Principles of Accounting | Study Mode

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Question 11
A
Current asset
B
Fixed asset
C
Current liability
D
Fixed liability
Explanation

calls in advance is treated as a current liability until the calls are made and the amount actually becomes payable by the shareholders


Correct option: C
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Question 12
A
To cover some expenses of the following year
B
To show the provisions made during the year
C
To show the total expenses paid and income received during the year
D
To ascertain the actual expenses incurred and income earned during the year
Explanation

Fundamental principle of preparing P&L account is that expenses and income relating to only the trading period are taken to the trading profit and loss account.


Correct option: D
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Question 13
A
Dependent branch
B
foreign branch
C
independent branch
D
single branch
Explanation

Explanation not provided, please join discuss, your contributions are welcomed


Correct option: D
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Question 14
A
Debit entry
B
Contra entry
C
Credit entry
D
Reversal entry
Explanation

A contra entry is an entry which is recorded to reverse or offset an entry on the other side of an account

When cash is remitted from the branch

Dr Bank account

Cr Branch account

Or

Dr Remittance from bank

Cr Remittance from branch


Correct option: A
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Question 15
A
Partners salaries
B
Interest on capital
C
Interest on loans
D
Partners drawings
Explanation

is charged in the profit and loss account as finance expenses


Correct option: C
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Question 16
A
1:1
B
2:3
C
1:2
D
3:2
Explanation

Acid test ratio measures the liquidity position of a company after deduction stock (inventory) from current assets

Formula: current assets less inventory/current liabilities

18000 - 4000/14000 = 1 : 1


Correct option: A
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Question 17
A
Bonus
B
Good will
C
Premium
D
Commission
Explanation

Goodwill is the excess of the purchase consideration over the total value of an entity


Correct option: B
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Question 18
A
Selling price
B
Fixed percentage on cost
C
Cost price
D
Invoice price
Explanation

Goods are transferred from head office to branch at cost price, selling price and cost price plus mark up


Correct option: C
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Question 19
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 20
A
cost based transfer price
B
market based transfer pricing
C
Dual pricing system
D
peak pricing
Explanation

Explanation not provided, please join discuss, your contributions are welcomed


Correct option: D

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