INTERVIEW QUESTIONS COMMON PROFICIENCY TEST (CPT) FUNDAMENTALS OF ACCOUNTING DETAILS

Question: A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs. 1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs. 20,000 out of which Rs. 5,000 was outstanding at year end. His total profit for the year 2008-09 as per the terms of accrual concept was: a) 30,000 b) 40,000 c) 45,000 d) 20,000

Answer: (b) 40,000
Description: As per the accrual concept, revenue and cost should be recognized as they are earned or incurred and not as money is paid or received.
Profit for the year =Rs. 1,20,000- 60,000
=Rs. 60,000
(-) Expenses incurred=Rs. 20,000
Profits =Rs. 40,000

(b) 40,000
Description: As per the accrual concept, revenue and cost should be recognized as they are earned or incurred and not as money is paid or received.
Profit for the year =Rs. 1,20,000- 60,000
=Rs. 60,000
(-) Expenses incurred=Rs. 20,000
Profits =Rs. 40,000 Source: CoolInterview.com

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