Which fund is used to meet unforeseen or urgent expenditure?
Special fund
Contingencies fund
General reserve fund
Consolidated reserve fund
Correct answer is B
Contingency fund is established by the constitution of 1979 to take care of any nation disaster or unforeseen circumstances.
Goodwill can be introduced when
The business suffers high loss
The business is being expanded
The partnership experience super profit
A new member is admitted
Correct answer is D
The circumstances giving rise to the ascertainment of goodwill are:
- admission of a new partner
- change in profit sharing ratio
- death or retirement of a partner
- the business has been purchased
- dissolution of a business
The discount column on the left-hand side of cash book represents a discount
Received from a debtor
Allowed to a creditor
Allowed to a debtor
Received from a creditor
Correct answer is C
The discount on the left hand side is known as discount allowed and it is given by a firm to its customers when they pay their accounts quickly or promptly.
When expenses are paid on behalf of the venture, the accounting entries is to debit
Expenses account and credit bank account
Bank account and credit joint venture account
Joint venture account and credit bank account
Joint venture account and credit expenses account
Correct answer is C
Expenditure paid on bahalf of joint venture
Accountint entries:
Dr: Joint venture account
Cr: Bank account
An advantage of FIFO method of stock valuation is that
It is calculated at the end of the year
Its flow of cost is in sequence with the flow of stock
It is progressive in nature
It serves as a control during inflation
Correct answer is B
One of the advantages of FIFO method is that the stock received first will be issued out first thereby reducing the problem of deterioration or obsolesence and also items are issued in order of receipt therefore, it is realistic.