Tag: bases of accounting

Quizzes (4) Questions (115)

Questions Related to bases of accounting

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.

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

The correct sequence of following will be :
1. Policies           2. Objective
3. Programmes   4. Procedures.

  1. 1, 2, 3, 4

  2. 1, 2, 4, 3

  3. 2, 1, 4, 3

  4. 2, 1, 3, 4
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The logical management sequence starts with defining the Objective (2), followed by setting Policies (1) to achieve them, then creating Programmes (3) to implement those policies, and finally establishing Procedures (4) for execution.

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

In the comparative financial statement, comparison of financial data is done in the form of ___________ .

  1. Absolute data of each year in terms of Rupees of the same firm

  2. Increase or decrease in data over the years of the same firm

  3. Increase or decrease in data of different firms

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

Comparative financial statements analyze changes in financial data over time for the same firm or between different firms, allowing for both absolute and percentage comparisons.

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

Which of the following statements is 'True'?

  1. Building Account is a nominal account

  2. Outstanding rent account is a non-personal account

  3. Every debit has a corresponding credit

  4. Income is debited
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The fundamental principle of double-entry bookkeeping is that every debit must have a corresponding credit, ensuring the accounting equation remains balanced.