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CBSE Questions for Class 10 Elements Of Book Keeping And Accountancy Capital And Revenue Quiz 4 - MCQExams.com
CBSE
Class 10 Elements Of Book Keeping And Accountancy
Capital And Revenue
Quiz 4
Receipt from the sale of season tickets for a series of soccer matches' should be classified as _________________.
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0%
Accrued asset
0%
Accrued liability
0%
Unearned revenue
0%
Prepaid expense
Explanation
Unearned revenue is that revenue which is received in advance and services or goods are not provided against these. It has to be shown as liability and will be transferred to revenue account when the services are provided for.
Any donation received for a specific purpose is an ________.
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0%
Liability
0%
Assets
0%
Revenue receipts
0%
Capital receipts
Explanation
Donation received by the non profit organization is a receipt and should be recorded in receipt and payment account.
A donation which is received as normal course without any specific condition, is considered as revenue receipt.
A donation which is received for a specific purpose is a capital receipts. This has to be
utilized only for the specific purpose. This is a capital receipt.
A company incurred Rs. 10 crore on massive advertisement campaign during CWG in order to launch a new product in the market. This expenditure is a ______.
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0%
Capital Expenditure
0%
Revenue Expenditure
0%
Deferred Revenue Expenditure
0%
None of the above
Explanation
Deferred revenue expenditure is an expenditure which is revenue in nature and incurred during an accounting period but the benefits from this is to be arrived in coming years.
Massive advertisement campaign done by the organization will give the benefits to the business in coming years too. Hence this should be treated as deferred revenue expenditure.
Treating capital expenditure as revenue expenditure will __________.
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0%
increase profit
0%
decrease profit
0%
increase net worth
0%
increase current ratio
Explanation
Treating Capital expenditure as revenue expenditure is an error of principle.
If capital expenditure is treated as revenue expenditure, this will reduce the profitability.
For example, Rs.5000 purchase of furniture is debited to purchase account. In such a case, purchases increase which ultimately reduces profits.
Cost of goods sold is Rs. 1,00,000, rate of gross profit on sales is 20%. What is the amount of sales?
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0%
Rs. 1,20,000
0%
Rs. 80,000
0%
Rs. 1,25,000
0%
None of these
Explanation
Gross Profit is represented as
Sales-Cost of Goods sold=Gross Profit
Assuming sales is Rs.100, than gross profit is Rs.20
Cost of goods sold represent 80% of the sales.
In the given situation:
Cost of goods sold is Rs 100000 which is 80% of sales
Sales= Rs 100000/80*100
Sales Rs 125000
The written down value of a plant is Rs. 6,000 (the original value being Rs. 10,000). It is sold for Rs. 12,000 during the current financial year. Which one of the following is true in this regard?
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0%
Capital profit = Rs.6,000
0%
Revenue profit = Rs. 6,000
0%
Capital profit and Revenue profit = Rs.2,000 and Rs.6,000.
0%
Capital profit = Rs. 12,000
Explanation
Capital profit
is a
capital gain
which is arise from the sale of
capital
asset such as stock, bond,real estate etc. when the asset is sold at a price which exceeds the purchase price the
profit
is
capital profit.
Revenue
is the total amount of income generated by the sale of goods or services related to the company's primary operations.
Capital profit = 12000 - 10000
= 2000
Revenue Profit = 12000 - 6000
= 6000
Which of the following is correct ?
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0%
Pre-operative expenses are revenue expenses.
0%
Errors of Principle will affect Trial Balance.
0%
Depreciation is an amortised expenditure.
0%
When we buy furniture on cash, we debit Cash Account.
Explanation
Option A is correct.
This is because pre-operative expenses are those expenses incurred by a company before commencement of commercial operation, or before starting to earn income through the production and sale of goods. EG: Flotation costs of issuing Shares, registration costs of the firm, legal costs etc.
Option B is the wrong answer because errors of principle will not affect trial balance.
Option C is also the wrong answer because depreciation is a capital expenditure.
Option D is also the wrong answer because when we buy furniture on cash we debit Furniture A/c and credit Cash A/c.
Sale of investment is ______________.
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0%
Capital receipts
0%
Capital expenditure
0%
Both (A) & (B)
0%
None of the above
Explanation
Receipts are sub classified as revenue receipt and capital receipt.
Revenue receipt are those which received during the course of normal business operations. Like sale of goods etc.
Capital receipts are those which received on account of sale of any capital item. Sale of investment is a non trading activity hence it is a capital receipt.
