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Multiple choice book keeping and accountancy reserve and fund kinds of reserves secret reserve reserves

Sinking funds is created for___________.

  1. redemption of long term liabilities

  2. replacement of depreciable assets

  3. both (A & B)

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

Option C is the correct One.

there are two main purpose of creating Sinking fund
1. Repayable of long term debt
2.Certain amount keep a side for the payment of regular expenses for the specific purpose.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Trial balance provides you the following information:
Debtors                              80,000
Bad debts                             2,000
Provision for bad debts        4,000
It is desired to maintain a provision for bad debt of  1,000. State the amount to be debited/credited in profit and loss account.

  1. 5,000 (Debit)

  2. 3,000 (Debit)

  3. 1,000 (Credit)

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

The balance in provision for bad debts is appearing in trial balance Rs.4000, of which bad debts of Rs.2000 is written off. Balance lying in provision account is now Rs.2000. It is desired to maintain a provision for bad debts of Rs.1000 only, hence an excess provision of Rs.1000 to be written back to profit & loss account by crediting the profit & loss a/c. 


                                           Provision for Bad Debts A/c

Particulars                             Amount                   Particulars                     Amount
To Bad debts                         2000                    By  Op Balance b/f            4000
To Profit & Loss A/c               1000
To Clo Balance c/d                1000
                                             -----------                                                              ----------
                                                4000                                                                4000
                                             ------------                                                            -----------

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

The provision for establishment of a 'District Consumer Protection Council' was made by the year _________ .

  1. 1988

  2. 1993

  3. 2002

  4. 2008
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Consumer Protection Act and its subsequent amendments established the framework for District Consumer Protection Councils, with the 2002 amendment being a key milestone for these provisions.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

X, Y and Z are partners in a firm.At the time of division of profit for the year there was dispute between the partners.Profits before interest on partner's capital was Rs.15,000 and Y demands interest at 24%p.a. on his loan of Rs.80,000. There was no agreement on this point.Calculate the amount payable to X, Y and Z respectively.

  1. Rs. 5,000 to each partner

  2. Loss of Rs. 4,200 for X and Z & Y will take home Rs.15,000

  3. Rs.3,400 for X, Rs. 8,200 for Y and Rs. 3,400 for Z

  4. Rs. 5,000 to each partner.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In the absence of partnership deed, Interest on loan at 6% will be calculated and also profit will be shared equally.

Interest on loan = 80000*6/100 = 4800. 
Profit available for distribution = 15000 - 4800 = 10200 
Profit distributed = 10200/ 3 = 3400.
Share of X = 3400.
Share of Y = 3400+4800 = 8200
share of Z = 3400. 

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

The provision for discount on debtors is calculated on the amount of debtors ______________.

  1. before deducting the provision for doubtful debts

  2. left after deducting the provision for doubtful debts

  3. before deducting the actual bad debts and the provision for doubtful debts

  4. that is available at the time of calculating provisions
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Provision for discount on debtors is calculated on the net amount of debtors, which is the total debtors minus the provision for doubtful debts.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Debtor's A/c shows debit balance.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An asset is a resource with economic value that will provide benefit in future. Debtors are an assets for organisation because they will provide cash in future. All assets have debit balance according to real account rule. That's why Debtors's a/c shows debit balance. 

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Provision for doubtful debts is _________________.

  1. Debited to Sundry Debtors Account

  2. Credited to Sundry Debtors Account

  3. Debited to Bad Debts Account

  4. Debited to Profit & Loss Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. Later, when you identify a specific customer invoice that is not going to be paid, eliminate it against the provision for doubtful debts.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Match List I (Provision of Partnership Act) with List II (Matters with which the provision are related) and select the correct answer using the codes given below the lists:

List I List II
Interest must be allowed at 6% p.a Drawings of Partners
No interest shall be allowed Net loss of the firm for an accounting year
No interest shall be charged Capitals contributed by the partners
Must be shared equally by all the partners unless otherwise agreed Loan given by a partner to the firm

  1. A - 1, B-3, C-2, D-4

  2. A - 4, B-3, C-2, D-1

  3. A - 3, B-2, C-4, D-1

  4. A - 4, B-3, C-1, D-2
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to the Indian Partnership Act: Interest on loan is 6% (D-1), net loss is shared equally (A-4), no interest on capital (B-3), and no interest on drawings (C-2).

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Rebate on bills discounted is shown in the Balance Sheet as _______.

  1. Advances

  2. Other liabilities and provisions

  3. Other income

  4. Reserves & surplus
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option B is correct one.

Rebate on Bills Discounted is also known as Discount Received in Advance, or, Unexpired Discount or, Discount Received but not earned. In bank balance sheet it shown under the head Other liability and provision.