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business
corporate accounting
Corporate Accounting 1st Edition Anita Raman, P. Radhika - Solutions
From the following particular, determine the maximum remuneration available to a full-time director of a manufacturing company. The Profit & Loss A/c of the company showed a net profit of ₹40,00,000 after taking into account the following items:(a). Depreciation (including special
Payment of wages and salaries is shown in the statement of Profit & Loss under: (a). Employees benefit expenses (b). Other expenses (c). Finance costs (d). None of these
True and False. Share application money outstanding allotment is shown as a current liability.
What are Tangible Assets?
Liabilities, which are not current liabilities, are termed as ____________.
Give the rules regarding transfer of profits to reserves.
Payment of interest on debentures and bank overdraft is shown in the statement of Profit & Loss under the head: (a). Employees benefit expenses (b). Other expenses (c). Finance costs (d). None of these
True and False. Spares and stores, and also loose tools are treated as other current assets.
How do you deal with provision for tax in final accounts of companies?
Liabilities that are to be settled within 12 months are termed as ____________.
Explain the provisions relating to transfer to reserves.
Preliminary expenses written off is shown in the statement of Profit & Loss as:(a). Employees benefit expenses. (b). Other expenses. (c). Finance costs. (d). Depreciation and amortisation expenses.
True and False. Dividend is not paid on Calls-in-Advance.
Give the meaning of Cost of Materials Consumed.
Trade payables include ____________ and ____________.
Carriage outwards is shown in the statement of Profit & Loss as: (a). Employees benefit expenses (b). Other expenses (c). Finance costs (d). Depreciation and amortisation expenses.
True and False. Provision for tax is regarded as a charge against profit and not as an appropriation of profit.
Trade receivables include ____________ and ____________.
Debentures redeemable after 10 years of issue are considered as: (a). Long-term borrowings (b). Short-term borrowings (c). Other current liabilities (d). None of these
True and False. If rate of dividend is 20%, then the company has to transfer 7.5% of the current profit to reserve.
What is the maximum rate of managerial remuneration in case of a public limited company?
Assets, which have physical existence, are called ____________.
Bank overdraft is shown in the balance sheet of a company as:(a). Long-term borrowings (b). Short-term borrowings (c). Other current liabilities (d). None of these.
What do you mean by Non-current Liabilities?
Assets that are to be converted into cash within 12 months are known as ____________.
Dividend is paid on: (a). Authorised capital (b). Issued capital (c). Called-up capital (d). Paid-up capital.
Briefly state the meaning of Shareholders Funds.
Statement of Profit & Loss shows ____________ performance.
Securities premium is shown in the balance sheet of a company under: (a). Share capital (b). Reserves and surplus (c). Long-term borrowings (d). None of these.
Balance sheet is a statement of ____________ and ____________.
What do you mean by Trade Receivable?
Alpha Ltd. was incorporated on 1st July 2000, to take over the business carried on by Gopal with effect from 1st April 2000. The following is the Profit & Loss A/c for the year ended 31st March 2001:Ascertain profit prior to incorporation. Particulars To Opening Stock To Purchases To
A company was incorporated on 1st May 1994 to take over a business as a going concern from 1st January of the same year. The turnover for the year ended 31st December was ₹2,00,000, namely ₹60,000 for the first period upto 1st May and ₹1,40,000 for the following period. From the profit and
Explain the accounting treatment for Profit Prior to Incorporation in Accounts.
Mohan Company Ltd. was incorporated on 30th June 1995 to take over the business of Mr. K Mohan, as from 1st January 1995. The financial accounts of the business for the year ended 31st December 1995 disclosed the following information:You are required to prepare a statement apportioning the balance
Vector Ltd. was incorporated on 1st April 1990 for the purpose of taking over the business of Shanta stores as a going concern from 1st January 1990. Purchase consideration will be paid on 31st December 1990 and the vendors will be entitled to 5% of the profits earned prior to incorporation in lieu
X company purchased a business on 1st April 1993. The company obtained certificate of incorporation on 31st July 1993. From the following particulars for the year ending 31st March 1994, ascertain profits prior to incorporation and divisible profits.(a). Total sales upto 31st March 1994 to
True and False. Pre-incorporation loss may be treated as revenue loss and debited to profit and loss account.
