Quiznetik

Financial Accounting | Set 10

1. Revenue is generally recognised as being earned at that point of time when

A. sale is effected ;

B. cash is received ;

C. production is completed ;

D. debts are collected

Correct : A. sale is effected ;

2. Which of the following is a revenue expenses

A. Raw material consumed ;

B. Plant purchased ;

C. Long term loan raised from bank;

D. Share Capital

Correct : A. Raw material consumed ;

3. Which of the following is a capital expenditure

A. Repair of plant and machinery ;

B. Salary paid to workers ;

C. Cost of stand by equipment;

D. Annual whitewash of the office building

Correct : C. Cost of stand by equipment;

4. Which of these types of expenditure would not be treated as a Capital Expenditure

A. Acquisition of an Asset ;

B. Extension of an Asset ;

C. Improvement of the existing Asset ;

D. Maintenance of the Asset

Correct : D. Maintenance of the Asset

5. Expenses of the following nature are treated as a Revenue expenses except —

A. Expenses for day to day running of the business ;

B. Putting the new asset in working condition ;

C. Depreciation ;

D. Purchase of raw material

Correct : B. Putting the new asset in working condition ;

6. Cash received from debtors would be deemed as ………… of funds.

A. No flow ;

B. Sources ;

C. Uses ;

D. Gain

Correct : A. No flow ;

7. Purchase day book records

A. All cash purchases ;

B. All credit purchases ;

C. Only credit purchase of raw material or goods purchased for resale ;

D. All purchases

Correct : C. Only credit purchase of raw material or goods purchased for resale ;

8. Journal is also known by —

A. Memorandum A/c ;

B. Kaccha books ;

C. Books of original entry ;

D. Proper books

Correct : C. Books of original entry ;

9. Generally the term fund is used to mean the difference between

A. Current assets and current liabilities ;

B. Profit and loss A/C and Balance sheet ;

C. Current assets and non-current liabilities ;

D. Current liabilities and non-current liabilities

Correct : A. Current assets and current liabilities ;

10. The periodic total of purchase day book is posted to —

A. Creditors A/c ;

B. Debtors A/c ;

C. Purchase A/c ;

D. None

Correct : C. Purchase A/c ;

11. Which of these documents is not required for Bank Reconciliation

A. Bank column of Cash Book ;

B. Bank Pass Book ;

C. Bank Statement ;

D. Trial Balance

Correct : D. Trial Balance

12. Which of these will not affect Bank and Cash balance

A. Cash received from X credited to Y;

B. Cheques issued to A but debited to B;

C. Cheques deposited and cleared on the same date ;

D. All the three

Correct : D. All the three

13. Which of these items are taken into consideration for preparation of adjusted Cash Book

A. Mistake in Cash Book ;

B. Mistake in Pass Book ;

C. Cheque issued but not presented for payment ;

D. Cheques deposited but not cleared

Correct : A. Mistake in Cash Book ;

14. Credit balance as per Cash Book mean-

A. Surplus cash ;

B. Bank overdraft ;

C. Terms deposits with bank ;

D. None of these

Correct : B. Bank overdraft ;

15. Debit side of Bank Pass book corresponds to –

A. Credit side of Cash Book ;

B. Debit side of Cash Book ;

C. Debit side of Trial Balance

D. Credit side of Balance Sheet

Correct : A. Credit side of Cash Book ;

16. Difference in Bank Balance as per Pass Book and Cash Book may arise on account of

A. Cheque issued but not presented

B. Cheque issued but dishonoured

C. Cheque deposited and credited by bank

D. All of (a) and (b) above

Correct : D. All of (a) and (b) above

17. Which of the following statements is/are true?

A. When there are cheques deposited but not collected by the banker, overdraft balance as per Pass Book will be less than that as per Cash Book

B. When the payment side of the Cash Book is undercast, overdraft balance as per Cash Book will be more than overdraft balance as per Pass Book

