X of Kolkata sends out goods costing Rs. 3,00,000 to Y of Mumbai at cost + 25%. Consignor’s expenses Rs. 5,000. 1/10th of the goods were lost in transit. Insurance claim received Rs. 3,000. The net loss on account of abnormal loss is

Rs.27,500
Rs.25,500
Rs.30,500
Rs.27,000

Solution

Abnormal loss = cost of goods of the goods damaged + consignor’s expenses of the goods damaged the insurance claim received = 1/10 of 3,00,000 + 1/10 of 5,000 – 3,000 = 30,000 + 500 – 3,000 = Rs. 27,500

A and D are equal partners. They wanted to admit C as 1/6th partner who brought Rs.60,000 as goodwill. The new profit sharing ratio is 3:2:1. Profit sacrificing ratio will be

0:1/6
2:1
3:1
None of the above

Solution

When a new partner comes into the business, old partners have to give him his profit share from their portion. Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by admission. In academic accounting, change in profit sharing ratio can be presented in various ways. The existing partners may decide to change their profit sharing ratio for various reasons. When the profit sharing ratio is revised among existing partners, there ought to be a partial sacrifice of profit share by some partners in favour of others. The sacrifice of one or a group of partners becomes the gain of the remaining partners.

Following is the formula for calculating sacrificing ratio: Sacrificing ratio = Old ratio – new ratio

Consideration may be gratuitous or non-gratuitous _________.

In case of sale
In case of bailment
In both the above cases
In no case

Sale is an_______.

Executed contract
Executory contract
Both of the above
None of the above

Amount spent, for the construction of temporary huts, which were necessary for construction of the cinema house and demolished when the cinema house was ready is a

Revenue expenditure
Capital expenditure
Deferred revenue expenditure
None of the above

Solution

The expenditure should be capitalized as it is necessary for construction of Cinema house.

Questions are based on the demand and supply diagrams in Figure 1. D₁ and S₁ are the original demand and supply curves. D₂ , D₃ , S₂ and S₃ are possible new demand and supply curves. Starting from initial equilibrium point (1) what point on the graph is most likely to result from each change?

In Figure 1 (which represents the market for Perk (chocolates), the initial equilibrium is at the intersection of S₁ and D₁. The new equilibrium if there is rapid economic growth but cost of labour producing Perk also rises:

Point 3
Point 9
Point 2
Point 6

The doctrine of Caveat Emptor does not apply, when:

the goods are bought by sample
the goods are bought by sample as well as as description
the goods are purchased under its brand name
All of above

A Company wishes to earn a 20% profit margin on selling price. ________is the profit mark up on cost, which will achieve the required profit margin?

33%
25%
20%
None of the above

Solution

Here profit margin on sale is given and we are required to find the profit margin on cost. This can be done
as follows:
Let the selling price be x
Then profit = 20% of x = .2x
Thus cost price = selling price – profit = x – .2x = 0.8x
And the markup on cost will be = 0.2/0.8 × 100 = 25%

A company offers to the public 10,000 shares for subscription. The company receives application for 12,000 shares. If the shares are allotted on pro-rata basis, then applicants for 12,000 shares are to be allotted as

4 shares for every 5 shares applied
2 shares for every 3 shares applied.
5 shares for every 6 shares applied
3 shares for every 4 shares applied

Solution

When issue is over-subscribed, the company will have to allot to each applicant according to the number of share applied by him. The excess application money is adjusted towards the sum due on allotment. Pro rata actually means ‘in proportion’.

So the proportion in which the shares will be alloted = total shares allotted/total shares applications Here company offers to the public 10,000 shares for subscription and receives application for 12,000
shares.

So the proportion in which the shares are to be allotted = 10000/12000 = 5/6
i.e. 5 shares for every 6 shares applied

The amount of the dishonoured bill has been wrongly debited to general expenses account, which type of error has been committed?

Error of principle
Error of commission
Compensating error
Error of omission

Solution

Amount of dishonoured bill wrongly debited to general expenses account, is an error of principle.

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