UNIT -III -LEDGER

1. A ledger is called a book of

(a) Primary entry
(b) Final entry
(c) Original entry
(d) None of the above (Answer: B)
2. From which of the following is a ledger account prepared?
(a) Transactions
(b) Journal
(c) Events
(d) None of the above (Answer: B)
3.The process of transferring of items from a journal to their respective ledger accounts is
called as?
(a) Entry
(b) Arithmetic
(c) Balancing
(d) Posting (Answer: D)

4.The business entity concepts can be applied to

a) Sole trading
b) Partnership firm
c) Company
d) All the above (Answer: D)

5 .According to money measurement concept the following will be recorded in the books of
accounts
a) Health of the chairman
b) Quality control in the business
c) Value of the building
d) Quality of goods (Answer:D)

6. Personal accounts relates to

a) Persons
b) Expenses
c) Assets
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 d) Incomes (Answer:A)

7. Subsidiary books are maintained in

a) Big business concerns
b) Small Business Concerns
c) Sole trade business
d) Single entry system (Answer:A)

8. Dual aspect concept results in the accounting equation

a) Capital-Liabilities = Assets
b) Capital +Liabilities = Assets
c) Capital + Profit = Assets
d) Capital + Drawings = Assets (Answer:B)

9.Each transaction is first entered in the

a) Ledger
b) Journal
c) Trial balance
d) Balance sheet (Answer:B)

10. Rent received in advance is the nature of

a) Real a/c
b) Personal a/c
c) Nominal a/c
d) Assets a/c (Answer:B)

11. Interest on drawings is

a) Expenditure for the business
b) Income to proprietor
c) Gain for the business
d) Loss for the business (Answer:C)

12. Cash book is an example of

a) General journal
b) Journal
c) It is not a journal
d) Special Journal (Answer:D)

13. The word contra means _____ in Latin

a) The other side
b) The Dual side
c) The same side
d) All of these (Answer:A)

14. ______ is used for depositing cash or cheque in a bank account

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 a) Accounting slips
b) Pay in slip
c) Withdraw slip
d) None of these (Answer:B)

15. Assets are Rs. 10,00,000 and liabilities are Rs. 2,00,000 his capital could be
a) 10,00,000
b) 12,00,000
c) 8,00,000
d) 4,00,000 (Answer:C)

16. The standard format of journal does not include which of the following
a) Assets column
b) Date column
c) Description Column
d) Amount Column (Answer:A)

17. 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 (Answer:B)

18. 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 (Answer: D)

19. 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 (Answer: D)

20.Long term assets having no physical existence but, possessing a value are called
A) Intangible assets
B) Fixed assets
C) Current assets
D) Investments (Answer: A)

21.The assets that can be easily 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 (Answer: A)
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22.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 (Answer: A)

23.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 (Answer: B)

24.Net profit is computed in the

A) Profit and loss account
B) Balance sheet
C) Trial balance
D) Trading account (Answer: A)

25.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 (Answer: A)

26.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 (Answer: D)

27.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 (Answer: A)
28.Suppliers personal a/c are seen in the
A) Sales Ledger
B) Nominal ledger
C) Purchases Ledger
D) General Ledger (Answer: C)

29.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
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 D) Not use the postal service in future (Answer: B)

30. 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 (Answer: A)

31.Sales invoices are first entered in

A) The Cash Book
B) The Purchases Journal
C) The Sales Journal
D) The Sales Account (Answer: C)

32.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 (Answer: D)

33. 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 (Answer: A)

34.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 (Answer: C)

35.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 (Answer: D)
36. The ledger column that links the entry with the journal is called as?
a) J.F column
b) L.F column
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 c) Credit column
d) Debit column (Answer: A)
37. The left hand side of the ledger account is referred to as?
a) Footing
b) Credit side
c) Debit side
d) Balance (Answer: C)
38. Ledger is a principal book that contains
a) Real accounts only
b) Personal accounts only
c) All accounts
d) Nominal accounts only (Answer: C)
39. Accounts that have credit balance are closed by using the statement
a) By balance b/d
b) By balance c/d
c) To balance b/d
d) To balance c/d (Answer: D)
40. An account is having debit balance is established when
a) The last entry of the accounting period was posted on the debit side
b) The amount of debit exceeds the amount of the credits
c) There are more entries on the debit side than on the credit side
d) None of above (Answer: B)
41. Which item will appear on the credit side of the ledger account?
a) Discount received
b) Cash received
c) Rent Expenses
d) Purchases (Answer: A)

