Accountancy Objective Questions

Sl.No. Question Answer

1. Contingent liability is shown in the balance sheet. This arises out of A
a) Convention of disclosure
b) Convention of materiality
c) Convention of consistency
d) Production is completed
2. The policy of ‘anticipate no profit and provide for all possible losses’ B
arises due to
a) Convention of consistency
b) Convention of conservation
c) Convention of disclosure
d) Convention of materiality
3. Revenue is generally recognized as being earned at the point of time A
a) Sale is effective
b) Cash is received
c) Production is completed
d) Wages paid
4. The most acceptable method of measuring income is A
a) To match the cost with revenue
b) To find out the difference in return as on two dates
c) To apply normal rate of return on capital invested
d) None of the above
5. Asset are usually shown the balance sheet at A
a) Un expired cost
b) Replacement cost
c) Revalued cost
d) Prime cost
6. The un expired cost carried forward will be more under A
a) Straight line method
b) Diminishing balance method
c) Sum of digits method
d) Average method
7. Depreciation change will be heavy in the earlier year under B
a) Straight line method
b) Diminishing balance method
c) Sinking fund method
d) Sum of digits method
8. During a period of rising prices, higher profit will be shown by valuing B
stock at
a) LIFO basis
b) FIFO basis
c) Weighted average price
d) Average price method
9. During the period of rising prices an enterprise gains an account of
monitary items following on
a) Increase inn the net working capital
b) Decrease in the net working capital
c) Decrease in current liability
d) Increase in current asset
10. Profit is made only after maintaining the physical capital of the business C
men
a) Current purchasing power method
b) Historic cost method
c) Current value method
d) Cost method
11. The net worth of a limited company is A
a) Equal to share holder’s funds
b) Not equal to share holder’s fund
c) Equal to paid up capital
d) Not equal to paid up capital
12. The excess of current asset over current liabilities is called B
a) Net worth
b) Working capital
c) Net tangible worth
d) Net intangible worth
13. If the company’s tangible net worth is a positive amount it indicates A
a) The solvency of the company
b) The liquidity of the company
c) The profitability of the company
d) The Costability of the company
14. In the case of a manufacturing company the arrangement of assets in the A
balance sheet is in the order of
a) Permanence
b) Liquidity
c) Tangible
d) None of the above

