Principles of Accounting | Study Mode

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Question 11
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 12
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 13
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 14
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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Question 15
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 16
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 17
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 18
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 19
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 20
A
#22,800
B
#9,200
C
#800
D
#21,200
Explanation

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


Correct option: B

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