Question: Which of the following provide frame work and accounting policies so that the financial statements of different enterprises become comparable?
(a) Business Standards
(b) Accounting Standards
(c) Market Standards
(d) None of these
Question: Abhishek purchased a computer on 1-4-16 for Rs.60,000 and another on 1-10-77 for Rs. 40, 000. He charged depreciation @ 20% p.a under straight line method. What will be the balance as on 31-03-19
(a) Rs.40,000
(b) Rs.64,000
(c) Rs.52,000
(d) Rs.48,000
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Question: Working capital is ____
(a) Current Assets – Current liabilities
(b) Fixed Assets- Current liabilities
(c) Fixed Assets – liabilities
(d) Fixed Assets – Current Assets
Question: Cost of goods sold Rs.10,000, Opening stock Rs.2,000 and Closing stock Rs. 3,000. Find the amount of purchases _____
(a) Rs.10,000
(b) Rs.11,000
(c) Rs.15,000
(d) Rs.9,000
Question: The sale __ is completed with reserved price
(a) sale by sample
(b) sale by description
(c) sale by auction
(d) sale by staple
Question: Cash a/c is a ______
(a) Real a/c
(b) Nominal
(c) Personal
(d) None
Question: Securities premium used for the purpose of
(a) Dividends
(b) fully paid bonus shares
(c) capital loss
(d) none of these
Question: Securities premium used for the purpose of
(a) Dividends
(b) fully paid bonus shares
(c) capital loss
(d) none of these
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Question: The credit balance in the ledger account shows
(a) revenue or an asset
(b) expense or an asset
(c) expense or an liability
(d) revenue or an liability
Question: Ruchi paid Rs.1,200 on 1-7-18 towards yearly subscription (July 1, 2018 to June 30, 2019) of a newspaper. It means she has to make adjustment of _____ expenses for finalization of a/c for the year ended 31-3-19
(a) Rs.300 as prepaid
(b) Rs.300 as outstanding
(c) Rs.200 as prepaid
(d) Rs.200 as outstanding
Question: Provision for bad and doubtful debts should be deducted in balance sheet from
(a) Capital
(b) Cash
(c) Debtors
(d) Creditors
Question: Liability on bills discounted at the time of final accounts is treated as ____
(a) not an liability
(b) current liability
(c) differed liability
(d) contingent liability
Question: On the death of partner, profit (or) loss on revaluation of assets and liabilities is transferred to the capital accounts of partners as per ____
(a) Sacrificing Ratio
(b) Gaining ratio
(c) New profit sharing ratio
(d) Old profit sharing ratio
Question: Which of the following statements is correct in relation to a trial balance?
(a) It shows the financial position of a business.
(b) All the balances in the trial balance will be summarized on the business balance sheet.
(c) It is a list of balances and forms the starting point for the preparation of the business accounts.
(d) It is part of the published accounts of a business.
Question: If there is no agreement in between the partners for sharing profits & losses then they share profits or losses in the ratio of ___
(a) capital ratio at the beginning
(b) equally
(c) capital ratio at the ending
(d) none of the above
Question: As per accrual concept, which of the followings is not true
(a) revenue – expenditure = profit
(b) revenue – profit = expenditure
(c) sales + gross profit = revenue
(d) revenue = profit + expenditure
Question: Calls in advance are recorded under which heading of the balance sheet?
(a) Share capital
(b) Reserves & Surplus
(c) Miscellaneous Expenditure
(d) none
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Question: In sale by description, subject matter can be in the form of
(a) sample words
(b) symbols
(c) numbers
(d) all of the above
Question: Statements of Standard Accounting Practice and Financial Reporting Standards should be complied with when preparing the final accounts of a limited company because:
(a) The Companies Act 1985 demands that they are used.
(b) The auditors will insist they are followed.
(c) The directors are under a legal obligation to ensure they are followed.
(d) They ensure that the accounts present a ‘true and fair view’.
Question: The liability of a partner in a firm to outside is _____
(a) Unlimited
(b) Unlimited up to their capital sharing ratio
(c) Unlimited up to their guaranteed amount
(d) Unlimited up to their profit sharing ratio
Question: Dishonour of a cheque deposited in bank is recorded in:
(a) Returns inward book
(b) Bills receivable book
(c) Cash Book
(d) Sales book
Question: Which of the following accounting concepts are being followed when a company operates a provision for bad debts account?
