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(CORPORATE)
Q: Fill in the blanks given below.
1. __________ is the largest type of Business organization is
2. The Business of Corporation is Operated under the provisions of ____________
3. It is ______________ for the corporation to get its registration
4. The liability of the share holders is __________ up to the amount of their_______
5. The maximum number of members of Private Limited company is __________
6. The maximum number of members of Public Limited company is __________
7. Corporation is an artificial Person created by ______________
8. A _________________Company may issue share to General Public
9. Share may not issued to____________________ when these are not fully paid up.
10. Share may be issued at par, premium and _______________
11. When a share is issued at Premium the Par Value of the share will be ____________then the issuance price of Share.
12. Dividend is Firstly given to ____________________ Stock Holders
13. A Corporation it self may sue or may be _________ in case any violation of law
14. Profit or Loss of the corporation is ultimately relating to the _________Holders
15. Interim dividend is declared by the corporation ________________ the year
16. A corporation being an ___________ can retain or sold the assets at its own name
17. Corporation may issue dividend in shape of Stocks and __________
18. __________ is the part of Profit of Corporation which is distributed among the Share holders
19. A corporation may raise funds by issuing ____________ and __________ to general public
20. A corporation may be dissolved by laws as it is ______________
ANSWER
1 Corporation 2 Companies Ordinance 1984
3 Compulsory 4 Limited ,investment
5 Fifty 6 Un- limited , but equal maximum no of shares
7 Law 8 Public
9 Minors 10 Discount
11 Less 12 Preferred
13 Sued 14 Share
15 During 16 Artificial
17. Cash 18 Dividend
19 Shares, Debentures 20 Formatted or established.
Q: Multiple choice answers.
1. The largest type of Business organization is A) Sole Proprietor ship B) Corporation C) Corporation
2. The Business of Corporation is Operated under the provisions of A)Companies Act1984 B)Partnership Act 1932 C) Companies Ordinance1984
3. The registration is compulsory for the business of
A) Sole Proprietor ship B) Corporation C) Partnership
4. The maximum number of members of Private Limited company is
A) 25 B) 50 C) Un limited.
5. The maximum number of members of Public Limited company is
A) Un limited B) 100 C) 50
6. A Company may issue share to General Public
A) Private limited B) Public limited C) Both
7. Share may not issued to
A) Directors B) Minor C) Non
8. Share may be issued at
A) Condition B) Provision C) Premium
9. When a share is issued at Premium the Original Value of the share will be
A) Greater the Issued price B) Less the Issued price C) Equal
10. Dividend is Firstly given to
A) Debenture Holders B) Common Stock Holders C) Preferred share Holders
11. Profit or Loss of the corporation is ultimately relating to the
A) Debenture Holders B) Stock Holders C) Creditors.
12. Interim dividend is declared by the corporation
A) At Beginning of year B) During the Year C) At end of year
13 For the Corporation the Debenture Holders are
A) Creditors B) Owners C) Debtors.
14. Corporation may issue dividend in shape of
A) Stock B) Cash C) Both.
15. The Remaining Part of Profit of Corporation which is un allocated is called.
A) Dividend B) Retained Earning C) Reserve.
ANSWER
1 C 2 A
3 B 4 B
5 A 6 B
7 B
( When are on installments only) 8 C
9 B 10 C
11 B 12 B
13 A 14 C
15 B
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Q: Give the short answers of the following questions.
1 Define Company
Answer:-
Company means an artificial person created by law having a separate entity and perpetual succession with a common seal, with and object to earn profit.
2 Under what Act or Ordinance the business of corporation is controlled
Answer:-
The business of corporation is controlled under The Companies Ordinance 1984
3 What are the major types of company
Answer:-
There are two major types of company according to its registration ( I ) Private limited Company ( II ) Public Limited Company
4 What are the main advantages of corporation
Answer:-
There are so many advantages of corporation but the most important are
a. Limited liability
b. Perpetual succession
c. Large capital
d. Separate entity
e. Legal protection
5 What is meant by Authorized Capital or Registered Capital
Answer:-
At the time of formation , it is compulsory for a corporation to mention the maximum limit of its capital and a corporation can’t issue share more than that limit this is called registered capital
Registered capital is also called the Authorized capital because a corporation is authorize to issue share against this one.
6 Define Share
Answer:-
Registered capital of the corporation is divided into to small units of equal amount , every small unit individually is known as Share.
7 Name any four parties to whom the shares may be issued
a. Promoters.
b. Directors.
c. Vendors.
d. General Public.
8 What are the maximum options for issuing the shares.
Answer:-
There are three options available to corporation for issuance of shares that are
A. Issuance at Par
B. Issuance at Discount
C. Issuance at Premium
9 Give Journal Entries for issuance of Share at Par, Discount and Premium.
Answer:-
Following are the general entries
Issuance of Share at Par
Bank Debited
Share Capital Credited
Issuance of Share at Discount
Bank Debited
Discount Debited
Share Capital Credited
Issuance of Share at Premium
Bank Debited
Share Capital Credited
Share Premium Credited.
10 What is meant by issuing share at Premium?
Answer:-
When the original price of the share is less than the issuance price of the share or controversially, the issuance price of the share is greater than the Par value, it is known as Issuance of share at premium
11 What are the major types of shares
Answer:-
There are three major types of share which are
a. Preferred Share
b. Common OR ordinary Share.
c. Deferred Share.
12 Define Dividend
Answer:-
Dividend is that part of the corporation profit which is distributed among the share holders.
13 What is the procedure of Dividend distribution.
Answer:-
When the dividend is declared among the share holder than it is firstly given to Preferred Share holders than it is given to Common Share holders and at last it is given to Deferred Share holders.
14 What is Debenture?
Answer:-
Debenture means a legal document which is issued by a corporation against debt taken by him as an evidence and security
15 Why a corporation issued debenture.
Answer:-
A corporation issued debenture to borrow money from the general public which is required for its expansion.
16 What is different between Share and Debenture?
Answer:-
Share and Debenture are two different things, Share means a document which is issued to those persons who invest in corporation and are its ultimate owners. While Debentures means a document which is issued to those people who provide loan to the corporation and are its creditors.
17 What will be the Journal entry for issuing debenture at par and redeemable at par.
Answer:-
Following are the general entry
Issuance of debenture at Par and redeemable at Par.
Bank Debited
Debenture Credited
18 Why the corporation issued Stock dividend
Answer:-
A corporation issued stock dividend to increase the total amount of share capital and to retain the cash balance un changed.
19 Can a corporation give the part of profit to its employees
Answer:-
A part of the corporation profit is also some time distributed among its employees in shape of Bonus , which is credited to Employees profit sharing Fund.
20 What is meant by retained earning statement and how it is prepared?
Answer:-
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Q: Point out true and false answer from the options given by Ticking “T” for True and “F”
for False
1. Corporation is an organization not for profit but is for social welfare. T/F
2. Corporation is the largest type of Business organization T/F
3. The Business of Corporation is Operated under the provisions of Companies Act 1932 T/F
4. It is optional for the corporation to get its registration T/F
5. The liability of the share holders is limited up to the amount of their shares held T/F
6. The minimum number of members of Private Limited company should be Seven T/F
7. The maximum number of members of Public Limited company is limited up to the no. of total shares of authorized capital T/F
8. Share mean a small unit of the total capital registered of the corporation. T/F
9. A private company can issue prospectus for the sale of its shares. T/F
10. Corporation has the status an artificial Person in the eyes of law separate from its members. T/F
11. A Public limited Company may issue share to General Public T/F
12. Share may not issued to directors and promoters, when these are fully paid up. T/F
13. Share may be issued at par only. T/F
14. When a share is issued at Premium the issued price of the share will be less then the Original price.
15. Dividend is Firstly given to directors of the corporation T/F
16. A Corporation it self may be sued in case any violation of law T/F
17. Profit or Loss of the corporation is ultimately is the profit of the Shareholders T/F
18. Interim dividend is declared by the corporation at the end of year T/F
19. A corporation having a separate legal entity can retain or sold the assets at its own name T/F
20. Corporation collects its capital by issuing Shares to General Public. T/F
21. Dividend is that part of Profit of Corporation which is distributed among the Share holders T/F
22. A corporation can take loan from general public by issuing Debentures. T/F
23. A corporation may be dissolved by laws only T/F
24. The Shares of corporation are traded on stock exchange T/F
25. The Price of the Share and Debentures remain constant for ever. T/F
ANSWER
1 F 2 T
3 F 4 F
5 T 6 F
7 T 8 T
9 F 10 T
11 T 12 F
13 F 14 F
15 F 16 T
17 T 18 F
19 T 20 T
21 T 22 T
23 T 24 T
25 F
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(DEPRECIATION)
Q: Give the short answers of the following questions.
1 Define Depreciation
Answer
Depreciation means a gradual decrease in the value of fixed due to use in the business or in the process of obtaining revenue of business.
2 What are reasons or causes of depreciation
Answer
There are many reasons
3 Why the depreciation is charged annually
Answer
4 What are the basis for depreciation
Answer
5 Why the reserve for depreciation is maintained
Answer
The reserve for depreciation is maintained because at the expiry of the assets the business needs another asset of same kind. The business also pays income taxes and depreciation reserve is maintained to reduce this liability . Depreciation reserve is maintained out of the profit earned by the business through utilizing the same asset.
6 Define amortization
Answer
A gradual decrease in the value of Intangible assets due to use in the revenue generating process is called amortization.
7 What is meant scrap value or Residual value.
Answer
When any asset becomes out dated or out of order then sometimes it posses its value that is the value of its scrap therefore it is known as Scrap value or residual value of the asset
8 What are the characteristics of depreciation.
Answer
9 Define Depletion
Answer
The natural resources when use also their value declines with passage of time that decrease in the value of natural resources e.g. mines etc is Depletion.
10 What the methods to calculate depreciation, Name any five methods which are used to calculate depreciation
Answer
The method to calculate depreciation are
A Original cost balance method OR straight line balance method.
B Units of out put method OR Units of production method
C Declining balance method OR Diminishing balance method
D Double Declining OR Double Diminishing balance method
E Sum of year digits method
11 What is the formula to calculate annual depreciation under Original cost balance or straight line balance method of depreciation
Answer
Depreciation under straight line method is calculated by dividing the difference cost and scrap value with estimated life.
Formula of depreciation (Under straight line method)
12 How the annual depreciation is calculated under units of out put method.
Answer
13 What will the general entry of depreciation and how it will effect the financial statements of a business.
Answer
14 What is formula to calculate rate of depreciation under declining balance method
Answer
15 What is meant by depreciable value of an assets.
Answer
16 May or may not the rate of depreciation is changed .
Answer
17 What is meant by accumulated depreciation.
Answer
18 Can depreciation of period less than a year ( Fraction period ) calculated.
Answer
19 How the depreciation for a month or for a day may be computed.
Answer
20
Answer
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(FINANCE)
Corporation
TOPIC NO. 05
Q: Give the short answers of the following questions.
1 Define Company
Answer:-
Company means an artificial person created by law having a separate entity and perpetual succession with a common seal, with and object to earn profit.
2 Under what Act or Ordinance the business of corporation is controlled
Answer:-
The business of corporation is controlled under The Companies Ordinance 1984
3 What are the major types of company
Answer:-
There are two major types of company according to its registration ( I ) Private limited Company ( II ) Public Limited Company
4 What are the main advantages of corporation
Answer:-
There are so many advantages of corporation but the most important are
a. Limited liability
b. Perpetual succession
c. Large capital
d. Separate entity
e. Legal protection
5 What is meant by Authorized Capital or Registered Capital
Answer:-
At the time of formation , it is compulsory for a corporation to mention the maximum limit of its capital and a corporation can’t issue share more than that limit this is called registered capital
Registered capital is also called the Authorized capital because a corporation is authorize to issue share against this one.
6 Define Share
Answer:-
Registered capital of the corporation is divided into to small units of equal amount , every small unit individually is known as Share.
7 Name any four parties to whom the shares may be issued
a. Promoters.
b. Directors.
c. Vendors.
d. General Public.
8 What are the maximum options for issuing the shares.
Answer:-
There are three options available to corporation for issuance of shares that are
A. Issuance at Par
B. Issuance at Discount
C. Issuance at Premium
9 Give Journal Entries for issuance of Share at Par, Discount and Premium.
Answer:-
Following are the general entries
Issuance of Share at Par
Bank Debited
Share Capital Credited
Issuance of Share at Discount
Bank Debited
Discount Debited
Share Capital Credited
Issuance of Share at Premium
Bank Debited
Share Capital Credited
Share Premium Credited.
10 What is meant by issuing share at Premium?
Answer:-
When the original price of the share is less than the issuance price of the share or controversially, the issuance price of the share is greater than the Par value, it is known as Issuance of share at premium
11 What are the major types of shares
Answer:-
There are three major types of share which are
a. Preferred Share
b. Common OR ordinary Share.
c. Deferred Share.
12 Define Dividend
Answer:-
Dividend is that part of the corporation profit which is distributed among the share holders.
