Accounting MCQs : This section focuses on the "Accounting". These Multiple Choice Questions (MCQs) should be practiced to improve the Accounting skills required for various interviews (campus interview, walk-in interview, company interview), placement, entrance exam and other competitive examinations.
Question 1
Which of the following is a real account?
A. Salary account
B. Cash account
C. Outstanding rent account
D. Sundry creditors account
Question 2
The trade discount on purchases is recorded
A. When it is received
B. When the inventory is purchased
C. When the inventory is sold
D. Not at all recorded in the books
Question 3
Purchase of office equipment for cash will be recorded on which side of a cash book?
A. Receipts
B. Payments
C. Incomes
D. Expenditures
Question 4
Discount for quick repayment of debt is normally referred to as
A. Trade discount
B. Prompt payment discount
C. Cash discount
D. Bulk discount
Question 5
Journals are also referred to as
A. Book of entries
B. Book of original entries
C. T account
D. Book of economic events
Question 6
When one or both aspects of a transaction are recorded in the wrong class or category of account, it is called
A. Error of principle
B. Error of omission
C. Error of commission
D. Error of original entry
Question 7
Based on which of the following concepts, is share capital account shown on the liability side of a balance sheet?
A. Business entity concept
B. Money measurement concept
C. Cost concept
D. Going concern concept
Question 8
The real accounts are accounts of Assets, Liabilities and
A. Expenses
B. Revenues
C. Capital
D. Drawing
Question 9
The process of recording in Journal is done
A. Two times in a year
B. Once in a year
C. Frequently during the accounting period
D. At the end of an accounting period
Question 10
Provision for doubtful debts account is a/an
A. Asset account
B. Contra asset account
C. Nominal account
D. Liability account
Question 11
Which of the following is known as the base for preparing trial balance?
A. Journal
B. Cash account
C. Ledger account
D. Balance Sheet
Question 12
General Journal is a book of _____ entries
A. First
B. Original
C. Secondary
D. Generic
Question 13
If we take goods for own use we should
A. Debit Drawings Account, Credit Purchases Account
B. Debit Drawings Account: Credit Stock Account
C. Debit Sales Account: Credit Stock Account
D. Debit Purchases Account: Credit Drawings Account
Question 14
When capital is increased by an amount, it is recorded on the:
A. Left or credit side of the account
B. Right or debit side of the account
C. Right or credit side of the account
D. Left or debit side of the account
Question 15
Cash book records
A. Cash payments
B. Cash Receipts
C. Cash payments and cash receipts
D. Neither cash payments nor cash receipts
Question 16
Authorized share capital is also known as
A. Registered capital
B. Issued capital
C. Paid up capital
D. Called up capital
Question 17
Which one of the following concepts states that the publication or presentation of financial statements should not be delayed?
A. Objectivity concept
B. Timing concept
C. Timeliness concept
D. Reliability concept
Question 18
Transferring entries from journal to ledger account is commonly known as
A. Recording
B. Transferring
C. Posting
D. Entry making
Question 19
Which of the following is non-profit organization?
A. Sole proprietorship
B. Partnership
C. Limited company
D. Trust
Question 20
The accounting equation is based on
A. Dual aspect
B. Business entity
C. Going concern concept
D. All of the above
Question 21
Balance sheets are prepared
A. Daily
B. Weekly
C. Monthly
D. Annually
Question 22
Memorandum Joint Venture account is a
A. Personal account
B. Real account
C. Nominal account
D. None of the above
Question 23
Which of the following account will be credited, if business bought goods on credit from Mr. Z?
A. Purchases account
B. Mr. Z account
C. Cash account
D. Sales account
Question 24
Which of the following is the internal user of financial statements?
A. Creditor of the business
B. Government agency
C. Shareholder of the business
D. Manager of the business
Question 25
Salaries paid in advance should be shown on
A. Asset side of the Balance sheet
B. Liability side of the Balance sheet
C. Credit side of the Trading account
D. All of the above
Question 26
The three column cash book represents
A. Real accounts
B. Nominal accounts
C. Nominal and personal accounts
D. Real, personal and nominal accounts
Question 27
Using 'lower of cost and net realisable value' for the purpose of inventory valuation is the implementation of which of the following concepts?
A. The going concern concept
B. The separate entity concept
C. The prudence concept
D. Matching concept
Question 28
Discount allowed is
A. Expense of business
B. Income of business
C. Loss of business
D. Abnormal loss of business
Question 29
Office equipment's account is classified as
A. Nominal accounts
B. Real account
C. Cash account
D. Capital account
Question 30
Which of the following is/are fixed asset(s)?
A. Closing inventory
B. Fixed deposit in a bank
C. Patents
D. Prepaid expenses
Question 31
Which of the following accounting equation is correct?
A. Cash + Other assets = Capital - Liabilities
B. Capital + Liabilities = Assets + Income
C. Assets - Liabilities = Capital
D. Assets + Capital = Liabilities
Question 32
All of the following are the methods of inventory costing except
A. FIFO
B. LIFO
C. AVCO or average cost
D. Stock take
Question 33
Opening inventory + Net purchases = ?
A. Ending inventory
B. Closing stock
C. Cost of goods manufactured
D. Cost of goods available for sale
Question 34
Which of the following is the effect on net income if a business decreases its provision for bad debts?
A. It will increase net income
B. It will decrease net income
C. No effect
D. It will increase gross profit and net income
Question 35
The most common imprest system is the ______ system
A. Petty cash
B. Cash book
C. Cash receipts journal
D. Discount
Question 36
Transactions that a business does not record in any specialized journal are recorded in which of the following books?
A. Cash payment journal
B. Cash receipt journal
C. Purchases return journal
D. General journal
Question 37
Those transactions for which there is no separate book, are recorded in the
A. Cash book
B. Bills receivable book
C. Bills payable book
D. Journal Proper
Question 38
Auditing refers to
A. Reporting the financial information
B. Examination of financial information
C. Preparation of financial statements
D. Maintaining the ledger accounts
Question 39
Debenture is also named as
A. Share
B. Bond
C. Reserve
D. Equity
Question 40
Which is the most important characteristic that all assets of a business have?
A. Long life of assets
B. Value of assets
C. Intangible nature of assets
D. Future economic benefits
Question 41
Which of the following is/are kind of depreciation expenses?
A. Amortization
B. Depletion
C. Both of them
D. None of the above
Question 42
Goodwill is classified as which one of the following assets?
A. Fixed
B. Long term
C. Current
D. Intangible
Question 43
Current assets are also known as
A. Gross working capital
B. Invested capital
C. Assets
D. Cash
Question 44
Double entry accounting system includes
A. Accrual accounting only
B. Cash accounting only
C. Both cash and accrual accounting
D. None of the above
Question 45
What does 'aged debtors analysis' signify?
