Bank reconciliation is a statement prepared to reconcile__________?

A. When a discounted bill is honoured by the drawee on the due date
B. When a bill is sent to the bank for collection
C. When a bill is renewed at the request of the drawee
D. When a debtor accepts a bill drawn by the drawer

A. When a discounted bill is honoured by the drawee on the due date, A. no journal entry
is passed in the books of the drawer. The entry is passed at the time of discounting of the bill itself and no entry is required if the discounted bill is honoured on due date. Hence, A. is the correct answer. The other alternatives are incorrect because, when a bill is sent to the bank for collection B. a journal entry debiting bills sent to bank for collection and crediting Bills Receivable is passed. When a bill is renewed at the request of the drawee C. a journal entry is passed canceling the old bill and raising a new bill with interest. When a debtor accepts a bill drawn by the drawer D. when a debtor is converted to bills receivable and debtors balance is reduced and Bills Receivable account is increased to extent of the amount passing a journal entry to that effect. Thus, A. is the correct answer

A. On the assets side under current assets
B. On the assets side under loans and advances
C. On the liabilities side under current liabilities
D. On the liabilities side under provisions

The amount payable to a person as consideration for the use of rights vested in him is

A. Dividend
B. Royalty
C. Purchase consideration
D. Installment

B. The amount paid to the landlord for use of rights vested in him is the royalty. Dividend is the amount paid for the investment made in an enterprise and is not the correct answer. Purchase consideration is the price paid for receiving a title of a property moveable and immoveable and is not the correct answer. Installment is the payment of amount in stages and is not the amount paid for using the rights vested in the landlord and is not the correct answer.

Which of the following statements is correct about Trial Balance?

A. The Trial Balance is prepared after preparing the Profit and Loss Account
B. The Trial Balance shows only balances of Assets and Liabilities
C. The Trial Balance shows only nominal account balances
D. The Trial Balance has no statutory importance from the point of view of law

D. A Trial Balance is a summary of all General Ledger Balances outstanding as on a particular date. All the debit balances from the ledger are shown on one side and all the credit balances are shown on the other side. A Trial Balance is prepared before Final Accounts are prepared. From the point of view of law, a Trial Balance has no statutory importance.

Which of the following is a capital expenditure?

A. Repair of plant and machinery
B. Salary paid to workers
C. Cost of stand by equipment
D. Annual whitewash of the office building

A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?

A. 20,000 Loss
B. 20,000 Profit
C. 10,000 Loss
D. 10,000 Profit