Threotical Framework -ll Accounts (MCQ)
Threotical Framework -ll
Multiple Choice Questions
1. Fundamental Accounting Assumptions as per AS-1 are
(a) Going concern, Consistency, Conservatism
(b) Going concern, Consistency, Accrual
(c) Going concern, Money Measurement, Conservatism
(d) Going concern, Accounting Period, Accrual
2.Economic life of an enterprise is artificially split into period intervals in
accordance with –
(a) Going concern Assumption (b) Revenue Recognition Principle
(c) Matching Principle (d) Periodicity Principle
3.The assets are classified as current assets and fixed assets in
accordance with
(a)Accounting period Assumption (b) Matching Principle
(c)Consistency Principle (d) Going concern principle
4.The accounting data should be definite, verifiable and free from the
personal bias in accordance with –
(a)Full Disclosure Principle (b) Consistency Principle
(c)Accounting Period Assumption (d) Objectivity Principle
5. Materiality Principle is an exception to the
(a) Consistency Principle (b) Accounting Period Assumption
(c)Prudence Principle (d) Full Disclosure Principle
6. When stock is valued at cost in one accounting period and at lower
of cost and net realizable value in another accounting period –
(a) Prudence principle conflicts with consistency principle
(b) Matching principle conflicts with consistency principle
(c) Consistency principle conflicts with consistency principle
(d) None of the above
7. Accrual means
(a) Recognition of revenue as it is earned and of costs as they are
paid
(b) Recognition of revenue as it is received and of costs as they are
incurred
(c) Recognition of revenue and costs on payment basis
(d) Recognition of revenue as it is earned and of costs at they are
incurred.
8. Prudence principle is as exception to the
(a) Matching Principle (b) Going concern assumption
(c) Conservation (d) Consistency
9. The assets and incomes are not overstated and the liabilities and losses
are not understated in accordance with –
(a)Cost concept (b) Going concern assumption
(c) Matching principle (d) Prudence Principle
10. Prudence is a concept to recognize –
(a) All losses and not profits (b) Unrealized profits and not losses
(c) Realized losses and not profits (d) None of the above
11. Accounting of a small calculator as an expense and not as an asset is
in accordance with
(a) Full disclosure principle (b) Objective principle
(c) Accounting period assumption (d) None of the above
12. X – Purchased merchandise worth Rs. 1, 00,000 and sold 60% for
Rs. 90,000 and 40% of the remaining sold for Rs. 60,000. The
market value of the remaining merchandise was Rs. 20,000. He
valued the closing stock at Rs. 24,000. He has violated the –
(a) Realization cost (b) Matching principle
(c) Consistency principle (d) None of the above
13. X-purchased merchandise worth Rs. 1, 00,000 and sold 60% for Rs.
90,000 and 40% of the remaining sold for Rs. 60,000 and met operating expenses of Rs. 10,000. He counted operating profit as
Rs. 40,000. He has violated.
(a) Cost concept (b) Consistency principle
(c) Prudence principle (d) None of the above.
14. Personal transaction are distinguished from business transaction of
an accounting period in accordance with –
(a) Accounting Period Principle (b) Accounting Entity Principle
(c) Money Measurement Principle (d) None of these
15. The principle which treats all rupees alike whether it is a rupee of
1957 or 2007
(a) Money Measurement Principle (b) Periodicity principle
(c) Consistency Principle (d)Accounting Entity
Principles
16. As per AS-1, the fact need not be disclosed in the financial
statements if the following concept is followed.
(a) Money Measurement Principle (b) Periodicity Principle
(c) Consistency principle (d) Accounting Entity Principle
17. As per AS-1, the fact need not be disclosed in the financial
statements if the following concept is followed.