A. shows how long debts have been outstanding
B. How old the customers are
C. How long does a business take to repay the bank loans
D. Minimum number of old debtors
Question 46
The revenue recognition principle dictates that all types of incomes should be recorded or recognized when
A. Cash is received
B. At the end of accounting period
C. When they are earned
D. When interest is paid
Question 47
A current asset that is convertible to cash within 3 months can be referred to as
A. Cash asset
B. Operating asset
C. Intangible assets
D. Cash equivalent
Question 48
A document sent to customer when he returns the goods is called
A. Promissory note
B. Invoice
C. Credit note
D. Debit note
Question 49
Interest on Capital is _____ for the business
A. Revenue
B. Expense
C. Gain
D. None of the above
Question 50
The purchase price of a software that will be used for more than 12 months should be regarded as
A. a revenue expenditure
B. a capital expenditure
C. a long term expense
D. an accounting period expense
Question 51
Which of the following is not a financial statement?
A. Profit and loss account
B. Profit and loss appropriation account
C. Balance sheet
D. Trial Balance
Question 52
Financial statements mainly help in
A. Assumption of economic events
B. Anticipation of economic events
C. Recording of economic events
D. Communication of economic events
Question 53
Information about an item is _______ if its ommission or misstatement might influence the financial decision of the users taken on the basis of that information
A. Concrete
B. Complete
C. Immaterial
D. Material
Question 54
Cash book with cash and discount column is mostly referred to as
A. Simple cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book
Question 55
The debts which are to be repaid within a short period (year or less) are known as
A. Current liabilities
B. Fixed liabilities
C. Contingent liabilities
D. All of the above
Question 56
________ is the first phase of accounting cycle
A. Identifying an economic event or transaction
B. Preparing Journal
C. Posting entries to Ledger accounts
D. Making decisions about business
Question 57
Stock of a Trading concern consists of
A. Raw material
B. Work in progress
C. Merchandise inventory
D. All of the above
Question 58
Which one of the following is INCORRECT about closing stock?
A. It is added into current assets
B. It is deducted from Material available for use
C. It becomes opening stock of next year
D. It reduces the resources of business
Question 59
A debit balance in the bank statement indicates
A. Cash at bank
B. Bank overdraft
C. Over payment to creditors
D. Cash in hand
Question 60
Trial Balance is prepared to check accuracy of
A. Ledger account balances
B. Balance sheet balances
C. Income statement balances
D. Cash flow statement balances
Question 61
The installation expenses for a new machinery will be debited to
A. Cash A/c
B. Profit & Loss A/c
C. Machinery A/c
D. Installation expenses A/c
Question 62
Which of the following is a double entry for deprecation expenses?
A. Accumulated depreciation Debit and depreciation expenses Credit
B. Depreciation expenses Debit and accumulated depreciation Credit
C. Cash Debit and Depreciation expenses Credit
D. Depreciation expenses Debit and Cash Credit
Question 63
Postage stamps on hand are considered as
A. Bank balance
B. Prepaid expenses
C. Accounts receivable
D. Creditors
Question 64
Return on Investment Ratio (ROI) =
A. (Gross profit / Net sales) x 100
B. (Gross profit x Sales / Fixed assets) x 100
C. (Net profit / Sales) x 100
D. (Net profit / Total assets) x 100
Question 65
Unpresented cheques are also referred to as
A. Uncollected cheques
B. Uncredited cheques
C. Outstanding cheques
D. Bounced cheques
Question 66
Accounting provides information on
A. Cost and income for managers
B. Company's tax liability for a particular year
C. Financial conditions of an institutions
D. All of the above
Question 67
When obligation is not probable or the amount expected to be paid to settle the liability cannot be measured with sufficient reliability, it is called
A. Contingent liability
B. Provision
C. Secured loan
D. None of the above
Question 68
The ratios that refer to the ability of the firm to meet the short term obligations out of its short term resources
A. Liquidity ratio
B. Leverage ratio
C. Activity ratio
D. Profitability ratio
Question 69
Which of the following item will be shown on debit side of debtors account?
A. Discount received
B. Return inwards
C. Discount allowed
D. Credit sales
Question 70
A cash book with cash, bank and discount column is commonly referrred to as
A. Cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book
Question 71
In Journal, the business transaction is recorded
A. Same day
B. Next day
C. Once in a week
D. Once in a month
Question 72
Which of the following is a biological asset?
A. Land
B. Building
C. Environment
D. Living plants and animals
Question 73
Which of the following is a commonly used base to create the provision for doubtful debts?
A. Total purchases
B. Total credit sales
C. Total current assets
D. Total current liabilities
Question 74
Sales and purchase journal doesn't record
A. Credit sales
B. Credit purchases
C. Credit sales and purchases
D. Cash sales and purchases
Question 75
The portion of the acquisition cost of an asset yet to be allocated is known as
A. Written down value
B. Accumulated value
C. Realizable value
D. Salvage value
Question 76
Discounts received are
A. Deducted by us when we pay our accounts
B. Deducted when we receive cash
C. Given by us when we sell goods on credit
D. None of these
Question 77
An 'account' records the ______ in the balance of an item
A. Increase
B. Decrease
C. Increase or decrease
D. Appreciation
Question 78
Which of the following subsidiary books serves the purpose of ledger too, in addition to the recording of accounting transaction?
A. Purchases book
B. Sales book
C. Bills receivable book
D. Cash Book
Question 79
Dividends are usually paid as a percentage of
A. Net profit
B. Authorized share capital
C. Called up capital
D. Paid up capital
Question 80
Shares for which amount is paid by public are called ____ shares
A. Authorized
B. Paid up
C. Bonus shares
D. All of the above
Question 81
_____ is not required in Promissory Note
A. Acceptance
B. Noting
C. Discounting
D. None of the above
Question 82
Petty cash fund is supposed to be replenished
A. Every year
B. Every half year
C. Every year
D. At the end of every accounting period
Question 83
Purchases + opening stock - closing stock = ?
A. Amount of sales
B. Gross profit
C. Cost of goods sold
D. Net income
Question 84
Office equipment is a ______ asset for a computer manufacturer and the same office equipment is a ____ asset for a company that deals in these equipments
A. Current, fixed
B. Fixed, intangible
C. Tangible, intangible
D. Fixed, current
Question 85
Which of the following is true about a trial balance?
A. It lists down the balances of accounts
B. It lists down the balances of a balance sheet
C. It is a kind of financial statement
D. It is not a part of accounting cycle
Question 86
Which one of the following statement is CORRECT about long term liabilities?
A. These are due within one year
B. These consist of all debts, payabke after 12 months
C. In working capital, these are deducted from current assets
D. All of the above
Question 87
Cash book is prepared by
A. Bank
B. Accountant of business
C. Manager of a company
D. Bank's cashier
Question 88
Lower the Debt Equity ratio
A. Lower the protection to creditors
B. Higher the protection to creditors
C. It does not affect the creditors
D. None of the above
Question 89
_______ is the gross inflow of economic benefits
A. Assets
B. Liabilities
C. Income
D. Expenses
Question 90
Current ratio =
A. Quick assets/Current liabilities
B. Current assets/Current liabilities
C. Debt/Equity
D. Current assets/Equity
Question 91
The normal balance of asset account is
A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance
Question 92
Which of the following financial statements show the financial health of an organisation at a stated point of time?
