Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

X and Y are partners with the capital of Rs. 50,000 and Rs. 30,000 respectively. Interest payable on capital is 10% p.a. Find the interest on capital for both the partners when the profits earned by the firm is Rs. 4,800?

  1. Rs. 5,000 and Rs. 3,000. 

  2. Rs. 3,000 and Rs. 1,800. 

  3. No interest will be paid to the partners.

  4. None of the above. 
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Interest on capital = capital x rate
X :-
= 50,000 x 10/100
= RS-5,000. 
Y:-
= 30,000 x 10/100
= RS-3,000.

Apportioned in the ratio of interest to be allowed to the extent of profits available:-
X:-
= 5,000
-------------- x 4,800
 8,000
= RS-3,000.
Y:-
= 3,000 
------------- x 4,800
  8,000
= RS-1,800.
Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

M and N are partners in a firm. M has given a loan of Rs. 8,000 to the firm on 1st July, 2017. The partnership deed is silent upon the question of provision of interest on partner's loan. Compute the amount of interest payable on the loan advanced by M to the firm, assuming the books are closed on 31st March each year.

  1. Rs. 460

  2. Rs. 360

  3. Rs. 560

  4. Rs. 480
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amount of loan given by M to the firm (on 1st July, 2017) = Rs. 8,000
Period (from 1st July, 2017 to 31st March, 2018) = 9 months
Interest rate = 6% p.a.
Interest on M's loan = 8,000 x 6/100 x 9/12 = 360

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

A and B are partners having capital of Rs. 5,000 and Rs. 6,000 respectively. Interest on capital is given @ 5% p. a. Profits for the year before the appropriation is Rs. 4.600 provide interest on capital out of profits. Interest allocated to partners is:

  1. Rs. 3,000 and Rs. 2,500

  2. Rs. 2,090 and Rs. 2,509

  3. Rs. 2,500 and Rs. 2,091

  4. Rs. 600 and Rs. 300
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Interest on capital = capital x rate
A :-
= 50,000 x 5/100
= RS-2,500.
B:-
= 60,000 x 5/100
= RS-3,000.

Apportioned in the ratio of interest to be allowed to the extent of profits available:-
A:-
= 2,500
-------------- x 4,600
   5,500
= RS-2,090.
B:-
= 3,000 
------------- x 4,600
  5,500
= RS-2,509.
Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Consider the following statements-Current ratio is increased by

    1. issue of redeemable preference shares.
    2. selling of old furniture for cash.
    3. cash realized from debtors.
    Which of the statements given ab

    1. 1 and 2 only

    2. 2 and 3 only

    3. 1 and 3 only

    4. 1, 2 and 3
    Reveal answer Fill a bubble to check yourself
    A Correct answer
    Explanation

    Current ratio is Current Assets / Current Liabilities. Issuing preference shares increases cash (asset), and selling furniture for cash increases cash (asset), both improving the ratio. Cash from debtors is just an exchange of one current asset for another, leaving the ratio unchanged.

    Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

    Discount on issue of debenture A/c is to be written off ___________.

    1. immediately

    2. within 3-4 years

    3. over the tenure of the debenture

    4. all the three alternatives are available to the company
    Reveal answer Fill a bubble to check yourself
    C Correct answer
    Explanation

    Discount on the issue of debentures is a capital loss that is amortized over the life of the debentures, matching the expense to the period the company benefits from the borrowed funds.

    Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

    The issue of debentures less than the face value is called_______.

    1. at par

    2. at premium

    3. at discount

    4. none of these
    Reveal answer Fill a bubble to check yourself
    C Correct answer
    Explanation

    When debentures are issued by the company at a price less than its nominal value (face value), it is said to be issued at discount.

    Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

    A debenture is said to be issued at discount when the issue price is _____ the face price.

    1. more than

    2. less than

    3. equal to

    4. double than
    Reveal answer Fill a bubble to check yourself
    B Correct answer
    Explanation

    A debenture is issued at a discount when the company receives less cash than the face value (par value) of the debenture.

    Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

    A company issued 12% debentures of Rs. 1000 each at Rs. 900 to be redeemable at Rs. 1050. The difference of Rs. 150 will be ___________.

    1. debited to loss on issue of Debenture A/ c

    2. credited to loss on issue of Debenture A/c

    3. preliminary expenses A/c

    4. capital loss A/c
    Reveal answer Fill a bubble to check yourself
    A Correct answer
    Explanation

    When debentures are issued at a discount and redeemed at a premium, the total loss is debited to the Loss on Issue of Debentures account. This account represents the total cost of borrowing over the life of the debenture.

    Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

    Loss on issue of Debentures is generally written off in __________.

    1. 10 years

    2. 8 years

    3. over the period of debentures

    4. 15 years
    Reveal answer Fill a bubble to check yourself
    C Correct answer
    Explanation

    Loss on issue of debentures is a capital loss that should be amortized over the tenure of the debentures to match the expense with the benefit received.

    Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

    The document inviting offers from public to subscribe for the debenture or shares or deposits of a company is a

    1. Share certificate

    2. Articles of association

    3. Fixed deposit receipt

    4. Prospectus
    Reveal answer Fill a bubble to check yourself
    D Correct answer
    Explanation

    A prospectus is the formal legal document issued by a company that invites the public to subscribe for its shares or debentures.