Question Option 1 Option 2

Accounting standards are statements prescribed by

Bodies of
Law
shareholders

Accounting Principles are generally based on

Practicability Subjectivity

The Policy of ‘anticipate no profit and provide for all possible

losses’ arises due to convention of Consistency Disclosure

Which is the accounting concept that requires the practice of

crediting closing stock to the trading account Going concern Cost

The convention of conservatism, when applied to the balance sheet, understatement Overstatement
results in of assets of assets
A business firm is separate and distinct from its owners is the
assumption under which of the following accounting concepts: Going Concern
Business Entity
Entity

Under which of the following kinds of business concepts it is

assumed that the organization will last for a long time. Going Concern Accounting
Entity Entity

Distinction between an expenditure whose benefit will be for a

long period and whose benefit for a short period of say up to one Going concern Accounting
year, is made under which of the following. Entity Entity

A firm is expected not to curtail its present scale and continue to Money
operate at least at the existing level under, which of the following: Going Concern
Measuring
Entity
Entity
It is assumed that only those transactions that could be expressed Money
in monetary terms, under which of the following concepts: Dual Aspect
Measurement
Principle
Entity
Entire life of a business entity is divided into shorter time intervals,
say of one year, under which of the following Accounting Dual Aspect
Principle Principle

General rules that are used as a guide in accounting and as a basis Generally
of accounting practices are called Accepted Cash Accrual
Accounting Principle
Practices
Every transactions has two aspects i.e., debit and credit, under
which of the following accounting principles: Dual Aspect Cash Accrual
Principle Principle

Anticipate no profits and provide for all possible losses. This is Conservatism Dual Aspect
essence of which of the following accouinting principles: Principle Principle
Accounting procedures and accounting practices should remain
same from year to year under which of the following accounting Consistency Dual Aspect
principles: Principle Principle
 An ink-stand has been purchased by a firm for a nominal amount
that is to last for 4 year. It should not be classified as a fixed asset Materiality Dual Aspect
under which of the following accounting principles: Principle Principle

When a machinery is purchased for cash, the cash balance is

reduced and to that extent, the amount of machinery as an asset is Dual Aspect Materiality
recorded. This is done to follow which of the following accounting Principle Principle
principles:

Expense on conveyance is a :
Manufacturing
Selling expense
expense

Prepaid rent is :
Administration
Current asset
expenses

Unpaid preliminary expenses are :

Current asset Current liability

Power and Fuel is expenses under head

Administration Selling

Controlling Telephone expenses is responsibility of

Administration Selling

Financial statement of company include :

Income
Income
statement and
statement
Balance Sheet

Balance sheet indicates : Assets, Asset,

Liabilities and Liabilities and
profit capital
Which of the following is true about a trial balance?
it lists down the it lists down the
balances of balances of a
accounts balance sheet

Debit balance= Credit balance in a trial balance indicates that

mathematically No error in
capital+Liabiliti recording
es= Assets transaction

Trial Balance is commonly Prepared At the end of an

At the end of the
accounting
month
period
Which of the following will affect the agreement of a trial balance Complete
Partial omission
omission of a
of a transaction
transaction
Which of the following account with normal balance is shown at Accrued
the credit side of a trial balance? Equipment
expenses
account
account
Purchase of office computer on credit requires : Credit to :
Computer Cash
A/ An ________________________ is a person who does the basic job of Accountant Finance Manager
maintaining accounts as he is the man who is engaged in book keeping.

_________________ is primarily concerned with the preparation of Financial Management

financial statements whereas management accounting covers areas such accounting Accounting
as interpretation of financial statements, cost accounting, etc.

__________________________ is based on certain concepts and Financial Management

conventions. accounting Accounting
The significance of _________________ lies in the fact that it aids the Financial Management
management in directing and controlling the activities of the firm accounting Accounting

Current liabilities must be paid within : 6 months 3 months

A business has the following items in it: 600,000 1,400,000
Owners’ equity Rs.6,00, 000
Liabilities Rs.14,00,000. What is the value of Assets__________
Left side of account is referred to as : Balance Debit
Payment of 18 months insurance policy requires debit to : Prepaid insurance Insurance
Expense
An agreement to spend Rs 1,00,000 a month on advertising beginning Debit to Credit to cash
next month requires. advertising
expense
Cash book is : Subsidiary book Ledger A/C

