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Introduction to accountancy - class-IX

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Costing system, which is a combination of process costing and job costing system is classified as _____________.

  1. weighted costing system

  2. average costing system

  3. hybrid costing system

  4. double costing system


Correct Option: C

A saree manufacturer marks 20% higher price on his sarees. He allows 10% discount to the coustomer and earns a profit of Rs. 56 The cost of the saree is _____________.

  1. Rs. 700

  2. Rs. 600

  3. Rs. 800

  4. Rs. 1, 000


Correct Option: A

Method which divides support department cost into two dimensions such as fixed and variable cost pool is classified as _____________.

  1. sales mix allocation method

  2. dual-rate cost-allocation method

  3. single rate cost allocation method

  4. quantity variance allocation method


Correct Option: B

Insurance Act came in to effect in _______.

  1. 1956

  2. 1972

  3. 1938

  4. None of these


Correct Option: C
Explanation:

The Insurance Act, 1938 is a law originally passed in 1938 in British India to regulate the insurance sector. It provides the broad legal framework within which the industry operates.

Debit means _________.

  1. decrease in asset

  2. increase in liability

  3. an entry on the left hand side of an account

  4. moderate increase in liability


Correct Option: C
Explanation:

Debit means left side. For e.g. every accounting entry will have a debit and credit amount. The debit amount is usually listed first and will be entered on the left side of the general ledger account indicated. The general ledger accounts will have both a debit and credit side, left and right side. The balance in a general ledger account will be either a debit balance or a credit balance. 

Rs. 500 spent on servicing office type writer should be debited to _________.

  1. Expenses Account

  2. Type writer Account

  3. Repairs Account

  4. Services Account


Correct Option: C
Explanation:

Amount spend on normal servicing or repair of any asset is a revenue expenditure and should be debited to repairs account in profit & loss account. Any amount spent which improves the life of any asset, should be capitalized.

The process of recording financial transactions in the journal is called ___________.

  1. Journalizing

  2. Utilizing

  3. Posting

  4. Balancing


Correct Option: A
Explanation:

All business transactions are to be first recorded in journal in chronological order. Process of recording the transaction is called journalizing.

In life insurance, the risk insured is __________________.

  1. certain to occur and also the timing of its occurrence is known

  2. certain to occur but its timing of occurrence is not known

  3. not certain to occur and also the timing of its occurrence is not known

  4. not likely to occur


Correct Option: C
Explanation:

Life insurance are taken to cover up the unforeseen and untimely event occurs during the life time. Life insurance companies provide the coverage of life of the insurer by taking an insurance premium. Life cover are taken to have future security in case of untimely and unforeseen circumstances.

A bank can open a branch only at the permission of the _______.

  1. SBI

  2. RBI

  3. Government

  4. None of these


Correct Option: B
Explanation:

Ans :-

Banks have to apply to RBI for set-up of new branches. 
RBI has strict guidelines about the same keeping multiple factors in mind - type of bank, financial inclusion being done, location, density of banking needed etc

$1.$ Providing only for the holding company's share of unrealised profit is more popular.
$2.$ The holding company's share of the unrealised profit should be reduced from the stock on the asset's side of the consolidated Balance Sheet
$3.$ The holding company's share of unrealised profit should be reduced from the profit and loss account on the liabilities side of the consolidated Balance Sheet.
$4.$ The approach of making a provision for the entire profit included in the stock is preferred by the American Institute of Certified Public Accountants (AICPA)
Of these.

  1. $1$ and $3$ are correct

  2. $2$ and $4$ are correct

  3. $1$ and $4$ are correct

  4. All are correct


Correct Option: D
Explanation:

Because

1. In order words, for you to realize profits from an investment you've made, you  Popular Stocks . Because you would still be holding on to all of your 1,000 shares, you .To learn more about profit realization and its implications for ... This unrealized gain would become realized only if you sell the security.
2.In short, holding company's share of unrealized profit should be deducted from the Consolidated Stock in the assets side of the Consolidated Balance Sheet ... of Goodwill will be reduced by the amount of increased value of paid-up shares.
3.In short, holding company's share of unrealized profit should be deducted from the Consolidated Stock in the assets side of the Consolidated Balance Sheet and the same amount should also be deducted from the Profit and Loss Account in the Consolidated Balance Sheet.
4.The American Institute of CPAs (AICPA) is a non-profit organization of Certified Public Accountants. Learn which job is right for you: salary, personality, skills, certifications etc. in the United States. It was established in 1887, and its role is to create and grade the Certified Public Accountant (CPA) examinations.