(a) Materiality Principle (b) Money Measurement Principle
(c) Accounting Entity Principle (d) Accrual
18. Mr. Y followed WDV Method and SLM Method of Depreciation during
2006 and 2007 respectively. He has violated –
(a) Conservatism Principle (b) Materiality Principle
(c) Cost Principle (d) Consistency Principle
19. Mr X has a closing stock costing Rs. 10,000 but its market value is
statements. He has violated. Rs. 12,000. He shows this stock at Rs. 12,000 in the financial
a) Conservation Principle (b) Materiality Principle
(c) Cost Principle (d) Consistency Principle
20. Mr X has a Sundry Debtors of Rs. 1,00,000 creating a provision for
discount @ 2% on sundry debtors is in accordance with –
(a) Conservatism Principle (b) Materiality Principle
(c) Cos Principle (d) Consistency Principle
21. The production manager reports to the top management that
production for the year 2007 I s200 tons but actual production is
1,99,000.90 kilogram. He has followed-
(a) Conservatism principle (b) Materiality Principle
(c) Cost principle (d) Consistency
22. Assets are held in the business for the purpose of
(a) Resale (b) Earning revenue.
(c) Conversion into cash (d) None of these
23. Mr. X purchased goods for Rs. 40,000 of which 25% for cash,
incurred expenses Rs. 10,000 of which Rs. 2,000 still outstanding
and sold 80% of the goods for Rs. 80,000 of which 75% on credit.
His profit for the period is –
(a) Rs. 2,000 (b) Rs. 30,000
(c) Rs. 40,000 (d) None of these
24. Mr. X purchased a car for Rs. 4, 00,000, making a down payment of
Rs. 5, 00,000 and signing a Rs. 3,50,000 bill payable due in 60
days. As a result of this transaction
(a) Total assets increased by Rs. 4,00,000
(b) Total liabilities increased by Rs. 3,50,000
(c) Total assets increased by Rs. 3,50,000
(d) Total assets increased by Rs. 3,50,000 with corresponding
increase in liabilities .
25. Consider the following data pertaining to X Ltd –
Particulars Rs.
Cost of Machinery purchased on 1st April, 2006 1, 00,000
Installation charges 10,000
Market value as on 31st March, 2006 1, 20,000
While finalizing the annual accounts, if the company values the
machinery at Rs. 1,20,000.
(a) Cost (b) Matching
(c) Realization (d) Periodicity
26. X Ltd follows the written down value method of depreciating
machinery year after year due to
(a) Comparability (b) Convenience
(c) Consistency (d) All of the above
27. Economic life of an enterprise is split into the periodic interval as
per –
(a) Periodicity (b) Matching
(c) Going concern (d) Accrual
28. Revenue from sale of products is generally, realized in the period in
which
(a) Cash in collected (b) Sale is made
(c) Products are manufacture (d) None of the above
29. The concept of conservatism when applied to the balance sheet
result in –
(a) Understatement of assets (b) Overstatement of assets
(c) Overstatement of capital (d) Understatement of capital
30. Decrease in the amount of creditors result in –
(a) Increase in cash (b) Decrease in cash
(c) Increase in assets (d) No change in assets
31. A sale of goods to Ram for cash should be credited to –
(a) Ram
(b) Sales
(c) Cash
(d) Capital.
32. A Withdrawal of cash from business by the proprietor should be
debited to –
(a) Drawing Account
(b) Expense Account
(c) Cash account
(d) Purchase Account.
33. A Withdrawal of goods from business by the proprietor should be
credited to -
(a) Drawing A/c
(b) Capital A/c
(c) Sales A/c
(d) Purchase A/c
34. We will debit Mr. A's account when
(a) A gets goods, services or assets on credit from us
(b) We get money from Mr. A on loan
(c) We get goods, services or assets on credit from Mr. A
(d) We get money from Mr. A "on account"
35. Journal entry for Rs.6,000 stolen from the safe of the firm will be
(a) Dr. P & L A/c & Cr. Cash embezzlement a/c Rs.6,000.
(b) Dr. Cash embezzlement a/c & Cr. Cash a/c Rs.6,000.
(c) Dr. Cash a/c and Cr. P& L a/c Rs.6,000
(d) None of the above.
