3. Sales return book records ____
A
Credit sales return
B
Cash sales return
C
Both A and B
D
Purchase return
Goods sold on credit when returned by the customer is recorded in returned inward book or sales return book. Sales return book shows a debit balance as it is reverse to the sales, which has credit balance. When the goods are returned by the customer one note is prepared which is called as "Credit note". The returned outward book is used to record return of goods purchased on credit.
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5. Cash book is a form of
A
Trial balance
B
Journal
C
Ledger
D
Both B and C
All cash transactions are primarily recorded in it as soon as they take place; so it is a journal (a book of original entry). On the other hand, the cash aspect of all cash transactions is finally recorded in the Cash Book (no posting in Ledger); so a Cash Book is also a Ledger (a book of final entry).
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6. Which of the following types of information are found in subsidiary ledgers, but not in the general ledger?
A
Total cost of goods sold for the period.
B
The quantity of a particular product sold during the period.
C
The amount owed to a particular creditor.
D
The portion of total current assets that consist of cash
7. The debts written off as bad, if recovered subsequently are
A
Credited to bad debts recovered account
B
Credited to debtors account
C
Debited to profit and loss account
D
None of the above
While journalizing for bad debts debtor`s personal account is credited and bad debts account is debited because bad debts written off are treated as a loss to the business and now when they are recovered it is seen as a fresh gain.
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9. Interest earned but not received, adjustment entry will be
A
Accured interest Dr. to customer
B
Accrued interest A/C dr To interest A/C.
C
Cash a/c Dr. to interest
D
None of the these
10. Journal entry for wages paid Rs 3000 for installation of plant will be
A
Dr. plant repairs a/c and Cr. cash a/c rs 3000
B
Dr wages a/c and Cr. cash a/c 3000
C
Dr. plant a/c and Cr. cash a/c 3000
D
None of the above
11. Income tax liability of the proprietor Rs 1200 was paid out of petty cash. Journal entry will be
A
Dr drawings and Cr. cash a/c Rs 1200
B
Dr. drawings and Cr. petty cash a/c Rs 1200
C
Dr income tax and Cr cash a/c Rs 1200
D
None of the above
12. Journal entry for Rs 6000 stolen from the sale of the firm will be
A
Dr. P & L a/c and Cr. Cash embezzlement a/c Rs 6000
B
Dr. Cash embezzlement a/c and cr. cash a/c Rs 6000
C
Dr. cash a/c and Cr. P & L a/c rs 6000
D
None of the above
13. Sunset Tours has a Rs. 3500 account receivable from Mohan On January 20, the alter makes a partial payment of Rs 2100 to Sunset Tours. The journal entry made on January 20 by Sunset Tours to record this transaction includes
A
A credit to the cash received account of Rs 2100
B
A credit to the accounts receivable amount of Rs 2100
C
A debit to the cash account of Rs 1400
D
A debit to the accounts receivable account of Rs 1400
16. Income tax paid by the sole proprietor from business bank account is debited to
A
Income tax account
B
Bank Account
C
Capital Account
D
Not to be shown in the business books
18. If two or more transactions of the same nature are journalized together having wither the debit of the credit account common is known as
A
Compound journal entry
B
Separate journal entry
C
Posting
D
None of the above
22. Purchase of goods on credit
A
Increased liability
B
Decrease assets
C
Decrease in total assets
D
No effect of total of assets
28. Which of the following is not an intangible asset
A
Land
B
Goodwil
C
Copyright
D
Patent rights
An intangible asset or resource is an asset that isn`t physical in nature. Patent rights, goodwill, brand acknowledgment, and protected innovation, like licenses, brand names, and copyrights, are largely a part of intangible resources. Tangible resources incorporate land, vehicles, hardware, and stock.
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36. Interest on drawing is ____ for the business
A
Expenditure
B
Expense
C
Gain
D
None of the above
Interest on drawing is a gain for the firm. It is calculated at the agreed rate. The amount of interest on drawings will be credited to Profit and Loss Appropriation Account and will be debited to partner`s capital account/current account (individually).
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37. The balance of the petty cash book is
A
An expense
B
An income
C
An asset
D
A liability
42. Which of the following is correct
A
Capital is equal to assets minus liabilities
B
Capital is equal to assets plus liabilities
C
Assets are equal to liabilities minus capital
D
Liabilities is equal to capital plus assets
45. The expired portion of capital expenditure is shown as
A
as an income
B
as an expense
C
as an asset
D
as a liability
An expired cost is a cost that has been recognised as an expense. This happens when a business entity fully consumes or receives benefit from a cost . An expired cost may also be construed as the total loss in value of an asset.
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48. Credit balance in the cash book means
A
Overdraft as per passbook
B
Favourable balance as per passbook
C
Both A and B
D
None of the above
A credit balance in cash book is a overdraft as per pass book. The bank maintains the customer account which is further printed in the passbook. The passbook is made from the view point of the bank hence customer depositing money is a liability to the bank and is credited. Therefore when the balance is unfavourable it shows a debit balance because they will receive money from the customer. The debits and credit of pass book and cash book are opposite.
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55. In case of debit becoming bad, the amount should be credited to
A
Debtor account
B
Bad debts account
C
Cast account
D
Sales account
In the normal course of business, there are certain customer who does not pay the amount to the business despite regular follow ups. The unrecoverable amount is considered as bad debts. Bad debts is a loss to the organization and should be debited to profit & loss account by crediting the customer account.
Accounting entry will be as under:
Bad Debts A/c Dr.