'Manufacturing Account' is prepared by _________.

  1. Pharma Industry

  2. Cement Industry

  3. Iron Industry

  4. All of the above


Correct Option: D
Explanation:

Every business have to prepare financial statements at the end of every financial year to know the profitability and financial position of the business. In case of trading concern, business need to prepare trading account and Profit & Loss account and the Balance Sheet. In case of manufacturing concern, business need to prepare manufacturing account, trading account and Profit & Loss account and the Balance Sheet.

Transaction is ____________.

  1. Buying and Selling of goods

  2. Affect financial position of business

  3. Measured in terms of money

  4. All of the Above


Correct Option: D
Explanation:

transaction is a business event that has a monetary impact on an entity's financial statements, and is recorded as an entry in its accounting records. 

Dealings between two persons is a __________ . 

  1. Narration

  2. Entry

  3. Transaction

  4. None of the above 


Correct Option: C
Explanation:

An event involving some value between two or more entities. It can be purchase of goods, receipt of  money, payment of creditor, incurring expenses, etc. It can be a cash transaction or a credit transaction. A transaction is a business event that has a monetary impact on an entity's financial statements, and is recorded as an entry in its accounting records. A high-volume transaction, such as billing to a customer, may be recorded in a specialized journal, which is then summarized and posted to the general ledger. Alternatively, lower-volume transactions are posted directly to the general ledger.

Sale or purchase of goods or for certain value to be receivable or payable in future is known as ____________ .

  1. Cash transaction

  2. Credit transaction

  3. Non-monetary transaction

  4. None of the above


Correct Option: B
Explanation:

The term "transaction" refers to any business dealing or event which has a value measurable in terms of money and which involves transfer of money or money's worth between the business and others. The capital introduced by the proprietor, the amount withdrawn by the proprietor, purchase of goods on cash or credit, selling of goods for cash or credit, receipt of money  from a debtor, payment to a creditor, borrowing of loan from bank or payment of a loan, payment of salaries, rent, telephone charges, and receipt of incomes such as discount, rent and interest are examples of transactions. A credit transaction is one in which payment or receipt of money is postponed for a future date. Here, the name of the party is mentioned (with or without the word 'credit'). Purchased furniture from Mohan on credit, sold goods to Rejeev on credit, and salary unpaid, are some examples of credit transactions.

Business transaction in which cash is not paid or received immediately is known as ______________.

  1. Cash transaction

  2. Non monetary transaction

  3. Credit transaction

  4. Transaction in kind


Correct Option: C
Explanation:

Credit transaction means any transaction by the terms of which the repayment of money loaned  or loan commitment made or payment for goods, services or properties sold or leased is to be made at future date or dates. In other words  credit transaction means goods or services are purchased but the payment will settle in a later date. 

Exchange of goods and services either for cash or any other goods or services is known as _______________ .

  1. Transaction

  2. Narration

  3. Monetary transaction

  4. None of the above


Correct Option: A
Explanation:

A event involving some value between two or more entities. It can be purchase of goods, receipt of money, payment to a creditor, incurring expenses, etc. A transaction is a business event that has a monetary impact on entity's financial statements, and is recorded as an entry in its accounting  records. A high-volume transaction, such as billing to a customer, may be recorded in a specialized journal, which is then summarized and posted to the general ledger. Alternatively, lower-volume transactions are posted directly to the general ledger. A transaction can be a cash transaction or a credit transaction.

Sale or purchase of goods or services for immediate cash payment is known as ____________ .

  1. Cash transaction

  2. Credit transaction

  3. Non-monetary transaction

  4. All of the above


Correct Option: A
Explanation:

The term "transaction" refers to any business dealing or event which has a value measurable in terms of money and which involves transfer of money or money's worth  between the business and others. The capital introduced by the proprietor, the amount withdrawn by the proprietor, purchase of goods on cash or credit, selling of goods for cash or credit, receipt of money from a debtor, payment to a creditor, borrowing of loan from the bank or payment of a loan, payment of salaries, rent, telephone charges, and receipt of incomes such as discount, rent and interest are examples of transactions. Cash transactions refer to any transaction which involves immediate payment or receipt of cash, e.g. purchase of goods for cash, sale of goods for cash, and payment of expenses or receipt of incomes

Money value of the reputation of business is known as ______.

