1. User of financial statement is:
a) Management
b) Creditors
c) Bankers
d) All of the above
2. Inventory accounts should be classified in which section of a balance sheet?
a) Current assets
b) Investments
c) Property, plant, and equipment
d) Intangible assets
3. The Cash account on the balance sheet should not include which of the following items?
a) Travel advances to employees
b) Currency
c) Money orders
d) Deposits in transit
4. In accounting all business transaction are recorded as having
a) Single aspect
b) Dual aspect
c) Triple aspect
d) None of these
5. Which of the following equations properly represents a derivation of the fundamental accounting
equation?
Assets + liabilities = Owner Equity
Asset = OwnerEquity
Cash = Assets
Assets – Liabilities = Owner Equity
a) Only (a)
b) Both (a) (b)
c) All (a)(b)(c)(d)
d) None of these
6. Which of the following would not be included on a balance sheet?
a) Accounts payable
b) Accounts receivable
c) Sales
d) Cash
7. Contingent liabilities should be recorded in the accounts when:
a) It is probable that the future event will occur.
b) The amount of the liability can be reasonably estimated.
c) Both (a) and (b).
d) Either (a) or (b).
8. The cost concept records the figures at
a) Market values
b) Actual amount paid
c) Actual amount or market values whichever is less.
d) MRP maximum retail price
9. Financial statements are:
a) Estimates of facets
b) Anticipated facts
c) Recorded facts
d) none
10. The term Management Accounting was first used in
a) 1910
b) 1939
c) 1950
d) 1960
11. Which does not comes under the head of asset:
a) Fixed asset
b) Investment
c) Current asset
d) Owners equity
12. The word accounting can be classified in to:
a) Financial accounting and management accounting
b) Financial accounting and cost accounting
c) Financial accounting, management accounting and cost accounting
d) Cannot be classified
13. The work of a book keeper is ______________ in nature
a) Analytical
b) Clerical
c) Executive
d) Non – executive
14. Which of the following is true for: – "In accounts recording is done of_ _ _ _ _"
a) only financial transaction
b) only non- financial transaction
c) Both
d) Personal transaction of Proprietor
15. Salary is one of the ______________ expenses
a) Capital
b) Revenue
c) Direct
d) Non – cash
16. A company's telephone bill consisting of a Rs.200 monthly base amount, plus long distance charges,
would be classified as a:
a) Variable cost
b) Committed fixed cost
c) Direct cost
d) Semi variable cost
17. The practice of appending notes regarding contingent liabilities in accounting statement is pursuant
of
a) Convention of consistency
b) Money measurement concept
c) Convention of conservatism
d) Convention of disclosure
18. In manufacturing a product, prime costs are:
a) Raw materials and manufacturing overhead
b) Indirect materials and manufacturing overhead
c) Indirect labour and manufacturing overhead
d) Direct materials and direct labour
19. Because of automation, which component of product cost is declining?
a) Direct labour
b) Direct materials
c) Manufacturing overhead
d) Advertising
20. Salary paid to factory manager is an item of:
a) Prime Cost
b) Factory Overhead
c) Selling overhead
d) Office overhead
21. Material concept tell about
a) Disclosure of loss
b) Disclosure of profit
c) Disclosure of all information which are important for investor
d) Disclosure of all information which are important for management
22. Using "lower of cost and net realisable value(Market Value)" for the purpose of inventory valuation
is the implementation of which of the following concepts?
a) The going concern concept
b) The separate entity concept
c) The prudence concept
d) Matching concept
23. Which financial statement represents the accounting equation ASSETS = LIABILITIES + OWNER'S
EQUITY
a) Income Statement
b) Cash Flow Statement
c) Balance Sheet
d) Fund Flow Statement
24. Cost accounting aims at ascertain ______________ of product
a) Cost
b) Net profit
c) Gross profit
d) Selling price
25. The purpose of financial accounts is reporting to
a) Management only
b) Government only
c) Investor only
d) All of these
26. Financial accounting use data
a) Projected data
b) External data only
c) Historic data
d) Manager data only
27. What comes in is to be debited, what goes out is to be credited.
a) Rules of Personal
b) Rules of Real
c) Rules of Nominal
d) All of these
28. Payment of salary is recorded by:
a) Debiting salary a/c; crediting cash a/c
b) Debiting cash a/c; crediting salary a/c
c) Debiting employee a/c; crediting cash a/c
d) Debiting employee a/c; crediting salary a/c
29. Amortization of intangible Asset Such as Goodwill which has indefinite life is an example of
accounting concept
a) Conservatism Concept
b) Continuity Concept
c) Realisation Concept
d) Measurement Concept
30. ______________ cost refers to those cost which have already been incurred and cannot be altered
by any decision in the future.