Establishment expenses are apportioned in the ____________ to ascertain preincorporation profits.
Dravida Nadu Enterprise decided to convert his firm into a limited company with effect from 1st April 1996. But he obtained the certificate of incorporation on 1st August 1996 and certificate to commence business on 1st October 1996. His accounts were closed on 31st December 1996. Work out time
Explain the term Profits Prior to Incorporation.
Profit prior to incorporation is the profit earned: (a). Between the date of incorporation and the date of commencement of business;(b). Between the date of purchase of business and the date of incorporation. (c). Between the date of purchase of business and the date of commencement of
True and False. Gross profit is to be divided between pre- and post-incorporation periods in sales ratio.
The two important ratios in the calculation of pre-incorporation profit are ____________ and ____________.
Mahesh, a sole trader has decided to convert his business into a Public Ltd. Company. Calculate time ratio from the following information:(a). Date of sale of the business to the company 30th June 2007. (b). Date of obtaining certificate of incorporation 1st October 2007. (c). Date of
Why do you calculate Profit Prior to Incorporation?
Enumerate the different methods of ascertaining Profit Prior to Incorporation.
Profit prior to incorporation belongs to: (a). The company.(b). The vendor (c). Both the company and the vendor (d). None of the above.
True and False. Profits prior to incorporation are capital profits and are not available for dividend.
Amaravathi sold her business to Komala Ltd., with effects from 1st January 2007 for ₹5,00,000. The company was incorporated on 1st April 2007 and on 31st December 2007, the accounts were finalised. The company paid off Amaravathi on 31st August 2008 with interest of ₹40,000. Salaries for
Pre-incorporation profit should be taken as ____________ profit.
Calculate sales ratio from the following particulars: Total sales is ₹10,00,000 and sales during pre-incorporation period is ₹2,00,000.
State the accounting treatment for Profit Prior to Incorporation in accounts?
What are the different ratios used in computing Profit Prior to Incorporation? Briefly describe each of them.
Profit prior to incorporation should be credited to: (a). Asset A/c (b). Profit and Loss A/c (c). Capital Reserve A/c (d). None of the above
True and False. Variable expenses are to be divided in sales ratio, while computing preincorporation profit.
Interest paid to vendors should be apportioned in ____________ ratio.
XYZ Ltd. Company was incorporated on 1st July 2008 in order to purchase a running business from 1st January 1998. From the following particulars, calculate pre-incorporation loss:(a). Total sales for the year 2008 was ₹4,50,000 (b). Sales from 1st January 2008 to 30th June 2008
Explain the various purposes for which profit prior to incorporation can be used?
How do you apportion various expenses and incomes between Pre- and Postincorporation Periods?
Gross profit is to be apportioned between pre- and post-incorporation periods in: (a). Time ratio (b). Adjusted time ratio (c). Sales ratio (d). None of the above.
True and False. For calculating pre-incorporation profit, date of commencement of business is the relevant date in the case of the company over a period of time.
Calculate sales ratio from the following particulars: Total sales is ₹10,00,000 and sales during pre-incorporation period is ₹2,00,000.
Partner’s salary is debited to the ____________ period.
ABC Ltd. was formed on 1st May 2008 and it obtained the certificate of commencement of business on 1st June 2008. It acquired a running business with effect from 1st January 2008. Books were closed on 30th September 2008 when it was found that the net profit was ₹1,50,000 with a gross profit of
What is the accounting treatment for Loss Prior to Incorporation in accounts?
Discuss the treatment of the following items with appropriate reasons, while ascertaining Profit Prior to Incorporation. a. Rent b. Depreciation c. Directors’ Fees d. Audit Fees e. Goodwill Written Off f. Debenture Interest g. Interest Paid to Vendors.
Bad debts are to be apportioned in: (a). Time ratio (b). Sales ratio (c). Post in pre-incorporation period (d). Post in post-incorporation period.
True and False. Expenses such as director’s fees, discount on issue of shares, underwriting commission, interest on debentures, etc., are to be charged fully to postincorporation period.
