Question Answer Option 1 Answer Option 2 Answer Option 3

Which of the following is Cash Debtor Machinery

liability
When opening stock given in Trading account only Balance sheet only Owner's equity only
trial balance, then it will
effect?
Goodwill would be reported Current assets Long-term liabilities Intangible assets
in the ______________
section of a classified
balance sheet?

Identify the assets from the Cash and Cash Equivalent Creditors Notes Payable
following
Business is said to be in a Expenditure exceeds income Income exceeds expenditure Income exceeds liability
profit when
Depreciation when given in substracted from fixed asset added in Fixed asset and only recorded on P&L A/c
adjustment is and recorded at P&L A/c recorded on Debit side of Debit Side
___________________ Debit Side P&L A/c
Profit on sale of Machinery Debit Side of Trading A/c Credit Side of Trading A/c Debit Side of P&L A/c
is recorded at
Stockholder ownership is Common Stock Debt Long Term Loans
recorded in the ___ account.

What is the main purpose of Organize Financial Provide Useful, Financial Keep Track Of Company
financial accounting? Information Information To Outsiders Expenses
On credit side of Profit and Direct Expenses Direct Income Indirect Expenses
Loss Account we record:

Opening stock is? Debited in trading account Credited in trading account Credited in profit and loss
account
Current liability does not Sundry creditors Accured Expenses Unclaimed dividend
include
The following statement Trading A/c Profit & Loss Account Balance Sheet
showing the financial status
of the company at any given
time

Net Loss occurs when Expenses are greater than Expenses are less than Expenses=Income
Income income
__________ is withdrawal of Depreciation Drawings Capital
cash or goods by the owner
of the business for his
personal use

The trial balance is Is a formal financial Is used to prove that there Provides a listing of every
statement are no errors in the journal account in the chart of
or ledger accounts
Which of the following is the Manager of the Business CEO of the business Suppliers to the business
external user of Financial
Statements
The debts which are to be Current Liabilities Fixed liabilities Contingent liabilities
repaid within a short period
(a year or less) are referred
to as,

Capital decreases if there is Drawings Income Gain

increase in
The process of entering all Posting Transfering Entry
the transactions from
Journal to Ledger is called
Which one of the following Machinery to manufacture Stock of goods for resale Buildings to house the
assets could be described as goods for resale machinery
a current asset?

Interest is an example of __ Operating Non-Operating

income reported on the
income statement
Which financial statement Income Statement Balance Sheet Cash Flow Statement
displays the revenues and
expenses of a company for a
period of time?

The basic sequence in the Transaction, journal entry, Source document, Transaction, source
accounting process can best source document, ledger transaction, ledger account, document, journal entry, trial
be described as account, trial balance journal entry, trial balance balance, ledger account.

Double entry implies that Recording entries in journal Recording entries in Ledger Recording two aspects of
account every transaction
When there is an increase in Credit or right side of the Debit or left side of the Credit or left side of the
capital by an amount, it is account account account
registered on the
Which account is not a Accounts Payable Accrued Expenses Cash
liability account?
Carraige Outward is Trading Debit Side Trading Credit side P&L Debit side
recorded at
Income statement format Standard Detailed Expanded
that separates cost of goods
sold into categories?

Find out which is nominal Machinery Account Building Account Creditors

Account
Which of these is not Assets Revenues Liabilities
included as a separate item
in the basic accounting
equation?

Which of the most vital Long Life of assets Value of assets Intangible nature of assets
characteristics that all the
assets of business have?
Tangible assets used in the Fixed assets Revenues Expenses
business that are of a
relatively fixed or
permanent nature are
called?

Direct Expenses are entered Trading Account profit & Loss Account Balance sheet
in:
After a business transaction General Ledger General Journal Profit & Loss Account
has occurred, journal entries
are recorded in the

Credit Balance of Profit and Net Loss Gross Loss Net Profit
Loss Account indicates
Assets which have physical Tangible assets Fictitious assets Contingent assets
existence are called:
Which of the following Cash + other assets = Capital Capital + Liabilities = Assets + Assets - Liabilities = Capital
equation is correct - Liabilities Income
Which of the following is not Commission received interest on investment Dividend received
indirect incomes?
Debit Balance of Trading Net Loss Gross Loss Net Profit
Account indicates
Which of these best explains Are bought to be used in the Are expensive items bought Are items which will not wear
fixed assets? business for the business out quickly

The following comments For any given journal entry, It is customary to record The chart of accounts reveals
each relate to the recording debits must exceed credits. credits on the left and debits the amount to debit and
of journal entries. Which on the right. credit to the affected
statement is true? accounts.

