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CA CPT Fundamentals of Accounting Question Bank

fundamentals of accounting questions and answers

Question: The balance of the petty cash is ______
(a) An expense
(b) Income
(c) An asset
(d) Liability
Ans. (c)

Question: The parties to joint venture is called_________
(a) Co-venturers
(b) Partners
(c) Principal & Agent
(d) Friends
Ans. (a)

Question: General ledger adjustment account(s) is/are opened in ____.
(a) Debtors ledger
(b) General ledger
(c) Creditors ledger
(d) Both (a) and (c)
Ans. (c)

Question: Economic life of an enterprise is split into the periodic interval as per ________
(a) Money Measurement
(b) Matching
(c) Going concern
(d) Accrual
Ans. (c)

Question: When adjusted purchase is shown on the debit column of the trial balance then
(a) Both opening stock and closing stock do not appear in the trial balance
(b) Closing stock is shown in the trial balance and not the opening stock
(c) Opening stock is shown in the trial balance and not the closing stock
(d) Both opening and closing stock appear in the trial balance
Ans. (b)

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Question: Writing of transaction in the ledger is called _______.
(a) Costing
(b) Balancing
(c) Journalizing
(d) Posting
Ans. (d)

Question: The debts written off as bad, if recovered subsequently are
(a) credited to Bad Debts Recovered Account
(b) credited to Debtors Account
(c) debited to Profit and Loss Account
(d) None of the above
Ans. (a)

Question: The purpose of accommodation bill is_______
(a) To finance actual purchase or sale of goods
(b) To facilitate trade transmission
(c) When both parties are in need of funds
(d) None of the above
Ans. (c)

Question: On March 31, 2019 after sale of goods worth Rs. 2,000, he is left with the closing stock of Rs. 10,000. This is
(a) An event
(b) A transaction
(c) A transaction as well as an event
(d) Neither a transaction nor an event
Ans. (a)

Question: Dividends are usually paid as a percentage of ______
(a) Authorized share capital
(b) Net profit
(c) Paid-up capital
(d) Called-up capital
Ans. (c)

Question: Following is the example of external users:
(a) Government
(b) Owners
(c) Management
(d) Employees.
Ans. (a)

Question: Interest on drawings is ________ for the business.
(a) Expenditure
(b) Expense
(c) Gain
(d) None of the three
Ans. (c)

Question: X draws a bill on Y. X endorsed the bill to Z. ________will be the payee of the bill
(a) X
(b) Y
(c) Z
(d) None
Ans. (c)

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Question: Parties to a bill of exchange are
(a) Drawer
(b) Drawee
(c) Payee
(d) All of the above
Ans. (d)

Question: Manufacturing account is prepared to
(a) ascertain the profit or loss on the goods produced
(b) ascertain the cost of the manufactured goods
(c) show the sale proceeds from the goods produced during the year
(d) both (b) and (c).
Ans. (b)

Question: Accounting policies refer to specific accounting ________
(a) Principles
(b) Methods of applying those principles
(c) Both (a) and (b)
(d) None of the above
Ans. (c)

Question: All the expenditures and receipts of revenue nature go to
(a) Trading account
(b) Profit and loss account
(c) Balance sheet
(d) Either to (a) or (b)
Ans. (d)

Question: General reserve at the time of admission of a new partner is transferred to _______.
(a) Profit and loss adjustment account
(b) Partners’ capital accounts
(c) Revaluation account
(d) Memorandum revaluation account
Ans. (b)

Question: Interest on capital will be paid to the partners if provided for in the agreement but only from________
(a) Profits
(b) Reserves
(c) Accumulated Profits
(d) Goodwill
Ans. (a)

Question: “Business unit is separate and distinct from the person who supply capital to it”, is based on
(a) Money measurement concept
(b) Going concern concept.
(c) Business entity concept
(d) Dual aspect concept.
Ans. (c)

Question: A withdrawal of cash from business by the proprietor should be credited to:
(a) Drawings Account
(b) Capital Account
(c) Cash Account
(d) None of the above
Ans. (c)

Question: A proforma invoice is sent by ________
(a) Consignee to Consignor
(b) Consignor to Consignee
(c) Debtors to Consignee
(d) Debtors to Consignor
Ans. (b)

