A systematic way to maintain the books of The excess of current assets over current liabilities

accounts is called_________? is called:

A. Accountancy A. Working Capital
B. Economics B. Circulating capital
C. Book Keeping C. Fixed capital
D. Auditing D. Trading capital
An Art of reading, classifying & Summarizing of When goods, in which business deals are sold, it is
accounts in a systematic way is called__________? called___________?
A. Accounting A. Purchases
B. Accountancy B. Return inward
C. Auditing C. Sales
D. Book Keeping D. Return outwards
The maintenance of accounts in a systematic way Sales return is also known as____________?
is called__________? A. Return received
A. Accounting B. Return Payed
B. Reading C. Return inward
C. Book Keeping D. Return outward
D. Auditing reduction in price is called:
Goods Return by the customer are termed as : A. Paid price
A. Purchase return B. Invoice price
B. Customer return C. Book price
C. Sales return D. Discount
D. Inventory return Cash brought by the owner to start business is
Modern system of book keeping is called__________?
called______________? A. Capital
A. Double entry system B. Loan
B. American system C. Drawing
C. Single entry system D. None of these
D. Italic system The concession received on the price of defective
The person to whom goods are sold on credit is goods is called:
called___________? A. Discount
A. Buyer B. Cash discount
B. Seller C. Allowance
C. Debtor D. Trading discount
D. Creditor In support of business transaction, any written
Double entry means______________? evidence is called ___________?
A. Entry in two sets of books A. Discount
B. Entry at two ends B. Voucher
C. Entry at two dates C. Allowance
D. Entry for two aspects of the transaction D. Price
Discount received is a/an: Building and furniture are called ____________?
A. Asset A. Current asset
B. Expense B. Fictitious asset
C. Liability C. Tangible asset
D. Revenue D. Fixed assets
Obligation of the Business are known For the business, capital is ____________?
as___________? A. Expense
A. Liabilities B. Liability
B. Revenues C. Assets
C. Expenses D. All of them
D. Assets When owner withdraw cash for its private use, it
The amount invested by the proprietor to start the is called ___________?
business is called: A. Profit
A. Capital B. Income
B. Business C. Expense
C. Drawings D. Drawing
D. All of them Assets having physical existence are called
Cash discount is provided on _______________? ___________?
A. Purchases A. Current asset
B. Prompt payment B. intangible asset
C. Sales C. Tangible asset
D. Sales return D. Liquid asset
Goods return to supplier are known The assets which have some market value are
as:__________? called ____________?
A. Merchandise return A. Fixed asset
B. Purchase return B. Quick asset
C. Return inwards C. Fictitious assets
D. Sales return D. Real assets
The assets which come into existence upon the Which of the following is true about a trial
happening of a certain event are balance?
called__________? A. It lists down the balances of accounts
A. Contingent assets B. It lists down the balances of a balance sheet
B. Fixed assets C. It is a kind of financial statement
C. Fictitious assets D. It is not a part of accounting cycle
D. Quick assets Debit balance = Credit balance in a trial balance
Income earned but not received is called indicates that:
____________? A. No error in recording transactions
A. Fictitious assets B. No error in posting entries to ledger accounts
B. Quick asset C. Account balances are correct
C. Real asset D. Mathematically Capital+Liabilities=Assets
D. Outstanding asset Trial balance is commonly prepared?
Debts which are payable in the course of a month A. Frequently during the year
are called _____________? B. At the end of an accounting period
A. External liabilities C. At the end of a month
B. Fixed liabilities D. At the end of a year
C. Current liabilities Which of the following will affect the agreement of
D. Liquid Liabilities a trial balance?
The unsold goods are ______________? A. Complete omission of a transaction
A. Equity B. Partial omission of a transaction
B. Sale return C. Error of principle
C. Inventory D. Compensating errors
D. Purchases If debit balances = credit balances, trial balance
The systems of accounting are _____________? only shows or check the ____________ and it does
A. Two not indicate that no errors were made during
B. Three recording and posting.
C. Five A. Arithmetic accuracy
D. Six B. Errors of commission
A sale of Rs. 50.000 to A was entered as a sale to C. Omissions of economic events
B. This is an example of____________? D. Understatements of balances
A. Error of omission Which of the following account with normal
B. Error of commission balance is shown at the debit side of a trial
C. Compensating error balance?
D. Error of principle A. Rent income account
Goods sent on approval basis’ have been recorded B. Creditors account
as ‘Credit sales’. This is an example C. Unearned income account
of____________? D. Cash account
A. Error of principle Which of the following account with normal
B. Error of commission balance is shown at the credit side of a trial
C. Error of omission balance?
D. Error of duplication A. Cash account
Institute of Chartered Accountants of Pakistan B. Bank account
was established in____________? C. Equipment account
A. 1949 D. Accrued expenses account
B. 1956 Which of the following specialized journals
C. 1961 records “goods returned by customers”?
D. 1972 A. Purchase journal
Trial balance is prepared to check accuracy B. Sales journal
of_______________? C. Purchases return journal
A. Ledger accounts balances D. Sales return journal
B. Balance sheet balances Sales on credit is recorded in which of the
C. Income statement balances following journal?
D. Cash flow statement balances A. Purchase journal
If a transaction is completely omitted from the B. Sales journal
books of accounts, will it affect the agreement of a C. Purchases return journal
trial balance? D. Sales return journal
A. Yes Transactions that a BUSINESS doesn’t record in
B. No any specialised journal are recorded in which of
C. Transactions can’t be omitted the following journals or day books?
D. none of these A. Cash payments journal
________ is the common base for preparing a trial B. Cash receipts journal
balance? C. Purchases return journal
A. Ledger accounts D. General journal
B. General Journal Another name of journal is_____________?
C. Specialized journals A. Specialized journal
D. Balance sheet B. Day book
C. Cash book A. Small businesses
D. Record book B. Big businesses
Which of the following specialised journals will C. Sole proprietorship
record “goods returned by the BUSINESS “? D. Partnership
A. Purchase journal Which of the following is known as an evidence
B. Sales journal that a transaction took place?
C. Purchases return journal A. Cash receipts journal
D. Sales return journal B. General journal
Sales and purchase journal don’t C. Source document
record__________? D. Cash book
A. Credit sales BUSINESS paid rent amounting to $100″ which
B. Credit purchases of the following specialized journals records this
C. Credit sales and purchases transaction?
D. Cash sales and purchases A. Cash receipts journal
Cash received from debtor is recorded in which of B. Cash payments journal
the following SPECIALIZED journals? C. Sales journal
A. Purchase journal D. Purchase journal
B. Sales journal Credit memo or credit note No. is entered in
C. Cash receipts which of the following journal?
D. Cash payments journal A. General journal
Which of the following is a type of cash receipt B. Cash journal
journal + cash payment journal? C. Purchase journal
A. Bank statement D. Sales return day book
B. Statement of cash flow In accounting an Economic event is referred to as:
C. Cash book A. Cash
D. Cash documents B. Bank statement
Cash purchases is recorded in which of the C. Transaction
following specialized journals? D. Exchange of money
A. Purchase journal Identify the correct sequence of accounting
B. Sales journal process
C. Purchases return journal A. Communicating→Recording→Identifying
D. Cash payments journal B. Recording→Communicating→Identifying
A brief explanation recorded below every entry in C. Identifying→communicating→recording
general journal is commonly known D. Identifying→recording→communicating
as__________? Bookkeeping mainly concerns with which part of
A. Narration accounting process?
B. Explanation A. Analyzing
C. Summary B. Preparing financial statements
D. Other information C. Recording financial information
Credit purchase of plant and machinery is D. Auditing the books of accounts
recorded in which of the following journals? Financial accounting provides financial
A. General journal information to all of the following external users
B. Cash journal except:
C. Purchase journal A. Government agencies
D. Purchase return journal B. investors
Debit note is the basis for recording a transaction C. Creditors
in which of the following journals? D. Managers
A. General journal For which step of accounting process the
B. Cash journal accountants of business entity prepare financial
C. Purchase journal statements?
D. Purchase return journal A. Identification of economic event
Read More Details about this Mcq B. Communication of financial information
SALE of old furniture” will be recorded in which C. Recording financial information
of the following specialised journals? D. Making decisions about business
A. Purchase journal Keeping the log of financial information in books
B. Sales journal of original entries is called__________?
C. General journal A. Recording
D. Cash receipt journal B. summarizing
Credit note is the basis for recording a transaction C. Grouping
in which of the following SPECIALIZED D. Processing
journals? Auditing is what?
