Tag: accounting process

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Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Business is treated as a separate entity accounts for ______________.

  1. Limited Liability Partnership

  2. Partnership

  3. Company

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

Accounting is based on certain basic concepts. One of the concept is "Separate Entity Concept". This defines that, for all accounting purposes, the business is considered to be a separate entity distinct from its owners. The transactions of business are recorded in the books of the business and the position of owner in his business will be like other creditors. 

This concept applies to all the forms of businesses.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

A vacant position that arises because of the resignation of the director can only be filed in ____________.

  1. Annual general meeting

  2. Board meeting

  3. Board meeting but expired at the general meeting

  4. Both A and B
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under the Companies Act, a casual vacancy caused by the resignation of a director is filled by the Board of Directors in a board meeting, but the appointee holds office only until the next general meeting.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Insurance claim for loss-in-transit received by consignor is _________________.

  1. Credited to Bank Account

  2. Debited to Insurance Co.

  3. Credited to Abnormal Loss Account

  4. Debited to Consignment Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A loss by theft or losses by fire, flood, earthquake, war, accidents, in transit, etc. are abnormal losses. These losses are avoidable and not inherent in nature. These losses reduce the value of closing stock as well as profit. 

After finding out the value, credit the Consignment A/c and debit the Abnormal Loss A/c.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process
  1. The cost of stock as per physical verification as on 24th March amounted to Rs.2,00,000. Purchases as per Purchases Book after stock taking till 31st March amounted to Rs.2,00,000 and included the following:
    (i) Rs.10,000 for goods received till 23rd March.
    (ii) Rs.20,000 for goods received on 1st April. Sales as per Sales Book after stock taking, till 31st March amounted to Rs.2,00,000 and included the following:
    (I) Rs.10,000 for goods delivered till 23rd March. (II) Rs.20,000 for goods delivered on 1st April. Goods are sold by the trader at a profit of 25% on Cost. The value of stock as per books Is ____________.

  1. Rs.2,40,000

  2. Rs.2,38,000

  3. Rs.2,36,000

  4. Rs.2,34,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

The debit side of manufacturing Account __________________.

  1. is always equal to its credit side

  2. is always more than its credit side

  3. is always less than its credit side

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The manufacturing account is prepared to determine the cost of production. The debit side includes all production costs, while the credit side includes the cost of finished goods transferred to the trading account. Since there is usually work-in-progress inventory at the end, the debit side is typically greater than the credit side.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Under sales on return or approval basis, the ownership of goods is passed only ____________________.

  1. when the retailer gives his approval

  2. if the goods are not returned within specified period.

  3. Both (a) and (b)

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

Ownership passes when the customer accepts the goods, or when the specified time period for return expires without the goods being returned.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

The secretary of a company is generally appointed by ________________.

  1. Registrar of companies

  2. Central government

  3. Shareholders in AGM

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

 A company Secretary is appointed by the resolution of the board. A company secretary is entitled to become the director of the company with the prior permission of the board.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

The liability of auditor can be ____________.

  1. Only civil

  2. Only criminal

  3. Either civil or criminal

  4. Civil and/or criminal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An auditor can face civil liability for negligence and criminal liability for fraud or willful misstatement under various sections of the Companies Act.