Profit and loss account Salaries Drawings Rent received

would not include?
Carriage Outwards is an Direct Expense Indirect Expense Indirect Income
example of:
Rent and sales are forms Operating Non-Operating
of__ income reported on the
income statement
On debit side of trading Direct Expense Indirect Expense Indirect Income
Account we record:
Balance Sheet is prepared Daily Weekly Monthly
Which of the options is not Land Patents Goodwill
an intangible asset?
Interest on Capital is added in Capital Substracted from Capital Multiplied in Capital
Accounts are typically T Account Horizontal Vertical
displayed in ___ format
before the trial balances is
drafted.

Account which shows Gross Profit and Loss Account Balance Sheet Trial Balance
Profit or Gross Loss of the
business is called:
Wages is an example of? Capital expenses Indirect expenses Direct expenses
Which of the options is an Creditors Cash Building
example of business
liability?
Which of the following is Creditors Debentures Dividend Payable
recorded under long term
liabilities section of the
balance sheet?

Asset accounts have what Debit Credit Both Debit and Credit
type of balance?
Which option gives a review Income & Expenditure Balance Sheet Cash Flow Statement
report on the firm’s financial Account
status at a specified date?
Accumulated amortization is Single Account Double Account Contra Account
an example of a ___ that is
reported on the balance
sheet

Which of the following is the Manager of the Business Suppliers to the busines Creditors of the business
internal user of Financial
Statements
Net income equals: Total Revenues Minus Cost Total Revenues Minus Total Operating Revenues Minus
Of Goods Sold Expenses Operating Expenses

Outstanding wages given in added in wages and recorded Minus from Wages and Only recorded at Balance
adjustment at Balance Sheet Liability Side recorded at Balance Sheet Sheet Asset Side
Asset Side
As per the accounting No need to show as an Income Debit
double-entry system, an accounting record
account that receives the
benefit is

Financial statements are Estimates of facts Anticipated facts Recorded facts

____________ is the first Identifying an economic Preparing Journal Posting entries to Ledger
phase of accounting process event or transaction

Closing stock when given in Profit and Loss Account Trading Account and Balance Balance Sheet only
adjustment is recorded in: Sheet

Discount received is an Indirect income Direct Income Net Income

example of:
If assets is Rs.8000 and 2000 8000 14000
Capital is Rs.6000, Liabilities
will be
In accounting, an economic Cash Bank Statement Transaction
event is called as
The amount or goods taken Additional Capital Fresh Capital Drawings
by the proprietor for his
personal use is
Payment of Expenses will Increase Reduce Apportion
_____________ the assets
When a Liability is decreased Debit side or left side of the Credit side or right side of Debit side or right side of the
or reduced, it is registered account the account account
on the
Capital increases Expenses are greater than Drawings Interest on Capital
if____________ increases Income
Trading Account is prepared Net Profit or Loss of business Gross Profit or Loss of Both Net Profit or Loss of
to know: business business & Gross Profit or
Loss of business
The ____ summarizes the Journal Ledger Balancesheet
accounting equation in
report format.
Which of the following is not Owners Managers Lenders
an internal user of financial
statements?
What is the basic Accounting Capital + Liabilites= Assets Assets + Liabilities= Capital Capital + Assets = Liabilities
Equation
Which are indirect incomes Commission received interest on investment Dividend received
of the followings?
Net profit is computed in the Profit and loss account Balance sheet Trial balance

Which financial statement Income Statement Balance Sheet Cash Flow Statement
uses the expanded
accounting equation?
All of the following are Machinery Supplies Land
property, plant, and
equipment except?
Copyrights, Patents and Current assets Fixed assets Intangible assets
Trademarks are,
Once journal entries are General Journals Ledger Accounts Income Statements
recorded, they can be
posted to
The following is a statement Trading A/c Profit & Loss Account Balance Sheet
of revenues and expenses
for a specific period of time

A contra asset account has Debit Credit Contra

what type of balance?
The assets that can be easily Current assets Fixed assets Intangible assets
converted into cash within a
short period, i.e., 1 year or
less are known as

Which financial statement Income Statement Balance Sheet Cash Flow Statement
displays the revenues and
expenses of a company for a
period of time?

What is the main purpose of Organize Financial Provide Useful, Financial Keep Track Of Company
financial accounting? Information Information To Outsiders Expenses
Which of these is not Assets Revenues Liabilities
included as a separate item
in the basic accounting
equation?

Which financial statement Income Statement Balance Sheet Cash Flow Statement
uses the expanded
accounting equation?

