- Loss on the sale of plant and machinery should be written off against:
- Sales premium account
- Depreciation fund account
- Sales account
- Plant and machinery
- What will be the effect on accounting equation if cash is received from a tenant as office rent?
- Select correct option:
- Increase cash and decrease equity
- Increase cash and increase equity
- Decrease cash and increase equity
- Decrease cash and increase dividends
- If, Cost of machine = Rs.400, 000 Useful life = 5 years Residual value = Rs.25, 000 Sale price = Rs.40, 000 Rate of depreciation = 40% What will be book value of machine after four years using straight line method?
- Select correct option:
- Rs.35, 000
- Rs.40, 000
- Rs.55, 000
- Rs.75, 000
- Which transaction will cause the balance in Terry's Cash Book to be greater than his Bank Statement balance?
- Select correct option:
- A cheque is drawn but not yet presented at the bank for payment
- The bank has not notified Terry about a dishonored cheque
- A credit transfer into Terry's Bank Account
- A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110
- Debit signifies:
- Increase in Asset account
- Decrease in liability account
- Decrease in capital account
- All of the given options
- The basic accounting principle/concept according to which business record must be kept separate from the personal records of the owner is known as:
- Select correct option:
- Going-concern concept
- Separate entity principle
- Realization principle
- Objectivity principle
- Expenditure incurred in acquiring the patent right for the business is an example of:
- Select correct option:
- Revenue expenditure
- Capital expenditure
- Deferred revenue expenditure
- Administrative expenditure
- The amount charged to depreciation goes on declining in:
- Select correct option:
- Depreciation fixed method
- Annuity method
- Written-down value method
- Straight line depreciation method
- Net Profit = Income - _____________
- Select correct option:
- Liabilities
- Assets
- Expenses
- Capital
- A Debtor Control Account is a part of:
- Double Entry book keeping system
- Single entry book keeping system
- Cash accounting system
All of the given options
- If a business purchases machinery for Rs. 50,000 on 31st January 2008 having life for 10 years, this expense will be realized ________ under the concept of accrual accounting.
- Only for the year 2008
- Only for the last day of 10th year
- Over 10 years
- Nothing can be said about it
- In an account if debit side > credit side, the balance is known as the:
- Negative Balance
- Debit balance
- Positive Balance
- Credit balance
1. Which of the following account balance is shown on debit side of Trial Balance?
a. Capital account
b. Sundry creditors account
c. Accounts payable account
d. Sundry debtors account
2. If cost of sales is Rs. 95,000, income from sales Rs. 200,000 and operating expenses Rs. 300,000. What will be net result?
a. Rs.195,000 Losses
b. Rs.195,000 Profits
c. Rs.105,000 Profits
d. Rs.105,000 Losses
3. In which of the following statement opening stock is shown?
a. Profit and loss account
b. Balance sheet
c. Cash flow statement
d. Owner’s equity
4. Working capital Rs. 20,000, Current liabilities Rs. 30,000 and fixed assets Rs. 100,000; calculate current assets?
a. Rs. 10,000
b. Rs. 50,000
c. Rs. 110,000
d. Rs. 120,000
5. Which of the following content(s) is (are) included in the Cost of goods sold?
a. Opening stock
b. Purchases
c. Freight in
d. All of the given options
6. Which of the following Organization converts raw material into finished goods?
a. Trading concern
b. Manufacturing concern
c. Merchandising concern
d. Service concern
7. Which of the following is an example of direct materials cost?
a. Production worker’s wages
b. Depreciation expenses
c. A piece of wood for the production of chair
d. Polish and finishing material for chair
9. What would be the value of Total Factory Cost, if cost of raw materials, direct labor costs, and manufacturing overhead costs are Rs.80,000, Rs.50,000, and Rs.60,000 respectively?
a. Rs.130, 000
b. Rs.110, 000
c. Rs.140, 000
d. Rs.190, 000
10. Which of the following assets are shown at written down value in Balance Sheet?
a. Current assets
b. Liquid assets
c. Floating assets
d. Fixed assets
11. An asset cost Rs. 50,000, has an estimated residual value of Rs.1, 500, and an estimated useful life of 5 years. What is the depreciation rate?
