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D. Operating expenses
4) Which of the following is not the same as the others?
A. Gain
B. Gross margin
C. Income
D. Revenue
5) The income statement records:
A. Sales
B. Cost of goods sold
C. Expenses
D. All of the above
6) The difference between assets and liabilities is called:
A. Balance sheet
B. Profit
C. Gross margin
D. Equity
7) Long-term liabilities are:
A. Debts or portions of debt due more than 12 months from the date of the balance
sheet
B. Bills for inventory
C. Amounts due for renovations
D. Amounts due for supplies
8) Which of the following is not a category used for assets on the balance sheet?
A. Current
B. Fixed
C. Other
D. Accrued
9) The _____________ compares the possessions of a company and the debts that
it owes on a specific day.
A. Income statement
B. Balance sheet
C. Cash flow projection
D. Completed-contract method
10) Which of the following accounting methods is the simplest and easiest to use?
A. Completed-contract method
B. Cash basis
C. Accrual basis
D. All of the above
1. If business purchases goods for resale purposes, such purchases are charged to
_____________
1) Expenses account
2) Purchases account
3) Sales account
4) None of the given options
2. The amount of resources supplied by the owner in business is called:
1) Investments
2) Assets
3) Capital
4) Reserves
3. Excess of sales over cost of goods sold in an accounting period is termed as:
1) Net Profit
2) Gross Profit
3) Retained earnings
4) None of the given options
4. At the end of the year, goods that are unsold are deducted from:
1) Finished goods
2) Closing stock
3) Cost of goods sold
4) Opening stock
5. Conversion cost is:
1) Total factory cost
2) The cost incurred in converting raw material into finished goods
3) The cost incurred in converting raw material into work in process
4) None of the given options
6. The cost of the asset after the expiry of its useful life is called___________
1) Written down value
2) Residual value
3) Expired value
4) None of the given options
When bank statement shows a debit balance, it means:
1) Overdraft balance as per cash book
The following Journal entry was recorded in Dixy stores accounting records:
Identify which of the following statements does not correctly describe the Net
Income.
1. Net Income is computed in Income statement, appears in the statement of
Owners equity and increases Owners equity in the balance sheet.
2. Net income is equal to Revenue minus expenses.
3. Net Income is computed in Income statement, appears in the statement of
Owners equity and increases the amount of cash shown in the balance sheet.
4. Net Income can be determined using the account balances appearing in the
adjusted Trial balance.
Which of the following can not be classified as Account?
1.
2.
3.
4.
Assets.
Liabilities.
Income.
Proprietor
F. Gross margin
G. Income
H. Revenue
15) The income statement records:
E. Sales
F. Cost of goods sold
G. Expenses
H. All of the above
16) The difference between assets and liabilities is called:
E. Balance sheet
F. Profit
G. Gross margin
H. Equity
17) Long-term liabilities are:
E. Debts or portions of debt due more than 12 months from the date of the balance
sheet
F. Bills for inventory
G. Amounts due for renovations
H. Amounts due for supplies
18) Which of the following is not a category used for assets on the balance sheet?
E. Current
F. Fixed
G. Other
H. Accrued
19) The _____________ compares the possessions of a company and the debts
that it owes on a specific day.
E. Income statement
F. Balance sheet
G. Cash flow projection
H. Completed-contract method
20) Which of the following accounting methods is the simplest and easiest to use?
E. Cash basis
F. Accrual basis
G. Completed-contract method
H. All of the above
1) Depreciation of machinery will be shown in the profit & loss account under the
heading of:
A. Selling expense
B. Administrative Expenses
C. Marketing expense
D. Financial expense
2) Advance insurance will be ___________ from Insurance expense.
A. Added
B. Deducted
C. Double charged
D. None of the given options
3) Money lying in our bank account is our:
A. Liability
B. Assets
C. Expense
D. None of the given option
4) Liquidity is:
A. The amount of cash to liquidate
B. The funds available for use
C. The ability of business to receive its cash
D. The ability of a business to pay its debts in time
5) If total liabilities decreased by $25,000 and stockholders equity increased by $5,000
during a period of time, then total assets must change by what amount and direction
during that same time period?
