Finding Closing Stock

Q. The entry for creating provision for doubtful debts is debit and credit provision for doubtful debts account.

1. Profit or Loss A/c
2. Trading A/c
3. Cash A/c
4. Bank A/c

Q.

If the rate of gross profit on the sale is 20% and cost of goods sold is Rs. 1, 00, 000, then the amount of gross profit will be equal to:

1. Rs 20, 000

2. Rs 25, 000

3. Rs 35, 000

4. Rs 15, 000

Q. If the rate of gross profit on the sale is 20% and cost of goods sold is Rs. 1, 00, 000, then the amount of gross profit will be equal to

1. Rs. 20, 000
2. Rs. 25, 000
3. Rs. 35, 000
4. Rs. 15, 000

Q.

From the following balances exatracted from the books of M/s Ahuja and Nanda.

Calculate the amount of:
(a) Cost of goods available for sale
(b) Cost of goods sold during the year
(c) Gross profit

$\begin{array}{cc}& \text{(Rs.)}\\ \text{Opening stock}& 25,000\\ \text{Credit purchase}& 7,50,000\\ \text{Cash purchase}& 3,00,000\\ \text{Credit sales}& 12,00,000\\ \text{Cash sales}& 4,00,000\\ \text{Wages}& 1,00,000\\ \text{Salaries}& 1,40,000\\ \text{Closing Stock}& 30,000\\ \text{Sales return}& 50,000\\ \text{Purchase return}& 10,000\end{array}$

Q.

As per Receipts and Payments Account for the year ended on March 31, 2012, the subscriptions received is Rs 2, 50, 000. Additional information given is as follows:

(i) Subscription Outstanding on 1.4.2011; Rs 50, 000.

(ii) Subscription Outstanding on 31.3.2012; Rs 35, 000.

(iii) Subscription Received in Advance as on 1.4.2011; Rs 25, 000.

(iv) Subscription Received in Advance as on 31.3.2012; Rs 30, 000. Ascertain the amount of income from subscriptions for the year 2011-12.

Q.

The cost of insurance and taxes are included: a. set up cost b) cost of shortages c) inventory carrying cost d) cost of ordering

Q.

Explain the concept of cost of goods sold.

Q.

What is CCL in banking?

Q.

Give the correct chronological order of ascertainment of the following profits from trading and profit and loss account Operating rofit, gross profit, net profit .

Q.

Trial balance of John did not agree. He put the difference to suspense account and discovered the following errors.

(a) In the sales book for the month of January total of page 2 was carried forward to page 3 as Rs. 1, 000 instead of Rs. 1200 and total of page 6 was carried forward to page 7 as Rs. 5, 600 instead of Rs. 5, 000.

(b) Wages paid for the installation of machinery Rs. 500 was posted to wages account as Rs. 50.

(c) Machinery purchased from R and Co for Rs. 10, 000 on credit was entered in purchase book as Rs. 6, 000 and posted there from to R and Co as Rs. 1, 000.

(d) Credit sates to Mohan Rs. 5, 000 were recorded in purchase book.

(e) Goods returned to Ram Rs. 1, 000 were recorded in the sales book.

(f) Credit purchase from S and Co for Rs. 6, 000 were recorded in the sales book. However, S and Co were correctly credited.

(g) Credit purchase from M and Co Rs. 6, 000 were recorded in sales book as Rs. 2, 000 and posted therefrom to the credit of M and Co as Rs. 1, 000.

(h) Credit sales to Raman Rs. 4, 000 posted to the credit of Raghvan as Rs. 1, 000.

(i) Bill receivable for Rs. 1, 600 from Noor was dishonoured and posted to the debit of allowances account.

(j) Cash paid to Mani Rs. 5, 000 against our acceptance was debited to Manu.

(k) Old furniture sold for Rs. 3, 000 was posted to sales account as Rs. 1, 000.

(l) Depreciation provided on furniture Rs. 800 was not posted.

(m) Material Rs. 10.000 and wages Rs. 3, 000 were used for the construction of a building. No adjustment was made in the books.

Rectify the errors and prepare suspense to ascertain the difference in trial balance.

