Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Non-profit earning companies are mostly formed as ______________.

book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Companies limited by shares

  2. Companies limited by guarantee

  3. Unlimited companies

  4. None of the above

Show answer
Correct Option: B
Explanation:

Limited by guarantee companies are formed by not for profit organisations, such as sports clubs, charitable organisations etc. A company limited by guarantee does not have any shares or stakeholders but is owned by guarantors who agree to pay a set amount of money towards company debts. In case of NPO, this amount is known as subscription. Each member is responsible towards NPO till the subscription amount only. 

The surplus generated in the form of excess of income over expenditure is not distributed amongst the _________.

book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. owners

  2. members

  3. directors

  4. shareholders

Show answer
Correct Option: B
Explanation:

Not-for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence, they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account.

The surplus generated in the form of excess of income over expenditure is not distributed amongst the members. It is simply added in the capital fund. This is one of the main characteristic of such organisations

The surplus generated in the form of excess of income over expenditure is simply ________ in the capital fund.

book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. added

  2. subtracted

  3. divided

  4. multiplied

Show answer
Correct Option: A
Explanation:

Not-for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence, they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account.

The surplus generated in the form of excess of income over expenditure is not distributed amongst the members. It is simply added in the capital fund. This is one of the main characteristic of such organisations

Common-size Income Statement is that statement in which amount of Revenue from Operations is taken as 100 and all other amounts are expressed as percentage thereof.

book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

True. Common-size Income statement is the vertical analysis of Income Statement. A vertical analysis is shows all items as percentages and not in absolute figures which provides better comparison. Each line item is expressed as a percentage figure of the base figure within the statement. The base is always shown as 100. 

A financial statement that shows both rupees and percentages in the report is referred to as ______________.

book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

  1. A Balance sheet

  2. A Common size statement

  3. A Proportional financial statement

  4. A Relative statement of equity

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Correct Option: B

Which of the following is/are objective of common-size income statement?

book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

  1. To analyse change in individual items of statement of Profit and Loss.

  2. To study the trend in different items of Revenues and Expenses.

  3. To assess the efficiency.

  4. All of the above

Show answer
Correct Option: D

Common-size Balance Sheet shows _______________.

book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

  1. Assets, Equity and Liabilities in absolute values.

  2. Assets and Liabilities as percentage of total assets or total equity and liabilities.

  3. Both (a) and (b)

  4. None of the above

Show answer
Correct Option: C

Common-size Income Statement is the vertical analysis of Income Statement.

book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

True. Common-size Income statement is the vertical analysis of Income Statement. A vertical analysis is shows all items as percentages and not in absolute figures which provides better comparison. Each line item is expressed as a percentage figure of the base figure within the statement. 

Objectives of common-size income statement is/are ________________.

book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

  1. To analyse change in individual items of statement of profit and loss.

  2. To study the trend in different items of revenues and expenses.

  3. To assess the efficiency.

  4. All of the above

Show answer
Correct Option: D
Explanation:

Objectives of common-size income statement are to analyse change in individual items of statement of profit and loss, to study the trend in different items of revenues and expenses and to assess the efficiency of the enterprise. 

'To determine the trend of different items of statement', is one of the objectives of common-size statements.

book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

True. To determine the trend of different items of statement is one of the objectives of common size statements. It measure the relationship of different items of financial statements with a common variable.