13 What is the procedure of Dividend distribution.
Answer:-
When the dividend is declared among the share holder than it is firstly given to Preferred Share holders than it is given to Common Share holders and at last it is given to Deferred Share holders.
14 What is Debenture?
Answer:-
Debenture means a legal document which is issued by a corporation against debt taken by him as an evidence and security
15 Why a corporation issued debenture.
Answer:-
A corporation issued debenture to borrow money from the general public which is required for its expansion.
16 What is different between Share and Debenture?
Answer:-
Share and Debenture are two different things, Share means a document which is issued to those persons who invest in corporation and are its ultimate owners. While Debentures means a document which is issued to those people who provide loan to the corporation and are its creditors.
17 What will be the Journal entry for issuing debenture at par and redeemable at par.
Answer:-
Following are the general entry
Issuance of debenture at Par and redeemable at Par.
Bank Debited
Debenture Credited
18 Why the corporation issued Stock dividend
Answer:-
A corporation issued stock dividend to increase the total amount of share capital and to retain the cash balance un changed.
19 Can a corporation give the part of profit to its employees
Answer:-
A part of the corporation profit is also some time distributed among its employees in shape of Bonus , which is credited to Employees profit sharing Fund.
20 What is meant by retained earning statement and how it is prepared?
Answer:-
Q: Multiple choice answers.
1. The largest type of Business organization is A) Sole Proprietor ship B) Corporation C) Corporation
2. The Business of Corporation is Operated under the provisions of A)Companies Act1984 B)Partnership Act 1932 C) Companies Ordinance1984
3. The registration is compulsory for the business of
A) Sole Proprietor ship B) Corporation C) Partnership
4. The maximum number of members of Private Limited company is
A) 25 B) 50 C) Un limited.
5. The maximum number of members of Public Limited company is
A) Un limited B) 100 C) 50
6. A Company may issue share to General Public
A) Private limited B) Public limited C) Both
7. Share may not issued to
A) Directors B) Minor C) Non
8. Share may be issued at
A) Condition B) Provision C) Premium
9. When a share is issued at Premium the Original Value of the share will be
A) Greater the Issued price B) Less the Issued price C) Equal
10. Dividend is Firstly given to
A) Debenture Holders B) Common Stock Holders C) Preferred share Holders
11. Profit or Loss of the corporation is ultimately relating to the
A) Debenture Holders B) Stock Holders C) Creditors.
12. Interim dividend is declared by the corporation
A) At Beginning of year B) During the Year C) At end of year
13 For the Corporation the Debenture Holders are
A) Creditors B) Owners C) Debtors.
14. Corporation may issue dividend in shape of
A) Stock B) Cash C) Both.
15. The Remaining Part of Profit of Corporation which is un allocated is called.
A) Dividend B) Retained Earning C) Reserve.
ANSWER
1 C 2 A
3 B 4 B
5 A 6 B
7 B
( When are on installments only) 8 C
9 B 10 C
11 B 12 B
13 A 14 C
15 B
Q: Fill in the blanks given below.
1. __________ is the largest type of Business organization is
2. The Business of Corporation is Operated under the provisions of ____________
3. It is ______________ for the corporation to get its registration
4. The liability of the share holders is __________ up to the amount of their_______
5. The maximum number of members of Private Limited company is __________
6. The maximum number of members of Public Limited company is __________
7. Corporation is an artificial Person created by ______________
8. A _________________Company may issue share to General Public
9. Share may not issued to____________________ when these are not fully paid up.
10. Share may be issued at par, premium and _______________
11. When a share is issued at Premium the Par Value of the share will be ____________then the issuance price of Share.
12. Dividend is Firstly given to ____________________ Stock Holders
13. A Corporation it self may sue or may be _________ in case any violation of law
14. Profit or Loss of the corporation is ultimately relating to the _________Holders
15. Interim dividend is declared by the corporation ________________ the year
16. A corporation being an ___________ can retain or sold the assets at its own name
17. Corporation may issue dividend in shape of Stocks and __________
18. __________ is the part of Profit of Corporation which is distributed among the Share holders
19. A corporation may raise funds by issuing ____________ and __________ to general public
20. A corporation may be dissolved by laws as it is ______________
ANSWER
1 Corporation 2 Companies Ordinance 1984
3 Compulsory 4 Limited ,investment
5 Fifty 6 Un- limited , but equal maximum no of shares
7 Law 8 Public
9 Minors 10 Discount
11 Less 12 Preferred
13 Sued 14 Share
15 During 16 Artificial
17. Cash 18 Dividend
19 Shares, Debentures 20 Formatted or established.
Q: Point out true and false answer from the options given by Ticking “T” for True and “F”
for False
21. Corporation is an organization not for profit but is for social welfare. T/F
22. Corporation is the largest type of Business organization T/F
23. The Business of Corporation is Operated under the provisions of Companies Act 1932 T/F
24. It is optional for the corporation to get its registration T/F
25. The liability of the share holders is limited up to the amount of their shares held T/F
26. The minimum number of members of Private Limited company should be Seven T/F
27. The maximum number of members of Public Limited company is limited up to the no. of total shares of authorized capital T/F
28. Share mean a small unit of the total capital registered of the corporation. T/F
29. A private company can issue prospectus for the sale of its shares. T/F
30. Corporation has the status an artificial Person in the eyes of law separate from its members. T/F
31. A Public limited Company may issue share to General Public T/F
32. Share may not issued to directors and promoters, when these are fully paid up. T/F
33. Share may be issued at par only. T/F
34. When a share is issued at Premium the issued price of the share will be less then the Original price.
35. Dividend is Firstly given to directors of the corporation T/F
36. A Corporation it self may be sued in case any violation of law T/F
37. Profit or Loss of the corporation is ultimately is the profit of the Shareholders T/F
38. Interim dividend is declared by the corporation at the end of year T/F
39. A corporation having a separate legal entity can retain or sold the assets at its own name T/F
40. Corporation collects its capital by issuing Shares to General Public. T/F
41. Dividend is that part of Profit of Corporation which is distributed among the Share holders T/F
42. A corporation can take loan from general public by issuing Debentures. T/F
43. A corporation may be dissolved by laws only T/F
44. The Shares of corporation are traded on stock exchange T/F
45. The Price of the Share and Debentures remain constant for ever. T/F
ANSWER
1 F 2 T
3 F 4 F
5 T 6 F
7 T 8 T
9 F 10 T
11 T 12 F
13 F 14 F
15 F 16 T
17 T 18 F
19 T 20 T
21 T 22 T
23 T 24 T
25 F
Q: Match the items in columns “A”, “B” & Write the answers in column “C”.
Column “A” Column “B” Column “C”
Formation of Corporation Debenture
Issuance of Shares Shareholders
Owners of Corporation Part of corporation’s profit which is distributed among share holders.
Debenture Corporation
Dividend Pubic limited company
Largest Form of Business Share Holders
Interest is allowed on Creditors
Debenture Holders are Liability
Asset
ANSWERS
Column “A” Column “C”
Formation of Corporation Under Companies Ordinance 1984
Issuance of Shares Pubic limited company
Owners of Corporation Shareholders
Debenture Liability
Dividend Part of corporation’s profit which is distributed among share holders.
Largest Form of Business Corporation
Interest is allowed on Debenture
Debenture Holders are Creditors
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Manufacturing Concerns
TOPIC NO. 02
MANFACTURING ENTERPRISES
Q: Give answers of following questions briefly.
1. There are how many types of business concerns.
Answer:-
There are three types of business concerns.
(i) Manufacturing concerns (ii) Trading Concerns (iii) Service Concerns.
2. What are manufacturing concerns?
Answer:-
Manufacturing Concern means those concerns which are related to the Conversion of raw material into finished or semi finished goods. These concerns are relating to the manufacturing of the goods from the produces of primary industry.
Manufacturing concerns are those types of business institution, which are dealt within producing goods. These concerns purchase raw material and labour, other expenses are applied on it to convert this raw material into another shape i.e. Finished or semi finished goods.
3. Define cost of goods sold statement?
Answer:-
Cost of goods sold means the payments made for those things which are sold by a business man to earn profit and the cost of goods sold statement means a statement which show the total payment made for the acquisition of goods in case of trading concern or the total payment made for the production of goods in case of manufacturing concern.
Cost of goods sols statement is a statement consisting the total cost of raw material used, direct labor cost, and other factory overhead cost, opening and ending work-in- process inventory and also the opening and ending finished goods inventory.
4. Write the main five objectives of manufacturing concerns?
Answer:-
There are many objectives of manufacturing concerns. Some main objectives of
1 Profit orientation
2 Utility Maximization
3 Enhancement Social welfare
4 Provision of Standard products
5 Minimization of production cost.
5. What is Factory overhead cost?
Answer:-
Factory Overhead means all those payments or expenses which are related to the factory or directly to the production other than Material and Labor Costs.
6. Write any five Factories overhead cost?
Answer:-
I Rent of the Factory
II Indirect Material
III Indirect Labor
IV Superintendent Fee
V Power, Height and Light.
7. What is Direct Material cost? Give its examples.
Answer:-
Direct material cost is the cost incurred on material , which is an integral part of the finished goods and can be directly included in computing the unit cost. It means the payments which are made to supplier of raw material which is directly used for production of goods.
Example:
1. Yarn used for cloth manufacturing furniture.
2. Timber used to manufacture
3. Cotton used to make thread
4. steal used to manufacture cycle
8. How the Material Cost is calculated
Answer:-
The material used for the production is calculated by
FORMULA
Opening material inventory
+ Cost of material purchased
- Ending material inventory.
= Cost of Material Used
9. How the Cost of Raw Material Purchased is calculated .
Answer:-
Cost of direct material purchased is calculated by adding direct expenses and Net Purchases which are computed by deducting the purchases return and purchases allowance or discount on purchases of raw material from total purchases.
FORMULA
Net Purchases ( Purchases less return, allowance and discount)
Add: Direct expenses.
10. What is meant by Indirect material cost ? Give its examples.
Answer:-
It refers to material which is indirectly used to produce some thing , or which indirect form part of the finished products.
Example:
1. Glue
2. Nails
3. Rivet s etc.
11. What is direct labor cost?
Answer:-
Direct labor cost means the payments which are made to the people who directly work on the site, or whose performance is directly related to the production of labor.
12. What is Indirect labor cost?
Answer:-
It refers to the payments which are made to the people who are not directly working for the manufacturing or production of goods or services , or whose performance doesn’t directly related to the production of labor.
13. Define Prime Cost and What is the formula to calculate prime cost?
Answer:-
Prime cost means the basic cost of goods manufactured. It is calculated by ADDING the Cot of direct material Used and Direct labor cost.
FORMULA
Prime cost = Direct material cost + Direct Labor Cost.
14. What is meant by Conversion Cost? How it is calculated.
Answer:-
Conversion cost means the payments made or costs which are relating to the conversion of raw material into semi finished or finished goods.
It is Sum of Cost of Direct Labor and Factory Over Head Cost.
FORMULA
Conversion cost = Direct Labor cost + FOH Cost.
15. Define Factory Cost ? What is the formula of factory cost
Answer:-
Factory cost is the sum of direct material consumed, direct labor applied and Factory Over Head Cost utilized for the manufacturing.
FORMULA
Factory Cost = Prime cost + Factory Over Head Cost.
OR
Factory Cost = Direct material cost + Direct Labor Cost + FOH Cost
16. What is meant by Work- in- process inventory.
Answer:-
During manufacturing process some work is in such a way that is neither in shape of raw material nor in shape of finished goods, this is called work in process inventory or cost of work still in process.
17. Define cost of Goods Manufactured and Give the formula for its computation.
Answer:-
Cost of Goods Manufactured is computed by summing up cost of direct material, direct labor , FOH Cost and Opening work- in – process inventory , while the ending work-in-process inventory is deducted from the sum of all above cost.
FORMULA
Factory Cost
+ Opening WIP Inventory
- Ending WIP Inventory
= Manufactured Cost
18. Why we make the Cost of Goods Sold Statement?
Answer:-
We make Cost of goods sold statement to determine the PRICE of goods manufactured and also to control and minimize the cost of material, labor and F.O.H cost
19. An organization which deals in production of goods is called?
Answer:-
An organization which deals in production of goods is called manufacturing enterprises.
20. What is meant by Applied FOH Cost and how it is determined?
Answer:-
Factory Over Head Applied means the estimated Factory Over Head Cost for the coming year on the basis of preceding year. It means the predetermined FOH Cost of the year on the basis of previous year actual FOH and other relevant items.
The FOH Applied is mostly calculated and determined upon the basis of proportion to Direct Labor Cost and the FOH Actual of the preceding year.
21. Is it a vital rule to estimate FOH Applied on the basis of Direct Labor Cost.
Answer:-
No it is not necessary to calculate FOH Applied on the basis of Direct Labor Cost.
The equitable basis for the calculation of FOH Applied are following
A As per Machine Labor
B As Ratio of Direct Labor
C As Ratio of Direct Material
D As per Estimated Units of Production.
E As Percentage of Prime Cost.
22. What is Under Applied? And why we use applied method.
Answer:-
When Actual FOH Cost is higher then the Applied FOH cost , the difference is called Under FOH Applied.
