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Complete resources on Partnership Accounts
A. Account Current MCQ
- An account current is normally exchanged between :
a. Consignor and consignee.
b. Broker and his clients.
c. Supplier and customer
d. All of the above
Account current is often exchanged between Consignor & Consignee, Broker & Clients and Supplier & Customer. So, option (d) is correct - Product method interest is calculated on balance for
a. Each day
b. Each month
c. Annual
d. None of the above
Under Product method, interest is usually calculated on Daily Balance. So, option (a) is correct. - Under Époque method no. of days are calculated
a. From the due date to the closing date.
b. From the date of the transaction to the date of the beginning of the account.
c. From its date or due date to the date of the following transaction
d. None of the above
Under Époque method no. of days are calculated from the date of the transaction to the date of the beginning of the account. So, option (b) is correct.
B. Average Due Date
- If there is an unspecified holiday, the maturity date will be taken as
a. Preceding the due date.
b. The next following day.
c. Any working day within this week.
d. None of the above.
If there is an unsuspected holiday, the maturity date will be taken as the next working day. So, option (b) is correct. - A Promissory Note executed by Mr.X is due on 12.8.17. What is the maturity date of the Promissory Note including grace days?
a. 15.8.17
b. 16.8.17
c. 14.8.17
d. None of the above
As the 3rd day after the due date, i.e 15.8.17 is holiday, the due date would be 14.8, the preceding day. So, option (c) is correct. - If a bill is drawn on 28th June for 3 months, it will mature on
a. 1st October
b. 2nd October
c. 3rd October
d. 4th October
Bill is drawn on 28th June for 3 months, will mature 3 days after 28th Sep, i.e 1st Oct. So, option (a) is correct. - If payment is made on the average due date , it will result
a. A Loss of interest to creditor
b. A loss of interest for the debtor.
c. A gain for both debtor and creditor
d. None of the above
If payment is made on the average due date, it will result no loss no gain for both debtor and creditor. So, option (d) is correct. - If the due date of a bill falls on Sunday or gazetted holiday, its due date will be taken as
a. The preceding day
b. The next day
c. Any working day within this week.
d. None of the above.
If the due date of a bill falls on Sunday or gazetted holiday, its due date will be taken as the preceding day. So, option (a) is correct.
C. Branch Accounts
- Goods are sent to Branch at cost plus 25%. The loading on the invoice price is
(a) 16%
(b) 20%
(c) 25%
(d) None of the above.
Loading on invoice price = 1-(100/125) % = 20%. Hence option (b) is correct - Kolkata Branch sells goods at cost plus 25%. Cash sales and credit sales of Kolkata Branch for the year were Rs.5, 00,000 and Rs.10, 00,000 respectively. The cost of goods sold by the Kolkata Branch was
(a) Rs.5, 00,000
(b) Rs.8, 00,000
(c) Rs.10, 00,000
(d) Rs.12, 00,000.
Cost of goods sold = (Cash sales + Credit sales) / Mark-up percentage = (15, 00,000 / 125) * 100 = 12, 00,000. Hence option (d) is correct - The fixed assets accounts of Poona Branch are maintained by the head office. In such case
(a) No entry is passed by the branch for depreciation on fixed assets.
(b) Branch account is debited and fixed assets is credited in the books of head office.
(c) Depreciation account is debited and head office account is credited in the books of branch.
(d) Both (b) and (c) above.
When Books of Accounts of Branch are maintain at Head Office, depreciation is provided in the books of Head Office only, by debiting Depreciation Account and in Books of Brach, Head office account is credited. So, option (d) is correct
- If the product of a company is sold at a discount of 10% on list price which is loaded with a profit of 20% on cost, then the gain of the product is —- %.
(a) 20
(b) 15
(c) 10
(d) 8
Let the price of the product be ‘100’, then the discounted price is 100-10=90; Sale price = 90 x (100+20)% = 108. So gain = (108 – 100)% = 8%. So, option (d) is correct.