Financial statement of company include : Income Income statement

statement and Balance
Sheet
Withdrawals by proprietor would : Reduce assets Reduce assets
and owners and increase
equity liability

Books of Accounts of company should be kept at Any of the offices Head office
of Co

Financial statements of company must be authenticated by All directors Any 2 directors

Annual accounts must be approved by --------------------------------------- Shareholders of Owner

company
Shareholders can impact books of accounts only if authorized by: Articles of Memorandum of
Association Association
Composition of Board is given in : Board Report Corporate
Governance
Report
Audit report gives confidence to : Investors Management
A component of cost which includes all direct costs is: Prime cost Cost of goods sold

Summarises the components of cost in the form of a statement: Cost Sheet Cost statements
Cost will still be incurred although a plant is shut down temporarily: Cost of raw Advertising
material
Anything for which a separate measurement of cost is desired may be Cost Object Cost control
defined as :
Following overheads are included under functional classification: Factory, Office Indirect
and expenses,Indirect
Administration, material, Indirect
Selling & labour
Distribution

Basic objective of cost accounting is: Tax compliance Financial audit

The information provided Financial Management

by_________________________________ is historical in nature accounting Accounting
and as such the predictability of such information is limited.

_____________________ the basic foundation on which other Financial Management

branches and tools of accounting analysis are based. accounting Accounting
______________________________ caters to the specific Management Financial
decision needs, it does not rest upon any well-defined and set accounting Accounting
principles.

___________________ reports can be of any duration– short or Management Financial

long, depending on purpose and the reports can be prepared for accounting Accounting
the organisation as a whole as well as its segments.

_____________________ makes elaborate cost records regarding Cost accounting Management

various products, operations and functions. Accounting
_________________ is the process of determining and Cost Accounting Management
accumulating the cost of a particular product or activity. Accounting
The basic purpose of__________________ is to provide a detailed Cost accounting Management
breakup of cost of different departments, processes, jobs, Accounting
products, sales territories, etc., so that effective cost control can
be exercised.

____________________ also helps in making revenue decisions Cost accounting Management

such as those related to pricing, product-mix, profit-volume Accounting
decisions, expansion of business, replacement decisions, etc.

_______________________ helps in making realistic pricing Cost accounting Management

decisions in times of low demand, competitive conditions, Accounting
technology changes, etc.

_______________________ is an ongoing process of performance Accounting Management

measurement and reporting the results to decision-makers. Accounting

___________________ is primarily concerned with the Financial Management

preparation of financial statements mainly for outsiders. accounting Accounting
_____________________________ is meant to help in decision- Management Financial
making by analyzing and interpreting the information generated accounting Accounting
by financial accounting.
_________________________________ is futuristic and decision- Management Financial
oriented. accounting Accounting
The methods of___________________________ are not very Management Financial
exact as they have to be varied according to the requirements of accounting Accounting
the decision.

__________________________ is an important aspect of Cost accounting Management

management accounting. Accounting
Cost Accounting does not include financial accounting and has with tax Management
nothing to do ----------------------- accounting Accounting
Cost Accounting is more concerned short term Long term
with_________________________ planning. planning
_____________________is mostly historical in its approach and Cost Accounting Management
projects the past. Accounting
Exchange of goods and or services for earning profit is called as Business Services
______________________
Amount which can not be collected by Co.from customer, is BAD DEBTS INSOLVENT
called____________________.
_________________ as those rules of action or conduct which are Accounting Accounting
adopted by the accountants universally while recording Principles Conventions
accounting transactions.

The term___________________ is used to connote the Concept Accounting

accounting postulates, i.e., necessary assumptions and ideas Conventions
which are fundamental to accounting practice.

______________________ are broad general assumptions which Accounting Accounting

underline the periodic financial statements of business concepts Conventions
enterprises.