A. Purchase journal A. Reporting the financial information
B. Sales return journal B. Examination of financial statements
C. General journal C. Preparation financial statements
D. Cash receipt journal D. maintaining the ledger records
Specialized journals are more adequate for which Which of the following is the external user of
TYPE OF BUSINESSES? financial statements?
A. Manager of the business Which is the most important characteristic that all
B. CEO of the business assets of a business have?
C. Creditor of the business A. Long life of assets
D. Controller of the business B. Value of assets
Which of the following is the internal user of C. Intangible nature of assets
financial statements? D. Future economic benefits
A. Creditor of the business What is the basic accounting equation?
B. Government agency A. Capital+Liabilities=Assets
C. Shareholder of the business B. Assets+ liabilities =Capital
D. Manager of the business C. Capital+assets=liabilities
_________ is the first phase of accounting cycle? D. Liabilities+Capital
A. Identifying an economic event or transaction Which of the following is a liability?
B. Preparing journals A. Cash
C. Posting entries to ledger accounts B. Equipment
D. Making decisions about business C. Debtors
Financial statements differ from management D. Creditors
account because What is equity?
A. They are mainly prepared for external users of A. Cash from the business
financial information B. liability of a business
B. They are more complex and hard to prepare C. Owner’s claim on total assets
C. The are the summary of accounting data D. Owner’s claim on total liabilities
D. The are prepared on basis of actual concept Identify the asset from the following:
________ is a separate legal entity that Total A. Cash and cash equivalent
capital can be divided in many shares. B. Creditors
A. Partnership C. Notes payable
B. Sole proprietorship D. Bank loan
C. Company _______ the withdrawal of cash and goods by the
D. Non-profit organization owner of the busienss for his/her personal use?
An asset posses which of the following? A. Depreciation
A. Future economic benefits for the business B. Drawings
B. All kind of benefits for the business C. Outflow of cash
C. Expenses for the business D. Appreciation
D. Merits and Demerits for the business Net loss occurs when______________?
Liabilities are which of the following? A. Expenses are greater than Income
A. Resources B. Expenses are less than Income
B. Obligations C. Expenses=Income
C. Future benefits D. Liabilities are greater than income
D. Expenses Double entry implies that
________ is the gross inflow of economic benefits? A. Recording entries in journal
A. Assets B. Recording entries in Ledger account
B. Liabilities C. Recording two aspects of every transaction
C. Income D. Recording every transaction in books
D. Expenses Identify the nominal account
The gross decrease in economic benefits for the A. Machinery account
business are what? B. Building account
A. Expenses C. Creditors account
B. Obligations D. Rent expenses account
C. Creditors Which of the following accounts can be classified
D. Income or gain as a real account?
An asset must be _______ by the business to be A. Rent expenses account
shown as an asset in its “balance sheet” B. Rent income account
A. Possessed C. insurance expenses account
B. Owned D. Cash account
C. Controlled Transferring entries from journal to ledger
D. Used account is commonly known as____________?
Liability are arisen from which of the following A. Recording
events? B. Transferring
A. Present event C. Posting
B. Future event D. Entry making
C. Past event An account records the ___________ in the
D. None of them balance of an item?
Which of the following can be considered as the A. Increase
most important phase of accounting cycle and it is B. Decrease
the primarily objective of financial accounting? C. Increase or decrease
A. Identifying transactions D. Appreciation
B. Preparing “T Accounts” If credit side of a bank account is greater than the
C. Preparing financial statements debit side, it indicates which of the following?
D. Preparing trial balances
A. Bank overdraft C. Capital
B. Cash at bank D. Drawing
C. Bank balance Building account is classified as _________
D. Current Asset account?
If debit side of a bank account is greater than A. Nominal
credit side it indicates which of the following? B. Real
A. Cash at bank C. Cash
B. Bank understatement D. Capital
C. Bank overdraft Office equipments account is classified as
D. Balance overstatement _________ account?
_________ will be credited if goods are given as A. Nominal
charity? B. Real
A. Cash C. Cash
B. Charity D. Capital
C. Purchases ___________ helps business to classify
D. Sales transactions according to their nature?
Which of the following is known as the base for A. General journal
preparing trial balance? B. Real accounts
A. Journal C. Ledger accounts
B. Cash account D. Cash accounts
C. Ledger account Which of the following is a real account?
D. Balance sheet A. Office equipment
If debit balance is greater than creadit balance B. Rent expenses
then the account blance will be__________? C. Rent income
A. Credit balance D. Insurance expense
B. Debit and credit balance Which of the following accounts are closed at the
C. Cash balance end of an accounting period?
D. Debit balance A. Nominal accounts
The normal balance of capital account B. Balance sheet accounts
is_____________? C. Real accounts
A. Credit balance D. None of them
B. Debit balance Which of the following is the closing balance of a
C. Cash balance ledger account?
D. Neither debit nor credit balance A. Balance c/d
The normal balance of asset account B. Balance b/d
is____________? C. Balance e/d
A. Credit balance D. Balance f/c
B. Debit balance The Basic accounting equation is___________?
C. Cash balance A. Asset=Expense +Income
D. Neither debit nor credit balance B. Assets=Cash+Capital
The normal balance of liability account C. Assets=Capital+Liabilities
is____________? D. Assets=Expenses+Capital
A. Debit balance Find out the value of assets if: Liabilities=$5000
B. Credit balance and Capital=$1000
C. Cash balance A. $4000
D. Neither debit nor credit balance B. $6000
Which of the following statements is incorrect C. $7000
regarding capital account? D. $3000
A. Debit increases the capital account balance Calculate the amount of cash if: Total
B. Credit increases the capital account balance assets=$10,000 Total liabilities=$10,000 Total
C. Fresh capital increases the capital account balance Capital=$5000
D. Net income increases the capital account balance A. $6000
Which of the following is the normal balance of a B. $10,000
rent expense account? C. $5000
A. Credit balance D. $1000
B. Cash balance Capital increases if _________ increases?
C. Overdraft A. Expenses
D. Debit balance B. Drawings
Revenue and expense accounts are referred C. Interest on capital
as______________? D. Revenue
A. Nominal accounts Capital of a business decreases if there is an
B. Real account increase in___________?
C. Cash accounts A. Drawings
D. Banks account B. Income
The real accounts are accounts of Assets, liabilities C. Gains
and ___________? D. Fresh capital
A. Expenses If the total liabilities of a business decrease by
B. Revenues $5000 what will be the effect on total asset?
(assuming the amount of capital remain same) A. Liabilities
B. Cash
A. Remain constant C. Bank
B. Decrease by $5000 D. Capital
C. Increase by $5000 An increase in provision for bad debt
D. Increase by $10,000 will____________?
A. Decrease net income
B. Decrease liabilities
If the business’s owner withdraws cash for his/her
C. Increase net income
personal use what will be the effect on capital?
D. Increase liabilities
A. Increase in capital
B. Remain the same Current assets – Current liabilities=?
A. Capital
C. Decrease in capital
B. Absorbed capital
D. No effect on capital
C. Net assets
Net income equal to Revenues
minus____________? D. Net working capital
A. Gains Assets-Liabilities=____________?
A. Cash
B. Depreciation
B. Equity
C. Expenses
C. Net income
D. Capital expenditures
D. Net expenses
Collection of account receivable will
A. Increase assets and decrease assets The process of recording is done?
A. Two times a year
B. Increase assets and decrease liabilities
B. once a year
C. Increase assets and increase capital
D. Increase assets and increase cash C. Frequently during the accounting period
D. At the end of a accounting period
Payment of expenses will ______ the assets
A. Increase General journal is a book of _______ entries?
A. First
B. Reduce
C. apportion B. Original
C. Secondary
D. Overstate
D. Generic
Which of the following is the practical
implementation of the accounting equation? The process of recording transactions in different
A. Cash flow statement journals is called_________?
A. Posting
B. Income statement
B. Entry making
C. Statement of changes in equity
C. Adjusting
D. Statement of financial position
D. Journalizing
Which of the following accounting equation is
correct? Every business transaction affects at least
A. Cash+Other assets=Capital-Liabilities ________ accounts?
A. One
B. Capital+ Liabilities=Assets+Income
B. Two
C. Assets-Liabilities=Capital
C. Three
D. Assets+Capital=Liabilities
D. Infinite
Fresh capital introduction will
increase____________? Discount allowed is a kind of deduction
A. Assets and liabilities from_____________?
A. Account payable
B. Assets and equity
C. Liabilities and equity and bank balance B. Account receivable
C. Cash account
D. Capital and liabilities
D. Discount account
Cash received for services rendered
will______________? The other name of journal is____________?