Cost of direct material and direct labor physically entering into processing department cab be determined by requisition of forms and tickets respectively , while so many items of Factory Over Head are which are incurred for factory as a whole , but indirectly related to the manufacturing process can’t be determined, moreover there are some items which are variable and decrease or increase according to the volume becomes difficult to calculate . Therefore the FOH Applied method is used.
23. What is Over Applied? Describe reasons to happen Over OR Under Applied.
Answer:-
When Applied FOH cost is higher then the Actual FOH Cost, the difference is called Over FOH Applied.
Over or Under Applied FOH happens due to Change in Market Prices,
24. What is unit cost? How will unit cost be calculate?
Answer:-
Unit cost means the portion of total cost which is relating to the single or small unit of total production
It is calculated by dividing the Cost of Goods Manufactured by the number of total units manufactured.
25. How the Profit or Loss of the Manufacturing Concerns is determined?
Answer:-
The Income Statement is prepared to determine the Profit or Loss of the manufacturing concerns.
26. Why we prepare Income Statement at the end of the year?
Answer:-
Income statement is prepared at the end of the year mostly or end of a specific time interval to find the Prof it earned or Loss suffered during the year. It also helps to make policies, or to take decision for the next year or period.
27. Distinguish between cost and expense?
Answer:-
Cost means all those payments which are recoverable or which are made up to the production or acquisition final goods and expenses refers to those which are made afterwards the acquisition or production of goods.
28. What is the difference between trading and manufacturing cost?
Answer:-
Trading concern are relating to the Buying and Selling of Goods and services only which are produced by manufacturing concern in the same shape in which they buy.
While the manufacturing concern is that concern which buy raw material and convert it into finished or semi finished goods.
29. what are method for material costing to a factory
Answer:-
There are three method of material costing to factory named LIFO and FIFO and AVERAGE method
30 What is meant by LIFO and FIFO
Answer:-
LIFO stands for Last In First Out and under this method the material received at the end or recently is delivered firstly to the factory or is charged to the production
FIFO stands for First In First Out and under this method the material received firs is delivered firstly to the factory or is charged to the production
Q. From the given answers of the statement select most appropriate one.
1. The prime cost is generally used to denote the sum of direct materials and___________
A. Direct labor B Factory overhead C Finish goods
2. The ___________forms an integral part of finish product and can be identified directly.
A Indirect material B Indirect labor C Direct material
3. The ___________refers to those costs which are indirectly related with the production.
A. Factory overhead B Prime cost C. Basic cost
4. The thread & Buttons used in producing garments are considered as____________
A Indirect labor B Indirect material C Direct material
5. The opening finish goods inventories in the cost of goods manufactured during the period are_____________
A. Included B. Excluded C Omitted
6. The answer of Material used and Direct Labor Cost is called_____________
A. Factory cost B. Prime cost C F.O.H
7. The statement of cost of goods sold is prepared at the end of ____________
A. Year B. Month C Financial year
8. Under applied ___________ in the cost of goods sold at normal
A. Less B. Added C Multiplied
9. The answer of Factory cost add opening work in process is called____________
A. Cost of work put in process B Cost of goods sold C Prime cost
10. Over F.O.H applied subtracts from _____________
A. Cost of goods sold B. Cost of goods sold at normal C F.O.H
11. Wages to factory workers is ____________
A. Operative expense B. F.O.H Cost C Direct Labor cost
12. Material at the beginning of year is called_______________
A. Opening raw material B. Ending raw material C Factory cost
13. Cost of goods sold is ______________from sales
A. Subtracted B. Added C Divides D NON
14. Carriage in is _____________
A. Operative expense B. F.O.H C Direct expense
15. What will be the answer of Material available for use less ending raw material
A. F.O.H cost B. Direct Labor Cost C Material used
16. Access of Actual FOH over the Applied FOH is called ____________
A. Over Applied FOH B. F.O.H Cost C Under Applied FOH
17. Material when is returned to supplier is _______________ from purchases
A . Deducted B. Added C Divides D NON
18. Cost of goods sold at normal is computed on the basis of_____________
A. Applied FOH B. F.O.H Actual C Non
19. Goods distributed as free samples is _____________
A. Operative expense B. Selling expense C Direct expense
20. What will be the answer of prime cost plus Factory Over Head Cost.
A. F.O.H cost B. Direct Labor Cost C Factory Cost.
ANSWERS
1 A 2 C
3 A 4 B
5 B 6 B
7 A 8 B
9 A 10 B
11 C 12 A
13 C 14 C
15 C 16 C
17 A 18 A
19 B 20 C
Q. File in the blanks.
1. __________________ are those concerns which convert raw material into finished or semi finished goods.
2. The prime cost is generally used to denote the sum of direct material used and___________________
3. The ___________________forms an integral part of finish product and can be identified directly.
4. Conversion Cost is the sum of _______________ and ______________ cost.
5. The __________________refers to those costs which are indirectly related with the production.
6. The Thread & Buttons used in producing garments are considered as_______________
7. Factory cost is the sum of FOH.Cost and _____________________
8. Work –in-process inventory is that cost which is not in shape of raw material and also still is not converted into ___________________
9. Indirect material and labor cost, Depreciation of plant are the examples of ________________________ cost.
10. The opening finish goods inventories in the cost of goods manufactured during the period are_____________ to calculate cost of goods available for sale.
11. Cost of goods sold statement is prepared at the end of ___________.
12. Per unit cost of goods manufactured is derived by dividing the cost of goods manufactured with_______________
13. Factory Overhead Applied is added in ___________________ to compute factory cost.
14. _________________ is the sum of total direct material and direct labour cost.
15. The sum direct labor cost and __________________ is called Conversion cost
16. The access of Factory Over Head Applied against the Actual Factory Over Head Cost is called _____________________
17. The access of Factory Over Head Actual against the Applied Factory Over Head Cost is called _____________________
18. When the Factory cost added in opening work in process, the answer will be ___________________.
19. F.O.H stands for _____________.
20. Over Applied FOH cost will be _______ in cost of goods sold at normal.
21. Under Applied FOH cost will be _______ in cost of goods sold at normal.
22. The formula of per unit cost is _____________.
23. There are ________________ methods of material costing to product.
24. FIFO stand for ______________________ Method
25. LIFO stand for ______________________ Method
ANSWERS
1 Manufacturing concerns. 2 Direct Labor
3 Direct Material 4 Direct Labor Cost &
Factory Over Head Cost.
5 FOH Cost 6 Indirect Material Cost.
7 Prime Cost. 8 Finished goods.
9 Factory Over Head 10 Added
11 Year 12 Number of units manufactured.
13 Prime Cost 14 Prime Cost
15 Factory Over Head Cost 16 Over FOH Applied
17 Under FOH Applied 18 Cost of Work Put into Process
19 Factory Over Head 20 Deducted
21 Added 22 P/U = Manufactured cost
Cost Units Manufactured
23 24
25
Q: Wrtie “T” for the statement which is True and “F” for the false statment
1. Trading concern are those institutions which are relating to the production of goods and services from the inputs.
2. The prime cost is generally used to denote the sum of direct materials and Direct labor
3. The Indirect material forms an integral part of finish product and can be identified directly.
4. The Factory overhead refers to those costs which are indirectly related with the production.
5. The thread & Buttons used in producing garments are considered as Indirect labor
6. The opening finish goods inventories in the cost of goods manufactured during the period are Included
7. The answer of Material used and Direct Labor Cost is called Factory cost
8. The statement of cost of goods sold is prepared at the end of every Month.
9. Under applied FOH cost is added in the cost of goods sold at normal
10. The answer of Factory cost add opening work in process is called Prime cost
11. Over F.O.H applied is subtracts from Cost of goods sold
12. Wages to factory workers is Direct Labor cost
13. Material at the beginning of year is called Opening raw material
14. Cost of goods sold is Subtracted from sales to calculate Gross Profit
15. Carriage in is an Operative expense
16. The answer of Material available for use less ending raw material is cost of Material used
17. Access of Actual FOH over the Applied FOH is called Under Applied FOH
18. Material when is returned to supplier is deducted from purchases of raw material.
19. Cost of goods sold at normal is computed on the basis of F.O.H Actual
20. Goods distributed as free samples is operative expense
21. Conversion cost is answer of prime cost plus Factory Over Head Cost.
22. FIFO or Average method of Material costing when are used drives same answer
23. LIFO stands for Last In First Out method
24. Under FIFO the material received at the end is issued first.
25. Under LIFO the material received at the end is issued first.
ANSWER
1 F 2 T
3 F 4 T
5 F 6 T
7 T 8 F
9 T 10 F
11 T 12 T
13 T 14 T
15 F 16 T
17 F 18 T
19 F 20 F
21 F 22 F
23 T 24 F
25 T
Q. Match the correct answer of columns “A” with Columns “B” and write
down the answer in Column “C”.
Column A Column B Column C
1. Total of Direct material cost ,direct labor and F.O.H Cost. F.O.H (Applied)
2. Appropriation of estimated overhead cost to particular product. Prime cost
3. Total amount of salaries and wages paid in a factory. Manufactured Cost when divided among the total units manufactured.
4. Total Cost of direct material and direct labor. Selling Expense
5. Advertisement expenses. Payroll
6. Factory Insurance Direct Labour Cost
7. Access of Factory Over Applied upon the Actual F.O.H Cost
8. Total of Labor Cost and FOH cost Over FOH Applied
9. Use of GLUE in furniture manufacturing Under FOH Applied
10 Per Unit Cost Conversion Cost.
Factory cost
Indirect Material Cost.
ANSWERS
Q. Match the correct answer of columns “A” with Columns “B” and write
down the answer in Column “C”.
Column A Column C
1. Total of Direct material cost, direct labor and F.O.H Cost. Factory cost
2. Appropriation of estimated overhead cost to particular product. F.O.H (Applied)
3. Total amount of salaries and wages paid in a factory. Payroll
4. Total Cost of direct material and direct labor. Prime cost
5. Advertisement expenses. Selling Expense
6. Factory Insurance F.O.H Cost
7. Access of Factory Over Applied upon the Actual FOH Cost. Over FOH Applied
8. Total of Labor Cost and FOH cost Conversion Cost.
9. Use of GLUE in furniture manufacturing Indirect Material Cost.
10 Per Unit Cost Manufactured Cost when divided among the total units manufactured
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Non Trading Concerns
TOPIC NO. 03
Q: Give the short answers of the following questions.
1. What are the Non Trading Concerns? Give some examples.
Answer:-
Non Trading Concern means those concern which are established or formed for the Public and Social Welfare, such institution have not any motive to earn profit but work for the betterment of society.
2. Define Non Trading Concern’s objective?
Answer:-
The objective Non Trading Concern is to provide benefit to the society, to work for the welfare of general public. These institutions also work for the betterment and progress of the society and Profit have no value for them
3. What is income and expenditure account?
Answer:-
Income and Expenditure account is a statement which serves the same purpose for Non Trading Concern as Income statement for the trading concerns. It is summary of total receipts (Revenues) and payments (Expenditure) of Non Trading Concern.
4. What is difference between the accumulated surplus and current surplus?
Answer:-
Accumulated Surplus is the sum of surplus of the Non Trading Concern up to currant year , in other words it is the opening balance of surplus in a specific (Currant) year. While the Currant surplus is the Surplus of the currant year.
Accumulate surplus is the access of opening assets over the opening liabilities of any entity, while the currant surplus is the access of Income over the expenditure of currant year.
5. Differentiate between the trading and non trading concern?
Answer:-
Trading concern are those which have major object to earn profit while the Non Trading concern work for the welfare of society. Trading concern prefer the owners welfare while the Non Trading concern don’t prefer the members over general public.
6. Write any five source of income for non trading concerns?
Answer:-
I Donation
II Subscription
III Legacies
IV Locker Rent
V Charity.
7. Which method is used to prepare the account of non trading concerns?
Answer:-
The cash system method including the account form is used to pr prepare the account of non trading concerns
8. What is expenditure? And how it handle.
Answer:-
Expenditure is any payment which is
9. What is legacies and how it be treated?
Answer:-
Legacies is a sources of income for non trading concerns which means the amount of money which is given by the died persons with his _______________ consent.
It is treated as income for the non trading concerns and is recorded on credit side or income side of Income and Expenditure Account.
10. What are surplus and deficit? Explain the difference between them.
Answer:-
The access of expenditures over the income is called surplus while the income over expenditures is known as Deficit. The difference between these two is the_____________
11. Explain formula of preparing accumulated surplus?
Answer:-
Acc. Surplus = Opening Assets LESS Opening Liabilities.
12. Define Endowment Fund, How will it be treated when it is given in cash receipt?
Answer:-
Endowment Fund means some of any amount which is collected for a specific task, purpose or objective just for example money collected from donors for earth quack
When the Endowment fund is given in cash receipt it will be transferred to Balance Sheet as a Liability.
13. Define and differentiate donation and subscription?
Answer:-
Donation and Subscription both are the incomes of Non Trading Concerns , while the amount collected through a demand or begging from donors is called the subscription while the donation is not demanded or asked to donors for the same .
