Accounting Pak Mcqs

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Test No. 09 Subject: Accounting 150 Mcqs
01.A systematic way to maintain the books of accounts is called_________?
A. Accountancy
B. Economics
C. Book Keeping
D. Auditing
02.An Art of reading, classifying & Summarizing of accounts in a systematic way is

called__________?
A. Accounting
B. Accountancy
C. Auditing
D. Book Keeping
03.The maintenance of accounts in a systematic way is called__________?
A. Accounting
B. Reading
C. Book Keeping
D. Auditing
04.Goods Return by the customer are termed as :
A. Purchase return
B. Customer return
C. Sales return
D. Inventory return
05.Modern system of book keeping is called______________?
A. Double entry system

B. American system
C. Single entry system
D. Italic system
06.The person to whom goods are sold on credit is called___________?
A. Buyer
B. Seller
C. Debtor
D. Creditor
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07.Double entry means______________?
A. Entry in two sets of books

B. Entry at two ends
C. Entry at two dates
D. Entry for two aspects of the transaction
08.Discount received is a/an:
A. Asset
B. Expense
C. Liability
D. Revenue
09.Obligation of the Business are known as___________?
A. Liabilities
B. Revenues
C. Expenses
D. Assets
10.The amount invested by the proprietor to start the business is called:
A. Capital
B. Business
C. Drawings
D. All of them
11.Goods return to supplier are known as:__________?
A. Merchandise return
B. Purchase return
C. Return inwards
D. Sales return
12.The excess of current assets over current liabilities is called:
A. Working Capital
B. Circulating capital
C. Fixed capital
D. Trading capital
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14.When goods, in which business deals are sold, it is called___________?
A. Purchases
B. Return inward
C. Sales
D. Return outwards
15.Sales return is also known as____________?
A. Return received
B. Return Payed
C. Return inward
D. Return outward
(more…)
16.reduction in price is called:
A. Paid price
B. Invoice price
C. Book price
D. Discount
17.Cash brought by the owner to start business is called__________?
A. Capital
B. Loan
C. Drawing
D. None of these
18.The concession received on the price of defective goods is called:
A. Discount
B. Cash discount
C. Allowance
D. Trading discount
19.In support of business transaction, any written evidence is called ___________?
A. Discount
B. Voucher
C. Allowance
D. Price
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20.Building and furniture are called ____________?
A. Current asset
B. Fictitious asset
C. Tangible asset
D. Fixed assets
21.For the business, capital is ____________?

23
A. Expense
B. Liability
C. financial assets
D. All of them
22.When owner withdraw cash for its private use, it is called ___________?
A. Profit
B. Income
C. Expense
D. Drawing
23.Assets having physical existence are called ___________?
A. Current asset
B. intangible asset
C. Tangible asset
D. Liquid asset
24.The assets which have some market value are called ____________?
A. Fixed asset
B. Quick asset
C. Fictitious assets
D. Real assets
25.The assets which come into existence upon the happening of a certain event are
called__________?
A. Contingent assets
B. Fixed assets
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C. Fictitious assets
D. Quick assets
26.Income earned but not received is called ____________?
A. Fictitious assets
B. Quick asset
C. Real asset
D. Outstanding asset
27.Debts which are payable in the course of a month are called _____________?
A. External liabilities
B. Fixed liabilities
C. Current liabilities
D. Liquid Liabilities
28.The unsold goods are ______________?
A. Equity
B. Sale return
C. Inventory
D. Purchases
29.The systems of accounting are _____________?
A. Two
B. Three
C. Five
D. Six
(more…)
30.A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?
A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle
31.Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example
of____________?
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A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication
32.Institute of Chartered Accountants of Pakistan was established in____________?
A. 1949
B. 1956
C. 1961
D. 1972
33.Trial balance is prepared to check accuracy of_______________?
A. Ledger accounts balances

B. Balance sheet balances
C. Income statement balances
D. Cash flow statement balances
34.If a transaction is completely omitted from the books of accounts, will it affect the
agreement of a trial balance?
A. Yes
B. No
C. Transactions can’t be omitted
D. none of these
35.________ is the common base for preparing a trial balance?
A. Ledger accounts
B. General Journal
C. Specialized journals
D. Balance sheet
36.Which of the following is true about a trial balance?
A. It lists down the balances of accounts

B. It lists down the balances of a balance sheet
C. It is a kind of financial statement
D. It is not a part of accounting cycle
37.Debit balance = Credit balance in a trial balance indicates that:

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A. No error in recording transactions
B. No error in posting entries to ledger accounts
C. Account balances are correct
D. Mathematically Capital+Liabilities=Assets
38.Trial balance is commonly prepared?
A. Frequently during the year

B. At the end of an accounting period
C. At the end of a month
D. At the end of a year
39.Which of the following will affect the agreement of a trial balance?
A. Complete omission of a transaction

B. Partial omission of a transaction
C. Error of principle
D. Compensating errors
40.If debit balances = credit balances, trial balance only shows or check the ____________
and it does not indicate that no errors were made during recording and posting.
A. Arithmetic accuracy
B. Errors of commission
C. Omissions of economic events
D. Understatements of balances
41.Which of the following account with normal balance is shown at the debit side of a trial
balance?
A. Rent income account

B. Creditors account
C. Unearned income account
D. Cash account
42.Which of the following account with normal balance is shown at the credit side of a trial
balance?
A. Cash account
B. Bank account
C. Equipment account
D. Accrued expenses account
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43.Which of the following specialized journals records “goods returned by customers”?
A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Sales return journal
44.Sales on credit is recorded in which of the following journal?
A. Purchase journal
B. Sales journal
45.Transactions that a BUSINESS doesn’t record in any specialised journal are recorded in
which of the following journals or day books?
A. Cash payments journal

B. Cash receipts journal
D. General journal
46.Another name of journal is_____________?
A. Specialized journal
B. Day book
C. Cash book
D. Record book
47.Which of the following specialised journals will record “goods returned by the
BUSINESS “?
A. Purchase journal
B. Sales journal
48.Sales and purchase journal don’t record__________?
A. Credit sales
B. Credit purchases
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C. Credit sales and purchases
D. Cash sales and purchases
49.Cash received from debtor is recorded in which of the following SPECIALIZED

journals?
A. Purchase journal
B. Sales journal
C. Cash receipts
D. Cash payments journal
50.Which of the following is a type of cash receipt journal + cash payment journal?
A. Bank statement
B. Statement of cash flow
C. Cash book
D. Cash documents
51.Cash purchases is recorded in which of the following specialized journals?
A. Purchase journal
B. Sales journal
D. Cash payments journal
52.A brief explanation recorded below every entry in general journal is commonly known
as__________?
A. Narration
B. Explanation
C. Summary
D. Other information
53.Credit purchase of plant and machinery is recorded in which of the following journals?
A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal
54.Debit note is the basis for recording a transaction in which of the following journals?
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A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal
55.SALE of old furniture” will be recorded in which of the following specialised journals?
A. Purchase journal
B. Sales journal
C. General journal
D. Cash receipt journal
56.Credit note is the basis for recording a transaction in which of the following
SPECIALIZED journals?
A. Purchase journal
B. Sales return journal
C. General journal
D. Cash receipt journal
57.Specialized journals are more adequate for which TYPE OF BUSINESSES?
A. Small businesses
B. Big businesses
C. Sole proprietorship
D. Partnership
58.Which of the following is known as an evidence that a transaction took place?
A. Cash receipts journal

