Tag: preparation of final accounts

Questions Related to preparation of final accounts

Commission to manager is __________ to Profit and loss Account.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. Debited

  2. Credited

  3. Added

  4. Deducted

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Correct Option: A
Explanation:

Manager's commission is an operating expense just as any other expense like salary, rent etc. Manager's commission paid is shown on the debit side of the profit and loss account as it is an expense for the company.

Commission due but not paid to the manager at d end of the years appears under __________ side.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. Asset

  2. Liability

  3. Trading A/c Debit side

  4. None

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Correct Option: B
Explanation:

The Outstanding Expense A/c appears on the liability side of the Balance Sheet. While preparing the Trading and Profit and Loss A/c we need to add the amount of outstanding expense to that particular expense.

Interest on capital is ______ for a business concern.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. Expense

  2. Income

  3. Asset

  4. Liability

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Correct Option: A
Explanation:

Interest on capital is a charge on the profits of a firm and it is debited to the P&L account to recognise as an expense (and a charge on the profits).

From the following details calculate the net profit after charging managerial commission.
Net profit before charging managerial commission Rs.65,000
Managerial commission 11% after charging such commission.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. Rs.58,558

  2. Rs.60,300

  3. Rs.59,101

  4. Rs.60,360

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Correct Option: A

From the following details, how much should be charged to profit and loss a/c as bad debts during the current year.
provisions for bad debts A/c at the beginning of the year Rs.20,000
Actual bad debts during year Rs.19,000
Debtors balance at the end of the year Rs.80,000
Previsions for bad debts to be made @5% of total debtors. 

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. Rs.3,000

  2. Rs.4,000

  3. Rs.2,600

  4. Rs.3,600

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Correct Option: A

The capital of a sole trader would change as a result of ____________________.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. A creditor being paid his account by cheque.

  2. Raw materials being purchased on credit.

  3. Fixed asset being purchased on credit.

  4. Wages being paid in cash.

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Correct Option: D

From the following details calculate the managerial commission, if the managerial commission is 11% net profit before charging such commission.fore 
Net profit before charging managerial commission Rs.65,000

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. Rs. 6,946

  2. Rs.7,230

  3. Rs.7,150

  4. Rs. 6,860

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Correct Option: C

The adjustment to be made for interest on drawings is ________________.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. Debit profit and loss account and add interest to drawings

  2. Credit profit and loss account and add interest to drawings

  3. Debit profit and loss account and deduct interest from drawings

  4. Credit profit and loss account and deduct interest from drawings

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Correct Option: B

In the Trial Balance, are shown Debtors Rs. 2,400, Bad Debts Rs. 221, Bad Debts Reserve Rs. 324. For creating a Reserve for Doubtful Debts @10% on debtors, the P & L A/c will be debited by __________.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. 137

  2. 240

  3. 343

  4. 9

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Correct Option: A

If the manager is entitled to a commission of 5% on profits before deducting this commission, he will get a commission of Rs. ________on a profit of Rs. 8,400.

elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

  1. 400

  2. 442.11

  3. 420

  4. None of these

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Correct Option: C