Deck 1: Accounting Basics and Principles

Question 1

According to which principle the same accounting methods should be used each year:

A)Prudence
B)Full disclosure
C)Materiality
D)Consistency

Answer 1

Consistency

Question 2

The elements of the accounting equation are

A)Assets, Liabilities,Capital
B)Liabilities,Capital
C)Liabilities
D)Capital

Answer 2

Assets, Liabilities,Capital

Question 3

Arun is a Book-seller, which item will be goods for his business ?

A)Purchase of Computer
B)Purchase of Fan
C)Purchase of Furniture
D)Purchase of Stationery

Answer 3

Purchase of Stationery

Question 4

The expenses due but not paid is known as -

A)Prepaid Expenses
B)Debtors
C)Outstanding Expense
D)Bills Receivable

Question 5

Goods destroyed by fire should be credited to

A)Puchases A/c
B)Sales A/c
C)Loss by fire A/c
D)Insurance A/c

Question 6

In the books of account if a transaction is completely deleted, will it affect the trial balance?

A)No
B)Yes
C)A transaction cannot be omitted
D)May be

Question 7

The respective normal account balances of Sales, Sales Returns , and Discounts allowed are?

A)Credit, Credit, Credit
B)Debit, credit, debit
C)Credit, Debit, Debit
D)Credit, Debit, Credit

Question 8

Trial balance is not a conclusive proof of accuracy due to which errors.
I.Error of omission
II.Error of Principle
III.Error of Commission
IV.Compensatory Errors

A)All I,II,III and IV
B)Only I,II and III
C)Only I,II and IV
D)Only II and III

Question 9

Which of the following is not the external user of accounting information?

A)Government
B)Shareholders
C)Tax Authorities
D)Financial institutions

Question 10

_______refers to the order in which the various assets and liabilities are shown in the Balance Sheet.

A)Grouping
B)Order of permanence
C)Marshalling
D)Order of liquidity

Question 11

If closing stock is mentioned in trial balance,Where is it shown in Final Accounts?

A)Credit side of Trading A/c
B)Asset side of Balance Sheet
C)Both A and B
D)Not shown anywhere

Question 12

Which one is false.
I.Capital Expenditure is non recurring in nature and shown in P&L account.
II.Revenue expenditure is incurred to conduct day to day activities

A)Both I and II
B)Only I
C)Only II
D)None is false

Question 13

Where do we show Provision of bad debts in final accounts if given in adjustments?
I.Debit side of P&L
II.Credit side of P&L
III.Deduct from Debtors in Balance Sheet
IV.Add to Debtors in Balance Sheet

A)I and III
B)II and IV
C)II and III
D)I and IV

Question 14

Which is true.
I.Fixed installation method is recognised by income tax department.
II.The amount of depreciation in WDV method remains same.

A)Both I and II
B)None is true
C)Only II
D)Only I

Question 15

Cost of machine=1,90,000 Installation=10,000 Scrap=50,000 Life=6 yrs Calculate depreciation as per SLM method

A)25,000
B)23,333
C)33,333
D)21,666

Question 16

Machinery purchased on 1 Oct,2016 for 40,000.This machinery was sold on Dec 2017.Calculate the total depreciation charged on machinery till date if co charges 10% as per WDV method if accounts are closed on 31st March every year.

A)6700
B)8000
C)5000
D)4850

Question 17

1 oct Opening balance=400 units @Rs 20 each, 3 Oct:Purchase=300 units @Rs 10 ,5 Oct Sales=500 units.What will be total Sales value(in Rs) as per FIFO Method?

A)Rs 9000
B)Rs 15000
C)Rs 10000
D)Rs 7500

Question 18

2 oct Opening balance=200 units @Rs 15 each, 4 Oct:Purchase=500 units @Rs 10 ,5 Oct Sales=600 units.What will be Closing Inventory value (in Rs) as per LIFO Method?

A)Rs 1000
B)Rs 500
C)Rs 8000
D)Rs 1500

Question 19

When proprietor withdrew cash from business for personal use , it is known as -

A)Drawings
B)Investment
C)Furniture
D)Bills Receivable

Question 20

In trial balance, which accounts with is/are recorded at the credit side?
I.Sales
II.Sales return
III.Cash
IV.Loan

A)Only I and II
B)All of these
C)Only I,II and IV
D)Only I and IV

Question 21

When Salary is paid by cheque, which account is credited.

A)Cash A/c
B)Bank A/c
C)Salary A/c
D)Personal A/c

Question 22

What are the two statements prepared for summarising the transactions?
I.Balance Sheet
II.Journal
III.P&L
IV.Cash Book

A)Only I and II
B)Only I,II and III
C)Only I,II and IV
D)Only I and III

Question 23

Where do we show Gas and Fuel in final accounts?

A)Trading A/c
B)P&L Account
C)Balance Sheet
D)Not shown anywhere

Question 24

What are the causes of depreciation?

A)Wear and Tear
B)Obsolescence
C)Expiration of legal rights
D)All of the above

Question 25

What is the formula for calculating depreciation in SLM Method?

A)Cost+Scrap/No of Yrs
B)Scrap-Cost/No of yrs
C)Cost - Scrap/Useful Life
D)None of these

Question 26

4 oct Opening balance=500 units @Rs 20 each, 5 Oct:Purchase=1000 units @Rs 15 ,6 Oct Sales=500 units.What will be rate at which the sales unit will be valued as per weighted avg method?

A)Rs20
B)Rs 15
C)Rs 16.66
D)17.5