A. Balance sheet
B. Trading and Profit & Loss account
C. Cash flow statement
D. Statement of retained earnings
Question 93
Specialized journals are more adequate for which type of businesses?
A. Small businesses
B. Big businesses
C. Sole proprietorship
D. Partnership
Question 94
A Master Budget consists of
A. Sales budget
B. Production budget
C. Material budget
D. All of the above
Question 95
_______ are cheques that are issued by the business but not yet presented to bank for payment
A. Uncollected cheques
B. Uncredited cheques
C. Outstanding cheques
D. Bounced cheques
Question 96
An informal accounting statement that lists the ledger account balances at a point of time and compares the total of debit balances with the total of credit balances is known as
A. Income statement
B. Balance sheet
C. Trial balance
D. Cash Book
Question 97
One of the Fundamental accounting assumption is
A. Materiality
B. Going concern
C. Business entity
D. Dual aspect
Question 98
Commercial accounting is based on
A. Single entry book keeping
B. Double entry book keeping
C. Both single and double entry book keeping
D. Cash basis of book keeping
Question 99
Liabilities are which of the following?
A. Resources
B. Obligations
C. Future benefits
D. Expenses
Question 100
Present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation is termed as
A. Contingent liability
B. Liability
C. Provision
D. Reserve
Question 101
The long term assets that have no physical existence but are rights that have value is known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Question 102
The expenses that have fallen due for payment but not paid are
A. Outstanding expenses
B. Deffered expenses
C. Accrues expenses
D. Prepaid expenses
Question 103
Every business transaction affects at least ____ accounts
A. One
B. Two
C. Three
D. Infinite
Question 104
Which of the following accounts will be credited if a company purchases building for cash?
A. Capital account
B. Fixed assets account
C. Building account
D. Cash account
Question 105
_______ is the common base for preparing a trial balance
A. Ledger accounts
B. General Journal
C. Specialized journals
D. Balance sheet
Question 106
Patents accounts are
A. Secured loan account
B. Nominal account
C. Real account
D. Debtors account
Question 107
Which of the following inventory valuation methods show higher profits during the period of rising prices?
A. FIFO
B. LIFO
C. Weighted average cost method
D. Simple average method
Question 108
An entry which is made on both sides of a cash book is called
A. Cash entry
B. Contra entry
C. Payment entry
D. Compound entry
Question 109
A recovery of bad debt
A. increases net income
B. decreases net income
C. increases gross profit
D. increases gross profit and net income
Question 110
Which of the following is the external user of financial statements?
A. Manager of the business
B. CEO of the business
C. Creditor of the business
D. Controller of the business
Question 111
Error which affect only one account can be
A. Error of complete omission
B. Error of posting
C. Compensatory errors
D. None of the above
Question 112
Payment of expenses will ______ the assets
A. Increase
B. Reduce
C. Apportion
D. Overstate
Question 113
Which of the following account with normal balance is shown at the credit side of a trial balance?
A. Cash account
B. Bank account
C. Equipment account
D. Accrued expenses account
Question 114
Which one of the following can offer its share to public at large?
A. Private limited company
B. Listed company
C. Partnership firm
D. Trust
Question 115
Which one of the following inventory costing methods is supposed to issue the most recently purchased goods?
A. FIFO
B. LIFO
C. AVCO or averrage cost
D. Moving average
Question 116
The accounting process involves recording
A. Quantifiable economic event
B. Non Quantifiable economic event
C. All of them
D. None of them
Question 117
Outsider's claim against the assets of the business is called
A. Liability
B. Expense
C. Income
D. Capital
Question 118
Suspense account given in the trial balance will be entered in the
A. Manufacturing account
B. Balance sheet
C. Trading account
D. Profit and loss account
Question 119
Net income equal to Revenues minus
A. Gains
B. Depreciation
C. Expenses
D. Capital expenditure
Question 120
Bank Reconciliation statement is prepared by
A. Accountant of business
B. Manager of business
C. Controller of business
D. Accountant of the bank
Question 121
The expenses related to the main operations of a business are referred to as
A. Administration expense
B. Non-administration expense
C. Selling expense
D. Operating expense
Question 122
The charter of a company which defines the limitations and powers of the company is called
A. Memorandum of Association
B. Articles of Association
C. Statutory Report
D. Certificate of Commencement
Question 123
When a liability is reduced or decreased, it is recorded on the:
A. Left or credit side of the account
B. Right or debit side of the account
C. Right or credit side of the account
D. Left or debit side of the account
Question 124
Which of the following financial reports shows the profitability of a business?
A. Income statement
B. Balance sheet
C. Cash flow statement
D. Statement of changes in equity
Question 125
Carriage inwards refers to the cost of transportation for
A. Purchase of materials
B. Sale of products
C. Returns outward
D. Return of unsold goods
Question 126
Which of the following is quoted company?
A. Private limited company
B. Public limited company
C. Listed company
D. Non listed company
Question 127
Which of the following is a selling expense?
A. Any tax/freight is paid on purchases
B. General salaries paid to laborers
C. Tax & freight paid on sale
D. Interest on deposits
Question 128
Cash purchases is recorded in which of the following specialized journals?
A. Purchase Journal
B. Sales Journal
C. Purchase return journal
D. Cash payments journal
Question 129
Under which depreciation method, the amount of depreciation expenses remains same throughtout the life of the asset?
A. Straight line method
B. Reducing balance method
C. Number of units produced method
D. Machine hours method
Question 130
Exercising a degree of caution in the case of judgements needed under the condition of uncertainity is the assumption of which of the following accounting concepts?
A. Matching concept
B. Timeliness concept
C. Accrual concept
D. Prudence concept
Question 131
An overstatement in the value of closing stock overstates all of the following except
A. Net income
B. Current assets
C. Capital of the business
D. Cost of goods sold
Question 132
Real account records
A. Dealings with creditors or debtors
B. Dealings in commodities
C. Gains and losses
D. All of the above
Question 133
Bills receivable endorsed are debited to
A. Bills Payable A/c
B. Debtor's A/c
C. Endorsee A/c
D. Bills Receivable A/c
Question 134
The normal balance of liability account is
A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance
Question 135
What is equity?
A. Cash from the business
B. Liability of a business
C. Owner's claim on total assets
D. Owner's claim on total liabilities
Question 136
Which of the following account will be credited when the goods are purchased on credit from Mr. Ali?
