Basic Accounting 295 Questions

8/2/2019 Basic Accounting 295 Questions

1/25


2/25

BRILLIANT COMMERCE ACADEMY(Self Evaluation Test-Answers) 2012

2

(c) Products are manufactured(d) None of the above

Q18} The concept of conservatism when applied to

the balance sheet results in

(a) Understatement of assets(b) Overstatement of assets(c) Overstatement of capital(d) Understatement of capital

Q19} The determination of expenses for an

accounting period is based on the principle of

(a) Objectivity(b) Materiality(c) Matching(d) Periodicity

Q20} Economic life of an enterprise is split into the

periodic interval as per

(a) Periodicity(b) Matching(c) Going concern(d) Accrual

Q21} If an individual asset is increased, there will be

a corresponding

(a) Increase of another asset or increase ofcapital

(b) Decrease of another asset or increase ofliability

(c) Decrease of specific liability or decrease ofcapital(d) None of the these

Q22} Financial position of the business is ascertained

on the basis of

(a) Records prepared under book keepingprocess

(b) Trial balance(c) Accounting reports(d) None of the above

Q23} User of accounting information include

(a) Creditors

(b) Lenders(c) Customers(d) All of the above

Q24} It is on the basis of the entity co9ncept that

money brought by the proprietor into the business is

credit to ____________ account.

(a) Proprietors personal(b) Proprietors capital(c) Cash A/c(d) Bank A/c

Q25} As per the going concern concept until and

unless the business has entered into a state of

liquidation, it is viewed as having ________ life.

(a) Definite(b) Indefinite(c) Standstill(d) None

Q26} A businessman needs to know the state of

affairs of his business at frequent intervals which is

normally a twelve-month period this period is called

_______ year.

(a) Accounting(b) Calendar(c) Financial year(d) Leap year.

Q27} ______ basis of revenue recognition considers

the revenue as realized when sale is completed.(a) Cash(b) Sales(c) Mercantile(d) None of these

Q28} In determining net income from business

operation, the losses not related to ordinary

business operation are ______ from the revenue for

determining net income.

(a) deducted(b) not deducted(c) added

(d) none of theseQ29} According to the convention of conservatism,

the stock in trade is valued at market price, or cost

price, whichever is _____

(a) Less(b) More(c) Same(d) None

Q30} The principle of accountancy, which recognizes

the double aspect of a business transaction is knows

are _______ concept.

(a) Dual(b) Accrual(c) Matching(d) Entity

Q31} The system of recording transactions based on

dual concept is called-(a) Double account system(b) Double entry system(c) Single entry system(d) Cash system

Q32} According to money measurement concept the

following on dual concept is called

(a) Health of the chairman of the company(b) Quality control in the business(c) Value of the building(d) Staff moraleQ33} Cost concept envisages the recording of the

following in the books of accounts -

(a) An asset at its cost(b) Knowledge and will acquired by business

executive

(c) Changes effected because of some politicalevents

(d) Qualification C/F/O. (Chief Financial officer)Q34} The practice of appending note regarding

contingent liabilities in the accounting statements is

in pursuant to


3/25


3

(a) Conventio0n of Consistency(b) Money measurement concept(c) Convention of disclosure(d) Entity concept

Q35} The Proprietor is treated as a creditor to the

extent of his capital according to

(a) Cost concept(b) Business entity concept(c) Going concern concept(d) Dual concept

Q36} The accounting equation is based on

(a) Going concern concept(b) Dual aspect concept(c) Money measurement concept(d) Entity concept

Q37} Market value of investments is shown as a

footnote according to(a) Convention of disclosure(b) Convention of consistency(c) Convention of conservatism(d) Entity concept

Q38} Making the provision for doubtful debts in

anticipation of actual bad debts is on the basis of

(a) Convention of disclosure(b) Convention of consistency(c) Convention of conservatism(d) Dual ConceptQ39} According to going concern concept, a Business

is viewed as having

(a) A limited life(b) An indefinite life(c) A very long life(d) No life

Q40} Contingent liability is shown due to

(a) Convention of full disclosure(b) Convention of conservatism(c) Convention of materiality(d) Dual aspect concept

Q41} Depreciation was not recorded because to do

so would result in a net loss for the period Indicate

the accounting principle that is violated

(a) Cost Principle(b) Consistency(c) Materiality(d) No principle of accounting is violated

Q42} LIFO inventory method was used in year 1, FIFO

in year 2 and weighed average in year 3. Which

accounting principle is violated?

(a) Cost Principle(b) Consistency(c) Materiality(d) No principle of accounting is violated

Q43.} The owner of a company included his personal

medical expenses in the companys income

statements. Indicate the accounting principle that isviolated.

(a) Cost principle(b) Going concern concept(c) Entity concept(d) Conservatism

Q.44.} Land was reported as its selling prince which

is substantially higher than its cost. The increase in

value was included in the income statement. Which

accounting principle is violated?

(a) Cost principle(b) Going concern concept(c) Entity concept(d) Conservatism

Q.45} No mention was made of a major law suit filed

against the company even though the companys

attorney believes that there is high probability of

losing the case. Indicate the accounting principle

that is violated.

(a) Cost principle(b) Conservatism(c) Full disclosure

(d) MaterialityQ.46} The cost of three small files (of `.4 each) was

charged to expenses when purchased even though

they had a useful life of several years. This was done

according to the

a) Cost principleb) Conservatism principlec) Full disclosured) Materiality

Q.47) An accounting convention which provides that

when doubt, choose the solution least likely to

overstate assets and income is

(a) Consistency(b) Materiality(c) Conservatism(d) Continuity

Q.48) Money measurement concept of accountingtheory is based on the assumption that the value of

money will

(a) Remain constant(b) Fluctuate(c) Decrease(d) Go up

Q.49) The fundamental accounting equation Assets

Liabilities is the formal expression of

(a) Dual aspect concept(b) Matching concept(c) Going concern concept(d) Money measurement concept

Q.50) Any change in the accounting policy relating to

inventories which has a material effect in the current

or late, periods should be disclosed. This is in

accordance with the accounting principle of :

(a) Going concern(b) Conservatism(c) Consistency(d) Disclosure


4/25


4

Q.51) Assets in the balance sheet are shown at cost

less depreciation rather than their replacement cost

because of the accounting convention.

(a) Going concern(b) Matching(c) Realization(d) Money Measurement

Q.52) The assets are classified as current assets and

fixed assets in accordance with____

(a) Accounting period assumption(b) Matching principle(c) Consistency principle(d) Going concern principle

Q.53) Materiality principle is an exception to the ___

(a) Consistency principle(b) Accounting period assumption(c) Prudence principle(d) Full disclosure principle

Q.54) When stock is valued at cost in one accounting

period and at lower at cost and net reliable value in

another accounting period _____

(a) Prudence principle conflicts with consistencyprinciple

(b) Matching principle conflicts with consistencyprinciple

(c) Consistency principle conflicts withAccounting period assumption

(d) None of the aboveQ.55) Accrual means _________

(a) Recognition of revenue as it is earned and ofcosts as they are paid

(b) Recognition of revenue as it is received andof costs as they are incurred

(c) Recognition of revenue and costs onpayment basis

(d) Recognition of revenue as it is earned and ofcosts as they are incurred.

Q.56) prudence principle is as exception to the

_____

(a) Matching principle(b) Going concern assumption(c) Conservatism(d) Consistency

Q.57) The assets and incomes are not overstated and

the liabilities and losses are not understated in

accordance with _________

(a) Cost concept(b) Going concern assumption(c) Matching principle(d) Prudence principle

Q.58) Prudence is a concept to recognize _____

(a) All losses and not profits(b) Unrealized profits and not losses(c) Realized losses and not profits(d) None of the above

Q.59) Accounting of a small calculator as an

expenses & not as an asset is in accordance with

_____

(a) Full disclosure principle(b) Objective principle(c) Accounting period assumption(d) None of the above

Q.60) Mr. X started business on 1st

April, 2001 and

reported about the financial performance andfinancial position of the business on 31

stMarch,

2007 being the date of liquidation of enterprise. He

has violated____

(a) Money measurement principle(b) Periodicity principle(c) Consistency principle(d) Accounting entity principle

Q.61) The principle which treats all rupees alike

whether it is a rupee of 1957 or 2007 ____

(a) Money measurement principle(b) Periodicity principle

(c) Consistency principle(d) Accounting entity principle

Q.62) Mr. X valued the inventory on FIFO basis and

LIFO basis during 2006 and 2007 respectively. He has

violated_______

(a) Conservation principle(b) Materiality principle(c) Cost principle(d) Consistency principle

Q.63) Mr. X has a sundry debtors of `.1,00,000.

