borrowings

  4. Other liabilities and provisions
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The provision for income taxes on an income statement is the amount of income taxes a company estimates it will pay in a given year.In the Balance sheet of bank it shown under the head other Liabilities and Provission.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Provisions are amounts set aside out of profits and other surpluses for:

  1. Meeting a liability arising out of arbitration

  2. Meeting a liability, the amount of which can be determined with exact figure

  3. Meeting an eventuality arising out of revaluation of assets in ordinary course of business

  4. Meeting known or unknown contingency that may arise in future.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A provision is an amount that you put in aside in your accounts to cover a future liability.

The purpose of a provision is to make a current year’s balance more accurate, as there may be costs which could, to some extent, be accounted for in either the current or previous financial year. These costs that distinctly belong to a specific year could be misleading if accounted for in the future.
A provision is not a form of saving, even though it is an amount that is put aside for a future possible cost or obligation. Provisions resulting impact is a reduction in the company's equity.
When accounting, provisions are recognized on the balance sheet and then expensed on the income statement.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Which Section of Companies Act 2013,describes the provisions regarding 'Additional Directors'?

  1. Section 160(1)

  2. Section 161(1)

  3. Section 262(3)

  4. Section 262(2)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 Section 161(1) – Appointment of additional director

1.      The Board of directors may, if authorized by the articles, appoint additional directors. Such additional directors may hold office only up to the date of the annual general meeting.

2.       If the AGM of the company is not held or cannot  be held the person appointed as the additional director vacates his office on the last day on which AGM should have been held.

3.       It may be noted that a person who fails to get appointed as a additional director in a general meeting cannot be appointed as the additional director.

4.       If such a person, while he was the additional director of a company, had been appointed the Managing Director,  The latter appointment (i.e., the managing director) also ceases simultaneously with the termination of his directorship at the commencement of the annual general meeting.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Provision can be shown as ________ from asset.

  1. Deduction

  2. Addition

  3. Both A and B

  4. None
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation


A provision for anticipated expenditure is to be disclosed under the head 'current liabilities and provisions' whereas a provision for an anticipated loss (provision for doubtful debts) is to be shown as a deduction from the asset which is likely to result in a loss.