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CBSE Questions for Class 11 Commerce Accountancy Financial Statements 1 Quiz 15 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Financial Statements 1
Quiz 15
Stock-in-trade does NOT include ______________.
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0%
goods in the process of manufacture.
0%
raw materials.
0%
items held as fixed assets.
0%
finished goods.
Explanation
Stock in trade means the stock which is purchased in the business for resale purposes.
Fixed assets are purchased in the business for taking the benefits in the coming years ahead. This are not purchased for resale.
Hence Stock in trade does not include fixed assets.
'Manufacturing Account' is prepared by _________.
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0%
Pharma Industry
0%
Cement Industry
0%
Iron Industry
0%
All of the above
Explanation
Every business have to prepare financial statements at the end of every financial year to know the profitability and financial position of the business.
In case of trading concern, business need to prepare trading account and Profit & Loss account and the Balance Sheet.
In case of manufacturing concern, business need to
prepare manufacturing account, trading account and Profit & Loss account and the Balance Sheet.
How should the following assets be shown in the permanence order in the balance sheet of a company ?
1.Patents
2.Cash at bank
Stock in trade
Land and building
Cash in hand
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0%
1 , 4 , 3 , 2 , 5
0%
4, 1 , 3, 2 , 5
0%
4, 3, 5, 2, 1
0%
5, 2, 1 , 3 , 4
Explanation
Assets and Liabilities are to be shown in the Balance Sheet on the basis of permanency or liquidity order.
In the given case, below is the sequence of assets to be shown in balance sheet on permanency basis:
4. Land & Building
1. Patents
3. Stock in trade
2. Cash at Bank
5. Cash in Hand
Vikas started business with a cash of Rs. 22,000 and stock of Rs. 3,000 on 1st Jan., 2014.During the year, he made a profit of Rs.6,000.His creditors were paid Rs.4,500 for Office furniture supplied. He tool goods worth Rs.3,500 for his daughter's wedding on 30th June,2014.The gross assets of his business on 31st Dec.,2014 is _____________.
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0%
Rs. 27,500
0%
Rs. 26,500
0%
Rs. 23,500
0%
Rs. 20,500
Explanation
Vikas's started business with Cash Rs.22000 and Stock of Rs.3000. His initial contribution to the capital will be Rs.25000 (Rs.22000 + Rs. 3000).
Calculation at the end of the year will be :
Capital introduced Rs.25000
Add; Profit during the year Rs. 6000
----------------
Rs.31000
Less: Drawings (Goods) Rs.3500
-----------------
Capital at the end of the year Rs.27500
-----------------
Therefore, Gross Assets of the business as on 31st Dec 2014 will be Rs.27500.
A business entity has assets of $$Rs.28,000$$ and liabilities of $$Rs.8,000$$. Owner's equity in this case is _______________.
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0%
$$Rs.32,000$$
0%
$$Rs.26,000$$
0%
$$RS.20,000$$
0%
$$Rs.6,000$$
Explanation
Accounting Equation is defined as:
Owner's Equity + Total Liabilities = Total Assets
Therefore,
Owner's Equity = Total Assets - Total Liabilities
Owner's Equity = Rs.28000 - Rs.8000
Owner's Equity = Rs.20000
Given that cost of goods amounts to Rs.18,000, Closing stock Rs. 7000, purchase will amount to_______.
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0%
$$Rs.18,000$$
0%
$$Rs.20,000$$
0%
$$Rs.25,000$$
0%
$$Rs.10,000$$
Explanation
Closing stock =
Rs. 7,000
;
Cost of goods = Rs. 18,000
Purchases = Cost of goods + Closing stock
Purchases
=
Rs. 18,000
+
Rs. 7,000
Purchases =
Rs. 25,000
Find cost of goods sold from the following details:
Opening stock Rs. 8,000
Direct expenses Rs. 5,000
Purchases Rs. 20,000
Indirect Expenses Rs. 5,500
Closing stock Rs. 2,000.
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0%
33,000
0%
38,000
0%
28,000
0%
32,000
______ is/are example(s) of non-operating income.
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0%
Profit from sale of assets
0%
Dividend
0%
Refund of income-tax
0%
All the three
Explanation
Non-operating income, in accounting and finance, is gain or losses from sources not related to the typical activities of the business or organisation. Non-operating income can include gains or losses from investments, property or assets sales, dividend, currency exchange, refund of income-tax, and other a typical gains or losses.
Donation received by 'Shekhawati Sports Club' for conducting a tournament should be shown in _____________.