Creating a provision for discount @ 2% on sundry

debtors is in accordance with_________

(a) Conservatism principle(b) Materiality principle(c) Cost principle(d) Consistency principle

Q.64) Mr. X has a sundry creditors of `. 1,00,000crediting a reserve for discount @ 2% on sundry

creditors is violation of _______

(a) Conservatism principle(b) Materiality principle(c) Cost principle(d) Consistency principle

Q.65) The production manager reports to the top

management that production for the year 2007 is

200 tons but actual production is 1,99,000.90

kilogram. He has followed ____(a) Conservatism principle(b) Materiality principle(c) Cost principle(d) Consistency

Q.66) Mr. X purchased a building for `.1,00,000 but

at the end of accounting period, the market value of

building is `.1,50,000. He disclosed the building at

`.1,50,000 in the financial statements. He has

violated _____

(a) Conservatism principle(b) Materiality principle


5/25


5

(c) Cost principle(d) Consistency

Q.67) The concept which calls for adjustment to be

made in respect of prepaid and outstanding

expenses and accrued and accrued revenue is _____

(a) Prudence principle(b) Accrual principle(c) Cost principle(d) consistency

Q.68) GAAPs are :

(a) Generally Accepted Accounting Policies(b) Generally Accepted Accounting Principles(c) Generally Accepted Accounting Provisions(d) None of these

JOURNAL

Q.1) Journal records the transactions of the firm in :(a) At least one account(b) At least two accounts(c) Maximum of two accounts(d) Maximum of three accounts

Q.2) A business transaction affects

(a) At least one account(b) At least two accounts(c) Maximum of two accounts(d) Maximum of three accounts

Q.3) Journal is book of(a) All cash transactions only(b) All credit transactions only(c) Secondary entry(d) Original entry

Q.4) The rent paid to landlord is credited to

(a) Landlords account(b) Rent account(c) Cash account(d) None of the above

Q.5) Trade discount is always

(a) Debited

(b) Credited(c) Deducted(d) Added

Q.6) Trade discount is recorded by

(a) Buyer(b) Seller(c) Customer(d) None

Q.7) In case of a debt becoming bad, the amount

should be credited to

(a) Debtors account(b) Bad debts account(c) Cash account(d) Sales account

Q.8) Which one of the following is an example of

personal accounts ?

(a) Capital account(b) Building account(c) Cash account(d) Investment account

Q.9) Which of the following is a real account?

(a) Salaries(b) Investments in shares(c) Debtors account(d) Bank account

Q.10) Provision for doubtful debts accounts is a

(a) Personal account(b) Real account(c) Nominal account(d) None

Q.11) Wages account is a

(a) Persona account(b) Real account(c) Nominal account(d) None

Q.12) Provision of Depreciation account is a

(a) Personal account(b) Real account

(c) Nominal account(d) None

Q.13) Prepaid insurance account is

(a) An expense(b) An Income(c) An asset(d) A liability

Q.14) Professional fees (earned) account is likely to

have

(a) Only debit entries(b) Only credit entries(c) Both debit and credit entries(d) None

Q.15) Bills receivable account

(a) Personal account(b) Real account(c) Nominal account(d) Both a and b

Q.16) Loan account is

(a) Personal account(b) Real account(c) Nominal account(d) None

Q.17) Loose tools is in the nature of.

(a) Real A/c(b) Nominal A/c(c) Personal A/c(d) None

Q.18) Sale of office furniture should be credited to

(a) Sales A/c(b) Nominal A/c(c) Personal A/c(d) None

Q.19) The debits written off as bad, if recovered

subsequently are

(a) Credited to bad debts recovered account(b) Credited to debtors account(c) Debited to profit and loss account


6/25


6

(d) None of the aboveQ.20) Bank overdraft account has a

(a) Debit balance(b) Credit balance(c) Debit or Credit balance(d) none

Q.21) Bank overdraft account is a:

(a) personal account(b) Real account(c) Nominal account(d) None of the above

Q.22) DEBIT signifies :

(a) Increase in Assets account(b) Decrease in liability account(c) Decrease in capital account(d) All of the above

Q.23) Credit signifies(a) Increase(b) Decrease(c) Either an increase or a decrease(d) None

Q.24) Bills payable is _______

(a) Personal A/c(b) Real A/c(c) Nominal A/c(d) None of the above

Q.25) Cash accounts is_________(a) Personal A/c(b) Real A/c(c) Nominal A/c(d) None of the above

Q.26) Wages `.1,000 payable to labour will be

credited

(a) Cash A/c(b) Labour A/c(c) Salary A/c(d) None of the above

Q.27) Stock of`.4,000 is destroyed by fire. It was not

insured the accounting entry is

(a) Loss by fire A/c Dr. 4,000To Goods A/c

4,000

(b) Loss by fire A/c Dr. 4,000To purchase A/c

4,000

(c) Loss by fire A/c Dr. 4,000To Goods destroyed by fire A/c

4,000

(d) All of the aboveQ.28) Ramlal, a debtor of `. 2,000 became insolvent

and dividend of 50% is recovered by the official

receiver. The entry is

(a) Bad debt A/c Dr. 1,000To Debtors A/c1,000

(b) Bank A/c Dr. 1,000To Debtors A/c

1,000

(c) Bank A/c Dr. 1,000To Bad debts A/c

1,000

(d) Bank A/c Dr. 1,000Bad Debt A/c Dr. 1,000

To Debtors A/c2,000

Q.29) Capital of business if `.75,000 and liability is

`.25,000 then Assets of business would be :

(a) `.1,00,000(b) `.15,000(c) `.75,000(d) `.50,000

Q.30) The Installation expenses for a new machinery

will be credit to

(a) Cash A/c(b) Profit & Loss A/c

(c) Machinery A/c(d) Installation Expenses A/c

Q.31) Goods worth `.5,000 given as charity should be

credited to

(a) Purchases A/c(b) Sales A/c(c) Capital A/c(d) None of the above

Q.32) Sale of office furniture should be debited to

(a) Furniture A/c(b) Sale A/c(c) Cash A/c(d) Purchase A/c

Q.33) Loss leads to a reduction in

(a) Capital(b) Income(c) Liabilities(d) None of the above

Q.34) Purchase for cash

(a) Increase liability(b) Decrease assets(c) No change in the total assets(d) Increase assets

Q.35) Trade discount allowed at the time of sale of

goods is

(a) Recorded in Journal(b)

Not recorded in book of accounts

(c) Recorded in cash Book(d) Recorded in Sales book

Q.36) Goods distributed as free samples is debited to

(a) Advertisement A/c(b) Charity A/c(c) Income(d) Goods A/c

Q.37) Drawing is a type of

(a) Expenses(b) Withdrawal of capital(c) Income


7/25


7

(d) None of the aboveQ.38) Purchase of office equipment on credit will

lead to

(a) Decrease in capital(b) Decrease in liability(c) Income in Assets(d) All of the above

Q.39) Ram paid `.1,000 towards a debt of `.3,000

which was written off as bad debt in the previous

year. Rams account will be credited with

(a) `.1,000(b) `.3,000(c) `.2,500(d) NIL

Q.40) An old motor car was purchase for `.1,00,000.

It was repaired for `.10,000 and `.15,000 spent on its

painting. Repairs A/c will be debit by(a) `.1,25,000(b) `.10,000(c) `.15,000(d) NIL

Q.41) Material cost `.4,000 and labour charges

`.3,000 paid for the erection of the building is debit

to

(a) Purchase A/c(b) Material A/c(c)

Building A/c

(d) Wages A/cQ.42) Sunset Tour has `.3,500. Account receivable

from Mohan. On January 20, Mohan makes a partial

payment of`.2,100 Sunset Tours. The Journal entry

made on January 20 by Sunset Tours to record this

transaction includes.

(a) A credit to the cash received account of`.2,100

(b) A credit to the account receivable account of`.2,100

(c) A debit to the cash account `.1,400

(d) A debit to the account receivable account`.1,400

Q.43) Which of the followings is an accounting

equation?

