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CBSE Questions for Class 10 Elements Of Book Keeping And Accountancy Final Accounts Quiz 10 - MCQExams.com
CBSE
Class 10 Elements Of Book Keeping And Accountancy
Final Accounts
Quiz 10
Which of the following are generally the inventories of a service business _________.
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0%
Finished goods inventories
0%
Purchased goods
0%
Raw materials inventories
0%
Work in process inventories
Explanation
Work in process inventories
are generally the inventories of a service business. Hence, the correct option is D.
Abnormal loss is debited to _________.
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0%
Profit & loss Account
0%
Consignee's Account
0%
Consignor's Account
0%
Consignment Account
Explanation
In every production activity, a predetermined percentage is considered as normal loss. If the actual loss is more than the predetermined loss, difference is considered as abnormal loss which is debited to profit & loss account.
If the rate of gross profit on sales is 25% and the cost of goods sold is Rs. 75,000, then the amount of total sales will be _________.
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0%
Rs. 1,00,000
0%
Rs. 93,750
0%
Rs. 92,150
0%
None of the Above
Explanation
This can be formulated as:
Sales - Cost of goods sold = Gross Profit
If sales is Rs.100
Then Gross Profit becomes Rs.25 (25% of sales)
Cost of Goods sold will be Rs.75 (Rs.100-Rs.25)
Cost of goods sols is equal to 75% of sales
Sales =Cost of goods sold/75%
Sales=Rs.100000
Which method of inventory valuation is most widely used in accounting?
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0%
Cost price
0%
Market price
0%
Cost or market price whichever is greater
0%
Cost or market price whichever is lower
Explanation
Conservatism concept defines that all future losses should be recorded in books of account. Stock is normally valued at cost or market value whichever is lower.
Given information:
Opening capital: $$Rs.5,000$$
Closing capital : $$Rs.6,000$$
Drawings : $$Rs.1,000$$
New capital invested : $$Rs.500$$
The profit for the year will be _____________.
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0%
$$Rs.2,000$$
0%
$$Rs.1,500$$
0%
$$Rs.1,000$$
0%
$$Rs.500$$
Explanation
The solution to the given problem can be found out through below equation:
Opening Capital
Add: Capital Invested during the year
Add: Profits during the year
------------------------------
Less: Drawings during the year
------------------------------
Balance - Closing Capital at the end
therefore,
Rs.5000 + Rs.500 + Profit - Rs.1000 = Rs.6000
Rs.5500 + Profit - Rs.1000 = Rs.6000
Rs.4500 + Profit = Rs.6000
Profit of the year = Rs.6000 - Rs.4500
Profit = Rs.1500
A reserve is charged against __________.
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0%
Trading Account
0%
Profit and Loss Account
0%
Profit and Loss Appropriate Account
0%
None of the Above
Explanation
Charge to profit & loss appropriation would results in a debit to the profit & loss account and reduce the profit available for further distribution. Reserve mean the amount set aside from profit & loss account for an unknown liability or contingencies.
Which of the following is true for a company which continuous reviews its inventory system?
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Order Interval is fixed
0%
Order Interval varies
0%
Order Quantity is fixed
0%
Both A and C
Explanation
Continuous inventory system or perpetual inventory system of inventory describes the system of inventory where information of inventory quantity with the availability is monitored on a regular basis.
As inventory ordering is also based on the availability of stock, order intervals may change because of the perpetual inventory system.
Inventory, is generally valued as lower of ________________.
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0%
Market Price and Replacement Cost
0%
Cost and Net Realizable Value
0%
Cost and Sales Value
0%
Sales Value and Profit
Explanation
Financial accounting is based on certain conventions , conservatism is one of them. Conservatism convention is based on the the concept "playing safe". Accordingly firms are recording all anticipated losses in books of account.
Valuation of inventory on the basis of cost or net realizable value is also based on the conservatism convention.
EOQ determines the order size when ______________.
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0%
Total order cost is minimum
0%
Total number of order is least
0%
Total inventory cost is minimum
0%
None of the above
Explanation
Economic Order Quantity is the optimum quantity of goods that a firm may order in one time to minimize the annual cost of ordering and inventory carrying cost.
EOQ is based on certain assumptions:
a) Annual Demand
b) Ordering Cost
c) Carrying cost
If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ __________.
