Amity B.SC IT 1 Sem Solve Assignment For Introduction to Financial Accounting

Assignment c

OBJECTIVE QUESTIONS

In each of the following cases indicate the alternative which you consider to be correct:

Q1. Which of the following financial statements is prepared as of a particular date?

1.  Profit and loss account
2. Balance sheet
3. Cash flow statement
4. Income and expenditure statement
5. Profit and loss appropriation account.

Q2. Based on which of the following concepts, share capital account is shown on the liability side of balance sheet?

1. Business entity concept
2. Money measurement concept
3. Cost concept
4. Going concern concept
5. Conservatism concept.

Q3. Which of the following is not an accounting transaction? (a) Sale of goods for cash

1. Payment of salary of office staff
2. Agreement to sell
3. Purchase of office furniture
4. Repayment of bank loan.

Q 4. Which of the following is false?

1. Taking the favourable balance as per pass book as the starting point, the amount in respect of charges made by the bank will be added to the pass book balance
2. Taking the favourable balance as per pass book as the starting point, the amount in respect of dividends received directly will be deducted from the pass book balance
3. Bank charges recorded twice in cash book will be added to the overdraft as per cash book in the preparation of reconciliation statement
4. Cheque issued but not presented for payment will be added when favourable balance as per cash book is the starting point
5. The amount of the undercasting of the credit side of the bank column of the cash book will be deducted from the overdraft as per pass book.

Q5. From the books of Mr.Neelam, it was observed that cheques amounting to Rs.2,40,000 were deposited in the bank, out of which cheques worth Rs.20,000 were dishonored and cheques worth Rs.40,000 are still in the process of collection. The treatment of this while preparing Bank Reconciliation Statement is

1. Deduct Rs.60,000 from bank balance as per pass book
2. Add Rs.20,000 and deduct Rs.40,000 from overdraft balance as per cash book
3. Deduct Rs.60,000 from overdraft balance as per pass book
4. Add Rs.60,000 to overdraft balance as per pass book
5. Deduct Rs.40,000 and add Rs.20,000 from overdraft balance as per pass book.

Q6 . Which of the following is true?

1. Bank account is a personal account
2. Stock of stationery account is a nominal account
3. Returns inward account is a personal account
4. Outstanding rent account is a nominal account (e) Capital account is a real account.

Q7 . A sales day book is to record

1. all credit sales only
2. All cash sales only
3. all credit and cash sales
4. credit sales of goods and trade discount
5. all cash and credit sales and trade discount.

Q8. Which of the following is a liability of a firm?

1. Debit balance of discount column of cash book
2. Credit balance of bank pass book
3. Debit balance of bank column of cash book
4.  Credit balance of bank column of cash book. 

Q9. Which of the following accounts will invariably have a debit balance?

I. Accounts receivable.

II. Accounts payable.

III. Purchases account.

IV. Bank account.

1. Prepaid expenditure.

1. Only (I) and (III) above
2. Both (II) and (III) above
3. Both (I) and (III) above
4. All of the above

Q10. The following is not a book of original entry

1. Purchase book
2. Journal proper
3. Cash book
4. General ledger
5. sales book

Q11. The Accountant of a company is recording the transactions of the day in various Books of Original Entry. Which of the following transactions is recorded in the wrong book? (a) Goods purchased on credit - Purchase Book

1. Goods purchased on credit - Purchase Book
2. Goods sold on credit - Sales Book
3. Wages paid in cash - Cash Book
4. None of the above

Q12. The impact on assets, profit and liabilities of a firm, on account of salary paid will be

1. Assets              Profit               Total Liabilities (a)

No effect        Decreases               Decreases

1. Assets                         Profit               Total Liabilities (a)

Decreases                No effect                Decreases

1. Assets                                 Profit               Total Liabilities (a)

Decreases                       Decreases              Decreases

1. None of the above

Q13. Which of the following is true?

1. Discount columns in cash book are totaled and not balanced
2. A petty cash book in which a separate column is provided to record payment under each head is called impress system
3. The total of purchases book is posted periodically on the credit side of sundry creditors account
4. The total of sales book is posted periodically on the debit side of sundry debtors account
5. Petty cash book is used to record all cash transactions.

Q14. Total of sales day book at the end of the month indicates

1. The total sales for the month
2. The total credit sales for the month
3. Total cash sales of the month
4. Total amount due to suppliers
5. Total amount receivable from credit sales.

Q15. Which of the following is true?

1. Cash book may be defined as the record of transactions concerning cash receipts and payments
2. Discount account should be balanced in the cash book
3. The ledger is the book of original entry
4. Sales journal is used for recording cash sales
5. Purchase return book is used for recording the return of goods purchased from suppliers against cash.