D. Hire Purchase
- At the time of entering the hire purchase transaction, the amount paid by the hire purchaser for the goods purchased is known as
a. First Instalment
b. Cash Price
c. Down payment
d. Hire Purchase price
At the time of entering the hire purchase contract, the amount paid by the hire purchaser for the goods purchased is known as Down Payment. Hence option (c ) is correct - The difference between is the total interest on hire purchased goods.
a. Hire Purchase Price and Cash Price
b. Hire Purchase Price and Down Payment.
c. Cash Price and 1st Instalment.
d. None of the above
The difference between Hire Purchase Price and Cash Price is the total interest on hire purchased goods. Hence option (a ) is correct - If default is made in payment of instalment by the hire-purchaser the vendor
a. Can not repossess the goods.
b. has the right to retake possession of the goods.
c. can only sue for the unpaid instalments.
d. None of the above
If default is made in payment of instalment by the hire-purchaser, the vendor has the right to retake possession of the goods from the hire purchaser. Hence option (b ) is correct - Depreciation is claimed by —– on hire purchased assets
a. Hire Purchaser
b. Hire vendor
c. Either the hire vendor or the hire purchaser according to their agreement
d. No depreciation till the last instalment is received.
Depreciation is claimed by Hire Purchaser on hire purchased assets. So, option (a) is correct - The hire-purchase price for goods is
a. more than the cash price.
b. less than the cash price.
c. as same as cash price.
d. none of the above.
The hire-purchase price for goods is more than Cash Price as Interest (and price of inherent risk) is included in the Hire Purchase Price. So, option (a) is correct - A machine was purchased on hire purchase system. Down payment was made Rs.10,000, and Rs.10,000 annually for 3 years. The cash price was Rs.35,000. The rate of interest is 10%. What will be the interest amount for 2nd year.
a. Rs.2,750
b. Rs.1,750
c. Rs.2,500
d. None of the above
Cash Price =35,000. Down payment=10,000. Balance Due at end of 1st year= 35000-10000=25000. So Interest for 1st year = 10% of 25000=2500. Balance would become 25000+2500=27500.
1st Instalment Rs 10000. Balance Due = 27500-10000=17500. Interest for 2nd year= 10% of 17500=1750. Hence option (b) is correct
- On 1st January, 2009 a car was purchased on hire purchase basis. Rs.90,000 payable by three equal annual instalments combining principal and interest, the rate of interest was 5% p.a. The present value of an annuity of one rupee for three years at 5% is Rs.2.72325. Calculate the amount of cash selling price.
a. Rs.2,45,092.50
b. Rs.81,698
c. Rs.94,500
d. None of the above
The present value of annuity of Re.1 paid for 3 years @ 5% = Rs.2.72325. So, the present value of Rs.30,000 for 3 years = Rs. (30, 000 x 2.72325) = Rs.81,698 (approx). So, option (b) is correct.
E. Insurance Claims
- Amount of Policy Rs.70,000. Value of the stock at the date of fire Rs.1,00,000. Salvage Value Rs.20,000. The claim will be after applying Average Clause-
a. Rs.70,000
b. Rs.56,000
c. Rs.80,000
d. None of the above
Stock Value (Net Claim)=1,00,000 (Total Stock on date of fire) – 2000 (Salvage Value) = 80000. Amount of Claim= 80,000 x 70,000/1,00,000 = Rs.56,000. Hence option (b) is correct. - Date of fire 1st June, 2022. Indemnity Period 3 months. Sales from 1st June, 2021 – 30th August 2021 was Rs.80,000. Sales during indemnity period Rs.20,000. Sales are expected to increase by 5%. Find out the Short Sales.
a. Rs.64,000
b. Rs.60,000
c. Rs.63,000
d. None of the above
Short sales = 80000 (standard Turnover) + 4000 (Expected Increase 5% of 80000) – 20000 (Sales during indemnity period) = 64000. Hence option (a) is correct.
Ans. a. Rs.64,000
F: Investment Accounts – MCQ
- Ram furnishes the following details relating to his holding in 16% Debentures of Sita Ltd. Interest dates are 30th September and 31st March.
Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000.
Interest on Opening Balance is :
a. Rs.2,400
b. Rs.9,600
c. Rs.2,360
d. None of the above
Interest on Rs.60,000@ 16% for 3 months (1.10.07 – 31.12.07)= Rs.2,400. Hence option (a) is correct. - Ram holds 16% Debentures held . Interest dates are 30th September and 31st March. Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000.
