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1. The revenues and expenses of a company are displayed in which statement?

Balance Sheet Cash Flow Statement Income Statement Periodicity

2. The main Purpose of Financial Accounting is?

To Provide financial information to shareholders To maintain Balance Sheet To minimize taxes To keep track of liabilities

3. Accounting provides information on:

Cost and income for managers Company’s tax liability for a particular year Financial conditions of an institution All of the above

4. The determination of expenses for an accounting period is based on the concept of:

Objectivity Materiality Matching Periodicity

5. Accounting does not record non-financial transactions because of:

Entity Concept Accrual Concept Cost Concept Money Measurement Concept

6. Provision for bad debt is made as per the:

Entity Concept Conservatism Convention Cost Concept Going Concern Concept

7. Fixed Assets and Current Assets are categorized as per concept of:

Separate Entity Going Concern Consistency Time period

8. Omission of paise and showing the round figures in Financial Statements is based on:

Conservatism Concept Consistency Concept Materiality Concept Realization Concept

9. P & L Account is prepared for period of one year by following:

Consistency Concept Conservatism Concept Accounting Period Concept Cost Concept

10. An expenditure is capital in Nature when:

The receiver of the amount is going to treat it It increase the quantity of fixed assets for the purchase of fixed assets It is paid as interests on loans for the business It maintains a fixed assets

11. Capital expenditures are recorded in the:

Balance Sheet Profit and Loss A/c Trading A/c Manufacturing A/c

12. Which of the following transaction is of capital nature:

Purchases of a truck Replacement of old trucks Cost of repairing of truck All of the above

13. ₹ 5,000 incurred for up gradation of computer by installation of 128 MB Ram is:

Capital Expenditure Deferred Revenue Expenditure Revenue Expenditure None of the above

14. Entrance fee of ₹ 20,000 received by a club is a:

Capital Receipts Revenue Receipt Capital Expenditure Revenue Expenditure

15. Life membership fees received by a club is a:

Revenue Expenditure Capital Expenditure Deferred Revenue Expenditure Capital Receipt

16. Cost of goods purchased for resale is an example of:

Capital Expenditure Revenue Expenditure Deferred Revenue Expenditure None of These

17. Import duty of raw material purchased:

Revenue Expenditure Capital Expenditure Deferred Revenue Expenditure None of These

18. Received from Soloman & co., an invoice for ₹ 1,500 for repairs to factory walls:

Revenue Expenditure Capital Expenditure Deferred Revenue Expenditure None of These

19. Compensation received from government for compulsory acquisition of land:

Revenue Expenditure Capital Expenditure Deferred Revenue Expenditure None of These

20. All revenue receipts and expenditures are shown in:

Balance Sheet Trading and Profit and Loss A/c Cash Flow Statement Statement of Affairs

21. A bad debt recovered during the year will be:

Capital Expenditure Revenue Expenditure Capital Receipt Revenue Receipt

22. Insurance claim received on account of machinery damaged completely by fire is:

Capital Receipt Revenue Receipt Capital Expenditure Revenue Expenditure

23. Amount of ₹ 5,000 spent as lawyers’ fees to defend a suit claiming that the firm’s factory site belonged to the plaintiff’s land is:

Capital Expenditure Revenue Expenditure Deferred Revenue Expenditures None

24. Money spent ₹ 10,000 as travelling expenses of the directors on trips abroad for purchase of capital assets is:

Capital Expenditure Revenue Expenditure Deferred Revenue Expenditures None

25. Nominal Account represents:

Profit & gain Loss/Expenses None Both (a) and (b)

26. S.B.I Account is a …:

Nominal Artificial Personal Account Representative Personal Account None

27. The process of recording business transactions in a book of original entry is known as:

Journal Balance Posting None

28. Prepaid rent is a:

Nominal A/c Representative Personal A/c Tangible Assets A/c None

29. In an Account if debit > credit side, the balance is known as the:

Negative balance Debit balance Positive balance Credit balance

30. A sale of goods to Ram for cash should be debited to:

Ram Cash Sales Capital

31. A withdrawal of cash from business by the proprietor should be credited to:

Drawing A/c Capital A/c Cash A/c Purchase A/c

32. Rent Account is:

Personal Real Nominal None

33. Ledger contains various________ in it:

Transactions Entries Accounts None

34. The process of transfer of entries from day book to ledgers is called:

Simple posting Journal posting Transaction Ledger posting

35. The rent paid to landlord is credited to:

Landlord’s A/c Rent A/c Cash A/c None

36. Which financial statement represents the accounting equation - Assets = Liabilities + Owner’s equity:

Income Statement Statement of Cash flows Balance Sheet None

37. The debts written off as bad, if recovered subsequently are:

Credited to Bad Debts Recovered A/c Credited to Trade Receivables Account Debited to Profit and Loss Account None

