Financial Accounting Quiz - 17

1. Based on which of the following concepts, is share capital account is shown on the liability side of a balance sheet?
[A]Business entity concept
[B]Money measurement concept
[C]Cost concept
[D]Going concern concept


2. Which of the following concepts is not considered as basic principles of accounting?
[A]Materiality concept
[B]Cost concept
[C]Consistency concept
[D]Logical concept


3. Which of the following events/transactions is not recorded in the books of account of a business?
[A]Withdrawal of goods by the proprietor for personal consumption
[B]Sale of an asset on credit
[C]Purchase of a new asset in exchange of an old asset
[D]Receipt of interest by proprietor on bank fixed deposit held jointly with spouse


4. Exchange of fixed assets for equity shares is the commonly used exchange mode in mergers and acquisitions. The accepted method of recognition of the value of fixed assets in the books is
[A]The net book value
[B]The fair market value
[C]The net realizable value
[D]The current market value


5. Which of the following is not considered as Research and Development Costs?
[A]Testing in search for product alternatives
[B]Legal work on patent application
[C]Modification of design of a process
[D]Searching for application of new research findings


6. Which of the following is not classified as inventory?
[A]Raw materials and components
[B]Goods-in-transit
[C]Work-inprocess
[D]Finished goods


7. Which of the following is a method of financial statement analysis which highlights the interrelationships in the contents of financial statements?
[A]Du Pont analysis
[B]Common size analysis
[C]Time series analysis
[D]Index analysis


8. Amortization of unidentified intangible assets is in terms of
[A]Conservatism concept
[B]Materiality concept
[C]Matching concept
[D]Cost concept


9. Which of the following is/are source(s) of funds?
[A]Disposal of an asset
[B]Payment to creditors
[C]Acceptance of bills payable
[D]Both (a) and (c) above


10. Which of the following concepts assumes that a business will last indefinitely?
[A]Business entity
[B]Going concern
[C]Periodicity
[D]Duality


11. Which of the following factors is used as multiplier of super profits in valuation of goodwill of a business?
[A]Average capital employed in the business
[B]Simple profits
[C]Number of years’ purchase
[D]Normal rate of return


12. The excess price received over the par value of shares, should be credited to
[A]Calls-in-advance account
[B]Share capital account
[C]Reserve capital account
[D]Share premium account


13. The statement which helps an accountant to assess the arithmetical accuracy of the accounting process is the
[A]Balance sheet
[B]Profit and loss account
[C]Cash book
[D]Trial balance


14. In a Funds flow statement, the excess application 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


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