A. Ledger
A. Increase cash and liability
B. T account
B. Increase equity and liability
C. Increase fixed assets and cash C. Day book
D. Cash book
D. Increase cash and equity
Which of following best describes the increase in A journal entry in which two or more account is
equity expands___________? debited or credited is referred as____________?
A. Journal entry
A. Business operations
B. Multi entry
B. cash outflows
C. Additional entry
C. Inflows of cash
D. Appropriation expenses D. Compound entry
If Cash=$1000 inventories=$4000 Debtors=$5000 he term 2/10-n/30 implies that ______ % discount
fixed assets=? Capital+Liabilities=$15000 What is will be given if the payment is made within days
or full amount is receivable within 30 days?
the Amount of total assets?
A. 2,10
A. $5000
B. 10,2
B. $10,000
C. $15,000 C. 10,30
D. $20,000 D. 3,15
Goods returned by customer should be debited to
Depreciation decreases____________?
which of the following accounts?
A. Sales income account C. Cash accounts
B. Sales account D. Revenue accounts
C. Return inward account Total depreciation of an asset cannot exceed its:
D. Expenses account A. Scrap value
Discount allowed is___________? B. Residual value
A. Expense of business C. Market value
B. Income of business D. Depreciable value
C. Loss of business Amount paid to Masood posted to the credit side
D. Abnormal loss of business of his account would affect___________?
_________ is the evidence that a transaction took A. Masood’s account
place? B. Cash account
A. Source documents C. Cash account and Gagan’s account
B. Ledger D. None of these
C. Bonds Which of the following statements is/are true ?
D. Journals A. A sale of an asset is recorded in the Sales Book
Which of the following will be debited if a business B. Total of Return Outward Book is debited to
purchases goods on credit? Return Outward Account
A. Cash C. The balance of Petty Cash Book is a liability
B. Debtor D. Cash Book is a subsidiary book as well as a
C. Creditor ledger
D. Purchases
Which of the following accounts will be debited if Read more about this Mcq
the business’s owner withdraws cash from
business for his personal use?
Which of the following is true regarding closing
A. Drawings entries?
B. Cash A. They must be followed by reversing entries
C. Business
B. They transfer the balances in all of the Nominal
D. Stock
Accounts to the Trading and Profit and Loss Account
Journals are also referred as_____________? C. They must be made after the reversing entries but
A. Book of entries
before the adjusting entries
B. Book of original entries D. They must be made after the adjusting entries
C. T account
but before the reversing entriesClosing stock is
D. Books of economic event
generally valued at______________?
The standard format of journal does not include A. Cost Price
which of the following? B. Market Price
A. Assets column C. Cost price or Market price whichever is higher
B. Date column
D. Cost price or Market price whichever is lower
C. Description column
Which of the following assets is/are to be valued at
D. Amount column
the lower of cost and net realizable value?
In which of the following orders data is entered in A. Goodwill
journal?
B. Inventories
A. Alphabetical order
C. Investments
B. Numeric order D. Both B. and C. above.
C. Bullets order
A few errors committed in Ahhiwalia’s books of
D. Chronological order
account are given below. State which errors would
Which of the following accounts will be credited if
affect the Trial Balance.
a company purchases building for cash? (a). Sales of `950 to Ram completely omitted from
A. Capital account books of account
B. Fixed assets account (b). Purchases of `720 from Shyam entered in the
C. Building account
purchases journal as `700
D. Cash account (c). Purchases Journal is overcast by `1,000
Discount for quick repayment of debt is normally (d). Sales returns journal is undercast by `200
referred as____________? (e) Amount paid to Agarwal wrongly posted to the
A. Trade discount debit to Mittal’s account
B. Prompt payment discount (f) Bank overdraft shown under debit column in the
C. Cash discount Trial Balance
D. Bulk discount
(g) Sales of `500 to Sadiq entered in sales journal as
The first step in accounting process sales to Mushtaq
is___________? (h) Wages paid for installation of machinery debited
A. Recording the transaction to wages account
B. Identifying the transaction A. a, c and g
C. Posting the transaction
B. c, d and f
D. Preparing the source documents
C. c, d, e and h
A chart of accounts generally start with which of D. c, d, f and h
the following types of accounts? Which of the following methods is not a practical
A. Assets accounts way of realizing revenue?
B. liability accounts
A. Delivery method
B. Percentage-of-completion method
C. Production method
D. Moving average method
The amount payable to a person as consideration
for the use of rights vested in him is
A. Dividend
B. Royalty
C. Purchase consideration
D. Installment
Buildings account is debited with an amount
towards repairs. This is an example of?
0A. Error of commission
B. Error of principle
C. Error of omission
D. Compensating error
The concept of conservatism will have the effect
of______________?A. Overstatement of Assets
B. Understatement of Assets
C. Overstatement of Liabilities
D. Understatement of Liabilities
During the year 2011-2012, the value of closing
inventory was overstated by 25,000. Which of the
following is true?
A. The cost of goods sold was overstated during
2011-2012 and income will be understated during
2012-2013
B. The income was overstated during 2011-12 and
closing inventory will be overstated during 2012-
2013
C. The retained earnings was overstated during
2011-2012 and retained earnings will be
understated during 2012-2013
D. The cost of goods sold was understated during
2011-2012 but retained earnings will not be affected
during 2012-2013
Which of the following errors is an error of
omission?
A. Sale of ` 100 was recorded in the Purchases
Journal
B. Wages paid to Mohan have been debited to his
account
C. The total of the sales journal has not been
posted to the Sales Account
D. Repairs to buildings have been debited to
buildings account
Which of the following statements is /are true?
A. Entering wrong amount in the subsidiary book
affects the agreement of the Trial Balance
B. Undercasting or overcastting of a subsidiary book
is an example or error of commission
C. Errors of principle do not affect the agreement of
Trial Balance
D. Both B. and C. above
Which of the following is true?
A. Error of casting affects personal accounts
B. Omission of a transaction from a subsidiary record
affects only one account
C. Error of carry forward affects two accounts
D. Error of principle involves an incorrect
allocation of expenditure or receipt between
capital and revenue
Journal proper is meant for
recording_____________?
A. Credit purchase of fixed assets
B. Return of goods
C. All such transactions for which no special
journal has been kept by the business
D. None of these
Closing stock in the Trial Balance implies
that______________?
A. It is already adjusted in the opening stock
B. It is adjusted in the Purchase A/c
C. It is adjusted in the Cost of Sale A/c
D. It is adjusted in the Profit &Loss A/c
Which of the following statements is true?
A. If a Trial Balance tallies, it always means that
none of the transactions has been completely omitted
B. A Trial Balance will not tally if a transaction is
omitted
C. A customer to whom goods have been sold on
credit cannot avail himself of a cash discount
D. A credit balance in the Pass Book indicates
excess of deposits over withdrawals
The adjustment to be made for income received in
advance is:
A. Add income received in advance to respective
income and show it as a liability
B. Deduct income received in advance from
respective income and show it as a liability
C. Add income received in advance to respective
income and show it as asset
D. Deduct income received in advance from
respective income and show it as an asset in the
Balance Sheet
Which of the following statements is correct about
Trial Balance?
A. The Trial Balance is prepared after preparing the
Profit and Loss Account
B. The Trial Balance shows only balances of Assets
and Liabilities
C. The Trial Balance shows only nominal account
balances
D. The Trial Balance has no statutory importance
from the point of view of law
While finalizing the current year‘s accounts, the
company realized that an error was made in the
calculation of closing stock of the previous year. In
the previous year, closing stock was valued more
by 50,000. As a result
A. Previous year‘s profit is overstated and current
year‘s profit is also overstated.
B. Previous year‘s profit is understated and current
year‘s profit is overstated.
C. Previous year‘s profit is overstated and current
year‘s profit is understated.
D. There will be no impact on the profit of either the
previous year or the current year.
Which of the following is not correct about
Errors?
