602 + Mcqs in Financial Accounting Page 7 McqOptions

301.	ncrease in debtors causes ______________ in working capital.
A.	Increase
B.	Decrease
C.	No change
D.	None of the above
Answer» B. Decrease

Discussion

302.	Businessmen may intentionally not maintain proper accounts
A.	to evade taxation.
B.	to prevent themselves from destruction of books due to uncertainty.
C.	as they are ignorant of the legal entity assumption.
D.	as they are ignorant of the double entry accounting principles.
Answer» B. to prevent themselves from destruction of books due to uncertainty.

Discussion

303.	Under debtors system which account is prepared by head office to calculate profit or loss of each branch:
A.	capital account
B.	debtors account
C.	branch account
D.	branch adjustment account
Answer» D. branch adjustment account

Discussion

304.	Statements of assets & liabilities prepared under single entry system is called:
A.	Balance sheet
B.	Profit & loss statement
C.	Statement of affairs
D.	Income Statement
Answer» D. Income Statement

Discussion

305.	To convert the accounts prepared on cash system of accounting into mercantile system of accounting, which of these adjustments is not necessary
A.	Reconciliation of cash with bank
B.	Adjustment of prepaid expenses and income received in advance
C.	Adjustment of outstanding expenses and income statement
D.	Distinction between revenue and capital expenditure/income
Answer» B. Adjustment of prepaid expenses and income received in advance

Discussion

306.	Recent developments have made much of a company s inventory obsolete. This obsolete inventory should be
A.	Written down to zero or its scrap value
B.	Shown in the Balance Sheet at its replacement cost
C.	Shown in the Balance Sheet at cost, but classified as a non-current asset
D.	Carried in the accounting records at cost until it is sold
Answer» B. Shown in the Balance Sheet at its replacement cost

Discussion

307.	Changes in the rate of Preference dividend payable in future without any change in the amount of capital is known as ___
A.	reduction of share capital
B.	variation of shareholders rights
C.	alteration of share capital
D.	compromise/ arrangement
Answer» C. alteration of share capital

Discussion

308.	Shares issued by a company to its employees or directors in consideration of Intellectual Property Rights are called :
A.	Right Equity Shares
B.	Private Equity Shares
C.	Sweat Equity Shares
D.	Bonus Equity Shares
Answer» D. Bonus Equity Shares

Discussion

309.	Which accounting concept should be considered if the owner of a business takes goods from inventory for his own personal use?
A.	The prudence concept
B.	The capitalisation concept
C.	The money measurement concept
D.	none
Answer» E.

Discussion

310.	As per the Companies Act, 1956 which of these are allowed to create secret reserves in their books of account
A.	Banking Companies ;
B.	Insurance Companies ;
C.	Electricity Companies ;
D.	All the three
Answer» E.

Discussion

311.	Branch stock account is a practical means of controlling stock at
A.	Branch
B.	Head office
C.	Both a and b
D.	None of the above
Answer» B. Head office

Discussion

312.	An additional commission is paid by the company to the principal underwriters to encourage
A.	Firm Underwriter
B.	Partial Underwriter
C.	Sub Underwriter
D.	Sole Underwriter
Answer» D. Sole Underwriter

Discussion

313.	The unerwriting may be done by many underwriters in an agreed ratio,is known as
A.	Sub Underwriter
B.	Joint underwriter
C.	Partial Underwriter
D.	Firm Underwriter
Answer» C. Partial Underwriter

Discussion

314.	R 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
A.	Returns Inward Book
B.	Returns Outward Book
C.	Cash Book
D.	Journal Proper
Answer» C. Cash Book

Discussion

315.	Branch Account under Debtor System is
A.	Real Account
B.	Personal Account
C.	Nominal Account
D.	None of the above
Answer» D. None of the above

Discussion

316.	Under the stock and debtor system, Branch A/c is treated as
A.	Joint A/c
B.	Nominal A/c
C.	Personal A/c
D.	Real A/c
Answer» E.

Discussion

317.	In order to spread risk of under subscription, The principal underwriters may appoint
A.	Sub Underwriter
B.	Sole Underwriter
C.	Partial Underwriter
D.	Principal Underwriter
Answer» B. Sole Underwriter

Discussion

318.	Provision for unrealized profit with respect to stock when transfers are affected at transfer price is to be charged to
A.	dept trading account
B.	dept profit and loss account
C.	either a or b
D.	general profit and loss account
Answer» E.

Discussion

319.	The party responsible for the risk attached to the goods in consignment is
A.	Consignee
B.	Consignor
C.	Both
D.	Creditor
Answer» C. Both

Discussion

320.	If ABC Limited and DEF Limited are taken over by a new company AKSHAY Limited
A.	(a) it is called absorption
B.	(b) it is called Internal Reconstruction
C.	(c) it is called external reconstruction
D.	(d) It is called as Amalgamatiom
Answer» E.