Q.

What is CC and OD in banking?

Q.

From the following Receipts and Payments Account of a Club and from the additional information supplied, prepare Income and Expenditure

Additional Information:

(a) The club has, 50 members each paying annual subscription of 25. Subscriptions outstanding on 31st Dec. 2011 were Rs 300.

(b) On 31st December 2012 salaries outstanding amounted to f 100. Salaries paid included Rs 100 for the year 2011.

(c) On 1-1-2012, the club owned Land and Building valued at Rs 10, 000, Furniture Rs 600 and Books Rs 500.

$\begin{array}{cccc}\text{Receipts}& \text{Amount (Rs)}& \text{Payments}& \text{Amount (Rs)}\\ \text{To Balance b/d}& 250& \text{By Salaries}& 1,200\\ \text{To Subscriptions :}& & \text{By General Charges}& 300\\ \text{2011}& 250& \text{By Electric Charges}& 200\\ \text{2012}& \text{1, 000}& \text{By Books}& \text{100}\\ \text{2013}& 200& \text{By Newspapers}& 400\\ \text{To Sale of old Furniture (Costing}& & \text{By Postage}& \text{50}\\ \text{Rs 100)}& 60& \text{By Furniture}& 250\\ \text{To Rent received for the use of Hall}& 740& \text{Balance c/d}& 500\\ \text{To Entertainment}& 400& & \\ \text{To Sale of Newspaper}& 100& & \\ & \underset{–}{\overline{\underset{–}{3,000}}}& & \underset{–}{\overline{\underset{–}{3,000}}}\end{array}$

Q.

Reliance Ltd purchased a second-hand machine for Rs. 56, 000 on 1st October 2014 and spent Rs. 28, 000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for Rs. 5, 000 at the end of its useful life of 15 years. Moreover, an estimated account and provision for depreciation account for the first 3 years charging depreciation by fixed installment method. Accounts are closed on 31st december every year.

Q.

Show the treatment of prepaid expenses, depreciation, closing stock at the time of preparation of final accounts-

(a) When given inside the trial balance.

(b) When given outside the trial balance.

Q.

Sales are equal to?

1. Cost of goods sold + Net Profit

2. Cost of goods sold + Gross profit

3. Purchases + Cash in hand

4. Purchases + Gross Profit

Q.

If opening capital is less than closing capital, it shows:

(a) Loss

(b) Profit

(c) No Profit; No Loss.

(d) Profit, if no additional capital is introduced.

Q.

On April 1, 2000, Bajrang Marbles purchased a Machine for Rs 2, 80, 000 and spent Rs 10, 000 on its carriage and Rs 10, 000 on its installation. It is estimated that its working life is 10 years and after 10 years its scrap value will be Rs 20, 000.

(a) Prepare Machine account and Depreciation account for the first four years by providing depreciation on the straight-line method. Accounts are closed on March 31 st every year.

(b) Prepare Machine account, Depreciation account and Provision for depreciation account (or accumulated depreciation account) for the first four years by providing depreciation using the straight-line method. Accounts are closed on March 31 st every year.

Q.

If opening capital is Rs. 16, 500, closing capital is Rs. 11, 350 and drawings were Rs. 3, 300, what is the amount of profit or loss made during the year?

1. Profit of the year is Rs. 8, 450

2. Loss for the year is Rs. 8, 450

3. Profit for the year is Rs. 1, 850

4. Loss for the year is Rs. 1, 850

Q.

An overstatement in the value of closing stock overstates all of the following except:

1. Net Income

2. Current assets

3. Capital of the business

4. Cost of goods sold

Q.

From the following information, calculate the amount to be taken to Profit and Loss Account:
(i) Rent paid as per cash book is Rs. 70, 000
(ii) Rent outstatnding at the end is Rs. 20, 000

Q.

Opening inventory + Net purchases =

1. Cost of goods available for sale

2. Cost of goods sold

3. Sales

4. Closing stock

Q.