14. Define capital fund?
Answer:-
Capital fund is an other name of Accumulated surplus , and it is the some of previous years surplus of the concerns which is collected by deducted the opening liabilities from the opening assets.
Q: Multiple choice answers.
1. The clubs, hospitals falls under category of____________________
A. Non Trading Concern B. Trading firm C. Corporation
2. The ____________of N.T.C is to provide services to its members and general public.
A. Main objectives B. Standard C. Criteria
3. In N.T.C income and expenditure account takes the place of______________
A. Manufacturing account B. Profit and loss account C. Realization A/c
4. The ______________are shown on the debit side of receipt and payment account.
A. Payment B. Receipt C. Income
5. The main source of ________________of N.T.C is donation, subscription and entrance fee.
A. Cash B. Property C. Income
6. The accrued income and outstanding expenses of currant year are ___________in income and expenditure statement for the period.
A. Balance Sheet B. Trial Balance C. Ledger
7. The receipts and payments of _____________nature are left side while computing the surplus and deficit.
A. Revenue B. Capital C. Nominal
8. The income and expenditure account includes only the revenue receipts and payments which pertains to the ______________
A. Current year B. Previous year C. Year to come
9. The income and the expenditure account prepared at the end of____________
A. Current year B Year C Month
10. Accumulated surplus contains __________ year.
A. Current year B Previous year C Next year
11. Current year’s surplus __________ in accumulated surplus.
A. Deducted B Multiplied C Added
12. Previous year’s subscription ______________from current year’s subscription.
A. Adds B Subtracts C Multiplies
13. Subscription is a_____________
A. Income B. Expenditure C Expense
14. Opening expenses written in_____________
A. Balance sheet B. Accumulated surplus C Income statement
15. The other name of excess of expenditures over the income is____________
A. Surplus B. Deficit C. Equal
16. The other name of accumulated surplus is_______________
A. Capital fund B. Equity C None of these
ANSWER
1 A 2 A
3 B 4 B
5 C 6 A
7 8 B
9 A 10 A
11 C 12 B
13 A 14 B
15 B 16 A
17 18
19 20
Q: Point out true and false answer from the options.
1. The income of NTC is derived form donations, Subscriptions and entrance fees etc. T/F
2. The trading and non trading concerns have the common objectives of profit making. T/F
3. The entire amount of capital is collected from subscription of the religious society for running it. T/F
4. The income and expenses statement of NTC is prepared from receipt and payment Account. T/F
5. The receipt and payment account reveals the trading results of any concern or institution T/F.
6. The receipt and payment account consolidates the cash received and cash paid for a Non Trading Concern. T/F
7. The trail business is essentially drawn up from the receipt and payment account of a club.
8. The receipt and payment account records sum paid whether they relate to revenue or capital item T/F
9. The income and expenditure statement is always accompanied by a relative balance sheet. T/F
10. The ending cash balance of receipt and payment account is showed in balance sheet. T/F
11. The receipt and payment account simply concludes with a closing balance of cash. T/F
12. The item of depreciation and bad debts etc. are includes in the income and expenditure statement T/F.
13. The donation or fund created for particular purpose is shown on the asset side of balance sheet. T/F
14. The accumulated surplus is drawn from current year transactions. T/F
15. The current year surplus is called accumulated surplus. T/F
16. The accumulated surplus is written on the debit side of balance sheet. T/F
17. Donation received for the next year in advance is shown in income and expenditure account T/F
18. Endowment fund given in debit side of cash account will be written as liability T/F
19. Access of income over the expenditure will cause the deficit of currant year. T/F
20. Assets purchased last year will be used to calculate the capital fund T/F
ANSWER
1 T 2 F
3 F 4 T
5 F 6 T
7 F 8 T
9 T 10 T
11 T 12 T
13 F 14 F
15 F 16 F
17 F 18 T
19 F 20 T
Q: Fill in the blanks given below.
17. The clubs, hospitals falls under category of____________________
18. The ____________of Non Trading Concern is to provide services to its members and general public.
19. In NON TRADING CONCERN income and expenditure account takes the place of______________ of Trading concerns.
20. The ______________are shown on the debit side of receipt and payment account.
21. The main source of ________________for NON TRADING CONCERN is donation, subscription and entrance fee.
22. The accrued income and outstanding expenses are ____________in income and expenditure statement for the period.
23. The receipts and payments of _____________nature are left side while computing the surplus and deficit.
24. The income and expenditure account includes only the revenue receipts and payments which pertains to the ______________
25. The income and the expenditure account prepared at the end of____________
26. Accumulated surplus contains __________ year.
27. Current year’s surplus is __________ in accumulated surplus.
28. Previous year’s subscription is ______________from current year’s subscription.
29. Subscription is a_____________ for non trading concerns.
30. Opening balance of expenditures Payable is written in_____________
31. The other name of excess of expenditures over the incomes is____________
32. All the transactions of Non Trading Concerns are mostly on ___________ basis.
33. Trial Balances is provided of Trading concern while the __________ of non trading concerns for the preparation of Financial statements.
34. Surplus/ Deficite is calculated by deducting ___________ from the _________of Non Trading Concerns.
35. The difference of expenditures and incomes when the income is greater than the expenditures the answer will be ________________
36. Deficit of the currant year is ____________________ from the Accumulated Surplus in the balance sheet of the currant year.
ANSWER
1 Non Trading Concerns 2 Main Objective
3 Income Statement. 4 Expenditures
5 Income 6 Added
7 8
9 Year 10 Opening balance of surplus at
11 Added 12 Deducted
13 Income 14 Accumulated Surplus
15 Deficit 16 Cash Basis
17. Cash Account 18 Expenditures , Incomes
19 Surplus. 20 Deducted.
Q: Match the items in columns “A” with those which are given in “B” &write the answers in column “C”.
Column “A” Column “B” Column “C”
Annual or monthly fee is charged from members. Accumulated surplus
The total of surplus income. Deficit
Amount due on subscription but not received. Subscription.
It is recorded as liability until purpose is achieved. Arrears of subscription.
Excess of expenditure over income. Special donation.
Non Trading Concerns Surplus.
Trading Concerns Locker’s rent.
Mosque, Clubs, Hospital etc
Work for profits.
ANSWERS
Column “A” Column “C”
Annual or monthly fee is charged from members. Subscription.
The total of surplus income. Accumulated surplus
Amount due on subscription but not received. Arrears of subscription
It is recorded as liability until purpose is achieved. Special donation
Excess of expenditure over income. Deficit
Non Trading Concerns Mosque, Clubs, Hospital etc
Trading Concerns Work for profits.
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Partnership
TOPIC NO. 04
Q. Give Short answer of the following questions.
1. Define Partnership.
Answer:-
Partnership is the relation between persons who have agreed to share the profit of business carried on by all or one of the acting for all.
2. Under what Act or Ordinance is the business of Partnership is controlled.
Answer:-
The business of Partnership is controlled under the provisions of Partnership Act 1932.
3. Who is Partner?
Answer:-
Partner is a person who makes investment in the business of partnership which works for mutual interests of all the members of firm and to earn profit.
4. What are the main privileges of Partnership over the Sole Proprietorship?
Answer:-
There are many draw backs and disadvantages of sole proprietorship which are removed or solved by partnership but the most important are
A Large Capital
B Efficient Management
C Favorable credit standing
D. Division of risk.
5. Why a new partner is admitted in a running business?
Answer:-
In running business when the old partners have no funds to invest in their business then they admit a new one who is willing to do so and is interested in their firm.
Many other reasons e.g. specialization , division of risk etc may also cause the admission of new partner but mostly new partner are admitted with the sake to meat the financial needs of the firm.
6. Write the name of methods of calculation of goodwill?
Answer:-
There two major methods to calculate the good will of the firm that are Bonus method and Goodwill method.
7. What is difference between goodwill method and bonus method of goodwill calculation.
Answer:-
The major difference between these two methods is the record of goodwill .
In bonus method the goodwill in not recorded in the balance sheet of the firm while under goodwill method the goodwill is shown in the balance sheet of the firm.
8. What is sacrifice ratio?
Answer:-
When a new partner is admitted in the firm the profit and loss sharing ratio of the old partner comes down , this decrease in profit sharing ratio is known as sacrifice ratio.
In other words the difference between the new profit and loss sharing ratio and old profit and loss sharing ratio is known is called sacrifice ratio.
9. What is gain ratio?
Answer:-
When any partner retires from the firm than the profit sharing ratio of the remaining partner ultimately increases and this increase or addition in PLS ratio of the remaining partner is known gain ratio.
In other words the difference between the new profit and loss sharing ratio and old profit and loss sharing ratio is known is called sacrifice ratio.
10. what is difference between sacrifice ratio and gain.
Answer:-
From the definitions of sacrifice ratio and gain ratio given above
“In other words the difference between the new profit and loss sharing ratio and old profit and loss sharing ratio is known is called sacrifice ratio.”
Seems that these two are same while there is a difference that is
In case of Sacrifice ratio the new ratio decreases due to admission of a partner or old ratio is greater then the new ratio while, in case of gain ratio the new ratio increases due to retirement of partner or new ratio is greater then the old ratio
11. What do it mean, “Goodwill raised”?
Answer:-
It means that the goodwill is brought into the books of accounts only.
12. How can a new partner be admitted into a firm?
Answer:-
A new partner can be admitted with the consent of all existing partners.
13. What revaluation account is?
Answer:-
At the time of admission , retirement or death or any other event the assets and liabilities of the firm are adjusted according to the market price and in other words , the assets and liabilities are revalued . When assets or liabilities are revalued than their value may increase or decrease and a nominal account is opened to adjust this variance that is known as Revaluation account.
14. Write the definition of Goodwill.
Answer:-
Goodwill is the access value of the business or any entity. The difference of net worth of business and market value of the business is called goodwill.
15. What do it mean, “insolvent partner”?
Answer:-
Insolvent means a person who is not in a position to pay his debts.
Insolvent partner means a partner who is unable to pay the debts of firm.
16. What is the procedure for the dissolution of the firm?
Answer:-
At the time of the dissolution the assets are sold and total cash available is realized with that first of all the dissolution expenses and other liabilities are paid off, if any balance of cash is available than the loan of the partner is returned back , any access if is than the capital of the partner repaid , and if any surplus is thereafter than it is distributed among the partners with their profit and loss sharing ratio.
Q. Select the appropriate answer of the statement from the given below under each statement of the following .An example is given as under.
Example:
Two and Two Makes
A. 5 B 4 C 0
Answer B
1. There should be at least persons to form a business of partnership
A. Three B One C Two D Four
2. The business of partnership is operated under to the provisions of partnership Act
A. 1971 B 1957 C 1981 D 1932
3. The partnership is relationship among its members who make each others
A. Agreement B Promise C Contract D Deed
4. The should be kept in writing so that future disputes of firm may avoided by
A. Agreement B Prospectus C MOA D AOA
5. Every partner has the right to take part in partnership business.
A. Agreement B Election C Salaries D Management
6. The partner who only contributes capital and does not take part in management of
the firm is called partner
A. Active B Nominal C Sleeping D Minor
7. The --of utmost good faith must be followed by all the partners of the firm.
A. Attitude B Element C Skill D Principal
8. The private estate of all the partners of firm can be utilized towards the firm’s
A. Liability B Assets C Tax D Funds.
9. The minor partner can be admitted with the consent of other partner (s)
A. One B All C Senior D No
10 When any partner withdraws funds in anticipation of profit as per partnership
agreement , in books of accounts debited his account
A. Current B Realization C Revaluation D Non
11 Account is required to be opened at the time of admission of new partner.
A. Current B Realization C Revaluation D Non
12. If the credit side of the revaluation account is greater than debit side it indicates
A. Net Loss B Net gain C Both D Non
13.The partnership will be dissolved if one or all partners become
A. Manager B Solvent C Insolvent D Major
14. The debit balance of current account of a partner is shown in the balance sheet as.
A. Asset B Liability C Both D Non
15. The profit or loss on revaluation is divided among the partners.
A. Old B New C Sleeping D All
16. Goodwill is access value of business which is shown in its Balance Sheet as asset
A. Currant B Intangible C Tangible D Fixed.
17. Goodwill should calculated at the time of any partner’s
A. Admission B Death C Retirement D All
18. The persons who provide finance to the business of partnership are called
A. Partner B Member C Owner D Non
19. The registration of the firm is
A. Compulsory B Optional C Both D Non
20. The firm may dissolved by
A. Agreement B Court C Expiry of Time D All
ANSWER
1 C 2 D
3 A 4 A
5 D 6 C
7 D 8 A
9 B 10 A
11 B 12 B
13 C 14 A
15 D 16 B
17 D 18 A
19 B 20 D
Q. Complete the following statements with appropriate word . Follow the given example, .An example is given as under.
Example:
Two and Two ______________ Four
Answer Makes
1. Partnership means a _______ among individual to start the business jointly.
2. The business under Partnership form of organization is ______________ size.
3. There should be at least ___________ persons to form a business of partnership
4. The business of partnership is operated under provisions of partnership Act_____
5. The partnership is relationship among members who make an ______each others
6. The partnership agreement should be in ___________ so that future disputes of firm may avoided by
7. Every partner has the right to ___________ in the management of partnership
8. The ____________ partner is one who only contributes in to the capital of the and does not take part in management of the firm is called partner
9. The ___________ of all the partners of firm can be utilized towards the firm’s debts.
10. The minor person can be admitted as a partner with the _______ of other partners
11. When any partner withdraws funds from the partnership in anticipation of profit as per partnership agreement , in books of accounts ___________ account is debited.