To Customer (Debtor) A/c
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59. Financial statements do not consider
A
Assets expressd in monetary terms
B
Liabilities expressed in monetary terms
C
Only assetts expressed in non monetary terms
D
Assets and liabilities expressed in non mometary terms
60. Financial position of the business is ascertained on the basis of
A
Records prepared uder book keeping process
B
Trial Balance
C
Balance Sheet
D
None of the above
Balance sheet is a known as the positional statement as it shows the financial position of the business. Balance sheet is prepared at the particular date usually at the end of financial year. Balance shows the lists of all assets and liabilities of the business.
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61. All of the following are functions of Accounting except?
A
Decision making
B
Measurement
C
Forecasting
D
Ledger Posting
62. Interest on capital in a business can be defined as:
A
Expense
B
Income
C
Liability
D
Asset
Expense
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63. The________ accounting system provides a system of checks and balances:
A
Single Entry
B
Financial Entry
C
Double Entry
D
Triple Entry
Double Entry
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64. Which of the following item will be shown on debit side of debtors account:
A
Discount received
B
Discount given
C
Discount allowed
D
Credit sales
Credit sales
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65. The Public Financial Management System (PFMS) is a web-based online software application developed and implemented by:
A
Niti Aayog
B
CGA
C
CAG
D
PFMA
CGA
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66. Which of the following account will be credited, if business bought goods on credit from Mr. X:
A
Purchases account
B
Mr. X Account
C
Cash account
D
Sales account
Mr. X Account
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67. Cash payments are recorded on the _________of the cash book:
A
Debit side
B
Credit side
C
Both sides
D
None of the Above
Credit side
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68. In the absence of partnership deed, partners are not entitled to receive:
A
Salaries
B
Commission
C
Interest on Capital
D
All of the above
All of the above
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69. The excess of the credit side of profit and loss account would indicate:
A
profit
B
net loss
C
loss
D
None of these
profit
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70. What is the amount of purchase when opening stock is ₹10000, closing stock is ₹8000, sales are ₹110000 and cost of goods sold is ₹80000?
A
₹78000
B
₹ 82000
C
₹ 30000
D
₹ 92000
₹78000
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71. Closing stock is recorded in the:
A
Profit and Loss Account
B
Trading Account and Balance Sheet
C
Balance Sheet Only
D
None of the above
Trading Account and Balance Sheet
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72. At the end of the year 2017-18, Prepaid Insurance Premium Rs. 7,500 appeared in the Trial Balance, it will be shown:
A
only in Profit & Loss Account
B
only in Balance Sheet.
C
both in Profit & Loss Account and in Balance Sheet.
D
not in Both in Profit & Loss Account and in Balance Sheet.
Prepaid expenses are expenses which have been paid in advance and not yet used. Prepaid insurance is the part of insurance which is already paid but the time period for use is not expired till the date of balance sheet. It is a part of current asset which has not been used. Thus it is written on the asset side of balance sheet until it is utilised.
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73. A profit on sale of furniture of a club will be taken to:
A
Cash Account:
B
Receipts and Payment Account
C
Income and Expenditure Account
D
Profit and Loss Account
Income and Expenditure Account
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74. Petty cash book has a balance of Rs 500. This represents:
A
profit
B
asset
C
liability
D
loss
asset
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75. If a fixed amount is withdrawn on the first day of every month of calendar year by a partner in partnership firm, then for what period the interest on the total amount of drawings will be calculated:
A
4.5 months
B
5.5 months
C
6.5 months
D
7.5 months
If a fixed amount is withdrawn on first day of every month of the calendar year, the interest on the total amount of drawings will be calculated for 6.5 months. Average period will be calculated as:- = Months left after first drawing + months left after last drawing = (12 + 1)/2 = 6.5 months
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76. Which of the following purpose is served from the preparation of Trial Balance:
A
To check the arithmetical accuracy of the recorded transactions
B
To ascertain the balance of any ledger account
C
To facilitate the preparation of final accounts promptly
D
All of the above.
All of the above.
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77. Double entry accounting system includes:
A
Accrual accounting only
B
Cash accounting only
C
Both cash and accrual accounting
D
None of the above
Both cash and accrual accounting
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78. Which of the following errors is not disclosed by a Trial Balance:
A
Errors of Principle
B
Errors of omission
C
Compensating Errors
D
All of the above
All of the above
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79. Verification refers to:
A
Examination of journal and ledger
B
Examination of vouchers related to assets
C
Examining the physical existence and valuation of assets
D
Calculation of value of assets
Examining the physical existence and valuation of assets
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80. Which of the following is not a Fundamental Accounting Assumption:
A
Going Concern
B
Consistency
C
Accrual
D
Business Entity
Business Entity
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81. Which of the following is of capital nature:
A
Commission on purchases
B
Cost of repairs
C
Rent of factory
D
Wages paid for installation of machinery
Wages paid for installation of machinery
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82. Income and Expenditure Account is a:
A
Nominal Account
B
Real Account
C
Personal Account
D
Artificial Personal Account q
Nominal Account
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83. The short description of a transaction written at the end of a journal entry is known as:
A
Summary
B
Narration
C
Memo
D
Info
Narration
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84. Which of the following book is both a journal and a ledger:
A
Cash Book
B
Sales Day Book
C
Trial Balance
D
Journal Proper
The Cash Book is also a ledger in the sense that it serves the purpose of a Cash A/c also. When a Cash Book is prepared, no separate Cash account is opened in the ledger. As such, the Cash Book is a journal as well as a ledger and hence it may be called Journalised ledger.
