Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

 X a co-venturer returns goods to other co- venturer Y. In whose books the transaction would be recorded under memorandum joint venture method?

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Y

  2. X

  3. X and Y

  4. None of these

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Correct Option: D

If at the beginning and ending of the period, goods inventories are $Rs. 400$ and $Rs. 700$ respectively and cost of goods sold is $Rs 3400$. Then net purchases are __________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. $Rs. 3700$

  2. $Rs. 3400$

  3. $Rs. 3100$

  4. $Rs.3000$

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Correct Option: A

The total cost of goods available for sale with a company during the current year is Rs. $12,00,000$ and the total sales during the period are Rs. $13,00,000$. If the gross profit margin of the company is $33$ $1/3\%$ on cost, the closing inventory during the current year is __________?

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Rs. $4,00,000$

  2. Rs. $3,00,000$

  3. Rs. $2,25,000$

  4. Rs. $2,60,000$

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Correct Option: C

Goods given as charity should be credited to _______________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Purchases account

  2. Charity account

  3. Sales account

  4. Trading A/c

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Correct Option: A
Explanation:

Purchases will be credited if goods are given as charity. When accounting for goods given as charity, purchases are reduced with the exact cost of goods contributed. The amount is reduced from purchases in the trading account. It is shown as an expense on the debit side of the income statement and the purchase account is credited.

Linux Ltd. maintains the inventory records under perpetual system of inventory. Consider the following data pertaining to inventory of Linux Ltd. held for the month of March 2005:

Date Particulars Quantity Cost per unit
Mar. 1 Opening inventory $15$ $400$
Mar. 4 Purchases $20$ $450$
Mar. 6 Purchases $10$ $460$

If the company sold $32$ units on March 24, 2005, closing inventory under FIFO method is:

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Rs. $5,200$

  2. Rs. $5,681$

  3. Rs. $5,800$

  4. Rs. $5,950$

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Correct Option: D

Inventory is valued at _____________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Cost price

  2. Replacement price

  3. Both (a) and (b) whichever is lower

  4. Both (a) or (b) whichever is higher

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Correct Option: C

While making an adjusting entry in respect of closing stock, we debit ______________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Closing stock

  2. Trading account

  3. Purchases account

  4. Sales account

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Correct Option: A
Explanation:

The closing stock is the unsold goods lying in the concern. Generally, the firm takes out a list of all stocks, remaining unsold along with their value. The stock is always valued at cost or market price whichever is lower. Generally, the closing stock will not appear in the Trial Balance and it lies in the adjustment. When it lies in the adjustment, adjustment entry has to be passed before the preparation of Final Accounts. The Entry will be

Closing stock A/c    Dr.        xx

        To Trading A/c                  xx

As per AS-2 historical cost of inventory includes ___________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Cost of purchase

  2. Cost of conversion

  3. Other cost incurred in bringing the inventories in their present condition

  4. All of these

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Correct Option: D

In which of the following methods, inventory is valued at the latest prices prevailing in the market?

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. LIFO

  2. FIFO

  3. Both (a) and (b)

  4. None of these

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Correct Option: B

Net realizable value means _______________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Sales less sales returns

  2. Sales less cost incurred necessarily to make the sale

  3. Sales less gross profit margin

  4. Sales less cost of purchase

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Correct Option: B
Explanation:

In the context of inventory, net realizable value is the expected selling price in the ordinary course of business minus any cost of completion, disposal and transportation.

Hence, option B is correct.