12. ______________Account is required to be opened at the time of admission of new partner.
13. The credit side of the revaluation account is less than debit side it indicates _____________ on revaluation account.
14. The partnership at will may dissolved at any time by ________ to other partners
15. The___________ balance of current account of a partner is shown in the balance sheet as an Asset
16. The profit or loss on revaluation is ____________ among the all partners.
17. Goodwill is ___________value of business which is shown in Balance Sheet as an asset
18. ____________ the person who provides finance to the business of partnership
19. The __________________of the firm is not Compulsory
20. The firm for a specific time may dissolve expiry of___________
ANSWER
1 Relationship 2 Medium
3 Four 4 1932
5 Agreement 6 Written
7 Take Part 8 Sleeping
9 Personal Estate 10 Consent
11 12 Revaluation
13 Profit 14 Notice
15 Debit 16 Distributed
17 Access 18 Partner
19 Registration 20 Time.
Q. Identify the following statements as True or False by ticking T for True and F for False
1. The title under which partnership is formed is called Firm’s name. T/F
2. The partnership agreement may be oral or written. T/F
3. The mutual agreement is not the essence of partnership. T/F
4. The partnership business is governed by partnership Act 1932. T/F
5. The members of partnership are individually called directors. T/F
6. The maximum number of partners in a banking business is two. T/F
7. The minimum number of partners in an ordinary business is ten. T/F
8. The objective of the partnership business is to earn profit. T/F
9. The liability of the partners is unlimited. T/F
10. The partnership agreement does not contain any provision regarding nature
of business. T/F
11. The profit sharing ratio is agreed upon among partners at the time of
agreement. T/F
12. All partners entitled to receive salary from partnership. T/F
13. There are many capital accounts in partnership as are partners. T/F
14. Goodwill is the value of reputation of an established firm. T/F
15. Partners are entitled to receive 6% interest on advances to the firm annually T/F
16. Revaluation account is debited for decrease in the book value of asset. T/F
17. Partnership means a relationship among individual to start the business jointly. T/F
18. The business under Partnership form of organization is large size. T/F
19. There should be at least Four persons to form a business of partnership T/F
20. Every partner has the right to take part in the management of partnership T/F
21. An active partner is one who only contributes in to the capital of the and does not take part in management of the firm is called partner T/F
22. The minor person can be admitted as a partner without consent of other partners T/F
23. Realization Account is required to be opened at the time of admission of partner. T/F
24. The credit balance of the revaluation account indicates Profit on revaluation T/F
25. .The partnership at will may dissolved at any time by a notice to other partners T/F
26. The profit or loss on revaluation is divided among all partners with their old ratio. T/F
27. Goodwill means the access value of business that is shown in Income Statement T/F
28. Promoters is that person who provides finance to the business of partnership T/F
29. The Registration of the firm is Compulsory T/F
30. The firm for a specific time may dissolve completion of task. T/F
ANSWER
1 T 2 T
3 F 4 F
5 F 6 F
7 F 8 T
9 F 10 F
11 T 12 F
13 T 14 T
15 T 16 T
17 T 18 F
19 F 20 T
21 F 22 F
23 F 24 T
25 T 26 T
27 F 28 F
29 F 30 F
Q. Match the correct answer of columns “A” with Columns “B” and write
down the answer in Column “C”
Column “A” Column “B” Column “C”
Formation of Partnership Ten Partners
Insolvency of Partner Partnership Act 1932
Admission of Partner Inability to pay the firm debts
Dissolution of firm Value of good reputation of the business
Goodwill
Maximum partners in the business of Banking Difference between the new and old ratio
Interest on Loan to firm by partner in absence of deed A partner who invests and also works in partnership
Active partner End of the partnership business
Sleeping Partner Six Percent p.a.
Gain Ratio Death of partner
In absence of partnership deed all the partners share profit and loss with the ratio A partner who only invests in partnership
Equally
ANSWER
Column “A” Column “C”
Formation of Partnership Partnership Act 1932
Insolvency of Partner Inability to pay the firm debts
Admission of Partner With consent of all others
Dissolution of firm End of the partnership business
Goodwill Value of good reputation of the business
Maximum partners in the business of Banking Ten Partners
Interest on Loan to firm by partner in absence of deed Six Percent p.a.
Active partner A partner who invests and also works in partnership
Sleeping Partner A partner who only invests in partnership
Gain Ratio Difference between the new and old ratio
In absence of partnership deed all the partners share profit and loss with the ratio
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(M.C)
Q. File in the blanks.
1. __________________ are those concerns which convert raw material into finished or semi finished goods.
2. The prime cost is generally used to denote the sum of direct material used and___________________
3. The ___________________forms an integral part of finish product and can be identified directly.
4. Conversion Cost is the sum of _______________ and ______________ cost.
5. The __________________refers to those costs which are indirectly related with the production.
6. The Thread & Buttons used in producing garments are considered as_______________
7. Factory cost is the sum of FOH.Cost and _____________________
8. Work –in-process inventory is that cost which is not in shape of raw material and also still is not converted into ___________________
9. Indirect material and indirect labor cost, Depreciation of plant are the examples of ________________________ cost.
10. The opening finish goods inventories in the cost of goods manufactured during the period are_____________ to calculate cost of goods available for sale.
11. Cost of goods sold statement is prepared at the end of ___________.
12. Per unit cost of goods manufactured is derived by dividing the cost of goods manufactured with_______________
13. Factory Overhead Applied is added in ___________________ to compute factory cost.
14. _________________ is the sum of total direct material and direct labour cost.
15. The sum direct labor cost and __________________ is called Conversion cost
16. The access of Factory Over Head Applied against the Actual Factory Over Head Cost is called _____________________
17. The access of Factory Over Head Actual against the Applied Factory Over Head Cost is called _____________________
18. When the Factory cost added in opening work in process, the answer will be ___________________.
19. F.O.H stands for _____________.
20. Over Applied FOH cost will be _______ from cost of goods sold at normal.
21. Under Applied FOH cost will be _______ in cost of goods sold at normal.
22. The formula of per unit cost is _____________.
ANSWER
1 Manufacturing concerns. 2 Direct Labor
3 Direct Material 4 Direct Labor Cost &
Factory Over Head Cost.
5 FOH Cost 6 Indirect Material Cost.
7 Prime Cost. 8 Finished goods.
9 Factory Over Head 10 Added
11 Year 12 Number of units manufactured.
13 Prime Cost 14 Prime Cost
15 Factory Over Head Cost 16 Over FOH Applied
17 Under FOH Applied 18 Cost of Work Put into Process
19 Factory Over Head 20 Deducted
21 Added 22 P/U = Manufactured cost
Cost Units Manufactured
23 24
25
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(MCQ)
Q. From the given answers of the statement select most appropriate one.
1. The prime cost is generally used to denote the sum of direct materials and___________
A. Direct labor B Factory overhead C Finish goods
2. The ___________forms an integral part of finish product and can be identified directly.
A Indirect material B Indirect labor C Direct material
3. The ___________refers to those costs which are indirectly related with the production.
A. Factory overhead B Prime cost C. Basic cost
N
4. The thread & Buttons used in producing garments are considered as____________
A Indirect labor B Indirect material C Direct material
5. The opening finish goods inventories in the cost of goods manufactured during the period are_____________
A. Included B. Excluded C Omitted
6. The answer of Material used and Direct Labor Cost is called_____________
A. Factory cost B. Prime cost C F.O.H
7. The statement of cost of goods sold is prepared at the end of ____________
A. Year B. Month C Financial year
8. Under applied ___________ in the cost of goods sold at normal
A. Less B. Added C Multiplied
9. The answer of Factory cost add opening work in process is called____________
A. Cost of work put in process B Cost of goods sold C Prime cost
10. Over F.O.H applied subtracts from _____________
A. Cost of goods sold B. Cost of goods sold at normal C F.O.H
11. Wages to factory workers is ____________
A. Operative expense B. F.O.H Cost C Direct Labor cost
12. Material at the beginning of year is called_______________
A. Opening raw material B. Ending raw material C Factory cost
13. Cost of goods sold is ______________from sales
A. Subtracted B. Added C Divides D NON
14. Carriage in is _____________
A. Operative expense B. F.O.H C Direct expense
15. What will be the answer of Material available for use less ending raw material
A. F.O.H cost B. Direct Labor Cost C Material used
16. Access of Actual FOH over the Applied FOH is called ____________
A. Over Applied FOH B. F.O.H Cost C Under Applied FOH
17. Material when is returned to supplier is _______________ from purchases
A . Deducted B. Added C Divides D NON
18. Cost of goods sold at normal is computed on the basis of_____________
A. Applied FOH B. F.O.H Actual C Non
19. Goods distributed as free samples is _____________
A. Operative expense B. Selling expense C Direct expense
20. What will be the answer of prime cost plus Factory Over Head Cost.
A. F.O.H cost B. Direct Labor Cost C Factory Cost.
ANSWER
1 A 2 C
3 A 4 B
5 B 6 B
7 A 8 B
9 A 10 B
11 C 12 A
13 C 14 C
15 C 16 C
17 A 18 A
19 B 20 C
MANFACTURING ENTERPRISES
Q: Give the short answers of following questions.
1. What are manufacturing concerns?
Answer:-
Manufacturing Concern means those concerns which are related to the Conversion of raw material into finished or semi finished goods. These concerns are relating to the manufacturing of the goods from the produces of primary industry.
Manufacturing concerns are those types of business institution, which are dealt within producing goods. These concerns purchase raw material and labour, other expenses are applied on it to convert this raw material into another shape i.e. Finished or semi finished goods.
2. What is cost
Answer:-
A cost is an unexpired expenditure of and defines by the committee on cost concepts as
“Cost is foregoing , measured in monetary terms incurred or potentially to be incurred to achieve a specific cost object.”
3. What is expense?
Answer:-
Expense is an expired expenditure actually when resources given up have no future potential benefit we call them as expense. In other words, when total amount of money is spent to achieve some objective we can say this an expense . Furthermore, it is an expired costs which is deducted from current year revenue.
4. Define product or manufacturing cost.
Answer:-
Manufacturing cost are the costs incurred for manufacturing . product cost are said to be attached to the units produced. In ease of manufacturing business product costs it consist of I) Direct material cost II) Direct Labor Cost and III) Factory Cost.
These are also called inventoriable or Factory Cost.
5. What is direct cost and indirect cost.
Answer:-
A direct cost is one that can be conveniently and economically identified with a cost objective or cab be associated with a particular segment under consideration . for instance wood used in furniture, clothes in making shirts , sugar cane in producing sugar etc.
6. What is indirect cost.
Answer:-
Indirect cost is one that cannot be conveniently and economically identified with cost objective. For instance, polish on furniture, thread used in shirts etc.
7. Define cost of goods sold statement?
Answer:-
Cost of goods sold means the payments made for those things which are sold by a business man to earn profit and the cost of goods sold statement means a statement which show the total payment made for the acquisition of goods in case of trading concern or the total payment made for the production of goods in case of manufacturing concern.
Cost of goods sols statement is a statement consisting the total cost of raw material used, direct labor cost, and other factory overhead cost, opening and ending work-in- process inventory and also the opening and ending finished goods inventory.
8. Write the main five objectives of manufacturing concerns?
Answer:-
There are many objectives of manufacturing concerns. Some main objectives of
1
2
3
4
5
9. What is Factory overhead cost?
Answer:-
Factory Overhead means all those payments or expenses which are related to the factory or directly to the production other than Material and Labor Costs.
10. Write any five Factories overhead cost?
Answer:-
I Rent of the Factory
II Indirect Material
III Indirect Labor
IV Superintendent Fee
V Power, Height and Light.
11. What is Direct Material cost? Give its examples.
Answer:-
Direct material cost is the cost incurred on material , which is an integral part of the finished goods and can be directly included in computing the unit cost. It means the payments which are made to supplier of raw material which is directly used for production of goods.
Example:
1. Yarn used for cloth manufacturing furniture.
2. Timber used to manufacture
3. Cotton used to make thread
4. steal used to manufacture cycle
12. How the Material Cost is calculated
Answer:-
The material used for the production is calculated by
FORMULA
Opening material inventory
+ Cost of material purchased
- Ending material inventory.
= Cost of Material Used
13. How the Cost of Raw Material Purchased is calculated .
Answer:-
Cost of direct material purchased is calculated by adding direct expenses and Net Purchases which are computed by deducting the purchases return and purchases allowance or discount on purchases of raw material from total purchases.
FORMULA
Net Purchases ( Purchases less return, allowance and discount)
Add: Direct expenses.