Discussion

321.	Statement of Affairs is a statement of
A.	Statement of assets and liabilities
B.	Ledger account balances
C.	Cash and bank balances
D.	Statement of assets
Answer» B. Ledger account balances

Discussion

322.	The portion of the Authorized Capital which can be called-up only on the liquidation of the Company is called:
A.	Authorized Capital
B.	Reserve Capital
C.	Issued Capital
D.	Called up Capital
Answer» C. Issued Capital

Discussion

323.	. ..is an agreement between two insurance companies whereby one transfers a part of risk to other.
A.	Reinsurance
B.	Sub insurance
C.	Shared Policy
D.	None of these
Answer» B. Sub insurance

Discussion

324.	When Winding Up Takes Place, Shareholders Are Described As
A.	Member
B.	Creditor
C.	Debtor
D.	Contributor
Answer» E.

Discussion

325.	Credit purchase is determined by preparing
A.	Purchase Account
B.	Debtor s Account
C.	Creditor s Account
D.	Cash A/c
Answer» D. Cash A/c

Discussion

326.	When there is a change in the current partners association that results in ending the existingagreement and initiate a formation of a new agreement is known asSol:
A.	Revaluation of Partnership
B.	Reconstitution of Partnership
C.	Realisation of Partnership
D.	None of the Above
Answer» C. Realisation of Partnership

Discussion

327.	At least of the designated partners of every limited liability partnership shall be a resident in India.
A.	One
B.	Two
C.	Three
D.	Seven
Answer» B. Two

Discussion

328.	Small amount of entrance fee is considered as
A.	Assets
B.	revenue income
C.	capital income
D.	Liabilities
Answer» C. capital income

Discussion

329.	In absence of LLP agreement the mutual rights of partners and the relation to LLP will be determined as per schedule _of LLP Act 2008
A.	I
B.	II
C.	III
D.	IV
Answer» B. II

Discussion

330.	Which of the following equations properly represents a derivation of the fundamental accounting equation?
A.	Assets + liabilities = owner's equity.
B.	Assets = owner's equity.
C.	Cash = assets.
D.	Assets - liabilities = owner's equity.
Answer» E.

Discussion

331.	The portion of the capital which can be called-up only on the winding up of the Company is called
A.	Authorised Capital
B.	Called up Capital
C.	Uncalled Capital
D.	Reserve Capital
Answer» E.

Discussion

332.	. is a form of agreement between two parties in which one party agrees to make good for loss of another.
A.	Contract
B.	Insurance
C.	Banking
D.	Mutual fund
Answer» C. Banking

Discussion

333.	Under the average clause, the loss is suffered by both insurer and insured in the ratio ofrisk coveredSol:
A.	True
B.	False
C.	none
D.	all
Answer» B. False

Discussion

334.	A resource owned by the business with purpose of using it for generating future profit, is known as
A.	Capital
B.	Asset
C.	Liability
D.	Surplus
Answer» C. Liability

Discussion

335.	Entrance fee, unless otherwise stated, is treated as
A.	Revenue Receipts
B.	Capital Receipts
C.	Liability
D.	None of these
Answer» B. Capital Receipts

Discussion

336.	Redemption of preference share capital is shown in
A.	Sources of funds
B.	Application of funds
C.	Funds from operation
D.	All of the above
Answer» C. Funds from operation

Discussion

337.	The following statements apply to equity/preference shareholders. Which one of them applies only to preference shareholders?
A.	Shareholders risk the loss of investment
B.	Shareholders bear the risk of no dividends in the event of losses
C.	Shareholders usually have the right to vote
D.	Dividends are usually given at a set amount in every financial year.
Answer» E.

Discussion

338.	Interest on fixed deposit received by enterprise is shown in the Cash Flow Statement under
A.	Operating Activities
B.	Investing Activities
C.	Financing Activities
D.	All of the Above
Answer» C. Financing Activities

Discussion

339.	Interest on Debenture paid by enterprise is shown in the Cash Flow Statement under
A.	Operating Activities
B.	Investing Activities
C.	Financing Activities
D.	None of the Above
Answer» D. None of the Above

Discussion

340.	P Ltd. issued shares of Rs.100 each at Rs.95.The Underwriting Commission will be paid on
A.	100
B.	95
C.	195
D.	105
Answer» C. 195

Discussion

341.	_______ are investments which are held beyond the current period as to sale or disposal.
A.	Non-current Investments
B.	Current Investments
C.	Current Liabilities
D.	None of the above
Answer» B. Current Investments

Discussion

342.	Specific donation is: Sol:
A.	Capital receipt
B.	Revenue Receipt
C.	Assets
D.	Liabilities
Answer» B. Revenue Receipt

Discussion

343.	Cash Flow Statement is also known as:
A.	Statement of Changes in Financial Position on Cash basis.
B.	Statement accounting for variation in cash.
C.	Both (i) and (ii).
D.	None of the above.
Answer» D. None of the above.

