Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

When shares are forfeited, the share capital account is debited by ________________.

  1. Paid-up amount

  2. Called-up amount

  3. Nominal value of the shares

  4. Market value of the shares
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When shares are forfeited, the share capital account must be debited by the amount that was actually called up on those shares, regardless of whether it was paid or unpaid.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Financial Statements usually consists of _____________.

  1. Trading Account

  2. Profit & loss Account

  3. Balance Sheet

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

Financial statements are prepared at the end of the financial year to know the overall financial performance and financial position of the business. 


Following are the financial statements:
Trading Account is prepared to know the gross profit earned by the business. 
Profit & Loss Account is prepared to find out the net profit after deducting the indirect expenses from the gross profit. 
Balance sheet is prepared to know the financial position of the  business on a particular date including the position of assets and liabilities.  

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Which of the following are the basic objectives of preparing Financial Statements?

  1. To view financial performance.

  2. To view financial Position.

  3. Both (A) & (B).

  4. None of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

To know the financial position of the business, financial statements are prepared. Normally the financial statements are prepared at the end of the financial year. 


Financial statements includes the following:

Trading, Profit & Loss A/c - To know the profitability of the business.
Balance Sheet- To know the position of assets and liabilities of the firm.
Fund Flow Analysis- To know the movement of fund during the year.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Which of the following statement is not correct?

  1. Financial statements do adjust themselves for price level changes

  2. Only business transactions are within the ambit of financial records

  3. Financial statements have evidential value in the court of law

  4. Accounting principles have no universal acceptability
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financial statements are generally prepared on a historical cost basis and do not automatically adjust for price level changes (inflation). The other statements correctly describe the nature and limitations of accounting.

Multiple choice book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

Which of the following statement(s) is / are true regarding Net Benefit Cost Ratio (NBCR)?

  1. It does not take time value of money into consideration

  2. This criterion cannot be used when the investment outlay is spread over more than one period

  3. IF NBCR = 0.75 the project cannot be accepted

  4. All of the above

  5. Both (B) and (C) above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Net benefit cost ratio takes into consideration the time value of money.
Net benefit cost ratio  = NPV /
Investment = BCR-1
When NBCR>1 (BCR>1), the project is accepted. Therefore, a project with NBCR = 0.75 will be accepted. This criterion cannot be used when investment outlay is spread over more than one period.

Multiple choice book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

Returns outward book makes a record of__________.

  1. Goods returned to the supplier

  2. Goods returned to customer

  3. Goods returned to proprietor

  4. Goods returned to neighbour
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The credit note received from supplier shows the goods returned and the amounts involved. The purchase returns book also known as returns outward book and is used to record the debit notes. Goods returned to supplier denotes purchase return to supplier hence it is recorded in return outward account.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills advantages of bill of exchange

Which of the following would be considered a risk-free investment?

  1. Gold

  2. Equity in a house

  3. High-grade corporate bonds

  4. Treasury bills
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

T-bills are considered the safest possible investment and provide what is referred to as a "risk-free rate of return," based on the credit worthiness of the United States of America. This risk-free rate of return is used as somewhat of a benchmark for rates on municipal bonds, corporate bonds and bank interest.

Multiple choice book keeping and accountancy dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities meaning of dissolution of partnership firm

Is rent paid to a partner appropriation of profits ?

  1. It is appropriation of profit

  2. It is not appropriation of profit

  3. If partner's contribution as capital is maximum

  4. If partner is working partner.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Rent is paid for the use of asset of partner in business. Rent paid is an expense for business not as distribution of profit to partners. It is charged to profit and loss account not from profit and loss appropriation account. Rent paid to a partner is charged to profit not appropriation of profit. 

Multiple choice book keeping and accountancy dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities meaning of dissolution of partnership firm

In which of the following case the need for the valuation of goodwill in a firm may arise?
(I) Admission of new partner
(II) While changing profit sharing ratio
(III) Retirement of partner
(IV) Death of partner
Select the correct answer from the options given below-

  1. (I) & (III) only

  2. (I), (III) & (IV)

  3. (I), (II) & (III) only

  4. All (I) to (IV)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In all these cases one partner sacrifice and the other partner gain. Gaining partner must compensate the sacrificing partner by paying the proportionate amount of goodwill. Gaining partner should pay the sacrificing partner that share of goodwill which is equal to the share gained by him. Valuation is done to calculate that share.