B. General journal
C. Source document
D. Cash book
59.BUSINESS paid rent amounting to $100″ which of the following specialized journals
records this transaction?
A. Cash receipts journal

B. Cash payments journal
C. Sales journal
D. Purchase journal
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60.Credit memo or credit note No. is entered in which of the following journal?
A. General journal
B. Cash journal
C. Purchase journal
D. Sales return day book
61.In accounting an Economic event is referred to as:
A. Cash
B. Bank statement
C. Transaction
D. Exchange of money
62.Identify the correct sequence of accounting process
A. Communicating→Recording→Identifying
B. Recording→Communicating→Identifying
C. Identifying→communicating→recording
D. Identifying→recording→communicating
63.Bookkeeping mainly concerns with which part of accounting process?
A. Analyzing
B. Preparing financial statements
C. Recording financial information
D. Auditing the books of accounts
64.Financial accounting provides financial information to all of the following external users
except:
A. Government agencies
B. investors
C. Creditors
D. Managers
65.For which step of accounting process the accountants of business entity prepare
financial statements?
A. Identification of economic event

B. Communication of financial information
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C. Recording financial information
D. Making decisions about business
66.Keeping the log of financial information in books of original entries is

called__________?
A. Recording
B. summarizing
C. Grouping
D. Processing
67.Auditing is what?
A. Reporting the financial information

B. Examination of financial statements
C. Preparation financial statements
D. maintaining the ledger records
68.Which of the following is the external user of financial statements?
A. Manager of the business

B. CEO of the business
C. Creditor of the business
D. Controller of the business
69.Which of the following is the internal user of financial statements?
A. Creditor of the business

B. Government agency
C. Shareholder of the business
D. Manager of the business
70._________ is the first phase of accounting cycle?
A. Identifying an economic event or transaction

B. Preparing journals
C. Posting entries to ledger accounts
D. Making decisions about business
71.Financial statements differ from management account because

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A. They are mainly prepared for external users of financial information
B. They are more complex and hard to prepare
C. The are the summary of accounting data
D. The are prepared on basis of actual concept
72.________ is a separate legal entity that Total capital can be divided in many shares.
A. Partnership
B. Sole proprietorship
C. Company
D. Non-profit organization
73.An asset posses which of the following?
A. Future economic benefits for the business

B. All kind of benefits for the business
C. Expenses for the business
D. Merits and Demerits for the business
74.Liabilities are which of the following?
A. Resources
B. Obligations
C. Future benefits
D. Expenses
75.________ is the gross inflow of economic benefits?
A. Assets
B. Liabilities
C. Income
D. Expenses
76.The gross decrease in economic benefits for the business are what?
A. Expenses
B. Obligations
C. Creditors
D. Income or gain
77.An asset must be _______ by the business to be shown as an asset in its “balance sheet”
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A. Possessed
B. Owned
C. Controlled
D. Used
78.Liability are arisen from which of the following events?
A. Present event
B. Future event
C. Past event
D. None of them
79.Which of the following can be considered as the most important phase of accounting
cycle and it is the primarily objective of financial accounting?
A. Identifying transactions
B. Preparing “T Accounts”
C. Preparing financial statements
D. Preparing trial balances
80.Which is the most important characteristic that all assets of a business have?
A. Long life of assets

B. Value of assets
C. Intangible nature of assets
D. Future economic benefits
81.What is the basic accounting equation?
A. Capital+Liabilities=Assets
B. Assets+ liabilities =Capital
C. Capital+assets=liabilities
D. Liabilities+Capital
82.Which of the following is a liability?
A. Cash
B. Equipment
C. Debtors
D. Creditors
83.What is equity?
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A. Cash from the business
B. liability of a business
C. Owner’s claim on total assets
D. Owner’s claim on total liabilities
84.Identify the asset from the following:
A. Cash and cash equivalent

B. Creditors
C. Notes payable
D. Bank loan
85._______ the withdrawal of cash and goods by the owner of the busienss for his/her
personal use?
A. Depreciation
B. Drawings
C. Outflow of cash
D. Appreciation
86.Net loss occurs when______________?
A. Expenses are greater than Income

B. Expenses are less than Income
C. Expenses=Income
D. Liabilities are greater than income
87.Double entry implies that
A. Recording entries in journal

B. Recording entries in Ledger account
C. Recording two aspects of every transaction
D. Recording every transaction in books
88.Identify the nominal account
A. Machinery account
B. Building account
C. Creditors account
D. Rent expenses account
89.Which of the following accounts can be classified as a real account?

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A. Rent expenses account
B. Rent income account
C. insurance expenses account
D. Cash account
90.Transferring entries from journal to ledger account is commonly known

as____________?
A. Recording
B. Transferring
C. Posting
D. Entry making
91.An account records the ___________ in the balance of an item?
A. Increase
B. Decrease
C. Increase or decrease
D. Appreciation
92.If credit side of a bank account is greater than the debit side, it indicates which of the
following?
A. Bank overdraft
B. Cash at bank
C. Bank balance
D. Current Asset
93.If debit side of a bank account is greater than credit side it indicates which of the
following?
A. Cash at bank
B. Bank understatement
C. Bank overdraft
D. Balance overstatement
94._________ will be credited if goods are given as charity?
A. Cash
B. Charity
C. Purchases
D. Sales
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95.Which of the following is known as the base for preparing trial balance?
A. Journal
B. Cash account
C. Ledger account
D. Balance sheet
96.If debit balance is greater than creadit balance then the account blance will
be__________?
A. Credit balance
B. Debit and credit balance
C. Cash balance
D. Debit balance
97.The normal balance of capital account is_____________?
A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance
98.The normal balance of asset account is____________?
A. Credit balance
B. Debit balance
C. Cash balance
99.The normal balance of liability account is____________?
A. Debit balance
B. Credit balance
C. Cash balance
100.Which of the following statements is incorrect regarding capital account?
A. Debit increases the capital account balance