36. Goods purchased from Rekha on credit. In this transaction the
names of two accounts affected are –
(a) One Personal and one Nominal
(b) Both Personal
(c) Both Real accounts
(d) One Personal and one Real
37. Kiran used the amount in business by selling his old personal car to
Surya. The entry of this transaction in Journal will be –
(a) Cash a/c Dr. To car a/c
(b) Car a/c Dr. To Capital a/c
(c) Car a/c Dr. To Sonu
(d) Cash a/c Dr. To Capital a/c
38. The owner of the business took goods worth Rs.15,600 for his
personal use. In this transaction which account will be credited –
(a) Sales account
(b) Drawings account
(c) Purchases account
(d) Capital account
39. Interest earned but not received, adjustment entry is –
(a) Accrued Interest Dr. To Customer
(b) Accrued interest Dr. To Interest
(c) Cash a/c Dr. To Interest
(d) None of the three
40. Goods worth Rs.1600 sold to Neeraj, its recording in Journal would
be-
(a) Debit the Sales Account, credit Neeraj Account
(b) Credit the Sales Account, debit the cash Account
(c) Debit Neeraj Account, credit the sales Account
(d) Debit Sales Account and Neeraj Account
41. Stock worth Rs.10,000 (cost price Rs.7,500) taken by Mohan -
Office Clerk. Amount to be deducted from his salary in the
subsequent month. Journal entry will be –
(a) Dr Salary and Cr Purchases A/c Rs.10,000
(b) Dr Mohan and Cr Sales Rs.10,000
(c) Dr Salary and Cr Purchases Rs.7500
(d) Dr Salary and Cr Sales Rs.10,000
42. Insured goods were lost due to theft and the Insurance Company
accepted the claim. In this transaction –
(a) Loss Dr. to Stock A/c
(b) Loss Dr. to Insurance Claim Receivable A/c
(c) Loss Dr. to Cash A/c
(d) Loss Dr. to Trading A/c
43. Ganesh's salary is Rs.10,000 per month. During a month, he
withdrew goods worth Rs.2,500 for personal use and also got salary
Rs.9,500 in cash. The excess payment of Rs.2,000 will be debited to
–
(a) Sales account.
(b) Goods account.
(c) Salary account.
(d) Salary in advance account.
44. On payment of Insurance by a businessman for his wife using
business cash, which a/c will be given effect? –
(a) Insurance Company account
(b) Wife's account
(c) Drawing account
(d) Miscellaneous expenses account
45. Income-tax of the sole trader paid is shown –
(a) Debited to profit and Loss A/c
(b) Debited to Trading A/c
(c) Debited to his capital A/c
(d) None
46. Which of the following A/c has a debit balance?
(a) Debtors A/c
(b) Sales A/c
(c) Creditors A/c
(d) Bank overdraft A/c
47. Which of the following A/c has a credit balance?
(a) Purchase A/c
(b) Sales A/c
(c) Goodwill A/c
(d) Cash in hand A/c
48. Debit balance in a personal A/c means –
(a) Amount due from him
(b) Amount due to him
(c) Discount allowed to him
(d) Goods sold to him
49. Expenses A/c will always have –
(a) Debit balance
(b) Credit balance
(c) Nil balance
(d) Debit or credit balance
50. Book of Original entry is called –
(a) A journal
(b) Memorandum A/c
(c) Kachha record
(d) Voucher
ANSWER
1. (b) 2. (d) 3. (d) 4. (d) 5. (d) 6. (a) 7. (d)
8. (d) 9. (d) 10. (d) 11. (d) 12. (d) 13. (d) 14. (b)
15. (a) 16. (c) 17. (d) 18. (d) 19. (a) 20. (a) 21. (b)
22. (b) 23. (c) 24. (d) 25. (a) 26. (c) 27. (c) 28. (b)
29. (a) 30. (b) 31. (b) 32. (a) 33. (d) 34. (a) 35. (b)
36. (d) 37. (d) 38. (c) 39. (b) 40. (c) 41. (c) 42. (b)
43. (d) 44. (c) 45. (c) 46. (a) 47. (b) 48. (a) 49. (a)
50. (a)
Multiple Choice Questions
1. Fundamental Accounting Assumptions as per AS-1 are
(a) Going concern, Consistency, Conservatism
(b) Going concern, Consistency, Accrual
(c) Going concern, Money Measurement, Conservatism