A. Errors which affect one account can be errors of
posting
B. Errors of omission arise when any transaction is
left to be recorded
C. Errors of carry forward from one year to another
year affect both Personal and Real A/c
D. Errors of commission arise when any transaction
is recorded in a fundamentally incorrect manner
If goods worth 1,750 returned to a supplier is
wrongly entered in sales return book as 1,570,
then
A. Net Profit will decrease by 3,140
B. Gross Profit will increase by 3,320
C. Gross Profit will decrease by 3,500
D. Gross Profit will decrease by 3,320
For the past 3 years, DK Ltd. has failed to accrue
unpaid wages earned by workers during the last
week of the year. The amounts omitted, which
were considered material, were as follows:
March 31,2010 – ` 56,000
March 31, 2011 – ` 51,000
March 31, 2012 – ` 64,000
The entry on March 31, 2012 to rectify these
omissions would include a
A. Credit to wage expense for ` 64,000
B. Debit to wage expense for ` 64,000
C. Debit to wage expense for ` 51,000
D. Debit to wage expense for ` 13,000
Purchase journal is kept to record_____________?
A. All purchases of goods
B. All credit purchases of goods
C. All credit purchases
D. None of these
The beginnings inventory of the current year is
overstated by 5,000 and closing inventory is
overstated by 12,000. These errors will cause the
net income for the current year by
A. 17,000 (overstated.
B. 12,000 (understated.
C. 7,000 (overstated.
D. 7,000 (understated.
The accountant of Leo Ltd. recorded a payment
by cheque to a creditor for supply of materials as
1,340.56. The bank recorded the cheque at its
correct amount of 3,140.56. The Company has not
passed any rectification entries and the error is
not detected through the bank reconciliation. The
impact of this error is
A. The Trial Balance will not agree
B. The balance of creditors is understated
C. The purchases are understated
D. The favorable bank balance as per Pass Book is
less than the Bank balance as per Cash book
Which of the following errors affects the
agreement of a Trial Balance?
A. Mistake in balancing an account
B. Omitting to record a transaction entirely in the
subsidiary books
C. Recording of a wrong entry in the subsidiary
books
D. Posting an entry on the correct side but in the
wrong account
Which of the following should not be treated as
revenue expenditure?
A. Interest on loans and debentures
B. Annual fire insurance premiums on Plant and
Equipment
C. Sales tax paid in connection with the purchase
of office equipment
D. Small expenditures on long- lived assets, such as `
20 for a paper weight.
Capital expenditure is an expenditure which
A. Benefits the current accounting period
B. Will benefit the next accounting period
C. Results in the acquisition of a permanent asset
D. Results in the acquisition of a current asset
Which of the following is not a deferred revenue
expenditure?
A. Expenses in connection with issue of equity shares
B. Preoperative expenses
C. Heavy advertising expenses to introduce a new
product
D. Legal expenses incurred in defending a suit for
breach of contract to supply goods
Any donation received for a specific purpose is
a_________?
A. Liability
B. Assets
C. Revenue receipts
D. Capital receipts
Which of the following is an item of capital
expenditure?
A. Research and development costs during the year
B. Interest on borrowed fund utilized for acquisition
of Office Furniture
C. Installation charges paid in conjunction with
the purchase of Office Equipment
D. Monthly rent of a machinery used in the business
The balance of which of the following accounts do
not disappear, once they are debited/credited to
Trading Account?
A. Sales
B. Purchases
C. Inward returns
D. Closing stock
Which one of the following should be considered a
revenue expenditure?
A. 1000 paid for the execution of a new plant
B. Loss of 10,000 incurred in increasing the sitting
accommodation of a hotel
C. Damage paid on account of breach of a
contract to supply certain goods
D. Repair to machinery purchased, second hand.
Which of the following statements are / is true? –
Events after Balance Sheet are?
A. All the significant events after the Balance Sheet
date
B. The events after Balance Sheet date but before
submitting it to the Registrar of Companies
C. The events after Balance Sheet date but before
its approval by the board
D. All changes after Balance Sheet date before its
approval
Which one of the following is a capital
expenditure?
A. Compensation paid to Directors on termination
of their services
B. Expenditure incurred in connection with the
renewal of a Trade Mark.
C. Gratuities paid to Directors on termination of their
services.
D. Royalty paid in installments for the purchase of
rights to manufacture and sell patient medicines.
Which of the following enhances the earning
capacity of an asset?
A. Increase in working capacity of an asset
B. Reduction in operating costs
C. Replacing damaged parts of an asset
D. Both A. and C. above
Which of the following items should not be A. Bank column
capitalized relating to fixed assets? B. Discount column
A. Interest payable on loans or deferred credits taken C. Cash column
for the acquisition or construction of fixed assets D. None
before they are ready for use Petty cash balance is a/an___________?
B. Stand by equipment and servicing equipment A. Assets
C. Expenditure incurred on test runs and B. Expenditure
experimental production C. Liability
D. Administration and general expenses D. None
Which of these errors affect only one account? Which of these is a Part of cash in hand?
A. Errors of casting A. Postage stamps
B. Errors of carry forward B. B/R
C. Errors of posting C. Cheque Deposited with Bank
D. All the three D. B/R endorsed
Which of these errors affect two or more accounts Which of the following is a Real A/c?
A. Errors of complete omission A. Salary A/c
B. Errors of principle B. Bank A/c
C. Errors of posting to wrong account C. Building A/c
D. All the three D. Goodwill A/c
Which of the following error is an error of Which of the following is a representative
principle Personal A/c?
A. 5,000 received from Sham credited to Ram A/c A. Outstanding Salary A/c
B. 5,000 incurred on installation of new plant B. Rent A/c
debited to travelling expenses A/c C. SBI A/c
C. 500 paid for wages debited to salary A/c D. Bad debts A/c
D. 500 being purchase of raw material debited to Which of the following is a Nominal A/c ?
purchase A/c ` 50 A. Outstanding Salary A/c
Which of the following is an one sided error? B. Rent A/c
A. 500 purchase of old equipment not recorded in the C. SBI A/c
books of A/c at all D. Debtors A/c
B. 500 being expense on travelling expense Goodwill A/c is a/an__________?
credited to travelling expenses A. Nominal A/c
C. Both B. Tangible Asset
D. None C. Intangible Asset
Any gain on the sale of non-current assets should D. Fictitious Asset
be _________ from the net profit and the loss must Posting is the process of____________?
be _________to the net profit in determining fund A. Posting the letters in drop box
from operation? B. Posting suitable person to a suitable job
A. Added, Reduced C. Entering in the ledger the information
B. Added, Added contained in the ledger
C. Deducted, Added D. All the three
D. Deducted, Deducted A book wherein various accounts are opened is
Cash book records? called____________?
A. Only cash sales A. Subsidiary books
B. All types of cash receipts and payments B. Journal
C. Only revenue receipts C. Ledger
D. Only capital receipts D. Trial Balance
In a three column cash book_______________does Which of these is not a special purpose journal?
not exist? A. Cash journal
A. Cash column
B. Bank column B. Purchase journal
C. Petty cash column C. Debtors journal
D. Discount column D. Sales journal
Which of these transactions will not be recorded
in cash book? The periodic total of sales day book is posted
A. Cash received from debtors
to___________?
B. Cash paid to creditors
A. Sales A/c
C. Salary remained outstanding B. Cash sales A/c
D. Cash deposited with bank
C. Sales return A/c
The closing balance of a petty cash book is a / D. Credit sales A/c
an___________? The periodic total of purchase day book is posted
A. Liability
to____________?
B. Gain
A. Purchase register
C. Assets
B. Purchase A/c
D. Loss C. Cash purchase A/c
Which column of a cash book will not have credit D. Credit purchase A/c
balance___________?
Capital expenses are shown in___________?
A. Balance Sheet
B. Profit and Loss A/c
C. Trading A/c
D. None of these
Revenue receipts are shown in___________?
A. Balance Sheet
B. Profit and Loss appropriation A/c
C. Manufacturing A/c
D. Trading and Profit and Loss A/c
Revenue is generally recognized as being earned
at that point of time when?
A. sale is effected
B. cash is received
C. production is completed
D. debts are collected
Which of the following is a revenue expenses?
A. Raw material consumed
B. Plant purchased
C. Long term loan raised from bank
D. Share Capital
Which of the following is a capital expenditure?
A. Repair of plant and machinery
B. Salary paid to workers
C. Cost of stand by equipment
D. Annual whitewash of the office building
Which of these types of expenditure would not be
treated as a Capital Expenditure?
A. Acquisition of an Asset
B. Extension of an Asset
C. Improvement of the existing Asset
D. Maintenance of the Asset
Expenses of the following nature are treated as a
Revenue expenses except__________?