15. The balance sheet indicate the financial position of a concern B

a) For a particular period
b) As on given date
c) As on month
d) None of the above
16. Able management force is to any company A
a) An asset
b) A capital profit
c) A revenue reserve
d) Less liability
17. Income received in advance by a business unit is B
a) An asset
b) A liability
c) A loss
d) Profit
18. Cash account will show C
a) Debit or credit balance
b) A credit balance
c) A debit balance
d) None of the above
19. Cash bank is a B
a) Subsidiary journal
b) Subsidiary journal and ledger account
c) Ledger account
d) Final account
20. Prepaid account is a B
a) Nominal account
b) Personal account
c) Real account
d) None of the above
21. Sale of old furniture on account is recorded in C
a) Sales day book
b) Cash book
c) Journal
d) Cost book
22. Out standing expenses account is B
a) An asset
b) A liability
c) An expense
d) None of the above
23. Prepaid rent is an example of A
a) An asset
b) A liability
c) An expense
d) An income
24. Error of Principle arises when B
a) There is complete or partial omission of a transaction
b) Distinction is not maintained between capital and revenue
account
c) There are wrong posting and wrong casting
d) Over lapping
25. Errors not affecting the agreement of Trial Balance are A
a) Error of Principle
b) Over or under costing
c) Posing made to the wrong side
d) All of the above
26. The difference in the trial balance must be entered in C
a) The capital account
b) A nominal account
c) A suspense account
d) A Miscellaneous account
27. Which of these errors would be disclosed by the trial balance B
a) Freight paid on purchase of machinery paid debited to carriage
inward account
b) Purchases of Rs.120 made from Hari posted to his account as
Rs.210
c) A credit Not for Rs.150 received from Raju not entered in the
sales return book
d) A Bill receivable for Rs.300 received from merchant entered in
the Bill payable book
28. Goods returned to X the supplier are wrongly entered in the sales day A
book, This will affect
a) Purchases returns and Sales Book
b) Sales account and X account
c) Purchases return account and X account
d) All the above
29. Bank reconciliation statement is D
a) Ledger account
b) A part of bash book
c) Adjustment of final account
d) A memorandum statement
30. In adjusting the cash balance one of the following is not taken into B
account
a) Mistakes in the cash book
b) Mistakes in the Pass book
c) Interest and dividends credited in the pass book
d) All of the above
31. Bank reconciliation statement is prepared by B
a) Bankers
b) Accountant of the business
c) Stationary Auditor
d) All of the above
32. Unfavourable bank balance means A
a) Credit balance of cash book
b) Credit balance of Pass book
c) Debit balance of cash book
d) None of the above
33. Payment side of the cash book is under cast Rs.200 when overdraft as A
per pass book is the starting point
a) Rs.200 will be deducted
b) Rs.200 will be added
c) Rs.400 will be added
d) Rs.400 will be deducted
34. An amount of Rs.1000 is debited twice in the pass book when over draft A
as per cash book is the starting point
a) Rs.1000 will be added
b) Rs.1000 will be deducted
c) Rs.2000 will be deducted
d) Rs.2000 will be added
35. The test of objectivity and verification is satisfied by valuing stock at A
a) historical cost
b) current replacement price
c) Net realizable value
d) Original cost
36. The ascertainment of values of stocks from accounting records is known C
as
a) Continuous stock taking
b) Periodic inventory
c) Perpetual inventory
d) Ascertaining the cost
37. Selling expenses are included in stock valuation by A
a) Job order industries
b) Process industries
c) Trading concerns
d) Non-Trading concerns
38. Plantation and farm output is valued at net realizable value because of C
a) The absence of cost particulars
b) The government regulation
c) The difficulty in ascertaining the cost
d) All of the above
39. Historical inventory cost are reduced to not realizable value because of C
the accounting principles of
a) Consistency
b) Conservation
c) Conservatism
d) Realisation
40. The cost formula recommended by IAS-2 for valuation of inventories A
are
a) FIFO or weighted average
b) Standard cost
c) NIFO or latest purchase price
d) LIFO or average
41. Bills receivable account is a A
a) Real account
b) Personal account
c) Nominal account
d) All of the above
42. On the acceptance of a bill the acceptor debits B
a) Payee’s account
b) Creditor’s account
c) Debtor’s account
d) Bills payable account
43. When a bill is endorsed credit is given to A
a) Bills receivable account
b) Endorsed account
c) Acceptor’s account
d) Both
44. Noting charges account is debited to C
a) The presenter of bills
b) The discounting banker
c) The acceptor
d) None of the above
45. When a bill discounted is dishonoured the drawer gives credit to C
a) Bills receivable account
b) Bankers account
c) Discount account
d) All of the above
46. When a bill endorsed in dishonoured the drawer gives credit to B
a) Bills receivable account
b) Endorsee/Creditor’s account
c) Bank account
d) Discount account
47. On the dishonour of a bill through endorsement, debit is given to B
a) Acceptor’s account
b) Endorser’s account
c) Payee’s account
d) None of the above
48. Cost of material consumed + Direct labour + Direct expenses is D
a) Gross work cost
b) Selling price
c) Net work cost
d) Prime cost
49. The Profit transferred to general Profit and Loss account from A
manufacturing account is adjusted for unsold goods through
a) Stock reserve account
b) Profit and Loss account
c) Trading account
d) Manufacturing account
50. The gross work cost after the necessary adjustment for work in progress A
is termed
a) Net work cost
b) Factory cost of Production
c) Prime cost
d) Cost of production
51. Cost of sales is D
a) Prime cost + factory cost
b) Prime cost + net works
c) Cost of production of goods sold
d) Cost of production of goods sold+ selling and distribution
expenses
52. The profit disclosed by cost sheet is C
a) Gross profit
b) Net profit
c) Operating profit
d) All of the above
53. Cost sheet are prepared in the form of a D
a) Account
b) Bill
c) Account and Bill
d) Statement
54. If Rs.1500 was outstanding at the beginning of the years towards A
subscription and Rs.10,000 is received during the year with Rs.2500
still outstanding at the end of the year the amount to be taken to
Receipts & Payments accounts is
a) Rs.11,000
b) Rs.8500
c) Rs.10,000
d) Rs.14,000
55. A revenue expenses for which a separate fund is available will be A

a) debited to the separate fund

b) debited to income and expenditure account
c) capitalized and shown in Balance sheet
d) debited to receipt and payment account
56. The information for the preparation of receipt payment account if taken A
from
a) Cash book
b) Income and Expenditure account
c) Cash book and balance sheet
d) Balance sheet
57. Sale of old materials must be shown on the credit side of B
a) Cash book
b) Income and expenditure account
c) Balance sheet
d) Receipt and payment account
58. Any donation for a specific purpose A
a) Capital receipt
b) Revenue receipt
c) Liablity
d) Assets
59. The receipt and payment account shows the following details A
Subscription – Arrears – Rs.500
- Current – Rs.10,500
- Advance – Rs.800
There are 1200 members each paying an annual subscription of
Rs.10/-. The amount credited to Income and expenditure account
will be
a) Rs.11,800
b) Rs.11,300
c) Rs.12,000
d) Rs.10,800

60. Any income arising special fund will be credited to A

a) Special fund in the Balance sheet
b) Income and expenditure account
c) General fund in the Balance sheet
d) Reserve fund in the Balance sheet
61. Income and expenditure account shows subscription at Rs.10,000/- A
subscription accrued in the beginning of the year aJnd end of the year
were Rs.1000 and Rs.1500 respectively. The figure of subscription
received appearing in receipts and payment account will be
a) Rs.9,500
b) Rs.11,000
c) Rs.10,000
d) Rs.12,500