Tag: book keeping and accountancy

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Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

When the opening and closing stocks are adjusted through purchases, the trial balance does not show any __________. 

  1. Opening stock

  2. Closing stock

  3. Purchases

  4. Stock
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The closing stock represents the cost of unsold goods lying in the stores at the end of the accounting period. The closing stock of the year becomes the opening stock of the next year and is reflected in the trial balance of the next year. Sometimes, the opening and closing stock are adjusted through purchases account. In this regard, the entry recorded is as follows: 

Closing Stock A/c Dr. 
          To Purchases A/c
This entry reduces the amount in the purchases account and is also known as adjusted purchases which is shown on the debit side of the trading and profit and loss account. Another important point is when the opening and closing stocks are adjusted through purchases, the trial balance does not show any opening stock. Instead, the closing stock appears in the trial balance and so also the adjusted purchases.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

The unadjusted and unrecorded items relating to a period are recorded in the journal by passing __________.

  1. transfer entry

  2. adjustment entry

  3. rectification entry

  4. opening entry
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The matching principle states expenses must be matched with the revenue generated during the period. The purpose of adjusting entries is to ensure that all revenue and expenses from the period are recorded. Many adjusting entries deal with balances from the balance sheet, typically assets and liabilities, which must be adjusted. In addition to ensuring that all revenue and expenses are recorded, we are also making sure that all asset and liability accounts have the proper balances. Adjusting entries are dated for the last day of the period.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

From the following details calculate Opening stock.
Purchases  Rs. 1,50,000
Manufacturing expenses =  Rs. 30,000
Selling and distribution expenses = Rs. 20,000
Administrative expenses = Rs. 10,000
Financial expenses = Rs. 5000
Sales Rs. 2,40,000
Closing stock  Rs. 30,000
Gross profit 25 % on sale 

  1. Rs. 65,000

  2. Rs. 30,000

  3. Rs. 85,000

  4. Rs. 95,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Calculation of Opening stock = (Sales + closing stock ) - (Purchase + manufacturing expense + Gross Profit*)

=( 240000 + 30000 ) - ( 150000 + 30000 + 60000)
= Rs 30000

Gross profit = 240000 * 25/100
                     = 60000

Multiple choice book keeping and accountancy basic accounting terms meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

India suffered from deficit balance both in trade and balance and not invisibles, hence took up a number of Steps to manage the problem. Which one is not appropriate for this?

  1. Export control

  2. Current Account Convertibility

  3. Liberalised Export Policy

  4. Unified Exchange Rate
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 Export control regulations are federal laws that prohibit the unlicensed export of certain commodities or information for reasons of national security or protections of trade.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Current assets are those assets which get converted into cash ___________ .

  1. within six months

  2. within one year

  3. between one and three years

  4. between three and five years
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Current assets are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. As a result, short-term assets are liquid meaning they can be readily converted into cash.

Hence, current assets which get converted into cash within one year.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Fresh capital introduction will increase _______________.

  1. Assets and Liabilities

  2. Assets and Equity

  3. Liabilities and equity and bank balance

  4. Capital and Liabilities
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When fresh capital is introduced into a business, the cash (an asset) increases and the owner's capital (equity) also increases to maintain the accounting equation: Assets = Liabilities + Equity.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Financial assets _________.

  1. directly contribute to the country's productive capacity

  2. indirectly to the country's productive capacity

  3. contribute to the country's productive capacity both directly and indirectly

  4. do not contribute to the country's productive capacity either directly or indirectly
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financial assets, such as stocks and bonds, represent claims on future income and facilitate the flow of funds to productive sectors, thereby directly contributing to the country's productive capacity.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Capital gain of Rs. 75 lakh arising from transfer of long term capital assets will be exempt from tax if such capital gain is invested in the bonds redeemable after three years, issued by NHAI u/s 54EC of the Act.

  1. True

  2. False

  3. Cannot be said with certainty

  4. Is decided by the Assessing Officer
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under Section 54EC of the Income Tax Act, capital gains from the transfer of long-term capital assets are exempt from tax if invested in specified bonds (such as NHAI or REC bonds) within the prescribed time limit, subject to the conditions of the Act.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

"For the financial year ended as on March 31, 20XX the figures extracted from the balance sheet of Xerox Limited as under: Opening Stock Rs 29, 000; Purchases Rs 2, 42, 000; Sales Rs 3, 20, 000; Gross Profit 25% of Sales. Stock Turnover Ratio will be".

  1. 8 times

  2. 6 times

  3. 9 times

  4. 10 times
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Gross Profit = 25% of 3,20,000 = 80,000. Cost of Goods Sold (COGS) = Sales - Gross Profit = 3,20,000 - 80,000 = 2,40,000. Average Stock = (Opening Stock + Closing Stock) / 2. Assuming Closing Stock is not provided, we use the opening stock as a proxy or check the calculation: COGS / Average Stock = 2,40,000 / 30,000 (approx) = 8.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

The liability of the shareholders of a public limited company is limited to the extent of ________________.

  1. Par value of the share

  2. Paid up value of the shares

  3. Market price of the shares

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

In a company limited by shares, the liability of each shareholder is restricted to the unpaid amount on the shares they hold, which is the paid-up value concept.