A. Expenses for day to day running of the business
B. Putting the new asset in working condition
C. Depreciation
D. Purchase of raw material
Cash received from debtors would be deemed
as___________of funds.
A. No flow
B. Sources
C. Uses
D. Gain
Generally the term fund is used to mean the
difference between?
A. Current assets and current liabilities
B. Profit and loss A/C and Balance sheet
C. Current assets and non-current liabilities
D. Current liabilities and non-current liabilities
Which of these documents is not required for
Bank Reconciliation?
A. Bank column of Cash Book
B. Bank Pass Book
C. Bank Statement
D. Trial Balance
Which of these items are taken into consideration
for preparation of adjusted Cash Book
A. Mistake in Cash Book
B. Mistake in Pass Book
C. Cheque issued but not presented for payment
D. Cheques deposited but not cleared
Credit balance as per Cash Book
mean____________?
A. Surplus cash
B. Bank overdraft
C. Terms deposits with bank
D. None of these
Debit side of Bank Pass book corresponds
to___________?
A. Credit side of Cash Book
B. Debit side of Cash Book
C. Debit side of Trial Balance
D. Credit side of Balance Sheet
Difference in Bank Balance as per Pass Book and
Cash Book may arise on account
of_____________?
A. Cheque issued but not presented
B. Cheque issued but dishonoured
C. Cheque deposited and credited by bank
D. All of A. and B. above
The Bank Reconciliation Statement is prepared?
A. To rectify the mistakes in the Cash Book
B. To arrive at the Bank Balance
C. To arrive at the Cash Balance
D. To bring out the reasons for the difference
between the Balance as per Cash Book and the
Balance as per Bank Statement
Bank reconciliation is a statement prepared to
reconcile__________?
A. Trial balance
B. Cash book
C. Bank A/c
D. Cash as per cash book with bank balance as
per bank pass book
Bank reconciliation statement is a part
of_________?
A. Cash book
B. Trial balance
C. Auditors report
D. None of these
Benefits of preparing Bank Reconciliation
Statement includes___________?
A. It bring out any errors committed in preparation of
Cash book / Bank Pass Book
B. Highlights under delay in clearance of cheques
deposited but not credited
C. Help know actual bank balance
D. All the three
Debit balance as per bank pass book
mean_____________?
A. Surplus cash
B. Bank Overdraft
C. Terms deposits with bank
D. None of these
Which of the following is not a cause of difference
in balance as per cash book and balance as per
bank pass book___________?
A. Errors in cash book
B. Errors in pass book
C. Cheques deposited and cleared
D. Cheques issued but not presented for payment
Provision is created for____________?
A. Unknown Liabilities
B. Known Liabilities
C. Creation of Secret Reserves
D. All the Three
Which of the following is not a method of charging
depreciation?
A. Straight line Method
B. Written down value Method
C. Discounted present value Method
D. Sum of digits Method
A second hand car is purchased for 2,00,000 and
sold at 1,40,000 after two years. If depreciation is
charged @ 10% on SLM method, find the profit A. Only (i) above
or loss on sale of the car? B. Only (ii) above
A. 20,000 Loss C. Both (i) and (ii) above
B. 20,000 Profit D. (i),(ii) and (iii) above
C. 10,000 Loss
D. 10,000 Profit The accounting process of gradually converting
A second hand car is purchased for 2,00,000 and the unexpired cost of fixed assets into expenses
sold at 1,40,000 after two years. If depreciation is over a series of accounting periods is_________?
charged @ 10% on written down value method, A. Depreciation
find the profit or loss on sale of the Second hand B. Physical deterioration of the asset
car? C. Decrease in market value of the asset
A. Loss of 20,000 D. Valuation of an asset at a point of time
B. Loss of 22,000 Which of the following factors are primarily
C. Loss of 11,000 considered to determine the economic life of an
D. Profit of 11,000 asset?
Which of the following is true with respect to A. Passage of time, asset usage, and obsolescence
providing depreciation under diminishing balance B. Tax regulations and SEBI guidelines
method? C. Tax regulations and asset usage
A. The amount of depreciation keeps increasing D. SEBI guidelines and Asset usage
every year while the rate of depreciation keeps In which of the following methods, the cost of the
decreasing asset is spread over in equal proportion during its
B. The amount of depreciation and the rate of useful economic life?
depreciation decrease every year A. Straight-line method
C. The amount of depreciation decreases while the B. Written down value method
rate of depreciation remains the same C. Units-of-production method
D. The amount of depreciation and the rate of D. Sum-of-the years‘-digits method
depreciation increases every year Which of the following statements is correct about
Which of the following statements best describes Depreciation?
the purpose of depreciation? A. Depreciation cannot be provided in case of loss in
A. Regular reduction of asset value to correspond to a financial year
changes in market value as the asset ages B. Depreciation is a charge against profit
B. A process of correlating the market value of an C. Depreciation is provided in the books only when
asset with its gradual decline in physical efficiency there is profit
C. Allocation of cost in a manner that will ensure that D. Depreciation is an appropriation of profit
Plant and Equipment items are not carried on the Depreciation is calculated on the____________?
Balance Sheet in excess of net realizable value A. Cost price of asset
D. Allocation of the cost of an asset to the periods B. Market price
in which services are received from the asset C. Cost+ Transport+ Installation expenses
The main objective of providing depreciation is D. Cost or market values whichever is less
to? Which of the following is an external cause of
A. Calculate the true profit depreciation?
B. Show the true financial position in the Balance A. Routine repair and maintenance
Sheet B. Misuse
C. Provide funds for replacement of fixed assets C. Obsolescence
D. Both A. and B. above D. Wear and tear
Depreciation is a process of____________? Which of the following is not depreciated?
A. Valuation A. Building
B. Valuation and allocation B. Land
C. Allocation C. Plant and Machinery
D. Appropriation D. Office equipment
The portion of the acquisition cost of the asset yet ____________is also known as Appraisal system of
to be allocated is known as___________? depreciation?
A. Written down value A. Inventory system
B. Accumulated value B. Survey system
C. Salvage value C. Annuity system
D. Residual Value D. Insurance
Which of the following statements is true with Bad debts recovered account will be transferred
regard to written down value method of to______________?
depreciation? A. Debtor‘s Account
i. The rate at which the asset is written off reduces B. Profit and Loss Account
year after year C. Provision for Doubtful Debt Account
ii. The amount of depreciation provided reduces D. Either (b )or C. above
from year to year
iii. The rate of depreciation as well as the amount The entry for creating a Provision for bad debts
of depreciation reduce year after year is_____________?
iv. The value of the asset gets reduced to zero over A. Debit Provision for Bad Debts A/c and credit
a period of time Debtors A/c
B. Debit Debtors A/c and credit Provision for Bad
Debts A/c B. Debit balance of Provision for Bad Debts
C. Debit Provision for Bad Debts A/c and credit Account
Profit & Loss A/c C. Debit balance of Bad Debts Account
D. Debit Profit and Loss A/c and credit Provision D. Debit balance of Discount on Debtors Account
for Bad Debts A/c. The creation of provision for doubtful debts given
as an adjustment requires____________?
A. Debit Profit and Loss Account and deduct the
provision from debtors
B. Credit Profit & Loss Account and deduct the
When a person purchasing goods on credit he
provision from debtors
becomes a_________in the books of the seller?
C. Credit Profit and Loss Account and add the
A. Debtor
provision to debtors
B. Creditor
D. Debit Profit & Loss Account and add the
C. Defaulter
D. Offender provision to debtors
Cost of goods sold excludes___________? Under the direct write-off method of recognizing a
A. Opening Stock bad debt expense. Which of the following
B. Carriage inward statements is/are true?
A. The bad debt expense is not matched with the
C. Wages & Salary
related sales
D. Postage & Stamps
B. Revenue is overstated in the year of sales
Tax deducted at source A/c appears
C. It violates the matching principle of accounting
in___________?
D. All of the above
A. Assets side
B. Liability side At the time of preparation of financial accounts,
C. Profit & Loss A/c bad debt recovered account will be transferred to?
D. Debited to Capital A/c A. Debtors A/c
Investment in own share A/c appears B. Profit & Loss A/c
C. Profit & Loss Adjustment A/c
in____________?
D. Profit & Loss Appropriation A/c
A. Asset side
B. Liability side The balance of Revaluation Reserve pertaining to
C. Netted from Capital an asset that has been disposed off or retired can
D. Profit & Loss A/c be transferred to?
A. General Reserve A/c
Payments received in advance from a customer
B. Profit & Loss A/c
for a contract can be__________?
