Accounting Questions & Answers - Free Online Practice

1,186.

When the invoice of a customer is overcast, the supplier will send to him a

Debit note

Cheque

Credit note

Payment voucher

Correct answer is C

A credit note is a letter sent by the supplier to the customer notifying the customer that he or she has been credited a certain amount due to an error in the original invoice or other reasons.

1,187.

Timo and Chris are computer engineers who went into partnership as Teachi and Co. Timo brought cash of N12,000 furniture worth of N18,000 and vehicle worth of 70,000. Chris equally brought in cash of 10,000 his building valued at 105,000 and personal computers worth N35,000.

What is the profit sharing ratio if it’s based on capital contribution by Teechi and Co?

2 : 3

3 : 2

6 : 5

5 : 6

View answer & explanation

Correct answer is A

Divide the net assets contributed by each partner by the total partnership's assets. This is the accountant ratio for income sharing. For instance, if the total assets of a company are $100,000 and the contribution of one partner is $10,000, the accounting ratio for this partner would be 0.1.

Timo = 100,000
chris = 150,000
Total = 250,000

Timo =100,000 / 250,000 = 0.4
chris = 150,000 / 250,000 = 0.6

This can be interpreted as 2:3 ratio

1,188.

The accounting concept that allows the cost of kitchen cutlery to be expensed, though it can be used for more than one year is

Materiality

Accrual

Going concern

Business entity

View answer & explanation

Correct answer is A

Materiality states that only items of material values are recorded e.g. the cost of a stapler should not be capitalized but expensed just as kitchen cutlery.

1,189.

Prime cost is one of the following

Expenses which can be identified with an allocated to cost centers

Aggregate direct material cost, direct labour cost and variable direct expenses

The cost taken into account in the production process whether direct or indirect

The cost of commodities supply to an undertaking

View answer & explanation

Correct answer is B

Prime cost is the direct cost of a commodity in terms of the materials and labour involved in its production, excluding fixed costs.

1,190.

The major distinguishing element between the final account of a partnership and that of a sole trader is the

Drawing account

Capital account

Creditor account

Appropriation account

View answer & explanation

Correct answer is B

The Major Difference Of The Financial Statement between a Sole Proprietorship And Partnership is More than one capital account. The number of capital accounts depends on the number of partners in the Partnership concern. Profit & loss is distributed to the partners' capital account according to the agreed ratio