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1. Which one of the following is an asset of an entity?

A. Owner’s Investment B. Salaries C. Goodwill

2. Which of the following is a liability of an entity?

o A. Premium on shares
o B. Accrued Electricity charges
o C. Short-Term prepayment

3. Which of the following best describes an income statement?

o A. An income statement reports changes over a period of time in component
accounts that comprise the ownership of a firm
o B. An income statement summarizes the financial position of a company at a
given point in time
o C. An income statement measures a company's financial performance over a
specified period of time

4. Which of the following best describes a balance sheet?

o A. It reports cash receipts and cash disbursements for a specific accounting
o B. It reports investment activities for a specified accounting period
o C. It reports the amount and composition of assets, liabilities and equity on a
specific date.

5. As a general rule, revenue is normally recognized when it is:

o A. Measurable and received
o B. Realizable and earned
o C. Measurable and earned

6. A firm issued invoice to its client for service rendered in the month of October. The
correct Journal Entry should be:
o A. Debit to Revenue Account and Credit to Accounts Payable
o B. Debit to Accounts Receivable and Credit to Accounts Payable
o C. Debit to Accounts Receivable and Credit to Revenue Account

7. XYZ Company closes its accounts on 31st December each year. On April 1, 2018 the
company paid Rs 360,000 on account of office rent for 12 months beginning April 1. Rent
expense shown in its Income Statement for the year ended 31st December 2018 would be:
A. Rs 360,000 B. Rs 270,000 C. Rs 90,000

8. A company adjusts its accounts on a monthly basis and closes on annual basis on 31st
December each year. Annual Insurance premium was paid on June 1, 2018. If the unexpired
Insurance shown in unadjusted Trial Balance of 31st December 2018 is Rs 180,000, then
the adjustment for insurance expense on 31st December 2018 would be:
A. Rs 30,000 B. Rs 210,000 C. Rs 150,000

9. In an unadjusted Trial Balance on June 30, Assets are Rs 200,000, Equity Rs 50,000,
Revenues Rs 80,000 and Expenses Rs 60,000. Then Liabilities would be:
A. Rs 150,000 B. Rs 20,000 C. Rs 130,000

10. ABC & Co. adjusts its accounts monthly and closes on 30th June each year. The company
borrowed Rs 1,000,000 on April 1, 2018 @ 15% per annum. Balance of interest expense
in the unadjusted Trial Balance on 30th June would be:
A. Rs 12,500 B. Rs 25,000 C. Rs 37,500
Answers to Quiz:

1. C
2. B
3. C
4. C
5. B
6. C
7. B
8. A
9. C
10. B