a. 20.0%
b. 25.0%
c. 35.5%
d. 50.4 %
12. Calculate depreciation of machine after first year by using diminishing balance method with the help of given data?
If, Cost of machine = Rs.400, 000
Useful life = 5 years
Residual value = Rs.25, 000
Sale price = Rs.40, 000
Rate of depreciation = 40%
a. Rs. 160,000
b. Rs. 11,840
c. Rs. 34,560
d. Rs. 34,860
13. Which one of the following is INCORRECT about closing Stock?
a. It is added into current assets
b. It is deducted from material available for use
c. It becomes opening stock of next year
d. It increases the owner’s equity of business
14. In the cost of goods sold statement, Cost of direct material consumed + Direct Labor ___________
a. Conversion cost
b. Prime cost
c. Total factory cost
d. Cost of goods manufactured
15. The total of all costs incurred to convert raw material into finished goods is known as:
a. Prime cost
b. Conversion cost
c. Sunk cost
d. Opportunity cost
16. In cost of goods sold statement the ‘total factory cost’ is equal to:
a. Cost of material consumed + Labor cost
b. Cost of material consumed + Conversion cost
c. Cost of material consumed + Total factory cost
d. Cost of material consumed + Factory overhead
17. Which of the following is (are) inventory valuation method(s)?
a. FIFO
b. LIFO
c. Weighted average
d. All of the given options
18. The cost of an incomplete fixed asset is transferred to _________ as on Balance Sheet date.
a. Capital account
b. Capital work in progress account
c. Relevant asset account
d. Owner's equity account
19. Under the straight line method of depreciation:
a. Amount of depreciation increases every year
b. Amount of depreciation remains constant for every year
c. Amount of depreciation decreases every year
d. None of the given options
20. Which of the following asset is NOT depreciated?
a. Factory Buildings
b. Office Equipment
c. Land
d. Plant & Machinery
 | Rs. |
| Opening written down value of machine | 1,00,000 |
| Cost of new machine purchased during the year | 50,000 |
| Depreciation during the year | 21,000 |
| Closing written down value (WDV) | ? |
► Rs. 1, 29,000
► Rs. 1, 50,000
► Rs. 1, 21,000
► Rs. 71,000
Find out the missing value of an Accounting Equation with the help of given data:
| Owner’s equity | Rs. 22,500 |
| Total Liabilities | Rs. 80, 385 |
| Cash in hand | Rs. 1,000 |
| Cash at bank | Rs. 2,000 |
| Debtors | Rs. 500 |
► Rs. 1, 02,885 other assets
► Rs. 1, 02,885 other liabilities
► Rs. 99,885 current liabilities
► Rs. 99,385 other assets
Bank Reconciliation Statement is prepared by:
► Bankers
► Accountant of the business
► Statutory auditor
► Manger
Bank Reconciliation Statement is:
► A memorandum statement
► A ledger account
► A part of cash book
► A part of journal
Expenditures incurred anually on renewal of patent are known as:
► Revenue Expenditures
► Capital Expenditures
► Financial Expenditures
► Operating Expenditures
| Rs. |
| Opening stock of raw material | 100,000 |
| Closing stock of raw material | 85,000 |
| Purchases of raw material during the period | 200, 000 |
| Cost of Material Consumed | ? |
► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000
► Rs. 60,000 loss
► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit
Which of the following account will be credited, when the goods are purchased on cash?
► Stock account
► Cash account
► Supplier account
► Work in process account
If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs. 20,000 during the year, what would be the value of Gross Profit?
► Rs. 15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000
If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.20,000 during the year. What would be the Net Profit?
► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000
Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance).
► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account
The amount of salary paid to Mr. Sohail should be debited to:
► Mr. Sohail account
► Salaries account
► Cash account
► Drawings account
Which of the following account will be credited, if business bought goods on credit from Mr. Ali?
► Purchases account
► Mr. Ali account
► Cash account
► Sales account
The unfavorable balance of Profit and Loss account should be:
► Added in liabilities
► Subtracted from current assets
► Subtracted from liabilities
► Subtracted from capital
Which of the following is NOT an example of Current Asset?
► Bank Overdraft
► Accounts Receivable
► Notes Receivable
► Prepaid Expenses
Which one of the following is NOT prepared by Non profit organizations?
► Profit & Loss account
► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet
An informal accounting statement that lists the ledger account balances at a point in time and compares the total of debit balances with the total of credit balances is known as:
► Income Statement
► Balance Sheet
► Trial Balance
► Cash Book
Documentary evidence, in a specific format used to record the details of a transaction is known as:
► Account
► Voucher
► Journal
► Ledger
A summarized record of transactions related to individuals or things is called a/an ___________.
