Accounts part- A
1-What is branch accounting?
Branch accounting is a bookkeeping system in which separate accounts are kept for each
branch or operating location of an organization.
2-Explain dependent branches?
Dependent Branch: A branch which is dependent upon Head Office mainly for “Goods and
Cash”. Books of accounts relating to such branch also will be maintained by Head Office.
3- what is department?
Department is a different functional area within the business organization.
4- explain the hire purchase agreement?
A hire purchase (HP) agreement is a credit agreement. With hire purchase you hire an item (a
car, a laptop, a television) and pay an agreed amount in monthly payments. You do not own the
item until you have made the final payment.
5-What is cash price and hire purchase price?
Cash price; cash price means the price at which goods may be purchased against cash payment.
Hire price; hire purchase price means the total amount which is payable by the hire-purchaser
under the agreement including interest.
6- define partnership?
A partnership is a formal arrangement by two or more parties to manage and operate a
business and share its profits.
7- what is sacrificing ratio?
Sacrificing Ratio: is the ratio in which one or more partners of the firm sacrifice their share of
profits in favour of one or more partners of the firm.
8- what are the two types of Goodwill?
● Purchased: Purchased goodwill is the difference between the value paid for an enterprise
as a going concern and the sum of its assets less the sum of its liabilities, each item of
which has been separately identified and valued.
● Inherent: It is the value of the business in excess of the fair value of its separable net
assets. It is referred to as internally generated goodwill, and it arises over a period of time
due to the good reputation of a business. It can also be called as self generated or non-
purchased goodwill.
9-what is dissolution?
The process of dissolution includes disposing of the assets and the liabilities are paid off. The
firm discontinues all of its activities and no partner has any relation with the other partners.
10- what do you mean by dissolution by agreement?
It means that the firm is dissolved due to a mutual agreement between the partners.
11- explain the two categories of branches?
There are two types of branches;
Dependent branches; those branch which depend on head office for goods and cash, the
accounts are also maintained by the head office.
Independent branch; Independent Branches are those which make purchases from outside, get
goods from Head Office, supply goods to Head Office and fix the selling price by itself Thus
an independent Branch enjoys a good amount of freedom like an American Son.
12- what is goods in transit?
Goods – in – transit is the difference between goods sent by Head Office and received by the
Branch. Such goods will be shown either on both sides of the Branch Account or will be
ignored altogether while preparing the Branch Account.
13- what are the advantages of departmental accounting?
a) It provides an idea about the affairs of each department.
b) It helps to evaluate the performance of each department.
c) It helps to reward the Departmental mangers and staff on the basis of performance.
14-write any two features of installment method?
1. Installment purchase system is just like an outright credit sale of goods.
2. The buyer makes the payment in different installment over a period of time as agrees upon in
the agreement.
3. Under installment purchase system, the buyer gets the immediate possession as well as the
ownership of goods.
4. The seller can not responses the good if the buyer made default in the payment of installment
but he/she can sue against the buyer for the recovery of amount due.
5. In case of default in the payment of installment, the total amount of installments already paid
by the buyer can not be forfeited.
15-write any two features of hire purchase agreement ?
(i) Payment will be made in installments, (ii) The possession of the goods is given to the buyer
immediately,
(iii) The property (ownership) in the goods remains with the vendor till the last installment is paid,
16- what is gaining ratio?
The profit-sharing ratio which is acquired by the surviving or continuing partners on account
of the death of any partner is called gain ratio or benefit ratio.
17- define goodwill?
Goodwill is an intangible asset that is associated with the purchase of one company by
another.
18- who is a retiring partner?
A partner retiring from a firm, i.e. ceasing to be a partner of the firm due to agreement
between them or at his own will or due to any other reason, is called a retiring partner.
19- what is an insolvency of a partner?
Where a partner in a firm is adjudicated an insolvent he ceases to be a partner on the date on
which the order of adjudication is made, whether or not the firm is hereby dissolved.
20- what do you mean by dissolution by agreement?
It means that the firm is dissolved due to a mutual agreement between the partners.