A. Purchases account
B. Mr. Ali account
C. Cash account
D. Sales account
Question 137
______ is a separate legal entity whose total capital can be divided into many shares
A. Partnership
B. Sole Proprietorship
C. Company
D. Non-profit organization
Question 138
A Trial Balance contains the balances of
A. Only Real A/c
B. Real A/c and Nominal A/c
C. Personal A/c
D. Both 'b' and 'c'
Question 139
Gross profit is
A. Cost of goods sold + Opening stock
B. Excess of sales over cost of goods sold
C. Sales fewer Purchases
D. Net profit fewer expenses of the period
Question 140
A brief explanation recorded below every entry in General Journal is commonly known as
A. Narration
B. Explanation
C. Summary
D. Other Information
Question 141
In case goods are manufactured and segregated for specified consumers, the best method for valuation of inventory would be
A. FIFO
B. Simple average
C. Base stock
D. Specific identification method
Question 142
A higher inventory ratio indicates
A. Better inventory management
B. Quicker turnover
C. Both A and B
D. None of the above
Question 143
Balance sheet is a statement of
A. Assets
B. Liabilities
C. Capital
D. All of the above
Question 144
If it is required to maintain fixed capitals then the partners shares of profits must be
A. Credited to capital accounts
B. Debited to capital accounts
C. Debited to partners current accounts
D. Credited to partners current accounts
Question 145
The charges of placing commodities into a saleable condition should be charged to
A. Trading account
B. P & L a/c
C. Balance Sheet
D. None of the above
Question 146
Depreciation is charged on fixed assets to comply with which of the following accounting principle?
A. Matching concept
B. Prudence concept
C. Timeliness concept
D. Reliability concept
Question 147
Different accounting policies can be adopted in the following area(s)
A. Valuation of inventories
B. Valuation of Investments
C. Calculation of depreciation
D. All of the above
Question 148
Accounts payable has ____ balance
A. Credit
B. Debit
C. Unfavorable
D. Favorable
Question 149
Which of the following is true when a debtor pays his dues?
A. The asset side of the balance sheet will decrease
B. The asset side of the balance sheet will increase
C. The liability side of the balance sheet will increase
D. There is no change in total assets or total liabilities
Question 150
Which of the following is NOT an example of intangible assets?
A. Franchise rights
B. Goodwill
C. Patents
D. Land
Question 151
Debit note is the basis for recording a transaction in which of the following journals?
A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal
Question 152
Which of the following is time spann into which the total life of a business is divided for the purpose of preparing financial statements?
A. Fiscal year
B. Calendar year
C. Accounting period
D. Accrual period
Question 153
Which of the following specialized journal records "goods returned by customers"?
A. Purchase journal
B. Sales journal
C. Purchase return journal
D. Sales return journal
Question 154
The sales income (Credit and Cash) of a business during a given period is called
A. Transactions
B. Sales Returns
C. Turnover
D. Purchase Returns
Question 155
An asset possesses which of the following?
A. Future economic benefits for the business
B. All kinds of benefits for the business
C. Expenses for the business
D. Merits & Demerits for the business
Question 156
Opening and closing inventories are recorded in
A. Journal proper
B. Purchase book
C. Sales book
D. Bill receivable book
Question 157
The process of recording transactions in different journals is called
A. Posting
B. Entry making
C. Adjusting
D. Journalising
Question 158
Which of the following accounts can be classified as a real account?
A. Rent expenses account
B. Rent income account
C. Insurance expenses account
D. Cash account
Question 159
The accrual basis of accounting records revenues when they are
A. Collected
B. Earned
C. Contracted
D. Readily available for use
Question 160
Under cash basis of accounting, revenue is recognized when
A. Sale is made
B. Cash is received
C. Goods are delivered
D. Services are rendered
Question 161
In which of the following order, data is entered into the Journal?
A. Alphabetical order
B. Numeric order
C. Bullets order
D. Chronological order
Question 162
Payment of rent expenses is recorded on which side of cash book?
A. Receipts
B. Payments
C. Income
D. Expense
Question 163
Accounting furnishes data on
A. Income and cost for the managers
B. Financial conditions of the institutions
C. Company’s tax liability for a particular year
D. All the above
Question 164
Which of the following is NOT a cash inflow?
A. Sale of fixed asset
B. Issue of debentures
C. Cash from business operation
D. Purchase of fixed asset
Question 165
When the goods are returned to a supplier
A. A Debit note is sent to him
B. An Account sale is sent to him
C. A receipt is sent to him
D. Either 'b' or 'c'
Question 166
An expenditure whose benefit is finished or enjoyed immediately is called
A. Expense
B. Liability
C. Cost
D. Income
Question 167
A decrease in value of a fixed asset due to age, wear and tear is known as
A. Depreciation
B. Accumulated depreciation
C. Appreciation
D. Written Down Value (WDV)
Question 168
If debit balances = credit balances, trial balance only shows or checks the _________ and it does not indicate that no errors were made during recording and posting.
A. Arithmetic accuracy
B. Errors of commission
C. Omissions of economic events
D. Understatements of balances
Question 169
Del-credere Commission is allowed to cover
A. All types losses
B. Abnormal loss
C. Normal loss
D. None of the above
Question 170
In income statement, gross profit is always equal to
A. Sales - expenses
B. Income - expenses
C. Sales - cost of goods sold
D. Sales - selling costs
Question 171
Which of the following will be debited if a business purchases goods on credit?
A. Cash
B. Debtor
C. Creditor
D. Purchases
Question 172
A company purchased a vehicle for Rs.6000. It will be used for 5 years and its residual value is expected to be Rs.1000. What is the annual amount of depreciation using straight line method of depreciation?
A. Rs. 1000
B. Rs. 2000
C. Rs. 3000
D. Rs. 5000
Question 173
Which of the following appears in the profit and loss appropriation account?
A. Interest on debentures
B. Dividend
C. Provision for taxation
D. Provision for bad debts
Question 174
Cost of a fixed asset - Accumulated depreciation expenses of the fixed asset = ?
A. Book value of a fixed asset
B. Market value of a fixed asset
C. Historical cost of a fixed asset
D. Recoverable amount if a fixed asset
Question 175
Assets minus liabilities equal to
A. Goodwill
B. Working capital
C. Net income
D. Capital
Question 176
Land on lease should be shown in Blance sheet contrary to the fact that the company does not own that piece of land is the implementation of which accounting concept?
A. Matchig concept
B. Accrual concept
C. Prudence concept
D. Substance over form concept
Question 177
Which of the following assets are shown at written down value in Balance sheet?
A. Current assets
B. Liquid asset
C. Floating assets
D. Fixed asset
Question 178
What is the basic accounting equation?
A. Capital + Liabilities = assets
B. Assets + Liabilities = Capital
C. Capital + Assets = Liabilities
D. Liabilities - Capital = Assets
Question 179
An alternative term used for accumulated depreciation expenses?
A. Provision for depreciation
B. Cumulative depreciation
C. Targeted depreciation
D. Depletion
Question 180
Commission to promote credit sale by consignee is known as
A. Del credere commission
B. Over riding commission
C. Ordinary commission
D. Special commission
Question 181
The concept that "an accountant shouldn't anticipate profit, but must provide for all losses"
A. Conservation concept
B. Consistency concept
C. Materiality concept
D. Reduction concept
Question 182
Which of the following does not appear in Balance sheet?
