InterviewSolution
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InterviewSolution
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
X started a businesss on 1st April , 2018 witha capitalof ₹50,000 anda loanof ₹25,000 takenfrom Y. During2018-19, hehad introduced additional capital ₹25,000 andhad withdrawn15,000 for personal use. On 31st March , 2019 his assets were ₹1,50,000. Findhis capital as on 31st March, 2019 and profitmadeor lossincurred duringtheyear 2018-19. |
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Answer» SOLUTION :ClosingCapital = Closing ASSETS - Closing Liailities(i.e., y's LOAN) = ₹ 1,50,000 - ₹25,000 - ₹1,25,000. Profits = closingCapital+ Darwing- Additional Capital- OpeningCapital = ₹ 1,25,000 + ₹15,000 - ₹ 25,000 - ₹ 50,000 = ₹65,000. |
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| 2. |
X started a businesss on 1st April , 2018 witha capitalof ₹50,000 anda loanof ₹25,000 takenfrom Y. During2018-19, hehad introduced additional capital ₹25,000 andhad withdrawn15,000 for personal use. On 31st March , 2019 his assets were ₹1,50,000. Findhis capital as on 31st March, 2019 and profitmadeor lossincurred duringtheyear 2018-19. |
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Answer» Solution :ClosingCapital = CLOSING Assets - Closing Liailities(i.e., y's LOAN) = ₹ 1,50,000 - ₹25,000 - ₹1,25,000. Profits = closingCapital+ Darwing- ADDITIONAL CAPITAL- OpeningCapital = ₹ 1,25,000 + ₹15,000 - ₹ 25,000 - ₹ 50,000 = ₹65,000. |
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| 3. |
X Ltd. Gets a contract of ₹ 100 crore to build a Shopping-Mal to be completed in 3 years. The management of the company wants to ascertain profit or loss on this contract only when the contract is completed. Is the management justified? |
| Answer» SOLUTION :No, the MANAGEMENT is not justified. ALTHOUGH the true profit or loss can be ascertained only after the completion of the contract, it will be divided into time intervals of twelve months for the ascertainment of profit as PER ACCOUNTING Period Concept. | |
| 4. |
X Ltd. Follows the Written Down Value Method of depreciating machinery year after year due to |
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Answer» comparability |
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| 5. |
X Ltd . Follows the Written Down value Method of depreciating machinery year after year due to |
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Answer» comparability. |
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| 6. |
X hasfollowingassetsand liabilities as on 31st March, 2019. Determinehis capital. Cash ₹25,000,Bank₹ 47,500, Debtors ₹ 18,000, Creditors ₹ 22,000, Pant and Machiney ₹ 80,000, Buliding₹2,00,000, Furniture ₹ 24,000, Bills Receivable₹ 56,500, Bills Payable ₹23,500. |
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Answer» Solution :Assest = LIABILITIES + Capital OrCapital = Asseste- Liabilities OrCapital = (Cash + Bank + Debtors + PLANTS and Machinery + Buliding + Furniture + Bills Receivable ) - (CREDITORS + Bills Payable) = ₹(25,000 + 47, 500 + 18,000+ 80,000 + 2,00,000 + 24,000+ 56,500)- ₹(22,000 + 23,500) =₹ (4,51,000 - 45,500 ) = ₹4,05,000. |
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| 7. |
X hasfollowingassetsand liabilities as on 31st March, 2019. Determinehis capital. Cash ₹25,000,Bank₹ 47,500, Debtors ₹ 18,000, Creditors ₹ 22,000, Pant and Machiney ₹ 80,000, Buliding₹2,00,000, Furniture ₹ 24,000, Bills Receivable₹ 56,500, Bills Payable ₹23,500. |
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Answer» Solution :Assest = Liabilities + Capital OrCapital = Asseste- Liabilities OrCapital = (CASH + Bank + Debtors + PLANTS and Machinery + Buliding + FURNITURE + Bills Receivable ) - (CREDITORS + Bills Payable) = ₹(25,000 + 47, 500 + 18,000+ 80,000 + 2,00,000 + 24,000+ 56,500)- ₹(22,000 + 23,500) =₹ (4,51,000 - 45,500 ) = ₹4,05,000. |
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| 8. |
X' commenced business on 1st April, 2013 with a capital of 6,00,000. On 31st March, 2014 his assets were worth 8,00,000 and liabilities 50,000. Find out his closing capital. |
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Answer» ₹7,50,000. |
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| 9. |
Write two adventages of accrual basis of accounting. |
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Answer» SOLUTION :(i) It discloses true profit or LOSS for a particular PERIOD. (II) It follows the MATCHING principle of accounting. |
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| 10. |
Write the following transactions in Debtor's Account , Creditor's Account and Cash Account : {:(,,,"₹"),(1., "Cash sales" ,, 50","000), (3., "Cash received from X" ,, 56","000), (5.,"Paid to Y" ,, 30","000):}:| {:(,,,"₹") , (2., "Sold goods to X on credit" ,, 80","000), (4., "Purchase goods from Y on credit" ,, 44","000), (6., "Cash purchases from Y" ,, 16","000):} |
Answer» SOLUTION :
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| 11. |
writethreedisadvantagesof AIS? |
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| 12. |
Writethreeadvantages if AIS. |