a) Opportunity cost
b) Sunk Cost
c) Incremental cost
d) Decremental cost
31. The main object of cost accounting is:
a) To record day to day transactions of the business
b) To reveal managerial efficiency
c) To ascertain true cost of products and services
d) To determine tender price
32. The nature of financial accounting is
a) Historical
b) Forward looking
c) Analytical
d) Social
33. An accounting that deals with the accounting and reporting of information to management
regarding the detail information is
a) Financial accounting
b) Management accounting
c) Cost accounting
d) Real Accounting
34. Bad debt amount should be credited to
a) Debtors account
b) Bad debts account
c) Sales account
d) Creditors account
35. Management accounting concentrates on ______________
a) Opening books of account
b) Preparation of financial statements
c) Control of business activities
d) None of these
36. Which of the following is not an internal user of management information?
a) Creditor
b) Department manager
c) Controller
d) Treasurer
37. Double entry system is used in which type of accounting
a) Cost
b) Financial
c) Management
d) All
38. Which type of asset class includes those assets which have only definite use and become valueless
when the yield is over?
a) Fixed asset
b) Current asset
c) Fictitious asset
d) Wasting asset
39. Cost accounting is applied to:
a) Public undertakings only
b) Large business enterprise only
c) Small business concerns only
d) Manufacturing and service concern
40. Reserve for doubtful debts appearing in the trial balance should be:
a) credited to P & L a/c
b) Shown as liability side in balance sheet
c) Reduced from related asset in the balance sheet
d) Both a and c
41. sales made by Mahesh for cash should be debited to
a) Cash a/c
b) Mahesh a/c
c) Sales a/c
d) Sales return a/c
42. The rent paid to land lord to be credited to
a) Land lord a/c
b) Rent a/c
c) Cash a/c
d) Tenant a/c
43. Which of the following statements are false?
a) All liability is a debt for your business
b) Debtor are a asset for business
c) The accounting equation shows how much of your assets belong to the owner, and how much belong to
people outside business
d) None of the above
44. A business has the following items in it:
Land Rs.1,000,000
Machinery Rs.20,000
Cash Rs.10,000
Debt Rs.0
Owner’s equity?
What is the valve of owner’s equity?
a) Rs.1020000
b) Rs.1010000
c) Rs.1030000
d) None of the above
45. A business has the following items in it:
Owners’ equity Rs.6,00, 000.
Liabilities Rs.14,00,000.
What is the value of Assets ______________
What is the valve of owner’sequity?
a) 600,000
b) 1,400,000
c) 2,000,000
d) None of these
46. A business has the following items in it:
Land Rs.1, 500,000
Machinery Rs.80, 000
Cash Rs.20, 000
Owners equity Rs.900, 000
Loan Rs.500, 000
Creditors?
a) Rs.200, 000
b) Rs.700, 000
c) Rs.800, 000
d) Rs1, 100,000
47. A business has following items in it Land?
Vehicles Rs.600,000
Debtors Rs. 1,20,000
Cash Rs.30,000
Owners’Equity Rs.1,000,000
Loan 5,00,000
Creditors Rs.50,000
What is the value of the land ______________
a) 1,000,000
b) 1,550,000
c) 800,000
d) None of these
48. XYZ ltd.has provided the following information about its balance sheet:
Cash Rs.100
Accounts Receivable Rs.500
Stock holder equity Rs.700
Accounts Payable Rs.200
Bank Loan Rs.1,000
Based on the information provided, how much are XYZ ltd.Total liabilities?
a) Rs.200
b) Rs.1900
c) Rs.1200
d) Rs.1700
49. Contingent liabilities should be recorded in the accounts when:
a) It is probable that the future event will occur.
b) The amount of the liability can be reasonably estimated.
c) Both (a) and (b).
d) Either (a) or (b).
