Accounting

The measure of how efficiently the asset resources are employed by the firm is called

Ans: Activity ratio

As Asset must be _______ by the business to be shown as an Asset in its balance sheet

Ans: Controlled

The process of recording transactions in different journals is called

Ans: Journalizing

The other name of Journal is

Ans: Day book

Discount for quick repayment for debt is normally referred to as

Ans: Cash discount

What is a debit note?

Ans: A debit note is a document used by a vendor to inform the buyer of current debt obligations, or a
document created by a buyer when returning goods received on credit. The note tells the buyer that
the seller has debited their account.

The real accounts are the accounts of Asset, liabilities and

Ans: Capital

Current assets are also called

Ans: Gross working capital

Provision for doubtful debt account is a/an

Ans: Contra Asset account

Provision for cash discount on debtors is a percentage of

Ans: net debtors less provision for doubtful debts

The term credit means ____________ by the business

Ans: Receiving of benefits

Accounting Errors

1. Error of Original entry

When the wrong amount is posted to an account.
2. Error of Omission
When an entry wasn’t made even though a transaction had occurred for the period.
3. Error of Principle
occurs when an accounting principle is applied in error. For example, an equipment purchase is
posted as an operating expense. The operating expenses are the day-to-day expenses and
wouldn't include a fixed-asset purchase.
4. Error of Commission
when a bookkeeper or accountant records a debit or credit to the correct account but to the
wrong subsidiary account or ledger. For example, money that has been received from a
customer is credited properly to the accounts receivable account, but to the wrong customer.
5. Error of Entry Reversal
Error of entry reversal is when the accounting entry is posted in the wrong direction, meaning a
debit was recorded as a credit or vice versa.
6. Error of posting
An error that affects only one account

Expenditure incurred annually on the renewal of patent is a

Ans: Revenue Expenditure

Outsider’s claim against the assets of the business is called

Ans: Liability

The trade discount on purchases is recorded in

Ans: Not at all recorded in the books

The portion of the acquisition cost of an asset yet to be allocated is known as

Ans: written down value

The main objective of providing depreciation is to

Ans: Create funds for replacement of fixed assets

Suspence account will be recorded in the

Ans: Balance Sheet

Normally the following accounts are balanced

Ans: Real account and personal account

Reserve capital means

Ans: part of subscribed uncalled capital

Dividends are usually paid as a percentage of

Ans: Paid up capital

Promissory note is prepared by

Ans: Drawer

Preliminary Expenses are treated as

Ans: Miscellaneous Expenses

Redeemable preference share can be issued for upto

Ans: 20 years

Heavy amount spent for the advertisement of a new company product is

Ans: Deferred Revenue Expenditure

Interest on debentures in calculated on the

Ans: Face value of Debentures

The parties to Joint Venture are called

Ans: Co ventures

Joint venture account is a

Ans: Nominal Account

Capital Expenditures are recorded in the

Ans: Balance Sheet

Recovery of Bad debts is a

Ans: Revenue receipts

Parties to promissory note

Ans: Maker/promissor, payee/promise

Parties to Bills of exchange

Ans: the drawer is the party that issues a bill of exchange – the 'creditor'; the beneficiary or payee is the
party to which the bill of exchange is payable; the drawee is the party to which the order to pay is sent -
'the debtor'.

The study of the effect of output volume on revenue, expenses and net income is known as

Ans: CVP analysis

Formula for provision of bad debt to be transferred to P/L acc.

Ans: Bad debts + new bad debts + new provision – old provision

Non convertible debentures refer to

Ans: Loan capital

Preliminary Expenses also called deferred Revenue Expenditure are shown

Ans: on the Assets side of the Balance Sheet

 Auditing
First auditor of the company to be appointed after the registration

Ans: 30 days (till the conclusion of 1sr AGM)

Correct sequence of activities

Ans: Vouching verification valuation

Backbone of Audit

Ans: Vouching (process of checking the evidence of the entries)

Management audit is done by

Ans: any qualified person

 Economics

Types of Markets

1. Perfect Competition: large no. of seller & buyer. Products are homogeneous
2. Monopolistic
 Financial Management
Operating leverage measures

Ans: business risk

Financial leverage measures

Ans: financial risk

The company’s cost of capital is called

Ans: Hurdle rate

Treasury bills is a

Ans: Risk-free investment

Beta measures the

Ans: Market risk

Largest single institutional owner of Common Stock

Ans: Mutual Funds

Coupon rate also called

Ans: stated interest rate

An unmanaged fixed income security portfolio handled by an independent trustee is known as

Ans: Hedge funds

Financial leverage is also called

Ans: Trading on equity

Corporate governance encompasses the relationship between

Ans: Shareholders, Board of Directors and senior management

Cash flow identity equation

Ans: cash flow from Assets= CF to creditors + CF to stockholders

Stockholder’s equity = Total Asset-Total liabilities

Statistics

Continuous Variable

Ans: that cannot be counted (infinite)

Discrete Variable

Ans: that can be counted (finite)

Variance is always calculated from

Ans: Mean

Arithmetic vs geometric mean

Ans: Arithmetic mean_ add value and divide by total number of values. Geometric mean_ multiply the
number and then take the root with the radical index for the total number of values.

Primary data and ______ data are same

Ans: grouped data

Descriptive Statistics deals with

Ans: organizing, displaying and describing data

_______ used the word statistics for the first time

Ans: Achenwall, a German professor

A characteristic that does not change is called

Ans: Constant

Continuous variables can assume ______ values

Ans: All possible values

The sum of the deviation around the mean is always

Ans: zero

The grouped data is also called

Ans: secondary data

Inferential statistics means

Ans: the method to make decision about population based on sample results

Measure of dispersion

Ans: Range, interquartile range , coefficient of variation and standard deviation

A measure of dispersion is always

Ans: Zero