Q16. Journal entry for receiving interest in cash from Mr. Prashant against the loan given to him

1. Interest on loan account Dr.

To Prashant account

1. Prashant account Dr.

To Interest account

1. Cash account Dr.

To Prashant account

1. None of the above

Q 17. Which of the following entries recorded in the books of the drawee of a bill is false?

1. When a bill is accepted, the account to be debited is drawer’s a/c
2. When a bill is discharged, the account to be debited is bills payable a/c
3. When a bill presented for payment by a bank is dishonored, the account to be debited is bills payable a/c
4. When noting charges of a dishonored bill is paid by the endorsee ,the account to be debited is noting charges a/c
5. At the time of retirement of a bill the account to be debited is the drawer’s a/c.

Q 18. Which of the following is true?

1. A bill sent for collection by bank when dishonored, the drawer will credit bank a/c
2. At the time of renewal of bill interest a/c is credited in the books of the drawee
3. Accommodation bills are drawn, accepted and endorsed for some consideration
4. None of the Above

Q19. Bills receivable account is a

1. Nominal account
2. Personal account
3. Intangible asset
4. None of the Above

Q20. Closing stock is generally valued at

1. Cost price
2. Replacement cost
3. Market price
4. None of the Above

Q21. The provision for discount on debtors is calculated on the amount of debtors

1. Before deducting the provision for doubtful debts
2. Left after deducting the provision for doubtful debts
3. Before deducting the actual bad debts
4. None of the Above

Q22. Consider the following information of Thumbs-up Company for the year 2006-2007:

The amount to be debited to profit and loss account to make the estimated provision is

1. Rs. 8,600
2. Rs.10,400
3. Rs.10,520
4. None of the Above

Q23. At the time of preparation of final accounts, bad debts recovered account will be transferred to

1. Debtor’s account
2. Profit & loss account
3. Profit & loss adjustment account
4. None of the Above

Q24. Which of the following is false about diminishing balance method of depreciation?

1. Higher amount of depreciation is charged when the machine is more efficient
2. It recognizes the risk of obsolescence by higher amount of depreciation in the early years
3. The total amount of depreciation and repairs is almost uniformally distributed over the useful life
4.  None of the Above

Q25. The following is not an example of fixed asset

1. Plant and machinery
2. Land and building
3. Patent
4. None of the Above

Q26. Under depletion method, depletion per unit is calculated as

1. Acquisition cost divided by average production units per annum
2. Acquisition cost divided by actual production units in the year
3. Acquisition cost minus residual value divided by average production units per annum
4. None of the Above

Q 27. Which one of the following is a capital expenditure?

1. Compensation paid to Directors on termination of their services
2. Expenditure for renewal of trade mark
3. Gratuity paid to employees
4. None of the Above

Q28. Entries passed for outstanding expenses, depreciation, interest on capital etc. are

1. Opening entries
2. Journal entries
3. Adjustment entries
4. None of the above

Q29. Which of following transactions does not change the total amount of liabilities in the balance sheet?

1. Purchase of office furniture on credit
2. Payment of bank loan
3. Issue of debentures
4. None of the above

Q30. Which of the following is false?

1. Capital plus liabilities will be equal to assets
2. The difference between assets and liabilities is bank borrowing
3. Capital account is a personal account
4. None of the above

Q31. The expenses and incomes pertaining to full trading period are taken to the Profit and Loss account of a business, irrespective of their actual payment or receipt. This is in recognition of

1. Time period concept
2. Business entity concept
3. Going concern concept
4. None of the above

Q32. Which of the following statements can be used to assess the liquidity of a company?

1. Balance sheet
2. Profit and loss account
3. Profit and loss appropriation account
4. None of the above

Q33. Which of the following state that “Anticipate no profit and provide for all possible losses”?

1. Convention of materiality
2. Convention of consistency
3. Convention of disclosure
4. None of the above

Q34. Which of the following statements is/are true?

 I. Drawings account is a nominal account.

II. Capital account is a real account.

III. Sales account is a nominal account.

IV. Outstanding salaries account is a nominal account.

1. Patents account is a personal account.

1. Only (I) above
2. Only (III) above
3. Both (II) and (IV) above
4. None of the above

Q35. RS Ltd., makes purchases on credit. If the purchases are not as per the specifications, the company returns them to the suppliers. The book, that is used to record such returns is

1. Returns inward book
2. Returns outward book
3. Cash book
4. None of the above

Q36. Which one of the following is not a reason for discrepancy in the balance as per cash book and bank pass book of a company?

1. Cheque issued to suppliers may not have been presented
2. Cheque deposited in the account may not have been realized
3. Bill discounted with bank is not due for payment
4. None of the above

Q37. The bank balance in the cash book of Mr.Avinash, a proprietor showed a credit balance of Rs.10,500 on March 31, 2008. On comparing it with his pass book he discovered the following discrepancies.

i. Cheque No. 51 for Rs.540 in favour of Mr.Raman has not yet been presented.