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Sample Paper-QUIZ

Question 1

Which of the following transactions will result in an increase in the working capital ?

A Settlement of creditors by cheque


B Sale of stock on credit
C Obtaining an overdraft from the bank
D Sale of a fixed asset for cash

Question 2

The opening stock of the year is shown in the

A Balance sheet only


B Trading A/C and balance sheet
C Trading A/C only
D Profit & Loss A/C only

Question 3
True False
Are these statements true or false ?

(i) Stock of goods should always be shown at cost


price irrespective of their selling price

(ii) A debit balance in the profit and loss A/C shows


net profit

Both are false

Question 4

When a bad debt is written off which two ledger accounts are affected ?

A Debtors A/C and bad debt A/C


B Creditors A/C and bad debt A/C
C Debtors A/C and sales A/C
D Sales A/C and bad debt A/C
Question 5

Which of the following current assets are omitted when calculating the quick assets ratio ?

A cash
B Stocks
C Debtors
D None of the above

Question 6

Which of the following is not capital expenditure ?

A Wages paid for construction of new office building


B Purchase of shop fittings
C Installation charges of new machinery
D Purchase of a new battery for the delivery van

Question 7

A sole trader’s drawings should be shown in the balance sheet as

A Deducted from creditors


B Added to debtors
C Deducted from capital
D Added to capital

Question 8

Which of the following is not revenue expenditure ?

A Purchase of goods for sale


B Interest paid on bank loan for purchase of lorry
C Carpenter’s wages for making office furniture
D Purchase of a battery for the lorry

Question 9

Which of the following is not an asset ?

A Patents & Trade marks


B Copyright
C Investments
D Bank overdraft

Question 10

If the purchase of a battery for a motor vehicle is recorded in the motor vehicles A/C it would result in

A An understatement of profit and an understatement of fixed assets


B An overstatement of profit and an understatement of fixed assets
C An understatement of profit and an overstatement of fixed assets
D An overstatement of profit and an overstatement of fixed assets

Question 11

Indicate whether the following statements are true or false

True False
(a) A profit & loss A/C will always have a credit balance

(b) In a successful business the current assets will be greater than


the current liabilities

(c) Current assets to current liabilities is known as the current ratio


a

Question 12

Payment of a liability

A Increases both assets and liabilities


B Decreases both assets and liabilities
C Increases assets and decreases liabilities
D Decreases assets and increases liabilities
Question 13

Understating the closing stock results in

A Understating the profit


B Overstating the profit
C Understating the cost of sales
D None of the above

Question 14

The current year’s dues of a long term debt is normally classified under

A Current assets
B Current liabilities
C Long term liabilities
D Owner’s equity
Question 15

A Trader bought goods from an importer for listed price of Rs.200, 000 on 1.1.2009. The importer allowed a
trade discount of 20%. He is entitled to a cash discount of 10% if he settles the dues within a month. He
settled this due on 15/1/2009. What is the amount he paid?

A Rs.150,000
B Rs.160,000
C Rs.144,000
D Non of the above

Question 16

Following are the relevant entries in the books of a business

Rs. Rs.

Sales 100,000 Carriage outwards 3,000


Purchases 60,000 Discount Received 3,500

Opening stock 10,000 Discount allowed 2,500

Closing stock 5,000 selling & Distribution expenses 1,200 Carriage inwards
2,000 Administration expenses 2,400

What is the Gross Profit of the Business?

30,000

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