► Account
► Voucher
► Journal
► Trial balance
When a Liability is reduced or decreased, it is recorded on the:
► Right or debit side of the account
► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account
What will be the effect on accounting equation, when payment is made to the creditor of the business?
► Decrease in an asset, decrease in a liability
► Increase in an asset, increase in a liability
► Decrease in an asset, decrease in owner's equity
► Increase in an asset, increase in owner's equity
Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping
Cost incurred for the maintenance of shop is considered as _________.
► Deferred expense
► Capital expense
► Revenue expense
► Preliminary expense
Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as _____________ for business.
► Revenue
► Net profit
► Gross profit
► Operating profit
Double entry accounting system includes:
► Accrual accounting only
► Cash accounting only
► Both cash and accrual accounting
► None of the given options
Which of the following financial statement shows the financial health of an Organization at a stated period of time?
► Balance sheet
► Trading and Profit & Loss account
► Cash Flow statement
► Statement of retained earnings
The records that are kept for the individual asset, liability, equity, revenue, expense, and dividend components are known as:
► Accounts
► Vouchers
► Journals
► Statements
Revenue should be recognized or recorded when the goods are sold or services are rendered to the customer, this concept is known as:
► Consistency concept
► Realization Concept
► Materiality concept
► Matching concept
A record maintained which is measurable in the form of money, this concept of accounting is known as:
► Matching concept
► Consistency concept
► Money measurement concept
► Materiality concept
The cost of goods and services used up in the process of obtaining revenue is known as:
► Revenue
► Expense
► Liability
► Expenditure
Which of the following is an accounting system in which events are recorded as and when they occur?
► Cash Accounting
► Accrual Accounting
► Both Accrual Accounting and Cash Accounting
► None of the above
Recording of all financial transactions undertaken by an individual or organization is known as:
► Summarizing
► Book-keeping
► Classification
► Interpreting
Any cheque drawn to creditor but not paid by bank will effect as follows:
► Cash book will show less balance & bank book will show more
► Cash book will show more balance & bank book will show less
► Cash book will show double balance
► Bank book will show double balance
If no distribution is made between capital and revenue expenditure then:
► The figure of debtors and creditors will be incorrect
► Cash or bank figure will be incorrect
► Net profit will be incorrect
► Balance sheet will not balance
The Policy for charging depreciation is selected by:
► Manufacturer
► Trader
► Management
► Accountant
The estimated value at which an asset is expected to be sold after the end of its useful life is called:
► Residual value
► Salvage Value
► Scrap Value
► All of the given options
Mr. “A” borrowed money from bank; this transaction involves which one of the following accounts:
► Cash & Mr. A
► Bank & Mr. A
► Drawing & Mr. A
► Cash & Bank
The beginning balance of Owner’s Equity was Rs.7,500. The dividends paid to stockholders were Rs.1,500. The ending balance of Owner’s Equity is Rs.5,000. What was the Net Income or Net Loss for the accounting period?
► Net Loss of Rs. 1,000
► Net Income of Rs. 1,000
► Net Loss of Rs. 3,000
► Net Income of Rs. 3,000
A company sold Rs. 400,000 of merchandise for cash and Rs.120,000 of merchandise to credit customers who will pay for the merchandise in a later time period. How much revenue should be reported on the income statement of the current time period under Cash Basis of Accounting?
► Rs. 280,000
► Rs. 520,000
► Rs. 400,000
► Rs. 120,000
Which one of the following statement is wrong about Current liabilities?
► These are due within one year
► These are short-term loans
► A vague term for loans to be repaid by an enterprise after twelve months
► In working capital, these are deducted from assets
| Rs. |
| Opening written down value of machine | 3,00,000 |
| Cost of machine purchased during the year | 50,000 |
| Depreciation during the year | 9,000 |
| closing written down value (WDV) of the Machine | ? |
Opening + cost of machine during year – depreciation during year
3,00,000 + 50,000 – 9,000
► Rs. 3, 41,000
► Rs. 3, 50,000
► Rs. 3, 59,000
► Rs. 59,000
Opening + cost of machine during year – depreciation during year
2,00,000 + 50,000 – 25,000
► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000
Consider the following data:
| Particulars | Rs. |
| Assets | 1,98,000 |
| Owner's equity | 95,000 |
| Liabilities | ? |
► Rs. 49,000
► Rs. 55,000
► Rs. 1, 25,000
► Rs. 1, 03,000
Find out the missing value of an Accounting Equation with the help of given data:
| Cash | Rs. 22,500 |
| Debtors | Rs. 500 |
| Total Assets | Rs. 80, 385 |
| Accounts payable | Rs. 1,000 |
| Total liabilities | Rs. 20,000 |
► Rs. 60,385 owner’s equity
► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity
Find out the missing value of an Accounting Equation with the help of given data:
| Furniture | Rs. 90,000 |
| Cash | Rs.1, 00, 000 |
| Debtors | Rs.10, 000 |
| Other Assets | Rs. 1,000 |
| Owner’s equity | Rs. 90, 000 |
► Rs. 2, 01,000 liabilities
► Rs. 1, 11, 000 liabilities
► Rs. 2, 90, 000 liabilities
► Rs. 2, 91, 000 liabilities
When the process of production is completed, all the costs must be charged to:
► Raw material account
► Work in process account
► Finished goods account
► Merchandise account
Which of the following assets are shown at written down value in balance sheet?
