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Royalty Account Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM FINANCIAL ACCOUNT INTERVIEW QUESTIONS ROYALTY ACCOUNT INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Royalty Account Interview Questions & Answers - Learning Mode

Some businesses entities have financial relationships in which one shares the revenues earned through use of an asset owned by the other. Essentially, it is a lessee/lessor relationship, though the terms licensee and licensor are more common. These usage-based payments are called royalties, and they typically consist of a percentage of the revenues brought in by the asset. The accounting details of a royalty agreement, as presented in the contract, dictate how royalties are calculated.

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Royalty Account Interview Questions & Answers - Learning Mode
Try Royalty Account Interview Questions & Answers - Exam Mode
Question: What is short working?

Answer: Short working is that amount by which the minimum rent exceeds actual royalty. in other words, whenever the minimum rent is more than the actual royalty, the difference is called short working or redeemable dead rent. Short working is also called 'royalty suspense' by lessor. Source: CoolInterview.com
Question: Give the journal entry in the books of lessor when royalty is less than the minimum rent for short working recouped and royalty received.

Answer: Bank A/C Dr xxx
Shortworking A/C Dr xxx
To Lessee's A/C xxx Source: CoolInterview.com
Question: What does it to mean to get a royalty check?


Answer: "The revenue decimal, or royalty interest that a mineral owner receives is calculated as a function of the percentage of the toatal drilling unit to which a owner holds the mineral interest,the royalty rate defined in that owner's mineral lease and any tract participation factors applied to the specific tracts.
Source: CoolInterview.com
Question: Give the journal entry in the books of lessor when royalty is less than the minimum rent for the actual royalties.

Answer: Lessee's A/C Dr xxx
To Royalities A/C xxx
To Short working A/C xxx
Source: CoolInterview.com
Question: Who is a tenant?

Answer: Tenant is a person who holds,occupies or possesses land or property by any kind of right or title, especially from a landlord under a lease.Also known as lessee.
Source: CoolInterview.com
Question: Explain the process of recoupment of short working?

Answer: Generally, a royalty agreement contains a provision for carrying forward of short working with a view to adjust in the future. in the subsequent years such short working is adjusted against the surplus royalty. This process of adjustment is called recoupment of short working.
Source: CoolInterview.com
Question: What is franchise?


Answer: A form of business organization in which a firm already has a successful product or service(the franchisor)enters into a continuing contractual relationship with other businesses(franchisees) operatingunder the farnchisor's trade name and usually with the franchisors trade name and usually with the franchisor's guidance,in exchange for a fee. Some of the most popular franchises in the United States include Subway, McDonalds and 7-Eleven.
Source: CoolInterview.com
Question: Give the journal entry in the books of lessee when the royalty is less than minimum rent for minimum rent payable.

Answer: Royalties A/C Dr xxx
Short Workings A/C Dr xxx
To Landlord A/C xxx Source: CoolInterview.com
Question: Give the journal entry in the books of lessor when royalty is less than the minimum rent with maintaining minimum rent account for minimum rent receivable.

Answer: Minimum Rent A/C Dr xxx
To Royalities A/C xxx
To shortworking A/C xxx Source: CoolInterview.com
Question: What is royalty in economics?

Answer: A royalty payment is made to the legal owner of a property,patent, copyrighted work or franchise by those who wish to make use of it for the purpose of generating revenue or other such desirable activities. In most cases, royalties are designed to compensate the owner for the asset's use, and are legally binding.
Source: CoolInterview.com
Question: How is surplus different from short working?

Answer: If the royalty exceeds minimum rent it is known as surplus whereas if the minimum rent exceeds the royalty it is termed as short working. Source: CoolInterview.com
Question: How is strike different form lockout?

Answer: Strike is the outcome of labor force unrest in the work and it is being called by the labor unions. On the other hand, lock out is the right of the owner of the assets fulfilling legal necessities to close down the working site.
Source: CoolInterview.com
Question: What is a lease?

Answer: A contract by which one party conveys land, property, services, etc. to another for a specified time, usually in return for a periodic payment. Source: CoolInterview.com
Question: What is ground rent?

Answer: Sometimes the lessee is to pay an additional fixed rent in addition to the minimum rent which is known as Ground or Surface Rent. Source: CoolInterview.com
Question: What is minimum rent?

Answer: Minimum rent is also known as dead rent, fixed rent, flatrent, rock rent and contract rent. A minimum sum guaranteed to the lessor by the lessee in order to make the lessor receive a minimum amount in any particular period, whether he derived any benefit or not, out of the rights is known as minimum rent. It is a pre-determined rent and being disclosed in the royalty agreement where both parties have their consent. Source: CoolInterview.com
Question: Who is a landlord?

Answer: Landlord is a person or organization that owns and leases apartments, land, buildings etc to others. He is also known as a lessor.
Source: CoolInterview.com
Question: State one similarity between strike and lockout?

Answer: The result of both strike and lockout show the production stoppage. Source: CoolInterview.com
Question: Give the journal entry in the books of lessor when royalty is equal to the minimum rent for transferring royalities.

Answer: Profit and loss A/C Dr xxx
To Royalities A/C xxx Source: CoolInterview.com
Question: Give the journal entry in the books of lessee when the royalty is equal to the minimum rent for royalities transferred.

Answer: Royalities A/C Dr xxx
To Profit and loss A/C xxx
Source: CoolInterview.com
Question: Give the journal entry in the books of lessee when the royalty is more than minimum rent for transferring royalities and unrecouped short working.

Answer: Profit and Loss A/C Dr xxx
To ShortWorking A/C xxx
To Royalities A/C xxx
Source: CoolInterview.com

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