A.
B.
C.
D.
$20,000 increase
$20,000 decrease
$30,000 increase
$30,000 decrease
Rs.
Opening Stock 42,850
Purchases 137,190
Carriage inward 1,500
Closing Stock 51,060
A. Rs. 229600
B. Rs. 130,480
C. Rs. 232600
D. Rs. 146900
Calculation:
Cost of good sold= Opening stock + Purchases + Carriage Inward - Closing Stock
= 42,850 + 137,190 + 1,500 - 51,060
= 130,480
4) If Motor Van Costs Rs. 12,500, its accumulated depreciation is Rs. 4,200; depreciation
charged for the year is Rs. 2,500. What will be its Book value at the end of the
period?
A. Rs. 10,000
B. Rs. 8,300
C. Rs. 5,800
D. Rs. 10,800
Calculation
Book value = Cost - (Depreciation + Accumulated Depreciation)
= 12,500 (4,200 + 2,500)
= 12,500 6,700 = 5,800
5) Mr. Abid is a partner in a partnership firm. His capital on July 1, 2001 was Rs.
150,000. He invested further capital of Rs. 50,000 on March 1, 2002. What will be
the mark up on capital if Mark up rate is 5%? The financial year is from July to June.
A. Rs.5833
B. Rs. 8,333
C. Rs. 833
D. None of the given options.
Calculation:
=150,000 x 5% = 7,500
= 50,000 x 5% x 4/12 = 833
= 7,500 + 833 = 8,333
6) Which of the following is an example of Non commercial organization?
A. Sole proprietorship
B. Partnership
C. Limited Company
D. Trusts
7) In case where actual increase or decrease in capital such as Drawing and Profit is not
recorded in capital account, such kind of account is called:
A. Fixed capital account
B. Fluctuating capital account
C. Current account
D. None of the given option
8) There should be a minimum of _________ members to form a public limited company.
A. Ten
B. Nine
C. Seven
D. Two
9) What amount of Provisions for bad debts will appear in Profit & Loss account if:
Total debtors Rs. 32,800
Bad debts Rs. 3,600
Provision for doubtful debts (old) Rs. 6,000
Current year provisions (New) Rs. 1,500
A. Rs. 11,100
B. Rs. 900
C. Rs. 8,100
D. Rs. 5,100
Calculation:
= New reserve - Old reserves +Old bad debts
= 1,500 6,000 + 3,600 = 900
10) Ascertain the amount of Current Assets from the following data.
Stock Rs. 51,060
Debtors Rs. 37,178
Provision for doubtful debts Rs. 870
Cash at bank Rs. 666
Advance rent Rs. 120
Rs. 88,154
A. Rs. 88,034
B. Rs. 88,238
C. Rs. 89108
Calculation:
Stock 51,060
Debtors 37,178
Less: Provision for doubtful debts (870)
Cash at bank 666
Advance rent 120
88,154
1. Memorandum of association contains which of the followings:
A. Place of registered office of the company
B. Objective of the company
C. Amount of registered share capital
D. All of the given options
2. The maximum amount with which a company gets registration/incorporation is called:
A. Authorized share capital
B. Issued share capital
C. Subscribed share capital
D. Paid up share capital
3. No entry is recorded for:
A. Issued share capital
B. Authorized share capital
C. Subscribed share capital
D. None of the given options
Company
b) Sole proprietorship
c) Partnership
d) None
2. Which one of the following concept may be stated as "for every debit, there is a
credit"?
a.
b.
c.
d.