  1. Copyright

  2. Goodwill

  3. Patents

  4. Trademark


Correct Option: B
Explanation:

Business goodwill is a key intangible asset that represents the portion of the business value that cannot be attributed to other business assets. The value of a company brand name, solid customer relations, good employee relations represent goodwill. 

Period of time for which accounts of the business are prepared is _____________.

  1. Financial year

  2. Calendar year

  3. Assessment  year

  4. All of the above


Correct Option: A
Explanation:

Every organization surely want to analyse the overall business performance. Normally this is 12 month or a period of a year. This year is called accounting year, also termed as financial year.

A transaction is concerned with money and money 's worth. 

  1. True

  2. False


Correct Option: A
Explanation:

A transaction is an agreement between a buyer and a seller to exchange goods, services or financial instruments. Transaction is a business event that has a monetary impact on an entity 's financial statements. For example - paying a supplier for services rendered or for supply of goods, paying an employee for hours work  etc.  This all are transactions and involve money and money' s worth. 

State True or False.
In barter transactions, goods or services are purchased for other goods or services. 

  1. True

  2. False


Correct Option: A
Explanation:

The above statement is true as barter system is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange such as money. 

State True or False.
In credit transaction, goods or services are purchased for cash only.

  1. True

  2. False


Correct Option: B
Explanation:

In credit transaction goods or services are purchased but the payment is settle in a later date and in cash transactions payment is settled immediately. 

Narration is written just above an entry. 

  1. True

  2. False


Correct Option: B
Explanation:

A brief about the journal entry is written after every journal entry to give the transaction details about the journal entry. 


This can be shown as:

Sanjay & Co.                                   Dr.
           To Sales A/c
(Being goods sold on credit through sales Invoice No. 07/18-19 to Sanjay & Co.)

Gopal Sons starts a business by investing Rs. 15 lakh and purchases goods worth Rs.12.5 lakh. At the end of the year he is left with a profit of Rs.1,50,000. The surplus profit of Rs.1,50,000 is a /an_________.

  1. event

  2. transaction

  3. dealing

  4. operations


Correct Option: A
Explanation:

Every economic activity is performed through transactions and events. An event is the happening, consequence or result of the transaction. Hence in our example the surplus profit is an event which is result of transaction.

________ is used to mean a happening as a consequence of transaction(s).

  1. Event

  2. Transaction

  3. Dealing

  4. Operations


Correct Option: A
Explanation:

Every economic activity is performed through transactions and events. A transaction may be a business, performance of an act or an agreement. Event is used to mean a happening as a consequence of transaction(s).

An accountant records a transaction if ________ .

  1. it is substantiated by a documentary evidence

  2. it has tax implication

  3. it is so required by the Management

  4. it is mandatory as per Statutory requirement


Correct Option: A
Explanation:

Any business transaction which occur during the course of business must have the documentary evidence. Since the accounts of the business need to be audited in future, all evidence must be available for records.

______ describes a record of the transaction.

  1. Income statement

  2. Journal

  3. General ledger

  4. Charter of accounts


Correct Option: B
Explanation:

The transactions are recorded first of all in the journal and then they are posted to the ledger. Thus the journal is the book of first or original entry while the ledger is the book of second entry. Journal records transactions in a chronological order. Journal is more reliable then ledger. The process of recording transactions is termed as journalising.

_______ is the first phase of accounting cycle.

  1. Identifying an event or transaction

  2. Taking rational decision

  3. Designing Accounting system

  4. Preparing charter of accounts


Correct Option: A
Explanation:

Accounting cycle starts only when there is an event or transaction of monetary value. If a transaction is completed, its considered an event to record the same in business books. Non economic transaction should not be considered as an event. Hence, no recording is done.

_______ is used to an economic event in accounting.

  1. Event

  2. Transaction

  3. Dealing

  4. Operations


Correct Option: B
Explanation:

Every economic activity is performed through transactions and events. A transaction may be a business, performance of an act or an agreement. Transaction is used to an economic event in accounting.

Choose the wrong statement.

  1. Accounting is the language of business.

  2. Transactions are recorded in qualitative terms only.

  3. Accounting is the art of recording, classifying and summarizing.

  4. Transactions and events of financial character are subject-matter of accounting.


Correct Option: B
Explanation:

Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. transactions and events of financial information. It revels profit or loss for a given period, and the value and nature of firm's assets, liabilities and owner;s  equity. It is the language of business.

A business transaction in which money comes into the business immediately after the goods are delivered or services are rendered is called ____________.

