Q: A decrease in the provision for doubtful debts would result in ______________.

Provision for Doubtful Debts means the expense reported on the income statement or profit and loss A/c. If Provision for Doubtful Debts is the current period expense associated with the losses from normal credit sales, it will appear as an operating expense usually as part of Selling, General and Administrative Expenses (SG&A). If a provision for doubtful debts would decrease then debit balance of profit and loss A/c would decrease and ultimately net profit would increase.

Question 1

Opening Stock Rs. 1,00,000, Sales Rs. 5,00,000, Gross profit @ 25% on cost, Purchase Rs. 6,00,000. Closing Stock is ___________.

Accepted Answer

Closing stock = (Opening stock + purchases + gross profit) - sales                        = (1,00,000 + 6,00,000 + 1,00,000)- 5,00,000                       = 8,20,000 - 5,00,000                      = 3,00,000Working note:- Calculation of gross profit (Gross profit is 25% of cost because we don't have cost we will calculate it with the help of sales)If cost is 100 gross profit is 25% of cost then sale will be Gross profit + cost Hence 100 +25 = 125 therefore, gross profit = 25/125 x 5,00,000                    = 1,00,000

Question 2

The credit balance in the Profit & Loss Account is ___________.

Accepted Answer

A profit and loss account records all the incomes and expenses that have taken place in the year. All the expenses are recorded on the debit side whereas all the incomes are recorded on the credit side. When the credit side is more than the debit side it denotes profit. Hence, Credit balance of Profit and loss account is profit.

Question 3

The debit balance in the Profit & Loss Account is ___________.

Accepted Answer

The debit balance of a profit and loss account denoted loss. Debit balance of the profit and loss account shows that the expenses were more than the incomes.

Question 4

Rent, rates and taxes is an example of direct expenses.

Accepted Answer

Expenses are classified in to direct expenses and indirect expenses.Expenses which are directly connected with the manufacturing or trading activity of the business are called direct expenses. Examples are direct material, direct wages, freight inward etc.Expenses which are not directly connected with the manufacturing or trading activity are called as indirect expenses. These are essential expenses but does not have any direct connect with trading of the business. Examples are Rent, Rates & Taxes, Salaries.

Question 5

If sales are $Rs. 6,00,000$; Gross profit is $1/3$ on cost; Purchases are $Rs. 4,90,000$ and the Closing stock is $Rs. 90,000$, then the opening stock will be_________.

Accepted Answer

Solution can be represented as:Sales= Cost of Goods Sold +Gross ProfitAssuming COGS is Rs.100Gross Profit will be 1/3 of Rs.100 i.e.33.33Therefore Sales =Rs.100+Rs.33.33 i.e. Rs.133.33If we calculate the Gross Profit on Sales that becomes = GP/Sales*100                                                                                           =33.33/133.33*100i.e. Gross  Profit will be 25% on salesSales= Rs.600000Gross Profit= 25% of Rs.600000 i.e. Rs.150000Cost of Goods Sold= Sales-Gross Profit                                = Rs.600000-Rs.150000                                = Rs.450000Now, to find out the opening stock, below equation help us:Cost of Goods Sold= Op Stock+Purchases-Closing Stock450000=Op Stock+490000-Rs.90000450000=Op Stock+ Rs.400000Op Stock = Rs.450000-Rs.400000Opening Stock =Rs.50000.

Question 6

Which of the following accounts have only credit balance?

Accepted Answer

An accounts assigned normal balance is on the side where increases go because the increases in any account are usually greater than the decreases. Therefore, asset, expense, and owner's drawing accounts normally have debit balances. Liabilities, revenue, and owner's capital accounts normally have credit balances.

Question 7

Journal entry for transfer of closing stock is -       Closing Stock A/c   Dr.                 To Trading A/c

Accepted Answer

The given journal entry to transfer closing stock is correct as the closing stock account which is to be debited is done correctly and trading account has been credit correctly.Closing stock being asset of the firm is debited because asset are to be debited during a journal entry. Moreover, closing stock is related to sale and any item related to sale is usually credited in trading account and thus trading account has been credited correctly.

Question 8

Opening Stock of Raw-Materials Rs. 1,00,000. Closing stock of Materials Rs. 2,00,000, PurchasesRs. 3,00,000, Carriage Inward Rs.10,000, Freight outward Rs. 5,000. Purchase Return Rs. 20,000, Opening work-in progress Rs. 25,000, Closing Work-in-progress Rs. 10,000. Manufacturing overheads Rs. 6,000, Selling overheads Rs. 10,000, Sale of By-products Rs.1,000, Royalty based on production Rs. 5,000. Opening stock of finished Goods Rs. 1,00,000, Closing Stock of Finished Goods Rs. 2,00,000. The manufacturing cost of finished goods sold is ______________.

Accepted Answer

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Question 9

A decrease in the provision for doubtful debts would result in ______________.

Accepted Answer

Provision for Doubtful Debts means the expense&#10;reported on the income statement or profit and loss&#10;A/c. If Provision for&#10;Doubtful Debts is the&#10;current period expense associated with the losses from normal credit sales, it&#10;will appear as an operating expense usually as part of Selling, General and&#10;Administrative Expenses (SG&A). If&#10;a provision for doubtful debts would decrease then debit balance of profit and&#10;loss A/c would decrease and ultimately net profit would increase.

Question 10

Raw-material consumed is equal to __________________.

Accepted Answer

The calculation of the cost of goods sold for a manufacturing company is:Beginning Inventory of Finished Goods.Add: Cost of Goods Manufactured.Equals: Finished Goods Available for Sale.Subtract: Ending Inventory of Finished Goods.Equals: Cost of Goods Sold.

Opening Stock Rs. 1,00,000, Sales Rs. 5,00,000, Gross profit @ 25% on cost, Purchase Rs. 6,00,000. Closing Stock is ___________.

The credit balance in the Profit & Loss Account is ___________.

The debit balance in the Profit & Loss Account is ___________.

Rent, rates and taxes is an example of direct expenses.

If sales are Rs.6,00,000; Gross profit is 1/3 on cost; Purchases are Rs.4,90,000 and the Closing stock is Rs.90,000, then the opening stock will be_________.

Which of the following accounts have only credit balance?

Journal entry for transfer of closing stock is - Closing Stock A/c Dr. To Trading A/c

A decrease in the provision for doubtful debts would result in ______________.

Raw-material consumed is equal to __________________.

If sales are $R s . 6, 00, 000$ ; Gross profit is $1 / 3$ on cost; Purchases are $R s . 4, 90, 000$ and the Closing stock is $R s . 90, 000$ , then the opening stock will be_________.

Journal entry for transfer of closing stock is -
Closing Stock A/c Dr.
To Trading A/c