(a) Capital = Asset + Liabilities(b) Capital = Assets - Liabilities(c) Assets = Liabilities + Capital(d) Liabilities = - Assets - Capital

Q.44) An old furniture appearing in the books at

`.10,000 is to be exchanged for a new furniture of

`.10,000. The old furniture has been value at

Purchase A/c `. 2,000 for exchange purpose. Loss on

exchange will be

(a) `.18,000(b) `.22,000(c) `.8,000(d) `.7,000

Q.45) Journal entry for wages paid `.3,000 for

installation of plant will be

(a) Dr. Plant repair A/c and Cr. Cash A/c 3,000(b) Dr. Wages A/c and Cr. Cash A/c 3,000(c) Dr. Plant A/c and Cr. Cash A/c 3,000(d) None of the above

Q.46) Capital of business is `.50,000 and its liabilities

are `.35,000. It assets will be

(a) `.25,000(b)

`.85,000

(c) `.15,000(d) `.75,000

Q.47) Assets of business are `.1,46,000 and its

liabilities are `.27,000. Its capital will be

(a) `.1,73,000(b) `.1,19,000(c) `.1,20,000(d) `.1,15,000

Q.48) Purchase of goods on credit will

(a) Increase Assets(b) Increase Liabilities

(c) Increase both Assets & Liabilities(d) Will not change value of Assets

Q.49) Loan repaid `.10,000 will

(a) Increase Assets by `.10,000(b) Decrease Asset by `.10,000(c) Decrease Liabilities by `.10,000(d) Both b & c

Q.50) Goodwill account is a

(a) Personal accounts(b) Real accounts(c) Nominal accounts(d) None

Q.51) Representative Personal Account includes

(a) Individuals like Rohan, Mohan etc.(b) Societies, Clubs etc.(c) Outstanding, Prepaid etc.(d) None of the above

Q.52) Relationship of Assets with liabilities & Capitl is

known as

(a) Double entry System(b) Traditional Approach(c) Accounting Equation Approach(d) None of the above

Q.53) Net purchase means

(a) Gross purchase before trade discount(b) Purchase less trade discount(c)

Purchase less purchase returns

(d) Purchase less cash discountQ.54) Traditional Approach follows:

(a) Relationship of Assets with liabilities &capitla

(b) Debit & Credit rule(c) Assets = Liabilities(d) None of the above

Q.55) Decrease in assets leads to

(a) Decrease in Liabilities(b) Increase in Assets(c) Increase in Liabilities


8/25


8

(d) a or bQ.56) Increase in Liabilities leads to

(a) Decrease is Assets(b) Decrease in Liabilities(c) Increase in Assets(d) b or c

Q.57) Personal Account relates to

(a) Persons(b) Assets(c) Expenses & Incomes(d) None of the above

Q.58) Real Account relates to

(a) Persons(b) Assets(c) Expenses & Incomes(d) None of the above

Q.59) Increase in Assets leads to(a) Decrease in Liabilities(b) Increase in Assets(c) Increase in Liabilities(d) a or b

Q.60) Decrease in Liabilities leads to

(a) Decrease in Assets(b) Decrease in Liabilities(c) Increase in Assets(d) b or c

LEDGERQ.1) Ledger Book is popularly known as :

(a) Prime book of accounts(b) Principal book of accounts(c) Subsidiary book of accounts(d) None

Q.2) Which of following accounts may have a debit

or a credit balance?

(a) Bank Acount(b) Purchase Account(c) Commission (Recd) Account(d) None

Q.3) The process of transferring the transactions

relating to changes in a particular item at one place

in the form of an account is called__________

(a) Balancing(b) Casting(c) Journalizing(d) Posting

Q.4) Ledger records transaction in :

(a) A chronological order(b) Analytical order(c) Both a & b(d) None

Q.5) The miscellaneous expenses account is likely to

have:

(a) Only debit entries(b) Only credit entries(c) Both of above(d) Initially only debit entries and subsequently

credit entries

Q.6) Discount allowed Account will always have:

(a) Only debit balance(b) Nil balance(c) Only credit balance(d) Debit or Credit balance

Q.7) The credit balance of personal account shows:

(a) Cash in hand(b)

The amount payable

(c) Income(d) Amount receivable

Q.8) Which of these Account has debit balance:

(a) Income received in advance(b) Bank loan(c) Prepaid insurance premium(d) Reserve for doubtful debts

Q.9) Cash Account is a:

(a) Personal account(b) Real account(c) Nominal account

(d) None of theseQ.10) The next step after preparation of Ledger is

the preparation of ________

(a) Trial balance(b) Final accounts(c) Cash flow statement(d) Balance sheet

Q.11) The process of transferring the debit and

credit items from a journal to their respective

account in the ledger is termed as

(a) Posting(b) purchase(c) balancing of an a/c(d) arithmetically accuracy test

Q.12) The technique of finding the net balance of an

account after considering the totals of both debit

and credits appearing in the account is known as(a) Posting(b) Purchase(c) Balancing of an account(d) Arithmetically accuracy test

Q.13) Journal and ledger records transactions in

(a) A chronological order and analytical orderrespectively

(b) An analytical order chronological orderrespectively

(c)

A chronological order only(d) An analytical order only

Q.14) Ledger book is known as

(a) Prime book o entry(b) Personal book of entry(c) Secondary book of entry(d) None of the above

Q.15) at the end of the accounting year all the

nominal accounts of the ledger book are

(a) Balance but not transferred to profit andloss account


9/25


9

(b) Not balanced and also the balance is nottransferred to the profit and loss account

(c) Balanced and the balance is transferred tothe balance sheet

(d) Not balanced and their balance istransferred to the profit and loss account.

Q.16) the credit balance in the bank account is

(a) An asset(b) A liability(c) Capital(d) A revenue

Q.17) Prepaid insurance account

(a) Shows a debit balance(b) Shows a credit balance(c) May have either a debit balance or credit

balance

(d) noneQ.18) Accounts receivable is likely to have

(a) Debit balance(b) Credit balance(c) May have debit or credit balance(d) None

Q.19) which of the following accounts is increased by

debit entries?

(a) Machinery account(b) Discount earned account(c)

Purchase return account

(d) All of theseQ.20) which of the following accounts is decreased

by debit entries?

(a) Salaries account(b) Bank account(c) Owners equity account(d) All of these

Q.21) which of the following accounts is increased by

credit entries?

(a) Sales return account(b) Bank overdraft

(c) Goodwill account(d) Purchase account

Q.22) Ledger is an accounting book in which

(a) Only real accounts are opened(b) Only real and personal accounts are opened(c) All the real, personal and nominal accounts

are opened

(d) noneQ.23) which of the followings is not a book of

original entry?

(a) Cash book(b) Ledger(c) Sales journal(d) Bills receivable book

Q.24) Ledger is a principal book in which

(a) All accounts are kept(b) Only personal accounts are kept(c) Only real accounts are kept(d) Only nominal accounts are kept

Q.25) the process of transferring the credit and debit

items from a journal to their respective account in

the ledger is termed as

(a) balancing(b) invoicing(c) double entry(d) posting

Q.26) the bank account at the end of the financialyear has a credit balance of `.56. What is the

explanation for this unusual balance?

(a) There must be un deposited cash in hand(b) There must be some error in recording(c) The cashier has manipulated cash(d) There is overdraft

Q.27) Normally, the following accounts are balanced

(a) Real A/c and Nominal A/c(b) Personal A/c and Real A/c(c) Only Nominal A/c(d) All accounts

Q.28) accounts payable has _____ balance

(a) Credit(b) Unfavorable(c) Debit(d) Favorable

Q.29) Accounts receivable normally has _____

balance

(a) Credit(b) Debit(c) Unfavorable(d) None of the above

Q.30) In case of credit balance the word _____ are

written on the credit side.

(a) By balance b/d(b) To balance b/d(c) By balance c/d(d) To balance c/d

Q.31) Bill payable normally has

(a) Credit balance(b) Debit balance(c) Unfavorable balance(d) Either (a) or (b)

Q.32) Writing transaction in the Ledger is called

(a) Casting(b) Balancing(c) Posting(d)

Journalizing

Q.33) In the ledger there are

(a) 5 columns(b) 6 columns(c) 7 columns(d) 8 columns

Q.34) The following account will have debit balance

(a) Loan to other party(b) Capital A/c(c) Outstanding salary(d) Reserve for doubtful debts

Q.35) Credit balance in the ledger will be


10/25


10

(a) A revenue or an asset(b) A revenue or a liability(c) An expenses or an asset(d) None of the above

Q.36) The debit balance of a personal account shows

the

(a) Amount of credit sales(b) Cash in hand(c) Amount payable to persons(d) Amount receivable from persons

Q.37) In case of debit balance the word_____ are

written on the debit side.