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0%
Income and Expenditure Account
0%
Trading and Profit and Loss Account
0%
Balance Sheet
0%
None of the above
Explanation
Donation received for a specific activity need not to be accounted as income. It has to be shown in the balance sheet against which the expenses of the specific activity accounted for.
Donation received for conducting a tournament should be shown in the Balance Sheet.
Loss on sale of asset is ____________ while calculating operating profit from net profit.
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0%
added
0%
ignored
0%
deducted
0%
none
Explanation
Operating profit is calculated by deducting the operating expenses from the operating income. Operating expenses are those which are directly related to the core business activity.
Loss on sale of asset is to be added while calculating operating profit from net profit.
The financial position of the business is ascertained on the basis of _________ .
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0%
Records prepared under Book-keeping process
0%
Ledgers
0%
Trial balance
0%
Financial statement
Explanation
Financial statements records and outline the financial activities of a business, an individual or any other entity. Financial statements are meant to present the financial information of the entity in question as clearly and concisely as possible for both the entity and for readers. The financial position of the business is ascertained on the basis of financial statements.
While calculating Operating profit the incomes and expenses of purely ____________ nature are not taken into account.
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0%
operating
0%
trading
0%
financial
0%
non financial
Explanation
Operating profit is defined as the profit earned by the firm during the course of normal trading operations. To calculate the operating profit, operational expenses are deducted from operational income.
Expense of purely of financial nature need not to be taken into account while calculating the operational profit like interest on loan, dividends etc.
Select the most appropriate alternative from those given below:
Trading A/c is prepared on the basis of ________ expenses and incomes.
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0%
indirect
0%
direct
0%
outstanding
0%
prepaid
Explanation
Trading account is prepared to know the profit earned by the firm through the trading activity. Trading account is prepared by considering only direct expenses. Gross Profit depicts the direct profit earned by the firm through trading of goods.
Trading Account
Particulars Amount Particulars Amount
To Opening Stock By Sales
To Purchases By Closing Stock
To Wages
To Direct Expenses
To Gross Profit
--------------- ---------------
---------------- ----------------
Income derived from, normal operation of the business is called ________.
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0%
normal income
0%
manufacturing income
0%
operating income
0%
financial income
Explanation
Operating income resulting from a firm's primary business operations (normal operations), excluding extraordinary income and expenses. Also called earning before interest and taxes. the measure revels an entity's ability to generate earnings from its operational activities.
Current liabilities do not include _______________.
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0%
Unclaimed Dividends
0%
Sundry Creditors
0%
Prepaid Insurance
0%
Bank Overdraft
Explanation
Current liabilities arises during the business operations and to be repayable in the coming business cycle. These are short term liabilities. Examples are sundry creditors, bills payable, bank overdraft etc.
Prepaid Insurance means the insurance premium paid in advance and to be shown an item of other current assets.
From the following details estimate the capital as on 1-1-2015.
Capital as on 31-12-2015 $$Rs. 2,40,000$$,
Drawing during the year $$Rs. 20,000$$,
Profit during the year $$Rs. 25,000$$.
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0%
Rs. $$2,35,000$$
0%
Rs. $$2,25,000$$
0%
Rs. $$2,20,000$$
0%
Rs. $$2,00,000$$
Explanation
This can be represented as follows:
Opening Capital+Profit during the year-Drawings=Closing Capital
Putting the available information in the equation:
Op Capital+25000-20000=Rs. 240000
Op Capital=Rs.5000=Rs.240000
Opening Capital = Rs.240000-Rs.5000
Opening Capital =Rs.235000.
A trade discount is calculated by ___________.
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0%
adding the discount rate to the amount of the sale
0%
multiply the amount of the sales by the discount rate
0%
dividing the amount of the sales rate of discount
0%
adding the discount rate to the amount of sale
Explanation
Trade discount is allowed to every customer for promotion of sales. This is allowed on a certain percentage on sales.
For example, if the selling price is Rs.500 per units and a trade discount of @5%. Discount is calculated as = Sales Price* Discount rate
= Rs.500*5%
= Rs.25/- per unit
Cost of goods sold is calculated from the following equation______.
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0%
beginning inventory-cost of goods purchased + ending inventory
0%
sales- cost of goods purchased + beginning inventory - ending inventory
0%
sales + gross profit - ending inventory + beginning inventory
0%
beginning inventory + cost of goods purchased - ending inventory
Explanation
Below are the accounting equations:
Gross Profit = Sales - Cost of goods sold
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock
Ascertain purchases from the following figures:
Cost of goods sold
$$Rs. 80,700$$
Opening stock
$$Rs. 5,800$$
Closing stock
$$Rs. 6,000$$
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0%
$$Rs. 80,700$$
0%
$$Rs.80,900$$
0%
$$Rs. 86,700$$
0%
None of these
Explanation
This can be represented as :
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock
80,700 = 5,800 + Purchases - 6,000
80,700 = 5,800 - 6,000 + Purchases
80,700 = Purchases - 200
Purchases = 80,700 + 200
Purchases = 80,900
In the balance sheet contingent liability should be ________.