A machine with a written down value of $$Rs 10000$$ has been sold for $$Rs 13000$$. The amount realized is a ___________.
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0%
capital receipt and profit involved should be transferred to capital reserve
0%
revenue receipt
0%
capital receipt and profit involved should be transferred to General Reserve
0%
capital receipt and profit involved should be transferred to profit and loss account
The following are capital expenditure except______.
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0%
computer and office equipment purchased for business use
0%
office building
0%
patents held on new product design developed
0%
furniture purchased for resale
Explanation
Anything purchased for resale is treated as goods for the business.
Hence if furniture purchased for resale, it is not a capital expenditure.
It is goods for resale and to be recorded as goods purchase account.
State with reasons, whether the following statement is True or False.
Insurance claim received on account of plant and machinery completely damaged by fire is a capital receipt.
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0%
True
0%
False
Explanation
Insurance claim received on account of machinery damaged completely by fire is called capital receipt. As this is a receipt that deals with fixed assets, it falls under capital receipt.
Option A is correct.
Which of the following statement is true?
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0%
Loan capital is paid up capital of the company
0%
Loan capital is subscribed capital of the company
0%
Loan capital is money borrowed from outsiders
0%
Loan capital is not normally repaid to the lender
Explanation
Business can be operated only with the help of money. Money in the business may be contributed in two ways i.e. from internal sources and external sources. Owner capital is an internal source of funding. Loan capital is infused by the outsiders and these should be shown in the balance sheet as long term loans.
Which of the following items is not an operating expenses?
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0%
Interest on debentures
0%
Office expenses
0%
Selling overheads
0%
Postage expenses
Explanation
Operating expenses are those expenses which are incurred to performed the normal business activities of the organization. This may includes Rent, Office Expenses , Salaries of the staff etc.
Interest on debenture is not directly associated with the routine business activity, hence its a non operating expense.
The following are the figures relating to a trader:
Opening stock
$$Rs. 1,00,000$$
Closing stock
$$Rs. 1,10,000$$
Purchase
$$Rs. 7,00,000$$
The goods are sold at a profit of $$30$$% on cost. The amount of sales will be_________.
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0%
$$Rs. 10,40,000$$
0%
$$Rs. 9,10,000$$
0%
$$Rs. 8,97,000$$
0%
$$Rs. 2,10,000$$
Explanation
Solution will be as under:
Cost of Goods Sold= Opening Stock+Purchases-Closing Stock
Cost of Goods Sold= Rs.100000+Rs.700000-Rs.110000
Cost of goods sold= Rs.690000
Gross Profit @30% on Cost= Rs.690000*30%
Gross Profit=Rs.207000
Sales=Cost of Goods Sold+Gross Profit
=Rs.690000+Rs.207000
Sales = Rs.897000
Extract of trial balance of Mr. Q is as follows.
Particulars
Dr. Rs.
Cr. Rs.
Sundry debtors
$$1,00,000$$
-
Sundry creditors
-
$$78,000$$
Additional information:
Included in sundry debtors Rs. $$5,000$$ due from Mr. A. Included in sundry creditors Rs. $$2,000$$ payable to Mr.A.
Sundry debtors and creditors will appear in balance sheet at __________ & Rs. ___________.
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0%
$$97,000; 75,000$$
0%
$$98,000; 76,000$$
0%
$$95,000; 76,000$$
0%
$$98,000; 72,000$$
Explanation
Since Rs.5000 due from Mr. A included in Sundry Debtors and Rs.2000 payable to Mr. A is included in Sundry Creditors. Hence Rs.2000 is a common adjustment amount which need to be deducted from Sundry Debtors and Sundry Creditors account by passing an accounting entry:
Sundry Creditors A/c Dr.
To Sundry Debtors A/c
Hence revised figures to be shown in balance sheet:
Sundry Debtors Rs.100000-Rs.2000= Rs.98000
Sundry Creditors Rs.78000-Rs.2000= Rs.76000.
The net assets of a firm at the beginning of 2007 were Rs. 107,What were the net assets in the year 2007, if the profit earned by the business in 2007 was Rs. 72,500 and owner withdrew goods for his own private use that had cost Rs. 2,500.
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0%
Rs. 177,200
0%
Rs. 107,700
0%
Rs. 177,700
0%
Rs. 176,700
Explanation
This can be represented as:
Opening Capital + Profit during the year- Drawings=Closing Capital
Rs.107700 + Rs.72500 - Rs.2500= Rs.177700
Closing Capital = Rs.177700
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Practice Class 10 Elements Of Book Keeping And Accountancy Quiz Questions and Answers
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