C. Asset A/c
A. Shown as a deduction from contract work-in-
progress on asset side D. Capital Reserve A/c
B. Shown as a liability Average Accounting Return is a measure of
C. Credited to P&L A/c accounting profit relative to:
D. Either A. or B. above A. Book value
B. Intrinsic value
If a company has contingent liabilities, they
C. Cost
appear in the__________?
D. Market value
A. Balance Sheet
B. Directors‘ report During the accounting period, sales revenue is Rs.
C. Notes on account to Balance Sheet 25,000 and accounts receivable increases by Rs.
D. Chairman‘s report 8,000. What will be the amount of cash received
from customers for the period?
0
Contingent liabilities are disclosed in the notes to
Balance Sheet
A. Rs. 33,000
B. Rs. 25,000
Recent developments have made much of a C. Rs. 17,000
company‘s inventory obsolete. This obsolete D. Rs. 8,000
inventory should be?
A. Written down to zero or its scrap value
B. Shown in the Balance Sheet at its replacement cost Which of the following form of business
C. Shown in the Balance Sheet at cost, but classified organization is least regulated?
as a non-current asset A. Sole-proprietorship
B. General Partnership
D. Carried in the accounting records at cost until it is
C. Limited Partnership
sold
D. Corporation
Which of the following is not classified as
inventory in the financial statements? Which of the following statement is considered as
A. Finished goods the accountant’s snapshot of firm’s accounting
B. Work-in-process value as of a particular date?
A. Income Statement
C. Stores and spares
B. Balance Sheet
D. Advance payments made to suppliers for raw
C. Cash Flow Statement
materials
D. Retained Earning Statement
If actual bad debts are more than the provision
Period cost include which of the following ?
for bad debts, then there will be a_____________?
A. selling Expense
A. Credit balance of Provision for Bad Debts
B. Direct labor
Account
C. factory overhead A club paid subscription fees of `1,400. Out of
D. selling Expenses & administrative expenses which ` 200 is prepaid. In such case
The compensation paid by the borrower of fund to A. P&L A/C is debited with 1,400
lender, from the borrower point of the cost of B. P&L A/C is debited with 1,200
borrowing fund is called? C. 200 is shown as current asset
A. Interest Rate D. Both B. and C. above
B. Required rate of return Bad debts recovered is:
C. Nominal interest rate A. Credited to P&L A/c
D. All of the above B. Debited to P&L A/c
An income statement in which each item C. Reduced from debtors in Balance Sheet
expressed as percentage of Sale? D. Added to debtors in Balance Sheet
A. Balance sheet The adjustment to be made for prepaid expenses
B. income statement is____________?
C. common size income statement A. Add prepaid expenses to respective expenses and
D. All of the Above show it as an asset
Short term Assets expected to be converted into B. Deduct prepaid expenses from respective
cash within 1 year or less than? expenses and show it as an asset
A. Current Assets C. Add prepaid expenses to respective expenses and
B. Fixed Assets show it as a liability
C. Current Assets& current liabilities D. Deduct prepaid expenses from respective expenses
D. All of the above and show it as a liability
_________is the cost of converting raw material On scrutiny of a firm‘s books of accounts, it was
into finished products? observed that the following errors have occurred
A. Prime cost in the previous years but have not yet been
B. Explicit cost rectified.
C. Job order cost i. Depreciation for 2011-2012- 7,000 understated
D. Conversion cost ii. Accrued expenses as at March 31, 2013 – 10,000
Net sales equals, sales minus: understated
A. Return outwords The impact of this on the reported net income for
B. Return inwards the year ending March 31, 2013 is
C. cost of goods sold
D. carriage on sales A. 7,000 Overstated
LIFO stands for__________? B. 10,000 Overstated
A. Lots in , Few out C. 17,000 Understated
B. Link input, Format Output D. 17,000 Overstated
C. Last input, First Output
D. Last in, First Out
Property, Plant and Equipment are Which of the following entries is correct in respect
conventionally presented in the Balance Sheet at
of reserve for discounts on accounts payable?
_________? A. Debit P&L A/c and Credit Reserve for Discount
A. Replacement cost – Accumulated Depreciation
on Accounts Payable A/c
B. Historical cost – Salvage Value
B. Debit Accounts Payable A/c and Credit P&L A/c
C. Historical cost – Depreciation portion thereof C. Debit Reserve for Discount on Accounts
D. Original cost adjusted for general price-level
Payable A/c and Credit P&L A/c
changes
D. Debit Reserve for Discount on Accounts Payable
Outstanding salaries is shown as___________? A/c and credit Accounts Payable A/c
A. An Asset in the Balance Sheet
Sundry debtors as per Trial Balance is 43,000
B. A Liability
which includes 2,200 due from ‗H in respect of
C. By adjusting it in the P & L A/c
goods sent to him on approval basis, the cost price
D. Both B. and C. above
of which is 1,800. Rectification would involve:
Read More Details about this Mcq
A. Adding 2,200 to closing stock
Insurance prepaid is shown as:___________? B. Deducting 1,800 from closing stock and deducting
0
2,200 each from debtors and sales
C. Adding 1,800 to closing stock and deducting
A. Current Asset 2,200 each from debtors and sales
B. Current Liability D. Deducting 1,800 from debtors
C. Fixed Asset Goods in stock worth 800 are destroyed by fire
D. Income and the Insurance Co. is accepted the claim for
600. Adjustment would involve
A. Debit of 800 to Trading Account and credit of 600
Depreciation appearing in the Trial Balance and 200 to insurance company and
should be? Profit and Loss Account respectively
A. Debited to P&L A/c B. Deduct the 800 from closing stock in the Trading
B. Shown as liability in Balance Sheet Account
C. Reduced from related asset in Balance Sheet C. Credit insurance company for 600
D. Both A. and C. above D. Debit of 600 and 200 to insurance company and
Profit and Loss Account respectively and
credit of 800 to Trading Account
Prepaid expenses are valued on the Balance Sheet
at
A. Replacement cost
B. Current cost
C. Cost to acquire less accumulated amortization
D. Cost less expired portion
Which of the following relationships is/are false?
A. Net Profit = Gross Profit – Administration and
Other expenses
B. Net Profit = Gross Profit + Administration
expenses and Other expenses
C. Opening Stock + Purchases – Closing Stock =
Cost of Sales
D. Both B. and C. above
Gross Profit is equal to_________?
A. Sales – Cost of goods sold
B. Sales – Closing Stock + Purchases
C. Opening Stock + Purchases – Closing Stock
D. None of the above
Which of the following shall not be deducted from
net profit while calculating managerial
remuneration?
A. Loss on sale of undertaking
B. Debts considered bad and written off
C. Liability arising from a breach of contract
D. Director‘s remuneration
Which of the following equations is correct?
A. Gross Profit+ Sales+ Direct expenses+ Purchases+
Closing stock = Opening stock
B. Gross Profit+ Sales+ Direct expenses+ Purchases-
Closing stock = Opening Stock
C. Gross Profit + Opening Stock + Direct expenses
+ Purchases- Closing stock = Sales
D. Gross Profit – Opening Stock + Direct expenses +
Purchases +Closing stock = Sales
Which of the following is not true with regard to
preparation of Profit & Loss Account?
A. Profit & Loss Account is prepared for a certain
period and hence it is an interim statement
B. Profit & Loss Account does not disclose the effect
of non-financial items
C. Net Profits are ascertained on the basis of current
costs
D. Net Profits as disclosed by P&L Account is not
absolute
The Profit and Loss Account shows the:
A. Financial results of the concern for a period
B. Financial position of the concern on a particular
date
C. Financial results of the concern on a particular
date
D. Cost of goods sold during the period
Read More Details about this Mcq
Which of the following will not appear in Profit
and Loss Account of a business?
A. Drawings
B. Bad debts
C. Accrued expenses
D. Reserve for discount on Sundry Creditors
Which of the following is not a financial
statement?
A. Profit and Loss Account
B. Balance Sheet
C. Funds Flow Statement
D. Trial Balance
If unexpired insurance appears in the Trial
Balance, it should be:
A. Credited to the Profit & Loss Account
B. Debited to the Profit & Loss Account
C. Shown on the liabilities side of the Balance Sheet
D. Shown on the assets side of the Balance Sheet
Which of the following are/is not a fixed asset?
