1. Which accounting concept satisfy the valuation criteria
a) Going concern, Realization, Cost
b) Going concern, Cost, Dual aspect
c) Cost, Dual aspect, Conservatism
d) Realization, Conservatism, Going concern
Ans :a
2. A trader has made a sale of Rs.75,500 out of which cash sales amounted to Rs.25,500. He showed trade receivables on 31-3-2014 at Rs.25,500. Which concept is followed by him?
a) Going concern
b) Cost
c) Accrual
d) Money measurement.
Ans : c
3. In which of the following cases, accounting estimates are needed?
a) Employs benefit schemes
b) Impairment of losses
c) Inventory obsolescence
d) All of the above
Ans :d
4. Diwali advance given to an employee is
a) Revenue Expenditure
b) Capital Expenditure
c) Deferred Revenue Expenditure
d) Not an Expenditure
Ans : d
5. A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into consideration the following items. (i) The cost of an asset Rs.23,000 has been taken as an expense (ii) The firm anticipated a profit of Rs.12,000 on the sale of an old furniture (iii) Salary of Rs.7,000 outstanding for the year has not been taken into account. (iv) An asset of Rs.85,000 was purchased for Rs.75,000 and was recorded in the books at Rs.85,000.
What is the correct amount of profit to be reported in the books?
a) Rs.1,47,000
b) Rs. 1,51,000
c) Rs.1,63,000
d) Rs.1,41,000
Ans : b
6. The process of recording financial data upto trial balance is
a) Book keeping
b) Classifying
c) Summarising
d) Analyzing
Ans : a
7. Rohit carrying on real estate business sold a piece of land for Rs.4,00,00,000 (cost
Rs.3,50,00,000) then the type of receipt is ______ nature and profit on sale is
a) Capital & transferred to capital reserve
b) Revenue & transferred to P & L a/c
c) Capital & transferred to P & L a/c
d) Revenue & transferred to general reserve
Ans: b
8. In income measurement & recognition of assets & liabilities which of the following
concepts goes together?
a) Periodicity, Accrual, Matching
b) Cost, Accrual, matching
c) Going concern, cost, Realization
d) Going concern, Periodicity, Reliability
Ans : a
9. Interpretation means
a) Explanation of meaning and significance of the data in Financial Statements.
b) Concerned with preparation and presentation of classified data
c) Systematic analysis of recorded data
d) Methodical classification of data given in Financial Statements.
Ans : a
10. A trader purchases goods for Rs. 2500000, of these 70% of goods were sold during the
year. At the end of 31st December 2009, the market value of such goods were Rs. 500000. But the trader recorded in his books for Rs. 750000. Which of the following concept is
violated.
a) Money measurement
b) Conservatism
c) Consistency
d) None of these.
Ans : b
11. Which of the following is wrong?
a) All real and personal accounts are transferred to balance sheet
b) Nominal accounts are transferred to P & L account
c) Each account is opened separately in ledger
d) Rent is a personal account, outstanding rent is nominal account
Ans : d
12. If nothing is given in the financial statements about the three accounting assumptions then it is to be treated as it
a) Is assumed that it is not followed.
b) Is assumed to be followed
c) Is assumed to be followed to some extent
d) None of the above
Ans : b
13. The proprietor of the business is treated as creditor for the capital introduced by him due to_____ concept.
a) Money measurement
b) Cost
c) Entity
d) Dual aspect
Ans : c
14. Fixed assets are held by business for _____
a) Converting into cash
b) Generating revenue
c) Resale
d) None of the above
Ans : b
15. Which accounting concept specifies the practice of crediting closing stock to the trading account?
a) Cost
b) Realisation
c) Going concern
d) Matching
Ans : d
16. Amount spent to increasing the earning capacity is a ______ expenditure
a) Capital
b) Revenue
c) Deferred revenue
d) Capital Loss
Ans : a
17. Change in the capital A/c of proprietor may occur due to ______
a) Profit earned
b) Loss incurred
c) Capital Introduced
d) All of the above
Ans : d
18. Consistency with reference to application of accounting procedures means
a) All companies in the same Industry should use identical accounting procedures
b) Income & assets have not been overstated
c) Accounting methods & procedures shall be followed uniform basis year after year
d) Any accounting method can be followed as per convenience
ANs :
19. If one of the cars purchased by a car dealer is used for business purpose, instead of resale, then it should be recorded by_____