(a) By balance b/d(b) To balance b/d(c) By balance /d(d) To balance c/d

Q.38) To Balance c/d means(a) Opening Debit balance(b) Closing debit balance(c) Closing credit balance(d) Opening credit balance

Q.39) Debit balance means

(a) Debit side total is more than credit side(b) Credit side total is more than debit side(c) Both debit & credit totals are equal(d) None of the above

Q.40) Credit balance means(a) Debit side total is more than credit side(b) Credit side total is more than debit side(c) Both debit & credit totals are equal(d) None of the above

Q.41) Assets always have

(a) Debit balance(b) Credit balance(c) Negative balance(d) Nil balance

Q.42) Liabilities always have

(a) Debit balance

(b) Credit balance(c) Negative balance(d) Nil balance

Q.43) Expenses always have


Q.44) Incomes always have


Q.45) Capital will always have


Q.46) Drawings will always have


Q.47) When debit total is equal to credit total the

account will have

(a) Debit balance(b)

Credit balance(c) Negative balance

(d) Nil balanceQ.48) Loan from Lender will have


Q.49) Loan to borrower will have

(a) Debit balance(b) Credit balance(c) Negative balance

(d) Nil balanceQ.50) Loan given always have


TRIAL BALANCE

Q.1) Methods of preparation of Trial balance are :

(a) Net trial balance(b) Gross trial balance(c) Gross and Net trial balance method(d) All of these

Q.2) Trial balance is a :

(a) Statement(b) Account(c) Summary(d) Ledger

Q.3) The preparation of trial balance is for:

(a) Locating errors of commission(b) Locating errors of principle(c) Locating clerical errors(d) All of the above

Q.4) Difference of totals of both debit and credit side

of trial balance is transferred to :

(a) Trading account(b)

Suspense account(c) Difference account

(d) Miscellaneous accountQ.5) Trial balance under balance method is known

as:

(a) Gross trial balance(b) Net trial balance(c) Simple trial balance(d) Trial balance appropriation

Q.6) A trial balance contains the balance of :

(a) Only personal and real accounts(b) Only real and nominal accounts


11/25


11

(c) Only nominal and personal Accounts(d) All Accounts.

Q.7) Trial balance is prepared on:

(a) End of the year(b) A particular date(c) For the period ending____(d) Both a and b

Q.8) A trial balance will not balance if

(a) Correct journal entry is posted twice(b) The purchase on credit basis is debited to

purchases and credited to cash

(c) `.500 cash payment to creditors is debited tocreditors for `. 50 and credited to cash as

`.500.

(d) None of the aboveQ.9) `.1,500 received from sub-tenant for rent and

entered correctly in the cash book is posted to thedebit of the rent account. In the trial balance

(a) The debit total will be greater by `.3,000 thatthe credit total

(b) The debit total will be greater by `.1,500 thatthe credit total

(c) Subject to other entries being correct thetotal will agree

(d) None of the aboveQ.10) After the preparation of ledgers, the step is

the preparation of(a) Trading accounts(b) Trial balance(c) Profit and Loss account(d) None of the above

Q.11) After preparing the trial balance the

accountant finds that the total of debit side is short

by `.1500. this difference will be

(a) Credited to suspense account(b) Debited to suspense account(c) Adjusted to any of the debit balance account

(d) Adjusted to any of the credit balanceaccount

Q.12)

S. No. Account Heads Debit (`.) Credit

(`.)

1.

2.

3.

4.

Sales

Purchase

Miscellaneous exp.

Salaries

10,000

2,500

15,000

2,500

Total 12,500 17,500

The difference in trial balance is due to

(a) Wrong placing of sales account(b) Wrong placing of salaries account(c) Wrong placing of miscellaneous exp. account(d) Wrong placing of all account

Q.13) In case a trial balance does not agree the

difference is put to(a) Trading accounts(b) Profit and Loss account trial Balance(c) Capital account(d) Suspense account

Q.14) Trial balance is a

(a) Final accounts(b) Statement of assets and liabilities(c) Subsidiary book(d) Statement of ledger A/c balances

Q.15) Which of the following accounts will invariablyhave a debit balance?

(a) Accounts receivable / Debtors(b) Accounts payable / Creditors(c) Current account of a partner(d) Bank account

Q.16) Which of the follo0wing account will in have a

credit balance?

(a) Current account of the proprietor(b) Accounts receivable(c) Accounts payable

(d) Discount accountQ.17) which of the following accounts may have a

debit or a credit balance?

(a) Miscellaneous expenses account(b) Current account of a partner(c) Purchase account(d) Commission (received) account

Q.18) Which item is shown on the debit side of a trial

balance?

(a) Purchases returns(b) Rent outstanding(c) Prepaid Expenses(d) Pre-received commission

Q.19) The amount listed for cash in the trial balance

represents

(a) Cash receipts during the period(b) Cash disbursements during the period(c) Cash receipts minus disbursements during

the period

(d) The balance of cash on the date of trialbalance

Q.20)Miscellaneous expenses account is likely to

have

(a) Debit balance(b) Credit balance(c) Debit or credit(d)

NoneQ.21)Which of the following accounts have only

credit balance?

(a) Reserve fund account(b) Capital account(c) Accounts payable(d) All of these

Q.22) The main purpose of preparing a trial balance

is

(a) To prepare a summary of all the balances(b) To compare the debit balances with credit

balances


12/25


12

(c) To locate all types of errors(d) To check the arithmetic accuracy of the

ledger accounts

Q.23) what do you mean by Gross trial balance?

(a) Only debit side total is considered(b) Only credit side total is considered(c) Both the debit and credit side totals are

considered

(d) Difference between the debit side and creditside total is considered

Q.24) What do you mean by Net trial balance?

(a) Purchases of sales are considered afterReturns

(b) Debtors are considered after RDD(c) Difference between the debit and credit side

total is considered

(d) Both the debit and credit side totals areconsidered

Q.25) Trial balance is prepared to ensure

(a) All transactions are recorded(b) Both the effects of a transaction are

recorded

(c) No frauds have been made(d) Whether the transactions recorded are

arithmetically correct

Q.26)Expenses will have

(a)

Debit balance(b) Credit balance(c) Positive balance(d) Negative balance

Q.27) Incomes will have

(a) Debit balance(b) Nil balance(c) Credit balance(d) None of the above

Q.28) Return outwards will have

(a) Debit balance(b) Credit balance

(c) Nil balance(d) None of the above

Q.29) Outstanding expenses and income received in

advance will have a credit balance because it is

(a) Money receivable(b) Money payable(c) Next year expense(d) Current years expense

Q.30) If trial balance tallies it means

(a) All transactions have been recorded(b) Both the effects of the transactions are

correctly recorded

(c) No error exists(d) Some errors may exist

Q.31) Purchase returns of`.1000 was posted to debit

of sales returns A/c and correctly credited to partly.

Due to this:(a) Debit side of Trial balance will be more by

`.1000

(b) Credit side of Trial balance will be more by`.1000

(c) Debit side of Trial balance will be more by`.2000

(d) credit side of Trial balance will be more by`.2000

Q.32) Rent paid `.10,000 not recorded. Due to this

(a)

Debit side of T.B. will be less by`

.10000(b) Debit side of T.B. will be more by `.10000(c) There will be no effect on T.B.(d) None of the above.

Q.33) Sales of 2000 on credit was posted as `.200.

Due to this

(a) Debit side of T.B. will be less by `.1800(b) Credit side of T.B. will be more by `.1800(c) Both a or b(d) There will be no effect on T.B.

