Question 1

Which of the following is not the main objective of accounting?

Accepted Answer

The main objectives of accounting include the systematic recording of transactions, ascertaining profit or loss, and determining the financial position of a business. Solving tax disputes with tax authorities, while a potential application of accounting information, is not considered a primary objective of accounting itself.

Question 2

Matching concept means

Accepted Answer

The matching concept in accounting means that expenses should be recorded and recognized in the same period as the revenues they helped to generate, ensuring that the financial statements accurately reflect the company's financial performance for that period.

Question 3

When Branch pays expenses for H.O. the following account is debited in the books of the branch _______

Accepted Answer

When a branch pays expenses on behalf of the Head Office, the H.O. account is debited in the branch's books. This is because the branch is essentially advancing funds to the Head Office, and this transaction is recorded as a debit to the H.O. account to reflect the expense payment made on its behalf.

Question 4

Under the stock and debtor system, Branch A/c is treated as ______

Accepted Answer

The answer of Under the stock and debtor system, Branch...

Question 5

Goods are sent to branch at cost plus 20%. If closing stock of the branch is Rs 60,000 at invoice price, Rs ______ will be credited to stock reserve a/c.

Accepted Answer

The closing stock at the branch is valued at invoice price, which includes a markup of 20% over the cost price. To find the stock reserve, we need to calculate the portion of the invoice price that represents the markup. The cost price (CP) can be represented as 100%, and the selling price (SP) at the branch is 120% of CP. The formula to find the cost price from the selling price is CP = SP / (1 + Markup Percentage). Thus, CP = 60,000 / 1.2 = Rs 50,000. The stock reserve is the difference between the invoice price and the cost price, which is Rs 60,000 - Rs 50,000 = Rs 10,000.

Question 6

HO sends goods to branch at 20% profit on invoice price, therefore the percentage of profit on cost comes to ______

Accepted Answer

The profit on cost is calculated as (Profit on Invoice Price) / (1 - Profit on Invoice Price). Here, 20% on invoice price means 20/80 on cost, which is 25%.

Question 7

HO sends goods to branch at invoice price after adding 25% on cost price, so profit would be ___ % of invoice price

Accepted Answer

The profit on the invoice price is calculated as follows: If the cost price is $100, adding 25% to it makes the invoice price $125. The profit is $25 on an invoice price of $125, which is (25/125)*100 = 20%.

Question 8

For finding the amount of sundry expenses paid by the branch, the following a/c should be prepared.

Accepted Answer

Sundry expenses paid by the branch are typically recorded in the petty cash account, as this account is used for tracking small or incidental expenses.

Question 9

If the opening balance of petty cash is Rs 1000, closing balance is Rs 500 and the petty cash received from HO is Rs 700, then what will be the amount of sundry expenses _____

Accepted Answer

The amount of sundry expenses can be calculated by adding the opening balance and the amount received from HO, then subtracting the closing balance: $1000 + 700 - 500 = 1200$.

Question 10

H.O. sent Rs 5000 as petty cash to branch during the year. Opening and closing balances of petty cash was Rs 1400 and Rs 400 respectively. Then petty expenses of the branch during the year will be ______

Accepted Answer

The answer of H.O. sent Rs 5000 as petty cash...

Question 11

Which of the following branches, taking into consideration the scope of authority and responsibility, prepares its own independent final accounts?

Accepted Answer

An independent branch prepares its own independent final accounts as it operates autonomously from the head office, unlike a dependent branch which relies on the head office for financial reporting.

Question 12

Opening balance of debtors a/c is Rs 1,40,000. Credit sales is Rs 10,74,000 and closing balance of Debtors a/c is Rs 1,90,000. What is the amount of cash collection from the debtors?

Accepted Answer

The cash collection from debtors can be calculated by adding the opening balance of debtors and the credit sales, then subtracting the closing balance of debtors. So, $1,40,000 + 10,74,000 - 1,90,000 = 10,24,000$.

Question 13

Goods in transit are shown in the balance sheet at ______

Accepted Answer

Goods in transit are typically shown in the balance sheet of the head office, as they are considered part of the inventory that the head office owns and controls.

Question 14

H.O. has sent goods on invoice price worth Rs 2,40,000 which are 25% above cost price. What is the loading element?

Accepted Answer

The answer of H.O. has sent goods on invoice price...

Question 15

The adjusting entry for difference between the invoice price and cost price of goods are shown in ________

Accepted Answer

The adjusting entry for the difference between the invoice price and cost price of goods is shown in the branch adjustment account. This account is used to adjust the discrepancies between the invoiced price (selling price to the branch) and the actual cost price of goods sent to a branch.

Question 16

Stock and debtors system is generally used when goods are sent to the branch at _____

Accepted Answer

The stock and debtors system is typically used when goods are sent to the branch at invoice price to maintain control over stock and debtors and to ensure that the branch accounts reflect the invoiced value of goods.

Question 17

H.O. sent goods to branch at invoice price 50% plus on original price. How many percentage of profit will be on Invoice price?

Accepted Answer

The profit on the invoice price is calculated as follows: If the original price is considered as 100, the invoice price is 150 (since there's a 50% increase). The profit is 50 (150 - 100). To find the percentage of profit on the invoice price, divide the profit by the invoice price: 50/150 = 0.3333, or 33.33%.

Question 18

Goods sent by HO but not received by branch before the end of the year, by debiting it to goods in transit, which account should be credited?

Accepted Answer

The answer of Goods sent by HO but not received...

Question 19

If the opening balance of debtors is Rs 16,000 and closing balance is Rs 80,000, cash received from debtors is Rs 35,000 and bad debts is Rs 1,000, then what will be the amount of credit sales?

Accepted Answer

Credit sales = Opening balance of debtors + Credit sales - Closing balance of debtors - Cash received from debtors - Bad debts= 16,000 + Credit sales - 80,000 - 35,000 - 1,000= Credit sales - 112,000= 100,000

Question 20

The system of keeping accounts generally adopted by small size branches are:

Accepted Answer

Small size branches typically use the debtors system for keeping accounts, as it is simpler and involves maintaining records of debtors and cash transactions.

Quiz 3: Accounting and Financial Management for Branches and Head Offices