Q1: An accounting system is used by a business to:
(A) Analyze transactions
(B) Handle routine book-keeping tasks
(C) Classify and summarize financial information
(D) All of the given options
Answer: (D) All of the given options
Q2: The assets which have a limited useful life are termed as:
(A) Limited assets
(B) Depreciable assets
(C) Unlimited assets
(D) None of the given options
Answer: (B) Depreciable assets
Q3: Accountancy covers which of the following area(s):
(A) Book-keeping
(B) Accounting
(C) Auditing
(D) All of the given options
Answer: (D) All of the given options
Q4: If a business pays rent in advance for 12 months, it will be treated as:
(A) Prepaid expenses of business
(B) Long term liability of business
(C) Fixed assets of business
(D) Current liability of business
Answer: (A) Prepaid expenses of business
Q5: Which of the following transaction have NO effect on stockholders’ equity?
(A) Purchase of land on credit
(B) Dividends to stockholders
(C) Net loss
(D) Investment in cash by stockholders
Answer: (A) Purchase of land on credit
Q6: Which of the following account balance is shown on credit side of Trial Balance?
(A) Cash account
(B) Furniture account
(C) Vehicle account
(D) Capital account
Answer: (D) Capital account
Q7: If you start with cash book balance (Dr.), which of the following item will be deducted in Bank Reconciliation Statement?
(A) Any cheque drawn to creditor but not paid by bank
(B) Interest credited by the bank in pass book
(C) Cheque deposited but not credited by the bank
(D) Dividend collected by bank on behalf of the customer
Answer: (C) Cheque deposited but not credited by the bank
Q8: The cost of moving plant and machinery to a new site will be treated as:
(A) Revenue expense
(B) Capital expense
(C) Administrative expense
(D) Operating expense
Answer: (B) Capital expense
Q9: Which one of the following is NOT true about Capital Expenditure?
(A) Creates future benefits
(B) Incurred to acquire fixed assets
(C) Incurred to increase the economic life of existing fixed assets
(D) Reduce the profit of the concern
Answer: (D) Reduce the profit of the concern
Q10: Eighty-five units were sold. What is the value of ending inventory using FIFO method?
(A) Rs.260
(B) Rs.232
(C) Rs.284
(D) Rs.268
Answer: (C) Rs.284
Q11: Consider the following inventory record.
(A) Rs. 1,225
(B) Rs. 1,015
(C) Rs. 965
(D) Rs. 905
Answer: (B) Rs. 1,015
Q12: If Cost of machine = Rs.400,000, Useful life = 5 years, Residual value = Rs.25,000. Depreciation per year using straight line method is:
(A) Rs.160,000
(B) Rs.96,000
(C) Rs.75,000
(D) Rs.57,600
Answer: (C) Rs.75,000
Q13: A decrease in value of a fixed asset due to age, wear and tear is known as:
(A) Depreciation
(B) Accumulated Depreciation
(C) Appreciation
(D) Written Down Value
Answer: (A) Depreciation
Q14: In balance sheet fixed assets are shown at:
(A) Cost price
(B) Market value
(C) Fair value
(D) Written down value (WDV)
Answer: (D) Written down value (WDV)
Q15: In cost of goods sold statement, the ‘cost of material consumed’ is equal to:
(A) Opening raw material inventory + Purchases – Ending raw material inventory
(B) Opening raw material inventory – Purchases + Ending raw material inventory
(C) Ending raw material inventory + Opening raw material inventory – Purchases
(D) Ending raw material inventory + Opening raw material inventory + Purchases
Answer: (A) Opening raw material inventory + Purchases – Ending raw material inventory
Q16:
(A) Rs.130,000
(B) Rs.110,000
(C) Rs.140,000
(D) Rs.190,000
Answer: (A) Rs.130,000
Q17: What would be the value of cost of goods manufactured if total factory cost is Rs.6,000, opening WIP Rs.2,000 and closing WIP Rs.2,500?
(A) Rs.5,500
(B) Rs.8,000
(C) Rs.4,500
(D) Rs.8,500
Answer: (A) Rs.5,500
Q18: Following are the inventories of Manufacturing Concern EXCEPT:
(A) Raw material
(B) Work in process
(C) Finished goods
(D) Merchandise inventory
Answer: (D) Merchandise inventory
Q19: If cost of sales is Rs.95,000, sales are Rs.200,000 and operating expenses are Rs.100,000. What will be the net result?
(A) Rs.5,000 Loss
(B) Rs.5,000 Profit
(C) Rs.195,000 Profit
(D) Rs.195,000 Loss
Answer: (A) Rs.5,000 Loss
Q20: Which of the following account balance will be shown on debit side of Trial Balance?
(A) Cash account
(B) Furniture account
(C) Vehicle account
(D) All of the given options
Answer: (D) All of the given options
Q21: The return of goods by a customer should be debited to:
(A) Customer’s account
(B) Sales return account
(C) Goods account
(D) Accounts receivable
Answer: (B) Sales return account
Q22: Which of the following account will be credited if furniture is purchased on cash?
(A) Furniture account
(B) Cash account
(C) Business account
(D) Bank account
Answer: (B) Cash account
Q23: Which of the following account will be credited if Mr. A started business with cash Rs.200,000?
(A) Capital account
(B) Cash account
(C) Mr. A’s account
(D) Business account
Answer: (A) Capital account
Q24: Which of the following journal entry will be recorded if goods are sold on credit to Mr. B?
(A) Mr. B / Accounts Receivable account (Dr) and Sales account (Cr)
(B) Cash account (Dr) and Sales account (Cr)
(C) Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
(D) None of the given options
Answer: (A) Mr. B / Accounts Receivable account (Dr) and Sales account (Cr)