On 1.03.18, 100 units purchased ex interest at Rs.98. So interest amount will be
a. Rs.667
b. Rs.2,400
c. Rs.267
d. None of the above
Interest on Rs.10,000 @ 16% for 5 months on 1.03.08 (1.10.07-1.03.08)=Rs.667. Hence option (a) is correct. - Ram holds 16% Debentures held. Interest dates are 30th September and 31st March. Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000. On 1.03.18, 100 units purchased ex interest at Rs.98. So interest amount will be
Interest received amount will be on 31st March, 2018
a. Rs.11,200
b. Rs.5,600
c. Rs.2,800
d. None of the above
Interest on Rs.( 60,000+10,000)=Rs.70,000 @ 16% for 6 months on 31.03.08 (1.10.07 – 31.03.08)=Rs.5,600. Hence option (b) is correct. - Ram holds 16% Debentures held . Interest dates are 30th September and 31st March. Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000. On 1.03.18, 100 units purchased ex interest at Rs.98. On 1.07.08, sold 200 Debentures ex interest out of the original holding at Rs.100. Brokerage is 1%. Interest amount on sale will be on 1.07.18
a. Rs.2,133
b. Rs.1600
c. Rs.800
d. None of the above
Interest on Rs.20,000 @ 16% for 3 months on 1.07.08(1.4.08- 1.7.08)= Rs.800. Hence option (c) is correct. - Ram holds 16% Debentures held . Interest dates are 30th September and 31st March. Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000. On 1.03.18, 100 units purchased ex interest at Rs.98. On 1.07.08, sold 200 Debentures ex interest out of the original holding at Rs.100. Brokerage is 1%. Interest amount on sale will be on 1.07.18
Interest received on 30th September will be
a. Rs.4,000
b. Rs.6,000
c. Rs.8,000
d. None of the above
Interest on Rs.(60,000+10,000-20,000)=Rs.50,000 for 6 months on 30th September (1.4.08-30.9.08)=Rs.4,000. Hence option (a) is correct. - Ram holds 16% Debentures held . Interest dates are 30th September and 31st March. Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000. On 1.03.18, 100 units purchased ex interest at Rs.98. On 1.07.08, sold 200 Debentures ex interest out of the original holding at Rs.100. Brokerage is 1%. Interest amount on sale will be on 1.07.18. On 1.10.08 purchased 50 Debentures at Rs.98 cum interest. The interest will be
a. Rs.400
b. Rs.600
c. Rs.200
d. None of the above
On 1.1.08, the interest amount will be Nil. Even if it is cum interest transaction, there is no interest since the date of interest only 30.9.08. Hence option (d) is correct. - Ram holds 16% Debentures. Interest dates are 30th September and 31st March. Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000. On 1.03.18, 100 units purchased ex interest at Rs.98. On 1.07.08, sold 200 Debentures ex interest out of the original holding at Rs.100. Brokerage is 1%. Interest amount on sale will be on 1.07.18. On 1.10.08 purchased 50 Debentures at Rs.98 cum interest. Ram closes its books on 31st December. Nominal Value at the end of the year will be
a. Rs.60,000
b. Rs.55,000
c. Rs.50,000
d. None of the above.
Closing Balance at the end of the of the year Rs.(60,000+10,000-20,000+5,000)=Rs.55,000. Hence option (b) is correct. - Ram holds 16% Debentures . Interest dates are 30th September and 31st March. Opening Balances (1.1.2018), face value Rs. 60,000, cost Rs.59,000. On 1.03.18, 100 units purchased ex interest at Rs.98. On 1.07.08, sold 200 Debentures ex interest out of the original holding at Rs.100. Brokerage is 1%. Interest amount on sale will be on 1.07.18. On 1.10.08 purchased 50 Debentures at Rs.98 cum interest.. Ram closes its books on 31st December. Interest accrued at the end of year :
a. Rs.8,800
b. Rs.4,400
c. Rs.2,200
d. None of the above
Accrued interest at the end of the year on Rs.55,000 for 3 months @ 16% on 31.12.08(1.10.08-31.12.08)=Rs.2,200. Hence option (c) is correct. - If an investor receives pre acquisition dividend, it will be treated as
a. Capital Receipt
b. Revenue Receipt
c. Income
d. None of the above
If an investor receive a pre acquisition dividend, it will be treated as Capital Receipt. Hence option (a) is correct. - The investment, which are easily realizable and not held for more than 1 year from the investment date is called
a. Long term Investment
b. Current Investment
c. Trade Investment
d. None of the above
Investment easily realizable and held upto 1 year is called Current Investment. Hence option (b) is correct.
- Cost of Current investment can be calculated on the basis of
a. Average Cost
b. FIFO
c. LIFO
d. All of a. b. c.
Cost of Current investment can be calculated on the basis of any of the methods: Average Cost, FIFO, LIFO. So, option (d) is correct.
