Accounting Process (CA Foundation Principles of Accounting): Questions 28 - 35 of 68

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Question number: 28

» Accounting Process » Books of Accounts - Capital and Revenue Receipts

Short Answer Question▾

Write in Short

Classify the following into capital or revenue expenditures or as capital or revenue receipts as the case may be. Justify your classification.

  1. Purchase of machinery for Rs. 200000, sales tax on it is 5%, carriage involved is Rs. 20000 and an installation expense is Rs. 10000.

  2. An amount of Rs. 2000 spent on repairs and Rs. 5000 was sent on replacing the worn out parts of a machine.

  3. Rs. 50000 was paid in connection to obtain the trade license to start the business.

  4. Rs. 100000 was received as insurance claim on machine damaged in fire.

Question number: 29

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Essay Question▾

Describe in Detail

What is deferred revenue expenditure? Give example

Explanation

  • In an organization sometimes, there may be a few expenditures, which though might be of revenue in nature, but the benefit derived by the organization from such expenditure would be spread beyond one accounting year. These expenses are called as deferred revenue expenditures.

  • The amount of such expenditures are carried

… (62 more words) …

Question number: 30

» Accounting Process » Books of Accounts - Contingent Assets and Liabilities

Short Answer Question▾

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Do a provision and a contingent liability mean the same thing? Justify your answer.

Question number: 31

» Accounting Process » Books of Accounts - Preparation of Trial Balance

Short Answer Question▾

Write in Short

What is an accounting equation?

Question number: 32

» Accounting Process » Books of Accounts - Preparation of Trial Balance

Essay Question▾

Describe in Detail

What is meant by a compound journal entry?

Explanation

Every transaction that has been identified from the source documents, finds its place in the books of original entry namely the journal. A journal entry is passed in the journal for each and every transaction.

Sometimes a combined journal entry is passed for few transactions in the following cases such

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Question number: 33

» Accounting Process » Books of Accounts - Fundamental Errors

Short Answer Question▾

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What is meant by compensating errors?

Question number: 34

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Essay Question▾

Describe in Detail

Can we state deferred revenue expenditure and prepaid expenses as one and the same. Justify your answer

Explanation

No, we cannot state, deferred revenue expenses and prepaid expenses as one and the same. This is because of the following differences that exist between them:

Distinction between prepaid expenses and deferred revenue expenditure

The basis on which deferred revenue expenditure differs from prepaid expenses

Basis of difference

Deferred revenue

… (100 more words) …

Question number: 35

» Accounting Process » Books of Accounts - Preparation of Trial Balance

Essay Question▾

Describe in Detail

At the end of the accounting period 31st December 2015, Jackson Ltd, had assets of Rs. 16, 00, 000 and liabilities of Rs. 7, 00, 000.

Using the accounting equation, you are required to find out

(a) The owner’s equity as on 31st December 2015 and

(b) The owner’s equity as on 31st December 2016, assuming that the assets had increased by Rs. 2, 60, 000 and the liabilities had decreased by Rs. 50000 during that year

Explanation

(a) Accounting equation is

Assets = Liabilities + owner’s equity.

Rs. 1600000 = Rs. 700000 + owner’s equity

Owner’s equity = Rs. 1600000 – Rs. 700000

Owner’s equity = Rs. 900000

Image show the Accounting equation

Image Show the Accounting Equation

Different way in writing accounting equation.

(b) Let us first determine the change in

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