Annual insurance premium paid on January 1, 2010 was Rs. 2,400. What will be the opening entry on April 01, 2010, if financial year ends on March, 31 every year?
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Solution
The opening entry will be to recognise prepaid insurance (2,400 × 9/12) i.e. Rs. 1,800. Thus entry will be debit insurance premium by giving corresponding credit to prepaid account.
Which of following statement is not true
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Solution
In case of debt becoming bad, the amount should be debited (not credited) to bad debts.
In the absence of any provision in the partnership agreement, profits and losses are shared
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Solution
Profits and losses are shared equally unless otherwise agreed among partners.
All of the following have debit balance except one. That account is
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Solution
Wages o/s is a liability and has credit balance
Which of the following is correct
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Solution
Capital is difference of assets and liabilities.
Difference of totals of both debit and credit side of the trial balance is transferred to
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Solution
Difference in trial balance is transferred to suspense A/c
Material costing Rs. 700 in the erection of the machinery and wages paid for it amounting to Rs. 400 should be debited to
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Solution
Material and wages for erection of machinery should be debited to Machinery A/c.
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
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Solution
The expenditure should be capitalized as it is necessary for construction of Cinema house.
Carriage outward is debited to
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Solution
Carriage outward is debited to P&L A/c but carriage inward is debited to Trading A/c.
If a firm makes a number of Promissory Notes usually, it would be convenient to record the transaction in –
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Solution
It would be convenient to record the tranaction in Bills payable book if firm makes numerous promissory notes.