(d) Going concern, Accounting Period, Accrual
2.Economic life of an enterprise is artificially split into period intervals in
accordance with –
(a) Going concern Assumption (b) Revenue Recognition Principle
(c) Matching Principle (d) Periodicity Principle
3.The assets are classified as current assets and fixed assets in
accordance with
(a)Accounting period Assumption (b) Matching Principle
(c)Consistency Principle (d) Going concern principle
4.The accounting data should be definite, verifiable and free from the
personal bias in accordance with –
(a)Full Disclosure Principle (b) Consistency Principle
(c)Accounting Period Assumption (d) Objectivity Principle
5. Materiality Principle is an exception to the
(a) Consistency Principle (b) Accounting Period Assumption
(c)Prudence Principle (d) Full Disclosure Principle
6. When stock is valued at cost in one accounting period and at lower
of cost and net realizable value in another accounting period –
(a) Prudence principle conflicts with consistency principle
(b) Matching principle conflicts with consistency principle
(c) Consistency principle conflicts with consistency principle
(d) None of the above
7. Accrual means
(a) Recognition of revenue as it is earned and of costs as they are
paid
(b) Recognition of revenue as it is received and of costs as they are
incurred
(c) Recognition of revenue and costs on payment basis
(d) Recognition of revenue as it is earned and of costs at they are
incurred.
8. Prudence principle is as exception to the
(a) Matching Principle (b) Going concern assumption
(c) Conservation (d) Consistency
9. The assets and incomes are not overstated and the liabilities and losses
are not understated in accordance with –
(a)Cost concept (b) Going concern assumption
(c) Matching principle (d) Prudence Principle
10. Prudence is a concept to recognize –
(a) All losses and not profits (b) Unrealized profits and not losses
(c) Realized losses and not profits (d) None of the above
11. Accounting of a small calculator as an expense and not as an asset is
in accordance with
(a) Full disclosure principle (b) Objective principle
(c) Accounting period assumption (d) None of the above
12. X – Purchased merchandise worth Rs. 1, 00,000 and sold 60% for
Rs. 90,000 and 40% of the remaining sold for Rs. 60,000. The
market value of the remaining merchandise was Rs. 20,000. He
valued the closing stock at Rs. 24,000. He has violated the –
(a) Realization cost (b) Matching principle
(c) Consistency principle (d) None of the above
13. X-purchased merchandise worth Rs. 1, 00,000 and sold 60% for Rs.
90,000 and 40% of the remaining sold for Rs. 60,000 and met operating expenses of Rs. 10,000. He counted operating profit as
Rs. 40,000. He has violated.
(a) Cost concept (b) Consistency principle
(c) Prudence principle (d) None of the above.
14. Personal transaction are distinguished from business transaction of
an accounting period in accordance with –
(a) Accounting Period Principle (b) Accounting Entity Principle
(c) Money Measurement Principle (d) None of these
15. The principle which treats all rupees alike whether it is a rupee of
1957 or 2007
(a) Money Measurement Principle (b) Periodicity principle
(c) Consistency Principle (d)Accounting Entity
Principles
16. As per AS-1, the fact need not be disclosed in the financial
statements if the following concept is followed.
(a) Money Measurement Principle (b) Periodicity Principle
(c) Consistency principle (d) Accounting Entity Principle
17. As per AS-1, the fact need not be disclosed in the financial
statements if the following concept is followed.
