Fact - Accounts Question Paper

50 Questions

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Fact - Accounts Question Paper

Dear Candidate Please read the questions carefully before you answer. Please note that there 50 questions which are to be completed in 25 mins. Your time starts now. . . . . Good Luck


Questions and Answers
  • 1. 
    Bills Payable A/c is shown in the balance sheet under the head 
    • A. 

      Provision

    • B. 

      Reserves & Surplus

    • C. 

      Secured loans

    • D. 

      Current liabilities

  • 2. 
    Which of the following is not an asset?
    • A. 

      Buildings

    • B. 

      Debtors

    • C. 

      Loan from Harish

    • D. 

      Cash balance

  • 3. 
    Which of the following is a liability?
    • A. 

      Creditors for goods

    • B. 

      Cash at Bank

    • C. 

      Machinery

    • D. 

      Motor Vehicles

  • 4. 
    Which of the following best describes the meaning of ‘Purchases’?
    • A. 

      Items bought

    • B. 

      Goods bought on credit

    • C. 

      Goods paid for

    • D. 

      Goods bought for resale

  • 5. 
    Which of the following is correct?
    • A. 

      Profit reduces capital

    • B. 

      Profit does not alter capital

    • C. 

      Profit increases capital

    • D. 

      Capital can only come from profit

  • 6. 
    Is it true that the trial balance totals should agree?
    • A. 

      No, there are sometimes good reasons why they differ

    • B. 

      Yes, always

    • C. 

      Yes, except where the trial balance is extracted at the year end

    • D. 

      No, because it is not a balance sheet

  • 7. 
    Capital Expenditure is:
    • A. 

      Money spent on selling fixed assets

    • B. 

      Money spent on buying fixed assets or adding value to them

    • C. 

      The costs of running the business on a day-to-day basis

    • D. 

      The extra capital paid in by the proprietor

  • 8. 
    • A. 

      The salvage value of a fixed asset

    • B. 

      The amount of money spent in replacing assets

    • C. 

      The amount spent to buy a fixed asset

    • D. 

      The part of the cost of the fixed asset consumed during its period of use by the firm

  • 9. 
    Which of the following should not be called ‘Sales’?
    • A. 

      Goods sold on credit

    • B. 

      Goods sold for cash

    • C. 

      Sale of item previously included in ‘Purchases’

    • D. 

      Office fixtures sold

  • 10. 
    Which of the following best describes a trial balance?
    • A. 

      It is a list of closing balances

    • B. 

      It is a special account

    • C. 

      Shows all the entries in the books

    • D. 

      Shows the financial position of a business

  • 11. 
    Gross profit is:
    • A. 

      Cost of goods sold + Opening stock

    • B. 

      Sales less Purchases

    • C. 

      Net profit less expenses of the period

    • D. 

      Excess of sales over cost of goods sold

  • 12. 
    Net profit is calculated in the:
    • A. 

      Profit and loss account

    • B. 

      Balance sheet

    • C. 

      Trading account

    • D. 

      Trial balance

  • 13. 
    Provision for discount on debtors is calculated on the amount of debtors
    • A. 

      Before deducting provision for doubtful debts

    • B. 

      After deducting provision for doubtful debts

    • C. 

      Before deducting actual debts and provision for doubtful debts

    • D. 

      After adding actual bad and doubtful debts

  • 14. 
    Carriage inwards is charged to the trading account because:
    • A. 

      It is an expense connected with buying goods

    • B. 

      It should not go in the balance sheet

    • C. 

      Carriage outwards goes in the profit and loss account

    • D. 

      It is not part of motor expenses

  • 15. 
    Which of the following should be charged in the Profit and Loss Account?
    • A. 

      Direct materials

    • B. 

      Carriage on raw materials

    • C. 

      Closing Stock

    • D. 

      Office rent

  • 16. 
    Profit or Loss on the sale of fixed assets is transferred to
    • A. 

      Revaluation A/C

    • B. 

      Capital A/c

    • C. 

      Profit & Loss A/c

    • D. 

