# Principles of Accounting | Study Mode

Question 21
A
Formation
B
dissolution
C
winding up
D
termination
##### Explanation

It is the first step in termination process

Question 22
A
4000
B
300
C
4300
D
5000

Question 23
A
Cost price
B
new price
C
invoice price
D
normal price
##### Explanation

Branch stock adjustment account deals with the loading on the respective items of goods relating to Branch stock account.

Branch adjustment account is prepared at invoice price.

The difference between the two sides of this account reveals either gross profit (if credit side is greater than the debit side) or gross loss (if debit side is greater than the credit side).

Question 24
A
#20,500
B
#23,000
C
#28,000
D
#27,000
##### Explanation

Average stock is the calculating the addition of stock at the beginning and at the end of the financial period and dividing the value by two.

It is the average value of products kept for sale during an accounting period.

Therefore:

Average stock = opening stock + closing stock/2

= 32000 + 9000/2

= 41000/2

=? 20500

Question 25
A
#61,000
B
#62,000
C
#58,000
D
#57,000
##### Explanation

Cost of goods sold is the direct costs attributable to the production of the goods sold in a company.

Cost of goods available for sale (32000 + 39000) = 71000

Less closing stock = 9000

Cost of goods sold = 7100 - 9000

= 62000

Question 26
A
Promote mutual understanding
B
Enhance mistrust
C
Encourage discrepancy
D
Control funds
##### Explanation

Partnership deed can be used to:

i. Indicates terms on which the business corporation us founded

ii. To form a partnership for the purpose of doing business together

iii. Prevent future disputes

iv. Promote mutual understanding

v. Avoid mistrust

Question 27
A
Goods are sold at specific prices
B
goods are perishable
C
goods attract different gross profit percentage
D
to disclose gross profit or loss
##### Explanation

cost price method is used to enhance quick sales

Question 28
A
#40,000
B
#41,500
C
#41,700
D
48,500
##### Explanation

Trading, profit and loss account for the month ended 31/1/95

For the month ended 31/1/95

? ?

Sales 8200

Cost of sales:

Purchases 15000

Closing stock(10000) (5000)

Gross profit8200

Gross profit b/d 8200

Sales commission 500

Rent 1000 (1500)

Net profit1700

WORKINGS:

Rent paid for 12 months 12000

Rent paid for one month

12000 x 1/12(1000)

Prepaid rent11000

Balance sheet as at 31/1/95

Noncurrent asset:

Furnishing 10000

Ceiling fan1500 11500

Current asset:

Cash (see cash account) 9200

Inventory 10000

Prepaid rent (see above) 11000 30200

41700

Capital 40000

Net profit (see p&l) 1,700

41700

Question 29
A
Profit and loss account as brought forward figure
B
Closing balance sheet as carried forward figure
C
Closing balance sheet as brought forward figure
D
Profit and loss as carried forward figure
##### Explanation

fixed asset are brought forward in closing balance sheet

Question 30
A
?705
B
?500
C
?1000
D
?10000