B. Credit increases the capital account balance
C. Fresh capital increases the capital account balance
D. Net income increases the capital account balance
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101.Which of the following is the normal balance of a rent expense account?
A. Credit balance
B. Cash balance
C. Overdraft
D. Debit balance
102.Revenue and expense accounts are referred as______________?
A. Nominal accounts
B. Real account
C. Cash accounts
D. Banks account
103.The real accounts are accounts of Assets, liabilities and ___________?
A. Expenses
B. Revenues
C. Capital
D. Drawing
104.Building account is classified as _________ account?
A. Nominal
B. Real
C. Cash
D. Capital
105.Office equipments account is classified as _________ account?
A. Nominal
B. Real
C. Cash
D. Capital
106.___________ helps business to classify transactions according to their nature?
A. General journal
B. Real accounts
C. Ledger accounts
D. Cash accounts
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107.Which of the following is a real account?
A. Office equipment
B. Rent expenses
C. Rent income
D. Insurance expense
108.Which of the following accounts are closed at the end of an accounting period?
A. Nominal accounts
B. Balance sheet accounts
C. Real accounts
D. None of them
109.Which of the following is the closing balance of a ledger account?
A. Balance c/d
B. Balance b/d
C. Balance e/d
D. Balance f/c
110.The Basic accounting equation is___________?
A. Asset=Expense +Income
B. Assets=Cash+Capital
C. Assets=Capital+Liabilities
D. Assets=Expenses+Capital
111.Find out the value of assets if: Liabilities=$5000 and Capital=$1000
A. $4000
B. $6000
C. $7000
D. $3000
112.Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total
Capital=$5000
A. $6000
B. $10,000
C. $5000
D. $1000
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113.Capital increases if _________ increases?
A. Expenses
B. Drawings
C. Interest on capital
D. Revenue
114.Capital of a business decreases if there is an increase in___________?
A. Drawings
B. Income
C. Gains
D. Fresh capital
115.If the total liabilities of a business decrease by $5000 what will be the effect on total
asset?
A. Remain constant
B. Decrease by $5000
C. Increase by $5000
D. Increase by $10,000
116.If the business’s owner withdraws cash for his/her personal use what will be the effect
on capital?
A. Increase in capital
B. Remain the same
C. Decrease in capital
D. No effect on capital
117.Net income equal to Revenues minus____________?
A. Gains
B. Depreciation
C. Expenses
D. Capital expenditures
118.Collection of account receivable will
A. Increase assets and decrease assets

B. Increase assets and decrease liabilities
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C. Increase assets and increase capital
D. Increase assets and increase cash
119.Payment of expenses will ______ the assets
A. Increase
B. Reduce
C. apportion
D. Overstate
120.Which of the following is the practical implementation of the accounting equation?
A. Cash flow statement

B. Income statement
C. Statement of changes in equity
D. Statement of financial position
121.Which of the following accounting equation is correct?
A. Cash+Other assets=Capital-Liabilities
B. Capital+ Liabilities=Assets+Income
C. Assets-Liabilities=Capital
D. Assets+Capital=Liabilities
122.Fresh capital introduction will increase____________?
A. Assets and liabilities

B. Assets and equity
C. Liabilities and equity and bank balance
D. Capital and liabilities
123.Cash received for services rendered will______________?
A. Increase cash and liability

B. Increase equity and liability
C. Increase fixed assets and cash
D. Increase cash and equity
124.Which of following best describes the increase in equity expands___________?

A. Business operations
B. cash outflows
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C. Inflows of cash
D. Appropriation expenses
125.If Cash=$1000 inventories=$4000 Debtors=$5000 fixed assets=?

Capital+Liabilities=$15000 What is the Amount of total assets?
A. $5000
B. $10,000
C. $15,000
D. $20,000
126.Depreciation decreases____________?
A. Liabilities
B. Cash
C. Bank
D. Capital
127.An increase in provision for bad debt will____________?
A. Decrease net income

B. Decrease liabilities
C. Increase net income
D. Increase liabilities
128.Current assets – Current liabilities=?
A. Capital
B. Absorbed capital
C. Net assets
D. Net working capital
129.Assets-Liabilities=____________?
A. Cash
B. Equity
C. Net income
D. Net expenses
130.The process of recording is done?

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A. Two times a year
B. once a year
C. Frequently during the accounting period
D. At the end of a accounting period
131.General journal is a book of _______ entries?
A. First
B. Original
C. Secondary
D. Generic
132.The process of recording transactions in different journals is called_________?
A. Posting
B. Entry making
C. Adjusting
D. Journalizing
133.Every business transaction affects at least ________ accounts?
A. One
B. Two
C. Three
D. Infinite
134.Discount allowed is a kind of deduction from_____________?
A. Account payable
B. Account receivable
C. Cash account
D. Discount account
135.The other name of journal is____________?
A. Ledger
B. T account
C. Day book
D. Cash book
136.A journal entry in which two or more account is debited or credited is referred
as____________?
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A. Journal entry
B. Multi entry
C. Additional entry
D. Compound entry
137.he term 2/10-n/30 implies that ______ % discount will be given if the payment is made
within days or full amount is receivable within 30 days?
A. 2,10
B. 10,2
C. 10,30
D. 3,15
138.Goods returned by customer should be debited to which of the following accounts?
A. Sales income account

B. Sales account
C. Return inward account
D. Expenses account
139.Discount allowed is___________?
A. Expense of business
B. Income of business
C. Loss of business
D. Abnormal loss of business
140._________ is the evidence that a transaction took place?
A. Source documents
B. Ledger
C. Bonds
D. Journals
141.Which of the following will be debited if a business purchases goods on credit?
A. Cash
B. Debtor
C. Creditor
D. Purchases
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142.Which of the following accounts will be debited if the business’s owner withdraws cash
from business for his personal use?
A. Drawings
B. Cash
C. Business
D. Stock
143.Journals are also referred as_____________?
A. Book of entries
B. Book of original entries
C. T account
D. Books of economic event
144.The standard format of journal does not include which of the following?
A. Assets column
B. Date column
C. Description column
D. Amount column
145.In which of the following orders data is entered in journal?
A. Alphabetical order
B. Numeric order
C. Bullets order
D. Chronological order
146.Which of the following accounts will be credited if a company purchases building for
cash?
A. Capital account
B. Fixed assets account
C. Building account
D. Cash account
147.Discount for quick repayment of debt is normally referred as____________?
A. Trade discount
B. Prompt payment discount
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C. Cash discount
D. Bulk discount
148.The first step in accounting process is___________?
A. Recording the transaction

B. Identifying the transaction
C. Posting the transaction
D. Preparing the source documents
149.A chart of accounts generally start with which of the following types of accounts?
A. Assets accounts
B. liability accounts
C. Cash accounts
D. Revenue accounts
150.Total depreciation of an asset cannot exceed its:

A. Scrap value
B. Residual value
C. Market value
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151.Amount paid to Masood posted to the credit side of his account would
affect___________?
A. Masood’s account
B. Cash account
C. Cash account and Gagan’s account
D. None of these
152.Which of the following statements is/are true ?
A. A sale of an asset is recorded in the Sales Book

B. Total of Return Outward Book is debited to Return Outward Account
C. The balance of Petty Cash Book is a liability
D. Cash Book is a subsidiary book as well as a ledger
153.Which of the following is true regarding closing entries?
A. They must be followed by reversing entries

B. They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss
Account
C. They must be made after the reversing entries but before the adjusting entries
D. They must be made after the adjusting entries but before the reversing entries
154.Closing stock is generally valued at______________?
A. Cost Price
B. Market Price
C. Cost price or Market price whichever is higher
D. Cost price or Market price whichever is lower
155.Which of the following assets is/are to be valued at the lower of cost and net realizable
value?
A. Goodwill
B. Inventories
C. Investments
D. Both B. and C. above.
156.A few errors committed in Ahhiwalia’s books of account are given below. State which
errors would affect the Trial Balance.
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(a). Sales of `950 to Ram completely omitted from books of account
(b). Purchases of `720 from Shyam entered in the purchases journal as `700
(c). Purchases Journal is overcast by `1,000
(d). Sales returns journal is undercast by `200
(e) Amount paid to Agarwal wrongly posted to the debit to Mittal’s account
(f) Bank overdraft shown under debit column in the Trial Balance
(g) Sales of `500 to Sadiq entered in sales journal as sales to Mushtaq
(h) Wages paid for installation of machinery debited to wages account
A. a, c and g
B. c, d and f
C. c, d, e and h
D. c, d, f and h
157.Which of the following methods is not a practical way of realizing revenue?
A. Delivery method
B. Percentage-of-completion method
C. Production method
D. Moving average method
158.The amount payable to a person as consideration for the use of rights vested in him is
A. Dividend
B. Royalty
C. Purchase consideration
D. Installment
159.Buildings account is debited with an amount towards repairs. This is an example of?
A. Error of commission
B. Error of principle
C. Error of omission
D. Compensating error
160.The concept of conservatism will have the effect of______________?
A. Overstatement of Assets
B. Understatement of Assets
C. Overstatement of Liabilities
D. Understatement of Liabilities
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161.During the year 2011-2012, the value of closing inventory was overstated by 25,000.
Which of the following is true?
A. The cost of goods sold was overstated during 2011-2012 and income will be understated
during 2012-2013
B. The income was overstated during 2011-12 and closing inventory will be overstated during
2012-2013
C. The retained earnings was overstated during 2011-2012 and retained earnings will be
understated during 2012-2013
D. The cost of goods sold was understated during 2011-2012 but retained earnings will not be
affected during 2012-2013
162.Which of the following errors is an error of omission?
A. Sale of ` 100 was recorded in the Purchases Journal

B. Wages paid to Mohan have been debited to his account
C. The total of the sales journal has not been posted to the Sales Account
D. Repairs to buildings have been debited to buildings account

163.Which of the following is true?
A. Error of casting affects personal accounts

B. Omission of a transaction from a subsidiary record affects only one account
C. Error of carry forward affects two accounts
D. Error of principle involves an incorrect allocation of expenditure or receipt between
capital and revenue
164.Journal proper is meant for recording_____________?
A. Credit purchase of fixed assets

B. Return of goods
C. All such transactions for which no special journal has been kept by the business
D. None of these
165.Closing stock in the Trial Balance implies that______________?
A. It is already adjusted in the opening stock

B. It is adjusted in the Purchase A/c
C. It is adjusted in the Cost of Sale A/c
D. It is adjusted in the Profit &Loss A/c
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166.Which of the following statements is true?
A. If a Trial Balance tallies, it always means that none of the transactions has been completely
omitted
B. A Trial Balance will not tally if a transaction is omitted
C. A customer to whom goods have been sold on credit cannot avail himself of a cash discount
D. A credit balance in the Pass Book indicates excess of deposits over withdrawals
167.The adjustment to be made for income received in advance is:
A. Add income received in advance to respective income and show it as a liability

B. Deduct income received in advance from respective income and show it as a liability
C. Add income received in advance to respective income and show it as asset
D. Deduct income received in advance from respective income and show it as an asset in the
Balance Sheet
168.Which of the following statements is correct about Trial Balance?
A. The Trial Balance is prepared after preparing the Profit and Loss Account
B. The Trial Balance shows only balances of Assets and Liabilities
C. The Trial Balance shows only nominal account balances
D. The Trial Balance has no statutory importance from the point of view of law
169.While finalizing the current year‘s accounts, the company realized that an error was
made in the calculation of closing stock of the previous year. In the previous year, closing
stock was valued more by 50,000. As a result
A. Previous year‘s profit is overstated and current year‘s profit is also overstated.
B. Previous year‘s profit is understated and current year‘s profit is overstated.
C. Previous year‘s profit is overstated and current year‘s profit is understated.
D. There will be no impact on the profit of either the previous year or the current year.
170.Which of the following is not correct about Errors?
A. Errors which affect one account can be errors of posting

B. Errors of omission arise when any transaction is left to be recorded
C. Errors of carry forward from one year to another year affect both Personal and Real A/c
D. Errors of commission arise when any transaction is recorded in a fundamentally
incorrect manner
171.If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as
1,570, then
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A. Net Profit will decrease by 3,140
B. Gross Profit will increase by 3,320
C. Gross Profit will decrease by 3,500
D. Gross Profit will decrease by 3,320
172.For the past 3 years, DK Ltd. has failed to accrue unpaid wages earned by workers
during the last week of the year. The amounts omitted, which were considered material,
were as follows:
March 31,2010 – ` 56,000
March 31, 2011 – ` 51,000
March 31, 2012 – ` 64,000
The entry on March 31, 2012 to rectify these omissions would include a
A. Credit to wage expense for ` 64,000

B. Debit to wage expense for ` 64,000
C. Debit to wage expense for ` 51,000
D. Debit to wage expense for ` 13,000
173.Purchase journal is kept to record_____________?
A. All purchases of goods

B. All credit purchases of goods
C. All credit purchases
D. None of these
174.The beginnings inventory of the current year is overstated by 5,000 and closing
inventory is overstated by 12,000. These errors will cause the net income for the current
year by
A. 17,000 (overstated.
B. 12,000 (understated.
C. 7,000 (overstated.
D. 7,000 (understated.
175.The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of
materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The
Company has not passed any rectification entries and the error is not detected through the
bank reconciliation. The impact of this error is
A. The Trial Balance will not agree

