Correct : C. Make information available to various groups and users.
2. Which of the following is NOT normally considered to be an asset?
Correct : A. Retained earnings.
3. Which of the following accounts would normally have a credit balance?
Correct : C. Liabilities.
4. Which of the following is not a sub-field of accounting?
Correct : D. Book-keeping
5. A revenue that is collected before it has been earned is called
Correct : D. Unearned
6. Which of the following statements about differences between financial and management accounting is incorrect?
Correct : B. Financial accounting is aggregated; management accounting is focused on products and departments.
7. External users of accounting information do not include:
Correct : A. Employees
8. Which is the third stage of accounting process?
Correct : C. Summarizing
9. “Assets should be valued at the price paid to acquire them” is based on?
Correct : B. Cost concept.
10. Which of the following equations properly represents a derivation of the fundamental
accounting equation?
Correct : D. Assets - liabilities = owner's equity.
11. Financial accounting is primarily concerned with:
Correct : C. Reporting financial information for external users of accounting reports
12. Which of the following is not the objective of accounting?
Correct : D. To provide information about the personal assets and personal liabilities of the owners of the business.
13. Which accounting concept or convention which, in times of rising prices, tends to understate asset values and overstate profits?
Correct : D. The historical cost convention
14. It is generally assumed that the business will not liquidate in the near foreseeable future
because of
Correct : D. Going concern.
15. Which accounting concept should be considered if the owner of a business takes goods
from inventory for his own personal use?
Correct : D. none
16. Assets are usually valued under which basis?
Correct : B. Historical cost
17. In India, a company can keep its books of accounts on?
Correct : C. Cash Basis
18. The comparison of the results of one accounting period with that in the past is possible
when the following convention is followed:
Correct : A. Convention of Consistency
19. According to this convention, important items must be recorded instead of being left out
or merged with other items.
Correct : C. Convention of Materiality
20. XYZ Ltd. follows the written down value method of depreciating machinery year after
year due to
Correct : C. Consistency
21. The Accounting Standards Board was established in India by
Correct : B. Institute of Chartered Accountant of India
22. The assets that can be converted into cash within a short period (i.e. 1 year or less) are
known as
Correct : A. Current assets
23. Patents, Copyrights and Trademarks are
Correct : C. Intangible assets
24. The total number of accounting standards issued by ICAI so far is
Correct : B. 32
25. The liabilities that are payable in more than a year and are not be liquidated from current
assets
Correct : B. Fixed liabilities
26. The debts, which are to be repaid within a short period (year or less) are known as
Correct : A. Current liabilities
27. The Convention of Conservatism takes into account
Correct : C. All prospective losses but leaves out prospective profit.
28. Any written evidence in support of a business transaction is called:
Correct : D. Voucher
29. According to the money measurement concept, the following will be recorded in the
books of account of the business:
Correct : C. Value of Plant & Machinery
30. Double Entry System was introduced in–
Correct : D. Italy
31. The global key professional accounting body is —
Correct : B. The International Accounting Standards Board
32. The International Accounting Standards Committee was set up in —
Correct : B. 1967
33. The underlying assumption that assumes that the life of a company can be divided into artificial time periods is:
Correct : A. Periodicity
34. The primary objective of the matching principle is to:
Correct : C. Recognize expenses in the same period as the related revenue
35. The term "compound entry" means that the journal entry has
Correct : A. More than two accounts involved in the entry
36. The convention of conservatism is applicable ___________________
Correct : B. In making provision for bad and doubtful debts
37. Creditors for goods purchase come within the category of________________
Correct : B. Current Liabilities
38. Money spent on heavy advertising, whose benefit is continuing for three years to come, is
a __________.
Correct : C. Deferred Revenue Expenditure
39. A deduction allowed to the buyers from the gross catalogue price on making bulk purchases is termed as ____________
Correct : B. Quantity discount
40. Goodwill is a
Correct : C. Intangible asset
41. What type of expenditure is shown as asset in balance sheet? Capital expenditure
Correct : A. Revenue expenditure
42. A business firm is separate and distinct from its owners is the assumption under which of the following accounting concepts:
Correct : A. Business Entity
43. General rules that are used as a guide in accounting and as a basis of accounting practices are called:
Correct : A. Generally Accepted Accounting Practices
44. Every transaction has two aspects i.e., debit and credit, under which of the following
accounting principles:
Correct : C. Dual Aspect Principle
45. Anticipate no profits and provide for all possible losses. This is essence of which of the
following accounting principles:
Correct : D. Conservatism Principle
46. Accounting procedures and accounting practices should remain same from year to year under which of the following accounting principles:
Correct : D. Consistency Principle
47. An ink-stand has been purchased by a firm for a nominal amount that is to last for 4 year. It should not be classified as a fixed asset under which of the following accounting principles:
Correct : B. Materiality Principle
48. When a machinery is purchased for cash, the cash balance is reduced and to that extent, the amount of machinery as an asset is recorded. This is done to follow which of the following accounting principles:
Correct : A. Dual Aspect Principle
49. Rules of revenue recognition determine that earning process should be either complete or
near completion under:
Correct : A. Realization Concept
50. The following is not a type of liability
Correct : A. Short term
51. Recording of a transaction in a Journal is called
Correct : B. Journalising
52. Value of goods withdrawn by the proprietor for his personal use should be credited to ____.
Correct : D. Purchases A/c
53. Outstanding salary account is
58
Correct : B. Personal Account
54. M/s Stationery Mart will debit the purchase of stationery to _______
Correct : A. Purchases A/c
55. Goods distributed as free samples is debited to
Correct : A. Advertisement A/c
56. Journal entry for wages paid Rs. 5,000 for installation of plant will be
Correct : C. Dr. Plant A/c and Cr. Cash A/c Rs. 5,000
57. Interest of Drawings is:
Correct : C. Gain for the business
58. Drawings account is the nature of
Correct : A. Personal Account
59. Outstanding Salaries are shown as:
Correct : B. A Liability
60. Income tax paid by a sole proprietor from his business income should be:
Correct : C. Deducted from the Capital account in the Balance Sheet
61. The Income created but not yet received is known as:
Correct : C. Acrued Income
62. The income earned but not yet received:
Correct : C. Unearned Income
63. The closing stock in adjustment is shown in:
Correct : D. Both (a) and (c)
64. The opening stock is shown in:
Correct : A. Trading Account
65. The trial balance checks
Correct : A. Arithmetical accuracy of books
66. In case a trail balance does not agree the difference is put to
Correct : D. Suspense A/c
67. Rs. 5000 spent on replacement of worn out part of the machine will be charged as:
Correct : B. Revenue Expenditure
68. What is the order in which the accounting transactions and events are recorded in the books
Correct : C. Journal, Ledger, Profit & Loss A/c and Balance Sheet
69. Depreciation of fixed assets is an example of:
Correct : A. Revenue Expenditure
70. Income is the output of excess or deficiency of revenue over related:
Correct : A. Expired Cost
71. The term ‘Business Income’ includes:
Correct : B. Realised Net Income
72. The concept of conservatism ensures that the reported profit is not:
Correct : B. Overstated
73. In accounting revenue is generally treated to be realized when goods or services are:
Correct : C. Furnished to the customers
74. Capital expenditures are the expenditures incurred for the:
Correct : B. Long term advantage of the business.
75. The principle of recognizing revenue proportionately on the basis of work actually done
is generally followed in case of:
Correct : A. Long term contracts
76. The process of recording financial data up to trial balance is:
Correct : A. Book keeping
77. Fixed assets are held by business for _____:
Correct : B. Generating revenue
78. Which accounting concept specifies the practice of crediting closing stock to the trading
account?
Correct : D. Matching
79. An asset was purchased for Rs.1000000 with the down payment of Rs.200000 and bills accepted for Rs.800000/-. What would be the effect on the total asset and total liabilities in the balance sheet?
Correct : D. Assets increased by Rs.800000 and liabilities increased by Rs.800000
80. In which of the following cases, accounting estimates are needed?
Correct : D. All of the above
81. The purpose of final accounts is to ascertain. …
Correct : D. profit or loss and financial position
82. Final accounts are prepared…….
Correct : D. at the end of accounting year
83. The accounts that records expenses, gains and losses are
Correct : C. Nominal accounts
84. Real accounts record:
Correct : B. Dealings in commodities
85. Errors of carry forward from one year to another year affect:
Correct : D. Both personal & Real accounts
86. The manufacturing account is prepared
Correct : B. To ascertain the cost of manufactured goods
87. Sales made to Mahesh fir cash should be debited to
Correct : A. Cash Account
88. The amount salary paid to Suresh should be debited to
Correct : B. Salaries Account
89. The cash discount allowed to a debtor should be credited to
Correct : B. Customer’s Account
90. In case of a debt becoming bad, the amount should be credited to
Correct : A. Debtor’s Account
91. When goods are purchased for cash, the entry will be recorded in the?
Correct : A. Cash book
92. The balance of petty cash is?
Correct : A. An asset
93. All of the following are not considered cash except?
Correct : A. Postage and stamps
94. Entry representing the reversal or cancellation of an entry on the other side is called?
Correct : B. Contra entry
95. The debit side discount column of three column cash book is called?
Correct : C. Discount allowed
96. The total of the ‘Discounts Allowed’ column in the Cash Book is posted to?
Correct : B. The debit of the Discounts Allowed account
97. Cash discount is provided?
Correct : A. Early payment
98. Which of the following explains the imprest system of operating petty cash?
Correct : D. Regular equal amounts of cash are tr
99. Which of the following payment is made from petty cash?
Correct : D. Payment of postage & telegrams
100. Which of the following transactions does not decrease cash?