► Current assets
► Liquid assets
► Floating assets
► Fixed assets
Which of the following asset is NOT depreciated?
► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land
The main goal of Bank Reconciliation Statement is to determine:
► If the discrepancy is due to error rather than timing
► If the discrepancy is due to timing rather than error
► If the discrepancy is due to error rather than amount
► If the discrepancy is due to amount rather than timing
Sale proceeds of goods are an example of:
► Revenue expense
► Capital expense
► Capital receipt
► Revenue receipt
Which one of the following is NOT true about revenue expenditure?
► These are the running expenses of the business
► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet
| Beginning inventory | 10 units @ Rs. 10 per unit |
| First purchase | 35 units @ Rs. 11 per unit |
| Second purchase | 40 units @ Rs. 12 per unit |
| Third purchase | 20 units @ Rs. 13 per unit |
Eighty units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.320
| Date | Item | Quantity | Cost/Unit Rs. | Total Rs. |
| Jan. 2 | Beginning inventory | 10 | 10 | 100 |
| Mar. 4 | Purchase | 35 | 11 | 385 |
| May 8 | Purchase | 40 | 12 | 480 |
| Nov. 3 | Purchase | 20 | 13 | 260 |
| De31 | Merchandise available | 105 | 1,225 |
80 units were sold, Use the FIFO method of inventory costing and determine the cost of goods sold.
► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905
If, Cost of machine = Rs.400, 000
Useful life = 5 years
Rate of depreciation= 40%
The book value of machine after one years using diminishing balance method is ?
► Rs.86, 400
► Rs. 1, 44,000
► Rs. 2, 40,000
► Rs. 51,840
Question No: 15 ( Marks: 1 ) - Please choose one
| Cost of asset | Rs. 1,00,000 |
| Life of asset | 5 years |
| Depreciation for each year | Rs. 5,000 |
| Sale price after 5 years | Rs.50,000 |
| Book value of Asset after 5 years | ? |
► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
► Rs.25, 000 loss
► Rs. 75,000 loss
► Rs. 15,000 profit
► Rs. 1, 00,000 profit
► Rs. 60,000 loss
► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit
The total of all costs incurred to convert raw material into finished goods is known as:
► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost
Which of the following is an example of direct materials cost?
► Polish and finishing material for chair
► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses
If the working capital and the current assets of company XYZ are Rs. 5,000 and Rs.15,000 respectively, calculate the current liabilities.
► Rs. 5,000
► Rs. 10,000
► Rs. 15,000
► Rs. 20,000
Which of the following item appears in Trading Account of a business?
► Interest expenses
► Wages and salaries
► Depreciation expenses
► Discount Allowed
Which of the following is an alternate term which can be used for “Capital”?
► Liability
► Owner’s net worth
► Working capital
► Asset
Which of the following financial statement DO NOT show the financial health of a business at a specific date?
► Profit and loss account
► Balance sheet
► Statement of financial position
► All of the given options
If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are Rs. 100,000. What will be the net result?
► Rs. 5,000 Loss
► Rs. 5, 000 Profit
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss
Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance)
► Cash account
► Furniture account
► Vehicle account
► All of the given options
Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance).
► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account
Which of the following journal entry will be recorded, if the payment of furniture purchased is made through cheque?
► Furniture account (Dr) and Bank account (Cr)
► Furniture account (Dr) and Profit & Loss account (Cr)
► Furniture account (Dr) and Cash account (Cr)
► Cash account (Dr) and Furniture account (Cr)
Which one of the following statement is CORRECT about Long term liabilities?
