Question 1

_______refers to the order in which the various assets and liabilities are shown in the Balance Sheet.

Accepted Answer

A) Grouping 
B) Order of permanence 
C) Marshalling 
D) Order of liquidity 
A) Grouping 
B) Order of permanence 
C) Marshalling 
D) Order of liquidity C

Question 2

Which one is false.
I.Capital Expenditure is non recurring in nature and shown in P&L account.
II.Revenue expenditure is incurred to conduct day to day activities

Accepted Answer

A) Both I and II 
B) Only I 
C) Only II 
D) None is false 
A) Both I and II 
B) Only I 
C) Only II 
D) None is false B

Question 3

Arun is a Book-seller, which item will be goods for his business ?

Accepted Answer

A) Purchase of Computer 
B) Purchase of Fan 
C) Purchase of Furniture 
D) Purchase of Stationery 
A) Purchase of Computer 
B) Purchase of Fan 
C) Purchase of Furniture 
D) Purchase of Stationery D

Question 4

What is the formula for calculating depreciation in SLM Method?

Accepted Answer

A) Cost+Scrap/No of Yrs 
B) Scrap-Cost/No of yrs 
C) Cost - Scrap/Useful Life 
D) None of these 
A) Cost+Scrap/No of Yrs 
B) Scrap-Cost/No of yrs 
C) Cost - Scrap/Useful Life 
D) None of these

Question 5

In the books of account if a transaction is completely deleted, will it affect the trial balance?

Accepted Answer

A) No 
B) Yes 
C) A transaction cannot be omitted 
D) May be 
A) No 
B) Yes 
C) A transaction cannot be omitted 
D) May be

Question 6

1 oct Opening balance=400 units @Rs 20 each, 3 Oct:Purchase=300 units @Rs 10 ,5 Oct Sales=500 units.What will be total Sales value(in Rs) as per FIFO Method?

Accepted Answer

A) Rs 9000 
B) Rs 15000 
C) Rs 10000 
D) Rs 7500 
A) Rs 9000 
B) Rs 15000 
C) Rs 10000 
D) Rs 7500

Question 7

2 oct Opening balance=200 units @Rs 15 each, 4 Oct:Purchase=500 units @Rs 10 ,5 Oct Sales=600 units.What will be Closing Inventory value (in Rs) as per LIFO Method?

Accepted Answer

A) Rs 1000 
B) Rs 500 
C) Rs 8000 
D) Rs 1500 
A) Rs 1000 
B) Rs 500 
C) Rs 8000 
D) Rs 1500

Question 8

Cost of machine=1,90,000 Installation=10,000 Scrap=50,000 Life=6 yrs Calculate depreciation as per SLM method

Accepted Answer

A) 25,000 
B) 23,333 
C) 33,333 
D) 21,666 
A) 25,000 
B) 23,333 
C) 33,333 
D) 21,666

Question 9

The elements of the accounting equation are

Accepted Answer

A) Assets, Liabilities,Capital 
B) Liabilities,Capital 
C) Liabilities 
D) Capital 
A) Assets, Liabilities,Capital 
B) Liabilities,Capital 
C) Liabilities 
D) Capital

Question 10

When Salary is paid by cheque, which account is credited.

Accepted Answer

A) Cash A/c 
B) Bank A/c 
C) Salary A/c 
D) Personal A/c 
A) Cash A/c 
B) Bank A/c 
C) Salary A/c 
D) Personal A/c

Question 11

According to which principle the same accounting methods should be used each year:

Accepted Answer

A) Prudence 
B) Full disclosure 
C) Materiality 
D) Consistency 
A) Prudence 
B) Full disclosure 
C) Materiality 
D) Consistency

Question 12

When proprietor withdrew cash from business for personal use , it is known as -

Accepted Answer

A) Drawings 
B) Investment 
C) Furniture 
D) Bills Receivable 
A) Drawings 
B) Investment 
C) Furniture 
D) Bills Receivable

Question 13

4 oct Opening balance=500 units @Rs 20 each, 5 Oct:Purchase=1000 units @Rs 15 ,6 Oct Sales=500 units.What will be rate at which the sales unit will be valued as per weighted avg method?

Accepted Answer

A) Rs20 
B) Rs 15 
C) Rs 16.66 
D) 17.5 
A) Rs20 
B) Rs 15 
C) Rs 16.66 
D) 17.5

Question 14

Trial balance is not a conclusive proof of accuracy due to which errors.
I.Error of omission
II.Error of Principle
III.Error of Commission
IV.Compensatory Errors

Accepted Answer

A) All I,II,III and IV 
B) Only I,II and III 
C) Only I,II and IV 
D) Only II and III 
A) All I,II,III and IV 
B) Only I,II and III 
C) Only I,II and IV 
D) Only II and III

Question 15

In trial balance, which accounts with is/are recorded at the credit side?
I.Sales
II.Sales return
III.Cash
IV.Loan

Accepted Answer

A) Only I and II 
B) All of these 
C) Only I,II and IV 
D) Only I and IV 
A) Only I and II 
B) All of these 
C) Only I,II and IV 
D) Only I and IV

Question 16

If closing stock is mentioned in trial balance,Where is it shown in Final Accounts?

Accepted Answer

A) Credit side of Trading A/c 
B) Asset side of Balance Sheet 
C) Both A and B 
D) Not shown anywhere 
A) Credit side of Trading A/c 
B) Asset side of Balance Sheet 
C) Both A and B 
D) Not shown anywhere

Question 17

What are the two statements prepared for summarising the transactions?
I.Balance Sheet
II.Journal
III.P&L
IV.Cash Book

Accepted Answer

A) Only I and II 
B) Only I,II and III 
C) Only I,II and IV 
D) Only I and III 
A) Only I and II 
B) Only I,II and III 
C) Only I,II and IV 
D) Only I and III

Question 18

Where do we show Provision of bad debts in final accounts if given in adjustments?
I.Debit side of P&L
II.Credit side of P&L
III.Deduct from Debtors in Balance Sheet
IV.Add to Debtors in Balance Sheet

Accepted Answer

A) I and III 
B) II and IV 
C) II and III 
D) I and IV 
A) I and III 
B) II and IV 
C) II and III 
D) I and IV

Question 19

Goods destroyed by fire should be credited to

Accepted Answer

A) Puchases A/c 
B) Sales A/c 
C) Loss by fire A/c 
D) Insurance A/c 
A) Puchases A/c 
B) Sales A/c 
C) Loss by fire A/c 
D) Insurance A/c

Question 20

What are the causes of depreciation?

Accepted Answer

A) Wear and Tear 
B) Obsolescence 
C) Expiration of legal rights 
D) All of the above 
A) Wear and Tear 
B) Obsolescence 
C) Expiration of legal rights 
D) All of the above

Exam 1: Accounting Basics and Principles