FINANCIAL ACCOUNTING
Q1] Which accounting concept satisfy the valuation criteria
a] Going concern, Realisation, Cost
b) Going concern, Cost, Dual aspect
c) Cost, Dual aspect, Conservatism
d) Realisation, Conservatism, Going concern.
Q2] A trader has made a sale of Rs.75,500 out of which cash sales amounted to
Rs.25,500. He showed trade receivables on 31-3-2014 at Rs.25,500. Which concept is followed
by him?
a) Going concern
b) Cost
c) Accrual
d) Money measurement
Q3] In which of the following cases, accounting estimates are needed?
a) Employs benefit schemes
b) Impairment of losses
c) Inventory obsolescence
d) All of the above
Q4] Deewali advance given to an employee is
a) Revenue Expenditure
b) Capital Expenditure
c) Deferred Revenue Expenditure
d) Not an Expenditure
Q5]A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into
consideration the following items.
(i) The cost of an asset Rs.23,000 has been taken as an expense
(ii) The firm anticipated a profit of Rs.12,000 on the sale of an old furniture
(iii) Salary of Rs.7,000 outstanding for the year has not been taken into account.
(iv) An asset of Rs.85,000 was purchased for Rs.75,000 and was recorded in the books at
Rs.85,000. What is the correct amount of profit to be reported in the books?
a) Rs.1,47,000
b) Rs. 1,51,000
c) Rs.1,63,000
d) Rs.1,41,000
Q6]The process of recording financial data upto trial balance is
a) Book keeping
b) Classifying
c) Summarising
d) Analyzing
Q7] Rohit carrying on real estate business sold a piece of land for Rs.4,00,00,000 (cost
Rs.3,50,00,000) then the type of receipt is ______ nature and profit on sale is
a) Capital & transferred to capital reserve
b) Revenue & transferred to P & L a/c
c) Capital & transferred to P & L a/c
d) Revenue & transferred to general reserve
Q8] In income measurement & recognisation of assets & liabilities which of the following
concepts goes together ?
(a) Periodicity, Accural, Matching
(b) Cost, Accural, matching
(c) Going concern, cost, Realization
(d) Going concern, Periodicity, Reliability
Q9] Interpretation means
(a) Explanation of meaning and significance of the data in Financial Statements.
(b) Concerned with preparation and presentation of classified data
(c) Systematic analysis of recorded data
(d) Methodical classification of data given in Financial Statements.
Q10] A trader purchases goods for Rs. 2500000, of these 70% of goods were sold during the
year. At the end of 31st December 2009, the market value of such goods were Rs. 500000. But
the trader recorded in his books for Rs. 750000. Which of the following concept is violated.
(a) Money measurement
(b) Conservatism
(c) Consistency
(d) None of these
Q11] Which of the following is wrong?
(a) All real and personal accounts are transferred to balance sheet
(b) Nominal accounts are transferred to P &L account
(c) Each account is opened separately in ledger
(d) Rent is a personal account, outstanding rent is nominal account
Q 12] is root cause for financial accounting
(a) Stewardship accounting
(b) Social accounting
(c) Management accounting
(d) Human resource accounting
Q 13] If nothing is given in the financial statements aboutthe three accounting assumptions then
it is to be treated as it
a) Is assumed that it is not followed
b) Is assumed to be followed
c) Is assumed to be followed to some extent
d) None of the above
Q14] The proprietor of the business is treated as creditor for the capital introduced by him due
to_____ concept.
a) Money measurement
b) Cost
c) Entity
d) Dual aspect
Q15] Fixed assets are held by business for _____
a) Converting into cash
b) Generating revenue
c) Resale
d) None of the above
Q16] Which accounting concept specifies thepractice of crediting closing stock to the trading
account?