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0%
$$(2AO/C)^2$$
0%
$$\sqrt{2AO/C}$$
0%
2A $$\div$$ OC
0%
2AOC
Explanation
Economic order quantity (EOQ) is the order quantity of inventory that minimizes the total cost of inventory management. Two most important categories of inventory costs are ordering costs and carrying costs. Ordering costs are costs that are incurred on obtaining additional inventories. They include costs incurred on communicating the order, transportation cost, etc. Carrying costs represent the costs incurred on holding inventory in hand. They include the opportunity cost of money held up in inventories, storage costs, spoilage costs, etc.
If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ = $$sqrt[2AO}/{C}$$
If the rate of gross profit is 25% on cost by goods sold and the sales are Rs. 2,00,000 the amount of profit will be ___________.
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0%
Rs. 50,000
0%
Rs. 40,000
0%
Rs. 45,000
0%
Rs. 65,000
Explanation
This can be simply calculated as :
Cost + Gross Profit=Sales
Assuming the cost is 100, than gross profit becomes 25
Hence
100+25= Sales i.e. 200000
therefore
200000/125*25= Rs.40000/-
Gross profit will be Rs.40000
Depreciation on machinery amounting to Rs. 25,000 is appearing in the Trial Balance of a firm. When preparing Final Accounts, it should be shown in ________________.
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0%
Profit and Loss Account (Dr. side)
0%
Profit and Loss Account (Cr. side)
0%
Balance Sheet (Assets side)
0%
Balance Sheet (Liability side)
Explanation
Depreciation is charged on the value of fixed assets based on the a certain percentage every year. Depreciation is a reduction in the value of fixed due to its usage and were and tear.
Depreciation is an indirect loss to the business and should be debited to the Profit & Loss account of the particular year by passing the below journal entries:
Depreciation A/c Dr. 25000
To Fixed Assets 25000
(Being depreciation provided)
Profit & Loss A/c Dr. 25000
To Depreciation A/c 25000
If the opening capital is Rs. 50,000 as on April 01, 2005 and additional capital introduced Rs. 10,000 on January 01,The interest charge on capital 10% p.a. The amount of interest on capital shown in profit and loss account as on March 31, 2005 will be:
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0%
Rs. 5,250
0%
Rs. 6,000
0%
Rs. 5,000
0%
Rs. 4,500
Explanation
Sometimes, the proprietor may like to know the profit made by the business after providing for interest on capital. In such a situation, interest is calculated at a given rate of interest on capital as at the beginning of the accounting year. If however, any additional capital is brought during the year, the interest may also be computed on such amount from the date on which it was brought into the business. Such interest is treated as and expense for the business and the following journal entry is recorded in the books of account:
Interest on Capital A/c Dr.
To Capital A/c
If the opening capital is Rs. 50,000 as on April 01, 2005 and additional capital of Rs. 10,000 on January 01, 2006. The interest charge on capital is 10% p.a. The amount of interest on capital shown in profit and loss account on March 31, 2005 will be:
Interest on Opening capital = Rs. 50,000 X 10/100
= Rs. 5,000
Interest on Additional capital = Rs. 10,000 X 10/100 X 3/12
= Rs. 250
Therefore, total amount of interest on capital = Rs. 5,000 + Rs. 250
= Rs. 5,250
The manager is entitled to a commission of 5% of net profit after changing such commission.
Profits before charging some commission is Rs. 21,000, find the commission ____________.
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0%
Rs. 1,000
0%
Rs. 2,000
0%
Rs. 3,000
0%
Rs. 4,000
Explanation
Calculation of commission = 21000 * 5 / 105
= Rs 1000.
An insurance claim of Rs. 300 was accepted in respect of stock of Rs. 500, which was destroyed by fire, Rs.200 not covered by insurance should be debited to ______________.
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0%
Stock account
0%
Trading account
0%
Profit and loss Account
0%
Bad debts accounts
Explanation
Loss of stock by fire is a loss to the business and to be debited to the profit & loss account fully if it is not insured.
In the given situation, loss of stock is Rs.500 of which a claim of Rs.300 was accepted by the insurance company. Hence the actual loss to the business is only Rs.200 which should be debited to the profit & loss account.
Which of the following is not an advantage of Trading Account?
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The percentage of Gross Profit serves as a guide in fixing the selling price of the goods in future
0%
The percentage of Net Profit on sales can be ascertained
0%
The stock at commencement can be compared with the stock at end in order to ascertain whether the purchases have been wise
0%
The trading account affords facilities for comparing the figures of sales and direct expenses with those of previous years.