A. Building
B. Cash
C. Goodwill
D. Rent expenses
Question 183
The term _______ is generally used for the depreciation of natural resources
A. Amortization
B. Depletion
C. Appreciation
D. Disposal value
Question 184
The account that records expenses, gains and losses is
A. Personal account
B. Real account
C. Nominal account
D. None of the above
Question 185
Which of the following event is subject matter of Accounting?
A. Death of key executive of the business
B. Strike of workers
C. Payment of Rs.1000 to bank in discharge of outstanding loan
D. Marriage of the daughter of the MD of the company
Question 186
Suppliers personal a/c are seen in the
A. Sales Ledger
B. Nominal ledger
C. Purchases Ledger
D. General Ledger
Question 187
Drawings by owner of business are generally recorded on which of the following side of a cash book?
A. Receipts
B. Payments
C. Incomes
D. Expenditures
Question 188
Which of the following capital is taken up by the general public?
A. Issued capital
B. Subscribed capital
C. Authorized capital
D. Reserve capital
Question 189
An asset must be ________ by the business to be shown as an asset in its balance sheet.
A. Possessed
B. Owned
C. Controlled
D. Used
Question 190
Which of the following accounts will be debited if the business's owner withdraws cash from business for personal use?
A. Drawings
B. Cash
C. Business
D. Stock
Question 191
The maximum amount beyond which a company is not allowed to raise funds by issue of shares is
A. Issued capital
B. Reserve capital
C. Nominal capital
D. Subscribed capital
Question 192
Money spent to acquire or upgrade physical assets is known as
A. Revenue expense
B. Capital expense
C. Administrative expense
D. Operating expense
Question 193
XYZ firm has imported a machine from abroad. Which of the following is NOT the element of the machine's cost?
A. Purchase price of machine
B. Import duty
C. Demmurage charges
D. Refundable tax
Question 194
Which of the following statements is incorrect regarding capital account?
A. Debit increases the capital account balance
B. Credit increases the capital account balance
C. Fresh capital increases the capital account balance
D. Net income increases the capital account balance
Question 195
Which of the following ratios indicate the short-term liquidity of a business?
A. Inventory turnover ratio
B. Debt equity ratio
C. Acid test ratio
D. Proprietary ratio
Question 196
Which of the following is the most common cause of bad debt?
A. Debtor refusal to repayment
B. Debtor left the country
C. Debtor committed a crime
D. Debtor declared to be a bankrupt
Question 197
Which of the following capital is required for the registration of the company?
A. Issued capital
B. Subscribed capital
C. Authorized capital
D. Reserve capital
Question 198
The claims against the company not acknowledged as debts are shown as
A. Current liabilities
B. Loans and advances
C. Notes to balance sheet
D. Director's report
Question 199
Which of the following is not considered as Research & Development costs?
A. Testing in search for product alternatives
B. Legal work on patent application
C. Modification of design of a process
D. Searching for application of new research findings
Question 200
Sales on credit is recorded in which of the following journal?
A. Purchase journal
B. Sales journal
C. Purchase return journal
D. Sales return journal
Question 201
American companies prepare their financial statement in Dollars whereas Japanese companies produce financial statement in Yen. This is an example of:
A. Stable monetary unit concept
B. Unit of measurement concept
C. Money value concept
D. Current swap concept
Question 202
The matching concept matches which of the following?
A. Asset with liabilities
B. Capital with income
C. Revenues with expenses
D. Expenses with capital
Question 203
Accounting is the process of matching
A. Benefits and costs
B. Revenues and costs
C. Cash inflows and outflows
D. Potential and real performance
Question 204
The value of inventories or stock is figured out at the lower of cost and
A. Purchase price
B. Opportunity cost
C. Realizable value
D. Net realizable value
Question 205
An increase in the value of fixed asset is referred to as:
A. Depreciation
B. Appreciation
C. Market capitalization
D. Reverse depreciation
Question 206
Liquid or Quick assets =
A. Current assets - (Stock + Work in progress)
B. Current assets + Stock + Work in progress
C. (Current assets + Stock) + Work in progress
D. (Current assets + Work in progress) - Stock
Question 207
Cost incurred for the maintenance of shop is considered as
A. Deffered expense
B. Capital expenditure
C. Revenue expenditure
D. Preliminary expense
Question 208
Term 'Credit' means _____ by the business
A. Receiving of benefits
B. It has no effect on business
C. Providing benefits
D. It depends upon items
Question 209
The following is a statement of revenues and expenses for a specific period of time
A. Trading account
B. Trial Balance
C. Profit & Loss statements
D. Balance Sheet
Question 210
The document inviting offers from public to subscribe for the debentures or shares of a body corporate is a
A. Share certificate
B. Debenture
C. Fixed deposit receipt
D. Prospectus
Question 211
Which of the following is TRUE about the treatment of insurance premium paid in advance
A. Current asset
B. Current liability
C. Short term liability
D. Fixed asset
Question 212
A cash book that is used to record the small payments of cash is generally referred to as
A. Simple cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book
Question 213
Discount allowed is a kind of deduction from
A. Account Payable
B. Account Receivable
C. Cash account
D. Discount account
Question 214
The concept of 'separate entity' is applicable to which of the following types of businesses?
A. Sole proprietorship
B. Corporation
C. Partnership
D. All of the above
Question 215
A credit balance in cash book indicates
A. Bank balance
B. Cash at bank
C. Bank overdraft
D. Bank underdraft
Question 216
Bank Reconciliation statement is the comparision of a bank statement (sent by bank) with the
A. Cash receipt journal
B. Cash payment journal
C. Cash book
D. Financial statements
Question 217
Net loss occurs when
A. Expenses are greater than income
B. Expenses are less than income
C. Expenses = Income
D. Liabilities are greater than income
Question 218
Which of the following items of balance sheet are useful in evaluating a company's liquidity?
A. Current assets and other assets
B. Current liabilities and current assets
C. Current liabilities and plant and equipment
D. In current liabilities and other assets
Question 219
Economic life of an enterprise Is split into periodic interval as per ____ concept
A. Materiality
B. Periodicity
C. Accrual
D. Conservation
Question 220
A cheque returned by bank marked "NSF" means that
A. Bank can't verify your identity
B. There are not sufficient funds in your account
C. Cheque has been forged
D. Cheque can't be cashed being illegal
Question 221
General office expenses are charged to which of the following head?
