Q#1: Mr. “A” sold goods to Mr. “B” for Rs. 3,000 and payment was made immediately. It is a case of:
(A) Cash
(B) Credit
(C) Accrual based
(D) None of the given options
Answer: (A) Cash
Q#2: Which of the following is a non-profit organization?
(A) Sole proprietorship
(B) Partnership
(C) Limited company
(D) Trust
Answer: (D) Trust
Q#3: Cost incurred for the maintenance of shop is considered as:
(A) Deferred expense
(B) Capital expense
(C) Revenue expense
(D) Preliminary expense
Answer: (C) Revenue expense
Q#4: Which of the following is correct according to the double entry system of book-keeping?
(A) Debit = Credit
(B) Debit > Credit
(C) Debit < Credit
(D) All of the given options
Answer: (A) Debit = Credit
Q#5: Which of the following is NOT true about Double Entry System?
(A) Both credit and debit transactions are recorded
(B) Accurate profit and loss is calculated
(C) Financial statements can be made directly from accounts
(D) Non-cash transactions are not recorded under this system
Answer: (D) Non-cash transactions are not recorded under this system
Q#6: An asset that is NOT physical in nature is called:
(A) Intangible Asset
(B) Liquid Asset
(C) Current Asset
(D) Fixed Asset
Answer: (A) Intangible Asset
Q#7: What would be the effect on accounting equation if goods are purchased on cash?
(A) Increase in cash and decrease in equity
(B) Increase in cash and increase in goods
(C) Increase in goods and decrease in cash
(D) Increase in equipment and increase in equity
Answer: (C) Increase in goods and decrease in cash
Q#8: When capital is increased by an amount, it is recorded on the:
(A) Left or credit side of the account
(B) Right or debit side of the account
(C) Left or debit side of the account
(D) Right or credit side of the account
Answer: (D) Right or credit side of the account
Q#9: Which of the following is also called the “original book of entry”?
(A) General Journal
(B) General Ledger
(C) Trial Balance
(D) Profit and Loss Account
Answer: (A) General Journal
Q#10: An informal accounting statement that lists ledger balances and compares debit and credit totals is called:
(A) Income Statement
(B) Balance Sheet
(C) Trial Balance
(D) Cash Book
Answer: (C) Trial Balance
Q#11: Which one of the following is NOT prepared by non-profit organizations?
(A) Profit & Loss Account
(B) Income & Expenditure Account
(C) Receipts & Payments Account
(D) Balance Sheet
Answer: (A) Profit & Loss Account
Q#12: Excess of income over expenses in Income & Expenditure account is called:
(A) Profit
(B) Loss
(C) Surplus
(D) Deficit
Answer: (C) Surplus
Q#13: An asset expected to be sold or used within one year is known as:
(A) Tangible asset
(B) Current asset
(C) Fixed asset
(D) Long term asset
Answer: (B) Current asset
Q#14: Accounts Receivable and Inventory are examples of:
(A) Liquid assets
(B) Current assets
(C) Fixed assets
(D) Capital assets
Answer: (B) Current assets
Q#15: Which of the following shows categories of assets in a balance sheet?
(A) Current assets, Long-term assets and Accounts payable
(B) Current assets, Long-term assets and Fixed assets
(C) Current assets, Quick assets and Business debts
(D) Current assets, Fixed assets and Deferred cost
Answer: (D) Current assets, Fixed assets and Deferred cost
Q#16: If cost of sales = Rs.95,000, sales = Rs.100,000 and operating expenses = Rs.200,000, the result will be:
(A) Loss of Rs.1,95,000
(B) Profit of Rs.1,95,000
(C) Profit of Rs.5,000
(D) Loss of Rs.5,000
Answer: (A) Loss of Rs.1,95,000
Q#17: An alternate term used for “Capital” is:
(A) Liability
(B) Owner’s net worth
(C) Working capital
(D) Asset
Answer: (B) Owner’s net worth
Q#18: Partially completed products not ready for sale are known as:
(A) Raw material
(B) Work in process
(C) Finished goods
(D) Closing stock
Answer: (B) Work in process
Q#19: Which of the following is an example of direct material cost?
(A) Polish and finishing material for chair
(B) A piece of wood for the production of chair
(C) Production worker’s wages
(D) Depreciation expenses
Answer: (B) A piece of wood for the production of chair
Q#20: Conversion cost will be:
(A) Rs.20,000
(B) Rs.40,000
(C) Rs.90,000
(D) Rs.160,000
Answer: (C) Rs.90,000