38. A trial balance will not balance if:

Correct entry is posted twice The purchase on credit basis is debited to purchases and credited to cash ₹ 500 cash payment to creditors is debited to creditors for ₹ 50 and credited to cash as ₹ 500 None of the above

39. A Trial Balance shows:

Honesty of accountants Accuracy of account Only arithmetical accuracy of accounts None of these

40. The process of recording business transactions in a book of original entry is known as:

Journal Balance Posting None

41. In an Account if debit > credit side, the balance is known as the:

Negative balance Debit balance Positive balance Credit balance

42. Ledger contains various________ in it:

Transactions Entries Accounts None

43. The process of transfer of entries from day book to ledgers is called:

Simple posting Journal posting Transaction Ledger posting

44. A Ledger is also called:

Book of Original entry Book of Primary entry Book of Final entry None of the above

45. Whenever errors are noticed in the accounting records, they should be rectified:

At the time of preparation of Trial Balance Without waiting the accounting year to end After the preparation of Final Accounts in the next accounting year None

46. A Trial Balance will not tally if:

Correct journal entry is posted twice Credit purchase debited to purchases and credited to cash ₹5,000 cash paid to creditors is debited to creditors for ₹500 and credited to cash as ₹5,000 None of the above

47. Sales of Shyam of ₹ 500 not recorded in the books would affect:

Shyam’s Account Sales Account Sales Account and Shyam’s Account Cash Account

48. Errors of carry forward from one year to another affects:

Personal Account Real Account Nominal Account Both (a) and (b)

49. Goods worth ₹ 272 returned by Lala passed through the books as ₹ 722. The rectification entry is:

Lala will be debited by ₹ 450 Lala will be debited by ₹ 272 Lala will be credited by ₹ 722 Lala will be credited by ₹ 272

50. If a receipt of ₹ 200 from Rajesh (debtor) has not been recorded in the books the profits would show:

An increase of ₹ 2,000 A decrease of ₹ 200 Neither an increase nor a decrease None of the above

51. A credit purchase of ₹ 950 from Sudhir was recorded in purchases book as ₹ 590. The rectification entry is:

Purchases account will be debited by ₹ 360 Sudhir will be credited by ₹ 590 Purchases account will be debited by ₹ 950 Sudhir will be credited by ₹ 950

52. Which of these errors affect only one account:

Errors of casting Errors of carry forward Errors of posting All the three

53. Which of these is/are recurring (indirect expenses)?

Transit insurance and freight Octroi Loading and unloading Godown rent and insurance

54. On receipt of goods the consignee debits which of these accounts:

Purchase Account Goods Account Consignors Account None of these

55. X sends out goods to Y, costing ₹1,50,000. Goods are to be sold at cost +33 1/3%. The consignor asked consignee to pay an advance for an amount equivalent to 60% of sales value. The amount of advance will be:

₹ 1,20,000 ₹ 1,00,000 ₹ 1,50,000 None

56. Goods of the invoice value of ₹ 2,40,000 sent out to consignee at 20% profit on cost the loading amount will be:

₹ 40,000 ₹ 48,000 ₹ 50,000 None

57. Goods sent on consignment account is of the nature of:

Personal Account Nominal Account Real Account Sales Account

58. Out of the given option which cannot be treated as part of cost of purchase for valuing stock on hand:

Packing Octroi Delivery charges Freight

59. X sends out 100 bags to Y costing ₹1,000 each. 60 bags were sold at 10% above cost price. Sale value will be:

₹ 66,000 ₹ 65,000 ₹ 60,000 ₹ 65,500

60. The consignment accounting is made on the following basis:

Accrual basis Realization basis Cash basis All of above

61. Which of the following term is true about consignment?

Sale of goods Hypothecation of goods Shipment of goods Mortgage of goods

62. Which of these accounts are not opened in the books of consignor?

Consignment Account Commission Account Goods Send on Consignment Account Consignees Personal Account

63. For closing stock held by consignee which account must be debited:

Consignment Stock Sales Account Consignee Account Consignment Account

64. X of Kanpur sends out 1000 boxes to Y Delhi costing ₹ 200 each at an invoice price of ₹ 220 each goods sent out on consignment to be credited in general trading will be:

₹ 2,00,000 ₹ 2,40,000 ₹ 40,000 None

65. A proforma invoice is sent by:

Consignee to consignor Consignor to consignee Debtor to consignee Debtor to consignor

66. Commission will be shared by:

Consignor and consignee Only consignee Only consignor Third party

67. X of Mumbai sends out certain goods at cost +25%. Invoice value of the goods is ₹2,00,000. 4/5th of the goods were sold by consignee at ₹1,76,000. Commission 2% upto invoice value and 10% of any surplus above invoice. The amount of commission will be:

₹ 4,800 ₹ 5,200 ₹ 3,200 ₹ 1,600

68. Joint venture account is of the nature of:

Personal A/c Nominal A/c Real A/c Suspense A/c

69. A and B purchased a piece of land for ₹40,000 and sold it for ₹60,000 in 2021. Originally A had contributed ₹24,000 and B ₹16,000. What will be the profit on venture?

₹ 20,000 ₹ 16,000 ₹ 30,000 Nil

70. A, for joint venture with B, purchased goods costing ₹2,00,000. B sold 80% of the goods for ₹2,50,000. Balance of goods were taken over by B at cost less 25%. Find out profit on venture?

₹ 80,000 ₹ 90,000 ₹ 50,000 None of these

71. If unsold goods costing ₹20,000 is taken over by venture at ₹15,000 the Joint venture A/c will be credited by:

₹20,000 ₹15,000 ₹5,000 Nil

72. Memorandum Joint Venture Account is:

Personal Account Real Account Nominal Account None of the above

73. A purchased goods costing ₹42,500. B sold goods of ₹40,000 at ₹50,000. Balance goods were taken over by A at same gross profit percentage as in case of sale. The amount of goods taken over will be:

₹3,125 ₹2,500 ₹3,000 None

74. What is the nature of joint venture with co-venture account:

Nominal Account Real Account Personal Account None of these

75. ‘M’ and ‘N’ enter into joint venture where ‘M’ supplies goods worth ₹6,000 and spend ₹100 on various expenses. ‘N’ sells the entire lot for ₹7,500 meeting selling expenses amounted to ₹200 profit sharing ratio equal. N remits M the amount due. The amount of remittance will be:

₹6,700 ₹7,300 ₹6,400 ₹6,100

76. A and B purchased a piece of land for ₹20,000 and sold it for ₹60,000 in 2021. Originally A had contributed ₹12,000 and B ₹8,000. The profit on venture will be:

₹40,000 ₹20,000 ₹60,000 Nil

77. A and B enter into joint venture sharing profit and loss in the ratio 1:1. A purchased goods costing ₹20,000. B sold the goods for ₹25,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. The profit will be:

₹3,550 ₹3,600 ₹3,400 ₹3,800

78. Goods costing ₹10,000 destroyed by an accident, insurance claim nil:

₹10,000 will be credited to joint venture account No entry will be made in the books of joint venture ₹10,000 will be debited in Joint venture account as loss ₹8,000 will be credited in joint venture account

79. Which of the following statement is true?

There is no difference between joint venture and partners Consignment and joint venture is same There is not separate act for joint venture In case of joint venture, the number of third party is none only

80. Which of the following accounts are maintained in the joint venture when separate set of books are maintained:

Joint Bank A/c Joint Venture A/c Co-venturer A/c All of these

81. If A coventurer takes away goods under memorandum joint venture method then he will debit these goods in his books to:

Joint Venture Account Personal Account Purchases Account Sales Account

82. For opening Joint Bank Account, in case of separate sets of books:

Venture a/c will be debited and Co-ventures A/c will be credited Joint Bank A/c is debited and Ventures Capital A/c is credited Joint Venture A/c is debited and Joint Bank A/c will be credited Joint Bank A/c will be debited and Joint Venture A/c will be credited

83. The person other than the original creditor to whom the amount in the bill is made payable to is known as the________ of the bill.

Holder Payee Drawer Endorser

84. Payment of Bills of exchange is received:

By drawer By holder in due course of due date By endorsee By bank

85. Retirement of bill means:

Making payment before the due date Cancellation of the bill Sending the bill for collection Endorsing the bill in favour of third party

86. At the time of retirement of a bill, the acceptor debits:

Bills Receivable Account Bill Payable Account Discount None of the above

87. The party who is ordered to pay the amount is known as:

Payee Drawer Drawee Endorsee

88. In which of these ways a bill of exchange cannot be disposed of:

Discounting with bank Retain till maturity Endorsement to creditors Destroyed

89. Bills Receivable Book is a part of the:

Ledger Balance Sheet Journal Profit and Loss Account

90. X sold goods to Y for ₹30,00,000. ½ of the amount will be received in cash and the balance through a B/R for what amount X should draw a bill on Y?