A. Administrative expenses
B. Marketing expenses
C. Selling expenses
D. Financial expenses
Question 222
In balance sheet, fixed assets are shown at
A. Cost price
B. Market value
C. Fair value
D. Written Down Value (WDV)
Question 223
Long term assets having no physical existence but, possessing a value are called
A. Intangible assets
B. Fixed assets
C. Current assets
D. Investments
Question 224
An asset that is NOT physical in nature is called
A. Intangible asset
B. Liquid asset
C. Current asset
D. Fixed asset
Question 225
Reserve capital means
A. Part of subscribed uncalled capital
B. Accumulated profit
C. Part of Capital Reserve
D. Part of Capital Redemption Reserve
Question 226
Sales invoices are first entered in
A. The Cash Book
B. The Purchases Journal
C. The Sales Journal
D. The Sales Account
Question 227
Bookkeeping mainly consists of which part of accounting process?
A. Analysing
B. Preparing financial statements
C. Recording financial information
D. Auditing the books of accounts
Question 228
Net profit is computed in the
A. Profit and loss account
B. Balance sheet
C. Trial balance
D. Trading account
Question 229
Copyrights, Patents and Trademarks are,
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Question 230
Which of the following is the closing balance of a ledger account?
A. Balance c/d
B. Balance b/d
C. Balance e/d
D. Balance f/c
Question 231
Revenue from sale of product ordinarily is reported as part of earning in the period
A. The planning takes place
B. The sale is made
C. The product is manufactured
D. The cash is collected
Question 232
If a trial balance totals do not agree, the difference must be entered in
A. The Profit and Loss Account
B. A Nominal Account
C. The Capital Account
D. A Suspense Account
Question 233
A proforma invoice is sent by
A. Consignee to consignor
B. Consignee to debtors
C. Debtors to consignee
D. Consignor to consignee
Question 234
The estimated value at which an asset is expected to be sold after the end of its useful life is called
A. Residual value
B. Salvage value
C. Scrap value
D. All of the above
Question 235
Cash discount is allowed on ______ repayment of debt
A. Lump sum
B. Prompt
C. Actual
D. None of them
Question 236
The measure of how efficiently the assets resources are employed by the firm is called
A. Liquidity ratio
B. Leverage ratio
C. Activity ratio
D. Profitability ratio
Question 237
Which of the following are the owners of a company?
A. Proprietors
B. Partners
C. Shareholders
D. Managers
Question 238
The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as
A. Appreciation
B. Depreciation
C. Fluctuation
D. None of the above
Question 239
A low Return on Investment Ratio (ROI) indicates
A. Improper utilization of resources
B. Over investment in assets
C. Both A and B
D. None of the above
Question 240
Which of the following specialized journal records "goods returned by the business"?
A. Purchase journal
B. Sales journal
C. Purchase return journal
D. Sales return journal
Question 241
Prepaid expenses are considered as
A. Asset
B. Liability
C. Loss
D. Capital
Question 242
Budgeting is difficult to apply in the following cases
A. Products subjected to rapid changes
B. Job order manufacturing
C. Uncertain market condition
D. All of the above
Question 243
When will the bill mature if the date of maturity of a bill is a holiday
A. Holiday itself
B. Other agreed day
C. Preceding working day
D. Next working day
Question 244
Which of the following sets of expense are the direct expense of business?
A. Wages, Carriage Inward, Octroi
B. Postage, Wages, Carriage Inward
C. Purchases, Wages, Coal Expenses
D. Both 'a' and 'c'
Question 245
Under which method of inventory costing, a pre-determined cost is assigned to all items of inventory?
A. Replacement cost method
B. Standard cost method
C. AVCO or average cost
D. FIFO method
Question 246
Normally the following accounts are balanced
A. Real account and Nominal account
B. Personal account and Real account
C. Only Nominal account
D. All accounts
Question 247
The maximum amount with which a company is registered is called
A. Authorized capital
B. Issued capital
C. Paid up capital
D. Called up capital
Question 248
Amortization of unidentified intangible assets is in terms of
A. Conservatism concept
B. Materiality concept
C. Matching concept
D. Cost concept
Question 249
Identify the correct sequence of accounting process
A. Communicating -> Recording -> Identifying
B. Recording -> Communicating -> Identifying
C. Identifying -> Communicating -> Recording
D. Identifying -> Recording -> Communicating
Question 250
Purchase book is maintained to record
A. All credit purchases
B. All cash purchases
C. Purchases of goods
D. None of the above
Question 251
Identify the asset from the following
A. Cash and cash equivalent
B. Creditors
C. Notes payable
D. Bank loan
Question 252
Which of the following is a type of cash receipt journal + cash payment journal?
A. Bank statement
B. Statement of cash flow
C. Cash book
D. Cash documents
Question 253
Which of the following account will be credited when the goods are purchased on cash?
A. Stock account
B. Cash account
C. Supplier account
D. Work in progress account
Question 254
Which of the following is not regarded as the fundamental concept that is identified by IAS-1?
A. The going concern concept
B. The separate entity concept
C. The prudence concept
D. Correction concept
Question 255
Revenue earned but not yet received by the business is known as
A. Contra asset revenue
B. Accrued expenses
C. Accrued revenue
D. Unearned revenue
Question 256
The main objective of providing depreciation is to
A. Calculate the true net profit
B. Compute the actual cash profit
C. Create funds for replacement of fixed assets
D. Reduce tax burden
Question 257
Transaction between business and owner are recorded following ____ concept
A. Periodicity
B. Business entity
C. Prudence
D. Going concern
Question 258
What is depreciation?
A. Cost of a fixed asset
B. Cost of a fixed asset's repair
C. The residual value of a fixed asset
D. Portion of a fixed asset's cost consumed during the current accounting period
Question 259
Which of the following is the most important document of the company?
A. Memorandum of association
B. Articles of association
C. Annual report
D. Prospectus
Question 260
The assets that can be easily converted into cash within a short period, i
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Question 261
A cash deposit made by business appears on the bank statement as ____ balance
A. Debit
B. Credit
C. Expenses
D. Liability
Question 262
Discount received is recorded on which of the following side of a cash book?
A. Receipts
B. Payments
C. Income
D. Expenditure
Question 263
When it is certain that a debt won't be recovered. Which of the following is correct?
A. Provision for bad debt is created
B. Account receivable is credited
C. Bad debts is credited
D. Sales is debited
Question 264
Does prudence concept allow a business to build substantially higher reserves or provisions than that are actually required?
A. Yes
B. No
C. To some extent
D. It depends on the type of business
Question 265
Fresh capital introduction will increase
A. Assets and Liabilities
B. Assets and Equity
C. Liabilities and equity and bank balance
D. Capital and Liabilities
Question 266
The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Question 267
Which of the following is (are) type(s) of Public Limited Companies?
A. Listed companies
B. Non listed companies
C. Private limited companies
D. Both listed and non listed companies
Question 268
Which of the following account will be credited when a typewriter is sold that has been used in the office?