(a) Materiality Principle (b) Money Measurement Principle
(c) Accounting Entity Principle (d) Accrual
18. Mr. Y followed WDV Method and SLM Method of Depreciation during
2006 and 2007 respectively. He has violated –
(a) Conservatism Principle (b) Materiality Principle
(c) Cost Principle (d) Consistency Principle
19. Mr X has a closing stock costing Rs. 10,000 but its market value is
statements. He has violated. Rs. 12,000. He shows this stock at Rs. 12,000 in the financial
a) Conservation Principle (b) Materiality Principle
(c) Cost Principle (d) Consistency Principle
20. Mr X has a Sundry Debtors of Rs. 1,00,000 creating a provision for
discount @ 2% on sundry debtors is in accordance with –
(a) Conservatism Principle (b) Materiality Principle
(c) Cos Principle (d) Consistency Principle
21. The production manager reports to the top management that
production for the year 2007 I s200 tons but actual production is
1,99,000.90 kilogram. He has followed-
(a) Conservatism principle (b) Materiality Principle
(c) Cost principle (d) Consistency
22. Assets are held in the business for the purpose of
(a) Resale (b) Earning revenue.
(c) Conversion into cash (d) None of these
23. Mr. X purchased goods for Rs. 40,000 of which 25% for cash,
incurred expenses Rs. 10,000 of which Rs. 2,000 still outstanding
and sold 80% of the goods for Rs. 80,000 of which 75% on credit.
His profit for the period is –
(a) Rs. 2,000 (b) Rs. 30,000
(c) Rs. 40,000 (d) None of these
24. Mr. X purchased a car for Rs. 4, 00,000, making a down payment of
Rs. 5, 00,000 and signing a Rs. 3,50,000 bill payable due in 60
days. As a result of this transaction
(a) Total assets increased by Rs. 4,00,000
(b) Total liabilities increased by Rs. 3,50,000
(c) Total assets increased by Rs. 3,50,000
(d) Total assets increased by Rs. 3,50,000 with corresponding
increase in liabilities .
25. Consider the following data pertaining to X Ltd –
Particulars Rs.
Cost of Machinery purchased on 1st April, 2006 1, 00,000
Installation charges 10,000
Market value as on 31st March, 2006 1, 20,000
While finalizing the annual accounts, if the company values the
machinery at Rs. 1,20,000.
(a) Cost (b) Matching
(c) Realization (d) Periodicity
26. X Ltd follows the written down value method of depreciating
machinery year after year due to
(a) Comparability (b) Convenience
(c) Consistency (d) All of the above
27. Economic life of an enterprise is split into the periodic interval as
per –
(a) Periodicity (b) Matching
(c) Going concern (d) Accrual
28. Revenue from sale of products is generally, realized in the period in
which
(a) Cash in collected (b) Sale is made
(c) Products are manufacture (d) None of the above
29. The concept of conservatism when applied to the balance sheet
result in –
(a) Understatement of assets (b) Overstatement of assets
(c) Overstatement of capital (d) Understatement of capital
30. Decrease in the amount of creditors result in –
(a) Increase in cash (b) Decrease in cash
(c) Increase in assets (d) No change in assets
31. A sale of goods to Ram for cash should be credited to –
(a) Ram
(b) Sales
(c) Cash
(d) Capital.
32. A Withdrawal of cash from business by the proprietor should be
debited to –
(a) Drawing Account
(b) Expense Account
(c) Cash account
(d) Purchase Account.
33. A Withdrawal of goods from business by the proprietor should be
credited to -
(a) Drawing A/c
(b) Capital A/c
(c) Sales A/c
(d) Purchase A/c
34. We will debit Mr. A's account when
(a) A gets goods, services or assets on credit from us
(b) We get money from Mr. A on loan
(c) We get goods, services or assets on credit from Mr. A
(d) We get money from Mr. A "on account"
35. Journal entry for Rs.6,000 stolen from the safe of the firm will be
(a) Dr. P & L A/c & Cr. Cash embezzlement a/c Rs.6,000.
(b) Dr. Cash embezzlement a/c & Cr. Cash a/c Rs.6,000.
(c) Dr. Cash a/c and Cr. P& L a/c Rs.6,000
(d) None of the above.
