Tick the correct answer :
1. Rahul’s trial balance provide you the following information :
Debtors Rs. 80,000
Bad debts Rs. 2,000
Provision for doubtful debts Rs. 4,000
It is desired to maintain a provision for bad debts of Rs. 1,000
State the amount to be debited/credited in profit and loss account :
(a) Rs. 5,000 (Debit) (b) Rs. 3,000 (Debit)
(c) Rs. 1,000 (Credit) (d) none of these.
2. If the rent of one month is still to be paid the adjustment entry will be :
(a) Debit outstanding rent account and Credit rent account
(b) Debit profit and loss account and Credit rent account
(c) Debit rent account and Credit profit and loss account
(d) Debit rent account and Credit outstanding rent account.
3. If the rent received in advance Rs. 2,000. The adjustment entry will be :
(a) Debit profit and loss account and Credit rent account
(b) Debit rent account Credit rent received in advance account
(c) Debit rent received in advance account and Credit rent account
(d) None of these.
4. If the opening capital is Rs. 50,000 as on April 01, 2016 and additional capital
introduced Rs. 10,000 on January 01, 2017. Interest charge on capital 10% p.a.
The amount of interest on capital shown in profit and loss account as on March
31, 2017 will be :
(a) Rs. 5,250 (b) Rs. 6,000
(c) Rs. 4,000 (d) Rs, 3,000.
5. If the insurance premium paid Rs. 1,000 and pre-paid insurance Rs. 300. The amount
of insurance premium shown in profit and loss account will be :
(a) Rs. 1,300 (b) Rs. 1,000
(c) Rs. 300 (d) Rs. 700.
Answers
Answer:
your answer is option a)1,300
The answers are explained below. Hope it will help you.
Explanation:
1(c) Rs. 1000 (credit)
It is because we have to create a provision for only 1000 rs but we have made excess provision.
2(d) Debit rent account and credit outstanding rent account.
Rent account is debited as it is our expense . Outstanding rent account is credited as it is a personal account and represent those persons to whom the payment is to be made.
3(b) Debit rent account and credit rent received in advance.
As it is received in advance so by debiting it, it will deduct from rent account and rent in advance is credited as it is our liability and would be shown on the liability side of the balance sheet.
4(a) 5250
We can easy calculate this by charging 10% on 50000 for full year and 10% on 10000 for 3 month the answer will come to 5000+250=5250
5(d) 700
In profit and loss account we show only current year income and profit so we need to deduct pre-paid insurance.