A. Office equipment account
B. Cash account
C. Sales account
D. Purchase account
Question 269
Debit balance = Credit balance in a trial balance indicates that
A. No error in recording transactions
B. No error in posting entries to ledger accounts
C. Account balances are correct
D. Mathematically Capital + Liabilities = Assets
Question 270
Accrued expenses are considered as
A. Asset
B. Liability
C. Gain
D. Income
Question 271
Petty cash balance is
A. Liability
B. Income
C. Expense
D. Asset
Question 272
Accounts receivable & inventory are the examples of
A. Current assets
B. Liquid asset
C. Fixed asset
D. Capital asset
Question 273
The Journal entry in which two or more account is debited or credited is referred to as
A. Journal entry
B. Multi entry
C. Additional entry
D. Compound entry
Question 274
Which of the following financial statements shows the financial position of a business at a specific date?
A. Balance sheet
B. Income statement
C. Cash flow statement
D. Statement of changes in equity
Question 275
Which of the following are closed at the end of an accounting period?
A. Nominal accounts
B. Personal accounts
C. Real accounts
D. None of them
Question 276
Goods returned by customer should be debited to which of the following accounts?
A. Sales income account
B. Sales account
C. Return inward account
D. Expenses account
Question 277
Merchandise on hand at either the beginning or end of the accounting period is called
A. Raw material
B. Cost of goods sold
C. Work in progress
D. Inventory
Question 278
The going concern concept assumes that
A. The entity continue running for forseeable future
B. The entity continue running until the end of accounting period
C. The entity will close its operation in 10 years
D. The entity can't be liquidated
Question 279
Which of these best explains fixed assets?
A. Are bought to be used in the business
B. Are expensive items bought for the business
C. Are items which will not wear out quickly
D. Are of long life and are not purchased specifically for resale
Question 280
Capital increases if ______ increases
A. Expenses are greater than income
B. Drawings
C. Interest on capital
D. Revenue
Question 281
In order to find out the value of the closing stock during the end of the financial year we,
A. do this by stocktaking
B. deduct the cost of goods sold from sales
C. deduct opening stock from the cost of goods sold
D. look in the stock account
Question 282
Depreciable amount + Residual value of a fixed asset = ?
A. Depreciation expenses
B. Accumulated depreciation
C. Cost of the fixed asset
D. Future economic benefits of a fixed asset
Question 283
The unfavorable balance of Profit and Loss account should be
A. Added to liabilities
B. Subtracted from current assets
C. Subtracted from capital
D. Subtracted from liabilities
Question 284
Which of the following is a liability?
A. Cash
B. Equipment
C. Debtors
D. Creditors
Question 285
Which of the following foxed assets is not depreciated in the ordinary circumstances?
A. Plant & Machinery
B. Building account
C. Land
D. Equipment's
Question 286
What type of expenses are paid out of Gross Profit?
A. General expenses
B. Financial expenses
C. Selling expenses
D. All of the above
Question 287
Which of the following is not an item of revenue expenditure?
A. Interest on deposits accepted
B. Annual insurance premium on inventory
C. Customs duty paid in connection with the import of equipment
D. Repairs and maintenance on machinery
Question 288
The persons who sign Articles and Memorandum of the company and contribute in the initial share capital of the company are called
A. Subscribers
B. Shareholders
C. Managers
D. Directors
Question 289
Capital of a business decreases if there is an increase in
A. Drawings
B. Income
C. Gains
D. Fresh capital
Question 290
In which of the following interim dividend is treated?
A. In profit and loss account
B. In profit and loss appropriation account
C. On the asset side of the Balance sheet
D. In trading account
Question 291
Under which method of depreciation, the amount of depreciation expenses remains constant throughout the life of the asset?
A. Reducing balance method
B. Unit of activity method
C. Straight line method
D. None of these
Question 292
Which one of the following accounting equations is correct?
A. Assets = Owner's equity
B. Assets = Liabilities + Owner's equity
C. Assets = Liabilities - Owner's equity
D. Assets + Liabilities = Owner's equity
Question 293
______ is the withdrawal of cash and goods by the owner of the business for his/her personal use
A. Depreciation
B. Drawings
C. Outflow of cash
D. Appreciation
Question 294
Which of the following will affect the agreement of a trial balance?
A. Complete omission of a transaction
B. Partial omission of a transaction
C. Error of principle
D. Compensating errors
Question 295
A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debt ommission?
A. Net profit would decrease
B. Net profit would increase
C. Gross profit would overstate
D. Gross profit would understate
Question 296
Cost of goods available for sale - closing inventory = ?
A. Opening inventiry
B. Cost of opening finished goods inventory
C. Work in progress ending inventory
D. Cost of goods sold
Question 297
The following is (are) the current liability (ies)
A. Bills payable
B. Outstanding expenses
C. Bank Overdraft
D. All of the above
Question 298
The assets which have a limited useful life are termed as
A. Limited assets
B. Depreciable assets
C. Unlimited assets
D. None of the above
Question 299
Favourable balance of cash book implies
A. Credit balance of cash book
B. Debit balance of cash book
C. Bank overdraft
D. Adjusted balance of cash book
Question 300
At the balance sheet date, the balance on the Accumulated Provision for Depreciation Account is
A. Transferred to Depreciation Account
B. Transferred to the Asset Account
C. Transferred to Profit and Loss Account
D. Simply deducted from the asset in the Balance Sheet
Question 301
Expenditure incurred annually on renewal of patent is a
A. Revenue expenditure
B. Capital expenditure
C. Financial expenditure
D. Operating expenditure
Question 302
Postdated cheques are considered as
A. Cash
B. Bank balance
C. Accounts receivable
D. Cash reserve
Question 303
The following is a statement showing the financial status of the comapany at any given time
A. Trading account
B. Profit & Loss statement
C. Balance Sheet
D. Cash Book
Question 304
Which of the following instruments is not a negotiable instrument?
A. Bearer cheque
B. Promissory note
C. Crossed cheque
D. Bills of exchange
Question 305
_____ will be credited if goods are given as charity
A. Cash
B. Charity
C. Purchases
D. Sales
Question 306
In an account, when credit side total < debit side total, then, the balance is known as
A. Negative balance
B. Debit balance
C. Positive balance
D. Credit balance
Question 307
If the opening inventory of a business is undercast, it will
A. Increase gross profit and decrease net profit
B. Decrease gross profit as well as net profit
C. Increase value of assets
D. Increase gross profit as well as net profit
Question 308
Loss leads to reduction in
A. Capital
B. Income
C. Liabilities
D. None of the above
Question 309
Which of the following can be distributed among the shareholders?
A. Capital reserve
B. General reserve
C. Revaluation reserve
D. All of the above
Question 310
Entered in the Purchases Journal are
A. Discounts received
B. Purchases invoices
C. Payments to suppliers
D. Trade discounts
Question 311
Declared dividend should be classified in the balance sheet as a
A. Provision
B. Current liability
C. Reserve
D. Current asset
Question 312
Net profit is computed in which of the following?
A. Balance sheet
B. Income statement
C. Cash flow statement
D. Statement of changes in equity
Question 313
Which one of the following is NOT true about capital expenditure?