(a) Consistency, prudence, accruals, going concern
(b) Accruals, consistency, going concern
(c) Prudence, consistency, going concern
(d) Prudence, accruals, going concern
Question: The buyer refused to take delivery and the seller refused to take return then the goods are
(a) Deemed to be in transit
(b) Not deemed to be in transit
(c) both
(d) none of these
Question: If there has been an over recovery of overheads, at the end of the accounting period the amount concerned should be?
(a) Debited to the company profit and loss account.
(b) Credited to the company profit and loss account.
(c) Carried forward to the next accounting period as a cost saving.
(d) Used to reduce next period’s overhead recovery rate.
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Question: Which of the following statements regarding manufacturing accounts is correct?
(a) All manufacturing companies must prepare a manufacturing account.
(b) A manufacturing account is useful as an aid to financial reporting for manufacturing companies.
(c) A management accounting system is needed to produce a manufacturing account.
(d) Manufacturing accounts are always produced annually by manufacturing companies.
Question: Purchased the asset for Rs. 2,00,000 with available discount 20% then what amount should be credited to debentures A/c, when the purchase consideration is discharged by the issue of debentures.
(a) Rs.2,00,000
(b) Rs.1,80,000
(c) Rs. 1,60,000
(d) Rs.2,40,000
Question: An ordinary share dividend is:
(a) Part of the company profits used to reward the shareholders for their investment
(b) Interest on money lent to the company by its shareholders
(c) An expense of running the company
(d) The directors’ remuneration
Question: Which of the following is not a method of pricing raw material issues from stock?
(a) Standard costing
(b) Unit cost
(c) Marginal cost
(d) Continuous weighted average
Question: Direct expenses are those which can be identified with particular products. Which of the following items is a direct cost?
(a) The rent of the factory in which products are made.
(b) The wages of the production supervisor.
(c) A royalty paid to the holder of a patent after each item is produced.
(d) The cost of the glue used to attach labels to the products.
Question: Which of the following factors is likely to be an area of difficulty in a large multinational group of companies?
(a) Compliance with international accounting standards.
(b) Foreign currency translation.
(c) The preparation of the group financial statements.
(d) All of the above.
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Question: The current ratio is an indicator of which following characteristic of an organization?
(a) The current level of profitability
(b) The future level of profitability
(c) The investment potential
(d) The liquidity in the short term
Question: A profit-making service sector entity records what is originally contributed by its shareholders in which account?
(a) Income and expenditure
(b) Accumulated fund
(c) Capital
(d) Members
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Question: Which of the following statements is correct?
(a) Accounting profit is the difference between cash receipts and cash paid in a period.
(b) Accounting profit is the total of cash sales in the year less the expenses for the period.
(c) Accounting profit is the difference between revenue income and expenses for the period.
(d) Accounting profit is the difference between revenue income and cash payments for the period.
Question: In a cash flow statement a bonus issue will:
(a) be included in cash flow from investing activities
(b) be included in cash flow from financing activities
(c) not appear as no cash flow occurs as a result of a bonus issue
(d) be included as part of cash flow from operations
Question: Which of the following statements is true?
The main accounts of a debating society will consist of the following:
(a) An income and expenditure account and a balance sheet.
(b) A trading account, a profit and loss account and a balance sheet.
(c) A profit and loss account and a balance sheet.
(d) A trading account, an income and expenditure account and a balance sheet.
Question: The double entry required to write off a specific bad debt is:
(a) Debit sales, credit trade debtor
(b) Debit profit and loss, credit trade debtor
(c) Debit trade debtor, credit profit and loss
(d) Debit profit and loss, credit provision for bad debts
Ans: (b)
Question: Which of the following items is unlikely to be found in the directors’ report for a limited company?
(a) A description of the accounting policies of the company
(b) Details of corporate donations to charities
(c) Details of corporate donations to political parties
(d) Details of the company’s health and safety policy
Question: The main reason for a company preparing a cash flow statement is:
(a) To comply with legal requirements.
(b) To show the financial position of the company at the end of a period.
(c) To show the profit or loss of the company for the period.
(d) To show, in a standard format, the sources and uses of cash during the period.
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Question: Which of the following statements best describes the purpose of financial accounting in a limited liability company?
(a) To assist in the day-to-day management of the company
(b) To enable the business to pay the correct amount of tax
(c) To ensure that the business pays the correct dividend
(d) To help the directors discharge their obligations to the shareholders
Question: An audit of most limited company financial statements is required because:
(a) The Cadbury Report into corporate governance recommended that one should be undertaken.
(b) The shareholders of a company usually request one.
(c) It is required by the Companies Act.
(d) Banks or other lenders usually request one to be carried out.
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