1.What you mean by average due date ?
Average due date is an "Equated or Mean" date on Which a Single payment of a Consolidated Amount can be made in lieu of several payments due on different dates without loss of interest to either persons
The Term average refers to a single figure represents a Group of figures.
2.What are the Uses of Average due date ?
In the settlement of running accounts between traders and Customers
In the settlement of transactions between a principal and Agent
In setting a series of bills of exchange or post dated cheques.
In the calculation of interest on drawings of partners.
3. Define Account Current ?
An account current is a running statement of transaction between two parties for a Given period of time and Includes interest allowed or charged on various items. Account current is an account, Which is opened by traders who buys and sells goods among themselves.
4. What is Red Ink Interest?
In case the due date falls after the date of closing the account, then no interest is to be allowed on it upto the end of period.However, interest from the date of closing to such due date is written in "Red-ink" in the appropriate side of account current.This interest is called Red ink interest. It is treated as negative interest.
If the Due date of a bill is after the date of closing the account, that we charge no interest for that. However, We write the interest from the date of closing to the Due date in Red ink in the Relevant side of the account current. This interest is known as red ink interest thus, we always treat red ink interest as negative interest.
5. Write the Methods of Calculation in Account Current.
- Product Method
- Interest Table method
- Daily balance method / periodical balance method
- Backward/Epoque Method
6.Define Branch Accounts
According to the section 29 of the companies act 1956, "Branch is an Establishment which carries on either the same activity or similar activity as that of Head office.
7. What is Partnership deed.
The document or the instrument containing the agreement between partners is known as partnership deed. It contains the Name of the Firm and Nature of the business, name and addresses of rhe Partners , The Ratio of sharing profits and Losses , Whether capital are to be fixed or Fluctuating , The Amount of Salary to the Partner , Rate of interest on advances , Admission of New partner and Explusion of the existing Ones.
8. Write the Types of Branches
Branches > Inland and Foreign
Inland > dependent and Independent
Dependent > Debtor system | Stock and Debtor system | Final account system | Wholesale branch system
9. Define debtor system
This system is adopted in case of branches of small size . Under this system, a branch account is opened seperately for each branch in the books of Head office. This account is nominal account in nature.
10. What you Mean by Imprest System ?
In case , Petty expenses paid by the Branch manager out of Petty cash balance must be reimbursed by the Head office and These expenses must be debited to the branch account. however same opening balance and closing balance of petty cash is to be shown on the Debit and Credit side of the Branch account
11. Write a Short note on Dependent Branch
If the Branch Account is Maintained in the Books of Head office which is a Dependent Branch. Branch Account is Maintained by the Head office in their Head office books.
12. What you Mean by Independent Branch ?
If the Branch Account is Maintained in their Own Books of Accounts it is considered as a Independent Branch. The Head office Should not Involve With the Branch decisions.
13. Define Stock and Debtor system.
Analytical method or stock and debtors method for accounting of branch is used for exercising more detailed control over the working of a branch. Under this method several accounts are opened in the books of head office in place of one branch account. By opening detail accounts of several transactions greater supervision can be imposed on the financial activities of branch. Generally, following accounts are prepared for both cash price and invoice price transactions. (A) Branch Stock Account. (either at cost price or invoice price) (B) Branch Debtors Account. (C) Branch Cash Account. (D) Branch Expenses Account. (E) Branch Profit / Loss Account. (F) Abnormal loss Account. (G) Goods sent to Branch Account. Etc.
14. Write a Note on Wholesale branch system.
Under this system, the goods are invoiced at the wholesale price to a retail branch. Opening stock and closing stock of branch will be shown at the wholesale price and unrealized profits in closing stock will be debited as stock reserve to profit and loss account of head office. Similarly, the stock reserve of opening stock will be credited to profit and loss account of head office.
15. What you mean by Epoque method
(Epoque Method): In this method, the numbers of the days are calculated from the opening date of account to the due date of the transaction.
16. Define Final account system.
Under this system, Trading and profit and loss account is prepared to calculate the gross profit or gross loss and net profit or net loss. The opening stock and goods sent to branch is debited in the trading account. The closing stock, sales, goods returned by branch is credited to the trading account.
17. What you understand about Invoice Price ?
Instead of sending the goods at cost price, may send it at a price higher than the cost price. This price is known as Invoice Price or Selling Price. The difference between the cost price and the invoice price of goods is known as loading or the higher price over the cost.
18. Define Departmental Accounting.
Departmental accounting is a system of accounting that maintains a separate book of account for every department or branch of a business enterprise. It is one where accounts are prepared and maintained for different departments of an organization on an individual basis for fairly evaluating their results. These individual books of account are then consolidated together with accounts of the head office for the preparation of financial statements of the business.
19. Write about interdepartmental Transfer.
The goods transferred by one department to another department is called inter-departmental transfers. The rule applies to inter-departmental transfers is: Debit the
Receiver and Credit the Giver.
The department sending the goods is debited and the account of receiving department is credited.