B. The balance of creditors is understated
C. The purchases are understated
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D. The favorable bank balance as per Pass Book is less than the Bank balance as per Cash
book
176.Which of the following errors affects the agreement of a Trial Balance?
A. Mistake in balancing an account

B. Omitting to record a transaction entirely in the subsidiary books
C. Recording of a wrong entry in the subsidiary books
D. Posting an entry on the correct side but in the wrong account
177.Which of the following should not be treated as revenue expenditure?
A. Interest on loans and debentures

B. Annual fire insurance premiums on Plant and Equipment
C. Sales tax paid in connection with the purchase of office equipment
D. Small expenditures on long- lived assets, such as ` 20 for a paper weight.
178.Capital expenditure is an expenditure which
A. Benefits the current accounting period

B. Will benefit the next accounting period
C. Results in the acquisition of a permanent asset
D. Results in the acquisition of a current asset
179.Which of the following is not a deferred revenue expenditure?
A. Expenses in connection with issue of equity shares

B. Preoperative expenses
C. Heavy advertising expenses to introduce a new product
D. Legal expenses incurred in defending a suit for breach of contract to supply goods
180.Any donation received for a specific purpose is a_________?
A. Liability
B. Assets
C. Revenue receipts
D. Capital receipts
181.Which of the following is an item of capital expenditure?
A. Research and development costs during the year

B. Interest on borrowed fund utilized for acquisition of Office Furniture
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C. Installation charges paid in conjunction with the purchase of Office Equipment
D. Monthly rent of a machinery used in the business
182.The balance of which of the following accounts do not disappear, once they are
debited/credited to Trading Account?
A. Sales
B. Purchases
C. Inward returns
D. Closing stock
183.Which one of the following should be considered a revenue expenditure?
A. 1000 paid for the execution of a new plant

B. Loss of 10,000 incurred in increasing the sitting accommodation of a hotel
C. Damage paid on account of breach of a contract to supply certain goods
D. Repair to machinery purchased, second hand.
184.Which of the following statements are / is true? – Events after Balance Sheet are?
A. All the significant events after the Balance Sheet date

B. The events after Balance Sheet date but before submitting it to the Registrar of Companies
C. The events after Balance Sheet date but before its approval by the board
D. All changes after Balance Sheet date before its approval
185.Which one of the following is a capital expenditure?
A. Compensation paid to Directors on termination of their services

B. Expenditure incurred in connection with the renewal of a Trade Mark.
C. Gratuities paid to Directors on termination of their services.
D. Royalty paid in installments for the purchase of rights to manufacture and sell patient
medicines.
186.Which of the following enhances the earning capacity of an asset?
A. Increase in working capacity of an asset

B. Reduction in operating costs
C. Replacing damaged parts of an asset
D. Both A and C above
187.Which of the following items should not be capitalized relating to fixed assets?
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A. Interest payable on loans or deferred credits taken for the acquisition or construction of fixed
assets before they are ready for use
B. Stand by equipment and servicing equipment
C. Expenditure incurred on test runs and experimental production
D. Administration and general expenses
188.Which of these errors affect only one account?
A. Errors of casting
B. Errors of carry forward
C. Errors of posting
D. All the three
189.Which of these errors affect two or more accounts
A. Errors of complete omission

B. Errors of principle
C. Errors of posting to wrong account
D. All the three
190.Which of the following error is an error of principle
A. 5,000 received from Sham credited to Ram A/c

B. 5,000 incurred on installation of new plant debited to travelling expenses A/c
C. 500 paid for wages debited to salary A/c
D. 500 being purchase of raw material debited to purchase A/c ` 50
191.Which of the following is an one sided error?
A. 500 purchase of old equipment not recorded in the books of A/c at all
B. 500 being expense on travelling expense credited to travelling expenses
C. Both
D. None
192.Any gain on the sale of non-current assets should be _________ from the net profit and
the loss must be _________to the net profit in determining fund from operation?
A. Added, Reduced
B. Added, Added
C. Deducted, Added
D. Deducted, Deducted
Lecturer Commerce

193.Cash book records?
A. Only cash sales

B. All types of cash receipts and payments
C. Only revenue receipts
D. Only capital receipts
194.In a three column cash book_______________does not exist?
A. Cash column
B. Bank column
C. Petty cash column
D. Discount column
195.Which of these transactions will not be recorded in cash book?
A. Cash received from debtors

B. Cash paid to creditors
C. Salary remained outstanding
D. Cash deposited with bank
196.The closing balance of a petty cash book is a / an___________?
A. Liability
B. Gain
C. Assets
D. Loss
197.Which column of a cash book will not have credit balance___________?
A. Bank column
B. Discount column
C. Cash column
D. None
198.Petty cash balance is a/an___________?
A. Assets
B. Expenditure
C. Liability
D. None
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199.Which of these is a Part of cash in hand?
A. Postage stamps
B. B/R
C. Cheque Deposited with Bank
D. B/R endorsed
200.Which of the following is a Real A/c?
A. Salary A/c
B. Bank A/c
C. Building A/c
D. Goodwill A/c
201.Which of the following is a representative Personal A/c?
A. Outstanding Salary A/c

B. Rent A/c
C. SBI A/c
D. Bad debts A/c
202.Which of the following is a Nominal A/c ?
A. Outstanding Salary A/c

B. Rent A/c
C. SBI A/c
D. Debtors A/c
203.Goodwill A/c is a/an__________?
A. Nominal A/c
B. Tangible Asset
C. Intangible Asset
D. Fictitious Asset
204.Posting is the process of____________?
A. Posting the letters in drop box

B. Posting suitable person to a suitable job
C. Entering in the ledger the information contained in the ledger
D. All the three
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205.A book wherein various accounts are opened is called____________?
A. Subsidiary books
B. Journal
C. Ledger
D. Trial Balance
206.Which of these is not a special purpose journal?
A. Cash journal
B. Purchase journal
C. Debtors journal
D. Sales journal
207.The periodic total of sales day book is posted to___________?
A. Sales A/c
B. Cash sales A/c
C. Sales return A/c
D. Credit sales A/c
208.The periodic total of purchase day book is posted to____________?
A. Purchase register
B. Purchase A/c
C. Cash purchase A/c
D. Credit purchase A/c
209.Capital expenses are shown in___________?
A. Balance Sheet
B. Profit and Loss A/c
C. Trading A/c
D. None of these
210.Revenue receipts are shown in___________?
A. Balance Sheet
B. Profit and Loss appropriation A/c
C. Manufacturing A/c
D. Trading and Profit and Loss A/c
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211.Revenue is generally recognized as being earned at that point of time when?
A. sale is effected
B. cash is received
C. production is completed
D. debts are collected
212.Which of the following is a revenue expenses?
A. Raw material consumed

