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c. Materiality
d. Going concern
e. None of the above
9. P&L account is prepared for a period of one year by following
a. Consistency concept
b. Conservatism concept
c. Time period concept
d. Cost concept
e. None of the above
10.
If the going concern concept is no longer valid, which of the
following is true?
a. All prepaid assets would be completely written-off immediately
b. Total contributed capital and retained earnings would remain
unchanged.
c. The allowance for uncollectible accounts would be eliminated
d. Intangible assets would continue to be carried at net amortized
historical cost.
e. Land held as an investment would be valued at its realizable value
11.
Under which of the following concepts are shareholders treated
as creditors for the amount they paid on the shares they subscribed
to?
a. Cost concept.
b. Duality concept
c. Business entity concept
d. Going concern concept
e. Since the shareholders own the business, they are not treated as
creditors.
12.
The underlying accounting principle(s) necessitating amortization
of intangible asset(s) is/are
a. Cost concept
b. Realization concept
c. Matching concept
d. Both (a) and (c) above
e. Both (b) and (c) above
13.
Which of the following practices is not in consonance with the
convention of conservatism?
a. Creating provision for bad debts.
b. Creating provision for discount on creditors.
c. Creating provision for discount on debtors.
d. Creating provision for tax.
e. None of the above.
14.
The accounting measurement that is not consistent with the
going concern concept is
a. Historical cost
b. Realization
c. The transaction approach
d. Liquidation value
e. Continuity
15.
Recording of fixed assets at cost ensures adherence of
a. Conservatism concept
b. Going concern concept
c. Cost concept
d. Both (a) and (b) above
e. Both (b) and (c) above
16.
Certain fundamental accounting assumptions underlie the
preparation and presentation of financial statements. They are usually
not specifically stated because their acceptance and use are assumed.
Disclosure is necessary if they are not followed. Which of the following
are not fundamental assumptions specified under Accounting
Standard-1?
a. Going concern concept.
b. Consistency concept
c. Accrual concept
d. Materiality concept
e. Both (a) and (b) above.
17.
Which of the following statements is /are true?
i.
The entity concept of accounting is not applicable to sole trading
concerns and partnership concerns
ii.
Assets are to be shown in the balance sheet at their replacement
cost on liquidation.
iii.
Money measurement concept takes into account changes in the
value of monetary unit.
iv.
When a creditor is paid, this results in decrease of one asset and
a corresponding increase in another asset.
a. Both (i) and (iii) above
b. Both (i) and (ii) above
c. Both (iii) and (iv) above
d. Both (ii) and (iv) above
e. All (i), (ii),(iii) and (iv) are false
18.
Omission of paise and showing the round figures in financial
statement is based on
a. Conservation concept
b. Consistency concept
c. Materiality concept
d. Realization concept
e. Cost concept
19.
X Ltd., purchased goods for Rs.5lakhs and sold 9/10th of the value
of goods for Rs. 6 lakh. Net expenses during the year were Rs. 25,000.
The company reported its net profit as Rs. 75,000. Which of the
following concept is violated by the company?
a. Realization
b. Conservation
c. Matching
d. Accrual
e. Materiality
20.
Accounting does not record non-financial transaction because of
a. Entity concept
b. Accrual concept
c. Cost concept
d. Money measurement concept
e. Continuity concept.
21.
Mr. Rohit, owner of Rohit Furniture Ltd. Owns a personal
residence that cost Rs.6,00,000, but has a market value of
Rs.9,00,000. During preparation of the financial statement for the
business, the entire value of property was ignored and was not shown
in the financial statements. The principle that was followed was
a. The concept of business entity
b. The concept of the cost principle
c. The concept of going concern principle
d. The concept of duality principle
e. The concept of realization principle
22.
Provision for bad debt is made as per the
a. Entity concept
b. Conservatism concept
c. Cost concept
d. Going concern concept
e. Time period concept
23.
Fixed assets and current assets are categorized as per concept of
a. Separate entity
b. Going concern
c. Contingency
d. Consistency
e. Time period
24.
Capital is shown under liabilities because of the
a. Conservatism concept
b. Accrual concept
c. Entity concept
d. Revenue recognition concept
e. Matching concept
25.
Which of the following statements is true?
a. Going concern concept assumes that business will be carried on for
a definite period.
b. Time period concept facilitates the comparison of the results of one
accounting period of a business with that in the past.
c. The capital losses need not be deducted to ascertain net income.
d. Provision for bad and doubtful debts is created in recognition of
conservatism concept.
e. Materiality concept states that all business transactions are to be
recorded however insignificant they may be.
26.