a) Dr Drawing A/c & Cr Purchases A/c
b) Dr Office Expenses A/c & Cr Motor Car A/c
c) Dr Motor Car A/c & Cr Purchases A/c
d) Dr Motor Car & Cr Sales A/c
Ans : c
20. If wages are paid for construction of business premises ______ A/c is credited and _____ A/c is debited.
a) Wages, Cash
b) Premises, Cash
c) Cash, Wages
d) Cash, Premises
Ans : d
21. Value of goods withdrawn by the proprietor for his personal use should be credited to ____
a) Capital A/c
b) Sales A/c
c) Drawings A/c
d) Purchases A/c
Ans : d
22. Which of the following is incorrect?
a) Good will intangible asset
b) Sundry debtors - current asset
c) Loose tools tangible fixed asset
d) Outstanding expenses -current asset.
Ans : d
23. M/s Stationery Mart will debit the purchase of stationery to _______
a) Purchases A/c
b) General Expenses A/c
c) Stationery A/c
d) None
Ans : a
24. Small items like, pencils, pens, files, etc. are written off within a year according to _
concept.
a) Materiality
b) consistency
c) Conservatism
d) Realisation
Ans : a
25. Business enterprise is separate from its owner according to _____ concept.
a) Money measurement concept
b) Matching concept
c) Entity concept
d) Dual aspect concept
Ans : c
26) Profit and loss is calculated at the stage of
a) Recording
b) Posting
c) Classifying
d) Summarising
Ans : d
27) Which of the following is a Real A/c?
a) Building A/c
b) Capital A/c
c) Shyam A/c
d) Rent A/c
Ans : a
28) Which of the following factor is not considered while selecting accounting policies?
a) Prudence
b) Substance over form
c) Accountancy
d) Materiality
Ans : c
29) Which of the following provide frame work and accounting policies so that the financial
statements of different enterprises become comparable.
a) Business Standards
b) Accounting Standards
c) Market Standards
d) None
Ans : b
30) Fixed assets are double the current assets and half the capital. The current assets are
Rs.3,00,000 and investments are Rs.4,00,000. Then the current liabilities recorded in balance
sheet will be
a) 2,00,000
b) 1,00,000
c) 3,00,000
d) 4,00,000
Ans : b
31) Which of the following is not a Real Account?
a) Cash A/c
b) Investments A/c
c) Outstanding rent A/c
d) Purchases A/c
Ans : c
32) Consistency with reference to application of accounting procedures means
a) All companies in the same Industry should use identical accounting
b) Income & assets have not been overstated
c) Accounting methods & procedures shall be followed uniform basis year after year
d) Any accounting method can be followed as per convenience
Ans : c
33) Amount spent to increasing the earning capacity is a ______ expenditure
a) Capital
b) Revenue
c) Deferred revenue
d) Capital Loss
Ans : a
34) Amount spent to increasing the earning capacity is a ______ expenditure
a) Capital
b) Revenue
c) Deferred revenue
d) Capital Loss
Ans : a
35) ……………………..happens when the fraudster avails multiple loans for the same property simultaneously for a total amount in excess of the actual value of the property.
a) Phishing
b) Window dressing
c) Shot gunning
d) Skimming
Ans : c
36) Various frauds in banking sector are:
a) Appraisal fraud
b) Mortgage fraud
c) Shot gunning
d) All of the above
Ans : d
37) Fraudsters may alter cheques to change the name or the amount on the face of cheques. This is called
a) Phishing
b) Forgery
c) Disbursement fraud
d) Skimming
Ans : b
38) The increase or decrease in the prices of various goods and services over a period of time is known as----------------------
a) Price Level Changes
b) Inflation
c) Deflation
Ans : a
39) Increase in the price of various goods and services over a period of time is known as ---- ------------------------
a) Price Level Changes
b) Inflation
c) Deflation
Ans : b
40) Traditionally as per the generally accepted accounting principles, transactions are recorded as per --------------
a) Historical cost
b) Current market value
c) Realizable value
Ans : a
41) Prices of goods and services may increase due to following -------------- demand factors
a) Increase in money supply, increase in disposable income
b) agricultural growth, inadequate industrial growth
c) None of the above
Ans : a
42) Prices of goods and services may increase due to following -------------- demand factors
a) Increase in money supply, increase in disposable income
b) Inadequate agricultural growth, inadequate industrial growth
c) None of the above
Ans : a
43) Current purchasing power method involves adjustment of historic figures at the current
purchasing value. Under this method historical figures are multiplied with the ------------
a) Wholesale Price Index
b) Consumer Price Index
c) Conversion factor
Ans : c
44) A building which was purchased in the year 2001 was recorded as 80 Lakhs when the
general price index was 120. The value of the building needs to be changed as per the price
changes. The current price index is 360. Find the conversion factor.
