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1) A business firm is separate and distinct from its owners is the assumption under which of the following
accounting concepts:
1) Business Entity 2) Going Concern Entity 3) Money Measuring Entity 4) Accounting Period concept
5) None of the above
2) Assumption of accounting entity or business entity concept is applicable for which of the following
business organizations.
1) Societies 2) Joint Stock Companies 3) Corporations 4) Partnership Firms 5) All the above
3) Under which of the following kinds of business concepts it is assumed that the organization will last for a
long time.
1) Accounting Entity 2) Going Concern Entity 3) Money Measuring Entity 4) Accounting Period
5) None of the above
4) Distinction between an expenditure whose benefit will be for a long period and whose benefit for a short
period of say up to one year, is made under which of the following.
1) Accounting Entity 2) Going concern Entity 3) Money Measuring Entity 4) Accounting Period
5) None of the above
5) A firm is expected not to curtail its present scale and continue at the operate at least at the existing level
under, which of the following:
1) Accounting Entity 2) Going Concern Entity 3) Money Measuring Entity 4) Accounting Period
5) None of the above
6) It is assumed that only those transactions that could be expressed in monetary terms, under which of the
following concepts:
1) Dual Aspect Principle 2) Going Concern Entity 3) Money Measurement Entity 4) Cost Principle
5) Accounting Principle
7) Entire life of a business entity is divided into shorter time intervals, say of one year, under which of the
following
1) Dual Aspect Principle 2) Going Concern Entity 3) Money Measuring Principle 4) Cost Principle
5) Accounting Principle
8) General rules that are used as a guide in accounting and as a basis of accounting practices are called
1) Generally Accepted Accounting Practices 2) Basic Accounting Conventions 3) Accounting and
Financing Principles 4) Accounting Principles 5) All the above
9) Every transactions has two aspects i.e., debit and credit, under which of the following accounting
principles:
1) Cash Accrual Principle 2) Revenue Accrual Principle 3) Dual Aspect Principle
4) Double Entry Book-keeping System 5) C and D both
10) Anticipate no profits and provide for all possible losses. This is essence of which of the following
accounting principles:
1) Dual Aspect Principle 2) Materiality Principle 3) Timeliness Principle 4) Consistency Principle
5) Conservatism Principle
11) Accounting procedures and accounting practices should remain same from year to year under which of
the following accounting principles:
1) Dual Aspect Principle 2) Materiality Principle 3) Timeliness Principle 4) Consistency Principle
5) Conservatism Principle
12) 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 under which of the following accounting principles:
1) Dual Aspect Principle 2) Materiality Principle 3) Timeliness Principle 4) Consistency Principle
5) Conservatism Principle
13) When a machinery is purchased for cash, the cash balance is reduced and to that extent, the amount of
machinery as an asset is recorded. This is done to follow which of the following accounting principles:
1) Dual Aspect Principle 2) Materiality Principle 3) Timeliness Principle 4) Consistency Principle
5) Conservatism Principle
14) Rules of revenue recognition determine that earning process should be either complete or near completion
under:
1) Realization Concept 2) Materiality Concept 3) Historical Record Concept 4) Accounting Period Concept
5) Dual Aspect Concept
15) The business transactions are recorded date wise to create proper record for all transactions. This is part of
which of the following
1) Realization Concept 2) Materiality Concept 3) Historical Record Concept 4) Accounting Period Concept
5) Dual Aspect Concept
16) Profit is a liability for a firm and the loss is an asset under which of the following concepts
1) Business Entity Concept 2) Materiality Concept 3) Historical Record Concept 4) Accounting Period
Concept 5) Dual Aspect Concept
17) The accounting equation ‘asset = capital + liability is part of which of the following concepts
1) Realization Concept 2) Materiality Concept 3) Historical Record Concept 4) Accounting Period Concept 5)
Dual Aspect Concept
18) Under which conventions of accounting, the contingent liabilities are shown as a footnote or explanatory
notes in the balance sheet of a firm:
1) Convention Of Full Disclosure 2) Convention Of Materiality 3) Convention Of Conservatism
4) Convention Of Consistency 5) None Of The Above
19) A business firm creates provisions against doubtful debt under which of the following conventions
1) Convention Of Full Disclosure 2) Convection Of Materiality 3) Convention Of Conservatism
4) Convention Of Consistency 5) None Of The Above
20) Valuation of stocks is done by a business firm at cost price or market price, whichever is lower basis,
under
1) Convention Of Full Disclosure 2) Convention Of Materiality 3) Convention Of Conservatism
4) Convection Of Consistency 5) None Of The Above
21) The concept that recognizes the distinction between the receipt of cash and the right to receive the cash is
called
1) Accrual Concept 2) Cash Concept 3) Materiality Concept 4) Full Disclosure Concept
5) None Of The Above
22). Trial balance is prepared to check accuracy of
A) Ledger accounts balances B) Balance sheet balances C) Income statement balances
D) Cash flow statement balances
23) If a transaction is completely omitted from the books of accounts, will it affect the agreement of a trial
balance?
