1. Which of the following items would not fall under the definition of an asset?

Select one:
a. Land
b. Machinery
c. Owners' capital
d. Cash

2. Omission of paise and showing the round figures in financial statements is based on

Select one:
a. Consistency Concept
b. Conservatism Concept
c. Realization Concept
d. Materiality Concept

3. If your company sold Inventory worth Rs70,000 for Rs125000 for cash. Identify which account will
be debited?

Select one:
a. Only cash account
b. Sales revenue
c. both Cash and Cost of Goods Sold accounts
d. Only the cost of goods sold account

4. Identify that which of the following would be a liability for a business?

Select one:
a. The amount it has paid for the electricity used
b. Account receivables
c. Account payable
d. Notes receivable

5. The John Marketing Company provides advertising services to an investment company in year A
but

receives advertising fee in year B. The John Marketing Company recognizes this revenue in year A.

This action of John Marketing Company is justified by:

Select one:
a. revenue recognition principle
b. business entity concept
c. going concern concept
d. economic entity concept

6. Which accounting concept or principle states that the transactions of a business must be recorded
separately from those of its owners or other businesses?

Select one:
a. business or economic entity concept of accounting- Separate entity
b. time period concept of accounting
c. matching principle of accounting
d. materiality concept of accounting

7. Which of the following is not an example for current assets?

Select one:
a. Inventory
b. Prepaid expense
c. Cash
d. Property and plant

8. The financial statement that shows the financial position of an enterprise at a particular point in
time is the

Select one:
a. Trial Balance
b. income statement
c. Balance sheet
d. Cash-flow statement

9. Which of the following statements regarding account payables is not true?

Select one:
 a. Account payables owe money to the business.
b. Account payables are treated as current liabilities.
c. Account payables have supplied goods to the business.
d. Account payables are the amounts owed to suppliers of the business who have not yet been
paid.

10. Accountant should follow the same principles of accounting continuously is as per which

accounting convention

Select one:
a. Convention of full disclosure
b. Convention of consistency
c. Convention of conservatism
d. None of the above

11. Your company's statement of profit or loss for a financial year ended 2018 showed a charge for
insurance of Rs9,000. The company actually paid Rs13,000 for insurance during that financial year.
Which of the following statements is true?

Select one:
a. Insurance of Rs4,000 had been accrued for at the year end.
b. Insurance of Rs9,000 had been accrued for at the year end.
c. Insurance had been prepaid by Rs4,000 at the year end.
d. Insurance of Rs9,000 had been prepaid at the year end.

12. An account receivables account will usually show a credit balance.

Select one:
a. None of the above
b. Partially true
c. False
d. True

13. Which of the concept assumes that the business will continue for the foreseeable future?

Select one:
a. the materiality concern
b. the going concern
 c. the matching concept
d. the consistency concept

14. A business has the following items in it:

- Owners equity Rs600,000
- Total liabilities Rs1,400,000
- What is the value of the assets in this business?

Select one:
a. 2,000,000
b. 800,000
c. 1,400,000
d. 600,000

15. Which of the following is not a characteristic of an asset?

Select one:
a. It will bring future economic benefits to the business
b. It is owned by the business.
c. It must have a physical substance
d. It can be held by the business for a short period of time

16. If a company collects cash from an account receivable, the effect of this transaction will be

Select one:
a. Total assets will increase
b. Total assets will decrease
c. No change in assets
d. None of the above

17. The accounting equation states that 'assets + liabilities = capital'.

Select one:
a. False
b. True for some companies and false of other companies
c. True
d. None of the above
18. Which one of the following would be classified as a current asset for a furniture retailer?

Select one:
a. Shop fittings
b. Furniture held for resale
c. Building
d. Property

19. Which of the following highlights the correct order of the stages in the accounting cycle?

Select one:
a. Journalizing, final accounts, posting to the ledger and trial balance
b. Journalizing, posting to the ledger, trial balance and final accounts
c. Posting to the ledger, journalizing, final accounts and trial balance
d. Posting to the ledger, trial balance, final accounts and journalizing

20. Amandeep starts business with Rs.48,000 and then buys goods from Akashdeep on credit for

Rs.8,000. He further purchased goods for cash Rs.6,000. The accounting equation based on

Assets = Capital + Liabilities will be:

Select one:
a. 40,000 = 48,000 – 8000
b. 54,000 = 48,000 + 6000
c. 62,000 = 48,000 + 14,000
d. 56,000 = 48,000 + 8000