Preliminary expenses written off are debited to ____________ period.
You are required to calculate the time ratio for the pre- and post-incorporation periods from the following particulars:(a). Date of incorporation: 1st June 1999.(b). Period of financial Accounts: April 1999 to March 2000 (c). Total wages ₹4,800 (d). Number of workers: Pre-incorporation
Enumerate the expenses, which are exclusively charged to post-incorporation period?
Audit fees should be divided between pre- and post-incorporation periods in: (a). Time ratio (b). Time ratio or posted only in post-incorporation period (c). Sales ratio (d). Pre-incorporation period
True and False. Pre-incorporation loss may be treated as deferred revenue expenditure and written off out of the profits of the company over a period of time.
Salary is divided in ____________ ratio while calculating pre-incorporation profit.
Give some examples of expenses, which are to be divided on ‘Time basis’ while computing profit prior to incorporation.
The salary paid to Manager, for a period before acquisition of business, should be: (a). Divided in time ratio (b). Posted in pre-incorporation period (c). Posted in post-incorporation period (d). Divided in adjusted time ratio
True and False. Advertisement expenses to be paid on monthly basis are to be apportioned on time ratio to the pre- and post-incorporation periods.
The profits acquired from the date of business purchase till the date of incorporation is called ____________.
Write a note on Pre-incorporation Profit.
Adjusted time ratio is used for: (a). Salaries (b). Interest paid to vendors (c). Directors’ fees (d). None of the above
Capital reserve account has to be shown in the liabilities side of the balance sheet under the heading ____________.
Ramki Ltd. was formed on 1st May 2008 to purchase the business of Mr. Ram, with effect from 1st January 2008. While preparing the final accounts on 31th December 2008, it was assumed that:(a). The sales for the year were ₹10,00,000. (b). Sales in the second half of the year were double to
How do you calculate Adjusted Time Ratio and when?
Purchase ratio is used for:(a). Discount received (b). Discount allowed (c). Wages (d). None of the above.
Loss prior to incorporation is to be shown in the assets side of the balance sheet under the heading _________.
RMK Ltd. was registered as company on 1st July 2007 to take over the running business of Kumar, with effect from 1st April 2007. The Profit & Loss A/c account was finalised on 31st March 2008. Bad debts debited to Profit & Loss A/c was ₹4,000 of which ₹1,000 to sales effected after
How do you calculate Time Ratio and Sales Ratio?
CMS Ltd. was incorporated on 1st July 1999 to take over the running business of Selvam, with effect from 1st April 1999. The profit and loss account was prepared on 31st March 2000. Bad debts debited to profit and loss account was ₹1,250, of which ₹350 related to sales effected after 1th July
How do you treat Interest on Purchase Consideration and Salary Paid to Partners, while ascertaining Profit Prior to Incorporation?
Z Ltd. was formed on 1st May 2000 and it obtained the certificate of commencement of business on 1st June 2000. It acquired a running business, with effect from 1st January 2000. Books were closed on 30th September 2000, when it was found that the net profit was ₹2,00,000 with a gross profit of
Own debenture account (at the time of purchase of own debentures) is always to be debited with:(a). The fair value (b). The cum-interest price (c). The ex-interest price (d). None of the above
When debenture are to be repaid _______, an equal amount is transferred to debenture redemption reserve account.
True or False. Own debentures can be cancelled only on dates when interest becomes payable on debentures.
True or False. Interest on debentures cannot be paid if the company does not earn profit.
In the absence of an agreement, which of the following is taken over by the purchasing company, at the time of acquisition of a business: (a). Share Capital (b). External Liabilities (c). Reserve Fund (d). Undistributed Profits.
True and False. Miscellaneous expenses are also taken over by the purchasing company, in the absence of a contract to the contrary.
____________ assets are not taken over by the purchasing company.
Anita Co., Ltd. was formed for taking over the business of Mr. Ganapathi. The purchase consideration was ₹1,92,000 which will be settled by issue of 960 shares of ₹100 each at a discount of 5% and balance in cash. Assets taken over were ₹2,10,000 and Liabilities taken over were ₹30,000.
How do you determine capital reserve?
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