Accounting Quiz 4

1 / 50

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

SBI A/c

Outstanding Salary A/c

Bad debts A/c

Rent A/c

2 / 50

Which of the following is true regarding closing entries?

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

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

They must be followed by reversing entries

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

3 / 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.

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.

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

4 / 50

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

Inventories

Both B. and C. above.

Investments

Goodwill

5 / 50

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

Expenditure incurred on test runs and experimental production

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

Administration and general expenses

6 / 50

Which of the following statements is correct about Trial Balance?

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

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

7 / 50

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

Moving average method

Percentage-of-completion method

Production method

Delivery method

8 / 50

Which of these is a Part of cash in hand?

B/R

B/R endorsed

Postage stamps

Cheque Deposited with Bank

9 / 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

Credit to wage expense for ` 64,000

Debit to wage expense for ` 51,000

Debit to wage expense for ` 64,000

10 / 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.

1000 paid for the execution of a new plant

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

11 / 50

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

Cash deposited with bank

Cash paid to creditors

Salary remained outstanding

Cash received from debtors

12 / 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

Omitting to record a transaction entirely in the subsidiary books

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

13 / 50

Which of the following statements is /are true?

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

Errors of principle do not affect the agreement of Trial Balance

Both B. and C. above

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

14 / 50

In a three column cash book_______________does not exist?

Cash column

Bank column

Petty cash column

Discount column

15 / 50

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

Purchases

Inward returns

Closing stock

Sales

16 / 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

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

17 / 50

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

Error of principle

Error of omission

Compensating error

Error of commission

18 / 50

Which of the following is a Real A/c?

Bank A/c

Goodwill A/c

Salary A/c

Building A/c

19 / 50

Purchase journal is kept to record_____________?

None of these

All purchases of goods

All credit purchases of goods

All credit purchases

20 / 50

Closing stock is generally valued at______________?

Cost price or Market price whichever is higher

Cost price or Market price whichever is lower

Cost Price

Market Price

21 / 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.

Compensation paid to Directors on termination of their services

Gratuities paid to Directors on termination of their services.

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

22 / 50

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

Liability

Assets

Gain

Loss

23 / 50

Which of the following is a Nominal A/c ?

Debtors A/c

Rent A/c

Outstanding Salary A/c

SBI A/c

24 / 50

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

Increase in working capacity of an asset

Both A. and C. above

Replacing damaged parts of an asset

Reduction in operating costs

25 / 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.

26 / 50

Which of these errors affect two or more accounts

Errors of principle

Errors of posting to wrong account

All the three

Errors of complete omission

27 / 50

Any donation received for a specific purpose is a_________?

Assets

Revenue receipts

Capital receipts

Liability

28 / 50

Which of the following error is an error of principle

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

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

29 / 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 Trial Balance will not agree

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

The purchases are understated

The balance of creditors is understated

30 / 50

The concept of conservatism will have the effect of______________?

Understatement of Assets

Overstatement of Liabilities

Overstatement of Assets

Understatement of Liabilities

31 / 50

Petty cash balance is a/an___________?

None

Liability

Expenditure

Assets

32 / 50

Capital expenditure is an expenditure which

Results in the acquisition of a current asset

Results in the acquisition of a permanent asset

Will benefit the next accounting period

Benefits the current accounting period

33 / 50

Closing stock in the Trial Balance implies that______________?

It is adjusted in the Purchase A/c

It is adjusted in the Profit &Loss A/c

It is already adjusted in the opening stock

It is adjusted in the Cost of Sale A/c

34 / 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 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

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

35 / 50

Journal proper is meant for recording_____________?

None of these

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

Credit purchase of fixed assets

Return of goods

36 / 50

Which of the following is an item of capital expenditure?

Interest on borrowed fund utilized for acquisition of Office Furniture

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

37 / 50

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

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

All the significant events after the Balance Sheet date

All changes after Balance Sheet date before its approval

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

38 / 50

Which of the following is true?

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

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

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

40 / 50

Cash book records?

Only capital receipts

Only revenue receipts

Only cash sales

All types of cash receipts and payments

41 / 50

Which of the following errors is an error of omission?

Repairs to buildings have been debited to buildings account

Wages paid to Mohan have been debited to his account

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

Sale of ` 100 was recorded in the Purchases Journal

42 / 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

Added, Reduced

Deducted, Added

43 / 50

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

Discount column

Cash column

None

Bank column

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

Total of Return Outward Book is debited to Return Outward Account

The balance of Petty Cash Book is a liability

45 / 50

Which of these errors affect only one account?

Errors of casting

Errors of carry forward

All the three

Errors of posting

46 / 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.

Sales tax paid in connection with the purchase of office equipment

Annual fire insurance premiums on Plant and Equipment

Interest on loans and debentures

47 / 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 3,320

Gross Profit will increase by 3,320

Gross Profit will decrease by 3,500

Net Profit will decrease by 3,140

48 / 50

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

Purchase consideration

Dividend

Installment

Royalty

49 / 50

Goodwill A/c is a/an__________?

Fictitious Asset

Nominal A/c

Intangible Asset

Tangible Asset

50 / 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

Both

None

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