Accounting Quiz 4

1 / 50

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

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

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

2 / 50

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

Mistake in balancing an account

Recording of a wrong entry in the subsidiary books

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

Omitting to record a transaction entirely in the subsidiary books

3 / 50

Which of the following errors is an error of omission?

Wages paid to Mohan have been debited to his account

Sale of ` 100 was recorded in the Purchases Journal

Repairs to buildings have been debited to buildings account

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

4 / 50

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

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

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 a liability

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

5 / 50

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

Error of principle

Error of omission

Error of commission

Compensating error

6 / 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

12,000 (understated.

7,000 (overstated.

7,000 (understated.

17,000 (overstated.

7 / 50

Which of the following is an one sided error?

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

Both

500 being expense on travelling expense credited to travelling expenses

None

8 / 50

Journal proper is meant for recording_____________?

Credit purchase of fixed assets

None of these

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

Return of goods

9 / 50

Which of the following is true?

Error of carry forward affects two accounts

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

Error of casting affects personal accounts

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

10 / 50

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

Closing stock

Inward returns

Sales

Purchases

11 / 50

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

Sales tax paid in connection with the purchase of office equipment

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

12 / 50

Which of the following statements is/are true ?

Total of Return Outward Book is debited to Return Outward Account

The balance of Petty Cash Book is a liability

A sale of an asset is recorded in the Sales Book

Cash Book is a subsidiary book as well as a ledger

13 / 50

Which of the following is an item of capital expenditure?

Installation charges paid in conjunction with the purchase of Office Equipment

Research and development costs during the year

Monthly rent of a machinery used in the business

Interest on borrowed fund utilized for acquisition of Office Furniture

14 / 50

Cash book records?

Only revenue receipts

Only capital receipts

Only cash sales

All types of cash receipts and payments

15 / 50

Purchase journal is kept to record_____________?

All purchases of goods

None of these

All credit purchases

All credit purchases of goods

16 / 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

17 / 50

Capital expenditure is an expenditure which

Will benefit the next accounting period

Results in the acquisition of a permanent asset

Benefits the current accounting period

Results in the acquisition of a current asset

18 / 50

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

Cash received from debtors

Salary remained outstanding

Cash paid to creditors

Cash deposited with bank

19 / 50

Which of these errors affect only one account?

All the three

Errors of casting

Errors of posting

Errors of carry forward

20 / 50

Which of the following is a Nominal A/c ?

SBI A/c

Outstanding Salary A/c

Rent A/c

Debtors A/c

21 / 50

Goodwill A/c is a/an__________?

Intangible Asset

Fictitious Asset

Tangible Asset

Nominal A/c

22 / 50

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

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

Repair to machinery purchased, second hand.

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

1000 paid for the execution of a new plant

23 / 50

The concept of conservatism will have the effect of______________?

Understatement of Liabilities

Understatement of Assets

Overstatement of Assets

Overstatement of Liabilities

24 / 50

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

Rent A/c

Bad debts A/c

Outstanding Salary A/c

SBI A/c

25 / 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.

26 / 50

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

Increase in working capacity of an asset

Both A. and C. above

Reduction in operating costs

Replacing damaged parts of an asset

27 / 50

Which of these is a Part of cash in hand?

Postage stamps

B/R

B/R endorsed

Cheque Deposited with Bank

28 / 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?

Added, Added

Added, Reduced

Deducted, Added

Deducted, Deducted

29 / 50

Closing stock is generally valued at______________?

Cost price or Market price whichever is higher

Market Price

Cost price or Market price whichever is lower

Cost Price

30 / 50

In a three column cash book_______________does not exist?

Petty cash column

Bank column

Discount column

Cash column

31 / 50

Which of the following statements is true?

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 Trial Balance will not tally if a transaction is omitted

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

32 / 50

Petty cash balance is a/an___________?

Liability

Expenditure

None

Assets

33 / 50

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

Purchase consideration

Royalty

Dividend

Installment

34 / 50

Which one of the following is a capital expenditure?

Gratuities paid to Directors on termination of their services.

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

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

Compensation paid to Directors on termination of their services

35 / 50

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

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

All the significant events after the Balance Sheet date

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

All changes after Balance Sheet date before its approval

36 / 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

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

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

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.

37 / 50

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

Net Profit will decrease by 3,140

Gross Profit will decrease by 3,500

Gross Profit will increase by 3,320

Gross Profit will decrease by 3,320

38 / 50

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

Moving average method

Production method

Delivery method

Percentage-of-completion method

39 / 50

Which of the following is true regarding closing entries?

They must be followed by reversing entries

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

40 / 50

Which of the following error is an error of principle

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

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

500 paid for wages debited to salary A/c

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

41 / 50

Which of these errors affect two or more accounts

Errors of posting to wrong account

Errors of complete omission

All the three

Errors of principle

42 / 50

Which of the following is a Real A/c?

Goodwill A/c

Building A/c

Bank A/c

Salary A/c

43 / 50

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

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

Administration and general expenses

Expenditure incurred on test runs and experimental production

Stand by equipment and servicing equipment

44 / 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

Credit to wage expense for ` 64,000

Debit to wage expense for ` 64,000

Debit to wage expense for ` 13,000

Debit to wage expense for ` 51,000

45 / 50

Which of the following statements is correct about Trial Balance?

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

The Trial Balance shows only nominal account balances

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

The Trial Balance shows only balances of Assets and Liabilities

46 / 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

47 / 50

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

Liability

Assets

Gain

Loss

48 / 50

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

Discount column

Cash column

None

Bank column

49 / 50

Which of the following statements is /are true?

Errors of principle do not affect the agreement of Trial Balance

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

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

Both B. and C. above

50 / 50

Any donation received for a specific purpose is a_________?

Capital receipts

Liability

Assets

Revenue receipts

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