  1. cash transaction

  2. credit transaction

  3. black money transaction

  4. hawala transaction


Correct Option: A
Explanation:

A cash transactions is a transaction where there is an immediate payment of cash for the purchases of an asset. It differs from other type of transactions that involves delayed delivery of purchased item, or delayed payment for the item.

A post dated cheque bears ______ date.

  1. Past

  2. No

  3. Future

  4. Present


Correct Option: C
Explanation:

A post-dated check (or post-dated cheque) is a check written with a future date. In other words, the date that appears on the check is after the date when the check was written. Even with a future date appearing on the check, the check could clear (be paid from) the bank account prior to that date.

Ram purchased goods of Rs. $10,000$. This can be classified as _________.

  1. an event

  2. a transaction

  3. a transaction as well as an event

  4. neither a transaction nor an event


Correct Option: B
Explanation:

Any exchange of value for value ( for money or money's worth) is called a transaction. Something having value is received, and something having value goes out.  Selling or purchasing of goods or taking or granting any loan are examples of transactions. 

Ram purchased goods of Rs.10000 is a transaction. 

On March 31, there is closing stock of Rs. $10,000$. This can be classified ________________.

  1. An event

  2. A transaction

  3. A transaction as well as an event

  4. Neither a transaction nor an event


Correct Option: A
Explanation:

Unsold items i.e Closing stock is captured in the financial statements as 'Current Asset'. An event can be internal or external. This is an internal event

State with reasons whether the following statement is true or false:
Transactions and events are guided by generally accepted accounting principles subject to law of land.

  1. True

  2. False


Correct Option: A
Explanation:

Accounting is based on the certain concepts and conventions which are commonly known as Generally Accepted Accounting principles". 

Each transaction is based on some or other accounting concept. For example:
1) Furniture costing Rs.1000 is purchased- based on cost concept
2) Director is not having good health- based on money measurement concept which signifies that only those transactions are recorded which are having monetary value.  
3) Provision  for bad debts- based on conservatism convention which signifies that business records all anticipated losses. 

Which of the following statement is false?

  1. Void agreements are punishable

  2. Illegal agreements are punishable

  3. Illegal agreements are forbidden under the law

  4. Collateral transactions of a void agreement are not void


Correct Option: A
Explanation:

A void agreement is not punishable under law whereas an illegal agreement is considered as an offence, hence the parties to it are punishable and penalised under Indian Penal Code (IPC)


An illegal agreement is one which is forbidden by law ; but a void agreement may not be forbidden , the law may merely say that if it is made , the courts will not enforce it . Thus every illegal contract is void but a void contract is not necessarily illegal.

Collateral agreements of a void agreement may or may not be void i.e. they may be valid also. Conversely, collateral agreements of an illegal agreement cannot be enforceable by law as they are void ab initio.

Which of the following is a cash transaction?

  1. Sold goods

  2. Sold goods to a customer

  3. Sold goods to a customer on credit

  4. none of above


Correct Option: A
Explanation:

This can be summarized as:


Sold Goods- It represent the sale of goods on cash as nothing is mentioned about customer name or sold on credit. Hence this is considered as cash sales. 
Sold Goods to customer- Its a credit sale
Sold goods to customer on credit- Its a credit sales.
Sold goods to customer on account- Its also a credit sales.

Which of the following is a credit transaction?

  1. Sold goods

  2. Sold goods for cash

  3. Sold goods to a customer for cash

  4. Sold goods to a customer


Correct Option: D
Explanation:

Sold goods to customer is defined as credit sales. 


Rest three statements are specifically denotes cash sales.

Posting means the recording of a transaction _____________.

  1. In any two accounts.

  2. On the debit side of an account related to that transaction.

  3. On the credit side of an account related to that transaction.

  4. On the proper side of two accounts related to that transaction.


Correct Option: D
Explanation:

Posting is the transfer of journal entries to a general ledger, which usually contains a separate form for each account. Journals record transactions in chronological order, while ledgers summarize transactions by account. Posting in accounting consists of a few simple steps.

Adjusting entries are essential to the ___________.

  1. matching rule

  2. accrual accounting

  3. proper determination of net income

  4. all of these


Correct Option: D
Explanation:

Before financial statements are prepared, additional journal entries, called adjusting entries, are made to ensure that the company's financial records adhere to the revenue recognition and matching principles. Adjusting entries are necessary because a single transaction may affect revenues or expenses in more than one accounting period and also because all transactions have not necessarily been documented during the period. Each adjusting entry usually affects one income statement account (a revenue or expense account) and one balance sheet account (an asset or liability account)


The basic concepts related to P&L Account are _______________.

