Questions in: Corporate/Business Roles

Right Answer:
Evaluated Receipt Settlement (ERS) is a process in accounts payable where payment is made to a supplier based on the receipt of goods rather than an invoice. It simplifies the payment process by allowing companies to pay for goods automatically upon receipt, reducing paperwork and the need for invoice matching.

Right Answer:
Activity Ratio = 60%
Capacity Ratio = 75%
Efficiency Ratio = 80%

Right Answer:
Depreciation on gift items is generally not recorded, as they are not considered business assets. However, if the gift item is used for business purposes, it may be subject to depreciation based on its useful life.

Right Answer:
Rs 48,000.

Right Answer:
Excise duty is a type of tax imposed on the manufacture, sale, or consumption of specific goods within a country, typically applied to products like alcohol, tobacco, and fuel.

Right Answer:
To handle credit claims, first verify the claim details against the original transaction. Ensure all necessary documentation is provided. Then, assess the validity of the claim based on company policies. If approved, process the credit in the system and communicate the outcome to the customer. Finally, update records and follow up to ensure customer satisfaction.

Right Answer:
Changing the depreciation method from straight-line to another method will impact the financial statements by altering the amount of depreciation expense recognized each period, which can affect net income and tax liabilities. Additionally, it may change the book value of assets on the balance sheet.

Right Answer:
The Short Term Solvency Ratio, also known as the Current Ratio, measures a company's ability to pay its short-term liabilities with its short-term assets. It is calculated by dividing current assets by current liabilities.

Right Answer:
Standard remittance refers to the process of sending payments or funds directly to a payee, typically involving cash or checks. Bills receivable remittance, on the other hand, involves the collection of payments for outstanding invoices or bills that a company is owed, often represented by promissory notes or accounts receivable.

Right Answer:
Contingent liabilities are potential financial obligations that may arise in the future depending on the outcome of a specific event, such as a lawsuit or warranty claim, but are not yet recognized as actual liabilities on the balance sheet.

Right Answer:
The accounting processes in a company typically include the following steps:

1. **Identifying Transactions**: Recognizing financial events that need to be recorded.
2. **Recording Transactions**: Documenting transactions in journals using double-entry bookkeeping.
3. **Posting to Ledger**: Transferring journal entries to the general ledger accounts.
4. **Trial Balance Preparation**: Summarizing all ledger accounts to ensure debits equal credits.
5. **Adjusting Entries**: Making necessary adjustments for accrued and deferred items at the end of the period.
6. **Financial Statement Preparation**: Creating income statements, balance sheets, and cash flow statements.
7. **Closing Entries**: Closing temporary accounts and preparing for the next accounting period.
8. **Review and Audit**: Ensuring accuracy and compliance through internal or external audits.

Right Answer:
Rates and ratios are not the same.

A rate is a ratio that compares two quantities of different units, such as speed (miles per hour) or interest rates (percentage per year). For example, if a car travels 60 miles in 1 hour, the rate is 60 miles/hour.

A ratio compares two quantities of the same unit. For example, if a company has 10 employees and 5 managers, the ratio of employees to managers is 10:5 or 2:1.

In summary, rates involve different units, while ratios involve the same units.

Right Answer:
Capital Receipt refers to funds received that result in the creation of a liability or the reduction of an asset, such as loans or sale of fixed assets. Revenue Receipt, on the other hand, refers to funds received from regular business operations, such as sales revenue or service income, which do not create a liability or reduce an asset.

Right Answer:
At 60% capacity, the cost per unit is Rs 250. At 80% capacity, the cost per unit is Rs 225.

Right Answer:
Net Cash Accrual refers to the difference between cash inflows and cash outflows during a specific period, adjusted for non-cash items like depreciation and changes in working capital. It affects working capital by providing a clearer picture of a company's liquidity and operational efficiency, as it reflects the actual cash available for day-to-day operations. Positive net cash accrual can improve working capital, while negative accrual can indicate potential liquidity issues.

Right Answer:
Net Cash Accrual refers to the difference between cash received and cash paid out during a specific period, reflecting the actual cash flow of a business. It affects Working Capital by indicating the liquidity available to meet short-term obligations; positive net cash accrual increases working capital, while negative net cash accrual decreases it.

Right Answer:
Costs subsequent to the acquisition of Property, Plant, and Equipment can be capitalized when they enhance the asset's value, extend its useful life, or improve its efficiency. This includes costs for major repairs, upgrades, or improvements that provide future economic benefits. Routine maintenance and repairs that do not significantly increase value or extend life should be expensed.

Right Answer:
Pre-paid insurance is treated as a current asset on the balance sheet.

Right Answer:
EMI Reports, or Equated Monthly Installment Reports, are financial documents that detail the monthly payments due on loans or credit. To create EMI Reports, you typically gather data on the loan amount, interest rate, loan tenure, and payment frequency, then calculate the monthly installment using the EMI formula. This report can also include a breakdown of principal and interest components for each payment.

Right Answer:
The unit selling price is Rs 120.