► These are due within one year
► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
► All of the given options
What type of expenses are paid out of Gross Profit?
► Selling Expenses
► General Expenses
► Financial Expenses
► All of the given options
While making Income & Expenditure account, Excess of income over expenses in a specified accounting period is called:
► Deficit
► Surplus
► Profit
► Loss
Which one of the following is NOT prepared by Non profit organizations?
► Profit & Loss account
► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet
Which of the following financial statement summarizes the profitability of an organization for a particular period?
► Trading and Profit & Loss account
► Cash Flow Statement
► Statement of Retained Earnings
► Balance Sheet
Which of the following period is known as a fiscal Year of the Government of Pakistan?
► 1st January to 31st December
► 1st June to 31st May
► 1st July to 30th June
► 1st October to 30th September
What would be the affect on the components of the accounting equation, if goods are purchased on cash?
► Increase in cash and decrease in equity
► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity
Obligations to pay cash or un-earned incomes by the business are the:
► Assets
► Liabilities
► Equities
► Expenses
Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping
Word “Credit” is derived from ______ language.
► Latin
► English
► French
► Chinese
The basic accounting principle/concept according to which Business is independent from its owner(s) is known as:
► Separate Entity Concept
► Matching Concept
► Going Concern Concept
► Materiality Concept
Double entry accounting system includes:
► Accrual accounting only
► Cash accounting only
► Both cash and accrual accounting
► None of the given options
Debenture is also named as:
► Share
► Bond
► Equity
► Reserve
Capital is also termed as__________________.
► Reserve Capital
► Bond Capital
► Share Capital
► None of the given options
How many types of reservers?
► Two
► Three
► Four
► Five
"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of accounts", is an example of:
► Error of principle
► Error of omission
► Error of commission
► Error of original entry
Transaction that has been completely forgotten to enter is called:
► Error of principle
► Error of omission
► Error of commission
► Error of original entry
An accounting system is used by a business to:
_ Analyze transactions
_ Handle routine book-keeping tasks
_ Classify and summarize financial information
_ All of the given options
The assets which have a limited useful life are termed as:
_ Limited assets
_ Depreciateable assets
_ Unlimited assets
_ None of the given options
Accountancy covers which of the following area(s):
_ Book-keeping
_ Accounting
_ Auditing
_ All of the given options
If a business pays rent in advance for 12 months, it will be treated as:
_ Prepaid expenses of business
_ Long term liability of business
_ Fixed assets of business
_ Current liability of business
Which of the following transaction have NO affect on stockholders' equity?
_ Purchase of land on credit
_ Dividends to stockholders
_ Net loss
_ Investment in cash by stockholders
Which of the following account balance is shown on credit side of Trial Balance? (It is assumed that all account balances are shown on normal balance)
_ Cash account
_ Furniture account
_ Vehicle account
_ Capital account
If you start with cash book balance (Dr.), which of the following item will be deducted in Bank Reconciliation Statement?
_ Any cheque drawn to creditor but not paid by bank
_ Interest credited by the bank in pass book
_ Cheque deposited but not credited by the bank
_ Dividend collected by bank on behalf of the customer
The cost of moving plant and machinery to a new site will be treated as:
_ Revenue expense
_ Capital expense
_ Administrative expense
_ Operating expense
Which one of the following is NOT true about Capital Expenditure?
_ Creates future benefits
_ Incurred to acquire fixed assets
_ Incurred to increase the economic life of existing fixed assets
_ Reduce the profit of the concern
80 units were sold, Use the FIFO method of inventory costing and determine the cost of goods sold.
_ Rs. 1,225
_ Rs. 1,015
_ Rs. 965
_ Rs. 905
If, Cost of machine = Rs.400, 000
Useful life = 5 years
Residual value = Rs.25, 000
The depreciation of machine per year using straight line method is?
= 400,000-25000 / 5 = 75000
_ Rs. 160,000
_ Rs. 96,000
_ Rs. 75,000
_ Rs. 57,600
A decrease in value of a fixed asset due to age, wear and tear is known as:
_ Depreciation
_ Accumulated Depreciation
_ Appreciation
_ Written Down Value
In balance sheet fixed assets are shown at:
_ Cost price
_ Market value
_ Fair value
_ Written down value (WDV)
1 ) - Please choose one
Particulars Rs.
