Tag: elements of book keeping and accountancy

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Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Ram sends goods on approval basis as follows :

Date January Customer's name Sale price of Goods sent Goods accepted Goods returned
Rs Rs Rs
10 A 3,600 3,000 600
12 B 2,000 2,000 -
15 C 2,680 - 2,680
25 D 2,260 2,000 260

The stock of goods sent on approval on 31st January will be:

  1. Rs 500

  2. Nil

  3. Rs 260

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

All goods sent on approval were either accepted or returned by January 31st. Therefore, the stock of goods sent on approval is nil.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

In a joint venture, A contributes Rs. 8,000 and B contributes Rs. 10,000. Goods are purchased for Rs. 11,000. Expenses amount to Rs. 1,000. Sales amount to Rs. 14,000, the remaining goods were taken by B at an agreed price of Rs. 400. A and B share profits and losses in the ratio of 1:2 respectively. As a final settlement, how much A will receive ?

  1. Rs. 8,800

  2. Rs. 9,000

  3. Rs. 8,000

  4. Rs. 13,800
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Under sales on return or approval basis, when transactions are few and the seller at the end of the accounting year reverses the sale entry, then the accounting treatment for the goods returned by the customers on a subsequent date will be ______________.

  1. No entry for return of goods

  2. Entry for return of goods is passed

  3. Only the stock account will be adjusted

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

If the sale entry was reversed at the end of the year, the goods are already back in stock. Therefore, no further entry is needed when they are physically returned.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

A and B entered into a joint Venture to purchase and sell a new item. They agreed to share the profits and losses equally, A purchased goods worth Rs. 90,000 and spent Rs. 25,000 in sending the goods, B spent Rs. 5,000 as selling expenses and sold goods for Rs. 20,0000. What will be the amount  remitted by B to A as final settlement ?

  1. Rs. 1,55,000

  2. Rs. 1,50,000

  3. Rs. 1,15,000

  4. Rs. 80,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total cost: 90,000 + 25,000 + 5,000 = 120,000. Sales: 200,000. Profit: 80,000. Share: 40,000 each. B collected 200,000, spent 5,000. B owes A: 90,000 (goods) + 25,000 (expenses) + 40,000 (profit) = 155,000.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Under sales on return or approval basis, the ownership of goods is passed only ___________________.

  1. When the purchaser gives his approval

  2. If the goods are not returned within specified period

  3. Both (a) and (b)

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

Ownership passes when the buyer signifies approval or fails to return the goods within the specified time frame.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Which of the following are generally the inventories of a service business _________.

  1. Finished goods inventories

  2. Purchased goods

  3. Raw materials inventories

  4. Work in process inventories
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Service businesses do not typically hold finished goods or raw materials for resale. Instead, they hold work in process inventories, which represent the costs of services currently being performed but not yet billed or completed.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Which method of inventory valuation helps in reducing the burden of income tax in times of rising prices?

  1. Last-in-first-out

  2. First-in-first-out

  3. Average cost

  4. Base stock method
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

LIFO (Last-In-First-Out) assumes that the most recently purchased, higher-cost items are sold first during periods of rising prices. This results in a higher cost of goods sold, which reduces taxable income.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

A higher inventory ratio indicates ____________.

  1. Better inventory management

  2. Quicker turnover

  3. Both A and B

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

A higher inventory turnover ratio indicates that a company is selling its goods quickly and managing its stock levels efficiently. Therefore, both A and B are correct interpretations.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Activities related to coordinating, controlling and planning flow of inventory are classified as ________________.

  1. decisional management

  2. throughput management

  3. inventory management

  4. manufacturing management
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Inventory management is the systematic approach to sourcing, storing, and selling inventory, which includes planning, controlling, and coordinating the flow of goods.