A. Stock
B. Vehicle
C. Fixed deposit in bank
D. Both A. and C. above
Which of the following are/is a current asset?
A. Sundry Debtors
B. Stock
C. Prepaid insurance
D. All of A. B. and C. above
Tax deducted at source appears in the Balance
Sheet
A. On the assets side under current assets
B. On the assets side under loans and advances
C. On the liabilities side under current liabilities
D. On the liabilities side under provisions
Which of the following statements is false ? select
the false from below options
A. Balance Sheet discloses financial position of the
business
B. A person who owes to the business is called
Debtor
C. Decrease in the value of the asset could decrease
the value of a liability
D. Assets are to be shown in the Balance Sheet at
the realizable value
The Balance Sheet gives information regarding
the____________?
A. Results of operations for a particular period
B. Financial position during a particular period
C. Profit earning capacity for a particular period
D. Financial position as on a particular date
Which of the following accounts appear(s) in the
Balance Sheet of a business?
i. Stock at the end of the financial year
ii. Stock at the beginning of the financial year
iii. Drawings
iv. Prepaid Rent
v. Interest received but not yet earned
A. Only (i) above
B. Only (iii) above
C. Both (i)and (iii) above
D. (i), (iii), (iv) and (v) above
Computers taken on hire by a business for a
period of twelve months should be classified
as:___________?
A. Current assets
B. Intangible assets
C. Deferred revenue expenditure
D. Not an asset
Which of the following is not an intangible asset?
A. Trade mark
B. Franchise
C. Accounts Receivable
D. Secret Profit
Which of the following is a current liability?
A. Prepaid expenses
B. Trademark
C. Discount on issue of shares
D. Outstanding Salaries
Based on which of the following concepts, is Share
Capital Account shown on the liabilities side of a
Balance Sheet?
A. Business entity concept A. 6441
B. Money measurement concept B. 5431
C. Going concern concept C. 7654
D. Matching concept D. 9876
Which of the following is not a contingent From the following details what will be the
liability? partners commission? Net profit before charging
A. Debts included in Sundry Debtors which are partners commission 65,000. Partners commission
doubtful in nature 11% before charging such commission
B. Uncalled liability on partly paid shares A. 6441
C. Claims against the company not acknowledged as B. 5431
debts C. 7150
D. Arrears of fixed cumulative dividend D. 5876
Which of the following are current assets of a Arrangement of Balance Sheet in a logical order is
business? known as __________?
i. Income received in advance A. Dressing Balance Sheet
ii. Stock B. Marshalling Balance Sheet
iii. Debtors C. Formatting Balance Sheet
iv. Pre-paid expenses D. Make up of Balance Sheet
v. Accrued income Find the cost of goods sold if goods are sold for
A. Both (i) and (iv) above 2,000 at 25% profit on cost?
B. Both (ii) and (iii) above A. 1,600
C. (i),(ii) and (iii) above B. 1,500
D. (ii),(iii),(iv) and (v) above C. 1,000
Closing entries are generally passed: D. 1,800
A. At the time of opening new books of account Find the value of opening stock from the following
B. At the time of closing the accounts data. Purchases 1,50,000, Closing stock 30,000
C. During the course of accounting period any time Sales 2,20,000, Gross profit 40,000.
D. After certification of accounts A. 50,000
Closing stock appearing in the Trial Balance is B. 55,000
shown in: C. 60,000
A. Trading A/c and Balance Sheet D. 65,000
B. Profit and Loss A/c A Bill of Exchange is drawn on 1st April, 2018
C. Balance Sheet only payable after 3 months. The due date of the bill is?
D. Trading A/c only A. 30th June,2018
Depreciation Account appearing in the Trial B. 1st July,2018
Balance is shown in: C. 4th July,2018
A. Profit and Loss A/c D. 4th August,2018
B. Trading A/c When bill discounted with the bank is
C. Deducted from the concerned assets A/c dishonored?
D. Shown on the liability side A. Acceptor‘s Account is debited in the books of
Profit on sale of old plant is:___________? drawer
A. In Trading A/c B. Bills Receivable Account is credited in the books
B. In Profit and Loss Appropriation A/c of drawer
C. Profit and Loss A/c C. Bank Account is debited in the books of drawer
D. Being a non operating item ignored D. Bills Payable Account is debited in the books of
Carriage on goods purchased is shown drawer
in:___________? In the books of the drawer, the accounting
A. Profit and Loss A/c treatment involved on receipt of a bill of exchange
B. Capitalized with work in progress duly accepted by the drawee is?
C. Trading A/c i. Debit Bills Receivable Account
D. Shown in Balance Sheet ii. Debit Drawee‘s Account
Which of these is not an operating income? iii. Credit Drawee‘s Account
A. Income from sale of trading goods iv. Credit Sales Account
B. Bad debts recovered A. Only (i) above
C. Interest on FDs B. Both (ii) and (iv) above
D. None C. Both (i) and (iii) above
Riaz holds an average inventory of 36,000(CP) D. Both (i) and (iv) above
with an inventory turnover of 5 times. If the firm The noting charges levied on dishonour of an
makes a gross profit of 25% on sales, find the total endorsed bill by the Notary Public are to be borne
sales of the company. by
A. 2,40,000 A. The drawer of the bill
B. 2,10,000 B. The person responsible for dishonour
C. 2,00,000 C. The holder of the bill
D. 1,80,000 D. The endorser of the bill
From the following details what will be the The drawer of a trade bill passes relevant entries
partners commission? Net profit before charging with regard to the transaction involved in it. But,
partners commission 65,000. Partners commission in case of an accommodation bill, he passes an
@ 11% after charging such commission.
entry in addition to the usual entries. The A check returned by bank marked “NSF” means
additional entry so passed is with respect to that:
A. Discounting of the bill with the bank A. Bank can’t verify your identity
B. Payment of the bill on due date B. There are not sufficient funds in your account
C. Remitting or receiving the amount C. Check has been forged
D. Sending the bill to bank for collection D. Check can’t be cashed being illegal
Under which of the following situations, is journal Bank reconciliation statement is prepared
entry not passed in the books of the drawer? by____________?
A. When a discounted bill is honoured by the A. Accountant of the business
drawee on the due date B. Manager of the business
B. When a bill is sent to the bank for collection C. Controller of the bank
C. When a bill is renewed at the request of the D. Accountant of the bank
drawee Bank charges amounting to $5000 was not entered
D. When a debtor accepts a bill drawn by the drawer in the cash book. Identify the correct adjustment
Which of the following is not a feature of a in cash book?
promissory note? A. Bank charges will be debited in cash book
A. It must be in writing B. Bank charges will be added to cash book balance
B. It contains an unconditional promise to pay C. Bank charges will be credited in cash book
C. It is payable to the bearer D. Bank charges need no adjustment in cash book
D. It must be signed by the maker Favorable balance of cash book implies that
How many parties are generally found in a Bill of A. Credit balance of cash book
Exchange? B. Debit balance of cash book
A. 4 C. Bank overdraft
B. 2 D. Adjusted balance of cash book
C. 3 Bank reconciliation statement is the comparison
D. 5 of a bank statement (sent by bank) with the
Negotiable Instrument Act was enacted _________ (prepared by business).
in_________? A. Cash receipt journal
A. 1981 B. Cash payment journal
B. 1881 C. Cash book
C. 1871 D. Financial statements
D. 2001 In the Bank reconciliation statement “Deposit in
Which of these is not an essential feature of a bill transit” is usually:
of exchange? A. Subtracted from bank balance
A. Unconditional B. Added to bank balance
B. Certainty of amount C. Added to Cash book balance
C. In writing D. Subtracted from cash book balance
D. Amount to be paid in foreign currency B. Unpresented checks also referred
A foreign bill of exchange is generally drawn up as____________?
