Explore topic-wise InterviewSolutions in Current Affairs.

Correct answer is: (D) Debit P & L Appropriation A/c and Credit Partner’s Capital A/c.

Correct answer is: (C) (ii), (i), (iii), (iv)

A independent clause is a group of words that forms a unit within sentence but is incomplete independently.

Correct answer is: (D) ₹30,000

(b) Rs. 9 Per share 

(A) Purchase of Fixed Assets 

(C) Interest

Payment of credit balance of partner’s capital accounts at the time of dissolve of a firm is made to Partner

Correct option is: (C) Debit

Ideal Liquidity Ratio is 1 : 1

(d) None of these

(C) Old Partner's Capital Account

Correct option is: (C) Realisation A/C

Correct option is: (A) Realisation expenses

Interpretation of financial statements includes Criticism and analysis, Comparison and trend study and Drawing conclusion.    

Equity Share holders are Owners of the Company

(b) Partners capital account debit

In the event of death of a partner, the accumulated profits and losses are shared by the partners in their Old profit Sharing Ratio

After the death of a partner, amount payable is received by Executor

(b) Fully Paid

Correct option is: (B) Discount

Correct option is: (B) Capital Loss

(B) Rs 8,550

Realization Account is Opened for Disposing Off All the Assets of the Firm and Making Payment to All the Creditors. Realization Account is a Nominal Account and the Object of such an Account is to find out the Profit or Loss on Realization of Assets and Payment of Liabilities. 

Share of Goodwill Brought in Cash by the New Partner is called Premium.

Premium on issue of debenture is Capital receipt

Correct option is: (A) Interest on capital

Correct answer is (c) As-6

correct answer is (b) Principle.

Companies must prepare financial statement at least yearly due to the Accounting Period assumption.

‘Verifiability and objectivity principle’:-

This principle states that the accounting data provided in the books of accounts should be verifiable and dependable.

The Consistency Principle requires that the same accounting method should be used from one accounting period to the next.

‘Going Concern Assumption’:-

According to this concept, business will continue its operation long enough to allocate the cost of fixed assets over their useful lives against the income.

Depreciation

In accounting parlance, depreciation is referred to as the reduction in the cost of a fixed asset in a sequential order due to wear and tear till the asset becomes obsolete.

It refers to the period within which the asset can be considered to be productive. Beyond its useful life, the fixed asset is no longer considered to be cost-effective for continuing the operation of the asset.

Causes of Depreciation

• By Constant Use- When the fixed assets like a motor vehicle, machinery are used for a good amount of time, it manages to wear out

• By Expiry of Time- Due to natural calamities or elements of nature land may start to erode. Similarly, the machinery particles might start rusting

• Outdated Technology- The machine and the technology used today might be outdated and might have to be discarded

Importance of Depreciation

• For Ascertaining the True Profit or Loss- The true profit of a company can be determined only when all the cost acquired is used to earn revenues is debited to the profit and loss account.

• Showing Correct Financial Status- When the depreciation is not imposed, the asset is recorded in the balance sheet at an amount which is excess of their actual value. In this case, the balance sheet does not present the actual financial status of a company.

• To avoid excess payment of Income Tax- Here, if the depreciation is not subtracted to profit and loss account, the net profit shown will be surplus to the actual profit. Therefore, the company will have to pay extra income tax.

Reserve

Reserves refer to the amount that is set aside out of profits and other surpluses to meet future uncertainties. In other words, a reserve is meant for meeting any sort of an unknown liability or losses in the future.

Types of Reserve

• Revenue Reserve- The share of the profits which is not paid to the owner or shareholders, and is kept reserved for operations or other demands, is known as a revenue reserve

• Capital Reserve- Capital reserve is the type of reserve that is created from capital profits. The purpose for which a capital reserve is created is for preparing the company for sudden events like inflation, business expansion, funds for a new project.

Provision

The amount retained by way of providing for any unknown liability of which the amount cannot be detained with substantial accuracy.

