Q#1: According to the double entry system of accounting, an account that obtains benefit is:
(A) Debit
(B) Credit
(C) Income
(D) No need to show as accounting record
Answer: (A) Debit
Q#2: Economic resources owned by a business and expected to benefit for the future operations are called:
(A) Expenses
(B) Assets
(C) Capital
(D) Liabilities
Answer: (B) Assets
Q#3: 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#4: The favorable balance of Profit and Loss account should be:
(A) Added in liabilities
(B) Subtracted from current assets
(C) Subtracted from liabilities
(D) Added in capital
Answer: (D) Added in capital
Q#5: If the cost of sales is Rs. 95,000, sales are Rs. 100,000 and operating expenses are Rs. 200,000 during the year, what would be the net result?
(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#6: Which of the following particular is NOT included in the specimen of a payment voucher?
(A) Name of organization
(B) Cash payment amount
(C) Date of transaction
(D) Bank receipt
Answer: (D) Bank receipt
Q#7: Partially completed products that are not yet 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#8: In the cost of goods sold statement, the sum of labor cost and the factory overhead is known as:
(A) Conversion cost
(B) Prime cost
(C) Total factory cost
(D) Cost of goods manufactured
Answer: (A) Conversion cost
Q#10: Cost of asset Rs. 1,00,000, Life of asset 5 years, Depreciation each year Rs. 5,000, Sale price after 5 years Rs. 50,000. Book value of Asset after 5 years?
(A) Rs. 25,000
(B) Rs. 75,000
(C) Rs. 15,000
(D) Rs. 1,00,000
Answer: (B) Rs. 75,000
Q#11: Interest on loan paid by business is an example of:
(A) Deferred expense
(B) Revenue expense
(C) Capital expense
(D) None of the given options
Answer: (B) Revenue expense
Q#12: Which of the following is NOT a characteristic of Joint Stock Company?
(A) Separate Legal Entity
(B) Limited Liability
(C) Easy Formation
(D) Common Seal
Answer: (C) Easy Formation
Q#13: When income exceeds expenses in a specific time period is known as:
(A) Savings
(B) Net profit
(C) Gross profit
(D) Operating profit
Answer: (B) Net profit
Q#14: Mr. “A” sold goods for Rs. 300,000 to Mr. “B”, Rs. 300,000 will be treated as _____________ for business of Mr. “A”.
(A) Revenue
(B) Net profit
(C) Gross profit
(D) Operating profit
Answer: (A) Revenue
Q#15: Accounting is concerned with which of the following?
(A) Recording data
(B) Classifying data
(C) Summarizing data
(D) Communicating what has been learned from the data
Answer: (D) Communicating what has been learned from the data
Q#16: Expenditure is revenue in nature when it:
(A) Benefits the current period
(B) Benefits the future period
(C) Belong to the previous period
(D) None of the given options
Answer: (A) Benefits the current period
Q#17: Which of the following is the act of recording each transaction in the Journal?
(A) Journalizing
(B) Posting
(C) Folioing
(D) Transferring
Answer: (A) Journalizing
Q#18: Wages of workmen employed for setting up new machinery should be debited to:
(A) Expenses account
(B) Wages account
(C) Salaries account
(D) Machinery account
Answer: (D) Machinery account
Q#19: A purchase of furniture for cash should be debited to:
(A) Cash account
(B) Furniture account
(C) Purchases account
(D) Fixture account
Answer: (B) Furniture account
Q#20: Which of the following account would be debited in case of goods given away as charity?
(A) Charity account
(B) Purchases account
(C) Sales account
(D) Assets account
Answer: (A) Charity account
Q#21: The cash book in book-keeping records:
(A) All cash and credit purchase of goods
(B) Only cash payments
(C) All receipts and payments in cash
(D) All cash and credit sale of goods
Answer: (C) All receipts and payments in cash
Q#22: Cash book and bank book are the integral part of
(A) General ledger
(B) Bank statement
(C) Voucher
(D) Transaction
Answer: (A) General ledger
Q#23: Which of the following journal entry will be recorded, if the cash is deposited in the bank?
(A) Bank account (Dr) and Cash account (Cr)
(B) Cash account (Dr) and Bank account (Cr)
(C) Bank account (Dr) and Profit & Loss account (Cr)
(D) Cost of goods Sold account (Dr) and Bank account (Cr)
Answer: (A) Bank account (Dr) and Cash account (Cr)
Q#24: Which of the following is used to record the payments of cash or cheque?
(A) Journal Voucher
(B) Receipt Voucher
(C) Payment Voucher
(D) Cash voucher
Answer: (C) Payment Voucher
Q#25: Which one of the following is the type of stock for trading concerns?
(A) Raw Material
(B) Work in Process
(C) Finished Goods
(D) Stock in Trade
Answer: (D) Stock in Trade
Q#26: If Manufacturing Cost = Rs. 30,000, Opening WIP = Rs. 5,000, Closing WIP = Rs. 10,000. Cost of Goods Manufactured = ?
(A) Rs. 35,000
(B) Rs. 25,000
(C) Rs. 15,000
(D) Rs. 20,000
Answer: (B) Rs. 25,000
Q#27: If Manufacturing Cost = Rs. 15,000, Opening WIP = Rs. 5,000, Cost of Goods Manufactured = Rs. 5,000. Closing WIP = ?
(A) Rs. 10,000
(B) Rs. 20,000
(C) Rs. 15,000
(D) Rs. 30,000
Answer: (C) Rs. 15,000
Q#28: If Manufacturing Cost = Rs. 30,000, Closing WIP = Rs. 10,000, Cost of Goods Manufactured = Rs. 35,000. Opening WIP = ?
(A) Rs. 40,000
(B) Rs. 15,000
(C) Rs. 25,000
(D) Rs. 20,000
Answer: (B) Rs. 15,000
Q#29: Which of the following is another name of straight line method of depreciation?
(A) Written down value method
(B) Diminishing balance method
(C) Original cost method
(D) Sum of year digit method
Answer: (C) Original cost method
Q#30: Which of the following is the unexpired portion of the cost of an asset?
(A) Carrying value
(B) Depreciable value
(C) Original cost
(D) Residual value
Answer: (A) Carrying value
Q#31: Loss on revaluation account is charged to:
(A) Profit and loss account immediately
(B) Capital account
(C) Revaluation reserve account
(D) Liability account
Answer: (B) Capital account
Q#32: Distinction between capital and revenue items is important for the preparation of:
(A) Income statement only
(B) Balance sheet only
(C) Final accounts
(D) Bank statement
Answer: (C) Final accounts