The term ______________________ is used to signify customs or convention Accounting

tradition as a guide to the preparation of accounting statements. Principles

Assumption of accounting entity or business entity concept is Societies Joint Stock

applicable for which of the following business organizations. Companies

Financial Accounting is governed statutory Government of

by___________________________ framework Maharashtra

Basic function of Financial Accounting is to record the do analysis

_____________________________ transactions of
the business

Format of financial accounting reports is standardized as per provisions of GAAP

______________________ Companies Act.

Rules of revenue recognition determine that earning process

should be either complete or near completion under: Realization Materiality
Concept Concept
 The business transactions are recorded date wise to create proper
record for all transactions. This is part of which of the following Historical Realization
Record Concept Concept

Profit is a liability for a firm and the loss is an asset under which
of the following concepts Business Entity Materiality
Concept Concept

The accounting equation ‘asset = capital + liability is part of Dual Aspect Realization
which of the following concepts Concept Concept
Under which conventions of accounting, the contingent liabilities
are shown as a footnote or explanatory notes in the balance sheet of Convention Of Convention Of
a firm: Full Disclosure Materiality
The use of management accounting is Optional Compulsory

Who coined the concept of management accounting? James H. Bliss J. Batty

The branch of accounting which primarily deals with processing and Financial Cost Accounting
presenting accounting data for internal use in a concern is: Accounting
The prime function of management accounting is to: Record business Assist the
transaction management in
performing its
functions
effectively

Cost Accounting does not include financial accounting and has nothing to with tax Management
do : accounting Accounting
Exchange of goods and or services for earning profit is called as : Business Services
Fixed budget is useless for comparison when the level of activity: Increases Fluctuates both
ways
The budget committee consists of… Managers Budget officers
R&D budget and Capital expenditure budget are examples of Short-term Current budget
budget
Plant utilization budget and Manufacturing overhead budgets are types Production Sales budget
of budget
A budgeting process which demands each manager to justify his entire Functional budget Master budget
budget in detail from beginning is
Management accounting deals with Quantitative Qualitative
information information
………………………………… is a system meant for measuring business Accounting management
activities, processing of information into reports and making the findings accounting
available to decision-makers.
The documents, which communicate these findings about the financial Profit and Loss
performance of an organisation in monetary terms, are called statements a/c
…………………………………………....
Accounting is understood as The Language of Important aspect
………………………………………………………………………. Business of Business

A man who is involved in the process of book keeping and accounting is Accountant Finance Manager
called a/an ……………………………………

What are fixed to control inventory Maximum Level Minimum Level

The allotment of whole item of cost to cost centre or cost units is
called cost allocation cost apportionment
Packing cost is will come under which cost production cost selling cost
production administrative
Directors remuneration and expenses form part of overhead overhead

charging charging of
overheads to overheads to
Absorption means which of the following cost centres cost units
List An example of fixed cost property tax rent for building
A cost that is easily traceable to a cost object is known as: Direct cost Indirect cost

The process of distribution of overheads allotted to a particular Allocation Apportionment

department or cost center over the units produced is called:
The labour engaged in the making of a product is known as Direct labour Indirect labour
Standards that can be attained only under the best circumstances Attainable Budget
are referred to as: standards standards
As per J. Batty, Standard Cost represents which costs Anticipated costsCurrent costs
Company tries to achieve ---------------------------------------------as Break even
early as possible. Standard
Point
…………………………………………….is more when sales are Margin of Break Even
more than B.E.P. Safety Point
Every company must maintain accounts on
Accrual Cash
----------------------------- basis.
Books of accounts are kept at
---------------------------------------------- Registered Head Office
office of Company

________ is the language of Business which used to communicate Accounting

financial information. Marketing
________ is the study of managerial aspects of financial Financial
accounting Cost accounting accounting
Auditor gives his report to
----------------------------------------------------------------- Shareholders of Management of
company the company

Every company at end of financial year must publish

-------------------------------. Annual Report Article

Indian Accounting standards are prepared

by_________________________. ICAI RBI

G.A.AP means_____________________________ Generally Government

Accepted Accepted
Accounting Accounting
Principals Principals
Marginal cost is the increase or decrease in total cost when there is
increase or decrease in production by one unit. 1 0
Difference between actual sales and B.E. sales is called Margin of
Safety 1 0

Profit volume ratio shows relationship between contribution and

turnover of company. 1 0

Marginal cost is the total cost incurred for producing one additional
unit, which is nothing but variable cost per unit. 1 0

Margin of safety (M.O.S. or M/S ) is the sales achieved by

company over break even sales 1 0

Marginal costing is useful for decision making 1 0

Contribution depends on fixed cost 1 0
Increase variable cost to increase P/V ratio 1 0
The type of account with normal credit balance is : Asset Dividend
Debit : Cash :: Debit :
Credit : Accounts
Receipt of cash from customer on his account is recorded as :
Accounts Receivable ::
Receivable Credit : Cash
Left side of account is referred to as : Balance Debit
Accounts
Which of the following is a liability A/C : Withdrawals
receivable

