1. Amount brought in by proprietor should be credited to
a) cash account
b) capital account
c) drawings account
d) creditors account
2. Which of the following is a real (permanent) account?
a) Goodwill
b) Sales
c) Accounts Receivable
d) Both Goodwill and Accounts Receivable
3. Which of the following errors will be disclosed in the preparation of a trial balance?
a) Recording transactions in the wrong account.
b) Duplication of a transaction in the accounting records.
c) Posting only the debit portion of a particular journal entry
d) Recording the wrong amount for a transaction to both the account debited and the account credited.
4. Management Accounting provides invaluable services to management in performing
a) All management function
b) Interpret financial data
c) Controlling function
d) None of these
5. If closing stock appears in the trial balance, it should be
a) Credited to the trading account
b) Credited to the profit and loss account
c) Deducted from the purchases in the trading account
d) Shown on the liability side of the Balance sheet
6. Financial information should be neutral and bias free" is the dictation of which one of the following?
a) Completeness concept
b) Faithful representation Concept
c) Objectivity Concept
d) Duality Concept
7. Which of the following statements is not an objective of financial reporting?
a) Provide information that is useful in investment and credit decisions.
b) Provide information regarding policy of organisation
c) Provide information that is useful in assessing cash flow prospective
d) None of theses
8. 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
9. A book containing a chronological record of business transaction & original record
a) Journal
b) Ledger
c) Trial balance
d) None of these
10. Which of these items would be accounted for as an expense?
a) Repayment of bank Loan
b) Dividend to stock holders
c) The purchase of land
d) Payment of current period rent
11. The amount of salary paid to Suresh should be debited to
a) The account of Suresh
b) Salaries a/c
c) Cash a/c
d) Bank a/c
12. The cash discount allowed to a debtor should be credited to
a) Discount a/c
b) Customer a/c
c) Sales a/c
d) None of these
13. Accounting does not record non-financial transactions because of:
a) Accrual concept
b) Cost concept
c) Continuity concept
d) Money measurement concept
14. The concept of separate entity is applicable to which of following types of businesses?
a) Sole proprietorship
b) Corporation
c) Partnership
d) All of them
15. Accounting is the process of matching
a) Benefits & Costs
b) Revenues & Costs
c) Cash Inflow & Cash Outflow
d) Potential & Real Performance
16. The primary objective of cost accounting is
a) Ascertain the cost of goods and services
b) Ascertain the profit
c) Presentation of all data
d) None of these
17. Of the following account types, which would be increased by a debit?
a) Liabilities and expenses.
b) Assets and equity.
c) Assets and expenses.
d) Equity and revenues.
18. Which of the following statements about differences between financial and managerial accounting is
incorrect?
a) Managerial accounting information is prepared primarily for external parties such as stockholders and
creditors; financial accounting is directed at internal users.
b) Financial accounting is aggregated; managerial accounting is focused on products and departments.
c) Managerial accounting pertains to both past and future items; financial accounting focuses primarily on
past transactions and events.
d) Financial accounting is based on generally accepted accounting practices; managerial accounting faces
no similar constraining factors.
19. Custom and traditions which guide the accountant while preparing the accounting statements
a) Accounting convention
b) Accounting concepts
c) Accounting principles
d) None of these
20. Balance Sheet is a statement of
a) Assets
b) Liabilities
c) Capital
d) All of these
21. Which one of the following is not an example of Intangible Assets?
a) Patents
b) Trade Marks
c) Copyright
d) Land
22. Creating provision against fluctuation in the price of investment is application of accounting concept
a) Convention of conservatism
b) Convention of full disclosure
c) Convention of consistency
d) None of these
23. Debit what come in Credit what goes out rule for
a) Real a/c
b) Personal a/c
c) Nominal a/c
d) None of these
24. The following comments each relate to the recording of journal entries. Which statement is true?
a) For any given journal entry, debits must exceed credits.
b) It is customary to record credits on the left and debits on the right.
c) The chart of accounts reveals the amount to debit and credit to the affected accounts.
d) Journalization is the process of converting transactions and events into debit/credit format.