50. Accounting concepts are based on
a) Certain assumptions
b) Certain facts and figures
c) Certain accounting records
d) Practice experience
51. Under which concept it is assumed that the enterprises has neither the intention nor the necessity
of liquidation or of curtailing materiality the scale of operation
a) Revenue realization concept
b) Matching cost concept
c) Going concern concept
d) None of these
52. Bookkeeping is an ______________ of correctly recording of business transition.
a) Art and Science
b) Art
c) Science
d) Art or Science
53. Journal Entries are known as book of ______________ Entry.
a) Original
b) Duplicate
c) Personal
d) Nominal
54. Fixed assets and current assets are categorized as per concept of:
a) Separate entity
b) Going concern
c) Consistency
d) Time period
55. The allocation of owner's private expenses to his/her business violates which of the following?
a) Accrual concept
b) Matching concept
c) Separate business entity concept
d) Consistency concept
56. Profit from sale of assets is example for
a) Revenue Profit
b) Capital Profit
c) Loss
d) None of these
57. Book keeping is mainly concerned with
a) Recording of financial data relating to business operation
b) Designing the systems in recording classifying,summarizing the recorded data
c) Interpreting the data for internal and external users
d) None of these
58. The convention of conservatism when applied to the balance sheet result in.
a) Understand the asset
b) Understand the liabilities
c) Overstatement of capital
d) None of these
59. The amount brought in by the proprietor in the business should be credited to
a) Cash a/c
b) Capital a/c
c) Drawing a/c
d) Bank a/c
60. The return of goods by the customer should be debited to
a) Customer a/c
b) Sales return a/c
c) Goods a/c
d) Purchase return a/c
61. Retained earnings statement depicts:
a) Appropriation of profits
b) Estimates of profits
c) Estimates of costs
d) None of these
62. Financial accounting deals with:
a) Determination of cost
b) Determination of profit
c) Determination of price
d) Determination of selling price
63. Financial account record only
a) Actual figures
b) Budgeted figures
c) Standard figures
d) Management Figure
64. Content of income statement
a) Trading account
b) Profit and loss account
c) Balance sheet
d) All of the above
65. Depreciation is a ______________
a) Cash operating expenditure
b) Non cash operating expenditure
c) Cash non-operating expenditure
d) Non cash non-operating expenditure
66. Outstanding salary account is a ______________ account
a) Nominal account
b) Real Account
c) Artificial person’s account
d) Representative personal account
67. The work of factory employees that can be physically associated with converting raw material into
finished goods is classified as ––
a) Manufacturing overhead
b) Indirect materials
c) Indirect labour
d) Direct labour
68. Aggregate of prime cost and Factory overhead is known as:
a) Work on cost
b) Work Cost
c) Cost of Production
d) Direct Cost
69. Conversion cost includes cost of onverting ______________ into ______________
a) Raw material, WIP
b) Raw material, Finished goods
c) WIP, Finished goods
d) Finished goods, Saleable goods
70. All costs other than direct materials cost, direct labour cost and direct expenses are known as:
a) Indirect material cost
b) Overhead
c) Indirect labour cost
d) Indirect expenses
71. Current ratio is 2:5.Current Liability is Rs.30,000.The Net working Capital is
a) Rs. 18,000
b) Rs. 45,000
c) Rs. (45,000)
d) Rs. (18000)
72. ______________ means expanding the number of investments which cover different kinds of
stocks.
a) Diversification
b) Standard deviation
c) Variance
d) Covariance
73. What is the value of a $1,000 Face Value Bond that has twenty years remaining to Maturity, 10 %
Coupon (paid annually), and is priced to yield 6%?
a) $ 980
b) $ 1,000
c) 1,263
d) None
74. One of the problems with attempting to forecast stock market values is that
a) There are no variables that seem to predict market return
b) The earnings multiplier approach can only be used at the firm level
c) The level of uncertainty surrounding the forecast will always be quite high
d) Dividend payout ratios are highly variable
75. Which of the following is a characteristic of a coupon bond?
a) Pays interest on a regular basis (typically every six months
b) Does not pay interest on a regular basis but pays a lump sum at maturity
c) Total payment must be made at the end of period
d) All of above statement are correct
76. When the market's Required Rate of Return for a particular Bond is much less than its Coupon Rate,
the Bond is selling at
a) Premium
b) Discount
c) Par
d) Face
77. ______________ is responsible for financial inventory, management, financial planning etc.
