Accounting Quiz 4

1 / 50

Which of the following errors is an error of omission?

Repairs to buildings have been debited to buildings account

The total of the sales journal has not been posted to the Sales Account

Sale of ` 100 was recorded in the Purchases Journal

Wages paid to Mohan have been debited to his account

2 / 50

Which of the following is an one sided error?

None

500 being expense on travelling expense credited to travelling expenses

500 purchase of old equipment not recorded in the books of A/c at all

Both

3 / 50

Which of the following statements is correct about Trial Balance?

The Trial Balance has no statutory importance from the point of view of law

The Trial Balance shows only nominal account balances

The Trial Balance shows only balances of Assets and Liabilities

The Trial Balance is prepared after preparing the Profit and Loss Account

4 / 50

The closing balance of a petty cash book is a / an___________?

Liability

Loss

Gain

Assets

5 / 50

Which of the following error is an error of principle

5,000 received from Sham credited to Ram A/c

500 paid for wages debited to salary A/c

5,000 incurred on installation of new plant debited to travelling expenses A/c

500 being purchase of raw material debited to purchase A/c ` 50

6 / 50

Which one of the following should be considered a revenue expenditure?

1000 paid for the execution of a new plant

Loss of 10,000 incurred in increasing the sitting accommodation of a hotel

Damage paid on account of breach of a contract to supply certain goods

Repair to machinery purchased, second hand.

7 / 50

Which of the following assets is/are to be valued at the lower of cost and net realizable value?

Goodwill

Inventories

Investments

Both B. and C. above.

8 / 50

Which of these errors affect only one account?

Errors of carry forward

All the three

Errors of casting

Errors of posting

9 / 50

Which of the following should not be treated as revenue expenditure?

Small expenditures on long- lived assets, such as ` 20 for a paper weight.

Interest on loans and debentures

Annual fire insurance premiums on Plant and Equipment

Sales tax paid in connection with the purchase of office equipment

10 / 50

Which of the following errors affects the agreement of a Trial Balance?

Posting an entry on the correct side but in the wrong account

Recording of a wrong entry in the subsidiary books

Omitting to record a transaction entirely in the subsidiary books

Mistake in balancing an account

11 / 50

Which of the following is a representative Personal A/c?

Bad debts A/c

Rent A/c

SBI A/c

Outstanding Salary A/c

12 / 50

Journal proper is meant for recording_____________?

All such transactions for which no special journal has been kept by the business

Return of goods

Credit purchase of fixed assets

None of these

13 / 50

Closing stock is generally valued at______________?

Cost Price

Market Price

Cost price or Market price whichever is higher

Cost price or Market price whichever is lower

14 / 50

The amount payable to a person as consideration for the use of rights vested in him is

Purchase consideration

Dividend

Installment

Royalty

15 / 50

Which of the following methods is not a practical way of realizing revenue?

Percentage-of-completion method

Production method

Moving average method

Delivery method

16 / 50

The beginnings inventory of the current year is overstated by 5,000 and closing inventory is overstated by 12,000. These errors will cause the net income for the current year by

7,000 (overstated.

12,000 (understated.

17,000 (overstated.

7,000 (understated.

17 / 50

Purchase journal is kept to record_____________?

None of these

All purchases of goods

All credit purchases of goods

All credit purchases

18 / 50

Which of the following enhances the earning capacity of an asset?

Both A. and C. above

Increase in working capacity of an asset

Replacing damaged parts of an asset

Reduction in operating costs

19 / 50

Which of the following statements is true?

A Trial Balance will not tally if a transaction is omitted

If a Trial Balance tallies, it always means that none of the transactions has been completely omitted

A credit balance in the Pass Book indicates excess of deposits over withdrawals

A customer to whom goods have been sold on credit cannot avail himself of a cash discount

20 / 50

Closing stock in the Trial Balance implies that______________?

It is adjusted in the Profit &Loss A/c

It is adjusted in the Purchase A/c

It is already adjusted in the opening stock

It is adjusted in the Cost of Sale A/c

21 / 50

Which of the following is a Real A/c?

Bank A/c

Goodwill A/c

Salary A/c

Building A/c

22 / 50

Which one of the following is a capital expenditure?

Royalty paid in installments for the purchase of rights to manufacture and sell patient medicines.

Gratuities paid to Directors on termination of their services.

Expenditure incurred in connection with the renewal of a Trade Mark.

Compensation paid to Directors on termination of their services

23 / 50

While finalizing the current year?s accounts, the company realized that an error was made in the calculation of closing stock of the previous year. In the previous year, closing stock was valued more by 50,000. As a result

There will be no impact on the profit of either the previous year or the current year.

Previous year?s profit is understated and current year?s profit is overstated.

Previous year?s profit is overstated and current year?s profit is understated.

Previous year?s profit is overstated and current year?s profit is also overstated.

24 / 50

If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as 1,570, then

Gross Profit will increase by 3,320

Gross Profit will decrease by 3,500

Gross Profit will decrease by 3,320

Net Profit will decrease by 3,140

25 / 50

Which of the following is an item of capital expenditure?