25. Going concern concept assumes
a) Business as a dissolving concern
b) Business on relishing values
c) Business as a going concern
d) Asset = liability
26. Management Accounting relates to
a) Recording of accounting data
b) Recording of cost data
c) Presentation of account data
d) None of the above
27. Which items does not come under the balance sheet
a) sales
b) Share capital
c) Reserves and surplus
d) Unsecured loan
28. Which of the following is not related with Money Measurement Concept ?
a) All business transaction should be expressed only in money
b) The transactions which cannot be expressed in money, will not be recorded in accounting books
c) Business is treated as separate from the proprietor
d) None of These
29. Depreciation is a charge against
a) Profit
b) Assets
c) Company
d) Books of A/c
30. Fixed assets and current assets are categorized as per concept of:
a) Separate entity
b) Going concern
c) Consistency
d) Time period
31. Marginal costing is concerned with:
a) Fixed cost
b) Variable cost
c) Semi variable cost
d) None of the above
32. The books to be compulsorily maintained by a company are:
a) Cash book and ledger
b) Sales and purchase book
c) Journal
d) All of a, b, c above
33. Which of the following best describes a trial balance?
a) It is a list of balances on the books
b) It is a special account
c) Shows the financial position of a business
d) Shows all the entries in the books
34. Which of the following equation is related with Dual Aspect Concept ?
a) Total Assets = Total Liabilities
b) Total Assets = Capital + Outsider’s Liabilities
c) Capital = Total Assets - Outsider’s Liabilities
d) All of the above
35. The prime function of accounting is to
a) To record economic data
b) Provide the information basis of action
c) Classifying and recording business transaction
d) Attainmentofeconomic goal
36. According to schedule VI Companies Act which item is not shown on Asset side of Balance sheet
a) Investment
b) Current Loan & Advances
c) Provision
d) Lease Holds
37. Salary paid to factory manager is an item of:
a) Prime cost
b) Factory overhead
c) Selling overhead
d) Office overhead
38. Carriage outward is charged to
a) Debit side Profit & Loss a/c
b) Debit side Trading a/c
c) Credit side of Profit & Loss a/c
d) Credit side of trading a/c
39. Payment received from Debtor
a) Decreases the Total Assets
b) Increases the Total Assets
c) Results in no change in the Total Assets
d) Increases the Total Liabilities
40. Accounting does not record non-financial transactions because of:
a) Accrual concept
b) Cost concept
c) Continuity concept
d) Money measurement concept
41. Management accounting is applicable to
a) Service entities
b) Manufacturing entities
c) Non profit entities
d) All of these
42. Insurance prepaid is shown as
a) Current assets
b) Current liabilities
c) Fixed asset
d) Fixed liability
43. Financial accounting is concerned with
a) Recording of business expenses and revenue
b) Recording of costs of products and services
c) Recording of day to day business transactions
d) None of the above
44. Goods given as samples should be credited to:
a) Advertisement account
b) Sales account
c) Purchase account
d) None of the above
45. Investment of X company profit in shares of other company PQR Pvt. ltd are recorded in
a) Asset side of Balance Sheet
b) Liability side of Balance Sheet
c) Profit & Loss a/c
d) Not recorded in Balance Sheet
46. Sales made to Mahesh for cash should be debited to
a) Cash account
b) Mahesh Account
c) Sales account
d) Purchase account
47. Income tax paid by a sole proprietor on his business income should be:
a) Debited to trading account
b) Debited to profit and loss account
c) Deducted from capital account in the balance sheet
d) None of the above
48. 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
49. Which of the following is not an example of real a/c:
a) Machinery
b) Building
c) Cash
d) Creditor
50. Payment received from Debtor
a) Decreases the Total Assets
b) Increases the Total Assets
c) Results in no change in the Total Assets
d) Increases the Total Liabilities
51. The basic concepts related to p & l a/c are:
a) Realization Concept
b) Matching Concept
c) Cost Concept
d) Both a and b above
52. All those to whom business owes money are:
a) Debtors
b) Investors
c) Creditors
d) Shareholders
53. All direct & indirect expenses related to business are charged:
