Accounting Quiz 6

1 / 50

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

Nominal interest rate

Required rate of return

Interest Rate

All of the above

2 / 50

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

Historical cost ? Salvage Value

Replacement cost ? Accumulated Depreciation

Original cost adjusted for general price-level changes

Historical cost ? Depreciation portion thereof

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

Debit 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

4 / 50

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

Debit balance of Provision for Bad Debts Account

Debit balance of Discount on Debtors Account

Credit balance of Provision for Bad Debts Account

Debit balance of Bad Debts Account

5 / 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

Revenue is overstated in the year of sales

All of the above

It violates the matching principle of accounting

6 / 50

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

Current Assets& current liabilities

All of the above

Current Assets

Fixed Assets

7 / 50

Net sales equals, sales minus:

cost of goods sold

carriage on sales

Return outwords

Return inwards

8 / 50

The Profit and Loss Account shows the:

Financial position of the concern on a particular date

Cost of goods sold during the period

Financial results of the concern on a particular date

Financial results of the concern for a period

9 / 50

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

Asset A/c

Profit & Loss A/c

General Reserve A/c

Capital Reserve A/c

10 / 50

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

Cash Flow Statement

Balance Sheet

Income Statement

Retained Earning Statement

11 / 50

LIFO stands for__________?

?Last in, First Out

Lots in , Few out

Last input, First Output

Link input, Format Output

12 / 50

Which of the following are/is a current asset?

Stock

Prepaid insurance

Sundry Debtors

All

13 / 50

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

A person who owes to the business is called Debtor

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

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

Balance Sheet discloses financial position of the business

14 / 50

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

Directors? report

Chairman?s report

Notes on account to Balance Sheet

Balance Sheet

15 / 50

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

200 is shown as current asset

Both B. and C. above

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

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

16 / 50

Tax deducted at source appears in the Balance Sheet

On the liabilities side under current liabilities

On the assets side under current assets

On the liabilities side under provisions

On the assets side under loans and advances

17 / 50

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

All of the Above

common size income statement

Balance sheet

income statement

18 / 50

Depreciation appearing in the Trial Balance should be?

Debited to P&L A/c

Reduced from related asset in Balance Sheet

Shown as liability in Balance Sheet

Both A. and C. above

19 / 50

Which of the following equations is correct?

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

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

20 / 50

Which of the following is not an intangible asset?

Trade mark

Franchise

Accounts Receivable

Secret Profit

21 / 50

Which of the following relationships is/are false?

Net Profit = Gross Profit ? Administration and Other expenses

Opening Stock + Purchases ? Closing Stock = Cost of Sales

Net Profit = Gross Profit + Administration expenses and Other expenses

Both B. and C. above

22 / 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

17,000 Overstated

7,000 Overstated

10,000 Overstated

17,000 Understated

23 / 50

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

Market value

Cost

Book value

Intrinsic value

24 / 50

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

Sole-proprietorship

Corporation

General Partnership

Limited Partnership

25 / 50

Which of the following is not a financial statement?

Funds Flow Statement

Trial Balance

Profit and Loss Account

Balance Sheet

26 / 50

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

Money measurement concept

Business entity concept

Going concern concept

Matching concept

27 / 50

Outstanding salaries is shown as___________?

A Liability

An Asset in the Balance Sheet

Both B. and C. above

By adjusting it in the P & L A/c

28 / 50

Bad debts recovered is:

Credited to P&L A/c

Reduced from debtors in Balance Sheet

Added to debtors in Balance Sheet

Debited to P&L A/c

29 / 50

Gross Profit is equal to_________?

None of the above

Sales ? Cost of goods sold

Opening Stock + Purchases ? Closing Stock

Sales ? Closing Stock + Purchases

30 / 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:

Adding 2,200 to closing stock

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

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

Deducting 1,800 from debtors

31 / 50

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

Both A. and C. above

Vehicle

Fixed deposit in bank

Stock

32 / 50

_________is the cost of converting raw material into finished products?

Conversion cost

Prime cost

Explicit cost

Job order cost

33 / 50

Period cost include which of the following ?

selling Expense

Direct labor

factory overhead

selling Expenses & administrative expenses

34 / 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. 33,000

Rs. 8,000

Rs. 25,000

Rs. 17,000

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

Credit Profit and Loss Account and add the provision to debtors

Debit Profit and Loss Account and deduct the provision from debtors

36 / 50

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

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

Written down to zero or its scrap value

Carried in the accounting records at cost until it is sold

Shown in the Balance Sheet at its replacement cost

37 / 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

38 / 50

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

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

Net Profits are ascertained on the basis of current costs

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

39 / 50

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

Finished goods

Stores and spares

Advance payments made to suppliers for raw materials

Work-in-process

40 / 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

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

Only (i) above

Both (i)and (iii) above

41 / 50

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

Debts considered bad and written off

Director?s remuneration

Loss on sale of undertaking

Liability arising from a breach of contract

42 / 50

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

Current assets

Not an asset

Deferred revenue expenditure

Intangible assets

43 / 50

Which of the following is a current liability?

Discount on issue of shares

Prepaid expenses

Trademark

Outstanding Salaries

44 / 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 an asset

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

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

45 / 50

The Balance Sheet gives information regarding the____________?

Financial position as on a particular date

Financial position during a particular period

Results of operations for a particular period

Profit earning capacity for a particular period

46 / 50

Prepaid expenses are valued on the Balance Sheet at

Cost less expired portion

Cost to acquire less accumulated amortization

Replacement cost

Current cost

47 / 50

Insurance prepaid is shown as:___________?

Income

Current Asset

Fixed Asset

Current Liability

48 / 50

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

Profit & Loss Appropriation A/c

Profit & Loss Adjustment A/c

Profit & Loss A/c

Debtors A/c

49 / 50

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

Shown on the liabilities side of the Balance Sheet

Debited to the Profit & Loss Account

Credited to the Profit & Loss Account

Shown on the assets side of the Balance Sheet

50 / 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

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

Deduct the 800 from closing stock in the Trading Account

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