14. What is meant by Indirect material cost ? Give its examples.
Answer:-
It refers to material which is indirectly used to produce some thing , or which indirect form part of the finished products.
Example:
1. Glue
2. Nails
3. Rivet s etc.
15. What is direct labor cost?
Answer:-
Direct labor cost means the payments which are made to the people who directly work on the site, or whose performance is directly related to the production of labor.
16. What is Indirect labor cost?
Answer:-
It refers to the payments which are made to the people who are not directly working for the manufacturing or production of goods or services , or whose performance doesn’t directly related to the production of labor.
17. Define Prime Cost and What is the formula to calculate prime cost?
Answer:-
Prime cost means the basic cost of goods manufactured. It is calculated by ADDING the Cot of direct material Used and Direct labor cost.
FORMULA
Prime cost = Direct material cost + Direct Labor Cost.
18. What is meant by Conversion Cost? How it is calculated.
Answer:-
Conversion cost means the payments made or costs which are relating to the conversion of raw material into semi finished or finished goods.
It is Sum of Cost of Direct Labor and Factory Over Head Cost.
FORMULA
Conversion cost = Direct Labor cost + FOH Cost.
19. Define Factory Cost ? What is the formula of factory cost OR manufacturing cost
Answer:-
Factory cost is the sum of direct material consumed, direct labor applied and Factory Over Head Cost utilized for the manufacturing.
FORMULA
Factory Cost = Prime cost + Factory Over Head Cost.
OR
Factory Cost = Direct material cost + Direct Labor Cost + FOH Cost
20. What is meant by Work- in- process inventory.
Answer:-
During manufacturing process some work is in such a way that is neither in shape of raw material nor in shape of finished goods, this is called work in process inventory or cost of work still in process.
21. Define cost of Goods Manufactured and Give the formula for its computation.
Answer:-
Cost of Goods Manufactured is computed by summing up cost of direct material, direct labor , FOH Cost and Opening work- in – process inventory , while the ending work-in-process inventory is deducted from the sum of all above cost.
FORMULA
Factory Cost
+ Opening WIP Inventory
- Ending WIP Inventory
= Manufactured Cost
22. Why we make the Cost of Goods Sold Statement?
Answer:-
We make Cost of goods sold statement to determine the PRICE of goods manufactured and also to control and minimize the cost of material, labor and F.O.H cost
23. An organization which deals in production of goods is called?
Answer:-
An organization which deals in production of goods is called manufacturing enterprises.
24. What is meant by Applied FOH Cost and how it is determined?
Answer:-
Factory Over Head Applied means the estimated Factory Over Head Cost for the coming year on the basis of preceding year. It means the predetermined FOH Cost of the year on the basis of previous year actual FOH and other relevant items.
The FOH Applied is mostly calculated and determined upon the basis of proportion to Direct Labor Cost and the FOH Actual of the preceding year.
25. Is it a vital rule to estimate FOH Applied on the basis of Direct Labor Cost.
Answer:-
No it is not necessary to calculate FOH Applied on the basis of Direct Labor Cost.
The equitable basis for the calculation of FOH Applied are following
A As per Machine Labor
B As Ratio of Direct Labor
C As Ratio of Direct Material
D As per Estimated Units of Production.
E As Percentage of Prime Cost.
26. What is Under Applied? And why we use applied method.
Answer:-
When Actual FOH Cost is higher then the Applied FOH cost , the difference is called Under FOH Applied.
Cost of direct material and direct labor physically entering into processing department cab be determined by requisition of forms and tickets respectively , while so many items of Factory Over Head are which are incurred for factory as a whole , but indirectly related to the manufacturing process can’t be determined, moreover there are some items which are variable and decrease or increase according to the volume becomes difficult to calculate . Therefore the FOH Applied method is used.
27. What is Over Applied? Describe reasons to happen Over OR Under Applied.
Answer:-
When Applied FOH cost is higher then the Actual FOH Cost, the difference is called Over FOH Applied.
Over or Under Applied FOH happens due to Change in Market Prices,
28. What is unit cost? How will unit cost be calculate?
Answer:-
Unit cost means the portion of total cost which is relating to the single or small unit of total production
It is calculated by dividing the Cost of Goods Manufactured by the number of total units manufactured.
29. How the Profit or Loss of the Manufacturing Concerns is determined?
Answer:-
The Income Statement is prepared to determine the Profit or Loss of the manufacturing concerns.
30. Why we prepare Income Statement at the end of the year?
Answer:-
Income statement is prepared at the end of the year mostly or end of a specific time interval to find the Prof it earned or Loss suffered during the year. It also helps to make policies, or to take decision for the next year or period.
31. Distinguish between cost and expense?
Answer:-
Cost means all those payments which are recoverable or which are made up to the production or acquisition final goods and expenses refers to those which are made afterwards the acquisition or production of goods.
32. What is the difference between trading and manufacturing cost?
Answer:-
Trading concern are relating to the Buying and Selling of Goods and services only which are produced by manufacturing concern in the same shape in which they buy.
While the manufacturing concern is that concern which buy raw material and convert it into finished or semi finished goods.
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Q. Match the correct answer of columns “A” with Columns “B” and write
down the answer in Column “C”.
Column A Column B Column C
1. Total of Direct material cost, direct labor and F.O.H Cost. F.O.H (Applied)
2. Appropriation of estimated overhead cost to particular product. Prime cost
3. Total amount of salaries and wages paid in a factory. Manufactured Cost when divided among the total units manufactured.
4. Total Cost of direct material and direct labor. Selling Expense
5. Advertisement expenses. Payroll
6. Factory Insurance Direct Labour Cost
7. Access of Factory Over Applied upon the Actual F.O.H Cost
8. Total of Labor Cost and FOH cost Over FOH Applied
9. Use of GLUE in furniture manufacturing Under FOH Applied
10 Per Unit Cost Conversion Cost.
Factory cost
Indirect Material Cost.
ANSWERS
Q. Match the correct answer of columns “A” with Columns “B” and write
down the answer in Column “C”.
Column A Column C
1. Total of Direct material cost,
direct labor and F.O.H Cost. Factory cost
2. Appropriation of estimated overhead cost to particular product. F.O.H (Applied)
3. Total amount of salaries and wages paid in a factory. Payroll
4. Total Cost of direct material and direct labor. Prime cost
5. Advertisement expenses. Selling Expense
6. Factory Insurance F.O.H Cost
7. Access of Factory Over Applied upon the Actual FOH Cost. Over FOH Applied
8. Total of Labor Cost and FOH cost Conversion Cost.
9. Use of GLUE in furniture manufacturing Indirect Material Cost.
10 Per Unit Cost Manufactured Cost when divided among the total units manufactured
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Q: Wrtie “T” for the statement which is True and “F” for the false statment
1. Trading concern are those institutions which are relating to the production of goods and services from the inputs.
2. The prime cost is generally used to denote the sum of direct materials and Direct labor
3. The Indirect material forms an integral part of finish product and can be identified directly.
4. The Factory overhead refers to those costs which are indirectly related with the production.
5. The thread & Buttons used in producing garments are considered as Indirect labor
6. The opening finish goods inventories in the cost of goods manufactured during the period are Included
7. The answer of Material used and Direct Labor Cost is called Factory cost
8. The statement of cost of goods sold is prepared at the end of every Month.
9. Under applied FOH cost is added in the cost of goods sold at normal
10. The answer of Factory cost add opening work in process is called Prime cost
11. Over F.O.H applied is subtracts from Cost of goods sold
12. Wages to factory workers is Direct Labor cost
13. Material at the beginning of year is called Opening raw material
14. Cost of goods sold is Subtracted from sales to calculate Gross Profit
15. Carriage in is an Operative expense
16. The answer of Material available for use less ending raw material is cost of Material used
17. Access of Actual FOH over the Applied FOH is called Under Applied FOH
18. Material when is returned to supplier is deducted from purchases of raw material.
19. Cost of goods sold at normal is computed on the basis of F.O.H Actual
20. Goods distributed as free samples is operative expense
21. Conversion cost is answer of prime cost plus Factory Over Head Cost.
ANSWER
1 F 2 T
3 F 4 T
5 F 6 T
7 T 8 F
9 T 10 F
11 T 12 T
13 T 14 T
15 F 16 T
17 F 18 T
19 F 20 F
21 F
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MODEL PAPERS
D. COM. ANNUAL 1988
ACCOUNTING-II Roll No ---------
New course PART-I
Time:- 30 minutes Max : marks: 40
Note:- This part is compulsory. It should be attempt on the question paper and returned after .30 minutes.
Q.I Encircle the letter of correct word given under each statement.
1. The partnership may come to an end due to the ;
a. Death of partner
b. bankruptcy of partner
c. both of them
2. Realization account is operated by partnership business for finding gain or loss at the time of;
a. dissolution
b. liquidation
c. both of them
3. The investors of the corporation business are called;
a. manages
b. shareholder
c. partners
4. Memorandum of Association contain the clause of;
a. forfeiture of shares
b. transfer of share
c. non of them
5. The face value of the shares is called;
a. book value
b. par value
c. market value
6. The amount gifted by the member to the society is called;
a. Donation
b. legacy
c. subscription
7. An account prepared to compute the cost of goods manufactured during the period is known;
a. Factory overhead
b. revaluation account
c. Manufacturing account
Q.II Tell whether is following statement are true or false by putting ( )on T or F written on the left side of the statement.
T F 1. Partner shall not be allowed any salary in the absence of written agreement.
T F 2. New partnership deed is necessary when amalgamation of firm took place.
T F 3. The deferred shares are given to the promoters and under-writers.
T F 4. Greater amount of capital cannot be accumulated in a corporate business.
T F 5. A partner is an employee of the partnership firm.
T F 6. The ordinary share holder have no right of voting.
T F 7. Expenses and revenue summary is prepared to know the net income or loss.
Q.III Under column 'A' some statement are given explaining the terms which are given
under column 'B' write down the letter of appropriate term on the left hand side of the statement concerned in the space provided first item is given as example.
COLUMN ' A ' COLUMN ' B '
--------------------- 1. it is the province of Pakistan a) liquidation
--------------------- 2. It contains the Claus of name of corporation b) Initial issue
--------------------- 3. it comes into existence by an agreement. c) Punjab
--------------------- 4. it as an issue (of shares ) which must be d) revaluation A / C.
subscribed within a year
--------------------- 5. it is an the sum total of prime cost and factory f) partnership
over-head.
--------------------- 6. it is the process of breaking up and e) cost of goods manufactured
discontinuing of partnership business g) Memorandum of Association
2. ------------------(d)
3. ------------------(c)
4. ------------------(a)
5. ------------------(b)
6. ------------------(b)
7. ------------------(a)
8. ------------------(b)
9. ------------------(b)
10.------------------(d)
11.------------------(a)
12.------------------(c)
13.------------------(b)
14.------------------(a)
15.------------------(a)
17.------------------(a)
18.------------------(c)
19.------------------(a)
20.------------------(a)
21.------------------(a)
22.------------------(b)
23.------------------(c)
24.------------------(a)
25.------------------(a)
26.------------------(a)
27.------------------(b)
28.------------------(a)
29.------------------(c)
30.------------------(b)
73
FXAMINATION PAPERS
NJAB BORD OF TECHNICAL EDUCATIN,LAHORE
D.COM ANNUAL,1987
ACCOUNTING-II Roll No ---------
New course PART-I
Time:- 30 minutes Max : marks: 40
NOTE:- This Part is compulsory. It should be attempted on the question paper and returned
after 45 minutes.
QNO I Encircle the number of correct word (8)
1. The partnership business is governed by the Indian partnership Act;
a. 1947
b. 1932
c. 1940
2. The liability of the members of the company is;
a. unlimited
b. limited
c. compulsory
3. The number of partners in case of banking partnership are maximum up to;
a. 10
b. 20
c. 15
4. The company framed by means of royal charter is called;
a. private company
b. registered company
c. chartered company
5. A partner who takes part in the management of the business of firm is known as;
a. join partner
b. active partner
c. partnership
6. the company incorporated by registration under the company Act is called;
a. registered company
b. private company
c. partnership
7. It takes the place of profit and loss account in non-trading concern
a. balance sheet
b. trial balance
c. Income & Expenditure account
8. the stock of merchandise or other items in hand is called;
a. Inventory
b. goods
c purchases
QNO II Tell whether the following statement are true or false by putting on T or F written
on the left side of the statement. (8)
T F 1. The name against which the partnership business is carried is called "firm' s name"
T F 2. The join stock companies are governed by Indian companies Act ( as adopt in
Pakistan)
T F 3. The liability of partners in partnership business is limited.
T F 4. The statutory company is incorporated by a special act.
T F 5. Every partner has right to entitle 6% interest on any advance made by him to firm.
T F 6. Memorandum of association is document which does not govern the company's
relationship which outside word.
T F 7. Receipt and payment account is as summary of cash book.
T F 8. Income and expenditure account only includes capital item.
