Tag: preparation of financial statements

Questions Related to preparation of financial statements

Making Provision for Discount on Debtors is an example 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. Increase in Asset & Owner's Liability

  2. Decrease in Asset & Owner's Liability

  3. Increase in Liability & Owner's Liability

  4. Decrease in Liability & Increase in Owner's Liability

  5. Increase in Liability & Decrease in Owner's Liability

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Correct Option: B

Sundry Debtors on $31^{st}$ March $2006$ are Rs. $55,200$ Further Bad debts are Rs. $200$:
Provision for doubtful debts are to be made on debtors $@ 5\%$ and also provision of discount on debtors $@ 2\%$ the amount of provision of discount on debtors will be __________.

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. $1,045$

  2. Rs. $2,750$

  3. Rs. $1,100$

  4. Rs. $2,760$

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Correct Option: A

The manager of a firm is entitled to a commission of $10\%$ on net profit after his commission. If the net profit of the firm before charging commission is Rs. $4,40,000$. The amount of manager's commission will be.

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. $44,000$

  2. Rs. $40,000$

  3. Rs. $37,000$

  4. Rs. $33,000$

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Correct Option: B

The percentage of the commission is applied on the profit either:
1. Before charging such commission 
2. 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. 1 is true

  2. 2 is true

  3. Both are true

  4. Both are false

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Correct Option: C
Explanation:

The manager of the business is sometimes given the commission on the net profit of the company. The percentage of the commission is applied on the profit either before charging such commission or after charging such commission. In the absence of any such information, it is assumed that the commission is allowed as a percentage of the net profit before charging such commission.

The manager of the business is sometimes given the commission on _______.

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. Salary

  2. Purchase

  3. Gross profit

  4. Net profit

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Correct Option: D
Explanation:

The manager of the business is sometimes given the commission on the net profit of the company. The percentage of the commission is applied on the profit either before charging such commission or after charging such commission.  In the absence of any such information, it is assumed that commission is allowed as a percentage of the net profit before charging such commission.

From the following details,_______will 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.24,000
Actual bad debts during the year Rs.20,000
Closing balance of Debtors. Rs.80,000
Provision 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. Nil

  2. Rs. 4,250

  3. Rs.2,690

  4. Rs.3,200

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Correct Option: A

From the following details calculated the 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.6,441

  2. Rs.6,500

  3. Rs.6,290

  4. Rs.6,360

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Correct Option: A

From the following details calculate the net profit after charging managerial commission if the managerial commission is 11% of net profit before charging such commission.
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.58,558

  2. Rs.60,300

  3. Rs.57,850

  4. Rs.60,360

Show answer
Correct Option: C