Features of Provision

• Provision is arranged to meet a known liability

• The liability is known but the amount of these liabilities cannot be ascertained with reasonable accuracy

• Provision is a charge against profit and as such reduces the profits of the year in which it is created

There are 2 main methods of filing, which are Loose Leaf method and secondly, the Collective method.

1.    Loose-Leaf method

Documents are filed individually in a normal file, holes are punched in the documents and then they are filed.

Advantages

•    Documents can be filed and de-filed very easily.
•    Does not occupy too much of space.
•    Easy to sub-divide by just using simple dividers.

Disadvantages

•    There are high chances of the documents being torn or damaged.
•    Retrieving and searching for documents is very time consuming.
•    Documents can be misplaced very easily.

2. Collective Method

There are 2 files, one an inner file and the second one, an outer file.

Advantages

•    Less chance of misfiling as each main category is marked.
•    Similarly, locating any file becomes easy as each category and sub-category is marked.

Disadvantages

•    Takes up more space as the filing method is a 2 step process.
•    Working with the same method in an unknown workplace is very difficult.
•    Also the filing process becomes time-consuming and tedious, and hence may decrease efficiency and cause inconvenience.

Sources of Business Finance as per the basis of period

• Long-term Funds

  • Equity shares

  • Debentures

  • Retained Earnings

  • Preference Shares

  • Loan from Financial Institutions

  • Loan from Banks

• Medium-term Funds

  • Loan from Banks

  • Public Deposits

  • Loan from Financial Institutions

  • Lease Financing

• Short-term Funds

  • Factoring

  • Trade Credit

  • Banks

  • Commercial Paper

Sources of Business Finance on the Basis of Ownership

• Owner’s Funds

  • Equity Shares

  • Retained Earnings

• Borrowed Funds

  • Debentures

  • Loans from Banks

  • Loans from Financial Institutions

  • Public Deposits

  • Lease Financing

  • Commercial Papers

Sources of Business Finance on the Basis of Sources of Generation

• Internal Sources

  • Equity Shares

  • Retained Earnings

• External Sources

  • Financial Institutions

  • Loan from Banks

  • Preferences Shares

  • Public Deposits

  • Debentures

  • Lease Financing

  • Commercial Papers

  • Trade Credits

  • Factoring

Two different firms in the same industry might decide to use different marketing strategies because marketing strategy is an important tool for conveying its branding and advertising messages to current and prospective customers . Creating unique strategies can have benefits to the firm and consumer .

There are four main goals in cryptography: confidentiality, integrity, authentication, and non-repudiation Read the section on the goals of cryptography to understand each concept.

The concept of insurance is risk distribution among a group of people. Hence, cooperation becomes the basic principle of insurance.

To ensure the proper functioning of an insurance contract, the insurer and the insured have to uphold the 7 principles of Insurances mentioned below:

• Utmost Good Faith
• Proximate Cause
• Insurable Interest
• Indemnity
• Subrogation
• Contribution
• Loss Minimization

Balance Sheet is a Statement

Product Concept

As a result of emphasis on production capacity during the earlier days, the position of supply increased over period of time. Mere availability and low price of the product could not ensure increased sale and as such the survival and growth of the firm. Thus, with the increase in the supply of the products, customers started looking for products which were superior in quality, performance and features. Therefore, the emphasis of the firms shifted from quantity of production to quality of products. The focus of business activity changed to bringing continuous improvement in the quality, incorporating new features etc. Thus, product improvement became the key to profit maximisation of a firm, under the concept of product orientation.

The Societal Marketing Concept 

The societal marketing concept holds that the task of any organisation is to identify the needs and wants of the target market and deliver the desired satisfaction in an effective and efficient manner so that the long-term well-being of the consumers and the society is taken care of. Thus, the societal marketing concept is the extension of the marketing concept as supplemented by the concern for the long-term welfare of the society. Apart from the customer satisfaction, it pays attention to the social, ethical and ecological aspects of marketing. There are large number of such issues that need to be attended.

The term financial statement include Profit and Loss Account and Balance Sheet

Debentureholders are Creditor of Company

(b) Going concern

Correct answer is (a) Accounting concept