Purchase of office computer on credit requires : Credit to : Computer Cash

Prepaid Insurance
Payment of 18 months insurance policy requires debit to :
insurance Expense
Debit to
An agreement to spend Rs 1,00,000 a month on advertising
advertising Credit to cash
beginning next month requires.
expense
Debit and Credit and
Normal account balance for asset and accumulated
credit debit
depreciation on asset are :
respectively respectively

All sales of
Sales day book records : All sales
merchandise

Suraj industries has returned goods sold to him. This will be Return inward
Cash book
recorded in : book

Assets sold on credit are recorded in : Sales day book Cash book

Bills raised by supplier and accepted by our Co. is recorded in Bills receivable
Bills book
: book.

Subsidiary
Cash book is : Ledger A/C
book
An action undertaken to earn profit is called sales after sales
 Secondary
Ledger is book of : Original entry
entry
The statement in which closing balance of ledger account are Income
Trial balance
listed is known as statement
Equity of debits and credit can be tested by preparing : Trial Balance T Accounts
Transaction recorded on debit side of cash book is transferred
Debit side Credit side
to ledger on :
The journal entry of purchase of stock under periodic Inventory to Cash to
inventory system would be? Cash Purchases
Price
Solution of
determination
Absorption costing is used for separation of
on basis of full
costs
cost
If total cost of 100 units is Rs 5000 and those of 101 units is
Marginal cost Prime cost
Rs 5030 then increase of Rs 30 in total cost is

replace simplify
A purpose of standard costing is to budgets and costing
budgeting. procedures.

Budgetary control helps the management in one of the Obtaining

Issue of shares
following? bank credit

Who coined the concept of management accounting? James H. Bliss J. Batty

The use of management accounting is Optional Compulsory

The convention of conservatism, when applied to the balance understatement Overstatement

sheet, results in of assets of assets
Which is the accounting concept that requires the practice of
Going concern Cost
crediting closing stock to the trading account
It is assumed that only those transactions that could be Money
Dual Aspect
expressed in monetary terms, under which of the following Measurement
Principle
concepts: Entity
Option 3 Option 4 Option 5 Answers
Professional
accounting Government 3
bodies
Convenience in
Recording 1
recording

Conservatism Materiality 3

Matching Conservatism 3

understatement Overstatement of
1
of capital. capital
Money
Accounting Period
Measuring 1
concept
Entity
Money
Measuring Accounting Period 1
Entity
Money
Measuring Accounting Period 1
Entity

Accounting
Materiality 1
Period

Going Concern
Cost Principle 1
Entity

Money
Measuring Cost Principle 1
Principle

Revenue
Double Entry Book-
Accrual 1
keeping System
Principle

Revenue
Double Entry Book-
Accrual 1
keeping System
Principle
Materiality
Timeliness Principle 1
Principle

Materiality
Timeliness Principle 1
Principle
 Timeliness Consistency
1
Principle Principle

Timeliness Consistency
1
Principle Principle

Distribution Administrative
4
expense expenses

Both (a) and

Current liability 2
(b) above

Fictitious asset Non Ficticious Asset 2

Manufacturing HR 3

Purchasing HR 1

Income statement,
Balance sheet Balance sheet and 4
cash flow statement

Assets and
Both a and c above 2
Liabilities

it is a kind of
it is not a part of
financial 1
accounting cycle
statement

No error in
posting entries Accounts balances
1
to ledger are correct
accounts

Frequently
at the end of a year 1
during the year

error of
compensating errors 1
principle

bank account cash account 1

 Accounts
Equipment expenses 3
payable
Data entry Finance head
operator 1

Cost Accounting None of the above

1

Cost Accounting None of the above

1
Cost Accounting None of the above
2

9 months 12 months 4
2,000,000 1,200,000
3

Credit Footing 2
Cash Accounts payable
1
No entry Debit to prepaid
advertising . 1

Journalized Account book

ledger 1
Balance sheet Income statement,
Balance sheet and cash 4
flow statement
Reduce owner's No. change.
equity and
increase 1
liabilities

Registered office Registered office or any

other place decided by 4
board
M.D. + Other Chairman of Co.
director + Mngr
or company 3
secretary

