SET IV

1) Credit sale can be obtained by preparing:

i)
Creditors account
ii)
Debtors account
iii)
Capital account
iv)
Cash account

2) Cash in hand can be obtained by preparing:

i)
Debtors account
ii)
Creditors account
iii)
Cash book
iv)
Bank account

3) Net worth of an organisation means excess of its total assets over its :
i)
Capital
ii)
Expenses
iii)
Liabilities
iv)
Incomes
4) If the rate of gross profit on sales is 20% and cost of goods sold is Rs. 1,00,000
then gross profit will be equal to:
i)
Rs. 20,000
ii)
Rs. 25,000
iii)
Rs. 10,000
iv)
Rs. 35,000
5) Bad debts written off always affect the:
i)
Debtors account
ii)
Purchase account
iii)
Creditors account
iv)
Cash account

6) The elements of account equation are:

i)
Assets & Liabilities
ii)
Income and expenses
1

iii)
iv)

Capital and Revenue expenditure

Non cash items

7) That portion of the state capital which can be called up only on the winding up of
the company is the:
i) Authorized capital
ii) Issued capital
iii) Subscribed capital
iv) Reserve capital

8) Minimum number of partners required to commence a business:

i)
ii)
iii)
iv)

2
5
10
None

9) In general form of partnership business the liabilities of the partners are limited to
the extent of
i)
Profits
ii)
Limited to the extent of Capital contributed by them
iii)
Limited
iv)
Unlimited

10)Written agreement of partnership is referred as:

i)
Partnership act
ii)
Partnership contract
iii)
Partnership deed
iv)
Agreement

11) When partnership does not exist, what will be the profit sharing ratio of the
partners:
i)
Equal
ii)
Unequal
iii)
Depends on the extent of capital contributed
iv)
Depends on the experience of partners
2

12)According to double entry system of accounting, an account that obtains benefit

is:
i)
Debit
ii)
Credit
iii)
Income
iv)
Assets

13)When liability is reduced it is recorded on:

i)
Left and credit side of account
ii)
Right and credit side of account
iii)
Left and debit side of account
iv)
Left and credit side of account

14)What type of expenses are paid out of gross profit:

i)
General expenses
ii)
Manufacturing expenses
iii)
Capital expenditures
iv)
Liabilities

15)Which is an example of business liability:

i)
Land
ii)
Goodwill
iii)
Creditors
iv)
Debtors

16)The unfavorable balance of profit and loss account should be:

i)
Added to capital
ii)
Subtracted from liabilities
iii)
Subtracted from current liabilities
iv)
Subtracted from capital

17)Interest on loan paid by business is an example of:

i)
Revenue expense
ii)
Return outward
iii)
Assets
iv)
Capital expense
3

18)In accounting an economic event is termed as:

i)
Cash
ii)
Bank statement
iii)
Exchange of money
iv)
Transaction

19)Book keeping is majorly concerned with which part of accounting cycle:

i)
Recording of transaction
ii)
Analysing of transaction
iii)
Preparation of financial statements
iv)
Auditing of financial statements

20)Trial Balance is prepared to check the accuracy of :

i)
Balance sheet
ii)
Ledger accounts
iii)
Income statement
iv)
Expenses

21)If an transaction is completely omitted will it affect the trial balance:

i)
May affect
ii)
May not affect
iii)
Yes
iv)
No

22)Trial balance is prepared:

i)
Quarterly basis
ii)
End of the financial year
iii)
Frequently
iv)
Half yearly basis

23)Economic resources owned by the business and which will benefit in future are:
i)
Assets
ii)
Capital
iii)
Liabilities
4

iv)

Expenses

24)Summarized record of transactions related to individuals or things are known as:

i)
Trial balance
ii)
Journal
iii)
Account
iv)
Voucher

25)Double system of accounting system includes:

i)
Cash basis of accounting
ii)
Accrual basis of accounting
iii)
Both cash and accrual basis of accounting
iv)
None of the above

26)Value of goodwill on Cs admission is Rs. 30,000 of the firm allowing him share
in the business, the amount of goodwill brought in by C will be:
i)
Rs. 30,000
ii)
Rs. 15,000
iii)
Rs. 7500
iv)
Rs. 10,000

27)New partner maybe admitted to the business:

i)
With the consent of all partners
ii)
Without the consent of partners
iii)
Consent of only one partner is required
iv)
Consent of partners is not applicable

28)Partnership may come to an end:

i)
Death of partner
ii)
Insolvency
iii)
By issuing notice
iv)
All of the above

29)The cost of the machinery is Rs. 1,20,000, residual value of asset at the end of
the 10 years is 10,000 what will be the annual depreciation as per straight line
method of depreciation:
5

i)
ii)
iii)
iv)

Rs. 11000
Rs. 12000
Rs. 13000
Rs. 15000

30)The total value of the tangible assets of the firm is Rs. 25,00,000 and the total
value of its liabilities are Rs. 23,00,000 the difference in the balance sheet will be:
i)
Capital
ii)
Good will
iii)
Loss
iv)
Profit

31)Shareholders are rewarded by:

i)
Profits
ii)
Dividends
iii)
Incomes
iv)
Interests
32) The four principal qualitative characteristic of useful financial statement are:
i)
ii)
iii)
iv)

Understandability, relevance, reliability, comparability

Timeliness, relevance, reliability and comparability
Understandability, relevance, accuracy, comparability
Understandability, relevance, reliability, Simplicity