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2201.

An investment company has been valuing its inventory of land at lower of market price or cost. It now wanted to value its inventory at the current market price which is higher than the cost. Which accounting concept will violated?

Answer»

SOLUTION :PRUDENCE CONCEPT.
Discussion
2202.

An increase in which of the following account will be recorded on the debit side ?

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Building Account
CAPITAL Account
Bills Payable Account
Rent RECEIVED Account

SOLUTION :Building Account
Discussion
2203.

An increase in one asset is accompanied by

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DECREASE in ANOTHER asset.
INCREASE in a liability.
Increase in CAPITAL.
All of these.

Solution : All of these.
Discussion
2204.

An expension of accounting equation is shown as

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PROFIT and LOSS Account
Trading Account
Manufacturing Account
BALANCE SHEET

Solution :Balance Sheet
Discussion
2205.

An enterprise prepares its accounts under the accrual basis . Salaries amounting to Rs.10,000 for themonth of March , 2019 were not paid . The owner did not want to account it in the books of account on the ground that the amount was not paid. The enterprise closes its books of account on 31 st March every year . Is he correct?

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SOLUTION :No, the owner is not correct because under the Accrual Concept , expense should be accounted at the time when it is incurred and not when it is paid . Salaries for MARCH 2019 have become DUE on 31st March , 2019 and therefore , should be accounted in the books of account for the year ENDED 31STMARCH , 2019.
Discussion
2206.

An employee of the enterprise suffers an injury at work and the enterprise decides to pay him ₹50,000 as compensation. Should the enterprises pass an entry even though it has not paid it ?

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YES, because of Accural CONCEPT
No,because it is not paid.
No, because the EMPLOYEE has not accepted
None of these.

Solution :Yes, because of Accural Concept
Discussion
2207.

An asset has been purchased for the firm. However, the amount was debited to Purchases Account. It is an error of _______

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SOLUTION :PRINCIPLE.
Discussion
2208.

An Asset Account shows a _________ balance.

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credit
debit
debit or credit
None of these.

Answer :B
Discussion
2209.

An Asset Account shows a

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CREDIT BALANCE
DEBIT balance
Debit or Credit balance
None of these .

SOLUTION :debit balance
Discussion
2210.

An amount of Rs 5,000received fromRam is credited to Shyam. It is an error of

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Omission.
COMMISSION.
Compensation.
Principle.

SOLUTION :Commission.
Discussion
2211.

An accountant of a large sized firm records all the transactions in a jornal instead of maintaining subsidiary books .His view on this are that it will result in better control and also large team of acountants will not be required whether his decision is correct?

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Solution :No ,his DECISION is not correct because of the following reasons:
(i) It ignores the CONCEPT of division of WORK and SPECIALISATION
Discussion
2212.

An accountant has debited the purchases account by the amount of funitrue purchase for office use. Which error has been committed by the accountatn?

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SOLUTION :ERROROF PRINCIPLE.
Discussion
2213.

An accountant always charges depriciation on fixed assets @ 20% p.a .Which principal is followed by the accountant?

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SOLUTION :CONSISTENCY ASSUMPTION
Discussion
2214.

An account is not opened in the name of the proprietor in the books of firm. Why?

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SOLUTION :An account is not OPENED in the NAME of the PROPRIETOR, he is represented by Capital Account.
Discussion
2215.

Amrit prepared his Trial Balance on 31st March, 2019, which did not match. What step should he take to proceed further?

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Solution :He should open Suspense ACCOUNT and transfer the DIFFERENCE in the Trial Balance on the DEBIT side of the Suspense Account (if the CREDIT side of the Trial Balance exceeds the debit side) or on the credit side of the Suspense Account (if the debit side of the Trial Balance exceeds the credit side).
Discussion
2216.

Amount withdrawn by proprietor for personal use will ... Cash and Capital.

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Increase.
DECREASE.
Not Change.
None of these.

Solution :Decrease.
Discussion
2217.

Amount received or receivable against sale of goods is

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REVENUE RECEIPT
CAPITAL receipt
SOMETIMES revenue receipt and sometimes capital receipt
None of these

Solution :revenue receipt
Discussion
2218.

