Tag: need for adjustments

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

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is ________________.

  1. Forwards.

  2. Futures.

  3. Options.

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

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is Options. Options are financial instruments that are derivatives based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell depending on the type of contract they hold the underlying asset.

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

More MCQs on Foreign Exchange Management 1. Which of the following is not an example of an international trade draft?

  1. Time draft.

  2. Sight draft.

  3. Both the first and second answers are correct

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

Time draft and Sight draft are both types of international trade drafts, as is Usance draft (which is essentially another term for time draft). The question asks what is NOT an example of a single draft type - option C says 'Both the first and second' which is not itself a draft type but a category combining multiple types.

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

Constant growth rate is 7.2% and an expected rate of return is 12.5% then expected dividend yield will be ___________.

  1. 5.30%

  2. 19.70%

  3. -5.30%

  4. 17.36%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The expected rate of return is the sum of the dividend yield and the growth rate. Therefore, Dividend Yield = Expected Rate of Return - Growth Rate = 12.5% - 7.2% = 5.30%.

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

Committee, launched the process of reforms of financial system in India __________________.

  1. Gadgil committee

  2. Nariman committee

  3. Narasimham committee

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

The Narasimham-II Committee was tasked with the progress review of the implementation of the banking reforms since 1992 with the aim of further strengthening the financial institutions of India. It focussed on issues like size of banks and capital adequacy ratio among other things.

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

After all closing entries have been posted, the balance of the P & L Account will be ________________.

  1. A debit if a net income has been earned

  2. A debit if a net loss has been incurred

  3. A credit if a net loss has been incurred

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

After closing entries, the Profit and Loss account balance is transferred to the Capital account. A net loss results in a debit balance in the P&L account before it is closed to Capital, and if the question implies the state before final transfer, a loss represents a debit balance.

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

Consider the following statements.
A credit purchase during the accounting year which was not recorded in the books of account but included in the closing stock is to be.
I. Added to the credit purchases account
II. Added to the creditors account
III. Subtracted from the closing stock
IV. Added to the opening stock
Which of the statements given is/are correct?

  1. III only

  2. I and II

  3. II and III

  4. II, III and IV
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Credit purchase during the accounting year which was not recorded in the books of account but included in the closing stock is to be added to the credit purchase A/c and Creditors A/c.

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

Financial capital is also referred to ______________.

  1. Money capital

  2. Current assets

  3. Fluid

  4. Long term debt
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financial capital is the money used to help pay for the acquisition of plants, equipment, and other items needed to build products or offer services. Hence, it can be referred to money capital. 

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

Outstanding salary is shown as _______________.

  1. An asset in the balance sheet

  2. A liability

  3. By adjusting it in the P & L A/c

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

Outstanding expense are those expenses which are due but not paid. These are expenses like salary for the month of March is not paid but the services are already taken.

To find out the correct profitability, all expenses pertaining to the financial year should be debited to profit & loss account. Hence out standing salary to be added in salary expenses in profit & loss account and shown as current liability in the balance sheet.

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

Outstanding Expenses is shown on the _______ side of the balance sheet.

  1. Assets

  2. Liabilities

  3. Both

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
The above entry opens a new account called Outstanding Expenses which is shown on the liabilities side of the balance sheet. The amount of outstanding expenses is added to the total of expenses under a particular head for the purpose of preparing trading and profit and loss account.
Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

________ represents the cost of unsold goods lying in the stores at the end of the accounting period.

  1. Closing stock

  2. Opening stock

  3. Purchases

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

Closing stock represents the cost of unsold goods lying in the stores at the end of accounting period.
The closing stock is calculated as:
Opening Stock + Purchases - Sales = Closing Stock.