Q: A business sent goods at cost Rs. 900,000 to its agent on 15.03.2025, adding 20% profit on cost. Only 60% of goods was sold by 31.03.2025. The net realizable value of unsold goods is Rs. 270,000. What is the value of stock at agent to be reported in the financial statements?

$$\text{Stock at agent} = \text{Net realizable value} = 270,000$$

Question 1

Which of the following statements best describes the primary purpose of financial accounting?

Accepted Answer

To provide historical financial information and comply with accounting standards and legal requirements.

Question 2

A business purchased goods during the financial year, but some goods remained unsold at year-end. According to which accounting concept are these unsold goods excluded from the cost of sales calculation?

Accepted Answer

Matching

Question 3

Which is the correct order of the accounting process?

Accepted Answer

Recognition and measurement, Recording, Classification, Analyzing, Summarizing

Question 4

Velan business sold goods costing Rs. 120,000 to Mani for Rs. 177,000 (including VAT Rs. 27,000) on credit. Mani settled the full amount after a Rs. 15,000 discount. What is the correct journal entry for recording the receipt from Mani?

Accepted Answer

Debit Cash Rs. 162,000; Debit Discount Allowed Rs. 15,000; Credit Debtor Rs. 177,000

Question 5

Which source documents are required to record the following Velan business transactions: (2) Cheque received from Mani, (3) Goods sold to Vinu, (4) Goods returned by Vinu?

Accepted Answer

Receipt, Invoice, Credit Note

Question 6

A business had a profit of Rs. 250,000 according to draft financial statements. After investigation, the following errors were found: Rent Rs. 22,500 accrued, Bank loan installment Rs. 42,500 paid (interest Rs. 7,500 not recognized), Sales journal total Rs. 425,000 recorded as Rs. 290,000. What is the adjusted net profit?

Accepted Answer

Rs. 377,500

Question 7

Mani business had stock at cost Rs. 40,000 completely damaged. Insurance paid 80% of the loss. Stock loss and insurance claim were not recorded. Gross profit and net profit before adjustment were Rs. 300,000 and Rs. 160,000. What are the correct gross profit and net profit after adjustment?

Accepted Answer

Gross profit: Rs. 340,000; Net profit: Rs. 192,000

Question 8

Pratha sole proprietorship had provision for doubtful debt Rs. 35,000 on 01.04.2024. Rs. 25,000 was written off as bad debt during the year. Debtor control account balance before write-off on 31.03.2025 was Rs. 525,000. 4% of debtor control account balance was allocated for provision for doubtful debt. What is the bad and doubtful debt expense for the year and carrying value of debtors?

Accepted Answer

Bad and doubtful debt expense: Rs. 40,000; Carrying value of debtors: Rs. 500,000

Question 9

Suthan business for March 2025: Stock on 01.03.2025 Rs. 50,000; Purchases Rs. 330,000; Cash discount received Rs. 10,000, paid Rs. 20,000; Sales return Rs. 40,000; Distribution and admin expenses Rs. 120,000; Credit sales Rs. 440,000; Stock on 31.03.2025 Rs. 160,000. What are the total income and total expenses recognized for March?

Accepted Answer

Total income: Rs. 410,000; Total expenses: Rs. 340,000

Question 10

Velan business sells goods by adding 20% profit on selling price. For the year ending 31.03.2025: Stock on 01.04.2024 Rs. 280,000; Stock on 31.03.2025 Rs. 240,000; Sales Rs. 2,400,000; Purchase return Rs. 100,000; Carriage inwards Rs. 80,000; Sales return Rs. 300,000. What is the purchase for the year?

Accepted Answer

Rs. 1,840,000

Question 11

Karan business: Total deposited during March Rs. 324,000; Total cheques paid Rs. 248,000; Unpresented cheque Rs. 14,800; Unrealized cheque Rs. 12,600 up to March. Unpresented Rs. 6,400 and unrealized Rs. 5,600 for February were presented and realized during March. What are the values of presented and realized cheques for March?

Accepted Answer

Presented cheques: Rs. 239,600; Realized cheques: Rs. 317,000

Question 12

A business reimburses petty cash expenses at the beginning of each month. The imprest amount increased by Rs. 1,000 from January 2025. Petty cash balances at end of December 2024 and January 2025 were Rs. 4,000 and Rs. 6,000. January petty expenses totaled Rs. 12,000. What are the petty cash expenses for December and the amount reimbursed in January?

Accepted Answer

Petty expenses in December: Rs. 11,000; Reimbursement in January: Rs. 14,000

Question 13

A business's debtor control account balance on 31.03.2025 was Rs. 175,000, but the debtor list balance was different. Errors found: Discount allowed Rs. 21,000 recorded as Rs. 12,000; Dishonoured cheque Rs. 30,000 recorded as Rs. 3,000; Return inwards journal overstated by Rs. 20,000. What are the adjusted debtor control account and debtor ledger balance before rectifying errors?

Accepted Answer

Adjusted debtor control account: Rs. 186,000; Debtor ledger balance before errors: Rs. 168,000

Question 14

A business sent goods at cost Rs. 900,000 to its agent on 15.03.2025, adding 20% profit on cost. Only 60% of goods was sold by 31.03.2025. The net realizable value of unsold goods is Rs. 270,000. What is the value of stock at agent to be reported in the financial statements?

Accepted Answer

$$	ext{Stock at agent} = 	ext{Net realizable value} = 270,000$$

Question 15

Vishnu trader had total assets Rs. 5,500,000 and equity Rs. 2,900,000 on 31.03.2025. What is the formula to calculate total liabilities?

Accepted Answer

$$	ext{Total liabilities} = 	ext{Total assets} - 	ext{Equity}$$

Question 16

A business's cash account balance on 31.03.2025 was Rs. 280,000. The bank statement showed: Cheque Rs. 70,000 not realized, Rent income Rs. 80,000 directly deposited, Debtor deposited Rs. 120,000, Bank loan installment Rs. 24,000 (including interest Rs. 8,000) paid by bank, Cheque Rs. 60,000 dishonoured. What is the adjusted cash account balance?

Accepted Answer

$$280,000 + 80,000 + 120,000 - 24,000 - 60,000 = 396,000$$

Question 17

A business paid monthly insurance Rs. 15,000 and monthly rent Rs. 25,000 until 30.09.2024, then Rs. 40,000 from 01.10.2025. Prepaid insurance on 31.03.2025 was Rs. 60,000, on 31.03.2024 Rs. 30,000. Accrued rent on 31.03.2025 was Rs. 75,000, on 31.03.2024 Rs. 50,000. What is the formula for insurance expense recognized for the year?

Accepted Answer

$$	ext{Insurance expense} = 	ext{Insurance paid} + 	ext{Prepaid at end} - 	ext{Prepaid at start}$$

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