Tag: adjustments in preparation of financial statements

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Questions Related to adjustments in preparation of financial statements

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Provision for discount on debtors shall be made on ____________________.

  1. Book debts before incurring bad debt and before providing for bad debt

  2. Book debts after incurring bad debt and after providing for bad debt

  3. Book debts before incurring bad debt and after providing for bad debt

  4. Book debts after incurring bad debt and before providing for bad debt
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Provision for discount on debtors is calculated on the amount expected to be collected from debtors, which is after accounting for bad debts and the provision for bad debts.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

While preparing final account, to record commissions payable to manager- which of the following adjustment entry will be passed?

Profit & Loss A/cTo Commission Payable A/c Dr.
Commission Payable A/cTo Profit & Loss A/c Dr.
Manager A/cTo Commission Payable A/c Dr.
Profit & Loss A/cTo Manager A/c Dr.

  1. A

  2. B

  3. C

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

The adjustment entry for manager's commission is to debit the Profit and Loss account (as it is an expense) and credit the Commission Payable account (as it is a liability).

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Debtors appeared in balance sheet at Rs. $18,525$ after making following adjustment.
Bad debt written off Rs. $400$.
Provision for discount on debtors @ $2.5\%$.
Provision for bad debt @ $5\%$.
Debtors as per trial balance $=$?

  1. Rs. $20,400$

  2. Rs. $16,788$

  3. Rs. $20,432$

  4. Rs. $18,573$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Let X be the debtors before adjustments. After bad debt: X - 400. After bad debt provision (5%): (X - 400) * 0.95. After discount provision (2.5%): (X - 400) * 0.95 * 0.975 = 18,525. (X - 400) * 0.92625 = 18,525. X - 400 = 20,000. X = 20,400.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Extract of trial balance of Mr.Z is as follows.

Particulars Dr. Rs. Cr. Rs.
Debtors $24,000$ -
Provisions for bad debts - $400$

Included amongst the debtors is Rs. $3,000$ due to Ram and included among the creditors Rs. $1,000$ due to him.
Provision for bad debts to created at @ $5\%$ and for discount @ $2\%$. Debtors will be shown at balance at.

  1. Rs. $21,413$

  2. Rs. $21,885$

  3. Rs. $22,344$

  4. Rs. $22,148$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Debtors = 24,000 - 1,000 (mutual set-off) = 23,000. Provision for bad debts = 5% of 23,000 = 1,150. Net = 23,000 - 1,150 = 21,850. Provision for discount = 2% of 21,850 = 437. Final = 21,850 - 437 = 21,413.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

During the year $2014-2015$, the profit of a business before charging Sales Manager's commission was Rs. $1,89,000$. If the Sales Manager's commission is $5\%$ on profit after charging his commission, then the total amount of commission payable to manager is?

  1. Rs. $10,000$

  2. Rs. $9,450$

  3. Rs. $9,000$

  4. Rs. $8,500$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Commission = (1,89,000 * 5) / 105 = 9,45,000 / 105 = 9,000.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Net profit before charging commission to manager - Rs. $2,20,000$. The manager is entitled to commission of $10\%$ on net profit after charging such commission. The commission payable to manager will be.

  1. Rs. $21,802$

  2. Rs. $24,200$

  3. Rs. $22,000$

  4. Rs. $20,000$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Commission = (2,20,000 * 10) / 110 = 22,00,000 / 110 = 20,000.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

From the following details find out the closing capital that will be appear in balance sheet on $31-12-2015$.

Particulars Rs.
Capital on $1-1-2015$ $14,00,000$
Drawings $5,000$
Repair $2,000$
Net profit before manager commission $6,62,900$
Debtors $1,50,000$

Provision for bad debts @ $6\%$.
The manager is entitled commission of $5\%$ of net profit after charging his commission.

  1. Rs. $20,26,333$

  2. Rs. $20,15,857$

  3. Rs. $20,14,305$

  4. Rs. $20,24,755$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The closing capital is calculated as Opening Capital + Net Profit (after commission) - Drawings. The net profit after commission is calculated by dividing the profit before commission by (1 + rate/100), which is 6,62,900 / 1.05 = 6,31,333. Adding this to the opening capital (14,00,000) and subtracting drawings (5,000) results in 20,26,333.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Net profit before charging commission to manager - Rs. $2,20,000$. The manager is entitled to commission of $10\%$ on net profit before charging such commission. The commission payable to manager will be.

  1. Rs. $21,802$

  2. Rs. $24,200$

  3. Rs. $22,000$

  4. Rs. $20,000$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The commission is 10% of the net profit before charging such commission. Therefore, 10% of 2,20,000 is 22,000.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Net profit before charging commission to General & Sales manager - Rs. $1,65,920$
The General Manager is entitled to commission of $10\%$ on net profit after charging such commission and commission of Sales Manager.
The Sales Manager is entitled to commission of $5\%$ on net profit after charging such commission and commission of General Manager.
Commission payable to General Manager- Rs. ___________ & Sales Manager - Rs. __________.

  1. $7,214$ & $14,428$

  2. $14,428$ & $7,214$

  3. $16,592$ & $8,296$

  4. $8,296$ & $16,592$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let G be the General Manager commission and S be the Sales Manager commission. G = 0.10 * (1,65,920 - G - S) and S = 0.05 * (1,65,920 - G - S). Solving these simultaneous equations leads to G = 14,428 and S = 7,214.