Amount of debts _______ from the debtors are termed as bad debts.

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SOLUTION :IRRECOVERABLE
Discussion
2219.

Amount of sundry debtors in Trial Balance is Rs 7,00,000. Write offf Rs 5,000 as bad debts Journal entries.

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Solution :
NOTES
1. Bad Debts account is tranferred to Profit and Loss Account because balance of Provision for Doubtful debts does not exist. Provision now CREATED is meeting EXPECTED bad debts in the next year.
2. Provision is MADE on Rs 6,95,000 (i.e., Rs7.00.000-Rs5,000, bad debts written off). Thus Provision for Doutful debts `=10%` of `Rs 6,95,000=Rs 69,500`.
Discussion
2220.

Amount paid or payable against purchase of goods is

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REVENUE EXPENDITURE
capital expenditure
Both (a) and (B)
NONE of these

Solution :revenue expenditure
Discussion
2221.

Amit sold goods for Rs 20,000 to Sumit on credit on Jan 01,2017. Amit drew a bill of exchange upon Sumit for the same amount for three months. Sumit accepted the bill and returned it to Amit. Sumit met this acceptance on maturity. Record the necessary journal entries under the following circumstances: (i) Amit retained the bill till the date of its maturity and collected directly (ii) Amit discounted the bill @ 12% p.a from his bank (iii) Amit endrsed the bill to this creditor Ankit (v) Amit retained the bill and on March 31,2017 Amit sent the bill for collection to its bank. On April 05,2017 bank advice was received.

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SOLUTION :Books of AMIT JOURNAL
(i) When the bill was RETAINED till its MATURITY.


Discussion
2222.

Amount invested by the owner in business is termed as ________

Answer»


SOLUTION :CAPITAL
Discussion
2223.

Ammount at which an asset appears in the books of account is ______

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SOLUTION :BOOK VALUE
Discussion
2224.

Amithas incurred an expense of ₹5,000 towards repairs. However, the amountis yet to be paid. How will it beshown in theaccountaing equition ?

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Solution :It is an OUTSTANDING expense. Itwill beshownin THEACCOUNTINGEQUATION as deductionform capitalandas an Outstanding Expense on theLiabilitie SIDE .
Discussion
2225.

Amithas incurred an expense of ₹5,000 towards repairs. However, the amountis yet to be paid. How will it beshown in theaccountaing equition ?

Answer»

SOLUTION :It is an OUTSTANDING EXPENSE. Itwill beshownin theaccountingequation as deductionform capitalandas an Outstanding Expense on theLiabilitie SIDE .
Discussion
2226.

Also, plot the computed amount of depreciation on a graph.

Answer»

Solution :DEPRECIATION for 3 YEAR (2016-17) = `Rs.92500-9250=Rs. 83050`
`"" =Rs. 83050xx(10)/(100)=Rs. 8305`
Discussion
2227.

Alok's Trial Balance shows Opening stock Rs. 20,000, it will be debited to the Profit & Loss Account.

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SOLUTION : FALSE
Discussion
2228.

All items or facts whether material or immaterial are recorded in accounting.

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ANSWER :FALSE
Discussion
2229.

All accountingerrors affect the agreement of Trial Balance.

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SOLUTION : FALSE
Discussion
2230.

Ajay , a dealer in furniture , received advance against sales of tables and chairs . In your opinion how shouldthis advance be treated and why ?

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SOLUTION :The ADVANCE received should be TREATED as a LIABILITY because Ajay has not YET made the sales .
Discussion
2231.

AIS is the _________ department of an organisation.

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SOLUTION :KEY
Discussion
2232.

AIS has relationship with all the departments within the ogranisation.

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SOLUTION : TRUE
Discussion
2233.

Agreement of trial balance is affected by:

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One SIDED errors only.
TWO sided errors only.
Both (a) and (b)
NONE of the above.

Solution :(c )
Discussion
2234.

AIS and MIS mean the same as far as computers are concerned.

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SOLUTION : FALSE
Discussion
2235.

Adjustments given are recorded once in Trading and Profit and Loss Account and again in Balance Sheet. It is so because of

Answer»

Matching PRINCIPLE
DUAL Aspect Principle.
ACCRUAL Concept
MATERIALITY Principle

Solution :Dual Aspect Principle.
Discussion
2236.