The expenses and income pertaining to full trading period are
taken to the Profit and Loss account of a business irrespective of their
payment of receipt. This is in recognition of
a. Time period concept
b. Business entity concept
c. Going concern concept
d. Accrual concept
e. Duality concept.
27.
Which of the following is an example of capital expenditure?
a. Insurance premium
b. Taxes and legal expenses
c. Depreciation on machinery
d. Discount allowed
e. Customs duty on import of machinery.
28.
Which of the following events is/are not recorded in the books of
a business?
a. Significant monetary events after the balance sheet date.
b. Death of a chief executive of the business.
c. Government investigations into the pricing policies of the business
d. Both (b) and (c) above
e. All of (a), (b) and (c) above.
29.
Which of the following concept is not considered a basic principle
of accounting?
a. Materiality concept
b. Cost concept
c. Consistency concept
d. Matching concept
e. Logical concept
30.
In contract accounting, the percentage of completion method is
an exception to the
a. Matching principle
b. Going concern principle
c. Historical cost principle
d. Business entity principle
e. Revenue recognition principle
31.
Which of the following concepts assumes that a business will last
indefinitely?
a. Business entity.
b. Going concern.
c. Periodicity
d. Conservatism
e. Consistency.
32.
If unexpired insurance appear in trial balance it should be
a- Debited to trading account
b- Credited to Profit and Loss account
c- Debited to P&L account
d- Shown In liabilities in balance sheet
e- Shown on asset side of business
33.
Which of the following is not a fixed asset?
a- Stock
b- Vehicle
c- FD in bank
d-a &c
e- b & c
34.
Which of the following is a current asset?
a- sundry debtors
b- Stock
c- Prepaid insurance
d- Both a & b
e-All of the above
35.
Which statement is false?
a- Owner equity + outsiders liability = Assets
b- Assets - capital= Liability
42.
Based on following which concept, is share capital account
shown on liabilities side of balance sheet?
a- Business entity concept
b- Money Measurement Concept
c- Duality concept
d- Going concern concept
e- Matching concept
43.
Which of the following is not a contingent liability?
a- Doubtful Debts
b- Uncalled liability on partly paid shares
c- Claims against company not acknowledged as debts.
d- Arrears of fixed cumulative dividend.
e- Liability on bills receivable previously discounted.
61. Which of the following are current assets of business?
- Income received in advance
- Stock
- Debtors
- Prepaid expenses
- Accrued income
a- a & d
b- b & c
c- a, b and c
d- b, c, d and e
e- a, b, c and d
62.
Mr. Rohit owner of Rohit furniter ltd. owns a personal residence
that costs Rs. 6, 00,000, but has a market value of Rs. 9, 00,000.
During preparation of the financial statement for the business, the
entire value of the property was ignored and was not shown in the
financial statements. The principle that was followed was
a. The concept of business entity
b. The concept of the cost principle
c. The concept of going concern principle
d. The concept of duality principle
e. The concept of realization principle
63. Provision for bad debt is made as per the
a. Entity concept
b. Conservation concept
c. Cost concept
d. Going concern concept
e. Time period concept
64. Fixed assets and current assets are categorised as per concept of
a. Separate entity
b. Going concern
c. Contingency
d. Consistency
e. Time period
65. Capital is shown under liabilities because of the
a. Conservation concept
b. Accrual concept
c. Entity concept
d. Revenue recognition concept
e. Matching concept
66. Which of the following is the expenses and incotrue?
a. Going concern concept assumes that the business will be
carried on for a definite period.
b. Time period concept facilitates the comparison of the results
of one accounting period of a business with that in the past.
c. The capital losses need not be deducted to ascertain net
income.
d. Provision for bad and doubtful debts is created in recognition
of conservation concept.
e. Materiality concept states that all business transactions are to
be recorded however insignificant they may be.
67. The expenses and incomes pertaining to full trading period are
taken to the Profit and Loss account of a business, irrespective of
their payment or receipt. This is in recognition of
a. Time period concept
b. Business entity concept
c. Going concern concept
d. Accrual concept
e. Duality concept
68.
e. consistency
72. Which of the following statements is/are true? Events after
balance sheet date are
a. All significant events.
b. The events after balance sheet date but before its approval by
the board.
c. The events after balance sheet date but its approval
d. all the errors rectified after the balance sheet date.
73. Which of the following are examples of contingencies?
a. Compulsory acquisition of part of land of the company by
Government.
b. A suit filed by the employee against the company.
c. A debtor of the company is declared insolvent, resulting in
bad debts to the company.
d. b and c
e. a, b and c
74. If the petty cash fund is not reimbursed just prior to year end and
an appropriate adjusting entry is not made, then
a. A complete audit is necessary
b. The petty cash a/c is to be returned to the companys cashier
c. Expenses are overstated and the cash is understated.
d. Cash is overstated and expenses are understated.