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85. Which of the following is not an item of Balance Sheet:
A
Accounts receivable
B
Accounts payable
C
Sales revenue
D
Marketable securities
Sales revenue
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86. The credit side of a profit and loss account records:
A
Direct Expenses
B
Direct Income
C
Indirect Expenses
D
Indirect Income
Indirect Income
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87. Bank Reconciliation Statement is:
A
Ledger Account
B
Part of cash book
C
A separate statement
D
A subsidiary of Journal
A separate statement
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88. There is a debit balance on the office expenses at the end of the financial year. In which section of the balance sheet this will be recorded:
A
Capital
B
Current Assets
C
Current Liabilities
D
Fixed Assets
Current Assets is the correct answer.
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89. A company is owned by its:
A
Directors
B
Employees
C
Shareholders
D
Managers
A company owned by the shareholders.
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90. Which of the following is not a business transaction:
A
Purchasing Office supplies
B
Hiring a new Employee
C
Paying interest on business loan
D
Receiving fee for services
A business transaction is an economic event with a third party that is recorded in an organizations accounting system. Such a transaction must be measurable in money.
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91. What from the following is NOT a capital expense?
A
Purchase of Property
B
Purchase of Office equipment
C
Replacement of Vehcile
D
Repair of vehicle
Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. CapEx is often used to undertake new projects or investments by a company.
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92. The concept that the enterprise will continue in a foreseeable future is known as:
A
Amortization
B
Depletion
C
Going Concern
D
Residual Value
The concept of going concern assumes that a business firm would continue to carry out its operations indefinitely.
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93. The process of recording consumption of natural resources (or wasting assets) is called
A
Amortization
B
Depletion
C
Going Concern
D
Residual Value
The process of recording consumption of natural resources is called deplition.
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94. The accounting process of allocation cost of intangible assets is called:
A
Amortization
B
Depletion
C
Going Concern
D
Residual Value
The process of allocating the cost of intangible assets to expense is called amortization, and companies almost always use the straight‐line method to amortize intangible assets.
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95. Depreciable amount =
A
Cost of an asset + Residual value
B
Cost of an asset – Residual value
C
Residual value – Cost of an asset
D
None of these
Depreciation is referred to as the reduction in the cost of a fixed asset in sequential order, due to wear and tear until the asset becomes obsolete.
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96. A machine price was Rs 1,000 and was carried through a truck. The truck’s fares were Rs 500. The engineers charged Rs 500 for the installation. The cost of the machine is?
A
Rs 1,000
B
Rs 1,500
C
Rs 2,000
D
Rs 2,500
Rs 2,000
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97. What from the following is/are NOT tangible asset(s)? I)Patent rights II)Good Will III)Land
A
I only
B
II only
C
I & II Only
D
I , II and III
Every business requires assets to run its operations and such assets that help a business in maintaining its daily operations are called tangible assets.Tangible assets can be seen and felt and are also capable of being damaged by fire, natural disaster or any accident. The tangible assets have a clearly defined purchase value or acquisition cost.
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98. What from the following is NOT a non-current asset?
A
investments
B
Property
C
Patent rights
D
Inventory
A non-current asset is an asset that the company acquires or invests, but the value of that investment does not recur within an accounting year.List of Non-Current Assets: Property, plant and equipment:
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99. What from the following is NOT a current asset?
A
Patent rights
B
Inventory
C
Cash
D
Trade receivables
A current asset is an asset that a company holds and can be easily sold or consumed and further lead to the conversion of liquid cash.Types of Current Assets: Cash and cash equivalent Inventory Ongoing projects Pre-paid expenses Account receivable Marketable securities
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100. Advance payments are recognized as:
A
receivable
B
payable
C
bad debt
D
none of these
The Advance payments are recognized as Receivable.
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101. A company sold goods worth Rs 5,000 on 5 June and Rs 10,000 on 28 June. The company received the first payment on 25 June and second on 7 July. The company prepared the financial statement on 30 June. What would be the total sale on the financial statement?
A
Rs 0
B
Rs 5000
C
Rs 10000
D
Rs 15000
Rs 15000
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102. The correct of Accounting Equation is :
A
Assets + liabilities = Equity
B
Assets -Liabilities =Equity
C
Assets -Receivable =Equity
D
Assets + Receivable =Equity
Shareholder equity = Assets – Liabilities
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103. What standards are used to prepare financial statements by most of the Countries and Companies:
A
International Financial Reporting Standards
B
International Financial Accounting Standards
C
International Accounting and Auditing Standards
D
International Risk Reporting Standards
International Financial Reporting Standards (IFRS) set common rules so that financial statements can be consistent, transparent, and comparable around the world. IFRS are issued by the International Accounting Standards Board (IASB).
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104. The main source(s) of Generally accepted Accounting Principles(GAAP) is/are:
A
Company Law
B
Accounting Standards
C
Both A and B
D
None of these
Company Law and Accounting Standards are two main sources of GAAP
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105. Statements of assets & liabilities prepared under single entry system is called
A
Balance sheet
B
Profit & loss statement
C
Statement of affairs
D
Income Statement
A statement of assets and liabilities prepared under the single entry system is called statement of affairs.
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106. 224. Statement of financial position produced from incomplete accounting record is commonly known as
A
Balance sheet
B
Cash flow statement
C
Statement of affairs
D
Statement of financial operations
Statement of financial position produced from incomplete accounting record is commonly known as statement of affairs. Basically, this statement of affairs comprise of assets and liabilities. This gives the net book value as well as the amount that is expected to realize during the insolvency of the business.
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107. Which one of the following items cannot be recorded in the profit and loss appropriation account?