  1. Realization concept

  2. Matching concept

  3. Cost concept

  4. Both (a) and (b)


Correct Option: D
Explanation:

The matching concept is an accounting practice whereby firms recognize revenues and their related expenses in the same accounting period.

The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively. 

In every business transaction, at least _______ parties are involved.

  1. Two

  2. Three

  3. Four

  4. Six


Correct Option: A
Explanation:

Any business transaction will involve at least two parties. One can not do the transaction with himself. One party may be receiver and another will be give. 


For example, XYZ Ltd sold goods to ABC Ltd. In this case, XYZ Ltd is the giver who is transferring the goods and ABC Ltd is the receiver who is accepting the goods.

Which of the following business entity will not prepare Trading Account?

  1. Banking companies

  2. Insurance companies

  3. Investment companies

  4. All of the above


Correct Option: D
Explanation:

Trading accounting is prepared only by those organization where the purchase and sale of goods is done. 

Below are the entities which are not involve in any trading business, hence no trading account is prepared.
Banking Companies- It carries the business of taking deposits and lending money.
Insurance Companies- It carries Insurance business and provide services.
Investment Companies- It involves in advisory services. No trading. 

The manufacturing account is prepared __________________.

  1. To ascertain the profit or loss on the goods produced

  2. To ascertain the cost of the manufactured goods

  3. To show the sale proceeds from the goods produced during the year

  4. Both (B) and (C)


Correct Option: B
Explanation:

Manufacturing account does not show the profit & loss. Manufacturing account accumulate the cost of manufacturing of material including raw material, labour and production overheads. 

Below is the format of manufacturing account.

                                             Manufacturing Account


 Particulars  Amount  Particulars  Amount
 To Op Stock of Raw Material    By Closing Stock of Raw Material  
 To Opening Stock of WIP    By Closing WIP  
 To Purchases of Raw Material    By Cost of goods transferred to Trading A/c   
 To Carriage Inwards      
 To Direct Labor      
 To Direct Expenses      
 To Factory Rent      
 To Fuel, Power      
 To Manufacturing overheads    

Fixed assets are recorded at _______.

  1. current cost

  2. original cost

  3. depreciated cost

  4. all of the above


Correct Option: B
Explanation:

Fixed assets are those which gives the benefits to the organization on a long term basis. Fixed Assets are recorded in the books of account on the original cost irrespective of their market value as per the cost concept in accounting.

On 1.1.2019, CS N. S. Zad paid rent of Rs. 25,000 for Zads Professional Academy. This can be classified as _________.

  1. an event

  2. a transaction

  3. a transaction as well as an event

  4. neither a transaction nor an event


Correct Option: B
Explanation:

Monetary concept of accounting defines that only those transactions are recorded in the books of account which are measured in terms of money. 

Rent of Rs.25000 paid is monetary transaction hence to be recorded in books of account. 
Accounting entry will be as under:

Rent A/c                           Dr.
        To Cash/Bank

Which of the following statements is correct?

  1. Accounting profit is the difference between cash receipts and cash paid in a period.

  2. Accounting profit is the total of cash sales in the year less the expenses for the period.

  3. Accounting profit is the difference between revenue income and expenses for the period.

  4. Accounting profit is the difference between revenue income and cash payments for the period.


Correct Option: C
Explanation:

Profit & Loss account is prepared for a business for a particular period. Profit & Loss account is having two sides i.e. Income and expenses side or debit or credit side. All incomes/revenues are recorded in credit side and expenses are debited. 

Excess of Income over expenditure is treated as profit and excess of expenditure over income is a loss. 

Which of the following statements is correct in relation to a trial balance?

  1. It shows the financial position of a business.

  2. All the balances in the trial balance will be summarized on the business balance sheet.

  3. It is a list of balances and forms the starting point for the preparation of the business accounts.

  4. None of the above.


Correct Option: C

When a consistency is found between financial statements of one entity from period to period it is _____________.

  1. conventions of conservatism

  2. conventions of materiality

  3. conventions of disclosure

  4. conventions of horizontal consistency


Correct Option: D
Explanation:

Consistency is the basic assumption and it is assumed that the various Policies/Methods adopted by the concern while preparing the accounts are consistent from one period to another. This convention plays its role particularly when there are some different methods available. However, consistency does not implies that there is no way for the introduction of new policies. 

If there is a change in the policy which results in inflating or deflating the figures of profits as compared to the previous year, a note to that should be given with the financial statements. 