Question: If the cheque is not presented for the payment upto the date of the preparation of the Bank Reconciliation Statement, then the balance as per Pass Book will be
(a) Higher than the balance shown by the cashbook by the amount of unpresented cheque.
(b) Lower than the balance shown by the cashbook by the amount of unpresented cheque.
(c) Same as shown by the cashbook.
(d) None of the above
Ans. (a)

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Question: All of the following are functions of Accounting except
(a) Decision making
(b) Measurement
(c) Forecasting
(d) Ledger posting
Ans. (d)

Question: A Company wishes to earn a 20% profit margin on selling price. ________is the profit mark up on cost, which will achieve the required profit margin?
(a) 33%
(b) 25%
(c) 20%
(d) None of the above
Ans. (b)

Question: A _____ is sent to a customer when he returns the goods.
(a) Debit note
(b) Credit note
(c) Proforma invoice
(d) None of the above.
Ans. (b)

Question: A suspense account facilitates the preparation of __________even when the _______ has not tallied.
(a) Ledgers; Trial balance
(b) Financial statements; Trial Balance
(c) Trial balance; Financial statements
(d) Journal; Trial balance
Ans. (b)

Question: Outgoing partner is compensated for parting with firm’s future profits in favour of remaining partners. The remaining partners contribute to such compensation amount in ______
(a) Gaining Ratio
(b) Capital Ratio
(c) Sacrificing Ratio
(d) Profit Sharing Ratio
Ans. (a)

Question: In ______ method, depreciation is charged by allocating depreciable cost in proposition of the annual output to the probable life-time output.
(a) Working hours method
(b) Replacement method
(c) Revaluation method
(d) Production units method.
Ans. (d)

Question: Financial statements only consider
(a) Assets expressed in monetary terms
(b) Liabilities expressed in monetary terms
(c) Assets expressed in non-monetary terms
(d) Assets and liabilities expressed in monetary terms
Ans. (d)

Question: State the case where the going concern concept is applied?
(a) When an enterprise was set up for a particular purpose, which has been achieved, or to be achieved shortly.
(b) When a receiver or liquidator has been appointed in case of as a company which is to be liquidated.
(c) Fixed assets are acquired for use in the business for earning revenues and are not meant for resale.
(d) When an enterprise is declared sick.
Ans. (c)

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Question: Contra entries are passed only when
(a) double column cash book is prepared
(b) three-column cash book is prepared
(c) simple cash book is prepared
(d) None of the above
Ans. (b)

Question: Noting charges are paid at the time of _______of a bill.
(a) Retirement
(b) Renewal
(c) Dishonour
(d) None of the above.
Ans. (c)

Question: A purchased a car for Rs.5,00,000, making a down payment of Rs.1,00,000 and signing a Rs.4,00,000 bill payable due in 60 days. As a result of this transaction
(a) Total assets increased by Rs.5,00,000.
(b) Total liabilities increased by Rs.4,00,000.
(c) Total assets increased by Rs.4,00,000.
(d) Total assets increased by Rs.4,00,000 with corresponding increase in liabilities by Rs.4,00,000.
Ans. (d)

Question: If two or more transactions of the same nature are journalised together having either the debit or the credit account common is known as
(a) Compound journal entry
(b) Separate journal entry
(c) Posting
(d) None of the above.
Ans. (a)

Question: Whenever errors are noticed in the accounting records, they should be rectified
(a) At the time of preparation of the trial balance.
(b) Without waiting the accounting year to end.
(c) After the preparation of final accounts.
(d) In the next accounting year.
Ans. (b)

Question: Consignment account is
(a) Real account
(b) Personal account
(c) Nominal account
(d) None of the above
Ans. (c)

Question: An amount of Rs.200 received from A credited to B would affect____________
(a) Accounts of A and B
(b) A’s account
(c) Cash account
(d) B’s account.
Ans. (a)

Question: Depreciation of fixed assets is an example of _______ expenditure.
(a) Revenue
(b) Deferred revenue
(c) Capital
(d) None of the above
Ans. (a)

Question: Which financial statement represents the accounting equation, assets = Liabilities + Owner’s equity:
(a) Income Statement
(b) Statement of Cash flows
(c) Balance Sheet
(d) None of the above
Ans. (c)

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Vishal Arora