Account M.C.Q (1 Marks)

Loss of goods by fire, it is just possible that some goods may catch fire and result in loss to the business. This is definitely loss, so "Loss of goods by fire" account will be debited. Such goods have been destroyed, not sold, so their valuation will be made at cost price. So, purchases account will be credited. The journal entry for this transaction will be made as under:
Loss of goods by fire A/c Dr.
To Purchases A/c

Operating profit is calculated by deducting the operating expenses from the operating income. Operating expenses are those which are directly related to the core business activity.
Operating profit indicates the earning from the core business operations. Its an indicator of how well a business operations are being managed.

A stakeholder is either an individual, group or organization who is impacted by the outcome of a project. They have an interest in the success of the project, and can be within or outside the organization that is sponsoring the project. Stakeholders can have a positive or negative influence on the project.
Financial statements are reports prepared by a company’s management to present the financial performance and position at a point in time.
A general-purpose set of financial statements usually includes a balance sheet, income statements, statement of owner’s equity, and statement of cash flows. These statements are prepared to give users outside of the company, like investors and creditors, more information about the company’s financial positions.
These financial statements are used by stakeholders such as bankers, government, creditors, debtors etc.

Donation received for a specific purpose is to be utilized for the specific activity. This kind of donations are capital receipts and to recorded separatly. It should be kept in a separate account and expense to be reduced from this account only. Balance of this account to be shown as liability in the balance sheet.

Capital expenditure

Closing inventory and total goods available for sale contains the same proportion of high cost and lost cost goods.

Prepaid expenses are those which are not due but already paid. These are considered as part of current assets.
Debtors are various customers to whom the organization has sold goods on credit. This is part of current assets as these are recoverable in next business cycle.

If all the goods are not sold by the Consignee within the accounting period, then the unsold stock is brought into account by the Consignor. As usual, the unsold stock in the hands of the consignee should be valued on cost price or market price whichever is less.

A book is maintained to record transaction, which do not find place in special journals, is known as journal proper or journal residual or general journal.
Purchase of office equipments on credit will not be recorded in any of the special subsidiary books, therefore, it will be recorded in journal proper.

Must be distinguished.

Profit and Loss A/c.

The balance sheet indicates the financial position of a firm on a particular date. It is prepared as a statement showing all the assets and liabilities of the firm.

A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period.

Extraordinary items consisted of gains or losses from events that were unusual and infrequent in nature that was separately classified, presented and disclosed on companies' financial statements.
It includes expenses to deal with a fire, earthquake, or uninsured losses from a flood, the gain or loss from early retirement of debt, and profit on the sale of raw materials.

These accounts types are related to persons. These persons may be natural persons like Raj's account, Rajesh's account, Ramesh's account, Suresh's account, etc. These persons can also be artificial persons like partnership firms, companies, bodies corporate, an association of persons, etc.

Divisible profit is that part of profit which is available with the company for distribution of reserves. Securities premium reserves made out of capital profit hence, are not divisible profit.

Deferred Revenue Expenditure.

The first step in the process of accounting cycle is recording of transactions in journal and ledger. After this process, summarizing takes place.
Summarising involves posting from ledger to prepare a trial balance and then the items of trial balance are posted in profit and loss account from which we get the net profit of the firm.
After that balance sheet of the company is prepared from which we get the details about the assets and liabilities of the business of the firm. So basically summarizing involves trial balnace,profit and loss account and balancesheet.

Deducted

Opening Stock.

Interest on capital account is an appropriation. Appropriation means it is paid only and only if there is profit.
As Interest on capital is appropriation it will be shown in the debit side of profit and loss appropriation account.

Operating profit is calculated by deducting the operating expenses from the operating income. Operating expenses are those which are directly related to the core business activity.
Expense of purely financial nature are not taken in to account while calculating the operating profit.

An international bond is a debt obligation that is issued in a country by a non-domestic entity in its native currency. International bonds are usually corporate bonds.

Where a company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to the capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet.

Provisions are created by debiting the profit and loss account. In the balance sheet, the amount of provision may be shown by the way of deduction from the concerned asset on asset side. For e.g. provision for doubtful debts is shown as deduction from the amount of sundry debtors and provision for depreciation as a deduction from the concerned fixed asset.