Wednesday, March 14, 2012

Accounting Quiz - 1

1. Under Hybrid system of accounting for revenues and expenses, the
[A]Accrual basis for revenues and cash basis for expenses is used
[B]Accrual basis for expenses and cash basis for revenues is used
[C]Accrual basis is used both for revenues and expenses
[D]Cash basis is used for both revenues and expenses

2. If a concern proposes to discontinue its business from March 2004 and decides to dispose off all its assets within a period of 4 months, the Balance Sheet as on March 31, 2004 should indicate the assets at their
[A]Historical cost
[B]Net realizable value
[C]Cost less depreciation
[D]Cost price or market value, whichever is lower

3. Which of the following is not a use of fund?
[A]Acquiring assets
[B]Incurring expenses
[C]Incurring losses
[D]Incurring liabilities

4. Which of the following statements is true?
[A]Capital of a firm is reduced by the outside borrowings
[B]When there is no change in proprietor’s capital account, it is an indication of loss in the business
[C]Nominal account refers to the tangible transactions
[D]Real accounts relate to the assets of a business

5. Which of the following statements is false?
[A]The convention of disclosure implies that all material information should be disclosed in the accounts
[B]The losses from the sale of capital assets need not be deducted from the revenue to ascertain the net income
[C]In recognition of the principle of materiality, unimportant items are either omitted or merged with other items
[D]The convention of consistency facilitates, the comparison of the results of one accounting period with that of the other

6. The impact of prior period items is required to be shown as
[A]Retained profits
[B]Gross profits
[C]Previous year profits
[D]Notes to accounts

7. Consider the following data pertaining to ABC Ltd. for the year 2010-2011:
Opening balance of creditors Rs. 80,000
Closing balance of creditors Rs. 90,000
Total purchases during the year Rs.2,50,000
If the creditors were paid to the tune of Rs.1,80,000 and discount received was Rs.8,000, the credit purchases during the year 2010-2011 are

8. Consider the following information of Hyder Ltd. of Hyderabad for the year 2010-2011:
Credit purchases during the year Rs. 9,25,000
Payment made to creditors during the year Rs.10,00,000
Closing balance of sundry creditors account Rs. 40,000
Discount received Rs. 10,000
The opening balance of sundry creditors account was

9. Consider the following data pertaining to Sun Ltd. for the month of December 2011:
Purchase of goods for resale Rs. 2,10,000
Freight in Rs. 30,000
Freight out Rs. 25,000
Returns outward Rs. 22,000
Cost of goods available for sale is

10. How does a mistake of overcasting of purchases day book affect the cost of sales and the profit?
[A]Cost of sales is decreased and net profit is increased
[B]Cost of sales is increased and net profit is not affected
[C]Both cost of sales and gross profit are increased
[D]Cost of sales is increased and gross profit is decreased

11. Which one of the following is a wrong entry in listing out the under mentioned accounts in the Trial Balance of a business?
[A]Plant & machinery - debit column
[B]Discount received - credit column
[C]Sales - credit column
[D]Carriage outward - credit column

12. As on March 31, 2004, the overdraft balance of Mr.X as per bank pass book is Rs.20,000. The pass book balance did not agree with the balance as per cash book. On scrutiny, the following omissions and commissions were noticed:
• A cheque for Rs.4,000 issued to Mr.Y has not been presented for payment till date
• Mr.Z, a tenant, directly deposited into the bank account an amount of Rs.10,000 towards rent and the same is not accounted in the cash book.
• A cheque for Rs.15,000 deposited in the bank is not yet realised
• The interest on debentures for this year, directly collected by the bank, amounted to Rs.10,000.
The bank balance as per cash book is
[A]Debit balance of Rs.23,500
[B]Credit balance of Rs.29,000
[C]Credit balance of Rs.16,500
[D]Debit balance of Rs.5,500

13. The withdrawal of cash from the bank will figure in both the bank and the cash columns of a three column cash book. Such entries are called
[A]Contra entries
[B]Continuous entries
[C]Credit entries
[D]Contingent entries

14. The following errors were made by the accountant of a company while preparing the profit and loss account for the year 2003–2004:
Salaries were overstated by Rs.15,000
Repairs were understated by Rs. 7,000
Income from investments was understated by Rs. 7,000
The impact of the errors on the net profit for the year was
[A]Rs.22,000 (overstated)
[B]Rs.22,000 (understated)
[C]Rs.15,000 (understated)
[D]Rs.7,000 (understated)

15. What is the net effect of the under mentioned errors on the trial balance of a firm?
I. Total of sales was taken as Rs.58,726 instead of Rs.58,762.
II. A discount of Rs.52 allowed to Mr.X was not posted in the discount account.
III. Sale of old furniture of Rs.130 was credited to Machinery account.
IV. A credit sale of Rs.250 to Mr.S was posted twice in his account.
[A]Credit total of trial balance will be more than that of debit total by Rs.234
[B]Debit total of trial balance will be more than that of credit total by Rs.234
[C]Credit total of trial balance will be more than that of debit total by Rs.104
[D]Debit total of trial balance will be more than that of credit total by Rs.264

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