Management Finance Manager

1
Management Company
1
Auditor's Report Annual report
2

Government Accountant 1
Works cost Total sales
1
Cost Cost analysis
measurement 1
Depreciation Carriage
3
Cost centre Cost allocation
1
Indirect Selling, distribution,
material,Direct R&D
material, Direct
labour 1

Cost Profit analysis

ascertainment 3
Cost None of the above
Accounting
1

Cost None of the above

Accounting 1
Cost None of the above
Accounting 1

Cost None of the above

Accounting
1

Financial None of the above

Accounting 1
Financial None of the above
Accounting 1
Financial None of the above
Accounting
1

Financial None of the above

Accounting
1

Financial None of the above

Accounting 1

Financial None of the above

Accounting 1

Cost None of the above

Accounting 1
Cost None of the above
Accounting 1
Cost None of the above
Accounting 1
Cost None of the above
Accounting 1

Financial None of the above

Accounting 1
Financial Corporate accounting
Accounting 1
Strategic None of the above
Planning 1
Financial None of the above
Accounting 3
Barter System Company
1
DEFAULTER All of the above
1
Both A & B None of the above
3

Accounting None of the above

Principles 1

Accounting None of the above

Principles 1

Accounting None of the above

Concepts 1

Corporations Partnership Firms all of the

above 5

RBI SEBI
1

provide match the debit side

information and credit side
1

Statutiry SEBI
framework 1

Historical Accounting Period

1
Record Concept Concept
 Materiality Accounting Period
1
Concept Concept

Historical Accounting Period

1
Record Concept Concept

Materiality Historical Record

1
Concept Concept

Convention Of Convention Of
1
Conservatism Consistency
Legally obligatory Compulsory to some
and optional to others 1

American R.N Anthony

Accounting 1
Association
Management Inflation Accounting
Accounting 3
Interpret the Assist tax authorities
financial data
2

Financial Corporate accounting

Accounting 1
Barter System Company 1
Decreases Constant
2
Creditors Supervisors 2
Long-term Cost budget
budget 3
Cost budget Purchase budget
3
Zero base Non- functional budget
budgeting 3
Both A & B None of the above
3
Cost Accounting Financial Accounting
1

Balance sheet Audit report

1

Important part of all of the above

business 1

Data entry Finance head

operator 1

Re-Order Level Inventory Levels 4

 1
cost absorption cost disbursement
administration codistribution cost 4

distribution overhead 4
selling overhead

charging of allotment of
overheads to overheads to different 2
cost centres or departments
cost units
direct material c direct wages 2
Variable cost Fixed cost 1

Absorption Departmentalization 3

Temporary labou Permanent labour 1

Practical standards
3
Ideal standards
Historical costs Empirical costs 1

Benchmark Margin 1

Marginal
Contribution 1
costing

Merchantile Credit 1

Company C.A office 1

Pricing 1
Profit
Management 3
accounting Business accounting

Manager Owner 1

Financial
Agenda 1
reports

SEBI IRDA 1

Government
accepted Generally assumed
1
Accrual accounting Principals
principals

1
 1

1
2
2
Revenue Expense 1
Debit : Cash ::
Debit : Accounts
Credit :
Payable :: Credit : 1
Accounts
Cash
Payable
Credit Footing 2
Rent expense Accounts payable 4

Accounts Equipment
3
payable expenses

Cash Accounts payable 1

Debit to prepaid
No entry 1
advertising .

Debits Credits 1

All cash sale

of Credit sale 4
merchandise

Return
Sales return book 4
outward book

Journal proper Purchase day book 1

Bills payable
None of the above 3
book

Journalized
None of the above 1
ledger
business pre sales 3
Subsidiary
None of the above. 2
entry

General ledger None of the above 1

Journal Ledger 1
Can not be
None of the above. 1
posted
Purchases to
Purchase to Stock 4
Inventory

Calculation of
gross and net Net profit, expenses 1
profit

All variable
Fixed cost 1
overheads
eliminate the eliminate the need
need for actual to account for year-
costing for end under-applied
3
external or over-applied
reporting manufacturing
purposes. overhead.

Getting grants
from Granting credits 4
government
American
Accounting R.N Anthony 1
Association
Compulsory to
Legally
some and optional 1
obligatory
to others
understatemen Overstatement of
1
t of capital. capital

Matching Conservatism 3

Going
Concern Cost Principle 1
Entity