42. Which of the following accounts always shows a debit balance

a)Capital Account
b)Sales Account
c) Purchases Return Account
d) None of the above (Answer: D)

43. Normally, the following accounts are balanced:

a)Personal A/c & Nominal A/c
b) Real A/c & Nominal A/c
c)Only Nominal A/c
d) Personal A/c & Real A/c (Answer: D)

44. Which of these accounts has debit balance?

a) Income received in advance
b) Bank loan
c) Prepaid insurance premium
d) Creditors for goods (Answer: C)

45.Which of the following is known as “Principal Book of Accounting”?

a)Ledger
b)Journal
c)Trial Balance
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 d)Balance Sheet (Answer: A)

46. The credit balance of a personal account is

a)Cash in hand
b)Amount receivable
c) Income earned
d) Amount Payable (Answer: D)

47. Posting of transaction means

a) entering transactions in Journal
b) entering transactions in Ledger
c) entering transactions in Trial Balance
d) entering transactions in financial Statements (Answer: B)

48. Ledger Account is prepared from

a)Vouchers
b) Trail Balance
c) Journal
d) Financial Statements
49.The process of transferring the transactions from the Journal to the ledger is called
a) Journalising
b) posting
c) Balancing
d) Costing

50. What type of Ledger Accounts are not carried forward to next year?
a) Personal Accounts
b) Real Accounts
c) Nominal Accounts
d) All of the above

51. How many accounts are effected in a transaction?

a) Only one
b) Only Two
c) At least two
d) Two or Three
52. Which of the following expenses is not a revenue expense?
a) Salary
b) Electricity
c) Water
d) Repair of second-hand machinery purchased

53. Process of recording transaction in ledger is known as

a)Balancing
b) Posting
c)Journalizing
d) None of above
54. Ledger is a book for
a)Analytical record
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 b)Chronological record
c)Alphabetical record
d)None of the above
55. Ledger is popularly known as
a)Secondary book of accounts
b)Principal book of accounts
c)Subsidiary book of accounts
d)None of the above
56. Credit balance of ledger is __________
a)A revenue or an asset
b)A revenue or a liability
c)An expense or an asset
d)An expense or a liability
57. Which Account is opened first in ledger book
a)Personal
b)Real
c)Non-real
d None of these
58. How many columns are there in a ledger (in one side)
a) Six
b) Four
c) Five
d) Seven

59. Ledger is the_______ of accounts where similar transactions relating to a particular

person or property or revenue or expense are recorded
a) Principal book
b) Primary entry book
c) Third entry book
d) None of above

60. Which of the following options do not count as operation revenue?

a)Goods which are sold for cash
b) Income from fixed asset sales
c)Sales on credit
d) Fee from the sale of services

UNIT -IV -TRIAL BALANCE

1. Trial balance is used to check the accuracy of

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 a) Balance sheet balances
b) Ledger accounts balances
c) Cash flow statement balances
d) Income statement balances (Answer: B)

2. In the books of account if a transaction is completely deleted, will it affect the trial
balance?
a) No
b) Yes
c) A transaction cannot be omitted
d) A transaction can be omitted (Answer: A)

3. What is used in preparing trial balance?

a) Specialized Journals
b) Balance Sheet
c) Ledger Accounts
d) General Journal (Answer: C)

4. What is the trial balance used?

a) It is a financial statement
b) It records balances of a balance sheet
c) It doesn’t contribute to the accounting cycle
d) It records balances of accounts (Answer: D)

5. When debit balance is equal to credit balance then the trial balance means
a) Account balances are correct
b) Mathematically Capital + Liabilities=Assets
c) No mistake in recording transactions
d) No mistake in posting entries to ledger accounts (Answer: B)

6. When is trial balance prepared?

a) At the end of an accounting period
b) At the end of a year
c) Frequently during the year
d) At the end of a month (Answer: A)

7. Which items influence the trial balance agreement?

a) Deposit in transit
b) Compensating errors
c) Complete omission of a transaction
d) Partial omission of a transaction (Answer: D)

8. When credit balances = debit balances, the trial balance check and shows
____________ . It also indicates that there were no errors made during posting and
recording and posting.
A) Understatements of Balances
B) Errors of Commission
C) Arithmetic Accuracy
D) Omissions of Economic Events (Answer: C)
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9. Which of the following account with normal balance is shown at the debit side of a trial
balance?
a) Creditors account
b) Unearned income account
c) Rent income account
d) Cash account (Answer: D)