Explanation
Trading account is prepared to know the Gross Profit of the business. To know the gross profit , major components are like sales , purchases opening stock, closing stocks and direct expenses are considered.
Format for the Trading account is as under:
Trading Account
To Opening Stock xxxxx By Sales xxxxx
To Purchases xxxxx By Closing Stock xxxxx
To Direct Labour xxxxx
To Direct Expenses xxxxx
To Gross Profit xxxxx
----------- -------------
xxxxx xxxxx
----------- ---------------
The following are the figures relating to a trader:
Opening stock - $$Rs.10,000$$
Closing stock - $$Rs.11,000$$
Purchase - $$Rs.70,000$$
The goods are sold at a profit of $$30$$% on cost. The amount of sales will be ____________.
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0%
$$Rs.1,04,000$$
0%
$$Rs.91,000$$
0%
$$Rs.89,700$$
0%
$$Rs.21,000$$
Explanation
Cost of Goods Sold can be be calculated as per given equation:
Opening Stock + Purchases - Closing Stock = Cost of Goods Sold
Rs.10000 + Rs.70000 - Rs. 11000
Cost of Goods Sold = Rs. 69000
In the given problem, sales is done with a profit of 30% on cost, hence
Sales = Cost of goods sold + 30% of cost of goods sold
Sales = Rs.69000 + 30% of Rs.69000
Sales = Rs.69000 + Rs.20700
Sales = Rs.89700
The percentage of the commission is applied on the profit either:
Before charging such commission
After charging such commission.
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0%
1 is true
0%
2 is true
0%
Both are true
0%
Both are false
Explanation
The manager of the business is sometimes given the commission on the net profit of the company. The percentage of the commission is applied on the profit either before charging such commission or after charging such commission. In the absence of any such information, it is assumed that the commission is allowed as a percentage of the net profit before charging such commission.
Stock of Rs.4,000 is destroyed by fire, It was not insured, The accounting entry is ________________.
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0%
Stock A/c Dr. 4,000 Trading A/c Cr. 4,000
0%
P and L A/c Dr. 4,000 Trading A/c Cr. 4,000
0%
Stock A/c Dr. 4,000 P/L A/c Cr. 4,000
0%
Trading A/c Dr. 4,000 Stock A/c Cr. 4,000
Explanation
Stock is an item of trading account, hence in case of loss of stock, stock need to be reduced. Hence the loss of stock due to fire which was not insured is a complete loss to the business.
Following accounting entry will be passed:
Profit & Loss A/c Dr. 4000
To Trading A/c 4000
Sequence of effect on debtors is ____________.
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0%
Bad Debts--Provision for Discount on Debtors--Provision for Doubtful Debts
0%
Bad Debts--Provision for Doubtful Debts--Provision for Discount on Debtors
0%
Provision for Discount on Debtors--Provision for Doubtful Debts--Bad Debts
0%
All of the above
Explanation
Bad debts and provision for bad debts are loss for the business and this should be debited to the profit & loss account.
Discount on debtors is also a loss to the business. Discount is allowed to the customer either by virtue of business requirement or some time due to written off of small amounts.
The sequence for putting all such expenses/loss in profit & loss account is as under:
Bad debts
Add: Provision for Doubtful debts
Add: Provision for Discount on Debtors
All above are actual losses or anticipated losses and should be debited to profit & loss account of the business to arrive the true profitability.
From the following details calculate Net Purchases of Universal Ltd.
Opening stock =50,000
Manufacturing expenses = 30,000
Selling and distribution expenses =Rs. 20,000
Administrative expenses =Rs. 10,000
Financial expenses =Rs. 5,000
Closing stock Rs. 25,000
Sales Rs. 2,40,00
Gross profit on sale 25 %
Report Question
0%
Rs. 1,20,000
0%
Rs. 95,000
0%
Rs. 1,25,000
0%
Rs. 85,000
Explanation
Solution to the given problem is as under:
Trading Account
Particuars Amount Particulars Amount
To Opening Stock 50000 By Sales 240000
To Manufacturing Exp 30000 By Closing Stock 25000
To Purchases (Balancing) 125000
To Gross Profit 60000
(25% of Sales)
---------------- ----------------
265000 265000
------------------ --------------
XY Associates Trial balance as on 31-3-2013 shows the balance of Sales A/c as Rs. 1,85,While checking the books of account the following discrepancies were noticed.
