Tag: book keeping and accountancy

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Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

A and B are partners sharing profits and losses in the ratio 4 : 1. C was manager who received the salary of Rs.2,000 p.m. in addition to a commission of 5% on net profits after charging such commission.Profit for the year is Rs.3,39,000 before charging salary. Find the total remuneration of C.

  1. Rs.39,000

  2. Rs.44,000

  3. Rs.43,500

  4. Rs.38,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Salary = 2,000 * 12 = 24,000. Net profit before commission = 3,39,000 - 24,000 = 3,15,000. Commission = 3,15,000 * 5 / 105 = 15,000. Total remuneration = 24,000 + 15,000 = 39,000.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

The profits of last five years are Ra.75,000, Rs.90,000; Rs.80,000; Rs.1,00,000 and Rs.80,000.Find the value of goodwill, if it is calculated on average profits of last five years on the basis of 3 years of purchase.

  1. Rs.85,000

  2. Rs.2,55,000

  3. Rs.2,75,000

  4. Rs.2,85,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Average profit = (75,000 + 90,000 + 80,000 + 1,00,000 + 80,000) / 5 = 4,25,000 / 5 = 85,000. Goodwill = Average profit * 3 = 85,000 * 3 = 2,55,000.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

Rent paid on 1 October, 2004, for the year to 30 September, 2005, was Rs.2,400, rent paid on 1 October, 2005 for the year to 30 September, 2006, was Rs.3,200. Rent payable, as shown in the profit and loss account for the year ended 31 December 2005, would be : 

  1. Rs. 6,000

  2. Rs. 3,200

  3. Rs. 2,600

  4. Rs. 3,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The financial year ends 31 Dec 2005. Rent for 2005 includes 9 months of the 2004-05 period (Jan-Sept: 2,400 * 9/12 = 1,800) and 3 months of the 2005-06 period (Oct-Dec: 3,200 * 3/12 = 800). Total = 1,800 + 800 = 2,600.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

A, B and C were partners in a firm sharing profits and losses in theratio of 2 : 2 : 1 respectively with the capital balance of 50,000 for A and B, for C 25,000. B declared to retire from the firm and balance in reserve on the date was 15,000 if goodwill of the firm was valued as 30,000 and profit on revaluation was 7,050, then what amount will be transferred to the loan account of B?

  1. 70,820

  2. 50,820

  3. 25,820

  4. 58,820
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

B's amount = Capital Rs.50,000 + Reserve (Rs.15,000 × 2/5) Rs.6,000 + Goodwill (Rs.30,000 × 2/5) Rs.12,000 + Revaluation profit (Rs.7,050 × 2/5) Rs.2,820 = Rs.70,820 transferred to loan account on retirement.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

A, B and C were partners in a firm sharing profits and losses in the ratio of 2 :2 :1 respectively with the capital balance of Rs. 50,000 for A, Rs. 70,000 for B,for C Rs. 35,000. B declared to retire from the firm and balance in reserve on the date was Rs. 25,000. If goodwill of the firm was valued as Rs. 30,000 and profit on revaluation was Rs. 7,500, then what amount will be payable to B?

  1. Rs. 70,820

  2. Rs. 76,000

  3. Rs. 75,000

  4. Rs. 95,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

B's capital = 70,000. Reserve share = 25,000 * 2/5 = 10,000. Goodwill share = 30,000 * 2/5 = 12,000. Revaluation profit share = 7,500 * 2/5 = 3,000. Total = 70,000 + 10,000 + 12,000 + 3,000 = 95,000.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

C, D and E are partners sharing profits and losses in the proportion of 3 :2 :1. D retired and the new profit sharing ratio between C and E is 3 :2 and the Reserve of Rs. 24,000 will be divided among the partners.

  1. 4,000, 8,000 12,0000

  2. 10,000, 10,000 4,000

  3. 8,000 12,000 4,000

  4. 12,000 8,000 4,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Reserves are distributed in the old profit sharing ratio (3:2:1). Total reserve = 24,000. C: 24,000 * 3/6 = 12,000; D: 24,000 * 2/6 = 8,000; E: 24,000 * 1/6 = 4,000.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

Cost of abnormal wastage is _________________.

  1. Charged to the product cost

  2. Charged to the profit & loss account

  3. charged partly to the product and partly profit & loss account

  4. not charged at all
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Abnormal wastage is not part of normal production costs and is therefore charged directly to the Profit and Loss account.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

The liability of a partner in profit is ________.

  1. limited.

  2. unlimited.

  3. limited to his capital.

  4. limited to his share of interest in the firm assets.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a general partnership, the liability of each partner for the debts and obligations of the firm is unlimited.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

In the case of loss to any party caused by a partner due to negligence or tort the loss shall be borne by ___________________.

  1. All the partners in their capital ratio

  2. All the partners in their profit sharing ratio

  3. By defaulting partner only

  4. Managing partner only
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the case of loss to any party caused by a partnerdue to negligence or tort the loss shallbe borne by all the partners in theie profit sharing ratio.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

In the case of loss caused by fraud or misrepresentation made by a partner the same shall be borne by ______________.

  1. All the partners in their capital ratio

  2. All the partners in their profit sharing ratio

  3. Defaulting partner only

  4. Managing partner only
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In the case of loss caused by fraud or misrepresentation made by a  partner the same shall be borne by defaulting partner only.