Thursday, March 15, 2012

Accounting Quiz - 2 (Financial Accounting)

1. A credit sale of Rs.2,000 was wrongly entered in the purchases book. The impact of the mistake on profit is, it
[A]Decreases the gross profit by Rs.2,000
[B]Increases the gross profit by Rs.2,000
[C]Decreases the gross profit by Rs.4,000
[D]Increases the gross profit by Rs.4,000

2. Goods worth Rs.750 have been purchased from S & Co. But while posting the entry, the credit was given to R & Co. The total of credit side of the trial balance is Rs.43,570. Assuming that, this is the only error, indicate the total of the debit side of the trial balance before rectification.

3. Consider the following data pertaining to Joy Ltd. for the year ended March 31, 2011:
Cash sales Rs 4,00,000
Decrease in inventory Rs. 40,000
Plant & Machinery Rs.1,70,000
Rent received Rs. 55,000
Purchases Rs 2,85,000
Sales commission paid Rs. 12,000
The company noticed the following:
• An amount Rs.2,500 is the amount of rent received in advance.
• A credit purchase of Rs.15,000 was wrongly recorded in sales day book as Rs.51,000.
• The company has the practice of depreciating the Plant and Machinery at the rate of 15% per annum on straight line method. The original cost of the Plant and Machinery was Rs.2,00,000.
• Sales commission was paid only to the extent of two thirds of the amount payable.
Considering the above data and the additional information, the net profit of the company for the period ended March 31, 2011 was

4. There was a fire in the factory of Mr. Anand and goods worth Rs.10,000 were lost. However, Mr. Anand who was far-sighted, already insured the goods and the insurance company accepted the claim to the extent of Rs.8,000. The treatment of this is
I. Debit Profit and Loss Account by Rs.2,000
II. Debit insurance company account by Rs.8,000
III. Credit Trading Account by Rs.10,000
IV. Deduct Rs.2,000 from closing stock
[A]Only (I) above
[B]Only (II) above
[C]Only (III) above
[D](I), (II) and (III) above

5. X Ltd. was showing a balance of Rs.30,000 to the debit of building account. It was sold for Rs.45,000. The gain on the sale of building was transferred to the profit and loss account, thus making the net profit equal to Rs.1,70,000. The profit from operations will be

6. Consider the following extracts of the trial balance of Nilgiri Ltd. as on March 31, 2004:
Particulars Rs.
Share Capital 5,76,900
12%Bank loan 1,50,000
Sundry creditors 50,000
Bills payable 10,000
Land & building 4,36,000
Cash at bank 23,500
Office equipment 1,99,700
Furniture 2,00,000
Closing stock 38,000
Bills receivable 9,000
Sundry debtors 55,000
Petty cash 210
Cash on hand 9,400
For the year ending March 31, 2004, the following adjustments were effected
• Depreciation on – Office equipment: Rs.19,970, Furniture:Rs.30,000
• Reserve for discount on Sundry creditors is Rs.720. Provision for discount on Sundry debtors is Rs.779
• Sundry creditors include a debt of Rs.8,000 due to Mr.Madhukar who is also in the list of Sundry debtors for the same amount
• Accrued commission receivable amounted to Rs.13,000 and prepaid printing charges aggregated to Rs.1,850, Accrued interest on bank loan is of Rs.15,000. After effecting the above adjustments, the net profit was Rs.1,33,731.
The total of the Balance Sheet of the company as at March 31, 2004 was

7. Consider the following data pertaining to Jagriti Ltd. as on March 31, 2004:
Particulars Amount (Rs.) Amount (Rs.)
Opening stock 90,000
Sales 6,35,000
Purchases 4,56,000
Salaries 86,000
Other expenses 73,000
Fixed assets 5,00,000
Sundry debtors 45,000
Sundry creditors 32,000
Cash and bank 53,000
Share capital 6,00,000
Short term loan 36,000
13,03,000 13,03,000
The value of stock as on March 31, 2004 is Rs.75,000. The company has the practice of charging depreciation on the fixed assets at the rate of 15% on written down value method. The total of liabilities side of balance sheet as on March 31, 2004 is

8. The amount earmarked for distribution to the shareholders is known as
[A]Profit after tax
[B]Retained earnings
[D]Operating profit

9. AB Ltd. follows perpetual inventory system. On March 31 every year, the company undertakes physical stock verification. On March 31, 2011, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:
• Stock register was overcast by Rs.6,000.
• Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.
• Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.
• Goods worth Rs.5,000 are returned to the suppliers but the same is omitted to be recorded. If the inventory is valued in the books at Rs.1,50,000, the value of physical inventory is

10. The following information pertains to Whitestar Ltd. for the year 2003–2004:
Particulars April 1, 2003 March 31, 2004
Inventory Rs. 72,000 Rs. 67,000
Sundry debtors Rs. 47,000 Rs. 70,000
Sundry creditors Rs. 40,000 Rs. 38,000
Total of credit sales made during the year was Rs.6,75,000. The cost of goods sold of the company was 80% of the sales. Cash collected from the customers during the year was

11. Consider the following data pertaining to Wren Ltd. for the year 2003-2004:
Particulars Rs.
Provision for doubtful debts as on April 1, 2003 4,000
Sundry debtors as on March 31, 2004 1,50,000
Bad debts to be written off 10,000
If a provision equal to 5% is to be created on the debtors’ balances, the charge against profit and loss account for the year ended March 31, 2004 is

12. Consider the following information pertaining to XYZ Ltd.:
On April 01, 2003, the provision for bad debts account showed a balance of Rs.30,000. As on March 31,2004, the status of the following debtors is
• Mr. A had become insolvent and only 40 paise in a rupee is expected to be realized out of his estate in full settlement. He owed a total amount of Rs.20,000
• Mr. B who owes an amount of Rs.10,000 became bankrupt and it was understood that no amount will be recovered from him.
• Mr. C has agreed to pay Rs.3,000 as final settlement against his dues of Rs.10,000 and the balance is irrecoverable.
If the company decided to maintain the provision at Rs.35,000 as on March 31, 2004, the amount to be debited to Profit and loss account, after considering the above, is

13. Among the various methods for valuation of inventory, Specific Identification method is the most suitable method for valuation of
[D]Diamond Jewellery

14. Which of the following is not classified as inventory in the financial statements?
[A]Finished goods
[C]Stores and spares
[D]Advance payment made to suppliers for raw materials

15. Consider the following data pertaining to a company for the year 2010-2011:
Opening balance of sundry debtors Rs. 45,000
Credit sales Rs.4,25,000
Cash sales Rs. 20,000
Cash collected from debtors Rs.4,00,000
Closing balance of sundry debtors Rs. 50,000
The bad debts of the company during the year are