C. When reconciliation is to be done with the extracts of the Cash Book and Pass Book relating to the same period, the transactions which do not figure in one of the extracts are to be noted

D. Bank interest debited in the Pass Book is to be added to Overdraft Balance as per Pass Book to arrive at the Overdraft balance as per Cash Book

Correct : D. Bank interest debited in the Pass Book is to be added to Overdraft Balance as per Pass Book to arrive at the Overdraft balance as per Cash Book

18. The Bank Reconciliation Statement is prepared

A. To rectify the mistakes in the Cash Book

B. To arrive at the Bank Balance

C. To arrive at the Cash Balance

D. To bring out the reasons for the difference between the Balance as per Cash Book and the

Correct : D. To bring out the reasons for the difference between the Balance as per Cash Book and the

19. Which of the following statements is false?

A. When the bank column of a Cash Book shows a credit balance, it means an amount is due to the bank

B. When Pass Book shows a debit balance, it means overdraft as per Pass Book

C. While preparing Bank Reconciliation Statement, cheques paid into bank but not yet cleared are deducted from the Debit balance as per Cash Book to arrive at the balance as per Pass Book

D. A Bank Reconciliation Statement is a part of Pass Book

Correct : D. A Bank Reconciliation Statement is a part of Pass Book

20. Which of the following statements is true?

A. Bank charges increase debit balance shown as per Bank Column of the Cash Book.

B. Bank charges increase debit balance as per Bank pass book.

C. A cash sale of a non-trading asset is recorded in the journal proper.

D. Cash discount allowed by the business will appear on the debit side of the debtor‘s account.

Correct : B. Bank charges increase debit balance as per Bank pass book.

21. Bank reconciliation is a statement prepared to reconcile—

A. Trial balance ;

B. Cash book ;

C. Bank A/c;

D. Cash as per cash book with bank balance as per bank pass book

Correct : D. Cash as per cash book with bank balance as per bank pass book

22. Bank reconciliation statement is a part of —

A. Cash book ;

B. Trial balance ;

C. Auditors report ;

D. None of these

Correct : A. Cash book ;

23. Benefits of preparing Bank Reconciliation Statement includes —

A. It bring out any errors committed in preparation of Cash book / Bank Pass Book

B. Highlights under delay in clearance of cheques deposited but not credited

C. Help know actual bank balance ;

D. All the three

Correct : D. All the three

24. Debit balance as per bank pass book mean —

A. Surplus cash ;

B. Bank Overdraft ;

C. Terms deposits with bank ;

D. None of these

Correct : B. Bank Overdraft ;

25. Which of the following is not a cause of difference in balance as per cash book and balance as per bank pass book—

A. Errors in cash book ;

B. Errors in pass book ;

C. Cheques deposited and cleared;

D. Cheques issued but not presented for payment

Correct : C. Cheques deposited and cleared;

26. Provision is created for —

A. Unknown Liabilities ;

B. Known Liabilities ;

C. Creation of Secret Reserves ;

D. All the Three

Correct : B. Known Liabilities ;

27. Which of the following is not a method of charging depreciation

A. Straight line Method ;

B. Written down value Method ;

C. Discounted present value Method ;

D. Sum of digits Method

Correct : C. Discounted present value Method ;

28. A second hand car is purchased for ` 2,00,000 and sold at ` 1,40,000 after two years. If depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car.

A. 20,000 Loss ;

B. 20,000 Profit ;

C. 10,000 Loss ;

D. 10,000 Profit

Correct : A. 20,000 Loss ;

29. In the above question if the depreciation is charged @10% on written down value method, find the profit or loss on sale of the Second hand car.