10. In trial balance, which accounts with normal balance is recorded at the credit side?
a) Bank account
b) Equipment account
c) Cash account
d) Accrued expenses account (Answer: D)

11. Among these, which item is used as the base for preparing trial balance?
a) Cash account
b) Balance sheet
c) Journal
d) Ledger account (Answer: D)

12.Trial Balance shows

a) Both debit and credit balances,
b) Only debit balance
c) Only credit balance
d) Either of debit or credit balance (Answer: A)

13. 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 (Answer: D)

14. If the closing stock appears in the trail balance, it is transferred to

A) Trading a/c
B) Trading a/c and B/S
C) Balance sheet
D) Goods a/c (Answer: B)

15. Outstanding Expenses appearing in the trial balance are shown in

a) P&L a/c only
b) Balance sheet only
c) P&L a/c and B/S
d) Trading a/c (Answer: B)

16. Trial balance shows

a) Only debit balance
b) Only credit balance

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 c) Only nominal a/c
d) Both debit and credit balance (Answer: D)

17.Trial balance sheet is prepare to find out

a) Value of assets and liabilities
b) Error of principle
c) Arithmetical accuracy of journal posting into ledger and its balancing
d) Compensating errors (Answer: C)

18. Trial Balance is Prepared on

a) End of the year
b) A particular date
c) For the period ending
d) Both “a” and “b (Answer: B)

19. Balances of the Accounts are transferred to:

a)Trial Balance
b) Trading Account
c)Profit & Loss Account
d)Balance Sheet (Answer: A)

20.A list which contains balances of accounts to know whether the debit and credit
balances are matched.
a)Balance Sheet
b) Day Book
c)Journal
d) Trial Balance (Answer: D)

21.Which of the following is not a process in the preparation of a Trial Balance

a) Recording
b) Summarizing
c) Classifying
d) Interpretation (Answer: D)

22. Which of the following in Trial Balance is contradictory to each other?

a) Inventory and drawings
b) Sales and purchase return
c) Carriage inward and outward
d) Trade receivable and liability (Answer: D)

23. Trial Balance creates accuracy

a) Principle
b) Arithmetical
c) clerical
d) none of the above (Answer: B)

24. Which of the following will not affect the agreement of Trial Balance?
a) An amount of purchase of 10,000 recorded in cr. A/c as-1,000
b) Customer account debited with the amount of cash received
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 c) An Entry of debit of – 1,000 was credit with twice the amount
d) An Entry posted twice in the ledger (Answer: D)

25. Closing Stock in the trial balance implies that

a)It is already adjusted in the opening stock
b) It is adjusted in Sales A/c
c)It is adjusted in the Purchases A/c
d) None of these (Answer: C)

26. Salaries paid – 4,500 is shown in credit side of trial balance. In the total of trial balance
the debit side will be short by ___________
a) Short by 4,500
b) Excess by 4,500
c) short by 9,000
d) Excess by 9,000 (Answer: C)

27. Ascertain in the arithmetical accuracy of posting and balancing

a) Cash Book
b) Journal
c) Trial Balance
d) Bank Reconciliation Statement (Answer: C)

28. Agreement of Trial Balance is not a ______ proof of accuracy

a) Submissive
b) Inclusive
c) Exhaustive
d) Conclusive (Answer: D)

29. Trial Balance is a statement which shows the or the of all the accounts.
a) Opening balances, closing balances
b) Debit balances, credit balances
c) Positive balances, negative balances
d) Balances, totals (Answer: B)

30. All the following statement’s are correct except _____________

a) trial balance is a statement not an account
b) trial balance is always prepared at the end of the financial year
c)agreement of Trial Balance is not a conclusive proof of accuracy
d) trial balance will tally even if an entry is posted twice in the ledger (Answer: B)

31.A suspense account facilitates the preparation of even the has not been tallied.
a)trial balance, financial statements
b) ledger, trial balance
c)trial balance, ledger
d)financial statements, trial balance (Answer: D)

32. The trial balance is prepared for

a)Locating clerical errors
b)Locating errors of principle
c)Locating errors of omission
d) All of the above (Answer: A)

33.Suspense Account is used to rectify those errors which have been located
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 a)Before preparation of Trial Balance
b) After preparation of Trial Balance
c)Before or after preparation of Trial Balance
d) After preparation of Final Accounts (Answer: B)

34.Which of the following errors is not revealed by the trial balance?

a)Wrong amount entered in the books off original entry
b) Wrong amount entered in the sides bill
c) Wrong amount entered in the books
d) All the above (Answer: D)