3. The accounting system, in which accounting entries are made on the basis of amount
having become due for payment or receipt, is known as:
a) Cash
system of accounting
b) Current
accounting period
c) Accrual
d) None
system of accounting
4. Assets which have no physical existence and which cannot be seen, touched or felt are
called:
a) Current
assets
b) Tangible assets
c) Fictitious
assets
d) Intangible
assets
5. If the Gross profit is Rs. 5,000 and the net profit is 25% of the Gross profit. The
expenses must be:
a) Rs.3,750
b) Rs.1,250
c) Rs.4,150
d) Rs.6,250
b) 1/3
c) 1/5
d) 1/2
balance
b) Closing
balance
c) Debit
balance
d) Credit
balance
8. Those liabilities which arise only on the happening of some event, are called:
a) Current
Liabilities
b) Outstanding
Liabilities
c) Deferred Liabilities
d) Contingent
Liabilities
9. Which one of the following system of recording transaction has a dual aspect concept
of accounting?
a) Double
entry system
b) Single entry
system
c) Cash
system of accounting
d) None
Balance
c) Ledger
d) None
Mr. X, the sole proprietor of Company XY does not list his personal house on the
balance sheet of Company XY; Example shows which one of the following
concept?
a) Business Entity
b) Matching Concept
examples of:
a. Financial Expenses
b. Operating expenses
c. Marketing expenses
d. All of the given options
10) _______shows how much of a mark-up a company is achieving between the cost
of what it sells and the selling price
a. Cost of goods sold
b. Gross profit
c. Gross margin
d. Net profit
1. If Accumulated profit brought forward has credit nature, what will be its
treatment?
a. It will be added in net profit for the year
b. It will be subtracted from the net profit for the year
c. It will be deducted from current Assets
d. It will be added in current assets
2. Fixed Assets at WDV + working capital =?
a. Total shareholders equity
b. Net capital employed
c. Long term loan
d. Current liability
3. Keeping in view the following data, what will be Net Cash Flow from
Investing Activities?
Particulars Rs.
Purchases from short term borrowing 45,000
Purchases of marketable securities (65,000)
Proceeds from marketable securities 40,000
Loans made to borrowers (17,000)
Cash paid acquire plant assets (160,000)
Proceeds from sales of sales of plant Assets 75,000
Collection on loans 12,000
a. Rs. (115,000)
b. Rs. 100,000
c. Rs. 55,000
d. None of the given options
4. Keeping in view the following data, what will be Net cash provided by
operating activities?
Particulars Rs.
Net income 65,000
Depreciation expenses 40,000
Decrease in accrued interest receivable 1,000
Increase in accounts payable 15,000
Increase in accrued liabilities 7,000
Non operating loss on sales of marketable securities 4,000
Increase in accounts receivable 30,000
a. Income Statements
b. Statement of Cash Flows
c. Balance Sheet
d. Statement of Retained Earnings
1. If Accumulated profit brought forward has credit nature, what will be its
treatment?
a. It will be added in net profit for the year
b. It will be subtracted from the net profit for the year
c. It will be deducted from current Assets
d. It will be added in current assets
2. Fixed Assets at WDV + working capital =?
a. Total shareholders equity
b. Net capital employed
c. Long term loan
d. Current liability
3. Keeping in view the following data, what will be Net Cash Flow from
Investing Activities?
Particulars Rs.
Purchases from short term borrowing 45,000
Purchases of marketable securities (65,000)
Proceeds from marketable securities 40,000
Loans made to borrowers (17,000)
Cash paid acquire plant assets (160,000)
c. Rs. 50,000
d. None of the given options
5. Advances from customers are shown in which of the following heads in
Balance Sheet?
a. Current Assets
b. Current liabilities
c. Fixed Assets
d. Long term liabilities
6. While preparing cash flow statements, the repayments of a loan during the
year should be included under the heading of:
a. Operating activities
b. Financing activities
c. Investing activities
d. None of the given options
7. Which of the following statement is also known as a source and use
statements?