A. Loss of ` 20,000 ;

B. Loss of ` 22,000 ;

C. Loss of ` 11,000 ;

D. Profit of ` 11,000

Correct : B. Loss of ` 22,000 ;

30. The term ― Reserve‖ has been defined in ------ of the Companies Act, 1956

A. Part III Schedule VI ;

B. Part III Schedule V ;

C. Part II Schedule VI ;

D. Part I Schedule I

Correct : A. Part III Schedule VI ;

31. Which of the following is true with respect to providing depreciation under diminishing balance method?

A. The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing

B. The amount of depreciation and the rate of depreciation decrease every year

C. The amount of depreciation decreases while the rate of depreciation remains the same

D. The amount of depreciation and the rate of depreciation increases every year

Correct : C. The amount of depreciation decreases while the rate of depreciation remains the same

32. Which of the following statements best describes the purpose of depreciation?

A. Regular reduction of asset value to correspond to changes in market value as the asset ages

B. A process of correlating the market value of an asset with its gradual decline in physical efficiency

C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value

D. Allocation of the cost of an asset to the periods in which services are received from the asset

Correct : D. Allocation of the cost of an asset to the periods in which services are received from the asset

33. The main objective of providing depreciation is to

A. Calculate the true profit

B. Show the true financial position in the Balance Sheet

C. Provide funds for replacement of fixed assets

D. Both (a) and (b) above

Correct : B. Show the true financial position in the Balance Sheet

34. Depreciation is a process of

A. Valuation

B. Valuation and allocation

C. Allocation

D. Appropriation

Correct : C. Allocation

35. The portion of the acquisition cost of the asset yet to be allocated is known as

A. Written down value

B. Accumulated value

C. Salvage value

D. Residual Value

Correct : A. Written down value

36. Which of the following statements is true with regard to written down value method of depreciation? i. The rate at which the asset is written off reduces year after year ii. The amount of depreciation provided reduces from year to year iii. The rate of depreciation as well as the amount of depreciation reduce year after year iv. The value of the asset gets reduced to zero over a period of time

A. Only (i) above

B. Only (ii) above

C. Both (i) and (ii) above

D. (i),(ii) and (iii) above

Correct : B. Only (ii) above

37. The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is

A. Depreciation

B. Physical deterioration of the asset

C. Decrease in market value of the asset

D. Valuation of an asset at a point of time

Correct : A. Depreciation

38. Which of the following factors are primarily considered to determine the economic life of an asset?

A. Passage of time, asset usage, and obsolescence

B. Tax regulations and SEBI guidelines

C. Tax regulations and asset usage

D. SEBI guidelines and Asset usage

Correct : A. Passage of time, asset usage, and obsolescence

39. In which of the following methods, the cost of the asset is spread over in equal proportion during its useful economic life?

A. Straight-line method

B. Written down value method

C. Units-of-production method

D. Sum-of-the years‘-digits method

Correct : A. Straight-line method

40. Which of the following statements is correct?

A. Depreciation cannot be provided in case of loss in a financial year

B. Depreciation is a charge against profit

C. Depreciation is provided in the books only when there is profit

D. Depreciation is an appropriation of profit

Correct : B. Depreciation is a charge against profit

41. Depreciation is calculated on the

A. Cost price of asset ;

B. Market price ;

C. Cost+ Transport+ Installation expenses;

D. Cost or market values whichever is less

Correct : C. Cost+ Transport+ Installation expenses;

42. Which of the following is an external cause of depreciation

A. Routine repair and maintenance ;

B. Misuse ;

C. Obsolescence ;

D. Wear and tear

Correct : C. Obsolescence ;

43. Depreciation is a process of —

A. Valuation of fixed assets ;

B. Allocation of cost over the useful life of assets

C. Generating funds replacements of the assets ;

D. Avoidance of tax

Correct : B. Allocation of cost over the useful life of assets

44. Which of the following is not depreciated

A. Building ;

B. Land ;

C. Plant and Machinery ;

D. Office equipment

Correct : B. Land ;