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0%
recognized
0%
not recognized
0%
adjusted
0%
none of the above
Use the following information for questions given ahead:
B Ltd. was registered with a share capital of $$Rs. 2,00,00,000$$ divided into equity shares of $$Rs. 10$$ each. It issued $$Rs. 1,80,00,000$$ equity shares to the general public at par payable as to $$Rs. 3$$ on application, $$Rs. 3$$ on allotment and balance in $$2$$ equal calls. The public had subscribed for $$17,00,000$$ shares. Till $$31st$$ March, $$2006$$, only first call had been made. All the shareholders had paid up except Mr. C, a holder of $$50,000$$ shares, who did not pay the call money.
B Ltd.'s Issued Capital will be ____________.
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0%
$$Rs. 2,00,00,000$$
0%
$$Rs. 1,80,00,000$$
0%
$$Rs. 1,70,00,000$$
0%
$$Rs. 1,36,00,000$$
Explanation
Issued capital can be taken as the part of the authorized capital, which is actually offered to the public for subscription. The number of issued stock is a sub-group of the total authorized or registered shares. Issued capital is the quantity of stock which the BOD (Board of Directors) or stockholders have decided to assign. Generally, a company does not issue the entire authorized shares at a time so that the issued capital is always less than the authorized capital.
Issued capital does not get affect by subscribed or paid up capital and hence, in the given question B Ltd.'s Issued capital is Rs. 1,80,00,000.
Arrangement of balance sheet in a proper way is known as __________.
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0%
Marshalling of Balance Sheet
0%
Formatting of Balance Sheet
0%
Finalization of Balance Sheet
0%
Grouping of Balance Sheet
Explanation
Assets and Liabilities are to be shown in the balance sheet either in permanency order or liquidity order. This is called marshaling of balance sheet.
Order of permanency is that where the assets and liabilities are shown as per their permanency in the business. For example, in assets side, fixed assets are shown first staring from Land & Building, Plant & Machinery , Furniture and Fixtures and than current assets.
Liquidity Order- In this order, assets are liabilities are shown as per their liquidity. In such case, cash and bank is the starting point of assets side, It is just reversed of the permanency order.
If sales are Rs. $$2,000$$ and the rate of gross profit on cost of goods sold is $$25\%$$, then the cost of goods sold will be ______________.
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0%
Rs. $$2,000$$
0%
Rs. $$1,500$$
0%
Rs. $$1,600$$
0%
None of these
Explanation
This can be represented as :
Let us assume the Cost Price is Rs.100
Profit Margin on Cost is @25% i.e. Rs.25
There fore the selling Price will be = Cost +Profit =SP
=Rs.100+Rs.25=Rs.125
If the Sales are Rs.2000
the cost of goods sold will be Rs.2000/125*100
Cost of good sole =Rs.1600.
Read the following which is taken from an income statement.
Rs.
Opening stock
$$50,000$$
Sales
$$1,60,000$$
Freight incurred
$$10,000$$
Sales retunrs
$$10,000$$
Gross profit on sales
$$60,000$$
Net loss for the year
$$10,000$$
Purchases
$$1,00,000$$
Purchases returns
$$9,000$$
The amount of operating expenses will be ___________________.
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0%
$$Rs. 50,000$$
0%
$$Rs.60,000$$
0%
$$Rs. 70,000$$
0%
$$Rs. 80,000$$
Explanation
Solution for the given situation:
Particulars
Amount
Particulars
Amount
To Opening Stock
50000
By Sales
160000
To Purchases 100000
Less: Sales Returns
10000
Less: P/return 9000
By Net Sales
150000
To Net Purchases
91000
By Closing Stock
(balancing figure)
61000
To Freight incurred
10000
To Gross Profit
60000
Total
211000
Total
211000
To Operating Expenses
(balancing figure)
70000
By Gross Profit
60000
By Net Loss
10000
Total
70000
Total
70000
Find the cost of goods purchased from the following details:
Opening stock Rs.8,000
Direct expenses Rs. 5,000
Sales Rs. 45,000
Indirect Expenses Rs. 3,500
Closing stock Rs. 2,000
Gross profit Rs. 5,000.