A) Yes B) No C) Transactions can't be omitted
A) It lists down the balances of accounts B) It lists down the balances of a balance sheet
C) It is a kind of financial statement D) It is not a part of accounting cycle
28) Which of the following will affect the agreement of a trial balance?
A) Complete omission of a transaction B) Partial omission of a transaction C) Error of principle
D) Compensating errors
29) If debit balances = credit balances, trial balance only shows or check the ____________ and it does not
indicate that no errors were made during recording and posting
A) Arithmetic accuracy B) Errors of commission C) Omissions of economic events
D) Understatements of balances
30) Which of the following account with normal balance is shown at the debit side of a trial balance?
A) Rent income account B) Creditors account C) Unearned income account
D) Cash account
31) Which of the following account with normal balance is shown at the credit side of a trial balance?
A) Cash account B) Bank account C) Equipment account D) Accrued expenses account
38) A journal entry in which two or more account is debited or credited is referred as
A) Journal entry B) Multi entry C) Additional entry D) Compound entry
39) The term 2/10-n/30 implies that ______ % discount will be given if the payment is made within _____
days or full amount is receivable within 30 days
A) 2,10 B) 10,2 C) 10,30 D) 3,15
40) Goods returned by customer should be debited to which of the following accounts?
A) Sales income account B) Sales account C) Return inward account
D) Expenses account
43) Which of the following will be debited if a business purchases goods on credit?
A) Cash B) Debtor C) Creditor D) Purchases
44) Which of the following accounts will be debited if the business's owner withdraws cash from business for
his personal use?
A) Drawings B) Cash C) Business D) Stock
46) The standard format of journal does not include which of the following?
A) Assets column B) Date column C) Description column D) Amount column
48) Which of the following accounts will be credited if a company purchases building for cash?
A) Capital account B) Fixed assets account C) Building account D) Cash account
49) Discount for quick repayment of debt is normally referred as
A) Trade discount B) Prompt payment discount C) Cash discount D) Bulk discount
51) A chart of accounts generally start with which of the following types of accounts?
A) Assets accounts B) liability accounts C) Cash accounts D) Revenue accounts
54) If credit side of a bank account is greater than the debit side, it indicates which of the following?
A) Bank overdraft B) Cash at bank C) Bank balance D) Current Asset
55) If debit side of a bank account is greater than credit side it indicates which of the following?
A) Cash at bank B) Bank understatement C) Bank overdraft
D) Balance overstatement
57) Which of the following is known as the base for preparing trial balance?
A) Journal B) Cash account C) Ledger account D) Balance sheet
58) If debit balance is greater than credit balance then the account balance will be:
A) Credit balance B) Debit and credit balance C) Cash balance D) Debit balance
63) Which of the following is the normal balance of a rent expense account?
A) Credit balance B) Cash balance C) Overdraft D) Debit balance
64) Revenue and expense accounts are referred as
A) Nominal accounts B) Real account C) Cash accounts D) Banks account
65) The real accounts are accounts of Assets, liabilities and ________
A) Expenses B) Revenues C) Capital D) Drawing
70) Which of the following accounts are closed at the end of an accounting period?
A) Nominal accounts B) Balance sheet accounts C) Real accounts D) None of them
75) A cash book with cash, bank and discount column is commonly referred as
A) Cash book B) Two columns cash book C) Three columns cash book D) Petty cash book
80) Discount received is recorded on which of the following side of a cash book?
A) Receipts B) Payments C) Incomes D) Expenditures
81) Drawings by owner of business are generally recorded on which of the following side of a cash book?
A) Receipts B) Payments C) Incomes D) Expenditures
82) Introduction capital by owner of business is recorded on which side of a cash book?
A) Receipts B) Payments C) Incomes D) Expenditures
83) Cash book with cash and discount column is mostly referred as
A) Simple cash book B) Two column cash book C) Three column cash book D) Petty cash book
84) A cash book that is used to record the small payments of cash is generally referred as
A) Simple cash book B) Two column cash book C) Three column cash book
D) Petty cash book
85) A simple or one column cash book usually has which of the following main columns?