Q.34) Difference in Trial Balance will be

(a) Debited to suspense A/c

(b) Credited to suspense A/c(c) Transferred to suspense(d) None of the above

Q.35) Trial balance is prepared to

(a) Find the profit(b) Find the financial position(c) Check Arithmetical accuracy(d) None of the above

SUBSIDIARY BOOK

Q.1) The total of purchase day book is posted

periodically to the:

(a) Debit of purchase A/c(b) Credit purchase A/c(c) Cash Book(d) None of these

Q.2) Total of the sales book for March indicates :(a) Total sales for the month(b) Total Credit sales for the month(c) Total cash sales for the month(d) Total sales less sales return

Q.3) Goods sold for cash `.10,000 plus 10% sales tax,

Sales A/c will be credit by:

(a) `.11,000(b) `.10,000(c) `.9,000(d)

NoneQ.4) Purchase book is used to record:

(a) All purchase of goods(b) All credit purchases(c) All credit purchase of goods(d) All credit purchases of assets

Q.5) A_______ is sent to a customer when he return

goods:

(a) Debit note(b) Credit note(c) Proforma invoice(d) Non of the above


13/25


13

Q.6) Purchase of fixed assets on credit basis is

recorded in :

(a) Purchase book(b) Cash book(c) Journal proper(d) Journal

Q.7) The source document or voucher used for

recording entries in sales book is :

(a) Invoice received(b) Invoice sent out(c) Credit notes sent out(d) Debit notes received

Q.8) Trade discounts are:

(a) Records in the books(b) Not recorded in the books(c) Not used for determining the net price(d) Used for specific purpose in accounting

Q.9) Total of sales book will be posted:

(a) On debit side of sales account(b) ON credit side of purchases account(c) ON credit side of sales account(d) On debit side of sales return account

Q.10) A note sent by buyer on return of goods is :

(a) Debit note(b) Credit note(c) Return note(d)

NoneQ.11) Bills receivable book is a part of

(a) Ledger(b) Journal(c) Balance sheet(d) None of these

Q.12) Purchase of office furniture on account is

recorded in

(a) Purchase book(b) Journal proper(c) Cash Book(d) Petty cash book

Q.13) While posting the purchase book

(a) Only the total of the purchases book isposted to the debit of purchases account

(b) Only the accounts of the suppliers arecredited with the amounts appearing against

their respective names

(c) The accounts of the suppliers are debited aswell as the total of the purchases book is

posted to the credit of the purchases

account.

(d) The total of the purchases book is posted tothe debit of purchases A/c as well as the

accounts of individual suppliers are credited

with the amounts appearing against their

names.

Q.14) Returns inward from Rahim is entered in

(a) Sales return book(b) Purchases return book(c) Journal(d) Sales book

Q.15) Returned goods to Bajaj and Co. is recorded in

(a) Purchases return book(b) Sales return book(c) Journal(d) Purchase book

Q.16)Sales on account is recorded in:

(a)

Cash book(b) Sales book(c) Journal(d) Sales return book

Q.17) Purchase of Electric kettles on account by

Electric appliance Co. is recorded in

(a) Journal(b) Purchase book(c) Cash book(d) Purchase return book

Q.18) In order to determine the amount of sales, to

which of the following records one should refer?

(a) Sales book(b) Sales account(c) Journal(d) Total Debtors account

Q.19) Which of the following books would be used to

record purchase of goods on account?

(a) Cash book(b) Purchase book(c) Sales book(d) Journal

Q.20) Which of the following books should be used

to record purchase of merchandise on account?

(a) Cash book(b) Purchase book(c) Sales Book(d) Journal

Q.21) Journal proper is used to record(a) All purchase of goods(b) All sales of goods(c) All business expenses paid in cash(d) All adjusting and rectification entries

Q.22) The sales Day-book is a part of the.

(a) Journal(b) Trial balance(c) Ledger(d) Final account

Q.23) Purchases book records all credit purchase of(a) Goods(b) Assets(c) Stationery(d) None

Q.24) Which one of the following entry is not

recorded in the journal

(a) Opening entry(b) Closing entry(c) Adjustment entry(d) Credit sales

Q.25) Bills payable book is a


14/25


14

(a) Subsidiary book(b) Principal book(c) Ledger(d) Memorandum book

Q.26) Posting is done from

(a) One subsidiary to another(b) Ledger to subsidiary book(c) Subsidiary to ledger(d) Leger to ledger

Q.27) The purchase Day book is a part of the.

(a) Journal(b) Balance sheet(c) Ledger(d) Cash flow statement

Q.28) The debit note issued are used to prepare

(a) Sales return book(b) Purchase return book(c) Sales book(d) Purchase book

Q.29) A debit note for `.2,000 issued to Mr. F for

goods returned by us is to be accounted for

(a) Bills Receivable book(b) Purchase book(c) Journal proper(d) Purchase return book

Q.30) Purchase day book records:

(a)

All cash purchases(b) All credit purchases(c) Credit purchases of goods in trade(d) None of the above

Q.31) Goods withdrawn for personal use will be

recorded in

(a) Purchase book(b) Sales book(c) Return outward book(d) Journal proper

Q.32) Sales of machinery for cash will be recorded in

(a) Cash book

(b) Sales book(c) Journal proper(d) None.

Q.33) Spot purchase of goods of `. 10,000 will be

recorded in

(a) Purchase book(b) Journal proper(c) Cash book(d) Returns inward book

Q.34) Computer repairs payable to Arvind will be

recorded in

(a) Cash book(b) Journal proper(c) Return Inward book(d) None.

Q.35) Appointment of typist on a monthly salary of

`.5,000 p.m. will be recorded in(a) Cash book(b) Journal proper(c) Petty cash book(d) None.

Q.36) Credit note is used to record

(a) Purchase book(b) Sales book(c) Return Inward book(d) Return outward book

Q.37) Inward invoice is used to record(a) Purchase book(b) Sales book(c) Return Inward book(d) Return outward book

Q.38) Outward invoice is used to record

(a) Purchase book(b) Sales book(c) Return Inward book(d) Return outward book

Q.39) Which accounting entry is to be made for

issuing a purchase order for `.9,000 to K. Verma?

(a) Purchase A/c Dr. 9,000To Cash A/c 9,000

(b) Purchase A/c Dr. 9,000To K.verma A/c 9,000

(c) Purchase A/c Dr. 9,000To K.verma A/c 9,000

(d) NoneQ.40) goods previously ordered from K.verma were

delivered and an invoice for `.9,000

(a) Goods A/c Dr. 9,000To K.verm A/c 9,000

(b) Invoice A/c Dr. 9,000To K.verma A/c 9,000

(c) Goods A/c Dr. 9,000To Cash A/c 9,000

(d) Purchase A/c Dr. 9,000To K.verma A/c 9,000

Q.41) What is the accounting entry for a cheques

issued for `.8,820 to K.verma for full settlement of

account of`.9,000

(a) K.verme A/c Dr. 8,820To Bank A/c 8,820

(b) K.verma A/c Dr. 9,000To Bank A/c 9,000

(c) K.verma A/c Dr. 9,000To Bank A/c 9,000

(d)

None of theseQ.42) Which of the following books should be used

to record purchase of a typewriter on A/c?

(a) Cash books(b) Purchase book(c) Sales book(d) Journal proper

Q.43) Which of the following books should be used

to record an adjusting entry for depreciation?

(a) Cash book(b) Sales book(c) Purchase book


15/25


15

(d) Journal properQ.44) Which of the following is recorded in the

journal?

(a) Paid bills payable by cheques(b) Depreciation provided on plant and

machinery

(c) Purchased machinery on cash basis(d) Sold old furniture of `.500 and cheque

received in payment

Q.45) The appropriate books to record credit

purchase of Machinery is

(a) Purchase book(b) Journal proper(c) Cash book(d) Petty cash book

Q.46) Opening and closing entries are recorded in:

(a) Journal proper(b) Purchase book(c) Sales book(d) Bill receivable book

Q.47) A debit note for . 500 issued by Mr. Marshall

to Mr. Fisher for goods returned by Mr. Marshall is

to be accounted for

(a) Bill receivable book(b) Purchase return book(c) Purchase book(d)

Journal properQ.48) When the goods are returned to a supplier

(a) A debit note is sent to him(b) An account sale is sent to him(c) Purchase book(d) Journal proper

Q.49) Credit purchase of cotton by dealer worth

`.10,000 will be entered in

(a) Sales book(b) Bill receivable book(c) Purchase book(d) None of the above

Q.50) The monthly total of the purchase book is

(a) Posted to the debit of the purchase A/c(b) Posted to the credit of the purchase A/c(c) Posted to the credit of bill payable A/c(d) None of the above

Q.51) _____ recorded in purchase book

(a) Credit purchase of goods dealt in by firm(b) Cash purchases of goods dealt in by firm(c) All purchases of goods dealt in by firm.(d) None of the above

Q.52) Return Inward books records_____

(a) Purchase returns(b) Sales returns(c) Cash sales returns(d) Bill receivable book

Q.53) Credit purchases of goods worth `.30,000 by a

dealer will be recorded in(a) Cash book(b) Journal proper(c) Sales book(d) Purchase book

