1. What is Balance Sheet?
Ans. Balance sheet is a statement which shows financial position of all assets and liabilities of the business on a particular date.
2. State the meaning of debit balance of Trading Account?
Ans. Debit balance of trading account indicates gross loss of the business for a particular year.
3. When is partner’s current account opened?
Ans. partner’s capital account is opened if partners adopt fixed capital method.
4. To which account Gross Profit transferred?
Ans. Gross profit is transferred to the credit side of profit & loss account.
5. What is closing stock?
Ans. Stock of goods in hand at the end of the accounting year is called as closing stock.
6. What is Final Accounts?
Ans. Final accounts are accounts which are prepared at the end of the financial year by the partnership firm, consisting of trading a/c, profit & loss a/c and balance sheet
7. How is closing stock valued?
Ans. Closing stock is valued at cost price or market price whichever is less.
8. What do you mean by direct expenses?
Ans. Expenses which are directly related to production of goods and purchases of goods are called as direct expenses.
9. What do you mean by indirect expenses?
Ans. Expenses which are not directly related to production of goods and purchases of goods are called as indirect expenses.
10. What do you mean by accrued income?
Ans. Income which is due for current accounting year but not yet received is known as outstanding income.
11. What is Trial balance?
Ans. A list of debit and credit balances of all ledger accounts is called as Trial balance.
12. What is bad debts?
Ans. The amount which is irrecoverable from debtor is called as bad debts.
13. In the absence of partnership deed, what is profit sharing ratio of the partners?
Ans. In the absence of partnership deed, profit and losses are shared equally by the partners.
14. What do you mean by carriage inward?
Ans. Transport expenses incurred to carry the goods purchased by the firm are called as carriage inward.
15. What do you mean by freight?
Ans. Expenses which are paid to railways or airways for carrying goods are called as freight.
16. What are tangible assets?
Ans. Tangible assets are those which are of permanent nature and can be seen by our eyes.
17. What are intangible assets?
Ans. Intangible assets are those which can not be seen by our eyes but have realisable value.
18. What are contingent liabilities?
Ans. A liability which may or may not occur in future, depending on happening of certain events is called as contingent liabilities.
19. What do you mean by Pre- received incomes?
Ans. Income which is not related to the current accounting year but related to the future period is known as pre-received incomes.
20. What are fictitious assets?
Ans. Fictitious assets are those which are intangible in nature and do not have realisable value.
21. What are outstanding expenses?
Ans. Expenses which are due but not paid in the current accounting year is known as outstanding expenses