35.Agreement of Trial Balance ensures arithmetical accuracy, but is not a proof of

accuracy.
a)submissive
b) inclusive
c)exhaustive
d)conclusive (Answer: A)

36.Trial Balance is used to check the accuracy of

a)Balance sheet balances
b) Ledger accounts balances
c)Cash flow statement balances
d) Income statement balances (Answer: B)

37.What is used in preparing trial balance?

a)Specialised Journals
b) Balance Sheet
c)Ledger Accounts
d) General Journal (Answer: C)

38.What is the trial balance used?

a)It is a financial statement
b) It records balances of a balance sheet
b)It doesn’t contribute to the accounting cycle
d)It records balances of accounts (Answer: D)

39.When debit balance is equal to credit balance then the trial balance means
a)Account balances are correct
b) Mathematically Capital+Liabilities=Assets
c)No mistake in recording transactions
d) No mistake in posting entries to ledger accounts (Answer: B)

40.When is trial balance prepared?

a)At the end of an accounting period
b) At the end of a year
c)Frequently during the year
d) At the end of a month (Answer: A)

41.Which items influence the trial balance agreement?

a)Deposit in transit
b) Compensating errors
c)Complete omission of a transaction
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 d)Partial omission of a transaction (Answer: D)

42.When credit balance = debit balances, the trial balance check and shows __________. It
also indicated that there were no errors made during posting and recording and posting.
a)Understatements of Balances
b) Errors of Commission
c)Arithmetic Accuracy
d) Omissions of Economic Events (Answer: C)

43.In the trial balance, which accounts with normal balance is shown at the debit side of a
trial balance?
a) Creditors account
b) Unearned income account
c) Rent income account
d) Cash account (Answer: A)

44. In trial balance, which accounts with normal balance is recorded at the credit side?
a)Bank account
b) Equipment account
c)Cash account
d) Accrued expenses account (Answer: D)

45. Trial Balance is

a)A Revenue Statement
b) Statement of Ledger Balances
c)Ledger Account
d) None of the above (Answer: B)

46.Any difference in Trial Balance is normally transferred to:

a)Capital Account
b) Suspense Account
c)Sundry Expenses A/c
d) Ledger Account (Answer: B)

47.A Trial Balance shows:

a)Flow of Funds
b) Arithmetical accuracy of posting
c)Value of assets and liabilities
a)Value of Capital (Answer: B)

48.Trial Balance is prepared to detect

a)Errors of Commission
b) Errors of Omission
c)Accuracy of Journal posting into ledger and its balancing
d) None of the above (Answer: C)

49.The Number of trial balance is :

a)4 b) 2
c)1 d)3 (Answer: D)

50.What is a trial balance?

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 a)Personal Account
b) Nominal Account
c) Real Account
d) None of these (Answer: D)

51. In which of the following accounts there is a credit balance?

a)Wage outstanding
b) Return inwards
c)Motor vehicles
d) Prepaid rent (Answer: A)

52.In which of the following accounts there is a debit balance?

a)Purchase returns
b) Purchase
c)Discounts
d) Owner equity (Answer: B)

53.What could be the possible description of a trial balance among the following?
a)Shows the total/balance of books
b) shows the entries in the sheet
c)It is a special system
d) Showcases the financial position of a company (Answer: A)

54.The wages to be paid to the workers for installing new machine equipment would be
debited to:
a)Fixed Overhead Account
b) Machinery Account
c)Wages Account
c) Factory expenses account (Answer: B)

55.With preparing trial balance, it help to deduct:

a)The error of complete omission
b) Compensating error
c)Error of principle
d) Clerical error (Answer: D)

56.The suspense accounts which come under trial balance is marked in:
a)Balance Sheet
b) Trading account
c)Income statement
d) Profit and loss statement (Answer: A)

57.Which of the methods is used to create a trial balance?

a)Compound method
b) Total method
c)Balance method
d) All of the above (Answer: D)

58.Of the two sides of Trial balance does not tally, which Account is opened
a)Suspense Account
b) Personal Account
c)Real Account
d) None of these (Answer: A)
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59.The error which can be disclosed by Trial balance
a)Error of omission
b) Error of principal
c) Compensatory error
d) None of these (Answer: D)

60. Which of the following is prepared on the basis of trial balance?

a) Journal
b) Ledger
c) Final Accounts
d) None of these (Answer: C)

UNIT -V - FINAL ACCOUNTS

1. Statements prepared to know profit or loss and financial position of the business are
called:
A) Financial Statement
B) Bank Reconciliation Statement
C) Trial Balance
D) All of these (Answer: A)