a) 0.33
b) 3
c) 240
Ans : b
45) XYZ Limited sold goods throughout the year evenly. The total turnover was Rs 120 Lakhs. The general price index at the beginning of the year was 125 and at the end of the year was
150.What value of sales needs to be recorded as per CPP Method.
a) Rs. 120 Lakhs
b) Rs. 130.91 Lakhs
c) Rs.145 Lakhs
Ans : a
46) During inflation the purchasing power of money --------------
a) Increases
b) Decreases
c) Does not change
Ans : b
47) One of the main reasons to adopt changes in price accounting is-----------
a) To remove the misleading effect on the financial statements due to ongoing increase or
decrease in general price levels over a period of time.
b) To provide a favorable financial statements revealing better profits and financial position
c) Both a and b
Ans : a
48) Current purchasing power method involves adjustment of historic figures at the current
purchasing value. Under this method historical figures are multiplied with the ------------
a) Wholesale Price Index
b) Consumer Price Index
c) Conversion factor
Ans : b
49) A trader has made a sale of Rs.75,500 out of which cash sales amounted to Rs.25,500. He
showed trade receivables on 31-3-2014 at Rs.25,500. Which concept is followed by him?
a) Going concern
b) Cost
c) Accrual
d) Money measurement
Ans : c
50) Value of goods withdrawn by the proprietor for his personal use should be credited to ____ a) Capital A/c
