A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 84 - 85 of 93

Question 84

Question

MCQ▾

Which of the following is not a component of Total Cost

Choices

Choice (4)

a.

Prime Cost

b.

Work Cost

c.

Operating cost

d.

Cost of production

Answer

c.

Explanation

Components of Total Cost

Costs can be divided under the following heads:

  • Prime Cost: It consists of direct materials, direct wages and other direct. It is also known as basic cost, flat cost, first cost or direct cost.
  • Works Cost: It consists of prime cost plus works or factory overheads. Works cost is also known as factory cost.
  • Cost of Production: It is made up of works cost plus office and administrative overheads.
  • Cost of Goods Sold: It is calculated by adjusting the value of opening and closing goods is added and the value of closing stock of finished goods is deducted from the cost of production to arrive at the figure of cost of goods sold. stock of finished goods in the cost of production. Value of opening stock of finished
  • Cost of Sales: Selling and distribution overheads are added sold to arrive at the figure of cost of sales.

Question 85

Question

MCQ▾

Interim payments to partners of a dissolved partnership are made according to the

Choices

Choice (4)

a.

Assumption that realizable value of the remaining assets is zero

b.

Balances of capital of the partners

c.

Existing profit-sharing ratios of partners

d.

Assumption that remaining unrealized assets would be able to realize their book value

Answer

a.

Explanation

Settlement of Accounts on Dissolution of a partnership firm are as follows:

  • The amount of loss and the deficiency in the capital of a business shall be paid out of profits, next out of Capital, and lastly, if necessary, will be realized from the partners in their profit-sharing ratio.
  • Amount realized from the sale of the assets of the firm (including any sum contributed by the partners) , shall be applied in the following manner and order:
    • Debts outside of the firm will be paid.
    • Out of the remaining amount, the loans advanced by partners will be paid off.
    • Thereafter, the partner՚s capital a/c balance will be returned.
    • If some amount remains, it will be divided among the partners in their profit-sharing ratio.

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