a) Profit and loss account
b) Trading account
c) Trading account Profit and Loss account
d) Directly to Balance sheet
54. If loan have been guaranteed by managers and directors is called as
a) Loan
b) Unsecured Loan
c) Secured Loan
d) Advance by Manager & director
55. Opening stock + ______________ + Direct Expenses (Carriage on Raw material)-Closing Stock =
______________
a) Sales, Purchases
b) Sales, Sales return
c) Purchases, Cost of goods produced
d) Purchases, Cost of goods sold
56. Carriage outward is charged to
a) Debit side Profit & Loss a/c
b) Debit side Trading a/c
c) Credit side of Profit & Loss a/c
d) Credit side of trading a/c
57. Credit balance of profit & loss a/c shown on
a) Asset side of balance sheet
b) Liability side of balance sheet
c) Not shown in balance sheet
d) Half on asset side and half on liability side
58. Outstanding expenses are charged to
a) Asset side of balance sheet
b) Liability side of balance sheet
c) Not charged to balance sheet
d) None of these
59. Which of the following is a liability?
a) Loan from Mr.Y
b) loan to Mr.y
c) Both (a) (b)
d) None of these
60. The revenue recognition principal dictates that all types of incomes should be recorded or
recognized when
a) Cash is received
b) At the end of accounting period
c) When they are earned
d) When interest is paid
61. Which of the following is a liability?
a) Loan from Mr.Y
b) loan to Mr.y
c) Both (a) and (b)
d) None of these
62. Purchases of goods on credit from A is recorded as:
a) Debit purchases a/c; credit cash a/c
b) Debit A a/c; credit purchases a/c
c) Debit purchases a/c; credit A a/c
d) Debit A a/c; credit stock a/c
63. Payment received from debtor:
a) Decreases the total assets
b) Increases the total assets
c) Results in no change in total assets
d) Increase the total liabilities
64. The transferring of debit and credit items from journal to the respective accounts in the ledger is
called as
a) Ledger
b) Posting
c) Forward journal
d) None of these
65. The following comments all relate to the recording process. Which of these statements is correct
a) The general ledger is a chronological record of transactions.
b) The general ledger is posted from transactions recorded in the general journal.
c) The trial balance provides the primary source document for recording transactions into the general
journal.
d) Transposition is the transfer of information from the general journal to the general ledger.
66. Cost accounting information can be used for:
a) Budget control and evaluation.
b) Determining standard costs and variances.
c) Pricing and inventory valuation decisions.
d) All of these
67. Current liability does not include
a) Sundry creditors
b) Acceptances
c) Unclaimed dividend
d) Short term investment
68. The term Management Accounting was first used in
a) 1910
b) 1939
c) 1950
d) 1960
69. ______________ system records only actual cash receipts and payments
a) Cash basis
b) Accrual basis
c) Mercantile basis
d) Single entry basis
70. Aggregate of direct costs is known as:
a) Direct material costs
b) Direct Wages
c) Direct Expenses
d) Prime Cost
71. Which of the following is time span into which the total life of a business is divided for the purpose
of preparing financial statements?
a) Fiscal year
b) Calendar year
c) Accounting period
d) Accrual period
72. If the total assets of the company amount to Rs 1,50,000 and owner’s equity is Rs 70,000,the
amount of liabilities will be
a) Rs 70,000
b) Rs 80,000
c) Rs 90,000
d) Rs 1,00,000
73. The system of recording transaction based on dual aspect concept is called
a) Double account system
b) Double entry system
c) Single entry system
d) None of these
74. The convention of conservatism is applicable
a) In providing for discount on creditors
b) In making provision for bad doubtful debts
c) Providing depreciation
d) None of these
75. Rules of action or conduct adopted by the accountants universally while recording accounting
transaction
a) Accounting convention
b) Accounting concepts
c) Accounting principles
d) None of these
76. Which of the following items would not fall under the definition of an asset?
a) Land
b) Machine
c) Cash
d) Milk
77. Basic assumptions or conditions upon which the science of accounting is based.
a) Accounting convention
b) Accounting concepts
c) Accounting principles
d) None of these.