      Capital Reserve A/c

  • 17. 
    Which of these best describes fixed assets?
    • A. 

      Expensive items bought for the business

    • B. 

      Items which will not wear out quickly

    • C. 

      Are bought to be used in the business

    • D. 

      Are of long life and are not bought specifically for resale

  • 18. 
    XYZ Ltd has a house of 3 years old. It is used as guest house. It incurred an expenditure of Rs 2.5 lakhs for its repairs. The nature of this expense is
    • A. 

      Capital Expenditure

    • B. 

      Revenue Expenditure

    • C. 

      Deferred Revenue Expenditure

    • D. 

      None of these

  • 19. 
    Which of the following is incorrect?
    • A. 

      Good will → intangible asset

    • B. 

      Sundry debtors → current asset

    • C. 

      Loose tools → tangible fixed asset

    • D. 

      Outstanding expenses → current asset

  • 20. 
    In case of Reducing Balance Method depreciation is calculated on
    • A. 

      Original Cost

    • B. 

      Original Cost – Depreciation

    • C. 

      Market value

    • D. 

      Written Down Value

  • 21. 
     If you want to make sure that your money will be safe if cheques sent are lost in the post, you should:
    • A. 

      Cross your cheques ‘Account Payee only, Not Negotiable’

    • B. 

      Not use the postal service in future

    • C. 

      Always pay by cash

    • D. 

      Always take the money in person

  • 22. 
    Prepaid expenses of Rs.1000/- shown in the trial balance will appear in
    • A. 

      Liabilities side of balance sheet

    • B. 

      Debit Side of P & L A/c

    • C. 

      Debit Side of P & L Appropriation A/c

    • D. 

      Assets side of Balance Sheet

  • 23. 
    ‘Posting’ the transactions in bookkeeping means:
    • A. 

      Making the first entry of a double entry transaction

    • B. 

      Making the second entry of a double entry transaction

    • C. 

      Entering items in a cash book

    • D. 

      Something other than the above

  • 24. 
    Which of the following expenses will not be included in the acquisition cost of plant?
    • A. 

      Purchase price of plant

    • B. 

      Installation expenses

    • C. 

      Annual maintenance charges

    • D. 

      Delivery charges

  • 25. 
    The owner of the consignment stock is
    • A. 

      Consignor

    • B. 

      Consignee

    • C. 

      Debtors

    • D. 

      None

  • 26. 
    Debit the Giver is a rule for which account
    • A. 

      Real Account

    • B. 

      Nominal Account

    • C. 

      Personal Account

    • D. 

      None of these

  • 27. 
    Which of the following are of capital nature?
    • A. 

      Purchase of a goods

    • B. 

      Cost of repair

    • C. 

      Wages paid for installation of machinery

    • D. 

      Rent of a factory

  • 28. 
    Bank Reconciliation Statement is prepared to know the causes for difference between
    • A. 

      The balances as per cash column of Cash Book and the Pass Book

    • B. 

      The balance as per bank column of Cash Book and the Pass Book

    • C. 

      The balance as per bank column of Cash Book and balances as per cash column of Cash Book

    • D. 

      None of the above

  • 29. 
    Which of the following is not a Real Account
    • A. 

      Cash Account

    • B. 

      Investment Account

    • C. 

      Outstanding Rent Account

    • D. 

      Motor Car Account

  • 30. 
    ABC Limited prepares accounts based on
    • A. 

      Companies Act

    • B. 

      Partnership Act

    • C. 

      Income Tax Act

    • D. 

      None of the above

  • 31. 
    M/s Stationery Mart will debit the purchase of stationery to
    • A. 

      Purchases A/c

    • B. 

      General Expenses A/c

    • C. 

      Stationery A/c

    • D. 

      None

  • 32. 
    Rent due for the month of March will appear in the cash book 
    • A. 

      On the receipt side

    • B. 

      On the payment side

    • C. 

      As Contra entry

    • D. 

      None

  • 33. 
    Salary paid to a partner will appear in
    • A. 

      Profit & Loss appropriation A/c

    • B. 

      Note on account

    • C. 

