Tag: commercial applications

Quizzes (170) Questions (1551)

Questions Related to commercial applications

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Mr.Ashok buys clothing of Rs.50,000 paying cash Rs.20,000. What is the amount of expense as per the accrual concept?

  1. Rs. 30,000

  2. Rs. 20,000

  3. Rs. 50,000

  4. Nil
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The accrual concept requires that expenses be recognized when they are incurred, regardless of when the cash is paid. Since Mr. Ashok bought clothing worth 50,000, the full amount is an expense at the time of purchase.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

An entry for the goods sold to Madhav for Rs. 1,020 was posted to his account as Rs. 1,200. If rectification is done before preparation of trial balance then which of the following is correct? 

  1. Supense A/C Dr. 180
    To Madhav A/C 180

  2. Profit & Losdd Adj. A/c Dr. 180
    To Madhav A/c 180

  3. Credit Madhav with Rs. 180 saying "By Excess debit for sales Rs. 180"

  4. Debit Madhav with Rs. 180 saying "To Excess debit for sales Rs. 180"
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The sale was 1,020 but recorded as 1,200, meaning Madhav's account was over-debited by 180. To rectify this before the trial balance, we must credit Madhav's account to reduce the balance, noting the reason for the adjustment.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

When a change in accounting policy is justified?

  1. To comply with accounting standard

  2. To ensure more appropriate presentation of the financial statement of the enterprise

  3. to comply with law

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting policies are changed only when required by law, accounting standards, or when the change results in a more appropriate presentation of financial statements. All these options represent valid justifications.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

All of the following are valuation principles except ___________________.

  1. Historical cost

  2. Current cost

  3. Realizable value

  4. Future value
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Historical cost, current cost, and realizable value are standard valuation principles used in accounting. Future value is a financial calculation concept rather than a primary valuation principle for assets in financial statements.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Match List I with List II and select the correct answer using the codes given below the lists.
List I                                                    List II
A. Doctrine of ultra vires                    1. Articles of association
B. Doctrine of indoor management    2. Prospectus
C. Doctrine of golden rule                   3. Memorandum of association

  1. A-1, B-3, C-2

  2. A-3, B-1, C-2

  3. A-2, B-1, C-3

  4. A-3, B-2, C-1
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Doctrine of ultra vires relates to the Memorandum of Association (3), Doctrine of indoor management relates to the Articles of Association (1), and the Doctrine of golden rule relates to the Prospectus (2).

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Overvaluation of opening stock in financial accounting results _____________.

  1. decreases costing profit

  2. decreases financial accounts profit

  3. increases costing profit

  4. increases financial accounts profit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Opening stock is a debit item in the trading account. Overvaluing it increases the total debits, which in turn decreases the calculated gross profit for that period.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

The current ratio of a company is 2: 1. Which of the following suggestions would improve the ratio?

  1. To pay a current liability

  2. To borrow money on an interest-bearing promissory note

  3. To purchase stocks for cash

  4. To give an interest-bearing promissory note to a creditor to whom money was owed on current account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A current ratio of 2:1 means current assets are double current liabilities. Borrowing money on a promissory note increases both current assets (cash) and current liabilities (notes payable) by the same amount, which mathematically improves the ratio when the initial ratio is greater than 1:1.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Globalisation of financial services is being promoted by _____________.

  1. World Trade Organisation

  2. International Finance Corporation

  3. International Bank for Reconstruction and Development

  4. International Monetary Fund
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The International Monetary Fund (IMF) plays a central role in monitoring global financial stability and promoting international monetary cooperation, which facilitates the globalisation of financial services.