Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1
Partners Bill and Ben share profits and losses in a 3:2 ratio. Bill receives a $12,000 annual salary. Given a net profit of $52,000, what amounts are credited to their Current Accounts?
Answer:
Bill $36 000, Ben $16 OOO
Remaining profit after salary = 52,000 - 12,000 = 40,000. Bill's share = 12,000 (salary) + (3/5 * 40,000) = 12,000 + 24,000 = 36,000. Ben's share = 2/5 * 40,000 = 16,000. Thus, Bill receives 36,000 and Ben receives 16,000.
2
Partners X and Y share profits in a 1:2 ratio. Given a net income of $10, X's salary of $2, Y's interest on drawings of $3, and X's interest on capital of $2, what is X's final share of profit?
Answer:
3
Starting with net income of $10, add interest on drawings ($3) to get $13. Subtract X's salary ($2) and X's interest on capital ($2), leaving $9 as divisible profit. X's share is 1/3 of $9, which equals $3. This calculation follows standard partnership appropriation procedures.
3
Partners X and Y share profits and losses in a 1:2 ratio. Given a net income of $10, X's salary of $2, Y's interest on drawings of $3, and X's interest on capital of $2, calculate X's share of the final profit.
Answer:
3
The divisible profit is calculated as: Net Income ($10) - Salary ($2) - Interest on Capital ($2) + Interest on Drawings ($3) = $9. X's share is 1/3 of $9, which equals $3. This calculation follows the standard appropriation of profit process where interest on drawings increases the distributable profit while salaries and interest on capital decrease it.
4
Which form of business organization does not require the preparation of a Profit and Loss Appropriation Account?
Answer:
Sole proprietorship business
A Profit and Loss Appropriation Account is used to distribute net profits among partners or shareholders. In a sole proprietorship, the entire profit belongs to the single owner, so there is no need to appropriate or divide the profit among multiple parties, making this account unnecessary.
5
In which financial statement is the interim dividend typically recorded?
Answer:
In profit and loss appropriation account
An interim dividend is a dividend payment declared and paid before the company's annual general meeting and the final financial statements are released. Because it represents a distribution of profits to shareholders, it is recorded in the Profit and Loss Appropriation Account, which shows how the net profit is allocated.
6
Calculate the partner's commission if the net profit before charging such commission is 65,000 and the commission rate is 11% after charging.
Answer:
6441
When commission is calculated after charging such commission, the formula is (Net Profit * Rate) / (100 + Rate). Here, (65,000 * 11) / 111 equals approximately 6,441.44. Rounding to the nearest whole number gives 6,441. This adjustment ensures the commission is correctly calculated as a percentage of the profit remaining after the commission expense has been deducted.
7
Calculate the partner's commission if the net profit before charging such commission is 65,000 and the commission rate is 11% before charging.
Answer:
7150
When the commission is calculated on net profit before charging such commission, the formula is (Net Profit * Rate) / 100. Here, 65,000 * 11 / 100 equals 7,150. This represents the commission amount to be paid to the partner based on the specified percentage of the profit before the deduction of the commission itself.