A
Interest on capital
B
Interest on drawings
C
Rent paid to partner
D
Partner`s salary
Salary/commission to manager is an item of Profit and loss account. Only items relating to partners will be entered in Profit and loss Appropriation like interest on capital, profit, interest on drawings, salary/commission to partners.
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108. Which is not a feature of a partnership business?
A
Ease of formation
B
Limited liability
C
Limited life
D
Mutual agency
#
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109. The main account for dealing with partnership dissolution would be:
A
Revaluation
B
Realisation
C
Appropriation
D
Dissolution
Dissolution of partnership firm means that the firm closes down its business and comes to an end. A realization account is opened for disposing off all the assets of the firm and making payment of all the liabilities. It is a nominal account.
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110. What is interest on drawings?
A
Credited to partner`s current a/c
B
Not shown in current account
C
Debited to partner`s current a/c
D
None of the above
Interest on Drawings will be debited to capital account. Interest on drawing is an income for the firm and is payable by the partners to the firm hence, is deducted/debited. Interest is charge on the money/goods taken by the partners for their personal use during the year.
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111. Current accounts of the partners should be opened when the capitals are:
A
Fixed
B
Fluctuating
C
Floating
D
Normal
Current account of the partners should be opened when capitals are Fixed that means when capital accounts of partners shows fixed amount of balance every year.
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112. Which of the following would not be found in a profit & loss appropriation account?
A
Interest on capital
B
Salaries
C
Interest on loan by partner to partnership
D
Interest on drawings
Salary/commission to manager is an item of Profit and loss account. Only items relating to partners will be entered in Profit and loss Appropriation like interest on capital, profit, interest on drawings, salary/commission to partners.
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113. No partnership agreement, what will be the percentage of profit-sharing ratio between them?
A
Unequal
B
Equal
C
It will depend on the experience of a partner
D
It will depend on a partner`s capital
If there is no partnership agreement the profits will be share equally. ... The profit must be share equally in the case of a partnership firm ... Profit sharing Ratio : Profits and losses would be shared equally among partners.
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114. What is the partnership written agreement known as:
A
Partnership Agreement
B
Contract
C
Partnership Deed
D
Partnership Act
The written agreement of partnership is called a partnership deed. It is a contract between two or more individuals who decide to manage and operate a business together for profit-making.
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115. What type of agreement is used to form a partnership business?
A
Written Agreement
B
Oral Agreement
C
Written or Oral Agreement
D
None of the above
A partnership deed is an agreement between two or more individuals who sign a contract to start a profitable business together. They agree to be the co-owners, distribute responsibilities, income or losses for running a business.
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116. To start a partnership business, what should be the minimum number of partners?
A
2
B
5
C
15
D
20
Minimum two persons are required to start a partnership firm as partnership can only be done when two or more people are involved while in banking business, minimum 10 persons are required to join hands to establish a partnership firm.
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117. Credit balance as per passbook is?
A
Unfavourable balance
B
Favourable balance
C
Both A & B
D
None of the above
The amount of balance shown in the passbook or the bank statement must tally with the balances shown in the cash book. ... It indicates the favorable balance as per cash book or favorable balance as per the passbook. Hence, credit balance in the pass book means bank balance.
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118. When the balance as per Cash Book is the starting point, direct deposits by customers are:
A
Added
B
Subtracted
C
Not required to be adjusted.
D
None of the above
So, when the balance as per cash book is the starting point, direct deposits by customers are added to reach the pass book balance.
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119. Bank statement also called?
A
Passbook
B
Cash book
C
Credit book
D
Debit book
A bank statement is a document (also known as an account statement) that is typically sent by the bank to the account holder every month, summarizing all the transactions of an account during the month.
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120. The balance on the debit side of the bank column of cash book indicates?
A
The total amount has drawn from the bank
B
Cash at bank
C
The total amount overdraft in the bank
D
None of above
The debit balance as per the cash book means the balance of deposits held at the bank. ... It indicates the favourable balance as per cash book or favourable balance as per the passbook. On the other hand, the credit balance as per the cash book indicates bank overdraft.
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121. A bank reconciliation statement is prepared by?
A
Banker
B
Accountant of the business
C
Auditors
D
Registrar
The bank reconciliation statement is prepared by the business enterprises.
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122. Uncollected cheques are also known as?
A
Outstanding checks
B
Uncleared checks
C
Outstation checks
D
Both B & C
What are uncleared or uncollected or uncredited cheques/checks. All those cheques which have been deposited by the customer, but the amount of which has not been collected or credited by the bank in customer`s, account, till the date on which Bank Statement is issued are called uncleared cheques/checks.
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123. Bank reconciliation statement is?
A
Part of bank statement
B
Part of the cash book
C
A separate statement
D
A sub-division of journal
A bank reconciliation statement is a summary of banking and business activity that reconciles an entity`s bank account with its financial records. The statement outlines the deposits, withdrawals, and other activities affecting a bank account for a specific period
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124. The main purpose of preparing a bank reconciliation statement is?
A
To know the bank balance
B
To know the balance of bank statement
C
To correct the cash book
D
To identify causes of difference between cash book and bank statement
Bank reconciliation statements ensure payments have been processed and cash collections have been deposited into the bank. The reconciliation statement helps identify differences between the bank balance and book balance, in order to process necessary adjustments or corrections.
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125. Which of the following is an asset account?
A
Accounts Payable
B
Prepaid Insurance
C
Unearned Revenue
D
None of above
Some examples of asset accounts include Cash, Accounts Receivable, Inventory, Prepaid Expenses, Investments, Buildings, Equipment, Vehicles, Goodwill, and many more
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126. Which of the following is a category or element of the balance sheet?