Research and development costs during the year

Interest on borrowed fund utilized for acquisition of Office Furniture

Installation charges paid in conjunction with the purchase of Office Equipment

Monthly rent of a machinery used in the business

26 / 50

The balance of which of the following accounts do not disappear, once they are debited/credited to Trading Account?

Purchases

Sales

Closing stock

Inward returns

27 / 50

Which of these transactions will not be recorded in cash book?

Cash paid to creditors

Cash received from debtors

Cash deposited with bank

Salary remained outstanding

28 / 50

Which of the following is a Nominal A/c ?

Outstanding Salary A/c

Debtors A/c

Rent A/c

SBI A/c

29 / 50

In a three column cash book_______________does not exist?

Cash column

Petty cash column

Discount column

Bank column

30 / 50

Petty cash balance is a/an___________?

Expenditure

None

Assets

Liability

31 / 50

Which of the following statements is /are true?

Entering wrong amount in the subsidiary book affects the agreement of the Trial Balance

Errors of principle do not affect the agreement of Trial Balance

Undercasting or overcastting of a subsidiary book is an example or error of commission

Both B. and C. above

32 / 50

The concept of conservatism will have the effect of______________?

Overstatement of Assets

Understatement of Assets

Overstatement of Liabilities

Understatement of Liabilities

33 / 50

Buildings account is debited with an amount towards repairs. This is an example of?

Error of omission

Compensating error

Error of principle

Error of commission

34 / 50

Which of these errors affect two or more accounts

All the three

Errors of posting to wrong account

Errors of principle

Errors of complete omission

35 / 50

Which of the following is true?

Error of principle involves an incorrect allocation of expenditure or receipt between capital and revenue

Error of carry forward affects two accounts

Error of casting affects personal accounts

Omission of a transaction from a subsidiary record affects only one account

36 / 50

Which of these is a Part of cash in hand?

B/R

Cheque Deposited with Bank

B/R endorsed

Postage stamps

37 / 50

Which column of a cash book will not have credit balance___________?

Bank column

Discount column

None

Cash column

38 / 50

For the past 3 years, DK Ltd. has failed to accrue unpaid wages earned by workers during the last week of the year. The amounts omitted, which were considered material, were as follows: March 31,2010 ? ` 56,000 March 31, 2011 ? ` 51,000 March 31, 2012 ? ` 64,000

Debit to wage expense for ` 13,000

Debit to wage expense for ` 64,000

Credit to wage expense for ` 64,000

Debit to wage expense for ` 51,000

39 / 50

During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which of the following is true?

The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013

The income was overstated during 2011-12 and closing inventory will be overstated during 2012-2013

The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013

The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013

40 / 50

Any donation received for a specific purpose is a_________?

Liability

Capital receipts

Assets

Revenue receipts

41 / 50

Goodwill A/c is a/an__________?

Intangible Asset

Tangible Asset

Nominal A/c

Fictitious Asset

42 / 50

Cash book records?

Only cash sales

Only capital receipts

All types of cash receipts and payments

Only revenue receipts

43 / 50

Which of the following items should not be capitalized relating to fixed assets?

Expenditure incurred on test runs and experimental production

Administration and general expenses

Interest payable on loans or deferred credits taken for the acquisition or construction of fixed assets before they are ready for use

Stand by equipment and servicing equipment

44 / 50

Which of the following statements is/are true ?

A sale of an asset is recorded in the Sales Book

Cash Book is a subsidiary book as well as a ledger

The balance of Petty Cash Book is a liability

Total of Return Outward Book is debited to Return Outward Account

45 / 50

The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The Company has not passed any rectification entries and the error is not detected through the bank reconciliation. The impact of this error is

The purchases are understated

The balance of creditors is understated

The Trial Balance will not agree

The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book

46 / 50

Capital expenditure is an expenditure which

Results in the acquisition of a permanent asset

Results in the acquisition of a current asset

Will benefit the next accounting period

Benefits the current accounting period

47 / 50

Which of the following is true regarding closing entries?

They must be followed by reversing entries

They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss Account

They must be made after the reversing entries but before the adjusting entries

They must be made after the adjusting entries but before the reversing entries

48 / 50

The adjustment to be made for income received in advance is:

Deduct income received in advance from respective income and show it as a liability

Add income received in advance to respective income and show it as asset

Add income received in advance to respective income and show it as a liability

Deduct income received in advance from respective income and show it as an asset in the Balance Sheet

49 / 50

Which of the following statements are / is true? ? Events after Balance Sheet are?

All changes after Balance Sheet date before its approval

The events after Balance Sheet date but before its approval by the board

The events after Balance Sheet date but before submitting it to the Registrar of Companies

All the significant events after the Balance Sheet date

50 / 50

Any gain on the sale of non-current assets should be _________ from the net profit and the loss must be _________to the net profit in determining fund from operation?

Deducted, Added

Deducted, Deducted

Added, Added

Added, Reduced

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