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B Com Exam  >  B Com Tests  >  Test: Vouching- 3 - B Com MCQ

Test: Vouching- 3 - B Com MCQ


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10 Questions MCQ Test - Test: Vouching- 3

Test: Vouching- 3 for B Com 2024 is part of B Com preparation. The Test: Vouching- 3 questions and answers have been prepared according to the B Com exam syllabus.The Test: Vouching- 3 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Vouching- 3 below.
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Test: Vouching- 3 - Question 1
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Which of the following types of accounts are transferred to the Trading and Profit and Loss Account?

Detailed Solution for Test: Vouching- 3 - Question 1
Nominal accounts, such as accrued incomes, are transferred to the Trading and Profit and Loss Account. Accrued incomes are incomes earned in the current year but not yet received. They are credited to the Profit and Loss Account to ensure accurate representation of the company's financial performance for the period.
Test: Vouching- 3 - Question 2
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When should audit fees for the current year's accounts be recognized as an outstanding liability?

Detailed Solution for Test: Vouching- 3 - Question 2
Audit fees for the current year's accounts should be recognized as an outstanding liability if the audit work starts in the current year. This is because the audit fee is associated with the work done during the current year and should be debited to the current year's Profit and Loss Account while also being shown as a liability in the Balance Sheet.
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Test: Vouching- 3 - Question 3
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What is the role of an auditor in relation to outstanding liabilities?

Detailed Solution for Test: Vouching- 3 - Question 3
An auditor's role in relation to outstanding liabilities involves verifying the payment of expenses that were due in the current year but have not been paid by the time the accounts were closed. The auditor ensures that these expenses are properly recognized as liabilities in the financial statements to present an accurate picture of the company's financial position.
Test: Vouching- 3 - Question 4
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Which type of expense is expected to provide financial benefits over multiple accounting periods?
Detailed Solution for Test: Vouching- 3 - Question 4
Deferred revenue expenditure refers to non-recurring expenses that provide financial benefits over multiple accounting periods. These expenses are spread out over the periods during which the benefits are likely to be realized. Examples include heavy expenditures on special advertising campaigns, research and development costs, and major repairs.
Test: Vouching- 3 - Question 5
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What is the purpose of maintaining a 'Memorandum Book' for outstanding assets and liabilities?
Detailed Solution for Test: Vouching- 3 - Question 5
A 'Memorandum Book' is maintained to keep track of outstanding assets and liabilities, which include unpaid expenses and accrued incomes. This helps in ensuring that all relevant transactions are appropriately adjusted in the financial statements, leading to accurate representation of the company's financial position and performance.
Test: Vouching- 3 - Question 6
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What are 'prepaid expenses' in accounting?
Detailed Solution for Test: Vouching- 3 - Question 6
Prepaid expenses are expenses that have been incurred and paid in the current year but the benefit of which will be enjoyed in the future years. Examples include paying an insurance premium for the upcoming year or advance payment of rent. A portion of these expenses is allocated to the future period in which the benefit will be realized.
Test: Vouching- 3 - Question 7
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Which of the following expenses pertains to the current year and should have been paid but remains unpaid?
Detailed Solution for Test: Vouching- 3 - Question 7
Outstanding expenses are expenses that pertain to the current year and should have been paid but remain unpaid by the end of the accounting period. The auditor's role includes identifying these outstanding expenses, verifying their accuracy, and ensuring they are treated as liabilities in the financial statements.
Test: Vouching- 3 - Question 8
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What should be done with the wages and salaries for the last month of the accounting year if they are paid in the next year?
Detailed Solution for Test: Vouching- 3 - Question 8
Wages and salaries for the last month of the accounting year that are paid in the next year should be included in the Balance Sheet as a liability. This ensures that the accurate financial position of the company is represented, as these expenses pertain to the current year but were not paid by the year-end.
Test: Vouching- 3 - Question 9
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Which of the following items would NOT be considered an outstanding liability?
Detailed Solution for Test: Vouching- 3 - Question 9
Unpaid audit fees for the next year's audit work would not be considered an outstanding liability. Audit fees are typically recognized as liabilities in the current year's financial statements if the audit work starts in the current year, as they pertain to the current year's activities.
Test: Vouching- 3 - Question 10
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Which type of expenditure is spread over multiple accounting periods based on the expected financial benefits?
Detailed Solution for Test: Vouching- 3 - Question 10
Deferred revenue expenditure is spread over multiple accounting periods based on the expected financial benefits. These are non-recurring expenses that provide benefits over an indeterminable length of time. Examples include research and development costs or significant repairs that will yield benefits in multiple years.
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