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| 13. |
writeshortnotes on thefollowing: (a)CustomisedAcoountingSoftware (b)Reafymade AccountingSoftware . |
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| 14. |
Write one limitation of accounting. |
| Answer» Solution :Based on Historical costs : Accounts are prepared on the basis of historical costs (i.e., the ORIGINAL costs) and as such the FIGURES given in the financial STATEMENTS do not shows the EFFECT of CHANGES in price level. | |
| 15. |
writedownfiveadvantagesof computerisedAccountingsystem overthemanualsystemof Accounting . |
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| 16. |
Write one difference between Cash Account and Cash Book. |
| Answer» Solution :CASH ACCOUNT is an account in the LEDGER whereas Cash BOOK is a SEPARATE book . | |
| 17. |
writea detailedcomparisonbetweenManualacountingandcomputerisedAccounting . |
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| 18. |
Withdrawal of money by the owner is not an expense but a reduction of ______ and_______. |
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Answer» |
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| 19. |
Withdrawal of goods from business by the proprietor is credited to |
| Answer» Solution :Purchase A/c | |
| 20. |
Withdrawal of cash from business by the proprietor is credited to Drawing Account. |
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Answer» |
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| 21. |
Withdrawalcolumn of the Pass Book showed a wrong entry of ₹1,200 . When the balance as per Cash Book is the starting point |
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Answer» ₹ 1,200 to be added. |
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| 22. |
Withdrawal of cash from business by the proprietor is credited to |
| Answer» Solution :Cash A/c | |
| 23. |
Will you transfer 'Wages and Salaries Account' to the debit of Profit and Loss Account? Why |
| Answer» SOLUTION :No. WAGES and SALARIES ACCOUNT will be transferred to Trading Account because it is assumed that when Wages and Salaries Account is given, it RELATES to wages. | |
| 24. |
Why the statement of assets and liabilities prepared under Single Entry System at the end of the accounting period is called a Statement of Affairs instead of Balance Sheet? |
| Answer» Solution :ALTHOUGH Statement of AFFAIRS, like Balance SHEET, shows assets and liabilities yet it is not a Balance Sheet. It is so because the values of the assets and liabilities, SHOWN in the Statement of Affairs are MERELY the result of estimates made by the owner and no Ledger Accounts exist for them. Since, these amounts are not drawn from the accounts, they cannot strictly be called balances and their depiction as liabilities and assets in a Balance Sheet. | |
| 25. |
Why the full cost of an asset is not treated as an expense in the year of its purchase? |
| Answer» SOLUTION :Because of going concern concept, it is assumed that the business will continue to EXIST for a LONG period in the future. Hence, the COST of the asset is spread over its USEFUL life only the current years depreciation is treated as expense. | |
| 26. |
Why transactions are first recorded in a Journal? |
| Answer» Solution :Journalbeing Book of Original ENTRY contains all the important INFORMATION relating to a TRANSACTIONS in a chronological ORDER. | |
| 27. |
Why the entire life of the business enterprise is divided into time-intervals? |
| Answer» SOLUTION :ENTIRE life of the business enterprise is divided into same intervals of TWELVE MONTHS for the ASCERTAINMENT of profit. | |
| 28. |
Why the entire life of business is divided into time intervals? |
| Answer» SOLUTION :To ascertain the AMOUNT of profit earned or loss SUFFERED by the BUSINESS. | |
| 29. |
Why should a business follow the consistency principle? |
| Answer» Solution :Comparability is a qualitative charaxteristic of a financial statement , i.e., the finacial performance of a year may be compared with that of another year . It is POSSIBLE only when ACCOUNTING practices are consistently FOLLOWED. | |
| 30. |
Why should a business follow the consistency Concept? |
| Answer» SOLUTION :One of the QUALITATIVE CHARACTERISTIC of accounting information is comparability i.e., the financial statements must be comparable from YEAR to year. It is possible only when accounting principles are not changed and followed consistenly year after year. | |
| 31. |
Why receipts are classified into capital and revenue? |
| Answer» SOLUTION :Classification of RECEIPTS into capital receipts and revenue receipts is essential for thepreparation of financial statementssince revenue receipts are shown on the CREDIT SIDE of Trading and PROFIT and Loss Account whereas capital receiptsare shown in the Balance Sheet. | |
| 32. |
Why Provision of Outstanding Expenses is required ? |
| Answer» Solution :Outstanding Expenses are provided FOLLOWING the ACCRUAL CONCEPT of ACCOUNTING, i.e., expenses for the year, whether paid or not, should be accounted. | |
| 33. |
Why is Trading Account prepared ? Or What do we come to know by preparing the Trading Account? |
