Deck 7: Hire Purchase System and Dissolution of Assets in a Firm

Question 1

At the time of dissolution all the assets of firm are transferred to the realization A/c:

A)market value
B)book value
C)cost value
D)bale value

Answer 1

book value

Question 2

Balance of realization A/c is transferred to the capital A/c of the partners in:

A)capital ratio
B)profit sharing ratio
C)interest ratio
D)equally

Answer 2

profit sharing ratio

Question 3

The decision is Garner Vs Murray was given in:

A)1904
B)1905
C)1933
D)1804

Answer 3

1904

Question 4

When an asset is acquired on hire purchase system, the asset account is debited with _______ of the assets in the books of the hire purchaser.

A)hire purchase price
B)cash price
C)instalment price
D)none of these

Question 5

If the firm stops making repayments and the goods or assets are taken away from them as a result, this is known as:

A)cancellation
B)forfeiture
C)repossession
D)annulment

Question 6

On the balance sheet of a company, the value of the asset bought through hire purchase will appear as:

A)cost less depreciation to date less amount owing on hire purchase less interest owing
B)cost less amounts owing on hire purchase
C)cost less depreciation to date less amount owing on hire purchase
D)cost less depreciation to date

Question 7

The depreciation on an asset purchased through hire purchase should be:

A)should be straight line only
B)based on the cost price of the asset only
C)based on the total cost including interest
D)no depreciation should be provide until the final payment is made

Question 8

The interest charged on the hire purchase should appear in the profit and loss account in what manner?

A)the total interest levied should be divided equally over the total period the for purchase agreement
B)the interest charged in that period only should be included
C)interest should instead be capitalised on the balance sheet
D)interest should be apportioned in proportion to the repayment totals

Question 9

Ownership of goods under hire purchase agreement is transferred at the time of:

A)payment of down payment
B)payment of first instalment
C)payment of last instalment
D)none of the above

Question 10

Which of the following does not give a difference between a hire purchase and a normal purchase?

A)timing of payment for asset
B)legal ownership of asset
C)quality of asset purchased
D)total cost of asset.

Question 11

The act of buying an asset without having to make full payment in the immediate future is known as:

A)hire purchase
B)finance lease
C)operating lease
D)sale and leaseback

Question 12

The amount of interest is credited by the buyer to ________

A)hire purchase account
B)hire vendor account
C)interest account
D)cash account

Question 13

The depreciation in the books of buyer is charged on _________

A)hire purchase price
B)market price
C)total instalment amount
D)cash price

Question 14

Hirer charges depreciation on:

A)hire purchase price
B)cash price
C)lower of the two
D)none of these

Question 15

What is transferred to Hirer under hire purchase system:

A)ownership of assets
B)possession of asset
C)ownership and possession of asset
D)none of these

Question 16

The Sale of Goods Act is applicable in:

A)credit purchases
B)cash purchases
C)cash sales
D)none of these

Question 17

Under which system, ownership is transferred on payment of final installment

A)installment system
B)credit system
C)hire purchase system
D)cash system

Question 18

Under hire purchase system the buyer is called _________

A)buyer
B)hirer
C)hire vendor
D)debtor.

Question 19

Under hire purchase system who has the right of sell __________

A)buyer
B)hirer
C)hire vendor
D)debtor

Question 20

Under hire purchase system, the agreement can be _________

A)renewed
B)registered
C)terminated
D)endorsed.

Question 21

Installment system is governed by _______

A)hire purchase act
B)sale of goods act
C)installment act
D)properties registration act

Question 22

Under hire purchase system, the retail price of the articles is called ________

A)mrp
B)wholesale price
C)retail price
D)cash price

Question 23

The advance amount under hire purchase system is called __________

A)cash price
B)retail price
C)interest
D)down payment

Question 24

Under hire purchase system, interest is calculated on _______

A)cash price
B)hire purchase price
C)mrp
D)outstanding balance.