Tag: ascertainment of profit and loss

Questions Related to ascertainment of profit and loss

The post closing trial balance shows __________________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. The accounts of only incomes and expenses.

  2. The accounts of only assets and liabilities.

  3. All incomes, expenses, assets and liabilities.

  4. All incomes, expenses, assets and liabilities after all adjustments have been made.

Show answer
Correct Option: B
Explanation:

A post closing trial balance is a trial balance which is prepared after all the temporary accounts in the general ledger have been closed. The post closing trial balance shows the total balance of permanent accounts at thee end of the reporting period. Permanent accounts are the account type found in a balance sheet, i.e., assets and liabilities such as inventories, unearned salaries, notes payable, retained earnings etc.

If beginning work in process equivalent units are 2500 units, work done in current period equivalent units are 3800 units and ending work in process equivalent units are 5000, then complete equivalent units in current period are ____________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. 1800 units

  2. 1600 units

  3. 1300 units

  4. 1500 units

Show answer
Correct Option: C

Capital Gearing Ratio denotes the relationship between ______________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. Assets and capital

  2. Loans and capital

  3. Equity share holder's funds and long-term borrowed funds

  4. Debentures and share capital

Show answer
Correct Option: C

Call option is?

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. A contract to buy a certain number of shares at a stated price within a specified period of time.

  2. A contract to sell a certain number of shares at a stated price within a specified period of time.

  3. The option of the issuing company to demand the shareholders to pay for the partly paid shares.

  4. The option available to the convertible debenture holders to demand equity shares in conversion of debentures.

Show answer
Correct Option: A
Explanation:

A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period.

The expression 'firm' would include a _________________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. Company

  2. LLP

  3. HUF

  4. AOP

Show answer
Correct Option: B

User of financial statement includes ___________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. Management

  2. Creditors

  3. Bankers

  4. All of the above

Show answer
Correct Option: D
Explanation:

Financial statements are reports prepared by a company's management to present the financial performance and position at a point of time. A general purpose set of financial statements usually includes a balance sheet, income statement, statement of owner's equity and statement of cash flows. 

There are various different users of financial statements, each with different information needs. Users of financial statements are management, creditors, bankers, suppliers, investors etc.

The purpose of financial accounts is reporting to _________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. Management 

  2. Government 

  3. Investor 

  4. All of the above

Show answer
Correct Option: D
Explanation:

Financial accounting is a technique of recording all the business transactions in chronological order. The recorded transactions are further classified and summarized to give a true and fair view of the financial position to all the interested parties which are management, government and investors.

A company pays dividend out of _____________________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. Profits of the company for year for which dividends are to be paid.

  2. Undistributed profit of the previous financial years.

  3. Money provided by the central and state governments for the payment of dividends in pursuance of their guarantors.

  4. All of these.

Show answer
Correct Option: D
Explanation:

Dividends - Dividends are the sum of money to be paid to the members of the company out of the profits made by the company.

Sources od dividend :-
1. Profits of  the compnany for the year for which dividends are to be paid.
2. Undistributed profit of the previous financial years.
3. Money provided by the central and state governments for the payment of dividends in pursuance of their guarantors.

The take over of a company in which most of the purchase price is paid with borrowed money is referred to as __________.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. Hostile takeover

  2. Illegal takeover

  3. Leveraged buy-out

  4. Management buy-out

Show answer
Correct Option: C
Explanation:

A leveraged buy out (LBO) is financial transaction in which a company purchased another company by using the borrowed money.

A leveraged buyout is the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.

The dividend per share in a company is Rs. 2, earning per share is Rs. 5, and the market value is Rs. 25. What will be its yield?

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. 20 per cent

  2. 12.5 per cent

  3. 8 per cent

  4. 25 per cent

Show answer
Correct Option: A
Explanation:

Yield ratio = A financial ratio that indicates how much a company earns after   pays out in dividends each year relative to its share price.  yield ratio  is   represented as a percentage.

  yield ratio = ( Earning per share / Share price)* 100
  yield ratio = ( Rs.5 / Rs. 25) * 100
  yield ratio =  20 percent.