Q.54) Returns of cash sales is recorded in

(a) Purchase book(b) Sales book(c) Cash book(d) Sales returns book

Q.55) Total of sales book is posted periodically tocredit of

(a) Journal proper(b) Purchase book(c) Sales account(d) Cash book

Q.56) Ram motors will debit purchases of motor in

(a) Motor A/c(b) Purchase A/c(c) General expenses A/c(d) None of the above

Q.57) Purchase of Plant & Machinery on credit basis

is recorded in

(a) Cash book(b) Journal proper(c) Purchases(d) Both (a) and (b)

CASH BOOK & PETTY CASH BOOK

Q.1) The balance of petty cash is:

(a) An expense(b) Revenue(c) An asset(d) Liability

Q.2) Small payments are recorded in a book called:

(a) Cash book(b) Small payments book(c) Purchase book(d) Petty cash book

Q.3) Petty cash system is designed

(a) To meet the needs of small businesses(b) To cover small and miscellaneous income(c) To cover the small expenditure to be paid in

cash

(d) To cover both small incomes andexpenditures

Q.4) The Imprest system is used in relation to

(a)

Purchases book(b) Sales book(c) Cash book(d) Petty cash book

Q.5) in petty cash boo, the system followed is:

(a) Accrual system(b) Imprest system(c) Cash system(d) None of these

Q.6) On 1st

Sept. 2008, a petty cash fund is

established for `.250. the accounting entry is

(a) Petty cash A/c Dr. 250


16/25


16

To cash A/c 250

(b) Cash A/c Dr. 250To Bank A/c 250

(c) Cash A/c Dr. 250To petty cash A/c 250

(d) No entry is required.Q.7) cash book is in a form of:

(a) Trial balance(b) Ledger(c) Journal(d) All of the above

Q.8) If the debit and credit aspects of a transaction

are recorded in the cash book it is a:

(a) Contra entry(b) Simple entry(c) Double entry(d) Single entry

Q.9) Cheques received but deposited on the next

day are recorded in:

(a) Cash column of the cash book(b) Bank column of the cash book(c) Both of these(d) None of these

Q.10) Double entry in cash book is completed when:

(a) Salaries are paid by cheque(b) Withdrawal of money from bank for

personal use(c) Deposited cash into bank(d) None of these.

Q.11) The total of discounts column on the debit side

of the cash book, recording cash discount deducted

by customers when paying their accounts, is posted

to the

(a) Credit of the discount allowed account(b) Debit of the discount received account(c) Credit of the discount received account(d) Debit of the discount allowed account

Q.12) Which of the following is the kind of a cash

book?

(a) Simple column cash book(b) Double column cash book(c) Three column cash book(d) All of the above

Q.13) Cash book is a type of ____ but treated as a

___ of accounts.

(a) Subsidiary book, principal book(b) Principal book, subsidiary book(c) Subsidiary book, Subsidiary book(d) Principal book, Principal book

Q.14) which of the following is not a column of a

three column cash book?

(a) Cash column(b) Bank column(c) Petty cash column(d) Discount column

Q.15) Salaries due for the month of March will

appear

(a) On the receipt side of the cash book(b) On the payment side of the cash book(c) As a contra entry(d) Nowhere in the cash book

Q.16) Contra entries are passed only when

(a) Double column book is prepared(b)

Three column cash book is prepared(c) Simple cash book is prepared

(d) None of the aboveQ.17) Purchase of machinery for business on cash is

recorded in

(a) Purchase journal(b) General journal(c) Cash book(d) Purchase return journal

Q.18) A three columnar cash book records

(a) All cash transactions only

(b) Both cash and bank transactions exceptingdiscounts

(c) All cash transactions excepting cashpurchase and cash sales

(d) Both cash and bank transactions includingdiscounts

Q.19) A customers cheques returned dishonored is

recorded in

(a) Purchase return book(b) Sales return book(c) Cash book(d) Journal

Q.20) Cash sales are recorded in

(a) Sales book(b) Cash book(c) Journal(d) Petty cash book

Q.21) The following are some of the transactions of a

business during a month.

1. Selling goods for cash

2. Cash discount allowed to a customer

3. Cash deposited in bank account/ Cash paid into

bank

4. Cash withdrawn from bank

5. Received cheques from Ram and allowed him

discount

6. Sundry expenses paid in cashWhich of these transactions are contract entries in

cash book?

(a) 2,3 and 4(b) 1,2 and 6(c) 3,4, and 5(d) 3 and 4

Q.22) The discount column of a triple-column cash

book records

(a) Trade discount(b) Cash discount(c) Quantity discount


17/25


17

(d) Seasonal discountQ.23) When furniture is sold for cash, the entry

should be made in

(a) Sales book(b) Cash book(c) Journal(d) Petty cash book

Q.24) The balance of cash account indicates

(a) Net income for the period(b) Net loss for the period(c) Net cash on hand(d) Net worth of the business

Q.25) Cash discounts are first recorded in

(a) Journal(b) Cash book(c) Purchases book(d) Sales book

Q.26) Cheque received and endorsed will be

recorded in the Cash book in the ____ column

(a) cash(b) Bank(c) Discount(d) None

Q.27) Bearer cheque received is recorded in ___

column

(a) Cash(b)

Bank(c) Discount

(d) NoneQ.28) Cheque received dishonoured will be recorded

in

(a) Debit side of Cash book(b) Credit side of cash book(c) Credited to customer(d) Debited to customer

Q.29) The cash book recorded

(a) All cash receipts(b) All cash payment

(c) All cash receipts and payments(d) Cash & Credit sale of goods

Q.30) Discount column in Cash-book should be

(a) Totaled(b) Balance(c) Totalled and Balanced(d) Do nothing

Q.31) Cash column in cash book always has

(a) Credit balance(b) Both (a) and (c)(c) Debit balance(d) None of the above

Q.32) Endorsed cheque dishonoured will be

recorded in _____ column.

(a) Cash(b) Bank(c) Discount(d) None

Q.33) Cheque received deposited in Bank at a later

date will be recorded in ____ column.

(a) Cash(b) Bank(c) Discount(d) None

Q.34) Cheque received dishonoured will be recorded

in

(a)

Cash column debit side(b) Cash column credit side(c) Bank column debit side(d) Bank column credit side

Q.35) Cheque issued dishonoured will be recorded in

(a) Cash column debit side(b) Cash column credit side(c) Bank column debit side(d) Bank column credit side

Q.36) Bank charges debited by Bank will be recorded

in

(a) Cash column debit side

(b) Cash column credit side(c) Bank column debit side(d) Bank column credit side

Q.37) Interest charged by Bank will be recorded in


Q.38) Interest credit by bank will be recorded in


Q.39) Total of discount column on the debit side of

cash book will be

(a) Posted to debit of discount A/c(b) Posted to credit of discount A/c(c) Posted to Bank A/c(d) Posted to credit of customer A/c

Q.40) Total of discount column on the credit side of

cash book will be

(a) Posted to debit of discount A/c(b) Posted to credit of discount A/c(c) Posted to Bank A/c(d) Posted to credit of customer A/c

CAPITAL AND REVENUE EXPENDITUREQ.1) Capital expenditure provides benefit

(a) Very short term(b) Long term(c) Short term(d) All of the above

Q.2) Capital expenditure are recorded in the

(a) Trading A/c(b) P&L A/c(c) Balance sheet(d) All of the above

Q.3) The expired portion of capital expenditure is


18/25


18

(a) An asset(b) A liability(c) An income(d) An expense

Q.4) Preliminary expenses in connection with

flotation of a new company is

(a) Miscellaneous capital expenditure(b) Current assets(c) Fixed assets(d) All of the above

Q.5) Dismantling and demolition charges is a

(a) Deferred revenue expenditure(b) Capital expenditure(c) Revenue expenditure(d) None of the above

Q.6) Recovery of bad debt is a

(a) Revenue expenditure(b) Revenue receipt(c) Deferred revenue expenditure(d) Capital receipt

Q.7) The un-expired portion of capital expenditure is

shown in the financial statement

(a) As a liability(b) As an asset(c) As an income(d) As an expense

Q.8) Which of the following enhances the earning

capacity of an assets?