Which account is not a Accounts Payable Accrued Expenses Cash

liability account?
Asset accounts have what Debit Credit
type of balance?
Which account increases Expenses Withdrawals Treasury Stock
equity?
A contra asset account has Debit Credit Contra
what type of balance?
The ____ summarizes the Journal Ledger Balancesheet
accounting equation in
report format.
Accounts are typically T Account Horizontal Vertical
displayed in ___
format before the trial
balances is drafted.

Stockholder ownership is Common Stock Debt Long Term Loans

recorded in the ___ account.

Accumulated amortization is Single Account Double Account Contra Account

an example of a ___ that is
reported on the balance
sheet

Interest is an example of __ Operating Non-Operating

income reported on the
income statement
Rent and sales are forms Operating Non-Operating
of__ income reported on the
income statement
Income statement format Standard Detailed Expanded
that separates cost of goods
sold into categories?

The following comments For any given journal entry, It is customary to record The chart of accounts reveals
each relate to the recording debits must exceed credits. credits on the left and debits the amount to debit and
of journal entries. Which on the right. credit to the affected
statement is true? accounts.

The trial balance is Is a formal financial Is used to prove that there Provides a listing of every
statement are no errors in the journal account in the chart of
or ledger accounts
After a business transaction General Ledger General Journal Profit & Loss Account
has occurred, journal entries
are recorded in the

Once journal entries are General Journals Ledger Accounts Income Statements
recorded, they can be posted
to
Which of the following is not Owners Managers Lenders
an internal user of financial
statements?
The amount or goods taken Additional Capital Fresh Capital Drawings
by the proprietor for his
personal use is
Financial statements are Estimates of facts Anticipated facts Recorded facts
Current liability does not Sundry creditors Accured Expenses Unclaimed dividend
include
The basic sequence in the Transaction, journal entry, Source document, Transaction, source
accounting process can best source document, ledger transaction, ledger account, document, journal entry, trial
be described as account, trial balance journal entry, trial balance balance, ledger account.

Net income equals: Total Revenues Minus Cost Total Revenues Minus Total Operating Revenues Minus
Of Goods Sold Expenses Operating Expenses
Which of the following items Land Machine Cash
would not fall under the
definition of an asset?
Retained earnings will Net Loss Net Income Dividend
change over time because of
several factors. Which of the
following factors would
explain an increase in
retained earnings?

Which of these items would Repayment of bank Loan Dividend to stock holders The purchase of land
be accounted for as an
current expense?
If a company has contingent Balance Sheet Director’s Report Foot note down the balance
liabilities, they appear in the sheet

Depreciation is a Cash operating expenditure Non cash operating Cash non-operating

expenditure expenditure
Salary is one of the Capital Revenue Direct
___________ expenses
Amount brought in by cash account capital account drawings account
proprietor should be credited
to
Amount of salary paid to Account of Suresh Salaries account Cash account
Suresh should be debited to

Which of the following would Accounts payable Accounts receivable Sales

not be included on a balance
sheet?
The full disclosure principle, All information related to an Information about each Enough information should
as adopted by the accounting entity's business and account balance appearing in be disclosed in the financial
profession, is best described operating objectives is the financial statements is to statements so a person
by which of the following? required to be disclosed in be included in the notes to wishingto invest in the stock
the financial statements. the financial statements. of the company can make a
profitable decision.

Which of the following is a Goodwill Sales Accounts Receivable

real (permanent) account?

Which of the following Provide information that is Provide information Provide information that is
statements is not an useful in investment and regarding policy of useful in assessing cash flow
objective of financial credit decisions. organisation prospective
reporting?

The following comments all The general ledger is a The general ledger is posted The trial balance provides
relate to the recording chronological record of from transactions recorded the primary source
process. Which of these transactions in the general journal. document for recording
statements is correct? transactions into the general
journal

Inventory accounts should be Current assets Investments Property, Plant, and

classified in which section of Equipment
a balance sheet?
Investment in Bonds should On Liability side of Balance On Assets side of Balance On both side of Balance
be disclosed on the balance sheet sheet sheet
sheet
Profit from sale of assets is Revenue Profit Capital Profit Revenue Loss
example for
Which expenses is a Capital Depreciation Wages Salary
Nature?
Which one of the following is Patents Trade Marks Copyright
not an example of Intangible
Assets?

A business has the following 1020000 1010000 1030000

items in it:
Land Rs.1,000,000
Machinery Rs.20,000
Cash Rs.10,000
Debt Rs.0
Owner’s equity ?
What is the valve of
owner’sequity?