Direct materials costs 80,000
Direct labor costs 50,000
Manufacturing overhead costs 60,000
Prime cost = dm + dl 130000
_ Rs.1 Rs.130, 000
_ Rs.110, 000
_ Rs.140, 000
_ Rs.190, 000
What would be the value of 'cost of goods manufactured' if the total factory cost of the month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing work in process is Rs. 2,500?
_ Rs. 5,500
_ Rs. 8,000
_ Rs. 4,500
_ Rs. 8,500
Following are the inventories of Manufacturing Concern EXCEPT:
_ Raw material
_ Work in process
_ Finished goods
_ Merchandise inventory
The return of goods by a customer should be debited to:
_ Customer’s account
_ Sales return account
_ Goods account
_ Accounts receivable
Which of the following account will be credited in the books of ABC Co. Ltd., if furniture is purchased on cash?
_ Furniture account
_ Cash account
_ Business account
_ Bank account
Which of the following account will be credited, If Mr. “A” started business with cash Rs. 2, 00,000?
_ Capital account
_ Cash account
_ Mr. A’s account
_ Business account
Which of the following journal entry will be recorded, if the goods are sold on credit to Mr. 'B'?
_ Mr. “B” / Accounts Receivable account (Dr) and Sales account (Cr)
_ Cash account (Dr) and sales account (Cr)
_ Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
_ Goods Sold account (Dr) and Mr. B / Accounts Receivable account (Cr)
Which of the following is NOT an item of a Balance Sheet?
_ Accounts Receivable
_ Accounts Payable
_ Sales Revenue
_ Marketable Securities
Accounts Receivable & Inventory are the examples of:
_ Liquid assets
_ Current assets
_ Fixed assets
_ Capital assets
Which of the following shows summary of a company's financial position at a specific date?
_ Profit & Loss Account
_ Cash Flow Statement
_ Balance Sheet
_ Income & Expenditure Account
Which of the following summarizes the cash movements during a specified period?
_ Trading account
_ Profit & Loss account
_ Receipts & Payments account
_ Balance Sheet
Which of the following financial statement summarizes the profitability of an organization for a particular period?
_ Balance Sheet
_ Trading and Profit & Loss account
_ Cash Flow Statement
_ Statement of Retained Earnings
In an account, if credit side <>
_ Negative Balance
_ Debit Balance
_ Positive Balance
_ Credit Balance
Which of the following is used to record financial transactions in chronological (day-to-day) order?
_ Voucher
_ General Journal
_ General Ledger
_ Trial balance
When a Liability is reduced or decreased, it is recorded on the:
_ Right or debit side of the account
_ Left or debit side of the account
_ Left or credit side of the account
_ Right or credit side of the account
What is the nature of an expense account?
_ Debit
_ Credit
_ Revenue
_ None of the given options
Economic resources owned by a business and expected to benefit for the future operations are called:
_ Expenses
_ Assets
_ Capital
_ Liabilities
Assets total Rs.50, 000 and Liabilities total Rs.10, 000. What is the equity of the business?
_ Rs. 40, 000
_ Rs. 60, 000
_ Rs. 10,000
_ Rs. 50,000
An expense incurred by the business for the purchase of land & building is an example of:
_ Capital Expense
_ Revenue Expense
_ Deferred Expense
_ Preliminary Expense
Which of the following is non- profit organization?
_ Sole proprietorship
_ Partnership
_ Limited company
_ Trust
The area of accounting concerned with reporting financial information to the interested parties is called:
_ Cost Accounting
_ Financial Accounting
_ Management Accounting
_ Tax Accounting
Find out the missing value of an Accounting Equation with the help of given data:
| Cash | Rs.1, 00, 000 |
| Debtors | Rs.10, 000 |
| Other Assets | Rs. 1,000 |
| Owner’s equity | Rs. 1, 000 |
► Rs. 12,000 liabilities
► Rs. 11,000 liabilities
► Rs. 1, 10,000 liabilities
► Rs. 1, 11,000 liabilities
| Beginning inventory | 10 units @ Rs. 10 per unit |
| First purchase | 35 units @ Rs. 11 per unit |
| Second purchase | 40 units @ Rs. 12 per unit |
| Third purchase | 20 units @ Rs. 13 per unit |
Eighty units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.320
Following are the inventories of Manufacturing Concern EXCEPT:
► Raw material
► Work in process
► Finished goods
► Merchandise inventory
Which of the following is an alternate term which can be used for “Capital”?
► Liability
► Owner’s net worth
► Working capital
► Asset
In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
► If current Assets <>
► If current assets = current liabilities
► If current assets < current liabilities
If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs. 300 during the year, what would be the total of "general & administrative expenses"?
