What is the purpose of a Balance Sheet in accounting?

To show the revenue and expenses of a business.

To summarize the assets and liabilities of a business.

To calculate the net profit of a business.

To record daily transactions of a business.

What is the difference between grouping and marshalling of assets and liabilities in a Balance Sheet?

Grouping refers to arranging items in order of liquidity, while marshalling refers to putting similar items together.

Grouping refers to putting similar items together, while marshalling refers to arranging items in order of liquidity.

Grouping and marshalling are the same concepts and can be used interchangeably.

Grouping refers to listing assets, while marshalling refers to listing liabilities.

How are assets typically arranged in a Balance Sheet in the order of liquidity?

The most liquid assets are shown first, and the least liquid assets are shown last.

The least liquid assets are shown first, and the most liquid assets are shown last.

Assets are arranged randomly with no consideration for liquidity.

There is no specific order for arranging assets in terms of liquidity.

What is the order of permanence in a Balance Sheet?

It refers to arranging assets and liabilities in the order of their permanence.

It is the same as the order of liquidity.

It is the same as the order of performance.

It does not have any relevance in accounting.

What is the purpose of creating a provision for bad debts in accounting?

To overstate the profits of a business.

To account for debts that are certain to be collected.

To estimate and account for potential bad debts that may not be collected in the future.

To reduce the total assets of a business.

How are bad debts typically treated in the accounting books?

Recorded as revenue in the Income Statement.

Deducted from total liabilities in the Balance Sheet.

Recorded as an asset in the Balance Sheet.

Deducted from accounts receivable in the Balance Sheet.

What is the purpose of creating a provision for discount on debtors in accounting?

To encourage debtors to pay promptly.

To reduce the total liabilities of a business.

To increase the total assets of a business.

To record discounts given to debtors.

How are closing stock and opening stock related in the accounting equation?

Closing stock is added to opening stock to calculate the cost of goods sold.

Opening stock is subtracted from closing stock to calculate the cost of goods sold.

Opening stock is shown in the Income Statement, while closing stock is shown in the Balance Sheet.

Opening stock and closing stock are not related in the accounting equation.

What happens to an asset's value when depreciation is recorded in accounting?

The asset's value remains the same.

The asset's value becomes fixed.

Computerised Accounting System - 2 Free MCQ Practice Test with Solutions

	Finance and Economics 245 videos\|193 docs\|105 tests

	Finance and Economics 245 videos\|193 docs\|105 tests

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