45. Schedule XIV of the Companies Act specifies —————— as minimum rate of depreciation (WDV) on ship fishing vessels

A. 27% ;

B. 33% ;

C. 10% ;

D. 15%

Correct : A. 27% ;

46. —————— is also known as Appraisal system of depreciation

A. Inventory system ;

B. Survey system ;

C. Annuity system ;

D. Insurance

Correct : A. Inventory system ;

47. Bad debts recovered account will be transferred to

A. Debtor‘s Account

B. Profit and Loss Account

C. Provision for Doubtful Debt Account

D. Either (b )or (c) above

Correct : D. Either (b )or (c) above

48. The entry for creating a Provision for bad debts is

A. Debit Provision for Bad Debts A/c and credit Debtors A/c

B. Debit Debtors A/c and credit Provision for Bad Debts A/c

C. Debit Provision for Bad Debts A/c and credit Profit & Loss A/c

D. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.

Correct : D. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.

49. When a person purchasing goods on credit he becomes a………….. in the books of the seller-

A. Debtor ;

B. Creditor ;

C. Defaulter ;

D. Offender

Correct : A. Debtor ;

50. Which of these is not a Business expense-

A. Fire Insurance of other building ;

B. LIC Premium of proprietor ;

C. Interest on Capital

D. Commission on sales

Correct : B. LIC Premium of proprietor ;

51. Cost of goods sold excludes-

A. Opening Stock ;

B. Carriage inward ;

C. Wages & Salary ;

D. Postage & Stamps

Correct : D. Postage & Stamps

52. Tax deducted at source A/c appears in-

A. Assets side ;

B. Liability side ;

C. Profit & Loss A/c ;

D. Debited to Capital A/c

Correct : A. Assets side ;

53. Investment in own share A/c appears in –

A. Asset side ;

B. Liability side ;

C. Netted from Capital ;

D. Profit & Loss A/c

Correct : A. Asset side ;

54. Payments received in advance from a customer for a contract can be

A. Shown as a deduction from contract work-in-progress on asset side

B. Shown as a liability

C. Credited to P&L A/c

D. Either (a) or (b) above

Correct : D. Either (a) or (b) above

55. If a company has contingent liabilities, they appear in the

A. Balance Sheet

B. Directors‘ report

C. Notes on account to Balance Sheet

D. Chairman‘s report

Correct : C. Notes on account to Balance Sheet

56. Recent developments have made much of a company‘s inventory obsolete. This obsolete inventory should be

A. Written down to zero or its scrap value

B. Shown in the Balance Sheet at its replacement cost

C. Shown in the Balance Sheet at cost, but classified as a non-current asset

D. Carried in the accounting records at cost until it is sold

Correct : A. Written down to zero or its scrap value

57. Which of the following is not classified as inventory in the financial statements?

A. Finished goods ;

B. Work-in-process ;

C. Stores and spares

D. Advance payments made to suppliers for raw materials

Correct : D. Advance payments made to suppliers for raw materials

58. Which of the following statements is true?

A. Inventory valuation affects only the income statement

B. Undercasting or overcastting of subsidiary book is an example of error of commission

C. Capital expenditure wrongly treated as revenue is an example of error of commission

D. Inventories should be valued at lower of historical cost and current replacement cost

Correct : B. Undercasting or overcastting of subsidiary book is an example of error of commission