A
Expenses
B
Gains
C
Liabilities
D
Losses
The balance sheet consists of three major elements: assets, liabilities and owner`s equity.
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127. Another name for the balance sheet is
A
Statement of Operations
B
Statement of Financial Position
C
Both A and B
D
None of the above
In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business partnership, a corporation, private limited company or other organization
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128. Which of the following shows summary of a company`s financial position at a specific date?
A
Profit & Loss Account
B
Cash Flow Statement
C
Balance Sheet
D
Trial Balance
Balance sheet financial statements shows the financial position of a business at a specific date. The balance sheet, sometimes called the statement of financial position, lists the company`s assets, liabilities, and stockholders equity (including dollar amounts) as of a specific moment in time.
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129. P&L statement is also known as
A
Statement of Operations
B
Statement of Income
C
Statement of Earnings
D
All of these
A P&L statement, often referred to as the income statement, is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time, usually a fiscal year or quarter.
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130. Account which shows Gross Profit or Gross Loss of the business is called
A
Profit and Loss Account
B
Balance Sheet
C
Trial Balance
D
Trading Account
A trading account helps in determining the gross profit or gross loss of a business concern
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131. Which accounting concept specifies the practice of crediting closing stock to the trading account?
A
Cost
B
Going concern
C
Realization
D
Matching
Matching is the accounting concept that specifies the practice of crediting closing stock to the trading account. Explanation: Matching concept in accounting states that revenue and the expenses made to earn the revenue should be matched
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132. The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as
A
Appreciation
B
Depreciation
C
Fluctuation
D
None of the given options
The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the as set, is termed as Depreciation. Depreciation is any method of allocating such net cost to those periods in which the organization is expected to benefit from use of the asset.
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133. Interest on loan paid by business is an example of
A
Revenue expense
B
Income
C
Asset
D
Return outward
Interest on loan paid by business is an example of Revenue expense. A revenue expenditure is a cost that is charged to expense as soon as the cost is incurred
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134. Prepayment of insurance premium will appear in the Balance Sheet and in the Insurance Account respectively as
A
Liability and a debit balance.
B
An asset and a debit balance.
C
An asset and a credit balance
D
A liability and a credit balance
a pre payment of insurance premium will appear in asset side of balance sheet as pre-payment of insurance premium is our prepaid expenses
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135. When closing stock is given in trial balance, then it will affect:
A
Trading and Profit & Loss account only
B
Balance sheet only
C
Owner`s equity only
D
D) Trading and Profit & Loss account and Balance sheet
If closing stock appeared in Trial balance it means the purchases has been reduced to the extent of stock amount at the end of the period. The accounting treatment will be closing stock to be shown in Balance sheet under current assets and it should not be credited to Trading a/c.
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136. Which of the following errors in the journal entry will not be detected by trial balance.
A
Debit part is overstated but credit part is correctly recorded
B
Debit part is correctly recorded but credit part is overstated
C
Both debit and credit parts are overstated by the same amount
D
Debit part is correctly recorded but credit part is understated
The following errors will not be disclosed by the trial balance: Errors of complete omission (transaction is not recorded) Errors of commission (transaction credited to wrong account, but correct amount and correct side) ... Recording wrong amount in subsidiary book (wrong amount on both the debit and credit sides
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137. Under balance method, which one of the following is used for preparing trial balance at the end of an accounting period?
A
Beginning balances of ledger accounts
B
Ending balances of ledger accounts
C
Total of beginning and ending balances of ledger accounts
D
Difference of beginning and ending balances of ledger accounts
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138. Which one of the following is the most popular method of preparing a trial balance
A
Balance method
B
Total method
C
Trial and error method
D
Line method
Trial balance can be prepared in three ways:
1) Total cum balance method- In this method, total and balances both are captured in tabular form.
2) Total Method- In this method, total of debit and credit are incorporated in the tabular form.
3) Balance method- In this method, only balances are taken in the trial balance. This method is most widely used for preparation of trial balance.
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139. A trial balance prepared after taking into account the effect of adjusting entries is known as:
A
Financial trial balance
B
Adjusted trial balance
C
Unadjusted trial balance
D
Normal trial balance
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140. The basic purpose of preparing a trial balance is
A
To find out profit of the business
B
To show financial position of the business
C
To test arithmetical accuracy of the ledger
D
To calculate net purchases of the business
A trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled into debit and credit account column totals that are equal. ... The general purpose of producing a trial balance is to ensure the entries in a company`s bookkeeping system are mathematically correct.
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141. When a cheque is received from a customer and it is deposited into the bank for collection but ultimately returned dishonoured, the customer account will be?
A
Debited
B
Credited
C
Becomes a liability
D
None of these
Debited
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142. The transaction will be treated as a contra entry when?
A
Cash withdrew from bank for personal use
B
Cheque received from customer and deposited
C
Cash drew from bank for office use
D
None of Above
A contra entry is recorded when the debit and credit affect the same parent account and resulting in a net zero effect to the account. These are transactions that are recorded between cash and bank accounts.
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143. A company issues cheque to pay account payable. The effect of the transaction is to?
A
Increase assets and liabilities
B
Increase assets and decrease liabilities
C
Decrease assets and liabilities
D
Increase assets and stockholder`s equity
When an account payable is paid, Accounts Payable will be debited and Cash will be credited. ... The same date is used to record the debit entry to an expense or asset account as appropriate.
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144. The process of finding out the balance of a ledger account is known as
A
Posting
B
Investigation
C
Calculation
D
Balancing
The process of transferring the entries from journal to respective ledger accounts is called ledger posting. Balancing of ledgers is carried to find out differences at the end of the year. ... This process is called the balancing of the ledger accounts.