B. Plant purchased
C. Long term loan raised from bank
D. Share Capital
213.Which of the following is a capital expenditure?
A. Repair of plant and machinery

B. Salary paid to workers
C. Cost of stand by equipment
D. Annual whitewash of the office building
214.Which of these types of expenditure would not be treated as a Capital Expenditure?
A. Acquisition of an Asset
B. Extension of an Asset
C. Improvement of the existing Asset
D. Maintenance of the Asset
215.Expenses of the following nature are treated as a Revenue expenses except__________?
A. Expenses for day to day running of the business

B. Putting the new asset in working condition
C. Depreciation
D. Purchase of raw material
216.Cash received from debtors would be deemed as___________of funds.
A. No flow
B. Sources
C. Uses
D. Gain
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217.Generally the term fund is used to mean the difference between?
A. Current assets and current liabilities

B. Profit and loss A/C and Balance sheet
C. Current assets and non-current liabilities
D. Current liabilities and non-current liabilities
218.Which of these documents is not required for Bank Reconciliation?
A. Bank column of Cash Book

B. Bank Pass Book
C. Bank Statement
D. Trial Balance
219.Which of these items are taken into consideration for preparation of adjusted Cash
Book
A. Mistake in Cash Book

B. Mistake in Pass Book
C. Cheque issued but not presented for payment
D. Cheques deposited but not cleared
220.Credit balance as per Cash Book mean____________?
A. Surplus cash
B. Bank overdraft
C. Terms deposits with bank
D. None of these
221.Debit side of Bank Pass book corresponds to___________?
A. Credit side of Cash Book

B. Debit side of Cash Book
C. Debit side of Trial Balance
D. Credit side of Balance Sheet
222.Difference in Bank Balance as per Pass Book and Cash Book may arise on account
of_____________?
A. Cheque issued but not presented

B. Cheque issued but dishonoured
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C. Cheque deposited and credited by bank
D. Both A and B
223.The Bank Reconciliation Statement is prepared?
A. To rectify the mistakes in the Cash Book

B. To arrive at the Bank Balance
C. To arrive at the Cash Balance
D. To bring out the reasons for the difference between the Balance as per Cash Book and
the Balance as per Bank Statement
224.Bank reconciliation is a statement prepared to reconcile__________?
A. Trial balance
B. Cash book
C. Bank A/c
D. Cash as per cash book with bank balance as per bank pass book
225.Bank reconciliation statement is a part of_________?
A. Cash book
B. Trial balance
C. Auditors report
D. None of these
226.Benefits of preparing Bank Reconciliation Statement includes___________?
A. It bring out any errors committed in preparation of Cash book / Bank Pass Book
B. Highlights under delay in clearance of cheques deposited but not credited
C. Help know actual bank balance
D. All the three
227.Debit balance as per bank pass book mean_____________?
A. Surplus cash
B. Bank Overdraft
C. Terms deposits with bank
D. None of these
228.Which of the following is not a cause of difference in balance as per cash book and
balance as per bank pass book___________?
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A. Errors in cash book
B. Errors in pass book
C. Cheques deposited and cleared
D. Cheques issued but not presented for payment
229.Provision is created for____________?
A. Unknown Liabilities
B. Known Liabilities
C. Creation of Secret Reserves
D. All the Three
230.Which of the following is not a method of charging depreciation?
A. Straight line Method

B. Written down value Method
C. Discounted present value Method
D. Sum of digits Method
231.A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If
depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?
A. 20,000 Loss
B. 20,000 Profit
C. 10,000 Loss
D. 10,000 Profit
232.A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If
depreciation is charged @ 10% on written down value method, find the profit or loss on
sale of the Second hand car?
A. Loss of 20,000
B. Loss of 22,000
C. Loss of 11,000
D. Profit of 11,000
233.Which of the following is true with respect to providing depreciation under

diminishing balance method?
A. The amount of depreciation keeps increasing every year while the rate of depreciation keeps
decreasing
B. The amount of depreciation and the rate of depreciation decrease every year
Lecturer Commerce

C. The amount of depreciation decreases while the rate of depreciation remains the same
D. The amount of depreciation and the rate of depreciation increases every year
234.Which of the following statements best describes the purpose of depreciation?
A. Regular reduction of asset value to correspond to changes in market value as the asset ages
B. A process of correlating the market value of an asset with its gradual decline in physical
efficiency
C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried
on the Balance Sheet in excess of net realizable value
D. Allocation of the cost of an asset to the periods in which services are received from the
asset
235.The main objective of providing depreciation is to?
A. Calculate the true profit

B. Show the true financial position in the Balance Sheet
C. Provide funds for replacement of fixed assets
D. Both A. and B. above
236.Depreciation is a process of____________?
A. Valuation
B. Valuation and allocation
C. Allocation
D. Appropriation
237.The portion of the acquisition cost of the asset yet to be allocated is known
as___________?
A. Written down value

B. Accumulated value
C. Salvage value
D. Residual Value
238.Which of the following statements is true with regard to written down value method of
depreciation?
i. The rate at which the asset is written off reduces year after year
ii. The amount of depreciation provided reduces from year to year
iii. The rate of depreciation as well as the amount of depreciation reduce year after year
iv. The value of the asset gets reduced to zero over a period of time
Lecturer Commerce

A. Only (i) above
B. Only (ii) above
C. Both (i) and (ii) above
D. (i),(ii) and (iii) above
239.The accounting process of gradually converting the unexpired cost of fixed assets into
expenses over a series of accounting periods is_________?
A. Depreciation
B. Physical deterioration of the asset
C. Decrease in market value of the asset
D. Valuation of an asset at a point of time
240.Which of the following factors are primarily considered to determine the economic life
of an asset?
A. Passage of time, asset usage, and obsolescence

B. Tax regulations and SEBI guidelines
C. Tax regulations and asset usage
D. SEBI guidelines and Asset usage
241.In which of the following methods, the cost of the asset is spread over in equal
proportion during its useful economic life?
A. Straight-line method
B. Written down value method
C. Units-of-production method
D. Sum-of-the years‘-digits method
242.Which of the following statements is correct about Depreciation?
A. Depreciation cannot be provided in case of loss in a financial year

B. Depreciation is a charge against profit
C. Depreciation is provided in the books only when there is profit
D. Depreciation is an appropriation of profit
243.Depreciation is calculated on the____________?
A. Cost price of asset

B. Market price
C. Cost+ Transport+ Installation expenses
D. Cost or market values whichever is less
Lecturer Commerce

244.Which of the following is an external cause of depreciation?
A. Routine repair and maintenance

