Tag: book keeping and accountancy

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Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

Which of the following consisting  the final account of a non-profit organization_____________.

  1. Trading and Profit & Loss A/c and Balance Sheet

  2. Income Statement and Statement of Financial Position

  3. Receipts & Payments A/c and Income & Expenditure A/c

  4. Receipts & Payments A/c Income & Expenditure A/c and Balance Sheet
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
The statements prepared by Non-for-profit organisations are:-
1) Receipt and payments account - It is a real account just like cash account. Its prepared at the end of the year. All receipts are recorded on the debit side and expenses on the credit side. 
2) Income and expenditure account - Its a nominal account and is just like a profit and loss account. All the expenses are recorded on the debit and side and incomes on the credit side. 
3) Balance sheet - Balance sheet is prepared normally. The difference between assets and liabilities is shown as capital fund or general fund. 
Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

Entrance fee of Rs. 20,000 received by a club is a _____________.

  1. capital receipt

  2. revenue receipt

  3. capital expenditure

  4. revenue expenditure
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Clubs normally charge two kind of fee. Entrance fee and yearly contribution. 

Entrance fee is part of capital receipt and yearly contribution is revenue receipt. 

Entrance fee of Rs.20000 received by a club is a capital receipts. 

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

Statement I: Receipt & Payment A/c starts with the opening balance of cash in hand and at bank.
Statement II: Income & Expenditure A/c have no opening balance.
Select the correct answer the options given below.

  1. Statement I is Correct while statement II is Incorrect.

  2. Both Statement I and II are incorrect

  3. Statement II is Correct while statement I is incorrect.

  4. Both Statement I and II are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Receipt and Payment account is a summary of cash transactions and starts with an opening cash/bank balance. Income and Expenditure account is like a Profit and Loss account, which is prepared for a specific period and does not carry forward an opening balance.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

An advance receipt of subscription from a member of the non profit organization is considered as a/an _______________.

  1. Expense

  2. Liability

  3. Equity

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

Subscription is the amount that is paid by members of NPO every year. It is the primary source of income of NPO. It is generally paid every month. It is the amount paid by members to keep their membership alive. An advance receipt of subscription from a member is an income received in advance. So it is treated as liability. 

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

The ______________ is the summary of cash and bank transactions which helps the preparation of Income and Expenditure account and Balance Sheet.

  1. income and expenditure account

  2. balance sheet

  3. receipts and payments&nbsp;<span>account</span>

  4. both a and b
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Not-for-Profit Organisations are required to prepare financial statements at the end of the each accounting period and the general principles of accounting  are fully applicable in their preparation. The final accounts of a not-for-profit organisations consist of the following:

(i) Receipt and Payment Account
(ii) Income and Expenditure Account
(iii) Balance Sheet
The Receipt and Payment account is the summary of cash and bank transactions which helps in the preparation of Income and Expenditure Account and the Balance Sheet. Besides, it is a legal requirement as the Receipts and Payments Account has also to be submitted to the Registrar of Societies along with the Income and Expenditure Account, and the Balance Sheet.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

Debentures which are convertible into shares at the option of the shareholders according to the terms of the issue are known as ____________.

  1. optional debenture

  2. convertible debenture

  3. convertible shares

  4. flexible debenture
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Convertible debentures are debt instruments that provide the holder with the option to convert the debt into equity shares of the issuing company after a specified period.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

Which of these statement is not true about debenture holders?

  1. Debenture holders are like the lenders of the company

  2. Debenture holders have priority of payment of interest and amount

  3. In case of loss the debenture holders are not entitled to interest on the debenture

  4. Interest on debenture is an allowable expenses
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Debenture holders are creditors of the company. They are entitled to interest regardless of whether the company makes a profit or a loss, as interest is a fixed financial obligation.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

Which of the following is incorrect?

  1. A company can issue irredeemable debentures

  2. A company can issue debentures with voting rights

  3. A company can buy its own shares

  4. A company can buy its own debentures
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to the Companies Act, a company cannot issue debentures with voting rights. Debenture holders are creditors, not owners, and therefore do not have voting power in company affairs.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

Use the following information for questions given below:
Consider the following data pertaining to A Ltd. as on March $31, 2006$:
Share Capital
Issued, subscribed and called-up $(20,000$ shares of $Rs. 100$ each) $Rs. 20,00,000$
Calls-in-arrear $Rs. 10,000$
Profit and loss account (Cr.) as on April $01, 2005\ Rs. 1,20,000$
Profit for the year $Rs. 2,60,000$
The company wants to create a Debenture Redemption Reserve and to transfer $Rs. 50,000$ every year out of profits to redeem the debentures.
The company declared $10$% dividends.
The amount of dividend declared will be _______________.

  1. $Rs. 33,000$

  2. $Rs. 21,000$

  3. $Rs. 1,99,000$

  4. $Rs. 2,00,000$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The dividend is calculated on the paid-up capital. Issued capital is 20,00,000, but calls-in-arrear are 10,000, so paid-up capital is 19,90,000. 10% of 19,90,000 is 1,99,000.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

In case of an Issue of a debenture of Rs$100$ at $Rs110$, Rs$10$ is to be credited to:

  1. Securities Premium A/c

  2. Debenture Premium A/c

  3. Capital Redemption Reserve A/c

  4. Debenture Redemption Reserve A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If debentures are issued at a price more than its nominal value (face value) such an issue is called issue at a premium.