(a) Reduction in operation costs(b) Increase in working capacity of an assets(c) Replacing damage parts of an assets(d) Both (b) and (c)

Q.9) Rs. 40,000 spent by a factory in overhauling of

its existing plant & machineries. It has enhanced its

working life by five years. The aforesaid expenditure

is

(a) Capital expenditure(b) Revenue expenditure

(c) Deferred revenue expenditure(d) None of the above

Q.10) Revenue expenditures are recorded in the

(a) Manufacturing A/c(b) Trading A/c(c) P&L A/c(d) All the above

Q.11) General Manager attended a meeting held

abroad to develop market; meeting was successful.

This expenses is in the nature of

(a) Deferred revenue expenditure(b) Capital expenditure(c) Revenue expenditure(d) None of the above

Q.12) Heavy amount spent for the advertisement jof

new company product is

(a) Revenue expenditure(b) Deferred revenue expenditure(c) Capital expenditure(d) Either (a) or (b)

Q.13) Amount spent for the construction of

temporary huts which were necessary for

construction of the over bridge (flyover) and

demolished when the flyover was ready is a

(a) Capital expenditure(b) Deferred revenue expenditure(c) Revenue expenditure(d) Both (a) and (c)

Q.14) A sum of Rs. 50,000 was spent on painting the

new plant. It is a

(a) Revenue expenditure(b) Capital expenditure(c) Deferred revenue expenditure(d) None of these

Q.15) Amount spent on Structural alteration under

pressure of law is a

(a) Capital loss(b) Revenue expenditure

(c) Capital expenditure(d) Deferred revenue expenditure

Q.16) Money spent Rs. 10,000 as travelling expenses

of the directors on trips abroad for purchase of

capital assets is

(a) Capital expenditures(b) Revenue expenditure(c) Deferred revenue expenditure(d) None of the above

Q.17) Amount of Rs. 5,000 spent as lawyers fee to

defend a suit claiming that the firms factory site

belonged to the plantiffs land.

(a) Capital expenditures(b) Revenue expenditures(c) Deferred revenue expenditures(d) None of the above

Q.18) Subsidy of Rs. 40,000 received from thegovernment by a manufacturing concern.

(a) Capital receipt(b) Revenue receipt(c) Capital expenditures(d) Revenue expenditures

Q.19) Insurance claim received on account of

machinery damaged completely by fire.


Q.20) Interest on investments received from UTI.


Q.21) Amount received from IDBI as a medium term

loan for augmenting working capital.

(a) Capital expenditures(b) Revenue expenditures(c) Capital receipt


19/25


19

(d) Revenue receiptQ.22)Rs. 2,500 spent on the overhaul of machines

purchased second-hand.

(a) Capital expenditure(b) Revenue expenditure(c) Deferred revenue expenditure(d) None of the above

Q.23) Advertising campaign to launch a new product.

(a) Capital expenditure(b) Revenue expenditure(c) Deferred revenue expenditure(d) None of the above

Q.24) An expenditure which benefits the _________

period is called revenue expenditure.

(a) Current(b) Future(c) Past(d) None

Q.25) Any expenditure incurred in acquiring a Fixed

asset for the business is called ____________

(a) Revenue(b) Capital(c) Deferred revenue(d) None

Q.26) Any expenditure incurred in achieving

operative economy is known as __________

(a) Revenue(b) Capital(c) Differed revenue(d) None

Q.27) Any expenditure incurred in acquiring the right

to carry on a business is __________

(a) Capital(b) Revenue(c) Differed revenue(d) None

Q.28) Money obtained by the issue of debentures is

_________ receipt.

(a) Capital(b) Revenue(c) Other(d) None

Q.29) An expenditure is capital in nature when

(a) The receiver of the amount is going to treatit for the sale of fixed assets.

(b) It increases the quantity of fixed assets(c) It is paid as interest on loans for the business(d) Wages are paid to labour

Q.30) An expenditure is revenue in nature, when

(a) It benefits the current period(b) It benefits the future period(c) It belongs to the previous period(d) Computer is purchased

Q.31) Discount allowed on issue of shares is an

example of(a) Capital expenditure(b) Revenue expenditure(c) Deferred revenue expenditure.(d) None

Q.32) Rs. 400 paid for removal of stock from new

site.

(a) Deferred Revenue Expenditure(b) Capital Expenditure(c) Capital Expenditure & Deferred Revenue

Expenditure

(d) Revenue expenditureQ.33) Cars piston and rings changed at a cost of Rs.

2,000

(a) Deferred Revenue Expenditure(b) Revenue expenditure(c) Capital Expenditure(d) Deferred Revenue Expenditure & Revenue

Expenditure

Q.34) Temporary rooms constructed for storing raw

materials for the construction of a big building.

(a) Capital Expenditure

(b) Deferred revenue expenditure.(c) Revenue expenditure(d) Deferred Revenue Expenditure & Revenue

Expenditure

Q.35) A machinery costing Rs. 5,000 has been sold; It

realizes Rs. 3,000. A new machine is purchased for

Rs. 9,000.

(a) Revenue Loss & Capital expenditure(b) Capital expenditure(c) Revenue expenditure(d) Deferred revenue expenditure

Q.36) Amount realised from sale of old furniture.

(a) Revenue Receipt(b) Capital Receipt(c) Revenue & Capital Receipt(d) Capital expenditure

Q.37) Amount received from a debtor whoseaccount was previously written off as bad

(a) Revenue Receipt(b) Capital Receipt(c) Revenue & Capital Receipt(d) Capital expenditure

Q.38) Fees received from apprentices.

(a) Capital expenditure(b) Revenue receipt(c) Capital receipt(d) Capital Receipt & Revenue Receipt

Q.39) Amount contributed by the proprietor to

augment his capital.

(a) Capital Receipt & Revenue receipt(b) Capital receipt(c) Revenue receipt(d) Capital Expenditure

Q.40) Rs. 4,000 spent towards addition to machinery

in order to double the production.

(a) Capital Expenditure(b) Revenue Expenditure(c) Deferred Revenue Expenditure


20/25


20

(d) Deferred Revenue Expenditure & RevenueExpenditure

Q.41) Rs. 1,500 incurred on repairs of machinery,

necessitated by the negligence of the employees.

(a) Revenue Expenditure(b) Capital Expenditure(c) Deferred Revenue Expenditure(d) Capital Expenditure & Revenue Expenditure

Q.42) Underwriting commission paid on the issue of

shares.

(a) Deferred Revenue Expenditure(b) Revenue Expenditure(c) Capital Expenditure(d) Revenue Expenditure & Deferred Revenue

Expenditure

Q.43) An honorarium paid Rs. 3,500 to an architect

for supervising the construction of the factorybuilding.

(a) Capital Expenditure(b) Deferred Revenue Expenditure(c) Revenue Expenditure(d) Revenue Expenditure & Deferred Revenue

Expenditure

Q.44) Loss caused by theft of cash by cashier during

business hours.

(a) Revenue Expenditure/Loss(b) Capital Expenditure(c) Deferred Revenue Expenditure(d) Deferred Revenue Expenditure & Revenue

Expenditure

Q.45) Mahender is a partner. He agrees to leave the

partnership on payment of compensation of Rs.

20,000.

(a) Capital Expenditure(b) Revenue Expenditure(c) Deferred Revenue Expenditure(d) Revenue Expenditure & Deferred Revenue

Expenditure

Q.46) Security deposit of Rs. 5,000 paid when

submitting tender which is forfeited for breach of

contract.

(a) Revenue Expenditure/Loss(b) Capital Expenditure(c) Deferred Revenue Expenditure(d) Revenue Expenditure & Deferred Revenue

Expenditure

Q.47) Cost incurred Rs. 25,000 for moving the plant

from one place to a favourable location.

(a) Capital Expenditure(b) Revenue Expenditure(c) Deferred Revenue Expenditure(d) Revenue Expenditure & Deferred Revenue

Expenditure

Q.48) Replacement of a vital component part costing

Rs. 1,500 which was damaged in transit for a newmachine purchased

(a) Deferred Revenue Expenditure(b) Revenue Expenditure(c) Capital Expenditure(d) Deferred Revenue Expenditure & Revenue

Expenditure

Q.49) Legal expenses incurred in a slaes tax appeal.

(a) Revenue Expenditure(b) Deferred Revenue Expenditure(c) Deferred Revenue Expenditure & Revenue

Expenditure

(d) Capital ExpenditureQ.50) Amount seating on increasing the seating

capacity in a cinema hall is a

(a) Capital expenditure(b) Revenue expenditure(c) Deferred revenue expenditure(d) None

Q.51) Which of the following is capital expenditure?