B. Misuse
C. Obsolescence
D. Wear and tear
245.Which of the following is not depreciated?
A. Building
B. Land
C. Plant and Machinery
D. Office equipment
246.____________is also known as Appraisal system of depreciation?
A. Inventory system
B. Survey system
C. Annuity system
D. Insurance
247.Bad debts recovered account will be transferred to______________?
A. Debtor‘s Account
B. Profit and Loss Account
C. Provision for Doubtful Debt Account
D. Either B or C above
248.The entry for creating a Provision for bad debts is_____________?
A. Debit Provision for Bad Debts A/c and credit Debtors A/c
B. Debit Debtors A/c and credit Provision for Bad Debts A/c
C. Debit Provision for Bad Debts A/c and credit Profit & Loss A/c
D. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.
249.When a person purchasing goods on credit he becomes a_________in the books of the
seller?
A. Debtor
B. Creditor
C. Defaulter
D. Offender
Lecturer Commerce

250.Cost of goods sold excludes___________?
A. Opening Stock
B. Carriage inward
C. Wages & Salary
D. Postage & Stamps
251.Tax deducted at source A/c appears in___________?
A. Assets side
B. Liability side
C. Profit & Loss A/c
D. Debited to Capital A/c
252.Investment in own share A/c appears in____________?
A. Asset side
B. Liability side
C. Netted from Capital
D. Profit & Loss A/c
253.Payments received in advance from a customer for a contract can be__________?
A. Shown as a deduction from contract work-in-progress on asset side

B. Shown as a liability
C. Credited to P&L A/c
D. Either A or B above
254.If a company has contingent liabilities, they appear in the__________?
A. Balance Sheet
B. Directors‘ report
C. Notes on account to Balance Sheet
D. Chairman‘s report
255.Recent developments have made much of a company‘s inventory obsolete. This

obsolete inventory should be?
A. Written down to zero or its scrap value

B. Shown in the Balance Sheet at its replacement cost
C. Shown in the Balance Sheet at cost, but classified as a non-current asset
D. Carried in the accounting records at cost until it is sold
Lecturer Commerce

256.Which of the following is not classified as inventory in the financial statements?
A. Finished goods
B. Work-in-process
C. Stores and spares
D. Advance payments made to suppliers for raw materials
257.If actual bad debts are more than the provision for bad debts, then there will be
a_____________?
A. Credit balance of Provision for Bad Debts Account

B. Debit balance of Provision for Bad Debts Account
C. Debit balance of Bad Debts Account
D. Debit balance of Discount on Debtors Account
258.The creation of provision for doubtful debts given as an adjustment

requires____________?
A. Debit Profit and Loss Account and deduct the provision from debtors
B. Credit Profit & Loss Account and deduct the provision from debtors
C. Credit Profit and Loss Account and add the provision to debtors
D. Debit Profit & Loss Account and add the provision to debtors
259.Under the direct write-off method of recognizing a bad debt expense. Which of the
following statements is/are true?
A. The bad debt expense is not matched with the related sales
B. Revenue is overstated in the year of sales
C. It violates the matching principle of accounting
D. All of the above
260.At the time of preparation of financial accounts, bad debt recovered account will be
transferred to?
A. Debtors A/c
B. Profit & Loss A/c
C. Profit & Loss Adjustment A/c
D. Profit & Loss Appropriation A/c
261.The balance of Revaluation Reserve pertaining to an asset that has been disposed off or
retired can be transferred to?
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A. General Reserve A/c
B. Profit & Loss A/c
C. Asset A/c
D. Capital Reserve A/c
262.Average Accounting Return is a measure of accounting profit relative to:
A. Book value
B. Intrinsic value
C. Cost
D. Market value
263.During the accounting period, sales revenue is Rs. 25,000 and accounts receivable
increases by Rs. 8,000. What will be the amount of cash received from customers for the
period?
A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000
264.Which of the following form of business organization is least regulated?
A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation
265.Which of the following statement is considered as the accountant’s snapshot of firm’s

accounting value as of a particular date?
A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement
266.Period cost include which of the following ?
A. selling Expense
B. Direct labor
C. factory overhead
D. selling Expenses & administrative expenses
Lecturer Commerce

267.The compensation paid by the borrower of fund to lender, from the borrower point of
the cost of borrowing fund is called?
A. Interest Rate
B. Required rate of return
C. Nominal interest rate
D. All of the above
268.An income statement in which each item expressed as percentage of Sale?
A. Balance sheet
B. income statement
C. common size income statement
D. All of the Above
269.Short term Assets expected to be converted into cash within 1 year or less than?
A. Current Assets
B. Fixed Assets
C. Current Assets& current liabilities
D. All of the above
270._________is the cost of converting raw material into finished products?
A. Prime cost
B. Explicit cost
C. Job order cost
D. Conversion
271.Net sales equals, sales minus:
A. Return outwords
B. Return inwards
C. cost of goods sold
D. carriage on sales
272.LIFO stands for__________?
A. Lots in , Few out

B. Link input, Format Output
C. Last input, First Output
D. Last in, First Out
Lecturer Commerce

273.Property, Plant and Equipment are conventionally presented in the Balance Sheet at
_________?
A. Replacement cost – Accumulated Depreciation

B. Historical cost – Salvage Value
C. Historical cost – Depreciation portion thereof
D. Original cost adjusted for general price-level changes
274.Outstanding salaries is shown as___________?
A. An Asset in the Balance Sheet

B. A Liability
C. By adjusting it in the P & L A/c
D. Both B. and C. above
275.Insurance prepaid is shown as:___________?
A. Current Asset
B. Current Liability
C. Fixed Asset
D. Income
276.Depreciation appearing in the Trial Balance should be?
A. Debited to P&L A/c

B. Shown as liability in Balance Sheet
C. Reduced from related asset in Balance Sheet
D. Both A. and C. above
277.A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case
A. P&L A/C is debited with 1,400

B. P&L A/C is debited with 1,200
C. 200 is shown as current asset
278.Bad debts recovered is:
A. Credited to P&L A/c

B. Debited to P&L A/c
C. Reduced from debtors in Balance Sheet
D. Added to debtors in Balance Sheet
Lecturer Commerce

279.The adjustment to be made for prepaid expenses is____________?
A. Add prepaid expenses to respective expenses and show it as an asset

B. Deduct prepaid expenses from respective expenses and show it as an asset
C. Add prepaid expenses to respective expenses and show it as a liability
D. Deduct prepaid expenses from respective expenses and show it as a liability
280.On scrutiny of a firm‘s books of accounts, it was observed that the following errors
have occurred in the previous years but have not yet been rectified.
i. Depreciation for 2011-2012- 7,000 understated

ii. Accrued expenses as at March 31, 2013 – 10,000 understated
The impact of this on the reported net income for the year ending March 31, 2013 is
A. 7,000 Overstated
B. 10,000 Overstated
C. 17,000 Understated
D. 17,000 Overstated
281.Which of the following entries is correct in respect of reserve for discounts on accounts
payable?
A. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c
B. Debit Accounts Payable A/c and Credit P&L A/c
C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c
282.Sundry debtors as per Trial Balance is 43,000 which includes 2,200 due from ‗H in
respect of goods sent to him on approval basis, the cost price of which is 1,800. Rectification
would involve:
A. Adding 2,200 to closing stock