Asertain cost of goods sold from the following

$\begin{array}{cc}& \text{Amt (Rs.)}\\ \text{Indirect expenses}& 30,400\\ \text{Direct expenses}& 37,200\\ \text{Sales}& 2,40,000\\ \text{Net purchases}& 1,44,000\\ \text{Return inwards}& 24,000\\ \text{Return outwards}& 16,000\\ \text{Closing inventory}& 56,000\\ \text{Opening inventory}& 32,000\end{array}$

Q.

Cost of goods available for sale – closing inventory =

1. Opening inventory

2. Cost of opening inventory

3. Work in progress ending inventory

4. Cost of goods sold

Q.

Which of the Following Is Not Included in the Trading Account?

1. Foreman’s wages

2. Carriage inwards

3. Direct wages

4. Depreciation on office equipment

Q. is the part of the trading account.

1. Closing stock
2. Net profit
3. Salary
4. Depreciation

Q.

To arrive at the gross profit of a trading business, which one of the following formula is applied?

1. Sales - (Opening Stock + Purchases + Closing Stock)

2. Sales - (Opening Stock + Purchases - Closing Stock)

3. Sales - (Opening Stock - Purchases + Closing Stock)

4. Sales - (Opening Stock - Purchases - Closing Stock)

Q.

Bobbie opened a consulting firm and copleted these trannsactions during November, 2005

(a) Invested Rs 4, 00, 000 cash and office equipment with Rs 1, 50, 000 in a business called Bobbie Consulting.

(b) Purchased land and a small building . The land was worth Rs. 1, 50, 000 and the building worth Rs 3, 50, 000. The purchase price was price was paid with Rs 2, 00, 000 cash and a long term note payable for Rs 8, 00, 000.

(c) Purchased office supplies on credit for Rs 12, 000.

(d) Bobbie transferred title of motor car to the business. The motor car was worth Rs 90, 000.

(e) Purchased for Rs 30, 000 additional office equipment on credit.

(f) Paid Rs 7, 500 salary to the office manager.

(g) Provide services to a client and collected Rs 30, 000.

(h) Paid Rs 4, 000 for the month's utilities.

(i) Paid supplier created in transaction (c).

(j) Purchase new office equipment by paying Rs 93, 000 cash and trading in old equipment with a recorded cost of Rs 7, 000.

(k) Completed services of a client for Rs 26, 000. This amount is to be paid within 30 days.

(l) Received Rs 19, 000 payment from the client created in transaction (k).

(m) Bobbie withdrew Rs 20, 000 from the business.

Analyse the above stated transactions and open the following T- accounts

Cash, client, office supplies, motor car, building, land , long term payables, capital , withdrawals, salary, expense and utilies expense.

Q.

From the following balances extracted from the books of M/s Ahuja:

$\begin{array}{cc}& \text{Amt. (Rs.)}\\ \text{Opening stock}& 25,000\\ \text{Credit purchases}& 7,50,000\\ \text{Cash purchases}& 3,00,000\\ \text{Credit sales}& 12,00,000\\ \text{Cash sales}& 4,00,000\\ \text{Wages}& 1,00,000\\ \text{Salaries}& 1,40,000\\ \text{Closing stock}& 30,000\\ \text{Sales return}& 50,000\\ \text{Purchases return}& 10,000\end{array}$

Calculate the amount of -
(i) Cost of goods available for sale

(ii) Cost of goods sold during the year

(iii) Gross profit

Q.

Mr. Farhan, a manager in Not-For-Profit Organisation received a sum off 5, 00, 000 as donation for construction of building. Mr. Farhan however, used this amount for his personal use.

(i) Identify the value missing in the above case.

(ii) Give the accounting treatment of donation in the financial statements.

Q.

Mr. Biggs bought several lots of inventory throughout a period for the following amounts Rs. 1, 100, Rs. 2, 200, Rs. 3, 300, Rs. 4, 400. He made sales on credit throughout this period of Rs. 1, 100, Rs. 2, 200, Rs. 3, 300, Rs. 4, 400. He sells inventory at cost plus 25%. His closing inventory at the end of the period is valued at:

1. 0

2. Rs. 3, 300

3. Rs. 4, 400

4. Rs. 2, 200