a) Cost
b) Realisation
c) Going concern
d)Matching
Q17] Amount spent to increasing the earning capacity is a ______ expenditure
a) Capital
b) Revenue
c) Deferred revenue
d) Capital Loss
Q18] Change in the capital A/c of proprietor may occur due to ______
a) Profit earned
b) Loss incurred
c) Capital Introduced
d)All of theabove
Q19] Consistency with reference to application of accounting procedures means
a) All companies in the same Industry should use identical accounting procedures
b) Income & assets have not been overstated
c)Accounting methods & procedures shall be followed uniform basis year after year
d) Any accounting method can be followed as per convenience
Q20] If one of the cars purchased by a car dealer is used for business purpose, instead of resale,
then it should be recorded by_____
a) Dr Drawing A/c & Cr Purchases A/c
b) Dr Office Expenses A/c & Cr Motor Car A/c
c) Dr Motor Car A/c & Cr Purchases A/c
d) Dr Motor Car & Cr Sales A/c
Q21] If wages are paid for construction of business premises ______ A/c is credited and _____
A/c is debited.
a) Wages, Cash
b) Premises, Cash
c) Cash, Wages
d) Cash, Premises
Q22] Human resources will not appear in the balance sheet according to ______ concept.
a) Accrual
b) Going concern
c) Money measurement concept
d) None
Q23] Provision for discount on debtors is calculated on the amount of debtors.
a) Before deducting provision for doubtful debts.
b)After deducting provision for doubtful debts.
c) Before deducting actual debts and provision for doubtful debts.
d) After adding actual bad and doubtful debts.
Q24] Which of the following is not a Real Account?
a) Cash A/c
b) Investments A/c
c) Out standing rent A/c
d) Purchases A/c
Q25] Value of goods withdrawn by the proprietor for his personal use should be
credited to ____
a) Capital A/c
b) Sales A/c
c) Drawings A/c
d) Purchases A/c
Q26] Which of the following is incorrect?
a) Good will intangible asset b) Sundry debtors -current asset
c) Loose tools tangible fixed asset
d) Outstanding expenses -current asset.
Q27] M/s Stationery Mart will debit the purchase of stationery to _______
a) Purchases A/c b) General Expenses A/c c) Stationery A/c d) None
Q28] Small items like, pencils, pens, files, etc. are written off within a year according to _
concept.
a) Materiality b) consistency c) Conservatism d) Realisation
Q29] Business enterprise is separate from its owner according to _____ concept.
a) Money measurement concept b) Matching concept c) Entity concept d) Dual aspect concept
Q30] The policy of anticipate no profit and provide for all possible losses arise due to the
concept of _____
a) Consistency b) Disclosure c) Conservatism d) Matching
Q31] According to which concept, the proprietor pays interest on drawings
a) Accrual concept b) Conservatism concept
c) Entity concept d) Dual Aspect concept
Q32] Cost concept basically recognises ____
a) Fair Market value b) Historical cost c) Realisable value d) Replacement cost
Q33]If the Market value of closing Inventory is less than its cost price, inventory will he shown
at ____
a) Marketable value b) Fair Market value c) Both d) none
Q34] The Market price of good declined than the cost price. Then the concept that plays a key
role is ____
a) Materiality b) Going concern concept c) Realization d) Consistency
Q35] Fixed assets are double the current assets and half the capital. The current assets are
Rs.3,00,000 andinvestments are Rs.4,00,000. Then the current liabilities recorded in balance
sheet will be
a) 2,00,000 b) 1,00,000 c) 3,00,000 d) 4,00,000
36]. The nature of financial accounting is:
a) Historical
b) Forward looking
c) Analytical
d) Social
Q37] Which of the following factor is not considered while selecting accounting policies?
