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CA Foundation Exam  >  CA Foundation Tests  >  Principles and Practice of Accounting  >  Test: Final Accounts of Non-Manufacturing Entities-2 - CA Foundation MCQ

Test: Final Accounts of Non-Manufacturing Entities-2 - CA Foundation MCQ


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15 Questions MCQ Test Principles and Practice of Accounting - Test: Final Accounts of Non-Manufacturing Entities-2

Test: Final Accounts of Non-Manufacturing Entities-2 for CA Foundation 2024 is part of Principles and Practice of Accounting preparation. The Test: Final Accounts of Non-Manufacturing Entities-2 questions and answers have been prepared according to the CA Foundation exam syllabus.The Test: Final Accounts of Non-Manufacturing Entities-2 MCQs are made for CA Foundation 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Final Accounts of Non-Manufacturing Entities-2 below.
Solutions of Test: Final Accounts of Non-Manufacturing Entities-2 questions in English are available as part of our Principles and Practice of Accounting for CA Foundation & Test: Final Accounts of Non-Manufacturing Entities-2 solutions in Hindi for Principles and Practice of Accounting course. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free. Attempt Test: Final Accounts of Non-Manufacturing Entities-2 | 15 questions in 15 minutes | Mock test for CA Foundation preparation | Free important questions MCQ to study Principles and Practice of Accounting for CA Foundation Exam | Download free PDF with solutions
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 1
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What is the journal entry to record the closing stock at the end of the year?

Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 1
The journal entry to record the closing stock at the end of the year is to debit the Closing Stock Account and credit the Trading Account. This entry reflects the value of unsold stock as an asset at the end of the year.
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 2
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What happens if the debit side of the Trading Account exceeds the credit side?

Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 2
If the debit side of the Trading Account exceeds the credit side, it indicates a gross loss. This means that the cost of goods sold and direct expenses are greater than the sales and closing inventory.
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Test: Final Accounts of Non-Manufacturing Entities-2 - Question 3
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In the context of the Trading Account, what are 'direct expenses'?

Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 3
Direct expenses in the context of the Trading Account are those expenses that are directly related to the purchase and preparation of goods for sale, such as freight and carriage on purchases.
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 4
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What is the treatment of purchase returns in the Trading Account?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 4
Purchase returns are deducted from the gross amount of purchases on the debit side of the Trading Account to reflect the net purchases.
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 5
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Which of the following best describes 'gross profit'?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 5
Gross profit is the profit calculated after deducting direct expenses (such as cost of goods sold) but before deducting indirect expenses (such as administrative and selling expenses). It is the profit from trading activities before any other overheads or taxes are considered.
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 6
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If the opening inventory is valued at $10,000, purchases during the year are $60,000, wages amount to $5,000, and carriage inwards is $3,000, what is the cost of goods sold if the closing inventory is valued at $20,000?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 6
The cost of goods sold (COGS) is calculated as:
COGS = Opening Inventory + Purchases + Wages + Carriage Inwards - Closing Inventory
COGS = $10,000 + $60,000 + $5,000 + $3,000 - $20,000 = $58,000
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 7
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A company has a gross profit of $42,000. If the total of management expenses is $11,000 and other income is $18,000, what is the net profit?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 7

Net profit is calculated by adding other income to gross profit and then subtracting expenses.
Net Profit = Gross Profit + Other Income - Management Expenses
Net Profit = $42,000 + $18,000 - $11,000 = $49,000

Test: Final Accounts of Non-Manufacturing Entities-2 - Question 8
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A business has a gross profit of $42,000 and the following expenses: salaries $11,000, legal charges $25,000, consultancy fees $32,000, audit fees $1,000, electricity charges $17,000, telephone charges $12,000, and stationery $27,000. What is the net profit or loss?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 8

Net profit or loss is calculated by subtracting total expenses from gross profit.
Total Expenses = $11,000 + $25,000 + $32,000 + $1,000 + $17,000 + $12,000 + $27,000 = $125,000
Net Profit/Loss = Gross Profit - Total Expenses
Net Profit/Loss = $42,000 - $125,000 = Net loss of $83,000

Test: Final Accounts of Non-Manufacturing Entities-2 - Question 9
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If a company has sales of $100,000 and returns inward of $10,000, what is the net sales figure?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 9
Net sales are calculated by subtracting returns inward from total sales.
Net Sales = Sales - Returns Inward
Net Sales = $100,000 - $10,000 = $90,000
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 10
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If a company has a discount received of $18,000 and a discount allowed of $19,000, what is the net effect on the Profit and Loss Account?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 10
The net effect on the Profit and Loss Account is the difference between the discount received and the discount allowed.
Net Effect = Discount Received - Discount Allowed
Net Effect = $18,000 - $19,000 = Net loss of $1,000
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 11
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A company's bad debts amount to $17,000. If this is written off as an expense, what is the journal entry?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 11
The journal entry to write off bad debts is to debit the Bad Debts Account and credit the Debtors Account, reflecting the loss and reducing the accounts receivable.
Journal Entry: Debit Bad Debts Account $17,000, Credit Debtors Account $17,000
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 12
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If a company allows a trade discount of 10% on goods with an invoice price of $1,000, what is the net invoice amount?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 12
The net invoice amount after a trade discount is calculated by subtracting the discount from the invoice price.
Trade Discount = 10% of $1,000 = $100
Net Invoice Amount = Invoice Price - Trade Discount
Net Invoice Amount = $1,000 - $100 = $900
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 13
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A company's depreciation expense for the year is $65,000. What is the effect on the net profit?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 13
Depreciation expense reduces the net profit because it is an expense.
Effect on Net Profit = Gross Profit - Depreciation Expense
Effect on Net Profit = Decrease by $65,000
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 14
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If a company's gross profit is $42,000 and the net profit is $43,000, what is the total amount of other incomes and expenses?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 14
Since the net profit is $1,000 more than the gross profit, it indicates that other incomes exceed expenses by $1,000.
Test: Final Accounts of Non-Manufacturing Entities-2 - Question 15
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A company pays interest on loans amounting to $7,000. How should this be recorded in the Profit and Loss Account?
Detailed Solution for Test: Final Accounts of Non-Manufacturing Entities-2 - Question 15
Interest paid on loans is an expense and should be recorded as a debit in the Profit and Loss Account.
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