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Liability

Which of the ...

Question

Which of the following is a liability?

A

Machinery

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B

Loans from bank

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C

Motor Vehicles

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D

Cash

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Solution

The correct option is B
Loans from bank

Loans from bank is the only liability among the above options. All the others are assets of the business.

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Q. Arrange assets in the order of permanence:
Sundry Debtors, Stock, Investment, Land and Building, Cash in Hand, Motor Vehicle, Cash at Bank, Goodwill, Plant and Machinery, Furniture, Loose Tools, Marketable Securities.

Q. Journalise the following transaction:
Assets: Cash in Hand Rs.2,000; Cash at Bank Rs. 68,000; Stocks of goods Rs. 40,000; Machinery Rs. 1,00,000; Furniture Rs. 10,000; M/s. Narain Bros. owe Rs. 15,000; M/s B.K. Bros. owe Rs. 25,000.
Liabilities: Loan Rs. 50,000; sum owing to Jacob Bros. Ltd. Rs. 20,000.

Q. On 31st March, 2018 the following Trial Balance was extracted from the books of Mohan:


Particulars	Debit Balances (₹)	Credit Balances (₹)
Capital		3,00,000
Plant and Machinery	50,000
Debtors	2,00,000
Creditors		1,00,000
Loan		95,000
Interest on Loan	3,000
Cash	20,000
Provision for Doubtful Debts		7,000
Stock on 1st April, 2017	68,000
Motor Vehicles	1,00,000
Bank	35,000
Land and Building	1,20,000
Bad Debts	5,000
Purchases	6,60,000
Sales		11,00,000
Purchases Return		15,000
Sales Return	80,000
Carriage Outwards	25,000
Carriage Inwards	30,000
Salaries	90,000
Rent and Insurance	30,000
Advertising	35,000
Discount Received		5,000
General Expenses	34,000
Bills Receivable	60,000
Bills Payable		20,000
Rent Received		3,000
Total	16,45,000	16,45,000

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following:
(a) Stock as at 31st March, 2018 was valued at ₹70,000.
(b) All debtors are considered good for recovery.
(c) Depreciate Motor Vehicles by 20%.
(d) Bank intimation of customer's cheque of ₹10,000 being dishonoured is not recorded in the books.
(e) Travelling expenses of ₹5,000 paid to sales person was wrongly debited to his Personal Account and was included in debtors.
(f) Amount of ₹6,000 received from Ronit was credited to his account and was included in creditors. This amount was written off as bad debt in earlier years.
(g) Drawings included an amount of ₹2,000 being amount drawn in cash. It was used by Mohan for Purchase of stationery used in business.

Q. Select the most appropriate alternative from those given below :

If any unrecorded liability is paid on dissolution of the firm____________ account is debited.
a) Cash/Bank A/c
b) Realisation A/c
c) Partner’s Capital A/c
d) Loan A/c

Q. Whenever you buy a vehicle, motor insurance is equally important and third party liability insurance is mandatory.

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