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145. Which of the following accounts is expected to have a debit balance?
A
Asset
B
Expense
C
Loss
D
All of the above
A debit balance is normal and expected for the following accounts: Asset accounts such as Cash, Accounts Receivable, Inventory, Prepaid Expenses, Buildings, Equipment, etc. For example, a debit balance in the Cash account indicates a positive amount of cash
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146. Collection or group of all accounts of a business enterprise is known as
A
Ledger
B
Balance sheet
C
Trial balance
D
Journal
A group of accounts is called a ledger.
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147. Transferring information from journal to ledger is known as
A
Transferring
B
Posting
C
Balancing
D
Journalizing
The process of recording transactions in a journal is called journalizing while the process of transferring the entries from the journal to the ledger is known as posting.
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148. Debit note is issued by an entity at the time of
A
Purchase return
B
Sales Return
C
Both of (A) & (B)
D
None of the above
A debit note is a document used by a vendor to inform the buyer of current debt obligations, or a document created by a buyer when returning goods received on credit. The debit note can provide information regarding an upcoming invoice or serve as a reminder for funds currently due.
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149. Credit note is issued by an entity at the time of
A
Purchase return
B
Sales Return
C
Both of (A) & (B)
D
None of the above
Credit notes are typically used when there has been an error in an already-issued invoice, such as an incorrect amount, or when a customer wishes to change their original order. In short, credit notes can be used in any circumstances that would require the invoice to be changed and re-issued.
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150. The accounts that records expenses, gains and losses are
A
Personal accounts
B
Real accounts
C
Nominal accounts
D
None of the above
The account that records expenses, gains and losses is Nominal account. A nominal account is an account in which accounting transactions are stored for one fiscal year.
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151. Any written evidence in support of a business transaction is called
A
Journal
B
Ledger
C
Ledger posting
D
Voucher
Any written evidence in support of a business transaction is called voucher.
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152. The rent paid to landlord is credited to
A
Landlord`s Account
B
Rent Account
C
Cash Account.
D
None
Rule for nominal account describe that all expense and losses should be debited and all incomes and gains should be credited. Payment of rent to landlord is an expense which need to be debited to rent account by crediting cash account.
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153. An Asset that is NOT physical in nature is called
A
Intangible Asset
B
Liquid Asset
C
Current Asset
D
None of the above
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets. Intangible assets exist in opposition to tangible assets, which include land, vehicles, equipment, and inventory.
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154. Commercial Accounting is based on
A
Single entry book keeping
B
Double entry book keeping
C
Both single and double entry book keeping
D
Cash basis of book keeping
Commercial accounting is based on Double entry book keeping. Commercial accounting is something about providing right informatin to right people on right time. In commercial accounting, the system is maintained by the business organizations.
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155. Which of the following account will be credited when a Computer is sold that has been used in the office?
A
Computer Account
B
Cash Account
C
Sales Account
D
Purchase Account
Office equipment account will be credited when a typewriter is sold that has been used in the office.
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156. Which of the following shows summary of business`s financial position at a specific date?
A
Profit & Loss Account
B
Cash Flow Statement
C
Balance Sheet
D
Income & Expenditure Account
Balance sheet financial statements shows the financial position of a business at a specific date. The balance sheet, sometimes called the statement of financial position, lists the company`s assets, liabilities,and stockholders equity (including dollar amounts) as of a specific moment in time.
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157. When Capital is increased by an amount, it is recorded on the
A
Right or debit side of the account
B
Left or credit side of the account
C
Left or debit side of the account
D
Right or credit side of the account
When capital is increased by an amount, it is recorded on the Right or credit side of the account.
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158. When a Liability is reduced or decreased, it is recorded on the
A
Left or credit side of the account
B
Right or debit side of the account
C
Right or credit side of the account
D
Left or debit side of the account
When a liability is reduced or decreased, it is recorded on the Left or debit side of the account.
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159. Every business transaction affects at least ____ accounts
A
One
B
Two
C
Three
D
Infinite
Every transaction affects at least two accounts in opposite directions. There can be no transactions in a business that affect only one account or have only one aspect because the double-entry system of accounting is followed while recording the transactions in the books of accounts.
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160. The amount brought in by owner of the business should be credited to?
A
Capital Account
B
Cash Account
C
Drawing Account
D
Bank Account
As we know that owner is considered as a creditor to the business in the book of accounts. So, owner contributed the amount to start a business and it`s a liability. Therefore, the amount brought into the business by the proprietor or the owner should be credited to capital account
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161. According to this concept, business and owner both have separate identity
A
Realization concepts
B
Going Concern Concept
C
Business entity concept
D
Cost Concept
The concept of business entity assumes that business has a distinct and separate entity from its owners. It means that for the purposes of accounting, the business and its owners are to be treated as two separate entities. Keeping this in view, when a person brings in some money as capital into his business, in accounting records, it is treated as liability of the business to the owner. Here, one separate entity (owner) is assumed to be giving money to another distinct entity (business unit). Similarly, when the owner withdraws any money from the business for his personal expenses(drawings), it is treated as reduction of the owner’s capital and consequently a reduction in the liabilities of the business.
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162. According to this concept, it is assumed that business will exist for indefinite time period
A
Realization concepts
B
Going Concern Concept
C
Business entity concept
D
None of the above
The concept of going concern assumes that a business firm would continue to carry out its operations indefinitely, i.e. for a fairly long period of time and would not be liquidated in the foreseeable future.