A business has the following 600000 1400000 2000000

items in it:
Owners’ equity Rs.6,00, 000
Liabilities Rs.14,00,000.
What is the value of Assets?

A business has the following Rs.2,00, 000 Rs.7,00, 000 Rs.8,00, 000
items in it:
Land Rs.15,00,000
Machinery Rs.80,000
Cash Rs.20,000
Owners equity Rs.9,00,000
Loan Rs.5,00,000
Creditors?

A business has following 1000000 1550000 800000

items in it
Land ?
Vehicles Rs.600,000
Debtors Rs. 1,20,000
Cash Rs.30,000
Owners’Equity Rs.1,000,000
Loan 5,00,000
Creditors Rs.50,000
What is the value of the
land?
Which of the following Assets + liabilities = Owner Asset = Owner Equity Cash = Assets
equations properly Equity
represents a derivation of
the fundamental
accounting equation?

The Cash account on the Travel advances to Currency Money orders

balance sheet should not employees
include which of the
following items?

XYZ ltd.has provided the Rs.200 Rs.1900 Rs.1200

following information about
its balance sheet:
Cash Rs.100
Accounts Receivable Rs.500
Stock holder equity Rs.700
Accounts Payable Rs.200
Bank Loan Rs.1,000
Based on the information
provided, how much are XYZ
ltd.Total liabilities?
 Answer Option 4 Correct Answer
Creditor D

Both Trading account and A

Balance sheet

Long-term investments C

Bank Loan A

Assets exceed expenditure B

Only recorded in Asset side A

of Balance Sheet

Credit Side of P&L A/c D

Short Term Loans A

Minimize Company Taxes B

Indirect Income D

Debited in profit and loss A

account
Short term investment D

Trial Balance C

Liablities are greater than A

Income
Appreciation B

Provides a listing of the D

balance of each account in
active use.
Controllers of the busines C

Assets A

Fresh Capital A
 Accounting A

Land on which the buildings B

stand

Statement of Stockholder’s A
Equity

Transaction, source D
document, journal entry,
ledger account, trial balance

Recording every transaction C

in books
Debit or right side of the A
account

Notes Payable C

P&L Credit Side C

Multi-Step D

Rent Expenses account D

Stockholder’s Equity B

Future Economic benefits D

Liabilities A

Income Statement A

Balance Sheet B

Gross Profit C
 Intangible assets A

Assets + Liabilities = Capital C

Commission Paid D

Gross Profit B

Are of long life and are not D

purchased specifically for
resale
Journalization is the process D
of converting transactions
and events into debit/credit
format.

Carriage outwards B

Direct Income B

Direct Income A

Annually D
Franchise rights A

None of the above A

A

Trading Account D

Indirect Income C
Land A

Provision for Taxation B

Profit & Loss Account B

 C

Government agency A

Revenues Minus Expenses B

Plus Income Taxes

Only recorded at Balance A

Sheet Liability Side

Credit D

Future facts C
Making decisions for A
business

Trading Account only B

General Income A

6000 A

Exchange of money C

Personal Expenses C

Overstate B

Credit side or left side of the A

account

Revenues D

Financial Position of business B

Employees C

Liabilities - Capital = Assets A

 All of these D

Trading account A

Statement of Stockholder’s B
Equity

Buildings B

Investments C

Expense Reports B

Trial Balance B

Investments A

Statement of Stockholder’s A
Equity

Minimize Company Taxes B

Stockholder’s Equity B

Statement of Stockholder’s B
Equity

Notes Payable C

Revenues D

C
 A

Short Term Loans A

Multi-Step D

Journalization is the process D

of converting transactions
and events into debit/credit
format.

Provides a listing of the D

balance of each account in
active use.
Balance Sheet B

Expense Reports B

Employees C

Personal Expenses C

Future facts C
Short term investment D

Transaction, source D
document, journal entry,
ledger account, trial balance

Revenues Minus Expenses B

Plus Income Taxes
 Owners Equity D

Investment by shareholder B

Payment of current period D

rent

Chairman’s report A

Non cash non-operating B

expenditure
Non- cash B

creditors account B

Outstanding expenses B

Cash C

Disclosure of any financial D

facts significant enough to
influence the judgment of an
informed reader

Both Goodwill and Accounts D

Receivable

Provide information about B

assets and liabilities

Transposition is the transfer B

of information from the
general journal to the
general ledger

Intangible assets A
Current Liability side of B
Balance sheet

Capital Loss B

Stationary A

Land D

200000 C

2500000 C

Rs1, 100,000 A

1750000 C
Assets= Liabilities + Owner D
Equity

Deposits in transit A

Rs.1700 B