(a) A sales of Rs.2,560 was recorded in the sales day book as Rs,650
(b) Total of sales day book for the month of May 2012 was short by Rs.2,000.
(c) Sales includes sales proceed of dead stock sold Rs.6,000
From the above details, calculate the actual sales to be shown in Trading A/c .
Report Question
0%
Rs.1,80,000
0%
Rs.1,82,910
0%
Rs.1,79,290
0%
Rs.1,81,690
Explanation
Solution to the given issues is as under:
Balance of Sales Account Rs.185000
Add: Short sales recorded (Rs.2560 - Rs.650) Rs. 1910
Add: Total of Sales day book short in May Rs. 2000
--------------------
Rs.188910
Less: Sales proceed of dead stock Rs. 6000
--------------------
Sales to be shown in Trading Account Rs.182910
-------------------
Producers inventories like livestock, agricultural and forest products, mineral oils, ores and gases are valued at__________.
Report Question
0%
cost price
0%
least of cost and market price
0%
net realizable value
0%
market value
Explanation
Normally, the valuation of inventory is done on the basis of cost or market/ net realizable value whichever is lower. In case of manufacturers inventory would be at its cost to produce the item, however, if the net realizable value of such inventory is less than the cost, the net realizable value will be shown as inventory value in balance sheet.
There is not process of finding out the actual cost of live stocks, agricultural and forest products, hence the valuation of inventory is done on the basis of net realizable value.
Calculate, sales from the following details :
Opening stock Rs. 4,000
Direct expenses Rs. 5,000
Cost of goods sold Rs. 30,000
Gross profit Rs. 1,500
Closing stock Rs. 2,000.
Report Question
0%
28,000
0%
31,000
0%
32,000
0%
33,500
Which inventory price method assumes that the goods most recently purchased are sold first?
Report Question
0%
FIFO
0%
Specific identifications
0%
Weighted average
0%
LIFO
Explanation
In the LIFO method, Inventory which is purchased recently is issued first. It is called last in first out.
Available closing stock will have the stock of older items with older price.
From the following details,_______will be charged to profit and loss A/c as bad debts during the current year.
Provisions for bad debts A/c at the beginning of the year Rs.24,000
Actual bad debts during the year Rs.20,000
Closing balance of Debtors. Rs.80,000
Provision for bad debts to be made @5% of total debtors.
Report Question
0%
Nil
0%
Rs. 4,250
0%
Rs.2,690
0%
Rs.3,200
From the following details calculate the missing figure.
Purchases = ______
Manufacturing expenses = Rs. 40,000
Direct expenses = Rs. 20,000
Selling and distribution expenses = Rs. 23,000
Administrative expenses = Rs. 12,000
Sales Rs. 2,80,000
GP 25% on sales
Report Question
0%
Rs.1,35,000
0%
Rs. 1,50,000
0%
Rs. 1,45,000
0%
Rs. 1,65,000
Explanation
Solution to the given situation is as under:
Trading Account
Particulars Amount Particulars Amount
To Purchases (balancing) 150000
By Sales 280000
To Manufacturing Expenses 40000
To Direct Expenses 20000
To Gross Profit 70000
(25% on sales)
------------------ ---------------
280000 280000
-------------------- --------------
Ram has been running business from the year $$2002$$. He has paid Rs.$$1,650$$ as rent upto February, $$2012$$ (for financial year $$2011-12$$). Total rent to be debited to profit and loss A/c of financial year $$2011-12$$ will be:
Report Question
0%
Rs. $$1,650$$
0%
Rs. $$1,800$$
0%
Rs. $$2,000$$
0%
Rs. $$1,400$$
Under FIFO method, the materials issued are priced at ___________.
Report Question
0%
latest purchases
0%
oldest purchases
0%
average cost of purchases
0%
next purchases
Explanation
Under the FIFO (First in First Out ) method, stock is issued to the production on the basis of its receipt. Stock which has procurred first is issued first and so on.
In such case, stock issued are priced at oldest purchases. Latest stock will be available as closing inventory.
The net' profit of a sole proprietorship firm is f$$1,320$$(before commission). The manager of the firm gets$$10/%$$ commission on the net profit after charging such commission. Manager's commission would be ___________.
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0%
f120
0%
f132
0%
f1,188
0%
f1,200
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Practice Class 10 Elements Of Book Keeping And Accountancy Quiz Questions and Answers
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