Fundamentals of Accounting - Theory & Practices
MCQs
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(1) Trial Balance of accounting year 2019-2020 (i.e. from 01-04-2019 to 31-03-2020), It shows insurance amounting to Rs.6000 which includes a premium of Rs.3600 for a year ended on 30th September 2020. What amount of insurance will be debited in profit & Loss A/C of that particular year?
(a) Rs.6000
(b) Rs.4200
(c) Rs.3600
(d) Rs.2400
Calculation :-
3600 premium is upto 30th sept 2020
Financial year 1-4-19 to 31-3-20
(Pre paid duration = 1-4-20 to 30-9-20 = 6 months
Step :-
Months = 12 prem = 3600
6 (?)
(3600×6) / 12 = 1800 (Pre paid)
Current year's insurance = 6000 - 1800 = 4200
(2) Accounting is the _______ phase of an accounting system while Book-keeping is the _______ phase of an accounting system.
(a) Classifying, summarizing
(b) Interpreting, communicating
(c) Summarizing, recording
(d) Recording, reporting
(3) Suspense Account can be classified into:
(a) Real Account
(b) Nominal Account
(c) Personal Account
(d) Can't be classified into any account.
(4) Drawing Account is a _______ account.
(a) Real
(b) Personal
(c) Nominal
(d) Notional
(5) A Journal is also known as-
(a) Purchase day book
(b) Book of duplicate entry
(c) Book of original entry
(d) Single entry system
(6) Out of total closing stock, 10% of the goods, its market value decrease by 15%; 35% of the goods, its market value is increase by 10%; and 25% of the goods, its market value is Rs.1200, which is 20% less than the cost price. Find out the value of closing stock to be shown in the Balance Sheet.
(a) Rs.5610
(b) Rs.5700
(c) Rs.6000
(d) Rs.7200
Calculation:-
Market value of 25% of goods is Rs. 1200 which is 20% less than cost price.
Step : 1
Find cost price of this 25% stock
Suppose C.P = 100
(-) 25% Less = (20)
________________________________________
Market value = 80
M.V. = 80 C.P = 100
1200 (?)
Working = (1200 × 100) / 80
= 1500 (C.P of 25% stock)
Step : 2
Find cost price of total stock
25% stock = 1500 (step - 1)
100% stock = (?)
Working = (1500 × 100) / 25
= 6000 (total C.P of stock)
Step : 3
(a) 10% of goods M.P Decrease by 15%
(6000 × 10%) - 15% = 510
(b) 35% goods M.V Increase = but Increase will not be considered
(6000 × 35%) = 2100
(c) Remaining goods = 100% - 25% - 10% - 35% = 30%
6000 × 30% = 1800
(No information is given for this, so C.P will be considered.)
Final value of closing stock =
(A) 25% stock = 1500 OR 1200 = 1200
(B) 10% stock = 600 OR 510 = 510
(C) 35% stock = = 2100
(D) Remaining 30% = 1800
______________________________________
TOTAL = 5610
(7) Which of the following account is considered as representative personal accounts?
(a) Mahesh's A/C
(b) BSNL A/C
(c) Outstanding Salary A/C
(d) Building A/C
(8) Accounting is helpful in replacing the _______.
(a) Memory
(b) Method
(c) Material
(d) Money
(9) Wages paid during the year 2019-20 : Rs.35000, Wages Outstanding for the year 2019-20 : Rs.7000, Wages Prepaid for the year 2020-21 : Rs.3000. Net Wages debited to Trading A/C for the year 2019-20 is ________.
(a) Rs.39,000
(b) Rs.42,000
(c) Rs.28,000
(d) Rs.38,000
Calculation :-
Total wages paid (2019-20) = 35,000
(+) Wages unpaid (2019-20) = 7,000
(-) Prepaid wage for (2020-21) = (3000)
_______________________________________
Wages Dr. to P&L A/c = 39,000
(10) In a partnership firm, Ram withdraws Rs.400 in the middle of each month while Rohan withdraws Rs.300 at the end of each month during the year. Calculate the interest on drawing @ 15% p.a.
(a) Ram-Rs.360, Rohan -247.50
(b) Ram-Rs.60, Rohan-45
(c) Ram-Rs.720, Rohan-540
(d) Ram Rs.312, Rohan-270
Calculation :-
Ram's int on drawing = 400 × 15 % × 72/12 = 360
Rohan's int on drawing = 300 × 15 % × 66/12 = 247.5
ACCOUNTING POLICY
(1) Accounting policies refer to specific accounting:
(a) Principles
(b) Method of applying those principles
(c) Both (a) & (b)
(d) None of the above
(2) Accounting policies are based on various:
(a) Accounting concepts
(b) Accounting principles
(c) Accounting conventions
(d) All of these
(3) Selection of appropriate _____________ is an important policy decision which affects the measurement of performance, as well as the financial position of the business entity
(a) Accounting policies
(b) Accounting principles
(c) Accounting conventions
(d) Accounting concepts
(4) A change in accounting policy is permissible : [MIMP]
(a) When it is required by some statue
(b) For compliance with an accounting standard
(c) When change would result in more appropriate presentation of financial statement
(d) All of these
(5) Selection of an inappropriate accounting policy may lead to :
(a) Understatement or overstatement of financial position / performance
(b) Understatement of performance
(c) Overstatement of performance
(d) None of the above
(6) Select of appropriate accounting policies is not based on :
(a) Amount involved
(b) Prudence
(c) Substance over form
(d) Materiality
(7) Which is not an example of accounting policy?
(a) Treatment of retirement benefits
(b) Going concern
(c) Valuation of fixed assets
(d) Valuation of inventories
ACCOUNTING CONCEPTS, CONVENTION & PRINCIPLES:
(8) Accounting principles are generally based on :
(a) Practicability
(b) Subjectivity
(c) Convenience in recording
(d) None of these
(9) According to money measurement concept, the following will be recorded in the book.
(a) Health of the chairman of the company
(b) Quality control in the business
(c) Value of the building
(d) All of these
(10) Cost concept envisages the recording of the following in the books of accounts.
(a) An asset at its cost
(b) Knowledge and will acquired by the business executive
(c) Changes effected because of some political events
(d) All of these
(11) The practice of appending a note regarding contingent liabilities in the accounting statements is in accordance with the :
(a) Convention of consistency
(b) Money measurement concept
(c) Convention of disclosure
(d) None of these
(12) When applied to the balance sheet, the convention of conservatism results in :
(a) Understatement of assets
(b) Understatement of liabilities and provisions
(c) Overstatement of capital
(d) All of these
ACCOUNTING EQUATION:
(13) On 31st Dec. 2013 assets of the business are Rs.3,00,000 and it’s capital is Rs.1,00,000. Its liabilities on that date will be
(a) Rs.4,00,000
(b) Rs.2,00,000
(c) Rs.1,00,000
(d) None of the above
A = C + L
L = A - C
L = 3,00,000 - 1,00,000
= 2,00,000
(14) Amount withdrawn by the proprietor would
(a) reduce both, assets and owner’s equity
(b) reduce assets and increase liabilities
(c) reduce owner’s equity and increase liability
(d) No change
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