78. Which of the following is time span into which the total life of a business is divided for the purpose
of preparing financial statements?
a) Fiscal year
b) Calendar year
c) Accounting period
d) Accrual period
79. The system of recording based on dual aspect concept is called:
a) Double account system
b) Double entry system
c) Single entry system
d) All the above
80. Preliminary expenses are recorded in ______________
a) Equity and liabilities-Liability side of B/S
b) Current liabilities- Liability side of B/S
c) Fixed assets- Asset side of B/S
d) Asset side of B/S
81. The practice of appending notes regarding contingent liabilities in accounting statements is in
pursuance to:
a) Convention of consistency
b) Money measurement concept
c) Convention of conservatism
d) Convention of disclosure
82. Sales are equal to:
a) Cost of goods sold + gross profit
b) Cost of goods sold - gross profit
c) Gross profit- Cost of goods sold
d) None of the above
83. Identify which is wrong rule
a) Nominal account- debit all expenses & losses
b) Real account- credit what comes in
c) Nominal account- credit all incomes & gains
d) Personal account- debit the receiver
84. 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
85. ______________ cost will still be incurred although a plant is shut down temporarily.
a) Cost of raw material
b) Advertising
c) Depreciation
d) Carriage
86. According to which concept business is treated as a unit apart from owner
a) Dual concept
b) Divider concept
c) Entity concept
d) Landlord concept
87. Variable cost per unit
a) Remains fixed
b) Fluctuates with volume of production
c) Varies in consideration with the volume of sales
d) None of the above
88. Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts
and discount is an example for which concept
a) Conservatism concept
b) Continuity concept
c) Realization concept
d) All of these
89. liabilities in balance sheet include the following items
a) Long term loan
b) Short term loan
c) Owner’s fund
d) All of these
90. Net profit is calculated in
a) Trading a/c
b) Balancesheet
c) Profit & loss a/c
d) Trial balance.
91. ______________ is a person or item for which cost may be ascertained.
a) Cost unit
b) Cost centre
c) Cost object
d) Cost estimation
92. Which of the following is not a fixed asset?
a) Building
b) Bank Balance
c) Plant Patents
d) Goodwill
93. According to which concept business is treated as a unit apart from owner
a) Dual concept
b) Divider concept
c) Entity concept
d) Landlord concept
94. The reduction in the value of the fixed assets which can arise due to time factor is
a) Discount
b) Depreciation
c) Reduction
d) None of the above
95. Which of the following should not be called sales?
a) Good sold on credit
b) Office fixtures sold
c) Sale of item previously included in purchase
d) Good sold for cash
96. Which of the following is not regarded as the fundamental accounting concept?
a) The going concern concept
b) The separate entity concept
c) The prudence (conservatism) concept
d) Correction concept
97. Outstanding salaries are shown as:
a) Added to Salaries while preparing P & La/c
b) Shown in liability side of Balance sheet under current Liability
c) (a) &(b) above
d) None of the above
98. Marginal costing is concerned with:
a) Fixed cost
b) Variable cost
c) Semi variable cost
d) None of the above
99. Which of the following account balance will be shown on debit side of Trial Balance?
a) Outstanding expenses
b) Cash a/c
c) Short term loan
d) creditors
100. Cash Purchases:
a) Increases assets
b) Results in no change in the total assets
c) Decreases assets
d) Increases liability