a) Shareholders
b) Treasurer
c) Controller
d) Board of Directors
78. Which group of ratios measures a firm's ability to meet short-term obligations?
a) Liquidity ratios
b) Debt ratios
c) Coverage ratios
d) Profitability ratios
79. Which one of following is not Direct Claim Security?
a) Bonds
b) Option
c) Shares
d) Stock
80. ABC’s and XYZ’s debt-to-total assets ratio is 0.4. What is its debt-to-equity ratio?
a) 0 .2
b) 0 .77
c) 0.667
d) 0.333
81. ______________ is a summary of all transactions relating to particular account.
a) Balance sheet
b) Trial Balance
c) Ledger
d) Journal
82. Amount of salary paid to Suresh should be debited to ____________
a) Account of Suresh
b) Salaries account
c) Cash account
d) Outstanding expenses
83. Modern Method of Accounting was introduced by
a) M. S. Gosav
b) Wheldon
c) LucoPacioli
d) R. N. Carter
84. If a company has contingent liabilities, they appear in the ______________
a) Balance Sheet
b) Director’s Report
c) Foot note down the balance sheet
d) Chairman’s report
85. The use of management accounting is
a) Compulsory
b) Optional
c) Obligation
d) Statutory requirement
86. Financial account state the ______________ position of a concern.
a) Financial
b) Economic
c) Non financial
d) None of these
87. Which group of ratios relates profits to sales and investment?
a) Liquidity ratios
b) Debt ratios
c) Coverage ratios
d) Profitability ratios
88. Process that involves decision making with respect to investment in fixed asset
a) Valuation
b) Breakeven analysis
c) Capital budgeting
d) Material management decision
89. When a Bond's Yield to Maturity is greater than the Bond's Coupon Rate, the Bond
a) Is selling at a Premium
b) Has reached its Maturity Date
c) Is priced at Par
d) Is selling at a Discount
90. The ______________ is a common term for the market consensus value of the required return on a
stock.
a) Dividend payout ratio
b) Intrinsic value
c) Market capitalization rate
d) Plowback rate
91. ______________ are analysts who use information concerning current and prospective profitability
of firms to assess the firm's fair market value.
a) Credit analysts
b) Fundamental analysts
c) Systems analysts
d) Technical analysts
92. Those liabilities which arise only on the happening of some event are called
a) Current liabilities
b) Outstanding liabilities
c) Deferred liabilities
d) Contingent liabilities
93. There are ______________ types of financial statements analysis
a) 1
b) 2
c) 3
d) 4
94. ______________ tells us after how much time period the amount of money will become double.
a) Real interest rate
b) Nominal interest rate
c) Rule of 72
d) Time value of money
95. Horizontal analysis is also called
a) Ratio change analysis
b) Common size analysis
c) Trend analysis
d) Ratio analysis
96. Interest paid (earned) on only the original principal borrowed (lent) is often referred to as
______________.
a) Compound interest
b) Simple interest
c) Present value
d) Future value
97. If gross profit is Rs 5,000 and the net profit is 25% of the gross profit the expenses must be
a) Rs 3,750
b) Rs 1,250
c) Rs 4,150
d) Rs 6,250
98. What are the earnings per share (EPS) for a company that earned Rs.100, 000 last year in after-tax
profits, has 200,000 common shares outstanding and Rs.1.2 million in retained earning at the year end?
a) Rs.1.00
b) Rs. 6.00
c) Rs. 0.50
d) Rs. 6.50
99. Which of the following affects the price of the bond?
a) Market interest rate
b) Required rate of return
c) Interest rate risk
d) All of the given options
100. Which of the following statements is most correct?
a) One of the ways in which firms can mitigate or reduce agency problems between bondholders and
stockholders is by increasing the amount of debt in the capital structure.
b) Managerial compensation can be structured to reduce agency problems between stockholders and
managers.
c) All of above statements are incorrect
d) All of the statements above are correct