Principles of Accounting Short Question With Answer 2019
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Q.1. Write down any four principle accounting policies.
Ans. Principles of accounting policies are :
(a) General. (b) Investments.
(c) Staff benefits. (d) Advances.
Q.2. What is term-loan?
Ans. A term-loan is treated as a Non-Performing Assets (NPA) if interest and/or installment of principal remains overdue for a period of more than 90 days. define exempted assets.
Q.3. Define exempted assets.
Ans. Certain categories of advances have been exempted from being treated as non-performing for the purpose of income determination and/or provisioning, even though they meet the aforesaid criteria.
Q.4. What is freight insurance?
Ans. Where the owner of goods promises or undertakes to pay the freight when the cargo is safely delivered at the port of destination and the cargo is destroyed on the way, the shipping company would lose the freight: The shipping company can cover this risk by taking out a freight insurance policy.
Q.5. What is premium?
Ans. The payment made by the insured as consideration for the grant of the insurance is known
as premium. The premium may be payable annually or at shorter intervals of time and may be payable throughout the period of the policy or only for a fixed term, depending upon the conditions in the policy.
Q.6. Define claims.
Ans. A claim occurs when a policy falls due for payment. In the case of life insurance business, it will arise either on death or on maturity of policy that is, on the expiry of the specified term of years. In the case of general insurance business, a claim arises only when the loss occurs or the liability arises.
Q.7. Write the formula of paid-up policy.
Ans. Paid-up value = No. of premiums paid x Sum assured
Total no. of premiums payable
Q.8. What do you mean by interim bonus?
Ans. It is a bonus paid to a policy holder for a period for which valuation is not complete and therefore, the exact profit or bonus has not been determined. Such a bonus is also included in claims.
Q.9. What is valued policy?
Ans. A policy in which the value of the property is ascertained and/or agreed upon which the insurer undertakes to pay in the event of destruction of goods/ property by fire is known as valued policy.
Q.10. Write down different types of fire policies.
Ans. Different types of fire policies are :
(a) Specific policy.
(b) Floating policy.
(c) Blanket policy.
(e) Average policy.
(f) Excers policy.
(g) Comprehensive policy.
Q.11 . Define open declaration policy.
Ans. It is a policy whereby the insured makes a deposit with the insurer and declares the value of the subject matter in respect of which risk is covered.
Q.12. What is the total loss?
Ans. When the subject matter of insurance, i.e., cargo, ship, freight etc. is totally lost, it is known as a ‘total loss’.
Q.13. What do you mean by voyage policy?
Ans. This is a policy whereby the subject matter in transit is insured from one place to another. It is generally carried out for cargo which is exposed to marine risks in transit.
Q.14. Write down the five types of marine insurance policies,
Ans. Types of marine insurance policies are :
(a) Time policy.
(b) Mixed policy.
(c) Floating policy.
(d) Blanket policy.
(e) Composite policy.
Q.15. What is the port policy?
Ans. This policy covers the ship when it is docked/stationed at a port.
Q.16. What is a branch?
Ans. Branch accounting is related to the recording of trading transactions of different branches in respect of their dealings with the H.Q. with outsiders and other branches.
Q.17. Write the classification of branches.
Ans. Branches are of two types :
(a) Inland branches.
(b) Foreign branches.
Q.18. What are the main objectives of opening a branch?
Ans. Objectives of opening a branch are :
(a) To increase the volume of sales.
(b) To enhance the profit margin.
(c) To eliminate middleman in the chain of the selling process.
Q.19. Write down any two salient features of dependent branches.
Ans. Features of dependent branches are :
(a) These branches sell the goods supplied by the H.Q. and purchase of goods for sale from local sources is prohibited.
(b) All branch expenses are paid by the H.Q.
Q.20. Write any three factors of dependent branches.
Ans. Factors of dependent branches are :
(a) Size of the branch.
(b) Types and nature of transactions.
(c) Degree of control by the H.Q. of Accounting
Q. 21.Mention the methods of dependent branches.
Ans. Methods of’ dependent branches arc :
(a) Debtors method.
(b) Stock and debtor method.
(c) Final accounts.
(d) Wholesale branch method.
Q.22. How is bad debts discount allowed?
Ans. There are not shown in the branch account (debtor at the end are shown on the credit side of the branch account after making adjustments for bad debts).
Q.23. Define the sale of fixed assets.
Ans. There do not appear in the branch account because book value of fixed assets at the end is decreased and either the amount of remittances is increased or the debtors at the end are increased,
Q.24.What is branch expenses?
Ans. All the expenses spent for the branch by the H.Q. are recorded as one single figure and debited to this A/c. This balance in this account is transferred (to compute the net profit/loss) to branch adjustment account.
Q.25. Define stock reserve account.
Ans. As stock is not shown at its loaded price in balance sheet, this account has to be prepared. Goods sent to branch account. To ascertains the cost of goods sent and to compute gross profit, this account is prepared.
Q.26. What is the disposal of non-banking assets?
Ans. A banking company can only acquire immovable property for its own use. Other immovable properties acquired must be disposed of within seven years from the date of acquisition. However, in any particular case, the reserve bank of India may extend such period of seven years if it is satisfied, that such extension would be in the interest of the depositors of the banking company.
Q.27. What is take-out finance?
Ans. In the case of take-out finance, if based on record of recovery, the account is classified by their lending banks as NPA, it should make provision for loan losses as per the guidelines. The Provision should be reversed when the account is taken over by the taking over institution. On taking over the account, the taking-over institution should make provisions as per guideline. For this Purpose, the account should be considered to have become NPA from the actual date of it’s becoming even though the account was not on the books of the taking over institution on that date.
Q.28. In the case of independent branches, the head office account in the books of the branch is analogous to capital account. (2018)
Q.29. Which of the following risks is not covered under the general insurance : (2017)
(a) Fire risk.
(b) Theft risk(c) Life risk. .
(d) Marine risk.
Ans. (d) Marine risk.
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