Business is treated as a separate entity accounts for __________.

  1. role trader

  2. partnership

  3. company

  4. all of the above


Correct Option: D
Explanation:

Separate entity concept defines that the owner and business are having a separate legal entity in the eye of law. Any amount contributed by the owner is considered as liability to the business. 

Sole traders differ from other types of trading organizations. Which of the following statements correctly summarizes the key characteristics of a sole trader's business?

  1. Liability is limited to the providers of loan finance and only the trader takes an active part in managing the business.

  2. The trader has unlimited liability and runs the business in conjunction with the providers of loan finance.

  3. The trader has unlimited liability and must have the business accounts audited.

  4. The trader has unlimited liability, takes sole responsibility for management of the busines.


Correct Option: D

Which of the following is TRUE about the sole trader form of business?

  1. A sole trader is liable to pay income tax on his/her earnings

  2. Sole traders must have to prepare books of accounts by law

  3. Sole traders must register the name of their business with the Registrar of Companies

  4. All of the given options


Correct Option: D

Which one of the following is NOT a feature of sole proprietorship business?

  1. Easy Formation

  2. Easy Dissolution

  3. Unlimited Liability

  4. Separate Legal Entity


Correct Option: D
Explanation:

Separate entity concept defines that the owner/proprietor and business are treated two separate legal entity in the eyes of law. Hence any contribution made by owner as part of capital is treated as liability in the business. 


In case of proprietorship, owner and business both are same as the proprietor is only the sole owner of the business. Hence separate legal entity concept does not applies in the proprietorship business. 

Accounting transactions are recorded in terms of ________.

  1. money

  2. purpose

  3. characteristics

  4. none of the above


Correct Option: A
Explanation:


In accounting we can communicate only those business transactions and other events which can be expressed in monetary units. This is called monetary unit assumption.  Therefore, only money or money's worth transactions are recorded in the books of account. 


Non monetary events like death, dispute etc. may have a great influence on the organization but these factors will not form the part of accounts as they can be calculated on monetary basis.

We may simply say " wherever there is money, there is an accounting, no money, no accounting". 

Atul purchased a car for Rs. $5,00,000$, by making a down payment of Rs. $1,00,000$ and signing a Rs. $4,00,000$ bill payable due in $60$ days. As a result of this transaction ____________________.

  1. total assets increased by Rs. $5,00,000$

  2. total liabilities increased by Rs. 4,00,0004,00,000

  3. total assets increased by Rs. 3,00,0004,00,000

  4. total assets increased by Rs. 4,00,0004,00,000


Correct Option: D
Explanation:

On purchase of a Car, total assets of balance sheet will be increased by $Rs. 5,00,000$ and on making of down payment of $Rs.1,00,000$ total assets will decrease by $Rs. 1,00,000$. The result will be that total assets of Balance sheet will increase by $Rs.4,00,000$.
On other hand a liability of $Rs.4,00,000$ has been made so the liability side of Balance Sheet will be increased by $Rs.4,00,000$.

Revenue from sales of products is generally accounted in the period in which __________.

  1. cash is collected

  2. sales in made

  3. products are manufactured

  4. none of the above


Correct Option: B
Explanation:


Business transactions are recorded when they occur and not when the related payments are received or made. This concept is called accrual basis of accounting and it is fundamental to the usefulness of financial accounting information.


Thus sale of products is recorded when sales is made and not when cash is collected or when products are manufactured.

Goods returned to supplier is an example of __________.

  1. Increase in Asset & Owner's Liability

  2. Decrease in Asset & Owner's Liability

  3. Increase in Liability & Owner's Liability

  4. Decrease in Liability & Increase in Owner's Liability

  5. Increase in Liability & Decrease in Owner's Liability


Correct Option: D

Which of the following is correct?

  1. A transaction which increases the capital is called income.

  2. A transaction which decreases the capital is called loss.

  3. A transaction which increases the capital is called additional capital.

  4. A transaction which decreases the capital is called drawing.

  5. All of above.


Correct Option: E

Sale of goods to Ram for Rs. 1,000 with a credit term of 5 days is a/an ____________.

  1. cash transaction

  2. credit transaction

  3. barter system

  4. internal event


Correct Option: B
Explanation:

The transaction in which there is no immediate payment of cash is known credit transaction. For e.g., sale of goods to Ram for Rs. 1,000. In this transaction goods worth Rs. 1,000 sold to Ram on 5 days credit is a credit transaction as the payment is not made immediately for the goods.

