Accounting Quiz 4

1 / 50

Which of the following statements is true?

A Trial Balance will not tally if a transaction is 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

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

2 / 50

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

Dividend

Purchase consideration

Royalty

Installment

3 / 50

Which of the following is an one sided error?

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

None

Both

4 / 50

The concept of conservatism will have the effect of______________?

Understatement of Assets

Understatement of Liabilities

Overstatement of Liabilities

Overstatement of Assets

5 / 50

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

Investments

Both B. and C. above.

Goodwill

Inventories

6 / 50

Which of the following statements is/are true ?

A sale of an asset is recorded in the Sales Book

The balance of Petty Cash Book is a liability

Cash Book is a subsidiary book as well as a ledger

Total of Return Outward Book is debited to Return Outward Account

7 / 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 ` 64,000

Debit to wage expense for ` 51,000

Debit to wage expense for ` 13,000

Credit to wage expense for ` 64,000

8 / 50

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

Production method

Percentage-of-completion method

Moving average method

Delivery method

9 / 50

Which of the following errors is an error of omission?

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

Sale of ` 100 was recorded in the Purchases Journal

Repairs to buildings have been debited to buildings account

Wages paid to Mohan have been debited to his account

10 / 50

Purchase journal is kept to record_____________?

All credit purchases

None of these

All purchases of goods

All credit purchases of goods

11 / 50

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

Purchases

Inward returns

Sales

Closing stock

12 / 50

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

Bad debts A/c

Outstanding Salary A/c

Rent A/c

SBI A/c

13 / 50

Which of the following statements is /are true?

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

Both B. and C. above

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

14 / 50

Which of the following statements is correct about Trial Balance?

The Trial Balance shows only balances of Assets and Liabilities

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

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

The Trial Balance shows only nominal account balances

15 / 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

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

Error of casting affects personal accounts

16 / 50

Which one of the following is a capital expenditure?

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

Compensation paid to Directors on termination of their services

Gratuities paid to Directors on termination of their services.

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

17 / 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

18 / 50

Which of these is a Part of cash in hand?

B/R endorsed

B/R

Cheque Deposited with Bank

Postage stamps

19 / 50

In a three column cash book_______________does not exist?

Discount column

Petty cash column

Cash column

Bank column

20 / 50

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

Recording of a wrong entry in the subsidiary books

Omitting to record a transaction entirely in the subsidiary books

Mistake in balancing an account

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

21 / 50

Cash book records?

Only revenue receipts

All types of cash receipts and payments

Only cash sales

Only capital receipts

22 / 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

23 / 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

24 / 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 Trial Balance will not agree

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

The balance of creditors is understated

25 / 50

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

Stand by equipment and servicing equipment

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

Expenditure incurred on test runs and experimental production

26 / 50

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

Loss

Assets

Liability

Gain

27 / 50

Which of the following error is an error of principle

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

500 paid for wages debited to salary A/c

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

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

28 / 50

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

Reduction in operating costs

Replacing damaged parts of an asset

Both A. and C. above

Increase in working capacity of an asset

29 / 50

Which of the following is an item of capital expenditure?

Monthly rent of a machinery used in the business

Interest on borrowed fund utilized for acquisition of Office Furniture

Research and development costs during the year

Installation charges paid in conjunction with the purchase of Office Equipment

30 / 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, Deducted

Added, Added

Deducted, Added

Added, Reduced

31 / 50

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

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

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

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 a liability

32 / 50

Which of the following is a Nominal A/c ?

Debtors A/c

Outstanding Salary A/c

Rent A/c

SBI A/c

33 / 50

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

Gross Profit will decrease by 3,500

Gross Profit will increase by 3,320

Gross Profit will decrease by 3,320

Net Profit will decrease by 3,140

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

The retained earnings was overstated during 2011-2012 and retained earnings 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

35 / 50

Petty cash balance is a/an___________?

Liability

Expenditure

None

Assets

36 / 50

Which of the following is true regarding closing 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

They must be followed by reversing entries

37 / 50

Journal proper is meant for recording_____________?

Return of goods

Credit purchase of fixed assets

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

None of these

38 / 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 overstated and current year?s profit is understated.

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 also overstated.

39 / 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 (understated.

17,000 (overstated.

12,000 (understated.

7,000 (overstated.

40 / 50

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

All changes after Balance Sheet date before its approval

All the significant events after the Balance Sheet date

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

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

41 / 50

Capital expenditure is an expenditure which

Will benefit the next accounting period

Results in the acquisition of a current asset

Benefits the current accounting period

Results in the acquisition of a permanent asset

42 / 50

Any donation received for a specific purpose is a_________?

Revenue receipts

Assets

Capital receipts

Liability

43 / 50

Which of these errors affect only one account?

Errors of posting

Errors of casting

All the three

Errors of carry forward

44 / 50

Which of the following is a Real A/c?

Bank A/c

Goodwill A/c

Salary A/c

Building A/c

45 / 50

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

Sales tax paid in connection with the purchase of office equipment

Interest on loans and debentures

Annual fire insurance premiums on Plant and Equipment

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

46 / 50

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

Repair to machinery purchased, second hand.

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

1000 paid for the execution of a new plant

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

47 / 50

Goodwill A/c is a/an__________?

Nominal A/c

Intangible Asset

Fictitious Asset

Tangible Asset

48 / 50

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

Error of principle

Compensating error

Error of omission

Error of commission

49 / 50

Which of these errors affect two or more accounts

Errors of principle

Errors of complete omission

Errors of posting to wrong account

All the three

50 / 50

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

Discount column

None

Cash column

Bank column

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