Explanation

The one-word substitution for a state, society, or group governed by old people is gerontocracy.

It refers to a political system where power is held by the elderly or senior members of society.

Explanation

The intangible asset recorded only as part of the acquisition of another company is goodwill.

Goodwill represents the premium paid over the fair value of the identifiable net assets of the acquired company and reflects factors like brand reputation and customer relationships.

Explanation

To calculate the annual depreciation rate, you can use the following formula:

Annual Depreciation = (Cost - Scrap Value) / Estimated Life

= ($20,000 - $10,000) / 5

= $10,000 / 5

= $2,000 per year

To find the percentage rate of depreciation, divide the annual depreciation by the cost and multiply by 100:

Percentage Rate = (Annual Depreciation / Cost) x 100

= ($2,000 / $20,000) x 100

= 10%

So, the percentage rate of depreciation on an annual basis is 10%.

Explanation

The term EVA stands for Economic Value Added.

It is a measure of a company's financial performance that calculates the value created beyond the required return on its capital.

Explanation

The measure of how efficiently the asset resources are employed by the firm is called activity ratios.

These ratios, such as inventory turnover and asset turnover, assess how effectively a company uses its assets to generate sales and profits.

Explanation

In a bank reconciliation, deposits in transit are added to the bank balance.

They represent amounts received and recorded by the company but not yet reflected in the bank's statement.

Explanation

To find the opening stock, use the following formula:

Opening Stock = Cost of Goods Sold - (Purchases + Freight Inward - Closing Stock)

Given:

• Cost of Goods Sold = Rs. 245,000
• Purchases = Rs. 250,000
• Freight Inward = Rs. 5,000
• Closing Stock = Rs. 25,000

Opening Stock = Rs. 245,000 - (Rs. 250,000 + Rs. 5,000 - Rs. 25,000)

Opening Stock = Rs. 245,000 - Rs. 230,000 = Rs. 15,000

So, the amount of opening stock is Rs. 15,000.

Explanation

In accounting, the basic equation is:

Assets = Liabilities + Capital

Rearranging this:

Capital = Assets - Liabilities

This represents the owner's equity in the business.

Correct Answer: Capital is equal to assets minus liabilities 

Explanation

The trader is following the accrual basis of accounting.

This concept recognizes revenue when it is earned, not necessarily when cash is received.

Hence showing the full sales amount and trade receivables in the financial statements.

Explanation

Liquidity ratios determine a company's ability to cover short-term obligations and cash flows.

Solvency ratios are concerned with a longer-term ability to pay ongoing debts.