Sale of goods to Ram for Cash $Rs.1000$ is a ______________.

  1. cash transaction

  2. credit transaction

  3. barter system

  4. internal event


Correct Option: A
Explanation:

The transaction which involves immediate payment of cash is known as cash transaction. For e.g., Sale of goods to Ram for Cash Rs. 1,000. In this transaction goods are sold to Ram when he paid Rs. 1,000 cash.

An economic event that involves transfer of money or money's worth is a/are _______________.

  1. financial transactions

  2. barter system

  3. settlements

  4. receipts/payments


Correct Option: A
Explanation:

Any event which involves transfer of money or money's worth is known as financial transaction. It is an agreement, or communication, carried out between a buyer and a seller to exchange an asset for payment. It is still a transaction if the goods are exchanged at one time, and the money at other.

On March 31 after sale of goods worth Rs 10,000, there is closing stock of Rs 20,000. This is _____________.

  1. An event

  2. A transaction

  3. A transaction as well as an event.

  4. Neither a transaction nor an event.


Correct Option: A
Explanation:

Unsold items i.e Closing stock is captured in the financial statements as 'Current Assets'.

An event can be internal or external. This is an internal event.
There is no exchange of goods or services or money. Hence, it cannot be termed as a 'transaction'.

Ram paid rent of Rs 10,000. This can be classified as _____________.

  1. An event

  2. A transaction

  3. A transaction as well as an event.

  4. Neither a transaction nor an event.


Correct Option: B
Explanation:

'Transaction' involves money or money's worth, and hence, has a financial impact in the books of accounts.

Event may or may not have a financial impact in the books of accounts.
Example: Change of Operations Manager of the company.
In the given example amount paid as rent involves a financial element as amount is paid by one person to another. 
Therefore, it is a transaction and not an event.

Closing Stocks with X and Y are 26400 & 60000 respectively. In the books of Y, what will be the treatment of closing stock in joint venture?

  1. Stock of 60000 will be shown as closing credit balance in Y's Account as 'To Balance c/d'.

  2. Stock of 26400 will be shown as closing debit balance in Y's Account as 'By Balance c\d'.

  3. Closing stock of 60000 will not appear in Y's Account.

  4. None of these.


Correct Option: A

Discount charges of Rs 1000 on discounting a B/R by one of the co-venture, maintaining all joint ventures transactions in his books of account will be __________.

  1. debited to Joint Venture Account.

  2. debited to Profit & Loss Account.

  3. debited to Other Co-venturer's Account

  4. None of the above.


Correct Option: A

If adjusting entries are not passed __________________.

  1. Trial Balance will be not be tallied

  2. Balance Sheet will not be tallied

  3. Both trial balance & Balance Sheet will be tallied

  4. None of these


Correct Option: C
Explanation:

Adjusting entries are the entries which are passed at the year end. The balance sheet as well as the trial balance will tally but the financial statements will not show a correct picture of the financial position of the company.

"Debit the receiver and credit the giver" is the golden rule for which type of account?

  1. Real A/c

  2. Personal A/c

  3. Nominal A/c

  4. None of these


Correct Option: B
Explanation:

"Debit the receiver, and credit the giver" is a golden rule for Personal A/c. Personal accounts are the accounts for individual, firms, companies etc. By debit the receiver means the person who is receiving goods on credit will be debited and the person who is giving will be credited.  

What rate of commission is charged by the bank issuing the credit card?

  1. 1% to 3%

  2. 3% to 6%

  3. 2% to 5%

  4. 1% to 4%


Correct Option: D
Explanation:

The bank issuing the credit card charges a commission from anywhere between 1% to 4% for each such transaction. The commission charged is immediately debited to the seller's bank account.

Vouching may be formed as ____________________.

  1. Identification of the documentary evidence supporting the transaction

  2. Verification of the document supporting the transaction

  3. Authentication of document supporting the transaction

  4. Verification of the accuracy and authenticity of the transaction


Correct Option: B

Which is an unearned income?

  1. Insurance premium received in advance

  2. Rent received in advance

  3. Depreciation

  4. Both A & B


Correct Option: D
Explanation:

Unearned Income is that income which is received in advance. That mean income received against which services are not provided so far.

Insurance premium received in advance and Rent received in advance are the cases of unearned income. Accounting entry will be passed as under:

Income A/c                             Dr.
       To Unearned Income

Unearned Income is a liability and to be shown in the balance sheet. 