Q NO III Fill in blanks by selecting appropriate one out of the given word. (9)
1. Additional security is offered to the investors of ------------------------.
(Ordinary shares, preference, guaranteed preference shares)
2. The amount called up but no paid by the shareholders is --------------------.
(call is arrear, call in advance, reserve capital)
3. A relation which subsists between two or more person who own property jointly is called------
(partnership, co-ownership, co-operative society)
4. The method of preparing merchandise inventory is-----------------------.
(physical inventory, diminishing balance method, summarization)
5. The acknowledgment of loan made to a limited co. at fix rate of interest is called-------------------
(share, stock, debenture)
6. A work sheet provides the------------------used in preparing the financial statement.
D.COM.1987 SUPPLEMENTARY
ACCOUNTING-II Roll No ---------
New course PART-I
Time:- 30 minutes Max : marks: 40
Q NO I Tell whether the following statement are true or false by putting( )on T or F written on the left side of the statement.
T F 1. The advantage of partnership business is ease of formation.
T F 2. Inventory is the stock of merchandise or other item in hand.
T F 3. Income and expenditure account includes revenue only.
T F 4. Articles of association is a document which given the company" s relationship
with out side word.
T F 5. The statutory company is corporated by a special Act of legislature.
T F 6. The liability of partners is limited in partnership business.
T F 7. Active partner is one who takes part in management of the business of the firm.
T F 8. Income is shown on the debit and expenditure on the credit side of income and expenditure account.
Q NO II Encircle the number of correct word given under each statement.
1. The join stock companies are governed by Indian companies Act (as adopted in Pakistan)
a. 1931
b. 1913
c. 1813
2. Every partner has the right to entitle interest on the advance made by him at the rate of;
a. 6 per cent
b. 8 per cent
c. 5 per cent
3. A company formed by means of a royal charter is called;
a. registered company
b. charted co.
c. statutory company
4. The annual audit is compulsory for a;
a. join stock company
b. partnership
c. sole trader
5. It is document which contains bye laws for caring into effect the object of company;
a. partnership deed
b. memorandum of association
c. Article of association
6. the maximum number of partnership on ordinary partnership are;
a. 30
b. 20
c. 10
7. Receipt and payment account is summary of;
a. purchase book
b. sale book
c. cash book
8. Additional security is offered to the investors of;
a. ordinary shares
b. preference shares
c. guaranteed preference shares
Q NO III Fill in blanks by selecting appropriate one out of given terms:
1. A company formed b at least two person and not exceeding fifty person is-------------------.
(private limited company, public limited company, chartered company)
2. When cells or full value of the shares held by the shareholder are paid before the cell are due is known--------------------.
(cell in arrear, cell in advance, forfeiture of shares)
3. A provisional certificate issued in lieu of the share on payment of the application and allotment money is called-----------------.
(share, stock, scrip)
4. The partnership business is governed by the Indian partnership Act--------------------.
(1940,1932,1947)
5. A partner who takes part in the management of the business of the firm is knows as-------------
(active partner, joint partner, share holder)
6. -----------------.takes the place of profit and loss account in non-trading concern.
(balance sheet, trial balance, Income & expenditure a/c.)
D.COM.1987 SUPPLEMENTARY SPECIAL
ACCONTIN-II ROLL NO ----------
PART-I Time:30 minutes marks:20
Q.I Encircle the letter of correct word given under each statement. (7)
1. It come into existence by an agreement;
a. sole proprietorship
b. partnership
c. corporation
2. The process of breaking up and discounting a partnership business is called;
a. liquidation
b. dissolution
c. Amalgamation
3. The debenture holder get from corporation;
a. dividend
b. profit
c. interest
4. The partnership business can be converted into a limited company if;
a. Number of partner exceed to 21
b. Huge capital is required
c. Both the above
5. Articles of association contain the clause of;
a. corporation name
b. Forfeiture of shares
c. object of corporation
6. The amount collected in excess of par value of shares is called;
a. dividend
b. premium
c. commission
7. The stock of merchandise or other item in hand is called;
a. Inventory
b. purchases
c. goods
Q.II Tell whether the following statement are TRUE or FALDE by putting( )on T or F
on the left side of the statement. (7)
T F 1. If the credit side of realization account is greater then debit side, it indicates net loss
on realization.
T F 2. A partner is not the employee of the partner ship.
T F 3. A clinic of doctor is categorized as non-trading concern for accounting purpose.
T F 4. The debenture holder is a debtor of the corporation.
T F 5. Certificate of incorporation is not issued by the register of companies.
T F 6. Revaluation account is required to be opened at the time of admission of new partner.
T F 7. Receipt and payment account is a summary of cash book.
Q.III Under column "A" are given some statement explaining the terms given under column "B" write down the letter,of appropriate term on the left hand side of the statement concerned in the space provided. first item so given as example.
COLUMN ' A ' COULMN ' B '
' d '
Example: it the capital of Pakistan (d)
-----------------1.It may come to an end due to the death of any (a) Deferred shares
partner.
-----------------2.It contains the clause of forfeiture of shares. (b) Certificate of Incorporation
-----------------3.It is an account which is required to be opened (c) debenture
for the purpose of finding gain or loss at the time
of liquidation.
-----------------4.It is a certificate issued by the registrar of companies (d) Islamabad
-----------------5.These are the shares which are given to the promoters (e) Partnership
and under-writers.
-----------------6.It is an acknowledgement of loan made to a limited (f) Articles of association
company at fixed rate of interest. (g) Realization a/c.
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(N.T.C)
Q: Fill in the blanks given below.
1. The clubs, hospitals falls under category of____________________
2. The ____________of Non Trading Concern is to provide services to its members and general public.
3. In NON TRADING CONCERN income and expenditure account takes the place of______________ of Trading concerns.
4. The ______________are shown on the debit side of receipt and payment account.
5. The main source of ________________for NON TRADING CONCERN is donation, subscription and entrance fee.
6. The accrued income and outstanding expenses are ____________in income and expenditure statement for the period.
7. The receipts and payments of _____________nature are left side while computing the surplus and deficit.
8. The income and expenditure account includes only the revenue receipts and payments which pertains to the ______________
9. The income and the expenditure account prepared at the end of____________
10. Accumulated surplus contains __________ year.
11. Current year’s surplus is __________ in accumulated surplus.
12. Previous year’s subscription is ______________from current year’s subscription.
13. Subscription is a_____________ for non trading concerns.
14. Opening balance of expenditures Payable is written in_____________
15. The other name of excess of expenditures over the incomes is____________
16. All the transactions of Non Trading Concerns are mostly on ___________ basis.
17. Trial Balances is provided of Trading concern while the __________ of non trading concerns for the preparation of Financial statements.
18. Surplus/ Deficite is calculated by deducting ___________ from the _________of Non Trading Concerns.
19. The difference of expenditures and incomes when the income is greater than the expenditures the answer will be ________________
20. Deficit of the currant year is ____________________ from the Accumulated Surplus in the balance sheet of the currant year.
ANSWER
1 Non Trading Concerns 2 Main Objective
3 Income Statement. 4 Expenditures
5 Income 6 Added
7 8
9 Year 10 Opening balance of surplus at
11 Added 12 Deducted
13 Income 14 Accumulated Surplus
15 Deficit 16 Cash Basis
17. Cash Account 18 Expenditures , Incomes
19 Surplus. 20 Deducted.
M.C.Q
Q: Multiple choice answers.
1. The clubs, hospitals falls under category of____________________
A. Non Trading Concern B. Trading firm C. Corporation
2. The ____________of N.T.C is to provide services to its members and general public.
A. Main objectives B. Standard C. Criteria
3. In N.T.C income and expenditure account takes the place of______________
A. Manufacturing account B. Profit and loss account C. Realization A/c
4. The ______________are shown on the debit side of receipt and payment account.
A. Payment B. Receipt C. Income
5. The main source of ________________of N.T.C is donation, subscription and entrance fee.
A. Cash B. Property C. Income
6. The accrued income and outstanding expenses of currant year are ___________in income and expenditure statement for the period.
A. Balance Sheet B. Trial Balance C. Ledger
7. The receipts and payments of _____________nature are left side while computing the surplus and deficit.
A. Revenue B. Capital C. Nominal
8. The income and expenditure account includes only the revenue receipts and payments which pertains to the ______________
A. Current year B. Previous year C. Year to come
9. The income and the expenditure account prepared at the end of____________
A. Current year B Year C Month
10. Accumulated surplus contains __________ year.
A. Current year B Previous year C Next year
11. Current year’s surplus __________ in accumulated surplus.
A. Deducted B Multiplied C Added
12. Previous year’s subscription ______________from current year’s subscription.
A. Adds B Subtracts C Multiplies
13. Subscription is a_____________
A. Income B. Expenditure C Expense
14. Opening expenses written in_____________
A. Balance sheet B. Accumulated surplus C Income statement
15. The other name of excess of expenditures over the income is____________
A. Surplus B. Deficit C. Equal
16. The other name of accumulated surplus is_______________
A. Capital fund B. Equity C None of these
ANSWER
1 A 2 A
3 B 4 B
5 C 6 A
7 8 B
9 A 10 A
11 C 12 B
13 A 14 B
15 B 16 A
17 18
19 20
SHOT QUESTIONS
Q: Give the short answers of the following questions.
1. What are the Non Trading Concerns? Give some examples.
Answer:-
Non Trading Concern means those concern which are established or formed for the Public and Social Welfare, such institution have not any motive to earn profit but work for the betterment of society.
2. Define Non Trading Concern’s objective?
Answer:-
The objective Non Trading Concern is to provide benefit to the society, to work for the welfare of general public. These institutions also work for the betterment and progress of the society and Profit have no value for them
3. What is income and expenditure account?
Answer:-
Income and Expenditure account is a statement which serves the same purpose for Non Trading Concern as Income statement for the trading concerns. It is summary of total receipts (Revenues) and payments (Expenditure) of Non Trading Concern.
4. What is difference between the accumulated surplus and current surplus?
Answer:-
Accumulated Surplus is the sum of surplus of the Non Trading Concern up to currant year , in other words it is the opening balance of surplus in a specific (Currant) year. While the Currant surplus is the Surplus of the currant year.
Accumulate surplus is the access of opening assets over the opening liabilities of any entity, while the currant surplus is the access of Income over the expenditure of currant year.
5. Differentiate between the trading and non trading concern?
Answer:-
Trading concern are those which have major object to earn profit while the Non Trading concern work for the welfare of society. Trading concern prefer the owners welfare while the Non Trading concern don’t prefer the members over general public.
6. Write any five source of income for non trading concerns?
Answer:-
I Donation
II Subscription
III Legacies
IV Locker Rent
V Charity.
7. Which method is used to prepare the account of non trading concerns?
Answer:-
The cash system method including the account form is used to pr prepare the account of non trading concerns
8. What is expenditure? And how it handle.
Answer:-
Expenditure is any payment which is
9. Distinction five points between receipt and payment account and income and expenditure account?
Answer:-
10. What is legacies and how it be treated?
Answer:-
Legacies is a sources of income for non trading concerns which means the amount of money which is given by the died persons with his _______________ consent.
It is treated as income for the non trading concerns and is recorded on credit side or income side of Income and Expenditure Account.
11. What are surplus and deficit? Explain the difference between them.
Answer:-
The access of expenditures over the income is called surplus while the income over expenditures is known as Deficit. The difference between these two is the_____________
12. Explain formula of preparing accumulated surplus?
Answer:-
Acc. Surplus = Opening Assets LESS Opening Liabilities.
13. Define Endowment Fund, How will it be treated when it is given in cash receipt?
Answer:-
Endowment Fund means some of any amount which is collected for a specific task, purpose or objective just for example money collected from donors for earth quack
When the Endowment fund is given in cash receipt it will be transferred to Balance Sheet as a Liability.
14. Define and differentiate donation and subscription?
Answer:-
Donation and Subscription both are the incomes of Non Trading Concerns , while the amount collected through a demand or begging from donors is called the subscription while the donation is not demanded or asked to donors for the same .
15. Define capital fund?
Answer:-
Capital fund is an other name of Accumulated surplus , and it is the some of previous years surplus of the concerns which is collected by deducted the opening liabilities from the opening assets.
TABLES
Q: Match the items in columns “A” with those which are given in “B” &write the answers in column “C”.
Column “A” Column “B” Column “C”
Annual or monthly fee is charged from members. Accumulated surplus
The total of surplus income. Deficit
Amount due on subscription but not received. Subscription.
It is recorded as liability until purpose is achieved. Arrears of subscription.
Excess of expenditure over income. Special donation.
Non Trading Concerns Surplus.
Trading Concerns Locker’s rent.
Mosque, Clubs, Hospital etc
Work for profits.
ANSWERS
Column “A” Column “C”
Annual or monthly fee is charged from members. Subscription.
The total of surplus income. Accumulated surplus
Amount due on subscription but not received. Arrears of subscription
It is recorded as liability until purpose is achieved. Special donation
Excess of expenditure over income. Deficit
Non Trading Concerns Mosque, Clubs, Hospital etc
Trading Concerns Work for profits.
TRUE AND FALSE
Q: Point out true and false answer from the options.