Adjustment is made for accured income/income received in advance under______ basis of accounting.

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SOLUTION :ACCRUAL
Discussion
2237.

Adjustment Entries/Non-cash Entries are recorded in

Answer»

PAYMENT Voucher
Contra Voucher
Journal Voucher
Purchase Voucher

Answer :B
Discussion
2238.

Adjustment entries are passed at the end of the accounting period.

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SOLUTION : TRUE
Discussion
2239.

Adjusted purchases Rs. 6,63,600 , sales Rs. 7,44,000, Closing Stock Rs. 50,400, Freight & Cartages Inward Rs. 3,600, Wages Rs. 2,400, Freight & Cartage outward Rs. 1,800, Gross Profit for the Year is

Answer»

RS. 76,200
Rs. 74,400
Rs. 1,24,800
None of these.

ANSWER :B
Discussion
2240.

Aditya a retailer, has not maintained proper books of account but it has been possible to obtain the following details: {:(,,"Last Year (Rs.)","This Year (Rs.)"),("Trade Creditors","......................................","6,270","5,890"),("Loan from Naresh","......................................","5,000","5,000"),("Stock","......................................","12,350","11,980"),("Cash in Hand","......................................","570","650"),("Shop Fltting","......................................","7,250","7,800"),("Trade Debtors","......................................","5,280","4,560"),("Bank Balance","......................................","3,990","4,130"):} Calculate the net profit for this year and draft the Statement of Affairs at the end of the year after noting that: ltbr. (a) Shop Fittings are to be depreciated by Rs. 780. (b)

Answer»


Answer :NET Profit - RS. 3,960; Total of STATEMENT of AFFAIRS - Rs. 28,070.
Discussion
2241.

Accural basis of accounting gives a ture or fair view of the results of operations of businessand financial position of the business.

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SOLUTION : TRUE
Discussion
2242.

Accural concept is based on :

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MATCHING CONCEPT
Dual ASPECT Concept
COST Concept
Going concern Concept

Answer :A
Discussion
2243.

Accrued incomes and income due but not received are two different terms.Do you agree?

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SOLUTION :No
Discussion
2244.

Accrued Income will increase Assets and Capital.

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SOLUTION : TRUE
Discussion
2245.

Accrued Income is added to the income because of

Answer»

Revenue RECOGNITION CONCEPT .
ACCRUAL Concept
Accounting Period Concept
Prudence Concept

SOLUTION :Accrual Concept
Discussion
2246.

Accrued Income, if given outside the Trial Balance is shown in

Answer»

TRADING ACCOUNT, as ADDITION to the INCOME.
Profit and loss Account, as deduction to the income.
Profit and Loss account, as addition to the income and in the Balance sheet, as an asset.
Balance sheet as an asset.

SOLUTION :Profit and Loss account, as addition to the income and in the Balance sheet, as an asset.
Discussion
2247.

Accrued Income, if given in the Trial Balance is shown in

Answer»

TRADING account, as ADDITION to the income.
Profit and loss account, as addition to the income.
Profit and loss account , as addition to the income, and in the Balance SHEET, as as asset.
Balance sheet as an asset.

SOLUTION :Balance sheet as an asset.
Discussion
2248.

Accrual Basis of Accounting recognises

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OUTSTANDING and PREPAID Expenses
Accrued Incomes and Incomes RECEIVED in ADVANCE
Both (a) and (b)
None of the above.

Solution :Both (a) and (b)
Discussion
2249.

Accrual Basis of Accounting

Answer»

does not give a TRUE and fair VIEW of profit and FINANCIAL position.
gives a true and fair view of profit and financial position
may or may not give a true and fair view of profit and financial position.
NONE of the above.

Solution :gives a true and fair view of profit and financial position
Discussion
2250.

Accouting records buysiness transactions and events which are of finanical nature. Is this a limitation of accounting?

Answer»

Solution :Yes , it is a limitation of ACCOUNTING because there are some events which impact BUSINESS but are not recorded because they are not of FINANCIAL nature.
Discussion