The bank statement reports a credit transfer of Rs.$4000$ from a customer. Accounting entries for this is _____________________.

  1. A debit in the cash account and a credit the account of the debtor concerned

  2. A debit in the bank account and a credit in the cash account

  3. A debit in the bank account and a credit in the account of the customer concerned

  4. A debit in the account of the debtor concerned and a credit in the bank account


Correct Option: C
Explanation:

As per double entry system of accounting, every transaction affects two account. In the given transaction, Bank and customer account are affected. Bank account is a real account and customer account is a personal account. 

Following the rule of real account and personal account, below entry will be passed:

Bank A/c                                     Dr.                   4000
         To Customer A/c                                                        4000
        

The characteristic that is always present with joint venture is _____________.

  1. it has an end life

  2. there is no specific act for joint venture

  3. profit is ascertained only after the end of the specific venture

  4. All of the above


Correct Option: D
Explanation:

A joint venture is a business entity created by two or more parties generally to share the ownership to complete a specific task or venture. 

Joint venture is having a specific end life i.e. when the task is completed, the joint venture comes to an end. 
There is no specific act for joint venture as it is a kind of temporary partnership to conclude a specific task. Hence all applicable laws have to be followed.
Profit of joint venture is calculated only when the specific joint venture is completed. 

India suffered from deficit balance both in trade and balance and not invisibles, hence took up a number of Steps to manage the problem. Which one is not appropriate for this?

  1. Export control

  2. Current Account Convertibility

  3. Liberalised Export Policy

  4. Unified Exchange Rate


Correct Option: A
Explanation:

 Export control regulations are federal laws that prohibit the unlicensed export of certain commodities or information for reasons of national security or protections of trade.

Current assets are those assets which get converted into cash ___________ .

  1. within six months

  2. within one year

  3. between one and three years

  4. between three and five years


Correct Option: B
Explanation:

Current assets are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. As a result, short-term assets are liquid meaning they can be readily converted into cash.

Hence, current assets which get converted into cash within one year.

Financial assets _________.

  1. directly contribute to the country's productive capacity

  2. indirectly to the country's productive capacity

  3. contribute to the country's productive capacity both directly and indirectly

  4. do not contribute to the country's productive capacity either directly or indirectly


Correct Option: A

Capital gain of Rs. 75 lakh arising from transfer of long term capital assets will be exempt from tax if such capital gain is invested in the bonds redeemable after three years, issued by NHAI u/s 54EC of the Act.

  1. True

  2. False

  3. Cannot be said with certainty

  4. Is decided by the Assessing Officer


Correct Option: A

"For the financial year ended as on March 31, 20XX the figures extracted from the balance sheet of Xerox Limited as under: Opening Stock Rs 29, 000; Purchases Rs 2, 42, 000; Sales Rs 3, 20, 000; Gross Profit 25% of Sales. Stock Turnover Ratio will be".

  1. 8 times

  2. 6 times

  3. 9 times

  4. 10 times


Correct Option: A

The liability of the shareholders of a public limited company is limited to the extent of ________________.

  1. Par value of the share

  2. Paid up value of the shares

  3. Market price of the shares

  4. Intrinsic value of the shares


Correct Option: B

The term cost refers to __________.

  1. the present value of future benefits

  2. the value of sacrifice made to acquire goods or services

  3. an asset that has given benefit but now expired

  4. the price of products sold or services rendered


Correct Option: B

 If a company is registered on the basis of fictitious names, its incorporation is invalid.

  1. True

  2. False


Correct Option: B
Explanation:

The certificate of incorporation once issued, is a conclusive evidence of the existence of the company even if there were deficiencies in the formalities.

Even when company get registered with illegal object with any fictitious name, the birth of the company cannot be questioned only remedy is to wind off.

Number of purchase orders for each year is multiplied to relevant ordering cost for each purchase order to calculate _________________.

  1. annual irrelevant ordering costs

  2. annual relevant carrying costs

  3. annual relevant ordering costs

  4. annual irrelevant carrying costs


Correct Option: C

Other factors held constant, but lesser project liquidity is because of ______________.

  1. Shorter payback period

  2. Greater payback period

  3. Less project return

  4. Greater project return


Correct Option: B
Explanation:

Other factors held constant, but lesser project liquidity is because of greater payback period. Payback period in capital budgeting refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even point.

Personal Account relates to  ____________.

  1. Persons

  2. All artificial and natural persons

  3. Representative Personal Accounts

  4. All of the above


Correct Option: D
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