A. Creates future benefits
B. Incurred to acquire fixed assets
C. Incurred to increase the economic life of existing fixed assets
D. Reduce the profit of the concern
Question 314
The following is (are) the type(s) of Journal
A. Purchase Journal
B. Sales Journal
C. Cash Journal
D. All of the above
Question 315
Which of the following is a leverage ratio?
A. Debt equity ratio
B. Current ratio
C. Quick ratio
D. Earning power
Question 316
If you want to ensure that your money will be secured if cheques sent are wasted in the post, you should
A. Always pay by cash
B. Cross your Cheques Account Payee only, Not Negotiable
C. Always get the money in person
D. Not use the postal service in future
Question 317
Right shares are the shares
A. Issued by a newly formed company
B. Legally issued to the public at large
C. Offered to the existing equity shareholders
D. That have a right of redemption
Question 318
Provision for bad debts is made as per the
A. Conservatism concept
B. Cost concept
C. Consistency concept
D. Going concern concept
Question 319
Which of the following account with normal balance is shown at the debit side of a trial balance?
A. Rent income account
B. Creditors account
C. Unearned income account
D. Cash account
Question 320
Which of the following is the normal balance of a rent expense account?
A. Credit balance
B. Cash balance
C. Overdraft
D. Debit balance
Question 321
The allocation of owner's private expenses to his/her business violates which of the following?
A. Accrual concept
B. Matching concept
C. Separate business entity concept
D. Consistency concept
Question 322
The process of entering all transactions from the Journal to Ledger is called
A. Posting
B. Entry
C. Accounting
D. None of the above
Question 323
In the calculation of depreciation, all of the following items are actually estimates except:
A. Useful life
B. Residual value
C. Historical cost
D. Salvage value
Question 324
Which of the following is used to record financial transactions in chronological (day-to-day) order?
A. Voucher
B. General Journal
C. General Ledger
D. Trial Balance
Question 325
When a petty cash book is kept there will be
A. No entries made at all in the general ledger for items paid by petty cash
B. The same number of entries in the general ledger
C. Fewer entries made in the general ledger
D. More entries made in the general ledger
Question 326
Current Assets - Current Liabilities = ?
A. Capital + Liabilities = assets
B. Absorbed capital
C. Net assets
D. Working capital
Question 327
Double entry implies that
A. Recording entries in Journal
B. Recording entries in Ledger account
C. Recording two aspects of every transaction
D. Recording every transaction in books
Question 328
Net Profit = Gross Profit minus
A. Operating expenses
B. Product cost
C. Deferred expenses
D. Direct cost
Question 329
The person from whom the goods are purchased on credit are called
A. Debtors
B. Creditors
C. Accounts receivable
D. None of the above
Question 330
Which of the following would NOT be considered as a component of 'cost' of stock?
A. Transportation inward costs
B. Import duties
C. Salaries of selling staff
D. Purchase price
Question 331
The other name of Journal is
A. Ledger
B. T account
C. Day Book
D. Cash Book
Question 332
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
Question 333
Cash received from debtor is recorded in which of the following specialized journals?
A. Purchase Journal
B. Sales Journal
C. Cash receipts journal
D. Cash payments journal
Question 334
Credit note is the basis for recording a transaction in which of the following journals?
A. Purchase Journal
B. Sales return journal
C. General journal
D. Cash receipt journal
Question 335
A company's merchandise, raw materials, finished and unfinished products which have not yet been sold is known as
A. Sales
B. Purchases
C. Inventory
D. Work in progress
Question 336
Overriding commission is generally calculated on
A. Cash sale only
B. Total sales exceeding invoice value/cost
C. Credit sales
D. None of the above
Question 337
Identify the nominal account
A. Machinery account
B. Building account
C. Creditors account
D. Rent expenses account
Question 338
Documentary evidence, in a specific format used to record the details of a transaction is known as
A. Account
B. Voucher
C. Journal
D. Ledger
Question 339
The standard format of Journal does not include which of the following?
A. Assets column
B. Date column
C. Description column
D. Amount column
Question 340
Provision for cash discount on debtors is a percentage of
A. Debtors
B. Net debtors
C. Net debtors less provision for doubtful debts
D. Net sales
Question 341
Earned but not yet received income is treated as
A. Asset
B. Liability
C. Loss
D. Capital
Question 342
Which one of the following methods of inventory costing yields highest taxable income?
A. FIFO
B. LIFO
C. AVCO or averrage cost
D. Standard cost method
Question 343
Which accounting concept dictates the inclusion of 'provision for doubtful debts' in the financial statements?
A. Accrual concept
B. Matching concept
C. Going concern concept
D. Prudence concept
Question 344
Sales expenditure budget is prepared by estimating the expense(s) of
A. Advertisement
B. Market analysis
C. Salesman's salary
D. All of the above
Question 345
What is nature of Capital account?
A. Debit
B. Credit
C. Expenses
D. Loss
Question 346
Which of the following financial statements shows the movement of cash and cash equivalents during an accounting period?
A. Income statement
B. Balance sheet
C. Cash flow statement
D. Statement of changes in equity
Question 347
Which of the following is not an item of Balance Sheet?
A. Accounts receivable
B. Accounts payable
C. Sales revenue
D. Marketable securities
Question 348
In accounting, an economic event is referred to as
A. Cash
B. Bank statement
C. Transaction
D. Exchange of money
Question 349
Which of the following account will be credited in the books of XYZ Co. Ltd, if the business purchases a vehicle thriugh cheque?
A. Vehicle account
B. Business account
C. Bank account
D. Debtors account
Question 350
NRV or net realizable value of inventory is the expected selling price or market value less
A. Carry value of the inventory
B. Expenses necessary to complete sale
C. Cost of the stock
D. Replacement cost
Question 351
Introduction of capital by owner of business is recorded on which side of a cash book?
A. Receipts
B. Payments
C. Incomes
D. Expenditures
Question 352
Revenue and expense accounts are referred to as
A. Nominal accounts
B. Real account
C. Cash account
D. Bank account
Question 353
Interest on loan paid by business is an example of
A. Revenue expense
B. Income
C. Asset
D. Return outward
Question 354
The normal balance of capital account is
A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance
Question 355
Which of the following is an example of business liability?
A. Land
B. Building
C. Cash
D. Creditors
Question 356
Which of the following documents contains rules and regulations for internal management of the business?
A. Memorandum of association
B. Articles of association
C. Prospectus
D. Statutory Declaration
Question 357
Trial Balance is commonly prepared
A. Frequently during the year
B. At the end of an accounting period
C. At the end of a month
D. At the end of a year
Question 358
Which one of the following is NOT true about revenue expenditure?
A. These are the running expenses of the business
B. They improve the financial position of the business
C. They reduce the profit of the concern
D. They do not appear in the balance sheet
Question 359
The debts which are to be repaid within a short period (a year or less) are referred to as,
A. Current Liabilities
B. Fixed liabilities
C. Contingent liabilities
D. All the above