in___________? A. Uncollected checks
A. Triplicate B. Uncredited checks
B. Duplicate C. Outstanding checks
C. Single D. Bounced checks
D. Quadruplicate A discount of $2000 was given to a supplier on his
Which of these are not required in a promissory prompt repayment of debt but the cashier entered
note? the gross amount in cash book. What should be
A. Acceptance the adjustment in cash to work out the correct
B. Unconditional promise to pay balance of cash book?
C. Properly stamped A. $2000 will be debited in cash book
D. Payment to be made legal currency B. $2000 will be credited in cash book
X draws a Bill of Exchange on Y for 10,000 on 1- C. $4000 will be debited in cash book
1-2013 for 3 months. The due date of the bill will D. $4000 will be credited in the cash book
be_________? Standing orders are ________
A. 4-4-2013 A. Credited in the cash book
B. 3-4-2013 B. Debited in the cash book
C. 1-4-2013 C. Entered in the bank statement
D. 31-3-2013 D. Entered in the petty cash balance
Accommodation bills are generally for? Uncollected checks also referred
A. Genuine trade reasons as______________?
B. For mutual financial accommodation A. Unpresented checks
C. To help augment money supply B. Uncredited checks
D. All the three C. Outstanding checks
A cash deposit made by business appears on the D. Bounced checks
bank statement as _______ balance? ___________ are checks that are issued by the
A. Debit business but not yet presented to bank
B. Credit A. Uncollected checks
C. Expenses B. Uncredited checks
D. Liability
C. Outstanding checks C. Cash payments and cash receipts
D. Bounced checks D. Neither cash payments nor cash receipts
Bank sent debit advice of $500 to company being Cash book is prepared by____________?
interest on overdraft. It wasn’t entered in cash A. Bank
book. Identify the correct adjustment in cash B. Accountant of business
book. C. Manager of a company
A. $500 will be debited D. Bank’s cashier
B. $500 will be credited Discount received is recorded on which of the
C. Non-adjustable following side of a cash book?
D. $1000 will be subtracted A. Receipts
In bank reconciliation statement the amount of B. Payments
outstanding checks is added to ________ balance C. Incomes
of cash book. D. Expenditures
A. Adjusted The closing balance of petty cash book is
B. Unadjusted considered as_________?
C. Understated A. Liability
D. Overstated B. Asset
Which of the following error results in unadjusted C. Expenses
cash book balance? D. Income
A. Outstanding checks A credit balance in cash book indicates?
B. Unpresented checks A. Bank balance
C. Deposit in transit B. Cash at bank
D. Omission of Bank charges C. Bank overdraft
_________ Checks that are presented to bank but D. Bank underdraft
not yet credited by the bank. Petty cash fund is supposed to be replenished?
A. Unpresented checks A. Every day
B. Uncredited checks B. Every half year
C. Outstanding checks C. Every year
D. Bounced checks D. At the end of every accounting period
Favorable balance of bank statement implies that Postdated checks are considered as__________?
A. Credit balance A. Cash
B. Debit balance B. Bank balance
C. Bank overdraft C. Accounts receivable
D. Adjusted balance D. Cash reserve
Balance as per cash book(adjusted.=$1000, Which of the following is generally not the party
Unpresented checks=$2000, Uncredited to a check?
checks=$500, Deposit in transit=$500. Compute A. Payee
the balance as per bank statement. B. Payer
A. $2000 C. Bank
B. Zero D. Seller
C. $3000 Cash book with cash and discount column is
D. $2500 mostly referred as________?
A company was entered in hire purchase A. Simple cash book
agreement and had to pay $1000 per month. B. Two column cash book
Three payments were made via bank account but C. Three column cash book
no entry was found in cash book. Identify the D. Petty cash book
correct adjustment in cash book A simple or one column cash book usually has
A. $1000 will be added to cash book balance which of the following main columns?
B. $2000 will be deducted from cash book balance A. Bank
C. $3000 will be added to cash book balance B. Payments
D. $3000 will be subtracted from cash book C. Discount
balance D. Cash
$5000 deposited in bank account was entered Purchase of office equipment for cash will be
twice in the cash book. Identify the correct recorded on which of the following sides of a cash
adjustment in cash book. book?
A. $5000 will be credited A. Receipts
B. $5000 will be debited B. Payments
C. $10,000 will be credited C. Incomes
D. $10,000 will be debited D. Expenditures
An entry which is made on both sides of a cash Postage stamps on hand are considered
book is called__________? as_________?
A. Cash entry A. Bank
B. Contra entry B. Prepaid expenses
C. Payment entry C. Accounts receivable
D. Compound entry D. Creditor
Cash book records:______________? A cash book that is used to record the small
A. Cash payments payments of cash is generally referred
B. Cash receipts as_________?
A. Simple cash book C. Target costs
B. Two column cash book D. Sunk costs
C. Three column cash book The total cost incurred in the operation of a
D. Petty cash book business undertaking other than the cost of
Drawings by owner of business are generally manufacturing and production is known
recorded on which of the following side of a cash as________?
book? A. Direct cost
A. Receipts B. Variable cost
B. Payments C. Commercial cost
C. Incomes D. Conversion cost
D. Expenditures Consider the following data for a company during
Payment of rent expenses is recorded on which the month of June 2012 Budgeted hours 4,000
side of cash book? Standard hours for actual production 4,400
A. Receipts Maximum possible hours in the budget period
B. Payments 4,800 Actual hours 3,800 The activity ratio of the
C. Income company during the month is
D. Expense A. 111%
Cash discount is allowed on _______ repayment of B. 120%
debt. C. 95%
A. Lump sum D. 117%
B. Prompt Which of the following bases is not appropriate
C. Actual for apportionment of Transport department‘s cost
D. None of them ?
Introduction capital by owner of business is A. Crane hours
recorded on which side of a cash book? B. Crane value
A. Receipts C. Truck Mileage
B. Payments D. Truck value
C. Incomes The cost of obsolete inventory acquired several
D. Expenditures years ago, to be considered in a keep vs. disposal
A cash book with cash, bank and discount column decision is an example of :
is commonly referred as________? A. Uncontrollable cost
A. Cash book B. Sunk cost
B. Two columns cash book C. Avoidable cost
C. Three columns cash book D. Opportunity cost
D. Petty cash book Budgeted sales for the next year is 5,00,000 units.
The most common imprest system is the ________ Desired ending finished goods inventory is
system? 1,50,000 units and equivalent units in ending W-I-
A. Petty cash P inventory is 60,000 units. The opening finished
B. Cash book goods inventory for the next year is 80,000 units,
C. Cash receipt with 50,000 equivalent units in beginning W-I-P
D. Discount inventory How many equivalent units should be
Which English alphabet is similar to the shape of produced?
an account? A. 5,80,000
A. I B. 5,50,000
B. T C. 5,00,000
C. H D. 5,75,000
D. None Read More Details about this Mcq
When production is equal to sales, which of the If the asset turnover and profit margin of a
following is TRUE? company are 1.85 and 0.35 respectively, the return
A. No change occurs to inventories for either use on investment is.
absorption costing or variable costing methods A. 0.65
B. The use of absorption costing produces a higher B. 0.35
net income than the use of variable costing C. 1.50
C. The use of absorption costing produces a lower net D. 5.29
income than the use of variable costing A company is currently operating at 80% capacity
D. The use of absorption costing causes inventory level. The production under normal capacity level
value to increase more than they would though the is 1,50,000 units. The variable cost per unit is ` 14
use of variable costing and the total fixed costs are ` 8,00,000. If the
An average cost is also known as________? company wants to earn a profit of ` 4,00,000, then
A. Variable cost the price of the product per unit should be
B. Unit cost A. 37.50
C. Total cost B. 38.25
D. Fixed cost C. 24.00
Costs that change in response to alternative D. 35.00
courses of action are called___________? Consider the following data pertaining to the
A. Relevant costs production of a company for a particular month :
B. Differential costs Opening stock of raw material 11,570
Closing stock of raw material 10,380
Purchase of raw material during the month
1,28,450
Total manufacturing cost charged to product
3,39,165
Factory overheads are applied at the rate of 45%
of direct labour cost.
The amount of factory overheads applied to
production is
A. 65,025
B. 94,287
C. 95,020
D. 1,52,624
If the minimum stock level and average stock level
of raw material are 4,000 and 9,000 units
respectively, find out its reorder quantity.
A. 8,000 units
B. 11,000 units
C. 10,000 units
D. 9,000 units
A worker has a time rate of 15/hr. He makes 720
units of component (standard time : 5 minutes/
unit) in a week of 48 hours. His total wages
including Rowan bonus for the week is
A. 792
B. 820
C. 840
D. 864
One of the most important tools in cost planning
is__________?
A. Direct cost
B. Cost Sheet
C. Budget
D. Marginal Costing.
A Ltd. Has sales of 2,200, total fixed cost of 570,
variable cost of 1,540, raw material consumed of `
1,100, number of units sold 22,000. What shall be
the BEP 9 in units) if raw material price is
reduced by 2%?
A. 18,387
B. 18,560
C. 18,750
D. 19,000