75.
76.
77.
78.
1)
2)
3)
4)
5)
1)
2)
3)
4)
5)
1)
2)
3)
4)
5)
84. Which of the following shall not be deducted from net profit while
calculating managerial remuneration?
Interest on debentures issued buy a company.
Loss on sale of undertaking
Debts considered bad and written off.
Liability arising from a breach of contract.
Managing directors remuneration.
1)
2)
3)
4)
5)
1)
2)
3)
4)
5)
1)
2)
3)
4)
5)
88. A club paid subscription fees of Rs.1400, out of which Rs.200 is prepaid,
in such case
1) P&L a/c is debited with Rs.1400
2)P&L a/c is debited with Rs.1200.
3) Rs.200 is shown as current asset
4) Both (b) and (c) above
5) Both (a) and (c) above
89.
Bad debts recovered is
1) Credited to P&L a/c
2) Debited to P&L a/c
3) Reduced from debtors in balance sheet
4) Both (b) and (c) above
90.
The concept of conservatism will have the effect of
1) Overstatement of assets
2) Understatement of assets
3) Overstatement of liabilities
4) Understatement of liabilities
91.
Bank overdraft is shown as
1) Current liability
2) Contingent liability
3) Current asset
4) Unsecured loan
5) Provision
92. Which of the following should not be treated as revenue expenditure?
a. Interest on loans and debentures.
b. Annual fire insurance premiums on plant and equipment.
c. Sales tax paid in connection with the purchase of office expenditure.
d. Repairs and maintenance on fixed assets like machines.
e. Small expenditures on long-lived assets, such as Rs.20 for a paper weight.
93. Which of the following is not true with regard to preparation of profit and
loss account?
a. Profit and loss account is prepared for a certain period and hence it is an
interim statement.
b. Profit and loss account does not disclose the effect of non-financial items.
107.
108.
109.
110.
114.
115.
116.
117.
iv.
A debit to discount account through journal proper.
v. A credit to creditors account through journal proper.
a. Only (i) above
b. Only (ii) above
c. Only (iv) above
d. Both (i) and (iii) above
e. Both (iv) and (v) above.
118. RS Ltd. makes purchases on credit. If the purchases are not as per the
specifications, the company returns them to the suppliers. The book, that is
used to record such returns is
a. Returns inward book
b. Returns outward book
c. Cash book
d. Journal proper
e. Purchases day book.
119. If office equipment is purchased for cash, what effect will this
transaction have on the financial position of the company?
a. There is no change in the assets, liabilities and owners equity.
b. There is a decrease in assets, increase in liabilities and no
change in owners equity.
c. There is a decrease in assets, no change in liabilities and a
decrease in owners equity.
d. There is an increase in assets, decrease in liabilities and no
change in owners equity.
e. There is an increase in assets, no change in liabilities and
increase in owners equity.
1)
a)
b)
c)
d)
2)
Management Accounting provides invaluable services to management in
performing
a)
All management functions
b)
Controlling functions
c)
Interpret the financial data
d)
None of these
3)
a)
b)
c)
d)
4)
a)
b)
c)
d)
5)
a)
b)
c)
d)
Management Accounting is
Extension of financial accounting
Extension of financial management
Accounting for management
Concerned with the provision of information to people within the organization
to help them to make better decisions
6)
Management accounting renders useful information to management in
performing
a)
All management functions
b)
Control functions
c)
Co-ordination functions
d)
Business functions
7)
a)
b)
c)
d)
8)
a)
b)
c)
d)
9)
a)
b)
c)
d)
10)
a)
b)
c)
d)
Cost refers to
The value of the sacrifice made to get some goods or services
The present value of future benefits
An asset which has given benefit and is now expired
All of these
11)
a)
b)
c)
d)
Accounting records
Qualitative aspect of business
Quantitative aspect of business
Economic aspect of business
Financial aspect of business
12)
a)
b)
c)
d)
Accounting records
Qualitative aspect of business
Quantitative aspect of business
Economic aspect of business
Financial aspect of business
13)
a)
b)
c)
d)
Management accounting
Is the process of accounting and controlling the cost of a product
Is mainly confined to the preparation of financial statements
Is a branch of financial accounting
Is to find out the profitability