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163. According to the money measurement concept, the following would be recorded in the books of accounts of the business
A
Health of director of the company
B
Quality of company`s goods
C
Value of plant machinery
D
All of the above
In the above case, only the value of plant machinery is measurable in terms of money.
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164. A concept that a business enterprise will not be sold or liquidated in the near future is known as:
A
Going concern
B
Economic entity
C
Monetary unit
D
None of the above
The assumption that a business enterprise will not be sold or liquidated in the near future is known as the Going concern concept.
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165. Who invented the double entry system?
A
Marshall
B
Karl Pearson
C
J.R. Batliboi
D
Lucas Pacioli
Luca Pacioli was a monk, magician and lover of numbers. He discovered this special bookkeeping in Venice and was intrigued by it. In 1494, he wrote a huge math encyclopedia and included an instructional section on double-entry bookkeeping
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166. Which of the following shows summary of a company`s financial position at a specific date?
A
Profit & Loss Account
B
Cash Flow Statement
C
Balance sheet
D
Income & Expenditure Account
Balance sheet financial statements shows the financial position of a business at a specific date. The balance sheet, sometimes called the statement of financial position, lists the company`s assets, liabilities, and stockholders equity (including dollar amounts) as of a specific moment in time.
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167. We can say that the business is in profit, when
A
Assets exceed Expenditure
B
Assets exceeds Liabilities
C
Income exceeds Expenditure
D
Income exceeds Liabilities
We can say that the business is in profit, when income exceeds expenditure.
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168. Which qualitative characteristics of accounting information is reflected when accounting information is clearly presented?
A
Understandability
B
Relevance
C
Comparability
D
Reliability
Understandability qualitative characteristics of accounting information is reflected when accounting information is clearly presented. As understandibility means that the information provided through the financial statements be presented in a manner that the users are able to understand it in the manner it should be.
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169. Cash is an example of
A
Personal Account
B
Real Account
C
Nominal Account
D
Both (a) and (b)
#
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170. How do we adjust direct deposits by the customers to ascertain the balance as per pass book, if the starting point of BRS is Balance as per Cash book?
A
Added
B
Subjtracted
C
Adjusted
D
Not Adjusted
when the balance as per cash book is the starting point, direct deposits by customers are added to reach the pass book balance.
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171. What is the basis of allocation of Carriage inward cost among pre and post incorporation period?
A
Time
B
Sales
C
Purchases
D
Credit Sales
Purchases
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172. Which of the following is excluded from the cost of stock?
A
Carriage Inward
B
Import duties
C
Purchases of Raw Material
D
Salary of purchasing staff
Salary of purchasing staff
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173. A firm has omitted to record provision for bad and doubtful debts. How will it impact the financial statement?
A
Net profit would decrease
B
Net profit would increase
C
Gross profit would be overstated
D
Gross profit would be understated
Provision for Doubtful Debts means the expense reported on the income statement or profit and loss A/c. . If a provision for doubtful debts would decrease then debit balance of profit and loss A/c would decrease and ultimately net profit would increase.
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174. Statement of financial position produced from incomplete accounting record is commonly known as
A
Balance Sheet
B
Statement of affairs
C
Statement of financial operations
D
Cash flow statement
Statement of financial position produced from incomplete accounting record is commonly known as statement of affairs. Basically, this statement of affairs comprise of assets and liabilities. This gives the net book value as well as the amount that is expected to realize during the insolvency of the business.
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175. The liability of at least one partner is unlimited whereas the liability of other partners is limited. What type of partnership is represented here?
A
Partnership at will
B
Limited Partnership
C
General Partnership
D
Particular Partnership
In limited partnership, the liability of at least one partner is unlimited whereas the rest may have limited liability.
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176. Which concept suggest the exclusion of human resource in Balance Sheet?
A
Accural Concept
B
Money Measurement Concept
C
Going Concern Concept
D
Cost Concept
The value of human resources is generally not shown in the balance sheet as per money measurement concept. Money measurement concept means only those transactions will be recorded in the books of accounts which can be measured in monetary terms
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177. A cheque is received from customer and the same is deposited in bank for collection. If it is finally returned dishonored then it will result into
A
Customer`s account being credited
B
Customer`s account being debited
C
No change in customer`s account
D
No change in bank account
In case if cheque gets dishonored bank immediately debits our A/c which is maintained in bank`s A/c book which results in less balance as per passbook than cashbook balance as the same is not recorded in the cash book.
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178. The balance remaining after deducting gross profit from sales is called
A
Cost of goods sold
B
Net sales
C
Gross sales
D
Liabilities
The balance remaining after deducting Cost of Goods Sold (COGS) from business revenue is called Gross Profit. Cost of Goods Sold is comprised of expenses directly related to the production of income.
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179. Income tax paid on business income by a sole proprietor is
A
Debited to trading account
B
Debited to profit and loss account
C
Deducted from capital account in the balance sheet
D
Added to capital account in the balance sheet
In sole proprietorship, all profits are transferred to the owner. Income tax is a personal tax which need to be paid by the individual in case of proprietorship. This will be considered as personal expense or drawings and should be deducted from the capital a/c.
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180. Which account is generally used in single entry and incomplete records to obtain the amount of credit sales made during an accounting period?
A
Accounts payable account
B
Total revenue account
C
Debtors account
D
Stock account
in order to prepare the financial statements for a particular period all the incomplete records should be completed by preparing various accounts. Since the credit sales are recorded in the debtors account, preparation of debtors account is very essential to determine the amount of total credit sales.
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181. The biggest strength of PFMS is its integration with the
A
Core defense system in the country
B
Core insurance sector in the country
C
Core social security sector in the country
D
Core banking system in the country
The biggest strength of PFMS is its integration with the Core banking system in the Country. As a result, PFMS has the unique capability to push online payments to almost every beneficiary/vendor.