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0%
28,000
0%
29,000
0%
32,000
0%
30,000
Explanation
This can be represented as:
Trading Account
Particuars Amount Particulars Amount
To Opening Stock 8000 By Sales 45000
To
Purchases (balancing) 29000
By Closing Stock 2000
To Direct Expenses 5000
To Gross Profit 5000
---------------- -------------
47000 47000
----------------- --------------
Particulars
June $$2015$$
July $$2015$$
August $$2015$$
Opening stock
$$4,08,000$$
$$4,34,400$$
$$4,60,800$$
Credit Sales
$$15,00,000$$
$$16,00,000$$
$$17,00,000$$
Cash Sales
$$2,00,000$$
$$2,10,000$$
$$2,20,000$$
Gross Margin is 20% on sales.
Stock purchased in June, $$2015$$ is?
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0%
Rs. $$16,05,000$$
0%
Rs. $$13,86,400$$
0%
Rs. $$14,40,000$$
0%
Rs. $$13,82,500$$
Explanation
Gross Margin is 20% on sales
Cost of Goods Sold = Sales - Gross Margin
= Rs.1700000-20% of Rs.1700000
= Rs.1700000- Rs.340000
= Rs.1360000
Another way of representing the cost of goods sold is,
COGS= Op Stock+Purchases-Closing Stock
Rs.1360000= Rs.408000 + Purchases - Rs.434400 (Op stock in July 2015)
Rs.1360000=Rs.408000-Rs.434400+Purchases
Rs.1360000= -Rs.26400+Purchases
Purchases=Rs.1360000+Rs.26400
Purchases = Rs.1386400.
On $$31^{st}$$ March, $$2009$$ Ram has loan of Rs. $$50,000$$ and creditors of Rs. $$80,000$$ Fixed assets of Rs. $$72,000$$, stock Rs. $$90,000$$ and cash in hand Rs. $$60,000$$. If he had started business on April $$1$$ $$2008$$ with capital of Rs. $$50,000$$. Compute Profit earned by Ram for year $$2008-09$$.
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0%
Rs. $$92,000$$
0%
Rs. $$42,000$$
0%
Rs. $$1,72,000$$
0%
Rs. $$52,000$$
Explanation
Assets on 31st March 2009 = Fixed assets + Stock + Cash in Hand
= 72000+90000+60000
= 2,22,000
Liabilities on 31st March 2009 = Loan + Creditors
= 50,000+ 80,000
= 1,30,000
Capital on 31st March, 2009 = Assets - Liabilities
= 222,000 - 1,30,000
= 92,000
Profit = Closing Capital - Opening Capital
= 92000- 50000
= 42000
Assuming no returns outwards or carriage inwards, the cost of goods sold will be equal to _________.
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0%
sales less gross profit
0%
purchases plus closing inventory less opening inventory
0%
closing inventory less purchases plus opening inventory
0%
opening inventory plus purchases plus closing inventory
Explanation
Cost of Goods Sold can be defined as:
Cost of Goods Sold= Sales- Gross Profit
Or
Opening Stock+Purchases-Closing Stock= Cost of Goods Sold
X & Co. is in the business of trading. It is to receive $$Rs.7,000$$ from Vinod and to pay $$Rs.8,000$$ to Vinod. Similarly it is to pay $$Rs.8,000$$ to Sudhir and to receive $$Rs.9,000$$ from Sudhir. Except above but after all adjustment, the books of X & Co. show the debtors balance at $$Rs.72,000$$ (Dr.) and creditors balance at $$Rs.39,000$$(Cr.). The correct value of debtors and creditors to be shown in balance sheet would be __________.
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0%
Debtors (Rs. $$72,000$$), Creditors (Rs. $$39,000$$)
0%
Debtors (Rs. $$88,000$$), Creditors (Rs. $$55,000$$)
0%
Debtors (Rs. $$80,000$$), Creditors (Rs. $$47,000$$)
0%
Debtors (Rs. $$79,000$$), Creditors (Rs. $$46,000$$)
Explanation
Solution to this can be given below:
Debtors
Creditors
Balance as given Rs.72000 Rs.39000
Add: Vinod Rs. 7000 Rs. 8000
Add: Sudhir Rs. 9000 Rs. 8000
------------------ -------------------
Balance to be shown in B/S Rs.88000 Rs.55000
----------------- -------------------
The items in the balance sheet are marshaled in a way that assets that are to be used permanently are put on top order; this type of arrangement is called.
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0%
Liquidity order
0%
According to time
0%
Permanence order
0%
Both a & b
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