b) Sales A/c
c) Drawings A/c
d) Purchases A/c
Ans : c
51. Usually, in a single entry system _____________.
A. Only manual accounts are maintained
B. Only cash and personal accounts are maintained
C. Only real accounts are maintained
D. Only nominal accounts are maintained
ANS: B
52. Profit can be ascertained from the incomplete records under Single entry by using ____________.
A. Only Statement of affairs method
B. Only Conversion method
C. Either Statement of affairs or conversion method
D. Neither Statement of affairs nor conversion method
ANS: C
53. If books are kept under single entry system, Credit sales are ascertained by preparing __________.
A. Total Creditors A/c
B. Credit sales A/c
C. Trading A/c
D. Total Debtos A/c
ANS: D
54. If books are kept under single entry system, Credit purchases are ascertained by preparing __________.
A. Total Creditors A/c
B. Credit sales A/c
C. Trading A/c
D. Total Debtos A/c
ANS: A
55. If books are kept under single entry system, opening stock is ascertained by preparing ___________.
A. Opening stock A/c
B. Stock register
C. Memorandum Trading A/c
D. Opening statement of Affairs
ANS: C
56. Under stock and Debtors method, Branch stock account helps to ___________.
A. Ascertain net profit / loss of the branch
B. Ascertain cost of goods sent to the branch
C. Ascertain closing stock at the branch
D. Ascertain Gross profit/loss of the branch
ANS: B
57. Branch Adjustment Account is opened __________.
A. Under debtors method, when goods are sent by HO to branch at cost
B. Under stock and debtors method, when goods are sent by HO to branch at cost
C. Under debtors method, when goods are sent by HO to branch at invoice price
D. Under stock and debtors method, when goods are sent by HO to branch at invoice price
ANS: D
58. Branch Account under debtors system is a __________.
A. Real A/c
B. Nominal A/c
C. Personal A/c
D. Representative personal A/c
ANS: B
59. When Branch 'A' sends goods to Branch 'B' in the books of Branch 'A' debit is given to
A. Sales return A/c
B. Branch B A/c
C. Head office A/c
D. Purchase return A/c
ANS: C
60. The cash and credit sales of a branch are Rs.5,000 and Rs.10,000 respectively. The amount collected from debtors is Rs.10,000. Under Debtors system the amount credited to branch will be _____
A. Rs.20,000
B. Rs.15,000
C. Rs.25,000
D. Rs.10,000
ANS: B
61. Cash received from debtors needed for the construction of cash account can be ascertained from ___________.
A. Total Creditors A/c
B. Total Debtors A/c
C. Analysis of cash book
D. Balance sheet
ANS: B
62. Closing balance of trade creditors can be ascertained from ___________.
A. Total Creditors A/c
B. Total Debtors A/c
C. Bills Payable A/c
D. Cash A/c
ANS: A
63. An estimate of assets and liabilities as on a date is called __________.
A. Balance sheet
B. Statement of affairs
C. Statement of Capital
D. Trial Balance
ANS: B
64. Bills Payable dishonoured are debited to ________ Account.
A. Bills Receivables
B. Bills Payable
C. Sundry Debtors
D. Sundry Creditors
ANS: B
65. With the available information a trader need to convert the incomplete records into complete records, it is known as _________.
A. Complete records method
B. Statement of affairs method
C. Conversion method
D. Random method
ANS: C
66. Goods are sent to the Branch at 20% margin on selling price. When Branch stocks disclose a surplus of Rs.2,000 the amount to be credited to Branch Adjustement A/c will be ________.
A. Rs.2,000
B. Rs.333
C. Rs.1,600
D. Rs.400
ANS: D
67. In Branch Accounts, Depreciation on branch assets under debtors system is ___________.
A. Not shown separately in branch A/c
B. Shown in Branch A/c
C. Not accounted
D. Shown in the Profit & loss A/c of head office
ANS: A
68. Stock reserve in relation to cloaing stock appears ___________.
A. On the credit side of branch A/c
B. On the debit side of branch A/c
C. On the debit side of Profit & loss A/c
D. On the credit side of profit & loss A/c
ANS: B
69. Which of the following statement is True ?
A. The income, expenses, assets and liabilities of an independent branch can be ascertained only by HO
B. Purchase of fixed assets by branch on credit will be recorded in the branch A/c kept under the Debtor method
C. Receipts from branch debtors are not recorded in the Branch account kept under the Debtor method.
D. Under stock and debtors method, branch stock A/c is opened in order to ascertain net profit/loss of branch
ANS: C
70. Which of the following statement is False
A. Consignor is the owner of the consignment A/c
B. Del-credere commission is allowed by consignor to protect himself for bad debt
C. Proportionate consignor's expenses is added up with consignment stock
D. All proportioante consignee's expenses will be added up for valuation of consignment stock
ANS: D
71. If total stock is Rs.50,000; the value of policy is Rs.70,000 and the entire stock is lost, the claim will be for _________.
A. Rs. 70,000
B. Rs. 35,714
C. Rs. 50,000
D. Rs. 60,000
ANS: C
72. The Balancing figure in Memorandum Trading A/c prepared by a trader who has lost goods in fire indicates ___________.
A. Gross profit on stock lost
B. Estimated closing stock as on date of fire
C. Value of fire insurance policy
D. Amount of claim to be made from Insurance company
ANS: B
73. If there are any damaged or obsolete items in stock lost by fire, the Memorandum Trading A/c _____________.
A. Should show only the normal items
B. should have two amount columns on each side for Normal items and Abnormal items
C. Should show only the abnormal items
D. should have only one amount columns on either side for Normal items and Abnormal items
ANS: B
74. If there are damaged or absolete items in stock lost by fire, the amount of loss will be ___________.
A. Equal to the Cost of normal items
B. Equal to the Cost of Abnormal items
C. Equal to the Cost of Normal items ANS: Cost of abnormal items
D. Equal to the Cost of Normal items - Cost of abnormal items
ANS: C
75. On loss of goods by fire, a trader can claim compensation for __________.
A. The cost of actual physical stock destroyed by fire less salvage, if any
B. The market value of actual physical stock destroyed by fire.
C. The cost of book stock on date of fire.
D. The cost of actual physical stock destroyed or the cost of book stock on date of fire as per stock records whichever is lower.
ANS: A
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