Discussion

344.	Recoupment is always necessary in royalties Sol:
A.	True
B.	False
C.	none
D.	all
Answer» C. none

Discussion

345.	Branches may be classified into ________.
A.	Inland branches and foreign branches
B.	Account branches and proper branch
C.	Main branch and subordinate branch
D.	None of these
Answer» B. Account branches and proper branch

Discussion

346.	Computers can be used in accounting in different number of ways: Sol:
A.	Utility in batch processing
B.	Utility in Online/Interactive Processing
C.	Utility in Wage/Payroll System
D.	All of the above
Answer» E.

Discussion

347.	The public hospitals do not carry the activities with an intention of earning profits. Sol:
A.	True
B.	False
C.	none
D.	all
Answer» B. False

Discussion

348.	The deficiency shown by deficiency account will be equal to the deficiency revealed by
A.	Liquidator final statement of account
B.	Liquidator report
C.	Statement of affairs
D.	none
Answer» D. none

Discussion

349.	Branches may be classified into
A.	Account branches and proper branch
B.	Main branch and subordinate branch
C.	Inland branches and foreign branches
D.	None of the Above
Answer» D. None of the Above

Discussion

350.	Capital investments for the branches are made by
A.	State office
B.	Central office
C.	Head office
D.	None of these.
Answer» D. None of these.

Discussion

Explore topic-wise MCQs in Bachelor of Business Administration in Computer Applications (BBA [CA]).

ncrease in debtors causes ______________ in working capital.

Businessmen may intentionally not maintain proper accounts

Under debtors system which account is prepared by head office to calculate profit or loss of each branch:

Statements of assets & liabilities prepared under single entry system is called:

To convert the accounts prepared on cash system of accounting into mercantile system of accounting, which of these adjustments is not necessary

Recent developments have made much of a company s inventory obsolete. This obsolete inventory should be

Changes in the rate of Preference dividend payable in future without any change in the amount of capital is known as ___

Shares issued by a company to its employees or directors in consideration of Intellectual Property Rights are called :

Which accounting concept should be considered if the owner of a business takes goods from inventory for his own personal use?

As per the Companies Act, 1956 which of these are allowed to create secret reserves in their books of account

Branch stock account is a practical means of controlling stock at

An additional commission is paid by the company to the principal underwriters to encourage

The unerwriting may be done by many underwriters in an agreed ratio,is known as

R 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

Branch Account under Debtor System is

Under the stock and debtor system, Branch A/c is treated as

In order to spread risk of under subscription, The principal underwriters may appoint

Provision for unrealized profit with respect to stock when transfers are affected at transfer price is to be charged to

The party responsible for the risk attached to the goods in consignment is

If ABC Limited and DEF Limited are taken over by a new company AKSHAY Limited

Statement of Affairs is a statement of

The portion of the Authorized Capital which can be called-up only on the liquidation of the Company is called:

. ..is an agreement between two insurance companies whereby one transfers a part of risk to other.

When Winding Up Takes Place, Shareholders Are Described As

Credit purchase is determined by preparing

When there is a change in the current partners association that results in ending the existingagreement and initiate a formation of a new agreement is known asSol:

At least of the designated partners of every limited liability partnership shall be a resident in India.

Small amount of entrance fee is considered as

In absence of LLP agreement the mutual rights of partners and the relation to LLP will be determined as per schedule _of LLP Act 2008

Which of the following equations properly represents a derivation of the fundamental accounting equation?

The portion of the capital which can be called-up only on the winding up of the Company is called

. is a form of agreement between two parties in which one party agrees to make good for loss of another.

Under the average clause, the loss is suffered by both insurer and insured in the ratio ofrisk coveredSol:

A resource owned by the business with purpose of using it for generating future profit, is known as

Entrance fee, unless otherwise stated, is treated as

Redemption of preference share capital is shown in

The following statements apply to equity/preference shareholders. Which one of them applies only to preference shareholders?

Interest on fixed deposit received by enterprise is shown in the Cash Flow Statement under

Interest on Debenture paid by enterprise is shown in the Cash Flow Statement under

P Ltd. issued shares of Rs.100 each at Rs.95.The Underwriting Commission will be paid on

_______ are investments which are held beyond the current period as to sale or disposal.

Specific donation is: Sol:

Cash Flow Statement is also known as:

Recoupment is always necessary in royalties Sol:

Branches may be classified into ________.

Computers can be used in accounting in different number of ways: Sol:

The public hospitals do not carry the activities with an intention of earning profits. Sol:

The deficiency shown by deficiency account will be equal to the deficiency revealed by

Branches may be classified into

Capital investments for the branches are made by