a. Income Statements
b. Statement of Cash Flows
c. Balance Sheet
d. Statement of Retained Earnings
8. Calculate depreciation for the year.
Building at cost = Rs. 1, 00,000
Depreciation rate = 10%
a. Rs. 10,000
b. Rs. 1,000
c. Rs. 500
d. Rs. 0
9. Mr. A, Mr. B and Mr. C are three partners of a partnership firm. The profit
sharing ratio is 2:3:5. If company has distributable profit of Rs. 4, 90,000,
determine the profit of Mr. A.
a. Rs. 98,000
b. Rs. 1, 47,000
c. Rs. 2, 45,000
d. Rs. 3, 43,000
10. An example of financing activities in the context of cash flow statement is:
a. Fixed capital expenditure
b. Long-term deposit
c. Financial charges paid
d. Dividend paid
Advance insurance is an example of
1. Current Asset
2. Administrative expense
3. Insurance expense
4. Current Liability
Which of the following is not a component of Financial Statement?
1. Balance Sheet
False
Budget is an Organizations plan of future period expressed in money terms.
True
False
Cash Accounting is the accounting system in which events are recorded as and when they
occur.
True
False
In double entry system of book keeping, every business transaction affects the same side
of the same account.
True
False
Which is the best definition of Balance sheet?
o An account proving the Book balances
o A record of closing entries
o A listing of balances
o A statement of Assets
Depreciation is:
o The amount spent to buy a fixed asset
o The salvage value of a fixed asset
o The part of the cost of the fixed asset consumed during its period of use by
the firm
o The amount of money spent on replacing asset
Which of the following is not a Cash flow in Cash flow statement?
o A depreciation charge
o Dividend paid
o Proceeds on Sales of Fixed Assets
o Tax paid
Gross Profit is:
o Excess of sales over Cost of good sold
o Sales less Purchases
o Cost of good sold plus Opening Stock
o Net profit less expenses of the period
Which of the following is an intangible asset?
o Patents
o Copyrights
o Trade marks
o All of the given options
__________ is used to record transactions that do not affect cash or bank.
Payment voucher
Receipt voucher
Journal voucher
All of the given options
Question No: 2 ( Marks: 1 ) - Please choose one
Which one of the following item will appear on the balance sheet of a company as current
assets?
Prepaid expenses
Outstanding expenses
Creditors
Owners
Debentures are a companys:
Assets
Liability
Expenses
Investments
Subscribers / Sponsors are the persons who sign:
Articles of Association
Memorandum of the company
Contribute in the initial share capital of the company.
All of the given options
All expenses incurred up to the stage of incorporation of the company are called:
Preliminary Expenses
Installation expenses
Accrued expenses
Deferred expenses
The head of board of directors is called:
Chief executive
Manager
Subscriber
Shareholder
Which of the following would not be categorized as current assets?
1. Stocks
2. Debtors
3. Plant and Machinery
4. Cash in hand
Pak Motors buys a stock worth Rs. 30,000 on credit on the last day of his accounting
period and includes these items in Closing Stock. Which of the following figures in the
Accounts would be increased by Rs. 30,000?
1. Cost of Sales
2. Working Capital
3. Gross Profit
4. Current Assets.
An account titled Unearned Fees would be classified as which of the following?
1. Asset account
2. Liability account
3. Revenue account
4. Expense account
Asset depreciation is calculated to which of the nearest time periods?
1. Day
2. Week
3. Month
4. None of the Given Option
Capital expenditures are:
1. The extra Capital paid in by the proprietor
2. The cost of running the business on day to day basis
A business letter
Store ledger card
Voucher
All of the given options
Under diminishing balance method, depreciation is calculated on:
The original cost
The scrap value
Book value
None of the given options
The books of account in which business transactions are originally recorded in
chronological order is known as:
Ledger
Journal
Trial Balance
Balance sheet
A firm purchased marketable securities for Rs. 10,000. What would its effect be on
working capital?
Increased by Rs. 10,000
Decreased by Rs. 10,000
Increased by Rs. 20,000
Remain unchanged
If the profit is 25% of the cost price then it would be:
25% of the sale price
33% of the sale price