MCQs 1: During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which of the following is true?
The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013
The income was overstated during 2011-12 and closing inventory will be overstated during 2012-2013
The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013
The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013
MCQs 2: Which of the following errors is an error of omission?
Sale of ` 100 was recorded in the Purchases Journal
Wages paid to Mohan have been debited to his account
The total of the sales journal has not been posted to the Sales Account
Repairs to buildings have been debited to buildings account
MCQs 3: Which of the following statements is /are true?
Entering wrong amount in the subsidiary book affects the agreement of the Trial Balance
Undercasting or overcastting of a subsidiary book is an example or error of commission
Errors of principle do not affect the agreement of Trial Balance
Both B. and C. above
MCQs 4: Journal proper is meant for recording_____________?
Credit purchase of fixed assets
Return of goods
All such transactions for which no special journal has been kept by the business
None of these
MCQs 5: Closing stock in the Trial Balance implies that______________?
It is already adjusted in the opening stock
It is adjusted in the Purchase A/c
It is adjusted in the Cost of Sale A/c
It is adjusted in the Profit &Loss A/c
MCQs 6: The adjustment to be made for income received in advance is:
Add income received in advance to respective income and show it as a liability
Deduct income received in advance from respective income and show it as a liability
Add income received in advance to respective income and show it as asset
Deduct income received in advance from respective income and show it as an asset in the Balance Sheet
MCQs 7: Which of the following statements is correct about Trial Balance?
The Trial Balance is prepared after preparing the Profit and Loss Account
The Trial Balance shows only balances of Assets and Liabilities
The Trial Balance shows only nominal account balances
The Trial Balance has no statutory importance from the point of view of law
MCQs 8: While finalizing the current year‘s accounts, the company realized that an error was made in the calculation of closing stock of the previous year. In the previous year, closing stock was valued more by 50,000. As a result
Previous year‘s profit is overstated and current year‘s profit is also overstated
Previous year‘s profit is understated and current year‘s profit is overstated
Previous year‘s profit is overstated and current year‘s profit is understated
There will be no impact on the profit of either the previous year or the current year
MCQs 9: If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as 1,570, then
Net Profit will decrease by 3,140
Gross Profit will increase by 3,320
Gross Profit will decrease by 3,500
Gross Profit will decrease by 3,320
MCQs 10: For the past 3 years, DK Ltd. has failed to accrue unpaid wages earned by workers during the last week of the year. The amounts omitted, which were considered material, were as follows:
March 31,2010 – ` 56,000
March 31, 2011 – ` 51,000
March 31, 2012 – ` 64,000
The entry on March 31, 2012 to rectify these omissions would include a
Credit to wage expense for ` 64,000
Debit to wage expense for ` 64,000
Debit to wage expense for ` 51,000
Debit to wage expense for ` 13,000
MCQs 11: Purchase journal is kept to record_____________?
MCQs 12: The beginnings inventory of the current year is overstated by 5,000 and closing inventory is overstated by 12,000. These errors will cause the net income for the current year by
MCQs 13: The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The Company has not passed any rectification entries and the error is not detected through the bank reconciliation. The impact of this error is
The Trial Balance will not agree
The balance of creditors is understated
The purchases are understated
The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book
MCQs 14: Which of the following errors affects the agreement of a Trial Balance?
Mistake in balancing an account
Omitting to record a transaction entirely in the subsidiary books
Recording of a wrong entry in the subsidiary books
Posting an entry on the correct side but in the wrong account
MCQs 15: Which of the following should not be treated as revenue expenditure?
Interest on loans and debentures
Annual fire insurance premiums on Plant and Equipment
Sales tax paid in connection with the purchase of office equipment
Small expenditures on long- lived assets, such as ` 20 for a paper weight
MCQs 16: Capital expenditure is an expenditure which
Benefits the current accounting period
Will benefit the next accounting period
Results in the acquisition of a permanent asset
Results in the acquisition of a current asset
MCQs 17: Which of the following is not a deferred revenue expenditure?
Expenses in connection with issue of equity shares
Preoperative expenses
Heavy advertising expenses to introduce a new product
Legal expenses incurred in defending a suit for breach of contract to supply goods
MCQs 18: Any donation received for a specific purpose is a_________?
MCQs 19: Which of the following is an item of capital expenditure?
Research and development costs during the year
Interest on borrowed fund utilized for acquisition of Office Furniture
Installation charges paid in conjunction with the purchase of Office Equipment
Monthly rent of a machinery used in the business
MCQs 20: The balance of which of the following accounts do not disappear, once they are debited/credited to Trading Account?
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