59. Which of the following statements is / are not correct?

A. Provision for bad debts appears as a liability on the Balance Sheet

B. The provision for bad debts is owed to the proprietor

C. Bad debts could be less than the provision for bad debts

D. Bad debts could exceed the provision for bad debts

Correct : B. The provision for bad debts is owed to the proprietor

60. If actual bad debts are more than the provision for bad debts, then there will be a

A. Credit balance of Provision for Bad Debts Account

B. Debit balance of Provision for Bad Debts Account

C. Debit balance of Bad Debts Account

D. Debit balance of Discount on Debtors Account

Correct : B. Debit balance of Provision for Bad Debts Account

61. The creation of provision for doubtful debts given as an adjustment requires

A. Debit Profit and Loss Account and deduct the provision from debtors

B. Credit Profit & Loss Account and deduct the provision from debtors

C. Credit Profit and Loss Account and add the provision to debtors

D. Debit Profit & Loss Account and add the provision to debtors

Correct : A. Debit Profit and Loss Account and deduct the provision from debtors

62. Under the direct write-off method of recognizing a bad debt expense. Which of the following statements is/are true?

A. The bad debt expense is not matched with the related sales

B. Revenue is overstated in the year of sales

C. It violates the matching principle of accounting

D. All of the above

Correct : D. All of the above

63. At the time of preparation of financial accounts, bad debt recovered account will be transferred to

A. Debtors A/c

B. Profit & Loss A/c

C. Profit & Loss Adjustment A/c

D. Profit & Loss Appropriation A/c

Correct : B. Profit & Loss A/c

64. The balance of Revaluation Reserve pertaining to an asset that has been disposed off or retired can be transferred to

A. General Reserve A/c

B. Profit & Loss A/c

C. Asset A/c

D. Capital Reserve A/c

Correct : D. Capital Reserve A/c

65. Property, Plant and Equipment are conventionally presented in the Balance Sheet at

A. Replacement cost – Accumulated Depreciation

B. Historical cost – Salvage Value

C. Historical cost – Depreciation portion thereof

D. Original cost adjusted for general price-level changes

Correct : C. Historical cost – Depreciation portion thereof

66. Outstanding salaries is shown as

A. An Asset in the Balance Sheet

B. A Liability

C. By adjusting it in the P & L A/c

D. Both (b) and (c) above

Correct : D. Both (b) and (c) above

67. Insurance prepaid is shown as

A. Current Asset

B. Current Liability

C. Fixed Asset

D. Income

Correct : A. Current Asset

68. Depreciation appearing in the Trial Balance should be

A. Debited to P&L A/c

B. Shown as liability in Balance Sheet

C. Reduced from related asset in Balance Sheet

D. Both (a) and (c) above

Correct : A. Debited to P&L A/c

69. A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case

A. P&L A/C is debited with ` 1,400

B. P&L A/C is debited with ` 1,200

C. 200 is shown as current asset

D. Both (b) and (c) above

Correct : D. Both (b) and (c) above

70. Bad debts recovered is

A. Credited to P&L A/c

B. Debited to P&L A/c

C. Reduced from debtors in Balance Sheet

D. Added to debtors in Balance Sheet

Correct : A. Credited to P&L A/c

71. The adjustment to be made for prepaid expenses is

A. Add prepaid expenses to respective expenses and show it as an asset

B. Deduct prepaid expenses from respective expenses and show it as an asset

C. Add prepaid expenses to respective expenses and show it as a liability

D. Deduct prepaid expenses from respective expenses and show it as a liability

Correct : B. Deduct prepaid expenses from respective expenses and show it as an asset

72. On scrutiny of a firm‘s books of accounts, it was observed that the following errors have occurred in the previous years but have not yet been rectified. i. Depreciation for 2011-2012- ` 7,000 understated ii. Accrued expenses as at March 31, 2013 - ` 10,000 understated The impact of this on the reported net income for the year ending March 31, 2013 is

A. 7,000 Overstated

B. 10,000 Overstated

C. 17,000 Understated

D. 17,000 Overstated

Correct : B. 10,000 Overstated

73. Which of the following entries is correct in respect of reserve for discounts on accounts payable?

A. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c

B. Debit Accounts Payable A/c and Credit P&L A/c

C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c

D. Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c

Correct : C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c

74. Sundry debtors as per Trial Balance is ` 43,000 which includes ` 2,200 due from ‗H‘ in respect of goods sent to him on approval basis, the cost price of which is ` 1,800. Rectification would involve:

A. Adding ` 2,200 to closing stock

B. Deducting ` 1,800 from closing stock and deducting ` 2,200 each from debtors and sales

C. Adding ` 1,800 to closing stock and deducting ` 2,200 each from debtors and sales

D. Deducting ` 1,800 from debtors

Correct : C. Adding ` 1,800 to closing stock and deducting ` 2,200 each from debtors and sales

75. Goods in stock worth ` 800 are destroyed by fire and the Insurance Co. is accepted the claim for ` 600. Adjustment would involve:

A. Debit of ` 800 to Trading Account and credit of ` 600 and ` 200 to insurance company and Profit and Loss Account respectively

B. Deduct the ` 800 from closing stock in the Trading Account

C. Credit insurance company for ` 600

D. Debit of ` 600 and ` 200 to insurance company and Profit and Loss Account respectively and

Correct : D. Debit of ` 600 and ` 200 to insurance company and Profit and Loss Account respectively and

76. Prepaid expenses are valued on the Balance Sheet at

A. Replacement cost

B. Current cost

C. Cost to acquire less accumulated amortization

D. Cost less expired portion

Correct : D. Cost less expired portion

77. Which of the following relationships is/are false?

A. Net Profit = Gross Profit – Administration and Other expenses

B. Net Profit = Gross Profit + Administration expenses and Other expenses

C. Opening Stock + Purchases – Closing Stock = Cost of Sales

D. Both (b) and (c) above

Correct : D. Both (b) and (c) above

78. Gross Profit is equal to

A. Sales – Cost of goods sold ;

B. Sales – Closing Stock + Purchases

C. Opening Stock + Purchases – Closing Stock ;

D. None of the above

Correct : A. Sales – Cost of goods sold ;

79. Which of the following shall not be deducted from net profit while calculating managerial remuneration?

A. Loss on sale of undertaking

B. Debts considered bad and written off

C. Liability arising from a breach of contract

D. Director‘s remuneration

Correct : D. Director‘s remuneration

80. Which of the following equations is correct?

A. Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock

B. Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock

C. Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales

D. Gross Profit – Opening Stock + Direct expenses + Purchases +Closing stock = Sales

Correct : C. Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales

81. Which of the following is not true with regard to preparation of Profit & Loss Account?

A. Profit & Loss Account is prepared for a certain period and hence it is an interim statement

B. Profit & Loss Account does not disclose the effect of non-financial items

C. Net Profits are ascertained on the basis of current costs

D. Net Profits as disclosed by P&L Account is not absolute

Correct : A. Profit & Loss Account is prepared for a certain period and hence it is an interim statement

82. The Profit and Loss Account shows the

A. Financial results of the concern for a period

B. Financial position of the concern on a particular date

C. Financial results of the concern on a particular date

D. Cost of goods sold during the period

Correct : A. Financial results of the concern for a period

83. Which of the following statements is true?

A. Provision for doubtful debts represents the amount that cannot be collected

B. Cash balance on hand shows whether the business has earned Profit or Loss

C. Free samples received are business gains

D. The WDV of an asset depreciated on the reducing balance method can never become zero

Correct : D. The WDV of an asset depreciated on the reducing balance method can never become zero