A) Bank B) Payments C) Discount D) Cash
86) Purchase of office equipment for cash will be recorded on which of the following sides of a cash book?
A) Receipts B) Payments C) Incomes D) Expenditures
UNIT – II
3) Which of the following adjusting double entries is correct for Unearned income?
A) DEBIT= Income, CREDIT= Unearned income
B) DEBIT= Unearned income, CREDIT= Income
C) DEBIT= Cash, CREDIT= Unearned income
D) DEBIT= Income, CREDIT= Cash
6)Which of the following adjusting double entries is correct for Prepaid expenses?
A) DEBIT= Expenses, CREDIT= Prepaid expenses
B) DEBIT= Prepaid expenses, CREDIT= Expenses
C) DEBIT= Cash, CREDIT= Prepaid expenses D) DEBIT= Expenses, CREDIT= Cash
8)Which of the following adjusting double entries is correct for earned income?
A) DEBIT= Income, CREDIT= Earned income B) DEBIT= Earned income, CREDIT= Income
C) DEBIT= Cash, CREDIT= Earned income D) DEBIT= Income, CREDIT= Cash
10)Identify the consequences of not making adjustment entry for accrued expense
A) Overstatement of liabilities B) Understatement of liabilities C) Overstatement of expenses
D) Understatement of capital
12) Adjusting entries convert cash based account into _________ based accounting
A) Capital B) Asset C) Accrual D) Prepaid
14) A business paid 3 month rent amounting to $3000 out of this amount one month rent pertains to the next
accounting period. Identify the correct amount prepaid expense
A) $3000 B) $1000 C) $2000 D) $4000
15) Adjusting entries help allocating incomes and expenses to their ________
A) Cash balances B) Appropriate accounting periods C) Credit balances
D) Received or paid cash balances
16)A customer paid you $100,000 for some construction work. However, at the end of your accounting period
only 1/4 of work was completed. What amount of income should be shown in income statement?
A) 100,000 B) 50,000 C) 10,000 D) 25,000
17)A business paid $5000 for technical services but used up the services for only $2000 until the end of its
accounting period. The remaining $3000 would be referred as
A) Accrued expenses B) Accrued income C) Prepaid income D) Prepaid expenses
18) Revenue earned but not yet received by the business is known as
A) Contra asset revenue B) Accrued expenses C) Accrued revenue D) Unearned revenue
20) If Rent expenses=$5000, Insurance expenses=$4000, Prepaid rent expenses=$3000. What amount of
total expenses will be shown in income statement?
A) $9000 B) $12000 C) $8000 D) $6000
FINAL ACCOUNTS:
1) We can say that the business is in profit, when:
2)
According to the double entry system of accounting, an account that obtains benefit is:
A) Credit
B) Debit
C) Income
3)
A) Receiving of benefits
C) Providing of benefits
4)
6)
A) General Expenses
B) Financial Expenses
C) Selling Expenses
7)
Which of the following shows summary of a company's financial position at a specific date?
C) Balance Sheet
8)
A) Franchise rights
B) Goodwill
C) Patents
D) Land
9)
Which of the following is an example of business liability?
A) Land
B) Building
C) Cash
D) Creditors
10)
A) Added in liabilities
Depreciation
1. Use of asset
2. Passage of time
3. Obsolescence
4. Repair of an asset
3. Depreciation is charged on
1. Current asset
2. Fixed asset
3. Intangible asset
4. Current liability
7. Bank purchased a computer on 1.03.2015 at a cost Rs. 50000, estimated life is 8 years, cost of
depreciation under straight-line method will be-
1. 6250
2. 7430
3. 5000
4. 4590
8. Annual depreciation of machine is 40000, cost of machine is 500000, rate of depreciation according
to straight-line method will be-
1. 9%
2. 18%
3. 16%
4. 8%
9. Value of an asset is 9 lakh, scrap value is 125000, estimated life is 10 years the cost of depreciation under
straight-line method will be-
1. 65000
2. 89000
3. 77500
4. 67880
11. Cost of the asset minus scrap value/ Life of the asset is the formula of
1. Diminishing balance method
2. Annuity method
3. Straight line method
4. Sum of digits method
17. The vehicle costs Rs. 150000; it charges 20% depreciation according to written down value method
estimate the value of the vehicle after depreciation at the end of three years.
1. 68000
2. 56000
3. 78000
4. 76800
20. A boiler was purchased from abroad for Rs. 10000. Shipping and forward charges Rs. 2000 and
expenses of installation amounts to Rs. 8000. Find the balance after three years @10% on
diminishing balance method.
1. 12400
2. 14580
3. 13800
4. 11800