B. Deducting 1,800 from closing stock and deducting 2,200 each from debtors and sales
C. Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales
D. Deducting 1,800 from debtors
283.Goods in stock worth 800 are destroyed by fire and the Insurance Co. is accepted the
claim for 600. Adjustment would involve
A. Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and
Profit and Loss Account respectively
B. Deduct the 800 from closing stock in the Trading Account
C. Credit insurance company for 600
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D. Debit of 600 and 200 to insurance company and Profit and Loss Account respectively
and
credit of 800 to Trading Account
284.Prepaid expenses are valued on the Balance Sheet at
A. Replacement cost
B. Current cost
C. Cost to acquire less accumulated amortization
D. Cost less expired portion
285.Which of the following relationships is/are false?
A. Net Profit = Gross Profit – Administration and Other expenses

B. Net Profit = Gross Profit + Administration expenses and Other expenses
C. Opening Stock + Purchases – Closing Stock = Cost of Sales
286.Gross Profit is equal to_________?
A. Sales – Cost of goods sold

B. Sales – Closing Stock + Purchases
C. Opening Stock + Purchases – Closing Stock
D. None of the above
287.Which of the following shall not be deducted from net profit while calculating
managerial remuneration?
A. Loss on sale of undertaking

B. Debts considered bad and written off
C. Liability arising from a breach of contract
D. Director‘s remuneration
288.Which of the following equations is correct?
A. Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock
B. Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock
C. Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales
D. Gross Profit – Opening Stock + Direct expenses + Purchases +Closing stock = Sales
289.Which of the following is not true with regard to preparation of Profit & Loss
Account?
Lecturer Commerce

A. Profit & Loss Account is prepared for a certain period and hence it is an interim
statement
B. Profit & Loss Account does not disclose the effect of non-financial items
C. Net Profits are ascertained on the basis of current costs
D. Net Profits as disclosed by P&L Account is not absolute
290.The Profit and Loss Account shows the:
A. Financial results of the concern for a period

B. Financial position of the concern on a particular date
C. Financial results of the concern on a particular date
D. Cost of goods sold during the period
291.Which of the following will not appear in Profit and Loss Account of a business?
A. Drawings
B. Bad debts
C. Accrued expenses
D. Reserve for discount on Sundry Creditors
292.Which of the following is not a financial statement?
A. Profit and Loss Account

B. Balance Sheet
C. Funds Flow Statement
D. Trial Balance
293.If unexpired insurance appears in the Trial Balance, it should be:
A. Credited to the Profit & Loss Account

B. Debited to the Profit & Loss Account
C. Shown on the liabilities side of the Balance Sheet
D. Shown on the assets side of the Balance Sheet
294.Which of the following are/is not a fixed asset?
A. Stock
B. Vehicle
C. Fixed deposit in bank
D. Both A. and C. above
295.Which of the following are/is a current asset?

Lecturer Commerce

A. Sundry Debtors
B. Stock
C. Prepaid insurance
D. All of A. B. and C. above
296.Tax deducted at source appears in the Balance Sheet
A. On the assets side under current assets

B. On the assets side under loans and advances
C. On the liabilities side under current liabilities
D. On the liabilities side under provisions
297.Which of the following statements is false ? select the false from below options
A. Balance Sheet discloses financial position of the business

B. A person who owes to the business is called Debtor
C. Decrease in the value of the asset could decrease the value of a liability
D. Assets are to be shown in the Balance Sheet at the realizable value
298.The Balance Sheet gives information regarding the____________?
A. Results of operations for a particular period

B. Financial position during a particular period
C. Profit earning capacity for a particular period
D. Financial position as on a particular date
299.Which of the following accounts appear(s) in the Balance Sheet of a business?
i. Stock at the end of the financial year

ii. Stock at the beginning of the financial year
iii. Drawings
iv. Prepaid Rent
v. Interest received but not yet earned
A. Only (i) above

B. Only (iii) above
C. Both (i)and (iii) above
D. (i), (iii), (iv) and (v) above
300.Which of the following is not an intangible asset?

Lecturer Commerce

A. Trade mark
B. Franchise
C. Accounts Receivable
D. Secret Profit

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Enforcement Officer , AD Accounts, Planning Officer Deputy Director Development

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02.An Art of reading, classifying & Summarizing of accounts in a systematic way is

03.The maintenance of accounts in a systematic way is called__________?

04.Goods Return by the customer are termed as :

05.Modern system of book keeping is called______________?

A. Double entry system

06.The person to whom goods are sold on credit is called___________?

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A. Entry in two sets of books

08.Discount received is a/an:

09.Obligation of the Business are known as___________?

10.The amount invested by the proprietor to start the business is called:

11.Goods return to supplier are known as:__________?

12.The excess of current assets over current liabilities is called:

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15.Sales return is also known as____________?

16.reduction in price is called:

17.Cash brought by the owner to start business is called__________?

18.The concession received on the price of defective goods is called:

19.In support of business transaction, any written evidence is called ___________?

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21.For the business, capital is ____________?

23.Assets having physical existence are called ___________?

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26.Income earned but not received is called ____________?

28.The unsold goods are ______________?

29.The systems of accounting are _____________?

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32.Institute of Chartered Accountants of Pakistan was established in____________?

33.Trial balance is prepared to check accuracy of_______________?

A. Ledger accounts balances

35.________ is the common base for preparing a trial balance?

36.Which of the following is true about a trial balance?

A. It lists down the balances of accounts

37.Debit balance = Credit balance in a trial balance indicates that:

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38.Trial balance is commonly prepared?

A. Frequently during the year

39.Which of the following will affect the agreement of a trial balance?

A. Complete omission of a transaction

A. Rent income account

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44.Sales on credit is recorded in which of the following journal?

A. Cash payments journal

46.Another name of journal is_____________?

48.Sales and purchase journal don’t record__________?

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49.Cash received from debtor is recorded in which of the following SPECIALIZED

51.Cash purchases is recorded in which of the following specialized journals?

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57.Specialized journals are more adequate for which TYPE OF BUSINESSES?

58.Which of the following is known as an evidence that a transaction took place?

A. Cash receipts journal

A. Cash receipts journal

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61.In accounting an Economic event is referred to as:

62.Identify the correct sequence of accounting process

63.Bookkeeping mainly concerns with which part of accounting process?

A. Identification of economic event