(a) Purchased a pencil sharpener at a cost ofRs.2

(b) Installing an escalator at cost of Rs. 5,600 ina three storey building which had previously

been used without escalators

(c) Painted delivery truck at a cost of Rs. 450after two years of use

(d) Rs. 200 spent for minor alterations inbuilding

Q.52) Expenses incurred on research and

development is an example of

(a) Capital expenditure(b) Revenue expenditure(c) Deferred revenue expenditure(d) None

Q.53) Furniture of the book value of Rs. 1,500 was

sold for Rs. 600 and new fixture of Rs. 1,000 was

purchased and cartage of Rs. 25 paid What is the

amount of capital expenditure?(a) Rs. 1,500(b) Rs. 900(c) Rs. 1,000(d) Rs. 1,025

Q.54) An expenditure is a classified as capital

expenditure when

(a) The amount is large(b) It is shown in the balance sheet(c) It is to benefit a number of future years(d) It benefits only the current year

Q.55) Which of the following receipts is of capital

nature

(a) Amount realised from sale of old furniture(b) Amount received from debtor whose

account was previously written off as bad

(c) Amount of interest receipt from bank on afixed deposit

(d) Amount realised from debtors against theirdebts

Q.56) Which of the following receipts is of revenue

nature


21/25


21

(a) Amount realised from sale of investments(b) Dividend re ceived on investments(c) Amount borrowed from a bank(d) Compensation received from municipal

corporation on acquisition of land for the

construction of a road

Q.57) Charging of capital expenditure to revenueresults in

(a) Revenue reserve(b) Capital reserve(c) Secret reserve(d) None of these

Q.58) Expenses incurred on Trial Run is:

(a) Capital Expenditure(b) Revenue Expenditure(c) Deferred Revenue Expenditure(d) Prepaid ExpensesQ.59) Brokerage on the issue of shares and

debentures is a ------------------- expenditure:

(a) Revenue(b) Capital(c) Deferred Revenue(d) Partly Capital partly revenue

Q.60) What is the difference between deferred

revenue expenditure and prepaid expenses?

(a) Accounting treatment(b) Estimation of amount(c) Benefit for more than one accounting period(d) Nature of expenditure

CONTINGENT ASSETS AND LIABILITIES

Q.1) What obligation is n ot probable or the amount

expected to be paid to settle the liability cannot be

measured with sufficient reliability, it is called

(a) Contingent liability(b) Provision(c) Secured loan(d) None of the above

Q.2) Contingent asset usually arises from unplanned

or unexpected events that give rise to

(a) The possibility of an inflow of economicbenefits to the business entity

(b) The possibility of an outflow of economicbenefits to the business entity

(c) Either (a) or (b)(d) None of the above

Q.3) If an inflow of economic benefits is probable

then a contingent asset is disclosed

(a) In the financial statements(b) In the report of the approving authority

(Board of Directors in the case of a

company, and the corresponding approving

authority in the case of any other

enterprise)

(c) In the cash flow statement(d) None of the aboveQ.4) in the case of ---------------, either outflow of

resources to settle the obligation is not probable or

the amount expected to be paid to settle the liability

cannot be measured with sufficient reliability.

(a) Liability(b) Provision(c) Contingent liabilities(d) Contingent assets

Q.5) present liability of uncertain amount, which can

be measured reliable by using a substantial degree

of estimation is termed as -------------.

(a) Provision(b) Liability(c) Contingent liability(d) None of the above

Q.6) In the financial statement, contingent liability is

---------------,

(a) Recognized(b) Not recognized(c) Adjusted

(d) None of the aboveQ.7) The term provision is generally used to

indicate known:

(a) Depreciation;(b) Losses;(c) Incomes(d) None of these

Q.8) Reserves are the items of:

(a) Current liabilities(b) Owners equity(c) Loans(d) None of these

Q.9) Reserves that arise from capital receipts are

known as;

(a) Capital reserve(b) Reserve fund(c) Income(d) None of these

Q.10) Provisions are;

(a) External transactions;(b) Internal transactions(c) Cash Transaction(d) None of these


22/25


22

Friends Jeena ho to apnoo k liye jiyooApne liye to har koi jeeta hai

Your wealth, beauty and status are to be

remembered for some time, But, Your good

character will rule over the hearts forever.

Hard work is the only way to success in CA

Course(Ssshhhh)


23/25


23


24/25


24

Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans. Q.N. Ans.ACCOUNTING CONCEPTS & CONVENTIONS JOURNAL 8 C 43 A 27 C 26 C 3 C 38 C 32 D

1 A 35 B 1 B 35 B 9 B 44 B 28 B 27 A 4 D 39 A 33 B

2 A 36 B 2 B 36 A 10 A 45 B 29 B 28 B 5 B 40 B 34 A

3 D 37 A 3 D 37 B 11 A 46 A 30 B 29 D 6 A CAPITAL & REVENUE EXP. 35 A

4 D 38 C 4 C 38 C 12 C 47 C 31 C 30 C 7 B 1 B 36 B

5 A 39 B 5 C 39 D 13 A 48 B 32 C 31 D 8 A 2 C 37 A

6 A 40 A 6 D 40 D 14 C 49 A 33 C 32 A 9 A 3 D 38 B

7 A 41 B 7 A 41 C 15 D 50 A 34 C 33 C 10 C 4 A 39 B

8 D 42 B 8 A 42 B 16 B TRIAL BALANCE 35 C 34 B 11 D 5 B 40 A9 B 43 C 9 B 43 C 17 A 1 D SUBSIDIARY BOOK 35 D 12 D 6 B

10 C 44 A 10 A 44 C 18 A 2 A 1 A 36 C 13 A 7 B 41 A

11 D 45 C 11 C 45 C 19 A 3 C 2 B 37 A 14 C 8 B 42 A

12 C 46 D 12 B 46 B 20 C 4 B 3 B 38 B 15 D 9 C 43 A

13 B 47 C 13 C 47 B 21 B 5 B 4 C 39 D 16 B 10 D 44 A

14 B 48 D 14 B 48 C 22 C 6 D 5 B 40 D 17 C 11 C 45 A

15 C 49 A 15 D 49 D 23 B 7 D 6 C 41 C 18 D 12 B 46 A

16 C 50 D 16 A 50 B 24 A 8 C 7 B 42 D 19 C 13 A 47 A

17 B 51 A 17 A 51 C 25 D 9 A 8 B 43 D 20 B 14 B 48 C

18 A 52 D 18 C 52 C 26 D 10 B 9 C 44 B 21 D 15 B 49 A19 C 53 D 19 A 53 C 27 B 11 B 10 A 45 B 22 B 16 A 50 D

20 A 54 A 20 B 54 B 28 A 12 B 11 B 46 A 23 B 17 B 51 B

21 B 55 D 21 A 55 D 29 B 13 D 12 B 47 B 24 C 18 B 52 C

22 C 56 D 22 D 56 D 30 A 14 D 13 D 48 A 25 B 19 A 53 D

23 D 57 D 23 C 57 A 31 A 15 A 14 A 49 C 26 A 20 B 54 C

24 B 58 A 24 A 58 B 32 C 16 C 15 A 50 A 27 A 21 C 55 A

25 B 59 D 25 B 59 C 33 D 17 B 16 B 51 A 28 B 22 A 56 B

26 A 60 B 26 B 60 C 34 A 18 C 17 B 52 B 29 C 23 C 57 C

27 C 61 A 27 D LEDGER 35 B 19 D 18 B 53 D 30 D 24 A 58 A


25/25


25

28 B 62 D 28 D 1 B 36 D 20 A 19 B 54 C 31 C 25 B 59 C

29 A 63 A 29 A 2 A 37 B 21 D 20 B 55 C 32 A 26 A 60 B

30 A 64 A 30 A 3 D 38 C 22 D 21 D 56 B 33 A 27 A

31 B 65 B 31 A 4 C 39 A 23 C 22 A 57 B 34 D 28 A

32 C 66 C 32 C 5 A 40 B 24 C 23 A C.B. & PETTY C.B. 35 C 29 B

33 D 67 B 33 A 6 D 41 A 25 D 24 D 1 C 36 D 30 A

34 C 68 B 34 C 7 A 42 B 26 A 25 A 2 D 37 D 31 C

Where

Success

Follows

Brilliance

Basic Accounting 295 Questions

Documents

Transcript of Basic Accounting 295 Questions