► Rs. 300
► Rs. 2,500
► Rs. 2,800
► Rs.18, 800
The amount brought by the proprietor in the business should be credited to:
► Cash account
► Capital account
► Drawings account
► Proprietor account
An asset on the balance sheet which is expected to be sold or used within one year is known as:
► Tangible asset
► Current asset
► Fixed asset
► Long term asset
Which one of the following is a type of General Ledger?
► Book of original entry
► ‘T’ Account
► Source document
► Day book
According to the double entry system of book keeping, the investment of Rs.10, 000 in the business made by the owner will effect:
► Cash & Capital Account
► Cash & Expense Account
► Capital & Revenue Account
► Capital & Expense Account
Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as _____________ for business.
► Revenue
► Net profit
► Gross profit
► Operating profit
when income exceeds expenses in a specific time period is known as:
► Savings
► Net profit
► Gross profit
► Operating profit
In which of the following condition(s) DEBT is regarded as BAD.
► Bankruptcy of the debtor
► Disappearance of debtor’s business
► Failure of repeated attempt to collect the debt
► All of the given options
Which of the following is CORRECT for Doubtful Debt?
► It is shown in balance sheet
► It is a definite loss to the business
► It is not shown in balance sheet
► No provision is necessary for it
The following balance and discrepancies were found on 31 March 2008:
| Particulars | Rs. |
| Cash book balance (Dr) | 5 000 |
| Unpresented cheques | 1 000 |
| Uncredited cheques | 500 |
The Bank Statement balance on 31 March 2008 should be:
► Rs. 5 500 (Dr)
► Rs. 5 500 (Cr)
► Rs. 4 500 (Dr)
► Rs. 4 500 (Cr)
Following information are extracted from books of Mr. XYZ
| Particulars | Rs. |
| Closing value of stock | 40,000 |
| Write off Bad debts (given in adjustments) | 2,400 |
| Sundry Debtors (given in trial balance) | 33,200 |
| Provision is created on Debtors at 10% | |
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480
Consider the following data and identify the amount which will be deducted from Sundry Debtors in Balance Sheet.
| Particulars | Rs. |
| Bad debts (from trial balance) | 1,600 |
| Provision for doubtful debts (old) | 2,000 |
| Current year’s provision (new) | 1,000 |
► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600
Net Profit + Expenses= _________
► Liabilities
► Assets
► Capital
Income
The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as:
► Appreciation
è Depreciation
► Fluctuation
► None of the given options
The basic purpose of depreciation is to achieve the:
► Matching principle
è Dual aspect principle
► Separate entity concept
► Money measurement concept
If a business pays rent in advance for 12 months, it will be treated as:
è Prepaid expenses of business
► Long term liability of business
► Fixed assets of business
► Current liability of business
Cash book is a part of:
► Voucher
► General Journal
► General Ledger
è Trial Balance
Bank Reconciliation Statement is:
è A memorandum statement
► A ledger account
► A part of cash book
► A part of journal
If you start with cash book balance (Dr.), which of the following item will be deducted in Bank Reconciliation Statement?
► Any cheque drawn to creditor but not paid by bank
► Interest credited by the bank in pass book
è Cheque deposited but not credited by the bank
► Dividend collected by bank on behalf of the customer
Consider the following inventory record:
| Date | Item | Quantity | Cost/Unit | Total |
| 2007Jan. 2 | Opening inventory | 100 | Rs.18.00 | Rs.1,800 |
| Mar. 4 | Purchase | 400 | 19.00 | 7,600 |
| May 8 | Purchase | 800 | 20.00 | 16,000 |
| Nov. 3 | Purchase | 500 | 21.00 | 10,500 |
Four hundred units are unsold, Use the FIFO method of inventory costing and determine the value assigned to the 400 units on hand at the end of the period.
è Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400
| Beginning inventory | 10 units @ Rs. 10 per unit |
| First purchase | 35 units @ Rs. 11 per unit |
| Second purchase | 40 units @ Rs. 12 per unit |
| Third purchase | 20 units @ Rs. 13 per unit |
Eighty units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
è Rs.320
The amount of depreciation charged on machinery will be debited to:
► Machinery account
è Depreciation account
► Cash account
► Capital account
In cost of goods sold statement the ‘total factory cost’ is equal to:
► Cost of material consumed + Labor cost
► Cost of material consumed + Conversion cost
► Cost of material consumed + Total factory cost
è Cost of material consumed + Factory overhead
Which of the following organization converts raw material into finished goods?
