Principles of Accounting | Study Mode

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Question 1
Principles of Accounting Q 1 image
A

?7000

B

?10000

C

?22000

D

?15000

Explanation

Capital Employed is the difference between the total assets and current liabilities of the company


Correct option: D
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Question 2
A
Sales department
B
Production department
C
Purchase department
D
Administration department
Explanation

Advertising expenses are expenses incurred in order to enhance the sales of the companys product/services


Correct option: A
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Question 3
A
Price above or below the stipulated price
B
Any price but not below the transfer price
C
Cost price
D
A price that is equal to the mark up
Explanation

Cost plus mark up is a pricing strategy in which the selling price is determined by adding a specific amount mark up to a product unit cost


Correct option: A
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Question 4
A
Accountant general
B
Finance minister
C
Auditor general
D
Permanent secretory.
Explanation

Appropriation is the amount that government reserves for a particular purpose. Public expenditure is the spending made by government of a country on collective needs


Correct option: C
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Question 5
A
Call in advance
B
call in arrears
C
forfeiture
D
shares
Explanation

is the amount called by the company which is not paid by the shareholders before the due date fixed for payment


Correct option: B
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Question 6
A
Goodwill account and credit partners capital account
B
Cash account and credit goodwill account
C
Goodwill account and credit cash account
D
Partners capital account and credit goodwill account
Explanation

When goodwill is raised in the books at full value, the entry is

Dr Goodwill Account

Cr Old partners capital account (old ratio)

When the raised goodwill is written off, entry will be:

Dr All partners capital account

Cr Goodwill accounts

Note: goodwill written off includes new partners in the new profit sharing ratio


Correct option: D
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Question 7
A
Debited to the branch current account
B
Debited to the head office current account
C
Credited to the head office current account
D
Credited to the branch current account
Explanation

Branch current account is maintained in the head office books to record all transactions between the head office and the branch. This account is debited with the following:

i. Goods sent to branch

ii. Expenses of the branch paid by the head office

iii. Profit of the branch


Correct option: B
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Question 8
A
Cash account
B
purchase account
C
goodwill account
D
sales account
Explanation

Goodwill is the excess of purchase consideration over the total value of the business


Correct option: C
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Question 9
A
Income and expenditure account
B
profit and loss account
C
receipt and payment account
D
trading account
Explanation

records profit on branch account


Correct option: B
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Question 10
A
1 : 1
B
3 : 6
C
2 : 1
D
2 : 6
Explanation

The existing ratio between Tony and Rose = 2/6 and 1/6

Ades ratio = 3/6

Ades share to be taken by Tony and Rose in the ratio 2 : 1

Tony gets: 3/6 x 2/6

= 6/18

Rose gets: 3/6 x 1/3

= 3/18

New ratio between Tony and Rose = 6 : 3

= 2 : 1


Correct option: C

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