14)
Objective of cost accounting
a)
Is to keep the management fully informed about the latest position of the
concern
b)
Is to summarise the financial performance of the business for external
stakeholders
c)
Is to create a common internal global 'language' in decision making
d)
Is to ascertain. the profitability of the activities carried out or planned _
15)
The art of recording the business transactions in a systematic and regular
manner refers to
a)
Accounting
b)
Cost accounting
c)
Book- keeping
d)
Financial accounting
16)
In financial accounting only transactions
a)
In monetary terms are considered
b)
In non-monetary terms are considered
c)
In an orderly manner are considered
d)
In the balance sheet are considered
17)
The full disclosure principle states
a)
That accounting practices should remain unchanged from one period to
another
b)
The tendency to maintain a state of affairs without a sudden change
c)
That all information significant to the users of financial statements should be
disclosed
d)
To the relative importance of an item or event
18)
a)
b)
c)
d)
19)
a)
b)
c)
d)
20)
Essential characteristic of accounting is
a)
Identification, measurement, recording, classification, analyzing and
communication
b)
Tracking methods that allow control of operations
c)
To satisfy the wishes of the management
d)
To act as a co-coordinator among different financial departments
21)
a)
b)
c)
d)
22)
a)
b)
c)
d)
May be Manipulated
Both (a) & (c)
23)
a)
b)
c)
d)
24)
a)
b)
c)
d)
25)
Decision Making as a role of management accounting in a Business
Organization means :
a)
Track the costs of each activity
b)
Helping management by providing relevant information
c)
Ensuring value for money for the customers.
d)
Creating value by enhancing their supply chain
26)
Scope of management accounting includes:
a)
Covering financial accounting, cost accounting and all aspects of financial
management.
b)
Preparing Trading Ne, Profit and Loss Ne and Balance Sheet.
c)
Measuring the economic performance of the cost centres.
d)
Focus attention on past and current operations.
27)
Cost Accounting:
a)
Uses information generated by economics, mathematics, statistics, etc.
b)
Uses output data.
c)
Uses the basic records (voucher's etc.) of financial accounting for generation
of information.
d)
Both (a) and (b)
28)
a)
b)
c)
d)
29)
n)
b)
c)
d)
30)
a)
b)
c)
d)
31)
a)
b)
Non - Materiality
c)
Full Disclosure
d)
Conservatism
MCQ- 2nd Unit
I)
Outstanding expenses appearing in the Trial Balance are shown in the
a)
Profit and loss Ne
b) Balance sheet
c)
In both (a) and (b)
d) None of these
2)
a)
b)
c)
d)
3)
a)
b)
c)
d)
4)
a)
b)
c)
d)
5)
a)
b)
c)
d)
6)
a)
b)
c)
d)
7)
a)
b)
c)
d)
8)
a)
b)
c)
d)
As per Schedule VI of the Companies Act, 1956, unclaimed dividends are to be shown
As a deduction from claimed dividends
As an addition to unpaid interest
As a deposit in a nationalized bank
As a current liability
9)
a)
c)
10)
a)
b)
c)
d)
1l)
a)
b)
c)
d)
12)
a)
c)
13)
a)
c)
14)
Under fluctuating capital account method interest on withdrawal will be debited to which
account?
Capital account
Trading account
Current account
Profit and loss appropriation account
a)
b)
c)
d)
15)
a)
c)
16)
a)
b)
c)
d)
17)
a)
b)
c)
d)
18)
a)
b)
c)
d)
19)
a)
b)
c)
d)
20)
a)
b)
c)
d)
Purchase account
Sales account
Profit and loss 8ccount
21)
a)
b)
c)
d)
22)
a)
c)
Sundry debtors should be classified between debts outstanding for a period exceeding
Two months
b)
Three months
Six months
d)
Five months
23)
a)
c)
24)
a)
b)
c)
d)
25)
a)
c)
That portion of the expenses, the benefit of which will be received during the next accounting
year, is known as
Prepaid Expenses
b)
Outstanding expenses
Depreciation
d)
Bad debts
26)
a)
b)
c)
d)
A balance sheet
Helps in assessment of financial position of the firm
Tells about current assets and current liabilities
Is affected by the accounting policies relating to inventory valuation
All of the above
27)
a)
b)
c)
d)
28)
a)
b)
c)
d)
Trial balance
Reflects the true financial position of the firm
Is accepted by the court as documentary evidence
is prepared annually or half yearly
None of these
29)
a)
b)
c)
d)
Answers
11) d
21) c
26) d
2)
7)
d
c
l2) a
3)
8)
17) a
22) c
27) d
18) b
13)
23) d
28) d
4)
9)
14)
19)
24)
a
d
a
29) a
d
10) d
15) a
5)
20) a
25) a