20. Define Partnership.
Section 4 of the Indian Partnership Act defines a partnership as “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all”
21. What do you mean by Admission of a Partner
22. Write a Short note on Goodwill.
23. What are the Five adjustment required when a Admission of a Partner ?
24. What is Sacrificing Ratio
The meaning of sacrifice ratio in accounting can be explained as the proportion in which existing partners surrender their share of profit in favour of newly admitted partners. The share thus sacrificed is usually given to new partners by either some existing partners or all of them.
25. What do you mean by Revaluation Account ?
26. Define Capital Ratio.
Capital Sharing Ratios means the percentages, from time to time, of Capital Contributions of the Members relative to the total Capital Contributions of all Members
27. Write the formula of Calculation of Sacrificing Ratio and Gaining Ratio.
Sacrificing Ratio = Old Ratio - New Ratio
Gaining Ratio = New Ratio - Old Ratio
28. What you mean by Fluctuating and Fixed capital Method
29. Write the Reasons/Causes of Dissolution.
Dissolution by Agreement. ...
Dissolution by Notice. ...
Insolvency of Partners. ...
Commitment to Illegal Business. ...
Death of a Partner. ...
Expiry of Term. ...
Completion of Work or Contract. ...
Resignation of Partner.
30. Write short note about Garner Vs Murray Rule.
31. What is Piecemeal Distribution.
In piecemeal distribution of cash, there are two methods:
1. Proportionate Capital Method: The partners whose capitals are more than the proportionate to other partner's capital should first be refunded so much as to bring down their capitals to proportionate levels.
2. Maximum Loss Method: An alternative method of piecemeal distribution is to calculate the maximum possible loss on every realisation after the outside liabilities and the partner's loan has been paid.
32. Write any Two needs for Preparation of Departmental Accounting
33. What is the Purpose of Average due date.
The average due date is usually used in the following cases: For paying off a lump sum amount against various bills due on different dates. For setting the accounts of transactions between the agent and principle. For calculating the interests on the drawings of two or more partners.36. What you mean by Daily Balance Method ?
This method is also known as Periodic balance Method. Banks usually adopt this method in the case where it is necessary to take out the balance of the account after each transaction.
In this method, we count the number of days written against each transaction from its date or due date to the date of the next transaction. For the last transaction, count the number of days to the end of the period. Every amount is multiplied by the number of days.
37. Write the Features of dependent Branch.
(1) The branch does not maintain its own set of books.But the head office maintain record of all transactions in respect of branch
(2) Goods are received from the head office.However, the outside purchases by branch are not allowed
(3) Goods are often supplied by head office at cost price. But sometimes they are sent at invoice price or loaded price
(4) All expenses of regular nature directly paid by head office through cheques
(5) All petty expenses at branch are paid by the branch manager from the petty cash received in advance from the head office
(6) Usually branch makes sales on cash basis.But in certain cases credit sales may be made with the authorization from the head office
(7) Cash received on account of cash sales and from debtors is duly remitted to head office or d deposited with a local bank in the account of head office
38. What are the Methods can be adopted to Prepare the accounts of dependent branch office books.
Debtors System.
Stock and Debtors System.
Final Account System.
Wholesale Branch System.
39. What you mean by Stock and Debtors system
This method is also adopted to find out the profit or loss made by the branch. This method is generally adopted when the goods are dispatched to the branch at the selling price which the branch is not authorized to vary.
40. What is Branch adjustment account what is its purpose.
This account is used to record the amount of loading added to the cost of the goods sent to the branch. The account is used to ascertain the actual gross profit of the branch.
41.What you Mean by Realisation Account
At the time of dissolution of a firm all the books of account are closed, all assets are sold and all liabilities are paid off. In order to record the sale of assets and discharge of liabilities a nominal account is opened known as realisation account.
42. How do you Allocate the Following expenses in departmental Accounts
- Salaries >> Sales
- Lighting >> meter reading/ Light points / Space occupied.
- Rent and Rates >>> Space / Area Occupied.
- Discount allowed >>> Sales
- Carriage inwards >>> Purchase
- Labour Welfare Expenses >> No of Workers / Wages of Each Department.
- Insurance >>> value of an relevant Asset
- Factory Manager's salary >> Sales
- Advertising >>> Sales
- Premium for loss of Profits insurance >>>
43. What you Mean by Retirement of Partner.
When one or more partners decides to leave the firm due to old age, poor health or any other reason and the remaining partner continues to do the business of the firm, it is known as retirement of partner.
44. What you Mean by Death'of a Partner
Similar to the admission and retirement of a partner, the death of any of the partners of a partnership also results in the reconstitution of a partnership. This is because, with the death of a partner, the old partnership deed comes to an end and is replaced by a newly formed partnership agreement. This new partnership agreement defines the new relationship among the remaining or continuing partners of the firm. The death of a partner also changes the profit sharing ratio, so we need to calculate the new profit sharing ratio among the continuing partners.
45. Write the Note on Insolvency of Partner
Insolvency of partnership implies insolvency of one or more partners of firm(since partnership and partners are same from the legal point of view). Loss arising out of the insolvency of one or more partners shall be borne by remaining solvent partners in their capital ratio.
46. What is Gaining Ratio
‘Gaining Ratio’ is a term that is frequent in the Partnership Accounts. This ratio means the share of profit gained by a partner with some reconstitution of the firm. This gaining ratio is caused by the reconstitution which generally happens due to the exit or death of any existing partner.
