State with reasons, whether the following statements are True or False: (i) Trade discount is recorded in the discount column in triple column cash…
CA Foundation · Accounting · PYQS · May 2025
State with reasons, whether the following statements are True or False: (i) Trade discount is recorded in the discount column in triple column cash book. (ii) Money measurement concept means transactions are to be recorded at a uniform-monetary units. (iii) If a society (Non-profit organization) has a separate trading activity, the profit / loss from the trading account shall be transferred to Income and Expenditure Account at the time of consolidation. (iv) Partners in a partnership firm will share the profits of business according to their capital contribution in the absence of any agreement. (v) LLP should have two designated partners who are resident in India. (vi) A Non-Profit Organization registered under Section 8 of Companies Act, 2013 can distribute its surplus among its members.
Suggested Answer and Working Notes:
(i) False: Discount column of cash book records the cash discount. Further, Trade discount is not shown in the Cash book/books of accounts. (ii) True: As per Money measurement concept, only those transactions, which can be measured in terms of money are recorded. Additionally, monetary units used should also be uniform. For example, - Rupee, dollars etc. (iii) True: Where in case of the trading activities, the profit /loss from such activity to be transferred to the Income and expenditure account in case of consolidated accounts. (iv) False: In absence of Partnership agreement, Profits and losses are to be shared equally among partners. (v) False: As per Section 7 of the LLP Act, every limited liability partnership should have at least two designated partners who are individuals and at least one of them should be a resident in India. (vi) False: A Non-profit organization s registered under section 8 of the Companies Act,2013 can’t distribute surplus to its members. The surplus must be credited to General fund for furtherance of its charitable objectives.
Topics: Partnership and LLP Accounts, Financial Statements of Not-for-Profit Organisations
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