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Accounting

Description: Accounting questions.
Number of Questions: 15
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Tags: Accounting Accountancy Financial Accounting Introduction & Double Entry System Partnership Accounts Depreciation Accounting Banking Transactions and Bank Reconciliation Statement Journalistic Transactions Meaning and Scope of Accounting
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Which of the following means 'super profit ' ?

  1. Where the cost of goods sold exceeds the sales revenue.

  2. Where the sales revenue exceeds the cost of goods sold.

  3. Net profit less the opportunity costs of alternative earnings and alternative returns on capital invested that have been foregone.

  4. Where the cost of goods sold plus expenses is greater than the revenue.

  5. Where sales revenue plus other income, such as rent received, exceeds the sum of cost of goods sold plus other expenses.

Show answer
Correct Option: C
Explanation:

Super profit

____________ is an act of giving personal property or money such as stocks, bonds, jewellery and cash left excluding real estate to an individual or organization through a provision of will or estate plan.

  1. Devise

  2. Bequest

  3. Legacy

  4. Heirdom

  5. Patrimony

Show answer
Correct Option: B
Explanation:

The act of giving personal property or money such as stocks, bonds, jewelry and cash left to an individual or organization through the provisions of a will or estate plan. Bequests can be made to family, friends, institutions or charities.

Which of the following entries come under journals?

  1. Opening entries

  2. Closing entries

  3. Transfer entries

  4. Adjustment entries

  5. All of these

Show answer
Correct Option: E
Explanation:

All the above entries are entered in journal proper.

According to which concept are shareholders treated as creditors, for the amount they paid on shares?

  1. Cost concept

  2. Duality concept

  3. Business entity concept

  4. Going concern concept

  5. Since shareholders are owner of the business they cannot be treated as creditors of a business.

Show answer
Correct Option: C
Explanation:

Under Business Entity concept shareholders are treated as creditors of the business. It is also known as seperate entity concept.

Seigniorage is concerned with which of the following?

  1. Taking debt from public

  2. Increase in revenue by increasing the tax rates

  3. Earning profit by government by issuing currency

  4. Controlling non-developmental expenses

  5. None of these

Show answer
Correct Option: C
Explanation:

 
 
Yes, Seigniorage is the profit earned by the government by issuing currency. It is the profit earned on the difference between face value of currency and its production cost. For instance, if the cost of production of a ten rupee coin is 50 paisa and its face value is Rs 10, then a profit of Rs 9.50 is earned on it.

Sohan and Mohan are partners in a firm. They admitted Salim into the partnership giving him fourth share in future profits. The new profit sharing ratio of all the partners will be ________.

  1. 3 : 1 : 2

  2. 3 : 3 : 2

  3. 3 : 3 : 3

  4. 3 : 2 : 1

  5. 1 : 2 : 2

Show answer
Correct Option: B
Explanation:

This is the correct answer as both Sohan and Mohan will share equal profit, and Salim will get fourth share of the future profit.

When two or more companies liquidate to form a new company, what is this called?

  1. Venturing a new business

  2. Collaboration

  3. Reconstruction

  4. Amalgamation

  5. Absorption

Show answer
Correct Option: D
Explanation:

Amalgamation is the term used when two or more companies liquidate to form a new company.

A cash book showed an overdraft of Rs. 2000, but the pass book made up to the same date showed that cheque of Rs. 100, Rs. 75, Rs. 125, respectively were not been presented for payment and the cheque of Rs. 500, paid into the account had not been cleared. What would be the balance as per the pass book?

  1. Rs. 1200

  2. Rs. 1800

  3. Rs. 2200

  4. Rs. 800

  5. Rs. 2000

Show answer
Correct Option: C
Explanation:

Credit balance as overdraft per cash book = Rs 2000, (+) cheque deposited but not cleared = Rs 500 (-) cheque deposited but not presented for payment (100 + 75 + 125) = Rs 300 Balance as per pass book = Rs 2200.

The original cost of a machinery is Rs. 4,15,000. The estimated life of an asset is 20 years and net scrap value is estimated to be Rs. 65,000. What will be the amount of depreciation to be charged every year? Use straight line method to calculate the answer.

  1. Rs. 20750

  2. Rs. 24000

  3. Rs. 17500

  4. Rs. 3250

  5. Rs. 128

Show answer
Correct Option: C
Explanation:

Depreciation =cost of machinery- net scrap value / estimated life 415000 - 65000 = 3500035000/20= 17500 It is the correct answer

A sales of Rs. 7800 to Raheem has been posted to Ramlal. Which of the following journal entries will correct this error?

  1. Debit Ramlal's account and credit Raheem's account with Rs. 15600.

  2. Debit Raheem's account and credit sales account with Rs. 7800.

  3. Debit Raheem's account and credit Ramlal's account with Rs. 7800.

  4. Debit sales account and credit Ramlal's account with Rs. 7800.

  5. None of the above entries will correct the error.

Show answer
Correct Option: C
Explanation:

This is error of omission and transfer needs to be made between both the accounts . This journal entry is required to be transferred so that their is no unauthorized transfer between two accounts.

On which of the following purposes can securities premium amount be used by a company?

  1. To issue fully paid bonus shares to the members

  2. To write off preliminary expenses of the company

  3. To provide the premium payable on redemption of any preference share or debenture of the company

  4. To purchase its own share

  5. All the above

Show answer
Correct Option: E
Explanation:

All the above purposes are correct hence, this is the correct answer.

In case of dishonour of bills receivable what effect will it have on the current ratio?

  1. Decrease in current asset and increse in current liability with the same amount

  2. Nil effect

  3. Increase in current assets and increase in current liability with the same amount

  4. Decrease in current assets and decrease in current liability

  5. None of these

Show answer
Correct Option: B
Explanation:

There will be no effect on current assets and current liabilities. So the effect will be nil.

What is the meaning of the term limited liability partnership?

  1. Limited scope of partnership

  2. Unlimited liability of a partner

  3. Limited liability of some partners

  4. Limited number of partners

  5. Unlimited number of partners

Show answer
Correct Option: C
Explanation:

A limited liability partnership is a partnership in which some or all partners have limited liabilities. A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnership. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. In an LLP, some partners have a form of limiled liability similar to that of the shareholders of a corporation.

Which of the following is meaning of fund based accounting?

  1. Process of producing information for external use usually in the form of financial statements.

  2. Produces information primarily for internal use by the company's management.

  3. An accounting system emphasizing accountability rather than profitability, used by non-profit organizations and governments.

  4. Refers to the type of accounting information system used in the public sector.

  5. Accounting for the tax related matters.

Show answer
Correct Option: C
Explanation:

Fund accounting is a system of accounting widely used in non-business entities, such as nonprofits, government agencies, churches, hospitals and colleges and universities. Fund accounting differs from traditional business accounting, which focuses on identifying how successful an entity has been at creating profits. Since nonprofits and governments are not designed to generate profits, an alternative accounting method gives them a more fitting approach to tracking and reporting their finances.

What are Interim Financial Statements?

  1. Financial statements which are made and presented for an accounting period of more than one year.

  2. Financial statements, which are made and presented for an accounting period of less than one year.

  3. Financial statements, which are made and presented for an a day.

  4. Financial statements, which are made and presented for an accounting period of one year.

  5. None of the above is correct

Show answer
Correct Option: B
Explanation:

Interim financial statements refer to profit and loss account and balance sheet,  which are made and presented  for an accounting period of less than one year, such as quarterly or monthly. Interim financial statements are normally  prepared after every three months. For accurate interim financial statements, accountant should evaluate inventory correctly and also reconcile the bank balance with company's record.

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