2. Account which shows Gross Profit or Gross Loss of the business is called:
A) Profit and Loss Account
B) Balance Sheet
C) Trial Balance
D) Trading Account (Answer: A)

3. Trading Account is prepared to know:

A) Net Profit or Loss of business
B) Gross Profit or Loss of business
C) Both (1) or (2)
D) Financial Position of business (Answer: A)

4. On debit side of trading Account we record:

A) Direct Expense
B) Indirect Expense
C) Both of these
D) None of these (Answer: C)

5. Closing stock is recorded in:Profit and Loss Account

A) Trading Account and Balance Sheet
B) Balance Sheet only
C) None of these (Answer: B)

6. Profit and Loss Account shows the:

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 A) Total Capital Employed
B) Profit and Loss through sale of assets
C) Profit earned by business
D) None of these (Answer: C)

7. Operating expenses are recorded in:

 Trading Account
 Profit and Loss Account
 Balance Sheet
 All of these (Answer: A)

8. Expenses relating to sale of goods are shown in:

A) Profit and Loss Account
B) Trading Account
C) Trading and Profit & Loss A/c
D) Balance Sheet (Answer: A)

9. Profit and Loss Account is prepared:

A) At a particular point of time
B) On fixed date
C) For a certain period
D) All of these (Answer: D)

10. Carriage Outwards is an example of:

A) Direct Expenses
B) Indirect Expenses
C) Indirect Income
D) Direct Income (Answer: D)

11. Which is indirect expense of the followings?

A) Salaries Expenses
B) Insurance Expenses
C) Rent Income
D) All of these (Answer: B)

12. Income earned from other than routine activities is called:

A) General Income
B) Direct Income
C) Indirect Income
D) None of these (Answer: D)

13. Discount received is an example of:

A) Indirect income
B) Direct Income
C) Net Income
D) General Income (Answer: B)

14. Which are indirect incomes of the followings?

A) Commission received
B) interest on investment
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 C) Dividend received
D) All of these (Answer: D)

15. On credit side of Profit and Loss Account we record:

A) Direct Expenses
B) Direct Income
C) Indirect Expenses
D) Indirect Income (Answer: A)

16. Balance Sheet is a statement of:

A) Assets
B) Capital
C) Liabilities
D) All of these (Answer: D)

17. Balance Sheet discloses the financial position of a business:

A) For a given period
B) On a particular point of time
C) On a certain fixed date
D) All of these (Answer: D)

18. Properties, things and receivables having certain value owned by business are called:
a)Assets
b)Liabilities
c) Goods
d) None of these (Answer: A)
19. Any physical thing that has money value is:
a) Intangible Assets
b) Fictitious Assets
c) Good Will
d) Assets (Answer: D)

20. Assets which have physical existence are called:

a) Tangible Assets
b) Fictitious Assets
c) Contingent Assets
d) Intangible Assets (Answer: A)

21. Goods given as charity should be credited to

a) Purchase a/c
b) Charity a/c
c) Sales a/c
d) Goods a/c (Answer: A)

22. Value of goods lost by fire must be

a) Credited to trading a/c
b) Debited to trading a/c
c) Credited to P&L a/c
d) Debited to P&L a/c (Answer: A)

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23. Loss by theft is debited to
a) Manufacturing a/c
b) P&L a/c
c) Trading A/c
d) Theft a/c (Answer: B)

24. Bank overdraft is a

a) Current liabilities
b) Fixed Liabilities
c) Current assets
d) Fixed assets (Answer: A)

25. Capital + Liabilities?

a) Net liability
b) Profit
c) Assets
d) Loss (Answer: C)

26. ‘Adjusted Purchases’ means adjustment of

a) Opening stock and closing stock with purchases
b) Cash purchases and credit purchases
c) Current year’s purchases with last year,s
d) Purchases less return (Answer: A)

27. Balance sheet is a statement of

a) Financial position of the organisation
b) Profit
c) Liabilities
d) Assets (Answer: A)

28. Accrued income is an item of

a) asset
b) Liability
c) Expenses
d) Profit (Answer: A)

29. Goodwill is
a) A current asset
b) An intangible asset
c) A tangible asset
d) Fictitious asset (Answer: B)

30. The balance of the petty cash book is an

a) Asset
b) Income
c) Expenditure
d) Outstanding (Answer: A)

34.Interest on capital is
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 a) Expenditure for the business
b) Income to proprietor
c) Gain for the business
d) Loss for the business (Answer: A)

