Test: Financial Statements Of Sole - 2 | 20 Questions MCQ Test Crash Course of Accountancy

QUESTION: 1

Which of the following account is affected from the Drawings of cash in sole- proprietorship business?

A.
Capital account
B.
Shareholder account
C.
Liability account
D.
Expense account

Solution:

QUESTION: 2

All direct expenses are ___ to Trading account and all indirect expenses are debited to Profit and Loss account

A.
Credited , Debited
B.
Debited, Credited
C.
Credited , Credited
D.
Debited, Debited

Solution:

QUESTION: 3

Creating Provision against fluctuation in the price of investment is an example of which accounting convention

A.
Convention of conservatism
B.
Convention of full disclosure
C.
Convention of materiality
D.
Convention of consistency

Solution:

QUESTION: 4

Types of account shown in the balance sheet are

A.
Real and Personal
B.
Nominal and real
C.
Nominal and personal
D.
None of these

Solution:

QUESTION: 5

Accrued income is

A.
Liability
B.
Revenue
C.
Asset
D.
Expense

Solution:

QUESTION: 6

Rent receivable (given in trial balance) is an item of:

A.
Balance Sheet
B.
Profit & Loss Account
C.
Trading Account
D.
Both Balance Sheet and Profit & Loss Account

Solution:

QUESTION: 7

Which of the following is another of EBIT (earning before interest and taxes)?

A.
Operating profit
B.
Gross Profit
C.
Net Profit
D.
None

Solution:

QUESTION: 8

Calculation of Operating profit

A.
Operating Profit = Gross Profit – (Office Admn. Expenses+wages exp.)
B.
Operating Profit = Gross Profit – (Office Admn. Expenses+selling and distribution exp.)
C.
Operating Profit = Gross Profit – (Factory Admn. Expenses+selling and distribution exp.)
D.
Operating Profit = Gross Profit – (Office Admn. Expenses+direct exp.)

Solution:

QUESTION: 9

_____ is the arrangement of various assets and liabilities in a particular order

A.
Grouping
B.
Balancing
C.
Marshalling
D.
All of these

Solution:

QUESTION: 10

Which of the following account is affected from the Drawings of cash in sole- proprietorship business?

A.
Capital account
B.
Shareholder account
C.
Liability account
D.
Expense account

Solution:

QUESTION: 11

Drawings account is a:

A.
Personal Account
B.
Company drawing account
C.
Nominal Account
D.
Real Account

Solution:

QUESTION: 12

According to Principle of Conservatism

A.
Provision is made for bad and doubtful debts
B.
Depreciation is charged on assets
C.
Recording is made of outstanding expenses
D.
All of the above

Solution:

QUESTION: 13

Revenue expenditure is intended to benefit _________.

A.
Past period
B.
Current period
C.
Future period
D.
None of these

Solution:

QUESTION: 14

Any expenditure incurred in order to reduce the operating expenses is ________.

A.
Deferred revenue expenditure
B.
Promotional expenditure
C.
Revenue expenditure
D.
Capital expenditure

Solution:

QUESTION: 15

Wages paid for erection of machinery are debited to __________.

A.
Deferred wages account
B.
Machinery account
C.
Profit and loss account
D.
Wages account

Solution:

QUESTION: 16

Preliminary expenses are

A.
Revenue receipt.
B.
Deferred revenue receipt
C.
Fictitious asset
D.
Deferred capital receipt.

Solution:

QUESTION: 17

Amount paid for acquiring goodwill is __________.

A.
Revenue expenditure
B.
Capital expenditure
C.
Deferred capital expenditure.
D.
Deferred revenue expenditure

Solution:

QUESTION: 18

The main purpose of this _______ accounting is to ascertain profit or loss during a specific period, to show financial position of the business.

A.
Human resource accounting.
B.
Management account
C.
Financial accounting
D.
Cost accounting

Solution:

Financial accounting aims at presenting 'true and fair' view of transactions, profit and loss for a period and Statement of financial position (Balance Sheet) on a given date. It aims at computing 'true and fair' view of the cost of production/services offered by the firm.

QUESTION: 19

Which of the following is false regarding capital expenditure

A.
Capital expenditure gives benefit over a short period
B.
Capital expenditure is recorded in balance sheet.
C.
When expenditure incurred for increasing the earning capacity of the business.
D.
When an amount is incurred in non-recurring in nature.

Solution:

QUESTION: 20

Which of the following are an example of Revenue Expenditure
(a) Preliminary expenses for floating a company
(b) Renewal expenses/fee of patent.
(c) Depreciation on fixed assets.
(d) Repair of machinery normal or due to negligence of operator
(e) Expenses for obtaining a license.
Options are as follows

A.
a,b,c,d,
B.
b,c,d
C.
c,d,e
D.
a,b,c,d,e,

Solution:

Test: Financial Statements Of Sole - 2

20 Questions MCQ Test Crash Course of Accountancy - Class 11 | Test: Financial Statements Of Sole - 2

Which of the following account is affected from the Drawings of cash in sole- proprietorship business?

All direct expenses are ___ to Trading account and all indirect expenses are debited to Profit and Loss account

Creating Provision against fluctuation in the price of investment is an example of which accounting convention

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