84. Cash Profit is

A. Net profit – Non-trading Profit – Depreciation and provision

B. Gross Profit – Non-trading Profit + Depreciation and provision

C. Net Profit + Depreciation and provision

D. Gross Profit – Operational expenses

Correct : C. Net Profit + Depreciation and provision

85. Which of the following will not appear in Profit and Loss Account of a business?

A. Drawings

B. Bad debts

C. Accrued expenses

D. Reserve for discount on Sundry Creditors

Correct : A. Drawings

86. Which of the following is not a financial statement?

A. Profit and Loss Account

B. Balance Sheet

C. Funds Flow Statement

D. Trial Balance

Correct : D. Trial Balance

87. If unexpired insurance appears in the Trial Balance, it should be

A. Credited to the Profit & Loss Account

B. Debited to the Profit & Loss Account

C. Shown on the liabilities side of the Balance Sheet

D. Shown on the assets side of the Balance Sheet

Correct : D. Shown on the assets side of the Balance Sheet

88. Which of the following are/is not a fixed asset?

A. Stock ;

B. Vehicle ;

C. Fixed deposit in bank ;

D. Both (a) and (c) above

Correct : D. Both (a) and (c) above

89. Which of the following are/is a current asset?

A. Sundry Debtors ;

B. Stock ;

C. Prepaid insurance ;

D. All of (a), (b) and (c) above

Correct : D. All of (a), (b) and (c) above

90. Tax deducted at source appears in the Balance Sheet

A. On the assets side under current assets

B. On the assets side under loans and advances

C. On the liabilities side under current liabilities

D. On the liabilities side under provisions

Correct : C. On the liabilities side under current liabilities

91. Which of the following statements is false?

A. Balance Sheet discloses financial position of the business

B. A person who owes to the business is called Debtor

C. Decrease in the value of the asset could decrease the value of a liability

D. Assets are to be shown in the Balance Sheet at the realizable value

Correct : D. Assets are to be shown in the Balance Sheet at the realizable value

92. Which of the following statements is true?

A. The balance of the goods account shows the value of stock in hand;

B. Balancing of all accounts must be done at the end of each day;

C. Assets which are to remain in business for continuous use and not meant for conversion into cash are fixed assets ;

D. Balance Sheet discloses income position of the business

Correct : C. Assets which are to remain in business for continuous use and not meant for conversion into cash are fixed assets ;

93. The Balance Sheet gives information regarding the

A. Results of operations for a particular period

B. Financial position during a particular period

C. Profit earning capacity for a particular period

D. Financial position as on a particular date

Correct : D. Financial position as on a particular date

94. Which of the following accounts appear(s) in the Balance Sheet of a business? i. Stock at the end of the financial year ii. Stock at the beginning of the financial year iii. Drawings iv. Prepaid Rent v. Interest received but not yet earned

A. Only (i) above

B. Only (iii) above

C. Both (i)and (iii) above

D. (i), (iii), (iv) and (v) above

Correct : D. (i), (iii), (iv) and (v) above

95. Which of the following is not an intangible asset?

A. Trade mark

B. Franchise

C. Accounts Receivable

D. Secret Profit

Correct : C. Accounts Receivable

96. Which of the following is a current liability?

A. Prepaid expenses

B. Trademark

C. Discount on issue of shares

D. Outstanding Salaries

Correct : D. Outstanding Salaries

97. Based on which of the following concepts, is Share Capital Account shown on the liabilities side of a Balance Sheet?

A. Business entity concept

B. Money measurement concept

C. Going concern concept

D. Matching concept

Correct : A. Business entity concept

98. Which of the following is not a contingent liability?

A. Debts included in Sundry Debtors which are doubtful in nature

B. Uncalled liability on partly paid shares

C. Claims against the company not acknowledged as debts

D. Arrears of fixed cumulative dividend

Correct : A. Debts included in Sundry Debtors which are doubtful in nature

99. Which of the following are current assets of a business? i. Income received in advance ii. Stock iii. Debtors iv. Pre-paid expenses v. Accrued income

A. Both (i) and (iv) above

B. Both (ii) and (iii) above

C. (i),(ii) and (iii) above

D. (ii),(iii),(iv) and (v) above

Correct : D. (ii),(iii),(iv) and (v) above

100. Which of the following statements is true?

A. Bad Debts Recovered Account is transferred to Sundry Debtors Account

B. Bill of exchange is drawn by the purchaser

C. Trial Balance establishes the arithmetical accuracy of the accounting records

D. A well maintained asset need not be depreciated

Correct : C. Trial Balance establishes the arithmetical accuracy of the accounting records