35.Bills Receivable a/c is a

a) Liability
b) Personal a/c
c) Nominal a/c
d) Real a/c (Answer: D)

36.Total trading income from cash sales and credit sales is called to
a) Turn over
b) Income
c) Profit
d) Gain (Answer: A)

37.Making the provision for doubtful debts in anticipation of actual bad debts is on the
basis of convention of
a) Convention of disclosure
b) Convention of consistency
c) Convention of conservatism
d) All the above (Answer: C)

38.Historical cost concept requires the recording of an assets at its

a) Cost
b) Market Value
c) Net realizable value
d) Replacement cost (Answer: A)

39.Transfer of money or money’s worth from one party to another is called

a) Journal
b) Transaction
c) Ledger
d) Entry (Answer: B)

40. The monthly total of a sales book must be

a) Credited to sales a/c
b) Credited to customer a/c
c) Debited to sales a/c
d) Credited to personal a/c (Answer: A)

41. Bills Payable book is a

a) Journal
b) Ledger
c) Account
d) Petty cash book (Answer: A)

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42. Return of goods bought is entered in the
a) Bought book
b) Return outward book
c) Sales book
d) Journal proper (Answer: B)

43. In a balance sheet, the total of common stock and retained earnings are examined as
a) Common Equity
b) Due Equity
c) Preferred Equity
d) Common Perpetuity (Answer: A)

44. Cash discounts are first recorded in

a) Journal
b) Cash book
c) Sales book
d) Purchase book (Answer: B)

45. Distribution of samples in entered in

a) Debit side of trading a/c
b) Debit side of P&L a/c
c) Both trading and P&L a/c
d) Credit side of trading a/c (Answer: B)

46. Wages paid on the erection of a new machinery should be debited to

A) Wages a/c
B) Cash a/c
C) Machinery a/c
D) P&L a/c (Answer: C)

47. In the situation of bankruptcy, a stock which is recorded above common stock and
below debt account is
a) Preferred Stock
b) Debt Liabilities
c) Common Liabilities
d) Hybrid Stock (Answer: A)

48.The loss on the sale of old furniture is debited to

A) P&L a/c
B) Furniture a/c
C) Depreciation a/c
D) Asset a/c (Answer: A)

49.Income tax paid by a sole trader is shown

A) In the trading a/c
B) In the P&L a/c
C) By way of deduction from the capital in the B/S
D) In the cash book (Answer: C)

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50.The provision for discount on debtors is calculated on the amount of debtors
a) Before deducting the provision for doubtful debts
b) Left after deduction the provision for doubtful debts
c) Before deducting the actual bad debts and the provision for doubtful debts
d) Before deducting the bad debts (Answer: B)

51.Goods are those things which are purchased for

a) Resale
b) Consumption
c) Private use
d) Permanent use (Answer: A)

52.Balance sheet is a statement of

a) Assets
b) Liability
c) Capital
d) All of the above (Answer: D)

53-Balance sheets are prepared

a) Daily
b) Weekly
c) Monthly
d) Annually (Answer: D)
54. On balance sheet, accruals, notes payables, and account payable are listed under which
category?
a) Current Liabilities
b) Accumulated Liabilities
c) Noncurrent Liabilities
d) Accrued Liabilities (Answer: A)

55. Financial securities which can be changed into cash to their book value price are
categorized as
a) Short-term Investments
b) Inventories
c) Long-term Investments
d) Cash Equivalents (Answer: D)

56. Earnings that have a cumulative amount and are not paid to the stockholder as a
dividend is known as
a) Common Earnings
b) Preferred Earnings
c) Non-paid Earnings
d) Retained Earnings (Answer: D)

57. Information that is used by investors for forecasting future earnings is documented in
a) Annual Report
b) Five Years Report
c) Exchange Report
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 d) Stock Report (Answer: A)

58. Outstanding liabilities are _____

a) Natural person’s personal a/c
b) Artificial Person’s personal a/c
c) Representatives’ personal a/c
d) Expenses a/c (Answer: C)

59. he assets that can be easily converted into cash within a short period (i.e., 1 year or less
is known as
a) Current assets
b) Fixed assets
c) Intangible assets
d) Investments (Answer: A)

60. 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 (Answer: A)

61. Gross profit is

a) Cost of goods sold + Opening stock
b) Excess of sales over cost of goods sold
c) Sales – Closing Stock + Purchases
d) Opening Stock + Purchases – Closing Stock (Answer : B)

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