Higher Financial Accounting
(HFA)
MCQs: Profit prior to incorporation
1. ABC ltd was incorporated on 1st March 2017 and received its certificate of commencement of business on 1st April 2017. The company bought the business of CBA ltd. With effect from 1st November 2016. Sales for the year were RS.3,00,000 out of which sales up to 1st march were RS.1,25,000. The company close it books of account on Oct, 2017. Find out the sales ratio.
A. 7:5
B. 2:5
C. 5:7
D. 5:2
2. Calculate sales ratio from the following information :
Sales for the year RS.6,00,000 of which RS.1,20,000 were for first six months. Date of acquisition:
1st April 2010, date of incorporation : 1st July 2010, year end : 31st march 2011
A. 1:9
B. 1:13
C. 1:4
D. 4:1
3. K ltd. Was incorporated on 1st aug, 2016 to take over running business of MS lal & Co. With effect from 1st april, 2016. Year ended 31st march, 2017. Total sales for the year amounted to RS.32,00,000 out of which sales of pre-incorporation period is 8,00,000. A commission of 0.5% was paid on sales. Find out the commission for pre-incorporation and post-incorporation.
A. RS.4,000 & RS.12,000
B. RS.4,000 & RS.16,000
C. RS.5,333 & RS.10,667
D. None of these
4. Jamun ltd was incorporated on 1st Aug, 2016 to take over running business of rasmnalai & Co. With effect from 1st April 2016 year ended on 31st march 2017 total sales for the year is an amounted to RS.16,00,000 out of which sales of pre-incorporation period is 4,00,000 a commission of 0.5% was paid on sales find out commission for pre-incorporation and post incorporation
A. RS.2000 & RS.6000
B. RS.2000 & RS.8000
C. RS.2667 & RS.5333
D. None of the above
5. C ltd was incorporated on 1st August 2016 to take over running business of M/S deep & Co. With effect from 1st april 2016 year ended 31st march 2017 office rent was paid RS.2800 per month upto 30th september and there after it was paid at RS.3600 per month. Find out the amount of office rent for post incorporation period
A. RS.27,200
B. RS.21,600
C. RS.11.200
D. RS.28,000
6. Maitri ltd was incorporated on 1-5-2016 to take over partnership of X and Y as a going concern from 1-1-2016 profit and loss account for year ended prepared on 31-12-2016. Total sales for the year were RS.12,00,000. It is ascertained that the sales for November and December are one and half times the average of those for the year, while those for February and April are only half the average calculate sale ration,
A. 1:2
B. 1:3
C. 2:5
D. 1:4
7. Director's fees is RS.30,000 time ratio 1:2 sales ratio 1:3.
Compute the amount apportioned in pre incorporation period.
A. RS.10,000
B. RS.7500
C. Nil
D. RS.30,000
8. ABC ltd is incorporated on 01-08-2017 to take over the running business of P & Co. From 01-04-2017. Financial year ended on 31-03-2018. Compute the time ratio.
A. 5:7
B. 7:5
C. 2:1
D. 1:2
9. In case of determining profit between pre-incorporation and post incorporation periods, preliminary expenses written off should be allocated on in
A. Time basis
B. Sales basis
C. Post incorporation period
D. Pre incorporation period
10. Pre-incorporation profit transferred to ...........
A. Capital reserve
B. Capital redemption reserve
C. General reserve
D. None of these
11. Profit earned after incorporation is a
A. Capital profit
B. Revenue profit
C. Both capital profit and Revenue profit
D. None of these
12. Loss prior to incorporation is
A. Credited to goodwill account
B. Credited to capital reserve account
C. Debited to goodwill account
D. Debited to capital reserve account
13. Profits prior to incorporation should be transferred to
A. Profit & Loss A/c
B. Capital Reserve
C. General Reserve
D. None of the above
14. Preliminary expenses written off should be charged to
A. Pre-incorporation profit
B. Post-incorporation Profit
C. Trading A/c
D. None of the above
15. The loss of Pre-incorporation period is debited to...........
A. capital reserve A/c
B. General reserve A/c
C. Good will A/c
D. Profit & loss A/c.
16. For computing Pre-incorporation profits, discount allowed is
A. Treated pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio fo time
D. Allocated in ratio of sales
17. Profit prior to incorporation is an example of :
A. Revenue Reserve
B. Secret Reserve
C. Capital Reserve
D. General Reserve
18. Profit prior to incorporation can be utilized for...........
A. Writing off goodwill
B. Writing off Preliminary Expenses
C. Writing off fixed assets acquired
D. All of the above
19. Who issues the Certificate of incorporation ?
A. Central Government
B. Shares holders
C. Directors
D. Company Register
20. For computing pre-incorporation profits, Salary to vendor is
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocated in ratio of sales
21. For computing pre-incorporation profits, Salary to directors is,
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocated in ratio of sales
22. For computing pre-incorporation profits, Interest on Debenture is
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocation in ratio of sales
23. For computing pre-incorporation profits, fixed expenses are
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocated in ratio of sales
24. For computing pre-incorporation profits, fixed expenses are
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocation in ratio of sales
25. For computing pre-incorporation profits, Insurance is
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocation in ratio sales
26. For computing pre-incorporation profits, Postage
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocation in ratio of sales
27. For computing pre-incorporation profits, Discount Allowed is
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocation in ratio of sales
28. For computing pre-incorporation profits, Sale Commission is
A. Treated as pre incorporation expenditure
B. Treated as post incorporation expenditure
C. Allocated in ratio of time
D. Allocation in ratio of sales
29. For computing pre-incorporation profits, Approximations by Company in
A. Treated as pre-incorporation expenditure
B. Treated as post-incorporation expenditure
C. Allocated in ratio of time
D. Allocation in ratio of sales
30. Profits prior or incorporation are available for
A. Payments of dividend
B. Payment of interest on debentures
C. Payment of cost of fixed ass
D. None of the above
You must be logged in to post a comment.