Q1: The object of non-trading concerns ______.
(a) Social service
(b) Profit earning
(c) Both of these
(d) None of the above
Ans: (a) Social service
Q2: Which of the following is recorded in income and expenditure accounts?
(a) Revenue items
(b) Capital items
(c) Revenue and capital items
(d) None of the above
Ans: (a) Revenue items
Q3: If the rent of one month is still to be paid, the adjustment entry will be _______.
(a) Debit outstanding rent account and Credit rent account
(b) Debit profit and loss account and Credit rent account
(c) Debit rent account and Credit profit and loss account
(d) Debit rent account and Credit outstanding rent account
Ans: (d) Debit rent account and Credit outstanding rent account
Q4: If a person fails to pay his debt, such an amount is considered as ______.
(a) Bad debts
(b) Bad debts recovered
(c) Provision for bad debt
(d) None of the above
Ans: (a) Bad debts
Q5: If the insurance premium paid Rs. 1,000 and prepaid insurance Rs. 300. The amount of insurance premium shown in the profit and loss account will be ______.
(a) Rs. 1,300
(b) Rs. 1,000
(c) Rs. 300
(d) Rs. 700
Ans: (d) Rs. 700
Ans:
Working Notes:
1. Provision for Doubtful Debts=5% of (Debtors – Further Bad Debts)
2. Discount on Debtors=2% of (Debtors – Provision for Doutful Debts – Further Bad Debts)
Working Notes:
Q3: The following balances has been extracted from the trial of M/s Runway Shine Ltd. Prepare a trading and profit and loss account and a balance sheet as on March 31, 2017.
Adjustments:
Ans: Trading and Profit and Loss Account of M/s Runway Shine Ltd. for the year ending March 31, 2017
Working Notes:
Q4.1: From the following Trial Balance you are required to prepare trading and profit and loss account for the year ending March 31, 2017 and Balance Sheet on that date.
Adjustments
Ans: Trading and Profit and Loss Account for the year ending March 31, 2017
Q4.2: The following balances have been extracted from the trial of M/s Haryana Chemical Ltd. You are required to prepare a trading and profit and loss account and balance sheet as on March 31, 2017 from the given information.
Adjustments:
Note:
Ans: Trading and Profit and Loss Account of M/s Haryana Chemical Ltd. for the year ending March 31, 2017
Q5: From the following information prepare trading and profit and loss account of M/s Indian sports house for the year ending March 31, 2017.
Adjustments:
Ans: Trading and Profit and Loss Account of M/s Indian Sports House for the year ending March 31, 2017
Note: In the text book answers, the gross profit is given with a typo as ₹ 1,01,000. However, as per our calculation, we got ₹ 97,000.
Note:
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