₹ 1,50,000 ₹ 3,00,000 ₹ 1,00,000 ₹ 1,20,000

91. A person who endorses a bill is called:

Drawer Drawee Bank Endorser

92. At the time of dishonor of an endorsed bill which one of these accounts would be credited by the drawee:

Bill Payable Account Drawer Bank Bill Dishonored Account

93. Date on which the payment of the bill is to be made:

Public holiday Date of grace Due date Date of bill + 3 days

94. Kuntal draws a bill on Shyam for ₹3,000. Kuntal endorsed it to Ram. Ram endorsed it to Rahim. The payee of the bill will be:

Kuntal Ram Shyam Rahim

95. If the due date is a public holiday what will be the due date of the bill:

Following day Preceding day The same day only One month later

96. On 1.8.23, X draws a bill on Y for 30 days after sight. The date of acceptance is 8-8-23. The due date of the bill will be:

8.9.2023 10.9.2023 11.9.2023 9.9.2023

97. If bill drawn on 3rd July 2023 for 40 days, payment must be made on:

16th August, 2023 15th August, 2023 12th August, 2023 14th August, 2023

98. The purpose of preparing final accounts is to ascertain:

Profit & Loss A/c Capital The value of assets Profit or loss and financial position

99. If the manager is entitled to a commission of 5% on profits before deduction this commission, he will get a commission of ₹____ on a profit of ₹8,400:

400 442.11 420 None of these

100. The balance of the petty cash is:

An expense An income An asset A liability

101. Fixed assets are:

Kept in the business for use over a long time for earning income Meant for resale Meant for conversion into cash as quickly as possible All of the above

102. The manufacturing account is prepared:

To ascertain the profit or loss on the goods produced To ascertain the cost of the manufactured goods To show the sale proceeds from the goods produced during the year Both (b) and (c)

103. A company wishes to earn a 20% profit margin on selling price. Which of the following is the profit mark upon cost, which will achieve the required profit margin?

33% 25% 20% None of these

104. At the time of preparation of financial accounts, bad debts recovered account will be transferred to:

Debtors A/c Profit & Loss A/c Profit & Loss Adjustment A/c Profit & Loss Appropriation A/c

105. Depreciation appearing in the Trial Balance should be:

Debited to P & L A/c Shown as liability in balance sheet Reduced from related asset in balance sheet Both (a) and (c) above

106. Gross profit is equal to:

Sales – cost of goods sold Sales – closing stock + purchase Opening stock + purchases – closing stock None of the above

107. The profit and loss Account shows the:

Financial results of the concern for a period Financial position of the concern on particular date Financial results of the concern on a particular date Cost of goods sold during the period

108. Which of the following is not a part of financial statement?

Profit and loss account Balance sheet Cash flow statement Trial balance

109. Based on which of the following concepts, is share capital account shown on the liabilities side of a balance sheet?

Business entity concept Money measurement concept Going concern concept Matching concept

110. Closing stock appearing in the trial balance is shown in:

Trading A/c and Balance Sheet Profit and Loss A/c Balance Sheet only Trading A/c only

111. Consider the following data and identify the amount which will be deducted from sundry debtors in Balance sheet.

₹ 400 ₹ 800 ₹ 2,000 ₹ 2,400

112. Inventory is:

Included in the category of fixed assets An investment A part of current assets An intangible fixed asset

113. Endowment fund receipt is treated as:

Capital Receipt Revenue Receipt Loss Expenses

114. Which one of the following is not prepared by non-profit organizations:

Profit and Loss Account Income & Expenditure Account Receipts and Payments Account Balance Sheet

115. Legacy are generally:

Capitalized Treated Loss Revenue Expenses Deferred Revenue expenses

116. Any donation received for a specific purpose is a:

Assets Revenue receipts Capital receipts None of the above

117. The receipts and payments account of a non-profit organization is a:

Nominal Account Real Account Income Statement Account Financial Account

118. The capital of a non-profit organization is generally known as:

Equity Accumulated Fund Finance Reserve Cash Fund

119. If ₹1,500 was outstanding at the beginning of the year towards subscription and ₹10,000 is received during the year, with ₹2,500 still outstanding at the end of the year the amount to be taken to receipts and payments account is:

₹11,000 ₹8,500 ₹10,000 None of the above

120. Any revenue expenses for which a separate fund is available will be:

Debited to the separate fund Debited to Income and Expenditure Account Capitalized and shown in the Balance Sheet None of the above

121. Sale of old materials must be shown on the credit side of:

Cash Book Income and Expenditure Account Balance Sheet None of the above

122. The information for the preparation of receipts and payments account is taken from:

Cash Book Income and Expenditure Account Cash Book and Balance Sheet None

123. Any donation received for a specific purpose is a:

Capital receipt Revenue receipt Liability None of the above

124. The Receipts and Payments Account shows the following details: Subscription Arrears ₹500, Current ₹10,500, Advance ₹800. There are 1,200 members each paying an annual subscription of ₹10. The amount to be credited to Income and Expenditure Account will be:

₹11,800 ₹11,300 ₹12,000 None of the above

125. Any income arising from special fund will be credited to:

Special Fund in the Balance Sheet Income and Expenditure Account General Fund in the Balance Sheet None of the above

126. Income and Expenditure Account shows subscriptions at ₹10,000. Subscriptions accrued in the beginning of the year and at the end of the year were ₹1,000 and ₹1,500 respectively. The figure of subscriptions received appearing in Receipts and Payments Account will be:

₹9,500 ₹11,000 ₹10,000 None of the above

127. Which of the following item(s) is (are) shown in the Income and Expenditure Account:

Only items of capital nature Only items of revenue nature which are received during the period of accounts Only items of revenue nature pertaining to the period of accounts Both the items of capital and revenue nature

128. The total cost incurred in the operation of a business undertaking other than the cost of manufacturing and production is known as:

Direct cost Variable cost Commercial cost Conversion cost

129. Which of the following is not a relevant cost?

Replacement cost Sunk cost Marginal cost Standard cost

130. Process cost is very much applicable in:

Construction industry Pharmaceutical industry Airline company None of these

131. The main purpose of cost accounting is to:

Maximize profits Help in inventory valuation Provide information to management for decision making Aid in the fixation of selling price

132. Opportunity cost is the best example of:

Sunk cost Standard cost Relevant cost Irrelevant cost

133. Costs are classified into fixed costs, variable costs and semi-variable costs, it is known as:

Functional classification Behavioral classification Element wise classification Classification according to controllability

134. Which method of costing is used for determination of costs for printing industry?

Process costing Operating costing Batch costing Job costing

135. Over which of the following costs, management is likely to have least control:

Wages cost Building insurance cost Machinery breakdown cost Advertisement cost

136. Variable costs are fixed:

For a period Per unit Depends upon the entity For a particular process of production

137. In behavioral analysis, costs are divided into:

Production and non-production costs Controllable and non-controllable costs Direct and indirect costs Fixed and variable costs

138. Prime cost plus factory overheads is known as:

Factory on cost Conversion cost Factory cost Marginal cost

139. Which of the following items is excluded from cost Accounts?

Income tax Interest on debentures Cash discount All of these

140. The following is included in financial accounts, but not in cost accounts:

Carriage and freight Excise duty Royalty Dividend paid

141. Advertisements are treated as:

Direct expenses Cost of production Selling overheads Distribution overheads

142. Which cost system description applies to the manufacture of 20 engraved doors for the new clubhouse at a golf course?

Contract Process Batch Service

143. Prime cost may be correctly termed as:

The sum of direct material and labour cost with all other costs excluded. The total of all cost items which can be directly charged to product units. The total costs incurred in producing a finished unit. The sum of the large cost there in a product cost.

144. The guidance and regulation by executive action of the cost of operating an undertaking is said to be:

Budgetary control Cost control Cost analysis None

145. Direct expenses are also known as:

Overhead expenses Process expenses Chargeable expenses None

146. Indirect material cost is a part of:

Prime cost Factory overhead Chargeable expenses None of these

147. Which of the following is a part of both Prime cost and conversion cost:

Direct Material Indirect Labour Indirect Material Direct Labour

148. Statement showing break-up of costs is known as:

Cost-sheet Statement of profit Production account Tender

149. The works cost plus administration expenses:

Total Cost Cost of production Cost of sales Factory cost

150. Directors remuneration and expenses form a part of:

Production overhead Administration overhead Selling overhead Distribution overhead

151. Cost reduction is:

Long term phenomena It challenges the standards It is carried out without compromising the quality All of the above

152. Interest on own capital is:

Cash cost Notional cost Sunk cost Part of Prime Cost

Foundation Question Bank Financial Accounts

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