| Answer» Solution :TRADING ACCOUNT is PREPARED to know by prepared to know gross profit or gross LOSS during the accounting YEAR | |
| 34. |
Why is the Ledger called the book of Final entry? |
| Answer» SOLUTION :The Ledger is called the BOOK of final entry because it is the book in which all the BUSINESS TRANSACTIONS would ultimately FIND their place. | |
| 35. |
Why is the evidence provided by source documents important to accounting? |
| Answer» Solution :These documents are written and authentic PROOF of the correctness of RECORDED transaction. They are REQUIRED for audit of ACCOUNTS and tax assessments. They also serve as legal evidence in CASE of a dispute. | |
| 36. |
Why is only one account posted to the Ledger Account from the Cash Book ? |
| Answer» SOLUTION :Although the Cash Book is a book of original entry, it is ALSO a book where the Cash Account and Bank Account are MAINTAINED. In EFFECT, it is both a book of oritinal entry and a Leger dedicated to those ACCOUNTS. As a result, each transaction in the Cash Book is posted book only once to another account. | |
| 37. |
Why is it necessary to sub-divide a Journal? What are its advantages? |
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| 38. |
Why is it necessary to record the adjusting entries in the preparation of final accounts? |
| Answer» SOLUTION :N/a | |
| 39. |
Why is it necessary to create a provision for doubtful debts at the time of preparation of final accounts? |
| Answer» SOLUTION :N/a | |
| 40. |
Why is it necessary to pass the Adjustment Entries ? |
| Answer» Solution :Accrual concept is the fundamental ACCOUNTING concept and requires that all expenses, whether paid or not and all incomes and GAINS whether RECEIVED or not, should be ACCOUNTED to ascertain correct profit or loss, assets and liabilities. They are recorded through the adjustments entries. | |
| 41. |
Why is it necessary for accounts to assume that a business entity will remain a going concern? |
| Answer» Solution :This assumption providesthe very BASIS for showing the value of assets in the BALANCE sheet because we assume that these assets are not going to be sold in NEAR future. | |
| 42. |
Why is it necessary for accounts to assume that a business entity will remain a going concern ? |
| Answer» Solution :GOING Concern Concept is a FUNDAMENTAL ACCOUNTING concept . It is because of this concept , distinction is made between CAPITAL and revenue expenditures and thus assets and LIABILITES are recognised. | |
| 43. |
Why is Input GST (CGST and SGST or IGST) Account credited when goods are given as charity and goods are damaged or lost in fire or theft ? |
| Answer» Solution :It is CREDITED because goods given as CHARITY and goods being damaged or lost in fire or theft in not sale i.e., GST is not COLLECTED. THEREFORE, Input GST will not be set- off against Output GST. | |
| 44. |
Why is Closing stock valued at lower of cost or net realisable value (market value) ? |
| Answer» Solution :Closing stock is valued at LOWER of cost or net REALISABLE value (market value) because of the PRUDENCE Concept of ACCOUNTING, WHEREBY anticipated losses are accounted while anticipated profits are not. | |
| 45. |
Why is Bank Reconciliation Statement prepared ? |
| Answer» Solution :Bank RECONCILIATION Statement is PREPARED to determine the REASONS for differences between BALANCE as Cash Book and balance as per Bank Statement or Bank Pass Book and if necessary to record the entry. | |
| 46. |
Why is Accrued Income credited to the Profit and Loss Account and shown as current asset in the Balance sheet ? |
| Answer» Solution :Accrual Concept of accounting requires that revenue be recognised when goods or services have been sold WHETHER the amount has been RECEIVED or not. Since income is credited to PROFIT and Loss Account, it is credited to the Profit and Loss account. And since, the amount is due to the enterprise, it is SHOWN as a CURRENT asset in the Balance Sheet. | |
| 47. |
Why is a Compensating Error not disclosed by the Trial Balance? |
| Answer» Solution :A COMPENSATING Error is not DISCLOSED by the Trial BALANCE as ONE error is nullified by ANOTHER error. | |
| 48. |
Why Input GST (CGST and SGST or IGST) Account ir credited when proprietor takes the goods for personal use ? |
| Answer» SOLUTION :It is credited because GST credit is allowed by when goods are sold. Goods taken by PROPRIETOR is not a SALE but drawings . | |
| 49. |
Why fixed assets are not shown in the books at market value? |
| Answer» Solution :Fixed assets are not SHOWN in the books at market VALUE because : (i) as per historical concept, we RECORDED fixed assets at original cost, and (ii) as per going CONCERN concept, the assets are not going to be sold in the NEAR future, Hence, the market value is irrelevant. | |
| 50. |
Why expenditure is classified into capital and revenue. |
| Answer» SOLUTION :FINANCIAL statements cannot be prepared without classifying theexpenditure into capital and revenue. Capital expenditure is written in the Balance Sheet whereas revenue expenditure is written on the debit SIDE of Trading or PROFIT and Loss Account. | |