-
Solution
The plant and machinery account of a firm had a debit balance of Rs. 1,47,390 as on 31st December, 2009. On 1st Jan., 2006 Co. started business and has been following the practice of charging full year’s depreciation every year on Diminishing balance method @ 15%. Cost of machinery on 01.01.2006 will be
-
Solution
In Jan., 2006 a trader purchased furniture for Rs. 10,000 Depreciation is charged @ 25% Diminishing balance. At the end of the third year it was sold for Rs. 1,000. Profit or loss as sale will be _______
-
Solution
-
Solution
Under average profit method goodwill is calculated on the basis of the average of some agreed number of past years. The average is then multiplied by the agreed number of years. This is the simplest and the most commonly used method of the valuation of goodwill.
Goodwill = Average Profits × Number of years of Purchase
Profit of the year 2006: 40,000
Profit for the year 2007: 50,000
Profit for year 2008: 60,000
Profit for the year 2009: 50,000
Average profit of last 4 years = (40,000 + 50,000 + 60,000 + 50,000)/4 = Rs. 50,000
Goodwill = 50,000 × 3 = Rs. 1,50,000
-
Solution
In financial accounting, every single event occurring in monetary terms is recorded. Sometimes, it just so happens that some events are either not recorded or it is recorded in the wrong head of account or wrong figure is recorded in the correct head of account. Whatever the reason may be, there is always a chance
of error in the books of accounts. These errors in accounting require rectification. When there is a difference in a trial balance a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference).
-
Solution
