Practice Test 24
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Goods costing Rs. 10,000 were sold at 1/6 profit on selling price. The sale value will be

Under mutual accommodation, Mohan drew a bill on Shyam for Rs.50,000 for 3 months.Proceeds are to be shared equally. Mohan got the bill discounted at 12% p.a. and remits required proceeds to Shyam. The amount of such remittance will be

  • Solution

    Discounting bills of exchange is a financial service, where the Bank purchases drawn bills, from the domestic trade transactions, confirmed in particular with an invoice - with right of recourse to you - and credits you with the amount of the bill of exchange less discount interest and additional costs related to the bill, accrued in advance from the discount date to the bill payment term.
    Here amount of the bill = 50,000
    Amount to be paid to bank on discounting at 12% pa = 50,000 × 12/100 × 3/12 = Rs. 1,500
    Thus amount received from bank on discounting = 50,000 – 1,500 = Rs. 48,500
    The amount of remittance to B will be = 48,500/2 = Rs. 24,250

A bill is drawn on 28th March, 2010 for one month after sight. The date of acceptance is 2 nd April, 2010. The maturity date of the bill will be

  • Solution

    The Maturity date will be 3 days after 2nd May i.e. 5th May, 2010.

Priya sold goods to Nidhi for Rs.1,00,000. Priya will grant 5% discount to Nidhi. Nidhi requested Priya to draw a bill. The amount of the bill will be

  • Solution

    Total sales value = 1,00,000
    Sales price after discount = 1,00,000 – 5% of 1,00,000 = 1,00,000 – 5,000 = Rs. 95,000
    So the amount of the bill drawn will be Rs. 95,000.

A purchased a computer costing Rs.10,000. Repairing expenses Rs.1,000 and miscellaneous expenses Rs.500 were incurred by him on the Computer. He sold the computer at 20% margin on selling price. The sales value will be

  • Solution

    Cost of the computer = purchase cost + repairing expenses + miscellaneous expenses = 10,000 + 1,000 + 500 = 11,500
    Let the sale price be x
    Then profit will be 20% of x i.e. 0.2x
    Cost of the computer = sale price-profit = x – 0.2x = 0.8x = 11,500 or x = Rs. 14,375

 

  • Solution

  • Solution

    For rectification, Ramesh will be debited by Rs. 1,000 with corresponding credit to Sales Return.

A and B entered into a joint venture agreement to share the profits and losses in the ratio of 2:1. A supplied 100 radio sets worth Rs.1,00,000 to B incurring expenses of Rs.5,000 for freight and insurance. B sold 95 radio sets for Rs.1,20,000. 5 radio sets were taken over by B. The profit/loss on venture will be

  • Solution

Value of physical inventory on 15.4.2010 was Rs.3,00,000. Sales amounting Rs.1,00,000 and purchases worth Rs.50,000 were held between 31.3.2010 and 15.4.2010. Goods are sold at a profit of 20% on sales. Value of inventory as on 31.3.2010 is

  • Solution

    Value of physical stock as on 15.4.2010 = Rs. 3,00,000
    Add cost of goods sold between 31-3-2010 and 15-4-2010 = 1,00,000 × 80% = Rs. 80,000
    Less purchases made between 31-3-2010 and 15-4-2010 = 50,000
    Value of closing stock as on 31-3-2010 = Rs. 3,30,000

Ram started business with cash Rs.50,000
Purchased goods from Mohan on credit Rs.20,000
Sold goods to Shyam (costing Rs.3,000) for cash Rs.3,600
The accounting equation on the basis of the above transactions will be

  • Solution

    The basic accounting equation, also called the balance sheet equation, represents the relationship between
    the assets, liabilities, and owner’s equity of a business. It is the foundation for the double-entry bookkeeping
    system. For each transaction, the total debits equal the total credits. It can be expressed as Assets = Liabilities + Capital
    So here Assets = cash brought in as capital + sales proceeds received in cash + closing inventory = 50,000 + 3,600 + (20,000 – 3,000) = 70,600
    Liabilities = accounts payable on account of purchases made on credit = 20,000
    owners equity = cash brought in + profit = 50,000 + 600 = 50,600
    thus assets = liabilities + owners equity

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FUNDAMENTALS OF ACCOUNTING
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