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AccountancyClass 11CBSE

What is the order of Permanence?

Assets which are to be used permanently in the business and are not meant to be sold are written first. Assets, which are most liquid such as cash in hand are written last.Order of PermanenceLiabilitiesAssetsCapitl:Opening Balance Add: Net Profit Less: DrawingsLoansBank OverdraftSundry CreditorsBills PayableGoodwillLand and BuildingsPlant and Ma

AccountancyClass 11CBSE

What is the Order of Liquidity?

Liquidity means the facility with which the assets may be converted into cash; those assets which are most difficult to convert into cash are written last. Liabilities are to be shown first as short-term liabilities and then as long-term liabilities and last of all capital.In the order of liquidityLiabilitiesAssetsBills PayableSundry CreditorsBank OverdraftLoansCapitalOpening B

AccountancyClass 11CBSE

What do you mean by Grouping and Marshalling?

The assets and liabilities should be shwn in certain order in the Balance Sheet. Therefore, they should be srranged in certain groups and in particular order. This is called ‘Grouping’ and ‘Marshelling’ of the Balance Sheet.Grouping:- Means putting items of a similar nature under a common heading.Marshelling:- The arrangement of assets and liabilities in a particular order in the Balance Sheet

AccountancyClass 11CBSE

What are the differences Between Balance Sheet and Trial Balance?

Basis of DifferenceBalance SheetTrial BalancePurposeThe purpose is to portray the financial position The purpose is to establish the arithmetic accuracy of the books of account.Information about ProfitsIt provides information as to the profitability and financial position of the firmNo such information is pos

AccountancyClass 11CBSE

What are the characteristics of Balance Sheet?

The characteristics of Balance Sheet are:It is prepred at a particular date, rather on the close of the day and not for a period. It is true only on that date and not later.The balance Sheet is prepared after the preparation of the Profit and Loss Account.The balance Sheet is not an account but only a statement of assets and liabilities.The Balance Sheet shows the financial position of a business as a going concernThe total of the asset side mus

AccountancyClass 11CBSE

What is the need of preparing the balance sheet?

A balance Sheet is prepared with a view to measure the true financial position of a business at a particular point of time. It is a device to show the financial position of a business in a systematic and standard form.

AccountancyClass 11CBSE

What is Balancesheet?

”A statement which sets out the assets and liabilities of a firm ar an institution as at a certain date”.OR“A balancesheet is a Screen picture of the financial position of a going business at a certain moment.”

AccountancyClass 11CBSE

Compute Operating Profit and Net Profit from the following. Gross Profit / Carriage Outward / Advertising / Salaries / Renat and Taxes / Lighting / Insurance Gharges / Bad Debts / Audit Fee | | Interest on Loan / Interest on Investment / Printing and Stationary / Loss on Sale of Furniture / General Expenses / Donation / Rent Received / Loss by Fire / Gain on Sale of Machine |

Gross ProfitLess: Selling and Distribution Expenses Carriage Outwards Advertising Bad DebtsLess: Office and Administrative Expenses: Salaries Rent and Taxes Lighting Insurance Charges Audit Fees Printing and Stationery General ExpensesOperating ProfitAdd: Non-Operating Incomes: Interest on Investments Rent Received<br /

AccountancyClass 11CBSE

What is Net-Profit?

Net-Profit means the excess of revenue (whether operating Expenses or non-operating ) over expenses and losses (Whether operating or non-operating). It is arrived by deducting operating espenses from operating profit as well as non-operating profit.

AccountancyClass 11CBSE

What is Operating Profit?

Operating Profit is the excess of gross profit over operating expenses. Gross profit is the excess of net sales revenue over cost of goods sold. Operating expenses includes office administrative expenses, selling and distribution expenses, cash discount allowed, interest on bill payable etc..Operating Profit = Net Sales – Operating Cost = Net sales – (cost of Goods Sold + Administration and OfficeExpenses + Selling and Distribution Expenses)OROperating Profi

AccountancyClass 11CBSE

The following is the Trial balance of C.Wanchoo on 31st March, 2007. Pass the closing entries and prepared the Trading and Profit and Loss Accounts for the year ending 31st March, 2007. Trial Balance As at 31st March, 2007 Particulars | Dr. Amount | Cr.Amount Capital A/c / Stock A/c (1st April 2006) / Cash at Bank / Cash in Hand / Machinery A/c / Furniture and fittings A/c / Purchases A/c / Wages A/c / Fuel and Power A/c / Factory Lighting A/c / Salaries A/c / Discount allowed A/c / Discount Received A/c / Advertising A/c / Sundry Office expenses A/c / Sales A/c / Sums owing by Customers (Sundry Debtors) / Sundry Creditprs (sum owing to Suppliers) | / 2,000 / 1,000 / 440 / 6,000 / 1,360 / 15,000 / 10,000 / 3,000 / 200 / 7,000 / 500 / / 5,000 / 4,000 / / 8,500 | 10,000 / / / / / / / / / / / / 300 / / / 50,000 / / 3,700 | 64,000 | 64,000 Value of Closing Stock as at 31st March, 2007 was Rs.2,700

Closing EntriesDate ParticularsL.FDr. AmtCr.Amt2007Mar.31Trading A/c Dr. To Stock A/c To Purchase A/c To Wages A/c To Fuel and Power A/c To Factory lighting A/c(Being the account in the Trial Balance which have to be transferred to the Trading A/c, Debit side)</

AccountancyClass 11CBSE

What is abnormal Loss?

