Accounting Quiz 6

1 / 50

Average Accounting Return is a measure of accounting profit relative to:

Book value

Market value

Intrinsic value

Cost

2 / 50

Which of the following accounts appear(s) in the Balance Sheet of a business? i. Stock at the end of the financial year ii. Stock at the beginning of the financial year iii. Drawings iv. Prepaid Rent

Only (iii) above

Both (i)and (iii) above

(i), (iii), (iv) and (v) above

Only (i) above

3 / 50

The Balance Sheet gives information regarding the____________?

Profit earning capacity for a particular period

Results of operations for a particular period

Financial position during a particular period

Financial position as on a particular date

4 / 50

_________is the cost of converting raw material into finished products?

Prime cost

Explicit cost

Job order cost

Conversion cost

5 / 50

Which of the following is not a financial statement?

Funds Flow Statement

Trial Balance

Profit and Loss Account

Balance Sheet

6 / 50

Which of the following is a current liability?

Trademark

Discount on issue of shares

Outstanding Salaries

Prepaid expenses

7 / 50

Which of the following relationships is/are false?

Net Profit = Gross Profit + Administration expenses and Other expenses

Both B. and C. above

Opening Stock + Purchases ? Closing Stock = Cost of Sales

Net Profit = Gross Profit ? Administration and Other expenses

8 / 50

If a company has contingent liabilities, they appear in the__________?

Chairman?s report

Balance Sheet

Notes on account to Balance Sheet

Directors? report

9 / 50

Recent developments have made much of a company?s inventory obsolete. This obsolete inventory should be?

Carried in the accounting records at cost until it is sold

Written down to zero or its scrap value

Shown in the Balance Sheet at its replacement cost

Shown in the Balance Sheet at cost, but classified as a non-current asset

10 / 50

During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period?

Rs. 17,000

Rs. 25,000

Rs. 33,000

Rs. 8,000

11 / 50

Gross Profit is equal to_________?

None of the above

Opening Stock + Purchases ? Closing Stock

Sales ? Closing Stock + Purchases

Sales ? Cost of goods sold

12 / 50

Which of the following are/is not a fixed asset?

Stock

Fixed deposit in bank

Vehicle

Both A. and C. above

13 / 50

Which of the following are/is a current asset?

Stock

Sundry Debtors

All

Prepaid insurance

14 / 50

Prepaid expenses are valued on the Balance Sheet at

Replacement cost

Current cost

Cost to acquire less accumulated amortization

Cost less expired portion

15 / 50

Under the direct write-off method of recognizing a bad debt expense. Which of the following statements is/are true?

The bad debt expense is not matched with the related sales

All of the above

Revenue is overstated in the year of sales

It violates the matching principle of accounting

16 / 50

Which of the following is not an intangible asset?

Trade mark

Franchise

Secret Profit

Accounts Receivable

17 / 50

Which of the following statement is considered as the accountant?s snapshot of firm?s accounting value as of a particular date?

Retained Earning Statement

Balance Sheet

Cash Flow Statement

Income Statement

18 / 50

Outstanding salaries is shown as___________?

An Asset in the Balance Sheet

Both B. and C. above

A Liability

By adjusting it in the P & L A/c

19 / 50

The adjustment to be made for prepaid expenses is____________?

Deduct prepaid expenses from respective expenses and show it as a liability

Add prepaid expenses to respective expenses and show it as a liability

Add prepaid expenses to respective expenses and show it as an asset

Deduct prepaid expenses from respective expenses and show it as an asset

20 / 50

Which of the following entries is correct in respect of reserve for discounts on accounts payable?

Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c

Debit Accounts Payable A/c and Credit P&L A/c

Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c

Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c

21 / 50

Tax deducted at source appears in the Balance Sheet

On the liabilities side under provisions

On the assets side under current assets

On the liabilities side under current liabilities

On the assets side under loans and advances

22 / 50

Which of the following is not true with regard to preparation of Profit & Loss Account?

Net Profits are ascertained on the basis of current costs

Profit & Loss Account does not disclose the effect of non-financial items

Net Profits as disclosed by P&L Account is not absolute

Profit & Loss Account is prepared for a certain period and hence it is an interim statement

23 / 50

Period cost include which of the following ?

selling Expenses & administrative expenses

selling Expense

Direct labor

factory overhead

24 / 50

Property, Plant and Equipment are conventionally presented in the Balance Sheet at _________?

Historical cost ? Depreciation portion thereof

Historical cost ? Salvage Value

Replacement cost ? Accumulated Depreciation

Original cost adjusted for general price-level changes

25 / 50

A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case

Both B. and C. above

P&L A/C is debited with 1,400

200 is shown as current asset

P&L A/C is debited with 1,200

26 / 50

Based on which of the following concepts, is Share Capital Account shown on the liabilities side of a Balance Sheet?

Matching concept

Money measurement concept

Going concern concept

Business entity concept

27 / 50

Which of the following equations is correct?

Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock

Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock

Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales

Gross Profit ? Opening Stock + Direct expenses + Purchases +Closing stock = Sales

28 / 50

The compensation paid by the borrower of fund to lender, from the borrower point of the cost of borrowing fund is called?

All of the above

Nominal interest rate

Interest Rate

Required rate of return

29 / 50

Goods in stock worth 800 are destroyed by fire and the Insurance Co. is accepted the claim for 600. Adjustment would involve

Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and credit of 800 to Trading Account

Credit insurance company for 600

Deduct the 800 from closing stock in the Trading Account

Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and Profit and Loss Account respectively

30 / 50

Which of the following form of business organization is least regulated?

Corporation

Limited Partnership

Sole-proprietorship

General Partnership

31 / 50

LIFO stands for__________?

?Last in, First Out

Last input, First Output

Link input, Format Output

Lots in , Few out

32 / 50

The Profit and Loss Account shows the:

Financial results of the concern on a particular date

Financial position of the concern on a particular date

Financial results of the concern for a period

Cost of goods sold during the period

33 / 50

Which of the following statements is false ? select the false from below options

Decrease in the value of the asset could decrease the value of a liability

Assets are to be shown in the Balance Sheet at the realizable value

A person who owes to the business is called Debtor

Balance Sheet discloses financial position of the business

34 / 50

Insurance prepaid is shown as:___________?

Current Liability

Income

Fixed Asset

Current Asset

35 / 50

The creation of provision for doubtful debts given as an adjustment requires____________?

Debit Profit & Loss Account and add the provision to debtors

Credit Profit & Loss Account and deduct the provision from debtors

Debit Profit and Loss Account and deduct the provision from debtors

Credit Profit and Loss Account and add the provision to debtors

36 / 50

Computers taken on hire by a business for a period of twelve months should be classified as:___________?

Deferred revenue expenditure

Intangible assets

Not an asset

Current assets

37 / 50

If actual bad debts are more than the provision for bad debts, then there will be a_____________?

Debit balance of Discount on Debtors Account

Credit balance of Provision for Bad Debts Account

Debit balance of Provision for Bad Debts Account

Debit balance of Bad Debts Account

38 / 50

The balance of Revaluation Reserve pertaining to an asset that has been disposed off or retired can be transferred to?

Asset A/c

Capital Reserve A/c

General Reserve A/c

Profit & Loss A/c

39 / 50

Bad debts recovered is:

Debited to P&L A/c

Added to debtors in Balance Sheet

Credited to P&L A/c

Reduced from debtors in Balance Sheet

40 / 50

Short term Assets expected to be converted into cash within 1 year or less than?

Current Assets& current liabilities

Current Assets

All of the above

Fixed Assets

41 / 50

An income statement in which each item expressed as percentage of Sale?

Balance sheet

income statement

common size income statement

All of the Above

42 / 50

On scrutiny of a firm?s books of accounts, it was observed that the following errors have occurred in the previous years but have not yet been rectified. i. Depreciation for 2011-2012- 7,000 understated ii. Accrued expenses as at March 31, 2013 ? 10,000 understated

10,000 Overstated

17,000 Understated

7,000 Overstated

17,000 Overstated

43 / 50

If unexpired insurance appears in the Trial Balance, it should be:

Shown on the assets side of the Balance Sheet

Shown on the liabilities side of the Balance Sheet

Credited to the Profit & Loss Account

Debited to the Profit & Loss Account

44 / 50

Depreciation appearing in the Trial Balance should be?

Shown as liability in Balance Sheet

Both A. and C. above

Debited to P&L A/c

Reduced from related asset in Balance Sheet

45 / 50

Net sales equals, sales minus:

cost of goods sold

carriage on sales

Return outwords

Return inwards

46 / 50

Sundry debtors as per Trial Balance is 43,000 which includes 2,200 due from ?H in respect of goods sent to him on approval basis, the cost price of which is 1,800. Rectification would involve:

Deducting 1,800 from debtors

Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales

Adding 2,200 to closing stock

Deducting 1,800 from closing stock and deducting 2,200 each from debtors and sales

47 / 50

At the time of preparation of financial accounts, bad debt recovered account will be transferred to?

Profit & Loss A/c

Profit & Loss Adjustment A/c

Debtors A/c

Profit & Loss Appropriation A/c

48 / 50

Which of the following is not classified as inventory in the financial statements?

Work-in-process

Finished goods

Advance payments made to suppliers for raw materials

Stores and spares

49 / 50

Which of the following shall not be deducted from net profit while calculating managerial remuneration?

Loss on sale of undertaking

Liability arising from a breach of contract

Debts considered bad and written off

Director?s remuneration

50 / 50

Which of the following will not appear in Profit and Loss Account of a business?

Drawings

Bad debts

Reserve for discount on Sundry Creditors

Accrued expenses

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