a) Prudence b) Substance over form
c) Accountancy d) Materiality
Q38] Debit the receiver & credit the giver is _____ account
a) Personal b) Real c) Nominal d) All the above
Q39] Cash a/c is a ______
a) Real a/c b) Nominal c) Personal d) None
Q40] As per accrual concept, which of the followings is not true
a) revenue –expenditure = profit b) revenue –profit = expenditure
c) sales + gross profit = revenue d) revenue = profit + expenditure
Q41] Mr. X sold goods to Mr. Y askMr. X to keep the goods with him for some time
a) symbolic delivery b) actual delivery c) constructive delivery d) none of these
Q42] If nothing is written about the accounting assumption to be followed it is presumed that
a) They have been followed
b) They have not been followed
c) They are followed to some extent d) none of these
Q43] Capital A/c is a _______ A/c.
a) Personal b) Real c) Nominal d) None
Q44] Cash A/c is a ________ A/c.
a) Personal b) Real c) Nominal d) None
Q45] The principle ―Debit the receiver and credit the giver‖ is related to_____
a) Personal a/c b) Real a/c c) Nominal a/c d) None
Q46] As per the Matching concept, Revenue –? = Profit
a) Expenses b) Liabilities c) Losses d) Assets
Q47] Sales –Gross Profit = ________
a) Cost of goods sold b) Net sales c) Gross Sales d) Liabilities
Q48] Which of the following is a Real A/c?
a) Building A/c b) Capital A/c c) Shyam A/c d) Rent A/c
Q49] Valuation of stock in accounting follows the principle of cost price or ____ which ever is
lower.
a) Market Price b) Average Price
c) Net realizable Value d) None of these.
Q50] Which of the following is not a nominal Account?
A] Outstanding salaries Account
B] Salaries account
C] Interest paid
D] Commission received
Q51] Mr. X is a dealer in electronic goods (refrigerator, washing machine, air
conditioners, televisions, etc.) He purchased two air conditioners and installed in his
showroom. In the books of X the cost two air conditioners will be debited to
A] Drawing account
B] Capital Account
C] Fixedassets
D] Purchases account
Q52] A trader calculated his profit as Rs.150000 on 31/03/2014. It is an
A] Transaction
B] Event
C] Transaction as well as event
D] Neither transaction nor event
Q53] For every debit there will be an equal creditaccording to
A] Matching concept
B] cost concept
C] Money measurement concept
D] Dual aspect concept
Q54] Historical cost concept requires the valuation of an asset at
A] Original cost
B] Replacement value
C] Net realizable value
D] Market value
Q55] The comparison of financial statement of one year with that of another is possible only
when ----------------concept is followed
A] Going concern
B] Accrual
C] Consistency
D] Materiality
Q56] Profit
and loss is calculated at the stage of
A] Recording
B] Posting
C] Classifying
D] Summarising
Q57] Which of the following is not the main objective of accounting?
A] Systematic recording of transactions
B] Ascertaining profit or loss
C] Ascertainment of financial position
D] Solving tax disputes with tax authorities
Q58] 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?
A] Assets increased by Rs.800000 and liabilities decreased by Rs.800000
B] Assets decreased by Rs.800000 and liabilities increased by Rs.800000
C] Assets increased by Rs.1000000 and liabilities increased by Rs.800000
D] Assets increased by Rs.800000 and liabilities increased by Rs.800000
Q59] The rule debit all expenses and losses and credit all income and gains relates to
A] Personal account
B] Real account
C] Nominal accounts
D] All
Q60] Matching concept means
A] Assets = capital + liabilities
B] Transactions recorded at accrual concept
C] Anticipate no profit but recognize all losses
D] Expenses should be matched with the revenue of the period.
61. Double entry system is used in which type of accounting
a) Cost
b)Financial
c) Management
d) All
62. Sales made to Mahesh for cash should be debited to________________
a) Cash account
b) Mahesh Account
c) Sales account
d) Purchase account
63. Rent paid to landlord should be credited to
a) Landlords account
b) Rent account
c)Cash account
d) Expense account
64. Cash discount allowed to a debtor should be credited to
a) Discount account
b)Customer’s account
c) Sales account
d) Cash account
65. Financial accounting is concerned with –
a) Recording of business expenses and revenue
b) Recording of costs of products and services
c) Recording of day to day business transactions
d) None of the above
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