A loss in business that is so severe that it threatens the viability of the enterprise Abnormal Losses such as loss by fire not covered by insurance, loss on sale of fixed assets, loss by theft, cash defalcation, etc., may occur during that accounting period.

AccountancyClass 11CBSE

What are the Selling and Distribution Expenses?

Following items comes under Selling and Distribution Expenses:Salesmen’s salaries and commissionCommission of agentsAdvertisingWarehousing expensesPacking expensesFrigght and carriage expensesExport dutiesSales tax to the extent it cannot be recovered from the customersMaintenance of vechicals fo distribution of goods and their running expensesInsurance of finioshed goods stock and goods in transit</l

AccountancyClass 11CBSE

Whar are the Administration and Office Management Expenses?

The Administration and Office Management Expenses includes:Establiishment expenses or charges.Office Salaries.Office rent and rates.LightingPrinting and stationeryPostage and telephone charges.Legal expensesAudit feeGeneral or Trade expenses.

AccountancyClass 11CBSE

Describe briefly the need of Profit and Loss Account.

Need of Profit and Loss Account To Ascertain Net profit or Net Loss: The Profit and Loss Account provides information about the net profit or net loss earned or suffered by the business during the accounting period.Comparison with the Previous Year’s Profit: The profit amount ascertained by the Profit and Loss Account for the acounting period can be compared with that of the previous year’s profit. It helps in ascertaining whether the bus

AccountancyClass 11CBSE

Create a list of debit and credit items of P&amp;L Account.

PROFIT AD LOSS ACCOUNTFor the year ending on….Dr. Cr.ParticularsAmountParticular AmountTo Gross Loss Trf from Trading A/cTo salariesTo Rent and TaxesTo Stationary and PrintingTo Postage and TelegramsTo Audit FeesTo Legal ChargesTo Telephone ExpensesTo

AccountancyClass 11CBSE

What are the features of P&amp;L Account?

Features of P&L Account.It is the second stage in the preparation of the final accounts.It relates to a particular accounting period and is prepared at the end of that period.Accural basis of accounting is followed in the preparation of this account.This account is credited with the gross profit and income from other sources and debited with indirect expenses and losses.The balance of this account is the net profit or net loss.The c

AccountancyClass 11CBSE

What do you mean by Profit and loss Account?

A Profit and Loss Account is Prepared to calculate the net profit or net loss of the business for a given accounting period. “ A Profit and Loss Account is an account into which all gains and losses are collected in order to ascertain the excess of gains over the losses or vice versa”

AccountancyClass 11CBSE

Opening Stock Rs.15,000, sales Rs.48,000, Carriage Inward Rs.3,000, Sales Return Rs.3,000, Gross Profit Rs.18,000, Purchases Rs.30,000, Purchases Returns Rs.2,700. Calculate closing Stock and the cost of goods sold.

Net Sales = Sales - Sales Returns= Rs.48,000 – Rs.3,000 = Rs.45,000Cost of Goods sold = Net Sales - Gross Profit= Rs.45,000 – Rs.18,000 = Rs.27,000Cost of Goods sold = Opening Stock + Purchases – Purchases Returns + CarriageInward – Closing StockRs.27,000 = Rs.15,000 + Rs.30,000 – Rs.2,700 + Rs.3,000 – Closing StockClosing Stock = Rs.45,000 – Rs. 27,000 = 18,300

AccountancyClass 11CBSE

Preparing A Trading Account for the year ending March 31, 2007 From the following balance as at March 31,2007: Stock 10,000 Purchases 1,00,000 Wages 5,000 Carriage Inwards 1,000 Sales (inclusive of sales tax) 1,70,000 Return Inwards 5,000 Returns Outward 8,000 Sales Tax Paid 15,000 Freight 500 Octroi Duty 2,500 Closing Stock as on March 31,2007 was valued at Rs.20,000

TRADING ACCOUNTFor year ending March 31,2007Dr. Cr.ParticularsParticularsAmountParticularsParticularsAmountTo Opening StockTo Purchase Less Return OutwardTo wagesTo Carriage InwardTo FreightTo Octroi DutyTo

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