Financial Accounting Objective Questions (Accounting Quiz - 12)

1. If the shares are re- issued at a price which is more than the face value of the shares, the excess amount will be credited to
[A]General Reserve
[B]Share premium account
[C]Share forfeiture account
[D]Profit & Loss account


2. The journal entry to record the replenishment of a petty cash fund involves
[A]A debit to office expenses account
[B]A credit to petty cash account
[C]A debit to miscellaneous expenses account
[D]A credit to cash account


3. The amount on shares actually demanded by the company is called
[A]Nominal capital
[B]Issued capital
[C]Subscribed capital
[D]Called up capital


4. Manish Ltd. maintains its current ratio at 2.5. If the working capital as on March 31, 2003 stood at Rs.60,000, then the current liabilities as on that date stood at
[A]Rs. 24,000
[B]Rs.1,00,000
[C]Rs. 40,000
[D]Rs. 60,000


5. In a Funds flow statement, the excess of uses of funds over sources of funds is known as
[A]Net profit
[B]Funds from operations
[C]Increase in working capital
[D]Decrease in working capital


6. Which of the following concepts is not considered as basic principle of accounting?
[A]Materiality concept
[B]Substance over form
[C]Consistency concept
[D]Matching concept


7. Which of the following factors are not primarily considered for determination of life of the useful asset?
[A]Asset usage
[B]SEBI guidelines
[C]Consumption or extraction
[D]Physical deterioration


8. ‘Outstanding salaries’ represents
[A]A personal account
[B]A real account
[C]A nominal account
[D]A deferred expense account


9. 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 assets side of the Balance sheet


10. Calls in advance account is shown on
[A]The assets side of the balance sheet
[B]The liabilities side of the balance sheet as a deduction from paid up share capital
[C]The liabilities side of the balance sheet as an addition to the paid up share capital
[D]The liabilities side of the balance sheet separately from the paid up share capital


11. The main objective of providing depreciation is to
[A]Calculate the true net profit
[B]Compute the actual cash profit
[C]Create funds for replacement of fixed assets
[D]Reduce tax burden


12. On July 01, 2003 a company purchased 200 of its own 12% Debentures of Rs.100 each at the rate of Rs.97 (ex-interest). The company pays interest on March 31 and September 30 every year. At the time of purchase the amount debited to own debenture account was
[A]Rs.20,000
[B]Rs.19,400
[C]Rs.20,600
[D]Rs.18,800


13. The maximum commission allowable to underwriters on issue of shares is
[A]5% of issue price of the shares
[B]10% of nominal value of the shares
[C]6 % of issue price of the shares
[D]5 % of the nominal value of the shares


14. The logic behind the creation of Capital Redemption Reserve is that
[A]It is required under the Companies Act, 1956
[B]It is required to maintain the capital intact
[C]It is required to protect the creditors’ interest
[D]Both (b) and (c) above


15. Mega Ltd. proposed a dividend of 12.5 %. The called-up equity share capital of Mega Ltd. is Rs.5,00,000; the share premium account is Rs.50,000. If the amount of calls-in-arrears is Rs.15,000, the amount of dividend payable by the company is
[A]Rs.62,500
[B]Rs.60,625
[C]Rs.68,750
[D]Rs.56,250