G: Lease Accounting
- During the lease term, the lessor can recover his capital outlay plus a return on his investment in the asset. This type of lease is called
a. Finance lease.
b. Operating lease
c. Non- Cancelable lease.
d. None of the above
Lease in which the lessor can recover his capital outlay plus a return on his investment in the asset during the lease term is called Finance Lease. Hence option (a) is correct. - Lease that does not transfer substantially all the risks and rewards incident to ownership of an asset, is called
a. Operating lease
b. Non- Cancelable lease
c. Finance lease.
d. None of the above
Lease that does not transfer substantially all the risks and rewards incident to ownership of an asset, is called Operating lease. Hence option (a) is correct. - Leasing involves a high risk of technological obsolescence and under utilization of the asset for
a. Lessor.
b. Lessee.
c. Both
d. None of the above
Leasing involves a high risk of technological obsolescence and under utilization of the asset, both for Lessor and lesee. Hence option (c) is correct. - Residual Value means
a. The Gross Investment of the lease.
b. The estimated fair value of the asset at the inception of the lease term.
c. The estimated fair value of the asset at the end of the lease term.
d. None of the above.
Residual Value means estimated fair value of the asset at the end of the lease term. Hence option (c) is correct. - Under Operating Lease, asset given under lease agreement, in Balance Sheet is shown as
a. Finance income
b. As Receivable amount equal to Net Investment.
c. Fixed Assets.
d. None of the above.
Under Operating Lease, asset given under lease agreement, in Balance Sheet is shown as Fixed Assets. Hence option (c) is correct. - Following information of a Lease Investment is given .
Lease term: 4 years. Fair value at inception of lease : 16,00, 000. Fair value at inception of lease : 16,00, 000, Lease Rent :.5,00, 000 p.a. at the end of year, Present Value of Gross Investment : 16,00,000. Guaranteed Residual Value : 1,50, 000. Expected Residual Value : 3,50, 000. Implicit Interest Rate : 14.97%. Present value of Gross Investment : Rs.7,00,000. Gross Investment will be-
a. Rs.23,50,000
b. Rs.21,50,000
c. Rs.22,00,000
d. None of the above
Gross Investment= Minimum Lease Payment or MLP + Guaranteed Residual Value + Unguaranteed Residual Value =[20,00,000 + 1,50,000 +( 3,50,000 – 1,50,000)] =20,00,000 + 1,50,000 +2,00,000
=23,50,000. Hence option (a) is correct - Following information of a Lease Investment is given .
Lease term: 4 years. Fair value at inception of lease : 16,00, 000. Fair value at inception of lease : 16,00, 000, Lease Rent :.5,00, 000 p.a. at the end of year, Present Value of Gross Investment : 16,00,000. Guaranteed Residual Value : 1,50, 000. Expected Residual Value : 3,50, 000. Implicit Interest Rate : 14.97%. Present value of Gross Investment : Rs.7,00,000. Unearned Finance income is:
a. Rs.5,50,000
b. Rs.6,00,000
c. Rs.7,50,000
d. None of the above
Gross Investment= Minimum Lease Payment or MLP + Guaranteed Residual Value + Unguaranteed Residual Value =[20,00,000 + 1,50,000 +( 3,50,000 – 1,50,000)] =20,00,000 + 1,50,000 +2,00,000 =23,50,000.
Unearned Finance Income = Gross investment – present value of gross investment= 23,50,000 – 16,00,000) = 7,50,000. So, option (c) is correct
- Following information is given
Lease term: 4 years. Fair value at inception of lease : 16,00, 000. Fair value at inception of lease : 16,00, 000, Lease Rent :.5,00, 000 p.a. at the end of year, Present Value of Gross Investment : 16,00,000. Guaranteed Residual Value : 1,50, 000. Expected Residual Value : 3,50, 000. Implicit Interest Rate : 14.97%. Present value of Gross Investment : Rs.7,00,000. Net investment will be:
a. Rs.18,00,000
b. Rs.17,50,000
c. Rs.16,00,000
d. None of the above
Net investment in lease = Gross investment – unearned finance income = 23,50,000 – 7,50,000 = 16,00,000. So, option (c) is correct.
H. Not for Profit Organisation MCQ
- Subscription received during a year Rs.18,000. Outstanding subscription during the year Rs.1,000.Subscription received in advance during the year Rs.400. Outstanding subscription during the previous year Rs.2,000. Subscription received in advance during the previous year Rs500. Find out the subscription for the current year.
a. Rs.18,900
b. Rs.21,100
c. Rs.17,100
d. None of the above
Subscription for the Current Year = 18000 ( Subscription received during the year) + 1000 (Outstanding during the year) – 400 (Advance received during the year) – 2000 (Outstanding subscription during the previous year) + 500 (received in advance during the previous year) = 1800+1000-400-2000+500=17100. So, option (c ) is correct.
