Tag: introduction to single entry system and difference between single entry and double entry system

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Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

While ascertaining profit in single entry system the amount of additional capital introduced is ___________.

  1. added to the capital in the beginning

  2. deducted from the capital in the beginning

  3. added to the capital at the end

  4. deducted from the capital at the end
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When single entry system is followed, profits can be calculated by comparing the capital at the beginning of the year and capital at the end of the year. This can be formulated as:

Opening capital+Capital introduced during the year+Profit during the year-Drawings=Closing capital.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Rs. 19,500 debited to building repairs on 31 st Dec. 1993 inclined Rs. 9,500 as the cost of building a small room for the watch man. A bill of Rs. 800 for colour wash of the whole building during the year was not received till  Dec. 1993. The amount to be debited to profit and loss account would be _____________.

  1. Rs. 20,300

  2. Rs. 19,500

  3. Rs. 10,800

  4. Rs. 9,500
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The cost of building a room (9,500) is a capital expenditure, not a repair expense. Total repairs = 19,500 - 9,500 = 10,000. Adding the outstanding bill of 800 for colour wash, the total amount to be debited to P&L is 10,000 + 800 = 10,800.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

A and B enter into a joint venture to sell a consignment of biscuits sharing profits and losses equally. A provides biscuits from stock Rs. 10,000. He pays expenses amounting to Rs. 1,000. B incurs further expenses on carriage Rs. 1,000. He receives cash for sales Rs. 15,000. He also takes over goods to the value of Rs. 2,000. What will be the amount to be remitted by B to A?

  1. Rs. 13,500

  2. Rs. 15,000

  3. Rs. 11,000

  4. Rs. 10,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A's investment: 10,000 + 1,000 = 11,000. B's expenses: 1,000. Total sales/assets: 15,000 + 2,000 = 17,000. Total profit: 17,000 - 11,000 - 1,000 = 5,000. Profit share: 2,500 each. B owes A: 11,000 (A's cost) + 2,500 (A's profit) - 0 = 13,500.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

In statement of profit and loss interest on capital is shown as _________.

  1. Addition

  2. Subtraction

  3. Ignored

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

Allowing interest on capital is an indirect expense for the business, an increase in expenses will lower the profit for the year. Hence, Interest on capital is deducted.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Further capital introduced during the year is ____________ from closing capital in order to find out the correct profit.

  1. Added

  2. Deducted

  3. Divided

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

Additional capital during the year is a result of working capital requirements and closing capital is the composition of profit or loss along with some capital contribution.
Hence, to remove the capital effect additional capital is deducted from closing capital in order to derive the correct profit or loss earned by the company.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Profit can be ascertained from the incomplete records under single entry by using  ________.

  1. Statement of affairs

  2. Conversion method

  3. Either A or B

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Statement of Affairs Method: takes the difference of opening and closing capitals for calculation of profit or loss under Single Entry System
The Conversion Method of single entry system: tries to convert the records from single entry to double entry system to find the Profit or loss earned by the business.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

The difference between capital at the end of year and capital at the beginning of year is called ____________.

  1. Profit

  2. Income

  3. Drawings

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

An increment of closing capital is a result of excess revenue earned during the year against the opening capital at the beginning thus representing Profit.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

In order to find out the correct profit, drawings are ___________ to the closing capital.

  1. Deducted

  2. Added

  3. Divided

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

As Drawing refers to withdrawal of capital, Due to drawings, closing capital is decreased resulting a reduced Profit.
Hence, to ascertain correct profit Drawings are added back to closing capital.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Find the total at assets at the end of the year if the net profit, drawing during the year and assets at the beginning of the year were 12,000, 7,000 and 15,000 respectively.

  1. 20,000

  2. 10,000

  3. 9,000

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

Calculation of total assets at the end of the year :- 

 Assets in the beginning of the year =Rs 15000
Less : Drawing made during the year (7000)
Add : Net profit for the year                  12000
                                                            = Rs 20000

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

                                             Rs.
Opening Capital                  50,000
Closing Capital                    52,000
Net profit during the year      5,000     
If the above figure are drawn from the books of a trader, then  his drawings, if any, are ____________.

  1. Rs. 5,000

  2. Rs. 3,000

  3. Rs. 1,000

  4. Rs. 6,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
 PARTICULARS  AMT RS.
 opening capital   50,000
add : net profit during the year    5,000
   
 less : closing capital  (52,000)
 TOTAL    3,000