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182. Root cause for financial accounting is
A
Social accounting
B
Management accounting
C
Human resource accounting
D
Stewardship accounting
In its oldest form, accounting aided the stewards to discharge their stewardship function. The wealthy men employed steward to manage their property; the steward in return rendered an account periodically of their stewardship. Thus Stewardship Accounting was the root of financial accounting system.
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183. Goods given as charity should be
A
Credited to purchases account
B
Debited to purchases account
C
Not recorded in purchases account
D
Credited to sales account
Purchases will be credited if goods are given as charity. When accounting for goods given as charity, purchases are reduced with the exact cost of goods contributed. The amount is reduced from purchases in the trading account. It is shown as an expense on the debit side of the income statement.
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184. Nominal account is classified under
A
Impersonal Account
B
Real Account
C
Personal Account
D
Representative Personal Account
Nominal Accounts are accounts related and associated with losses, expenses, income, or gains. Examples include a purchase account, sales account, salary A/C, commission A/C, etc. The outcome of a nominal account is either profit or loss, which is then ultimately transferred to the capital account.
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185. A bank pass book is a copy of
A
The cash column of a customer`s cash book
B
The bank column of a customer`s cash book
C
The customer`s account in the bank`s ledger
D
The debtor`s account in the bank`s ledger
Passbook is a copy of the account of the customer as it appears in the bank`s book. In other words, passbook is a record of banking transaction of a customer with bank. Entries which are made by a customer in the bank column of his cashbook must be entered by the bank in the passbook. Hence, the balances as per bank column of the cashbook must agree with the balance as per passbook.
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186. What does a Nominal Account having debit balance represent?
A
Income / Gain
B
Cash
C
Asset
D
Expenses / Losses
The debit balance of a nominal accounts show the expenses or losses of a firm or company.
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187. Drawings account is classified under
A
Real Account
B
Personal Account
C
Impersonal Account
D
Nominal Account
Drawings account is a personal account.
Personal accounts are classified as :-
1) Natural person,
2) Artificial person
3) Representative personal accounts.
A representative personal account represents a person/persons. Drawings account is a representative personal account. Some examples of representative personal accounts are capital, outstanding wages, prepaid salaries.
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188. Receipt Voucher is
A
Record of purchase of raw material
B
Record of purchase of stationery
C
Record of sale of Machinery
D
Record of receipt of cash and bank
A receipt voucher is a manually written receipt for services or goods sold. This is typically used in place of a printable receipt. These receipts are typical for taxicabs, construction material, equipment rentals, and labor services. Vouchers are considered an adequate record of expenses for auditing purposes.
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189. Wages paid for installation of a new machinery should be
A
Credited to the Machinery Account
B
Debited to the Machinery Account
C
Credited to the wages Account
D
Debited to the wages Account
It is the amount incurred for buying and installing the machine. The machinery account is debited since the machine has to be put to use. The expenses are done to start the working of machinery. Hence it will be added to the cost of machinery. Therefore the wages for the installation of machinery are added to the cost of machinery since without spending the amount for the installation, the machine will not be operational.
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190. Drawing must be deducted from
A
Liability
B
Gross Profit
C
Capital
D
Net Profit
Drawings is the money that is withdrawn by the owner for personal use and is an asset for the company. Capital is money brought by the owner in the business and is liability for the company. Drawings are deducted from the capital to reduce the liability of the company and not shown on the assets side.
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191. The Public Financial Management System (PFMS) was earlier known as
A
Central Plan Schemes Monitoring System (CPSMS)
B
Controller General of Accounts (CGA)
C
Central Sector Scheme of Planning Commission
D
Core Banking System (CBS)
The Public Financial Management System (PFMS),earlier known as Central Plan Schemes Monitoring System (CPSMS), is a web-based online software application developed and implemented by the Office of Controller General of Accounts (CGA). PFMS was initially started during 2009 as a Central Sector Scheme of Planning Commission with the objective of tracking funds released under all Plan schemes of GoI, and real time reporting of expenditure at all levels of Programme implementation. Subsequently in the year 2013, the scope was enlarged to cover direct payment to beneficiaries under both Plan and non-Plan Schemes. The latest enhancement in the functionalities of PFMS commenced in late 2014, wherein it has been envisaged that digitization of accounts shall be achieved through PFMS and the additional functionalities would be built into PFMS in different stages. Beginning with Pay & Accounts Offices payments, the O/o CGA did further value addition by proposing to bring in more financial activities of the Government of India in the ambit of the project. The primary objective of PFMS is to facilitate sound Public Financial Management System for Government of India (GoI) by establishing an efficient fund flow system as well as a payment cum accounting network. PFMS provides various stakeholders with a real time, reliable and meaningful management information system and an effective decision support system, as part of the Digital India initiative of GoI
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192. Depriciation is
A
cash operating expenditure
B
non cash operating expenditure
C
cash non operating expenditure
D
non cash non operating expenditure
Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy. Depreciation represents how much of an asset`s value has been used up.
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193. What is the first step of a financial audit?
A
planning the audit
B
interviewing the company`s managers to find out what they want the auditors to say in the final report
C
determining the scope, or boundaries of the audit
D
Conducting surprise cash counts on nay point of sale registers
Audit Process
Step 1: Planning
Step 2: Notification
Step 3: Opening Meeting
Step 4: Fieldwork
Step 5: Report Drafting
Step 6: Management Response
Step 7: Closing Meeting
Step 8: Final Audit Report Distribution
Step 9: Follow-up
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