      Revaluation A/c

    • D. 

      Trading A/c

  • 34. 
    A Provision for Doubtful Debts is created:
    • A. 

      When debtors cease to be in business

    • B. 

      When debtors become bankrupt

    • C. 

      To provide for possible bad debts

    • D. 

      To write off bad debts

  • 35. 
    Working Capital is a term meaning:
    • A. 

      The excess of the current assets over the current liabilities

    • B. 

      The amount of capital invested by the proprietor

    • C. 

      The total of Fixed Assets - Current Assets

    • D. 

      The capital less drawings

  • 36. 
    TDS refers to 
    • A. 

      Tax Deposition as Source

    • B. 

      Tax Deployment at Source

    • C. 

      Tax Deposited at Source

    • D. 

      Tax Deletion at Source

  • 37. 
    If wages are paid for the construction of building, then ________ a/c is credited and _______ a/c is debited
    • A. 

      Wages, Cash

    • B. 

      Cash, Building

    • C. 

      Cash, Wages

    • D. 

      Building, Cash

  • 38. 
    VAT is known as
    • A. 

      Value Added Tax

    • B. 

      Value Assessment Tax

    • C. 

      Value Against Tax

    • D. 

      None

  • 39. 
    The Journal is
    • A. 

      Not part of the double entry system

    • B. 

      Part of the double entry system

    • C. 

      Used when other journals have been mislaid

    • D. 

      A supplement to the Cash Book

  • 40. 
    Preliminary expenses will be shown in
    • A. 

      Trading A/c – debit side

    • B. 

      Profit & Loss Appropriation A/c – debit side

    • C. 

      Balance sheet – liabilities side

    • D. 

      Balance sheet – assets side

  • 41. 
    If a trial balance totals do not agree, the difference must be entered in:
    • A. 

      The Capital Account

    • B. 

      A Suspense Account

    • C. 

      A Nominal Account

    • D. 

      The Profit and Loss Account

  • 42. 
    What should happen if the balance on a Suspense Account is of a material amount?
    • A. 

      Find the error(s) before publishing the final accounts

    • B. 

      Should be written off to the balance sheet

    • C. 

      Write it off to Profit and Loss Account

    • D. 

      Carry forward the balance to the next period

  • 43. 
    A Receipts and Payments Account is one:
    • A. 

      Which is accompanied by a balance sheet

    • B. 

      In which the profit is calculated

    • C. 

      In which the surplus of income over expenditure is calculated

    • D. 

      In which the opening and closing cash balances are shown

  • 44. 
    Annual Report does not contain 
    • A. 

      Cash Flow Statement

    • B. 

      Balance Sheet

    • C. 

      Trial Balance

    • D. 

      Profit and Loss Account

  • 45. 
    Company accounts are prepared based on
    • A. 

      Schedule VI

    • B. 

      Chapter 9

    • C. 

      Schedule I

    • D. 

      Schedule X

  • 46. 
    What is the rate of service tax
    • A. 

      2%

    • B. 

      10%

    • C. 

      4%

    • D. 

      12%

  • 47. 
    A Bank Reconciliation Statement is a statement:
    • A. 

      Drawn up by us to verify our cash book balance with the bank statement balance.

    • B. 

      Drawn up by the bank to verify the cash book

    • C. 

      Sent by the bank when we have made an error

    • D. 

      Sent by the bank when the account is overdrawn

  • 48. 
    How many golden rules are there
    • A. 

      1

    • B. 

      2

    • C. 

      3

    • D. 

      4

  • 49. 
    Can two companies be registered in the same name in India?
    • A. 

      Yes

    • B. 

      NO

    • C. 

      Maybe

    • D. 

      Depends

  • 50. 
    A debts written off as bad, subsequently collected by the proprietor and retained by him for his personal use. What is the accounting treatment for this transaction?
    • A. 

      Debit Drawings A/c & Credit Debtors A/c

    • B. 

      Debit Cash A/c & Credit Bad debts A/c

    • C. 

      Debit Drawings A/c & Credit Bad debts A/c

    • D. 

      Ignore the Transaction