Thursday 27 January 2011

Trial Balance, Rectification of Errors and Final Accounts Multiple Choice-3

Greetings to fellow blog readers......

1.    Purchase of an asset is called :
1. an expense                                                       2. An expenditure
3. a loss                                                                 4. None of these

2.    A claim which can be enforced against the assets of the firm in the court is called:
1. equity                                                                2. Assets
3. Liabilities                                                            4. None of these

3.    The balance appearing on the debit side of the trial balance as an expenditure is shown in the :
1. balance sheet                                                    2. Trading account
3. profit and loss account                                      4. None of these

4.    Income statement has normally :
1. two parts                                                           2. One part
3. three parts                                                         4. None of these

5.    Which of the following is an accounting equation ?
1. Capital = Assets – Liabilities                             2. Assets = Capital – Liabilities
3. Liabilities = Assets + Capital                             4. Capital = Assets + Liabilities

6.    A business has assets of Rs.40,312 and owners equity Rs.10,210 what is the amount of liabilities ?
1. 20,420                           2. 50,530                     3. 30,102                     4. 40,312

7.    If the profit is ¼ of the sales than it is :
1. ¼ of the cost price                                            2. 1/3 of the cost price
3. 1/5 of the cost price                                          4. 1/3 of the selling price

8.    If profit is 25% of the cost price than it is ?
1. 25% of the sales price                                      2. 33% of the sales price
3. 20% of the sales price                                      4. None of these

9.    Interest on capital is :
1. Expenditure for the business                            2. Expense for the business
3. gain for the business                                         4. None of these

10.  Furniture of the book value of Rs.1,500 was sold for Rs.600 and new fixture of Rs.1,000 was purchased and cartage of Rs.25 paid. What is the amount of capital expenditure ?
1. Rs.1,500                        2. Rs.900                     3. Rs.1,000                  4. Rs.1,025

11.  Trading and profit and loss accounts shows only :
1. Personal accounts only                                    2. Real accounts only
3. Nominal accounts only                                                 4. Both 1 & 2

12.  A balance sheet shows only :
1. personal accounts and nominal accounts        2. Real accounts and nominal accounts
3. Personal accounts and real accounts              4. Nominal accounts only

13.  If operating expenses exceed gross profit, the excess is referred to as :
1. Operating income                                             2. Operating loss
3. non-operating expenses                                   4. Non-operating income

14.  Interest earned but not received should be classified as ?
1. accrued asset                                                   2. Accrued liability
3. prepaid expenses                                              4. Unearned revenue

15.  Life Insurance premium received by an insurance company should be classified as :
1. Accrued asset                                                   2. Accrued liability
3. prepaid expenses                                              4. Unearned revenue

16.  Stock does not include :
1.    Goods in the hands of an agent
2.    Goods out on approval (on sale or return)
3.    Goods sold awaiting delivery to the buyer
4.    Goods (meant for re-sale) hypothecated as security

17.  Depreciation is provided on :
1. fixed assets                                                       2. Outword charges
3. current assets                                                   4. Intangible assets

18.  Heavy advertising to lunch a new product is a :
1. Capital expenditure                                           2. Revenue expenditure
3. Deferred revenue expenditure                                     4. None of these

19.  Gross Profit + Opening stock + Purchase + direct expenses – Sales = ?
1. Gross profit                                                       2. Net profit
3. Net loss                                                             4. Closing stock

20.  The claim admitted on respect of stock destroyed by fire will be credited to trading account and will go to the – side of balance sheet.
1. Liabilities                                                            2. Assets
3. Contingent assets                                             4. None of these

21.  What is the amount of net profit when CGS – 9,500 operating expenses – Rs.2,700 Sales – Rs.13,000.
1. Rs.1,300                        2. Rs.6,000                  3. Rs.800                     4. Rs.3,500

22.  What is the amount of operating expenses when sales – 14,900 GP – 3,300 net loss – 500 :
1. 2,800                             2. 3,800                       3. 11,600                     4. 2,880

23.  Interest on drawing is :
1. expenditure for the business                             2. Expense for the business
3. gain for the business                                         4. Loss for the proprietor

24.  Income tax paid by a sole trader is shown :
1.    On the debit side of the trading account
2.    On the debit side of the profit and loss account
3.    By way of deduction from the sales in the trading account
4.    None of these

25.  Out standing wages are shown as :
1. an expenses                                                      2. A liability
3. an asset                                                             4. None of these

26.  The withdrawal of goods from the business by the proprietor should be credited to:
1. drawing account                                               2. Purchase account
3. capital account                                                  4. None of these

27.  Goods given as charity should be credited to :
1. Purchases account                                           2. Charity account
3. sales account                                                    4. None of these

28.  The loss on the sale of old machinery is debited to :
1. machinery account                                           2. Profit and loss a/c
3. depreciation account                                        4. Suspense a/c

29.  Wages paid on the creation of a new machinery should be debited to :
1. Wages account                                                 2. Cash account
3. Machinery account                                           4. None of these

30.  While making an adjusting entry in respect of closing stock, we debit :
1. closing stock                                                     2. Trading account
3. purchases account                                           4. Opening stock 
ANSWERS
1.2       2.1       3.1       4.1       5.1       6.3       7.2       8.3       9.2       10.4     11.3     12.3    
13.3     14.1     15.4     16.3     17.1     18.3     19.4     20.2     21.3     22.2     23.3     24.3

25.2     26.1     27.1     28.2     29.3     30.1