► Trading concern
è Manufacturing concern
► Merchandising concern
► Service concern
Which of the following item appears in Trading Account of a business?
► Interest expenses
è Wages and salaries
► Depreciation expenses
► Discount Allowed
Which of the following is an alternate term which can be used for “Capital”?
► Liability
È Owner’s net worth
► Working capital
► Asset
If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs. 300 during the year, what would be the total of "general & administrative expenses"?
► Rs. 300
► Rs. 2,500
è Rs. 2,800
► Rs.18, 800
Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance).
► Capital account
► Sundry creditors account
► Accounts payable account
è Cash account
The amount brought by the proprietor in the business should be credited to:
► Cash account
è Capital account
► Drawings account
► Proprietor account
Which of the following account will be credited, if business sold goods for Rs.10,000 on credit?
► Cash account
è Sales account
► Accounts receivable account
► Purchases account
Which of the following account will be credited, if business purchased a vehicle on cash?
► Vehicle account
è Cash account
► Business account
► Bank account
Which of the following journal entry will be recorded, if the goods are sold on credit to Mr. 'B'?
è Mr. “B” / Accounts Receivable account (Dr) and Sales account (Cr)
► Cash account (Dr) and sales account (Cr)
► Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
► Goods Sold account (Dr) and Mr. B / Accounts Receivable account (Cr)
Accrued expenses are the example of:
è Current liabilities
► Long term liabilities
► Deferred costs
1. If Accumulated profit brought forward has credit nature, what will be its treatment?
a. It will be added in net profit for the year
b. It will be subtracted from the net profit for the year
c. It will be deducted from current Assets
d. It will be added in current assets
2. Fixed Assets at WDV + working capital =?
a. Total shareholders equity
b. Net capital employed
c. Long term loan
d. Current liability
5. Advances from customers are shown in which of the following heads in Balance Sheet?
a. Current Assets
b. Current liabilities
c. Fixed Assets
d. Long term liabilities
6. While preparing cash flow statements, the repayments of a loan during the year should be included under the heading of:
a. Operating activities
b. Financing activities
c. Investing activities
d. None of the given options
7. Which of the following statement is also known as a source and use statements?
a. Income Statements
b. Statement of Cash Flows
c. Balance Sheet
d. Statement of Retained Earnings
8. Calculate depreciation for the year.
Building at cost = Rs. 1, 00,000
Depreciation rate = 10%
a. Rs. 10,000
b. Rs. 1,000
c. Rs. 500
d. Rs. 0
9. Mr. A, Mr. B and Mr. C are three partners of a partnership firm. The profit sharing ratio is 2:3:5. If company has distributable profit of Rs. 4, 90,000, determine the profit of Mr. A.
a. Rs. 98,000
b. Rs. 1, 47,000
c. Rs. 2, 45,000
d. Rs. 3, 43,000
10. An example of financing activities in the context of cash flow statement is:
a. Fixed capital expenditure
b. Long-term deposit
c. Financial charges paid
d. Dividend paid
- If business purchases goods for resale purposes, such purchases are charged to _____________
- Expenses account
- Purchases account
- Sales account
- None of the given options
- The amount of resources supplied by the owner in business is called:
- Investments
- Assets
- Capital
- Reserves
- Excess of sales over cost of goods sold in an accounting period is termed as:
- Net Profit
- Gross Profit
- Retained earnings
- None of the given options
- At the end of the year, goods that are unsold are deducted from:
- Finished goods
- Closing stock
- Cost of goods sold
- Opening stock
- Conversion cost is:
- Total factory cost
- The cost incurred in converting raw material into finished goods
- The cost incurred in converting raw material into work in process
- None of the given options
- The cost of the asset after the expiry of its useful life is called___________
- Written down value
- Residual value
- Expired value
- None of the given options
When bank statement shows a debit balance, it means:
- Overdraft balance as per cash book
- Favorable balance as per cash book
- Un Favorable balance as per bank book
- None of the above
- Closing stock is credited in the:
- Balance sheet
- Profit & Loss account
- Cost of good sold statement
- None of the given option
- Depreciation of machinery will be shown in the profit & loss account under the head of:
- Selling expense
- Administrative Expenses
- Marketing expense
- Financial expense
- Assets and liabilities are presented in the balance sheet in the order of their:
- Life
- Classification
- Maturity
- None of the above