1. The income of NTC is derived form donations, Subscriptions and entrance fees etc. T/F
2. The trading and non trading concerns have the common objectives of profit making. T/F
3. The entire amount of capital is collected from subscription of the religious society for running it. T/F
4. The income and expenses statement of NTC is prepared from receipt and payment Account. T/F
5. The receipt and payment account reveals the trading results of any concern or institution T/F.
6. The receipt and payment account consolidates the cash received and cash paid for a Non Trading Concern. T/F
7. The trail business is essentially drawn up from the receipt and payment account of a club.
T/F
8. The receipt and payment account records sum paid whether they relate to revenue or capital item T/F
9. The income and expenditure statement is always accompanied by a relative balance sheet. T/F
10. The ending cash balance of receipt and payment account is showed in balance sheet. T/F
11. The receipt and payment account simply concludes with a closing balance of cash. T/F
12. The item of depreciation and bad debts etc. are includes in the income and expenditure statement T/F.
13. The donation or fund created for particular purpose is shown on the asset side of balance sheet. T/F
14. The accumulated surplus is drawn from current year transactions. T/F
15. The current year surplus is called accumulated surplus. T/F
16. The accumulated surplus is written on the debit side of balance sheet. T/F
17. Donation received for the next year in advance is shown in income and expenditure account T/F
18. Endowment fund given in debit side of cash account will be written as liability T/F
19. Access of income over the expenditure will cause the deficit of currant year. T/F
20. Assets purchased last year will be used to calculate the capital fund T/F
ANSWER
1 T 2 F
3 F 4 T
5 F 6 T
7 F 8 T
9 T 10 T
11 T 12 T
13 F 14 F
15 F 16 F
17 F 18 T
19 F 20 T
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(PARTNERSHIP)
Q. Complete the following statements with appropriate word . Follow the given example, .An example is given as under.
Example:
Two and Two ______________ Four
Answer Makes
1. Partnership means a _______ among individual to start the business jointly.
2. The business under Partnership form of organization is ______________ size.
3. There should be at least ___________ persons to form a business of partnership
4. The business of partnership is operated under provisions of partnership Act_____
5. The partnership is relationship among members who make an ______each others
6. The partnership agreement should be in ___________ so that future disputes of firm may avoided by
7. Every partner has the right to ___________ in the management of partnership
8. The ____________ partner is one who only contributes in to the capital of the and does not take part in management of the firm is called partner
9. The ___________ of all the partners of firm can be utilized towards the firm’s debts.
10. The minor person can be admitted as a partner with the _______ of other partners
11. When any partner withdraws funds from the partnership in anticipation of profit as per partnership agreement , in books of accounts ___________ account is debited.
12. ______________Account is required to be opened at the time of admission of new partner.
13. The credit side of the revaluation account is less than debit side it indicates _____________ on revaluation account.
14. The partnership at will may dissolved at any time by ________ to other partners
15. The___________ balance of current account of a partner is shown in the balance sheet as an Asset
16. The profit or loss on revaluation is ____________ among the all partners.
17. Goodwill is ___________value of business which is shown in Balance Sheet as an asset
18. ____________ the person who provides finance to the business of partnership
19. The __________________of the firm is not Compulsory
20. The firm for a specific time may dissolve expiry of___________
ANSWER
1 Relationship 2 Medium
3 Four 4 1932
5 Agreement 6 Written
7 Take Part 8 Sleeping
9 Personal Estate 10 Consent
11 12 Revaluation
13 Profit 14 Notice
15 Debit 16 Distributed
17 Access 18 Partner
19 Registration 20 Time.
Q. Select the appropriate answer of the statement from the given below under each statement of the following .An example is given as under.
Example:
Two and Two Makes
A. 5 B 4 C 0
Answer B
1. There should be at least persons to form a business of partnership
A. Three B One C Two D Four
2. The business of partnership is operated under to the provisions of partnership Act
A. 1971 B 1957 C 1981 D 1932
3. The partnership is relationship among its members who make each others
A. Agreement B Promise C Contract D Deed
4. The should be kept in writing so that future disputes of firm may avoided by
A. Agreement B Prospectus C MOA D AOA
5. Every partner has the right to take part in partnership business.
A. Agreement B Election C Salaries D Management
6. The partner who only contributes capital and does not take part in management of
the firm is called partner
A. Active B Nominal C Sleeping D Minor
7. The --of utmost good faith must be followed by all the partners of the firm.
A. Attitude B Element C Skill D Principal
8. The private estate of all the partners of firm can be utilized towards the firm’s
A. Liability B Assets C Tax D Funds.
9. The minor partner can be admitted with the consent of other partner (s)
A. One B All C Senior D No
10 When any partner withdraws funds in anticipation of profit as per partnership
agreement , in books of accounts debited his account
A. Current B Realization C Revaluation D Non
11 Account is required to be opened at the time of admission of new partner.
A. Current B Realization C Revaluation D Non
12. If the credit side of the revaluation account is greater than debit side it indicates
A. Net Loss B Net gain C Both D Non
13.The partnership will be dissolved if one or all partners become
A. Manager B Solvent C Insolvent D Major
14. The debit balance of current account of a partner is shown in the balance sheet as.
A. Asset B Liability C Both D Non
15. The profit or loss on revaluation is divided among the partners.
A. Old B New C Sleeping D All
16. Goodwill is access value of business which is shown in its Balance Sheet as asset
A. Currant B Intangible C Tangible D Fixed.
17. Goodwill should calculated at the time of any partner’s
A. Admission B Death C Retirement D All
18. The persons who provide finance to the business of partnership are called
A. Partner B Member C Owner D Non
19. The registration of the firm is
A. Compulsory B Optional C Both D Non
20. The firm may dissolved by
A. Agreement B Court C Expiry of Time D All
ANSWER
1 C 2 D
3 A 4 A
5 D 6 C
7 D 8 A
9 B 10 A
11 B 12 B
13 C 14 A
15 D 16 B
17 D 18 A
19 B 20 D
Q. Give Short answer of the following questions.
1. Define Partnership.
Answer:-
Partnership is the relation between persons who have agreed to share the profit of business carried on by all or one of the acting for all.
2. Under what Act or Ordinance is the business of Partnership is controlled.
Answer:-
The business of Partnership is controlled under the provisions of Partnership Act 1932.
3. Who is Partner?
Answer:-
Partner is a person who makes investment in the business of partnership which works for mutual interests of all the members of firm and to earn profit.
4. What are the main privileges of Partnership over the Sole Proprietorship?
Answer:-
There are many draw backs and disadvantages of sole proprietorship which are removed or solved by partnership but the most important are
A Large Capital
B Efficient Management
C Favorable credit standing
D. Division of risk.
5. Why a new partner is admitted in a running business?
Answer:-
In running business when the old partners have no funds to invest in their business then they admit a new one who is willing to do so and is interested in their firm.
Many other reasons e.g. specialization , division of risk etc may also cause the admission of new partner but mostly new partner are admitted with the sake to meat the financial needs of the firm.
6. Write the name of methods of calculation of goodwill?
Answer:-
There two major methods to calculate the good will of the firm that are Bonus method and Goodwill method.
7. What is difference between goodwill method and bonus method of goodwill calculation.
Answer:-
The major difference between these two methods is the record of goodwill .
In bonus method the goodwill in not recorded in the balance sheet of the firm while under goodwill method the goodwill is shown in the balance sheet of the firm.
8. What is sacrifice ratio?
Answer:-
When a new partner is admitted in the firm the profit and loss sharing ratio of the old partner comes down , this decrease in profit sharing ratio is known as sacrifice ratio.
In other words the difference between the new profit and loss sharing ratio and old profit and loss sharing ratio is known is called sacrifice ratio.
9. What is gain ratio?
Answer:-
When any partner retires from the firm than the profit sharing ratio of the remaining partner ultimately increases and this increase or addition in PLS ratio of the remaining partner is known gain ratio.
In other words the difference between the new profit and loss sharing ratio and old profit and loss sharing ratio is known is called sacrifice ratio.
10. what is difference between sacrifice ratio and gain.
Answer:-
From the definitions of sacrifice ratio and gain ratio given above
“In other words the difference between the new profit and loss sharing ratio and old profit and loss sharing ratio is known is called sacrifice ratio.”
Seems that these two are same while there is a difference that is
In case of Sacrifice ratio the new ratio decreases due to admission of a partner or old ratio is greater then the new ratio while, in case of gain ratio the new ratio increases due to retirement of partner or new ratio is greater then the old ratio
11. What do it mean, “Goodwill raised”?
Answer:-
It means that the goodwill is brought into the books of accounts only.
12. How can a new partner be admitted into a firm?
Answer:-
A new partner can be admitted with the consent of all existing partners.
13. What revaluation account is?
Answer:-
At the time of admission , retirement or death or any other event the assets and liabilities of the firm are adjusted according to the market price and in other words , the assets and liabilities are revalued . When assets or liabilities are revalued than their value may increase or decrease and a nominal account is opened to adjust this variance that is known as Revaluation account.
14. Write the definition of Goodwill.
Answer:-
Goodwill is the access value of the business or any entity. The difference of net worth of business and market value of the business is called goodwill.
15. What do it mean, “insolvent partner”?
Answer:-
Insolvent means a person who is not in a position to pay his debts.
Insolvent partner means a partner who is unable to pay the debts of firm.
16. What is the procedure for the dissolution of the firm?
Answer:-
At the time of the dissolution the assets are sold and total cash available is realized with that first of all the dissolution expenses and other liabilities are paid off, if any balance of cash is available than the loan of the partner is returned back , any access if is than the capital of the partner repaid , and if any surplus is thereafter than it is distributed among the partners with their profit and loss sharing ratio.
Q. Match the correct answer of columns “A” with Columns “B” and write
down the answer in Column “C”
Column “A” Column “B” Column “C”
Formation of Partnership Ten Partners
Insolvency of Partner Partnership Act 1932
Admission of Partner Inability to pay the firm debts
Dissolution of firm Value of good reputation of the business
Goodwill
Maximum partners in the business of Banking Difference between the new and old ratio
Interest on Loan to firm by partner in absence of deed A partner who invests and also works in partnership
Active partner End of the partnership business
Sleeping Partner Six Percent p.a.
Gain Ratio Death of partner
In absence of partnership deed all the partners share profit and loss with the ratio A partner who only invests in partnership
Equally
ANSWER
Column “A” Column “C”
Formation of Partnership Partnership Act 1932
Insolvency of Partner Inability to pay the firm debts
Admission of Partner With consent of all others
Dissolution of firm End of the partnership business
Goodwill Value of good reputation of the business
Maximum partners in the business of Banking Ten Partners
Interest on Loan to firm by partner in absence of deed Six Percent p.a.
Active partner A partner who invests and also works in partnership
Sleeping Partner A partner who only invests in partnership
Gain Ratio Difference between the new and old ratio
In absence of partnership deed all the partners share profit and loss with the ratio
Q. Identify the following statements as True or False by ticking T for True and F for False
1. The title under which partnership is formed is called Firm’s name. T/F
2. The partnership agreement may be oral or written. T/F
3. The mutual agreement is not the essence of partnership. T/F
4. The partnership business is governed by partnership Act 1932. T/F
5. The members of partnership are individually called directors. T/F
6. The maximum number of partners in a banking business is two. T/F
7. The minimum number of partners in an ordinary business is ten. T/F
8. The objective of the partnership business is to earn profit. T/F
9. The liability of the partners is unlimited. T/F
10. The partnership agreement does not contain any provision regarding nature
of business. T/F
11. The profit sharing ratio is agreed upon among partners at the time of
agreement. T/F
12. All partners entitled to receive salary from partnership. T/F
13. There are many capital accounts in partnership as are partners. T/F
14. Goodwill is the value of reputation of an established firm. T/F
15. Partners are entitled to receive 6% interest on advances to the firm annually T/F
16. Revaluation account is debited for decrease in the book value of asset. T/F
17. Partnership means a relationship among individual to start the business jointly. T/F
18. The business under Partnership form of organization is large size. T/F
19. There should be at least Four persons to form a business of partnership T/F
20. Every partner has the right to take part in the management of partnership T/F
21. An active partner is one who only contributes in to the capital of the and does not take part in management of the firm is called partner T/F
22. The minor person can be admitted as a partner without consent of other partners T/F
23. Realization Account is required to be opened at the time of admission of partner. T/F
24. The credit balance of the revaluation account indicates Profit on revaluation T/F
25. .The partnership at will may dissolved at any time by a notice to other partners T/F
26. The profit or loss on revaluation is divided among all partners with their old ratio. T/F
27. Goodwill means the access value of business that is shown in Income Statement T/F
28. Promoters is that person who provides finance to the business of partnership T/F
29. The Registration of the firm is Compulsory T/F
30. The firm for a specific time may dissolve completion of task. T/F
ANSWER
1 T 2 T
3 F 4 F
5 F 6 F
7 F 8 T
9 F 10 F
11 T 12 F
13 T 14 T
15 T 16 T
17 T 18 F
19 F 20 T
21 F 22 F
23 F 24 T
25 T 26 T
27 F 28 F
29 F 30 F
