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MCQs 1: The compensation paid by the borrower of fund to lender, from the borrower point of the cost of borrowing fund is called?

Interest Rate Required rate of return Nominal interest rate All of the above
Answer Explanation

MCQs 2: An income statement in which each item expressed as percentage of Sale?

Balance sheet income statement common size income statement All of the Above
Answer Explanation

MCQs 3: Short term Assets expected to be converted into cash within 1 year or less than?

Current Assets Fixed Assets Current Assets& current liabilities All of the above
Answer Explanation

MCQs 4: _________is the cost of converting raw material into finished products?

Prime cost Explicit cost Job order cost Conversion cost
Answer Explanation

MCQs 5: Net sales equals, sales minus:

Return outwords Return inwards cost of goods sold carriage on sales
Answer Explanation

MCQs 6: LIFO stands for__________?

Lots in , Few out Link input, Format Output Last input, First Output Last in, First Out
Answer Explanation

MCQs 7: Property, Plant and Equipment are conventionally presented in the Balance Sheet at _________?

Replacement cost – Accumulated Depreciation Historical cost – Salvage Value Historical cost – Depreciation portion thereof Original cost adjusted for general price-level changes
Answer Explanation

MCQs 8: Outstanding salaries is shown as___________?

An Asset in the Balance Sheet A Liability By adjusting it in the P & L A/c Both B. and C. above
Answer Explanation

MCQs 9: Insurance prepaid is shown as:___________?

Current Asset Current Liability Fixed Asset Income
Answer Explanation

MCQs 10: Depreciation appearing in the Trial Balance should be?

Debited to P&L A/c Shown as liability in Balance Sheet Reduced from related asset in Balance Sheet Both A. and C. above
Answer Explanation

MCQs 11: A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case

P&L A/C is debited with 1,400 P&L A/C is debited with 1,200 200 is shown as current asset Both B. and C. above
Answer Explanation

MCQs 12: Bad debts recovered is:

Credited to P&L A/c Debited to P&L A/c Reduced from debtors in Balance Sheet Added to debtors in Balance Sheet
Answer Explanation

MCQs 13: The adjustment to be made for prepaid expenses is____________?

Add prepaid expenses to respective expenses and show it as an asset Deduct prepaid expenses from respective expenses and show it as an asset Add prepaid expenses to respective expenses and show it as a liability Deduct prepaid expenses from respective expenses and show it as a liability
Answer Explanation

MCQs 14: On scrutiny of a firm‘s books of accounts, it was observed that the following errors have occurred in the previous years but have not yet been rectified.
i. Depreciation for 2011-2012- 7,000 understated
ii. Accrued expenses as at March 31, 2013 – 10,000 understated
The impact of this on the reported net income for the year ending March 31, 2013 is

7,000 Overstated 10,000 Overstated 17,000 Understated 17,000 Overstated
Answer Explanation

MCQs 15: Which of the following entries is correct in respect of reserve for discounts on accounts payable?

Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c Debit Accounts Payable A/c and Credit P&L A/c Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c
Answer Explanation

MCQs 16: Sundry debtors as per Trial Balance is 43,000 which includes 2,200 due from ‗H in respect of goods sent to him on approval basis, the cost price of which is 1,800. Rectification would involve:

Adding 2,200 to closing stock Deducting 1,800 from closing stock and deducting 2,200 each from debtors and sales Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales Deducting 1,800 from debtors
Answer Explanation

MCQs 17: Goods in stock worth 800 are destroyed by fire and the Insurance Co. is accepted the claim for 600. Adjustment would involve

Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and Profit and Loss Account respectively Deduct the 800 from closing stock in the Trading Account Credit insurance company for 600 Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and credit of 800 to Trading Account
Answer Explanation

MCQs 18: Prepaid expenses are valued on the Balance Sheet at

Replacement cost Current cost Cost to acquire less accumulated amortization Cost less expired portion
Answer Explanation

MCQs 19: Which of the following relationships is/are false?

Net Profit = Gross Profit – Administration and Other expenses Net Profit = Gross Profit + Administration expenses and Other expenses Opening Stock + Purchases – Closing Stock = Cost of Sales Both B. and C. above
Answer Explanation

MCQs 20: Gross Profit is equal to_________?

Sales – Cost of goods sold Sales – Closing Stock + Purchases Opening Stock + Purchases – Closing Stock None of the above
Answer Explanation

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