36. Goods purchased from Rekha on credit. In this transaction the
names of two accounts affected are –
(a) One Personal and one Nominal
(b) Both Personal
(c) Both Real accounts
(d) One Personal and one Real
37. Kiran used the amount in business by selling his old personal car to
Surya. The entry of this transaction in Journal will be –
(a) Cash a/c Dr. To car a/c
(b) Car a/c Dr. To Capital a/c
(c) Car a/c Dr. To Sonu
(d) Cash a/c Dr. To Capital a/c
38. The owner of the business took goods worth Rs.15,600 for his
personal use. In this transaction which account will be credited –
(a) Sales account
(b) Drawings account
(c) Purchases account
(d) Capital account
39. Interest earned but not received, adjustment entry is –
(a) Accrued Interest Dr. To Customer
(b) Accrued interest Dr. To Interest
(c) Cash a/c Dr. To Interest
(d) None of the three
40. Goods worth Rs.1600 sold to Neeraj, its recording in Journal would
be-
(a) Debit the Sales Account, credit Neeraj Account
(b) Credit the Sales Account, debit the cash Account
(c) Debit Neeraj Account, credit the sales Account
(d) Debit Sales Account and Neeraj Account
41. Stock worth Rs.10,000 (cost price Rs.7,500) taken by Mohan -
Office Clerk. Amount to be deducted from his salary in the
subsequent month. Journal entry will be –
(a) Dr Salary and Cr Purchases A/c Rs.10,000
(b) Dr Mohan and Cr Sales Rs.10,000
(c) Dr Salary and Cr Purchases Rs.7500
(d) Dr Salary and Cr Sales Rs.10,000
42. Insured goods were lost due to theft and the Insurance Company
accepted the claim. In this transaction –
(a) Loss Dr. to Stock A/c
(b) Loss Dr. to Insurance Claim Receivable A/c
(c) Loss Dr. to Cash A/c
(d) Loss Dr. to Trading A/c
43. Ganesh's salary is Rs.10,000 per month. During a month, he
withdrew goods worth Rs.2,500 for personal use and also got salary
Rs.9,500 in cash. The excess payment of Rs.2,000 will be debited to
–
(a) Sales account.
(b) Goods account.
(c) Salary account.
(d) Salary in advance account.
44. On payment of Insurance by a businessman for his wife using
business cash, which a/c will be given effect? –
(a) Insurance Company account
(b) Wife's account
(c) Drawing account
(d) Miscellaneous expenses account
45. Income-tax of the sole trader paid is shown –
(a) Debited to profit and Loss A/c
(b) Debited to Trading A/c
(c) Debited to his capital A/c
(d) None
46. Which of the following A/c has a debit balance?
(a) Debtors A/c
(b) Sales A/c
(c) Creditors A/c
(d) Bank overdraft A/c
47. Which of the following A/c has a credit balance?
(a) Purchase A/c
(b) Sales A/c
(c) Goodwill A/c
(d) Cash in hand A/c
48. Debit balance in a personal A/c means –
(a) Amount due from him
(b) Amount due to him
(c) Discount allowed to him
(d) Goods sold to him
49. Expenses A/c will always have –
(a) Debit balance
(b) Credit balance
(c) Nil balance
(d) Debit or credit balance
50. Book of Original entry is called –
(a) A journal
(b) Memorandum A/c
(c) Kachha record
(d) Voucher
ANSWER
1. (b) 2. (d) 3. (d) 4. (d) 5. (d) 6. (a) 7. (d)
8. (d) 9. (d) 10. (d) 11. (d) 12. (d) 13. (d) 14. (b)
15. (a) 16. (c) 17. (d) 18. (d) 19. (a) 20. (a) 21. (b)
22. (b) 23. (c) 24. (d) 25. (a) 26. (c) 27. (c) 28. (b)
29. (a) 30. (b) 31. (b) 32. (a) 33. (d) 34. (a) 35. (b)
36. (d) 37. (d) 38. (c) 39. (b) 40. (c) 41. (c) 42. (b)
43. (d) 44. (c) 45. (c) 46. (a) 47. (b) 48. (a) 49. (a)
50. (a)
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