FINAL ANSWER KEY
Paper: Book-keeping (Theory and Practical) (Paper III)
Date of
Examination
05-09-2019
Question1:-In Journal, the business transaction is recorded
A:-Once in a month
B:-Next day
C:-Once in a week
D:-Same day
Correct Answer:- Option-D
Question2:-The process of entering all transactions from the journal to ledger is called A:-Posting
B:-Entry
C:-Accounting
D:-None of the above
Correct Answer:- Option-A
Question3:-The following is a statement showing the financial status of the company at any given time A:-Trading account
B:-Profit and Loss statements
C:-Balance sheet
D:-Cash book
Correct Answer:- Option-C
Question4:-In which order does the journal list transactions?
A:-Alphabetical
B:-Chronological
C:-Increasing
D:-Decreasing
Correct Answer:- Option-B
Question5:-The ____________ reports activity over a period of time.
A:-Income statement
B:-Balance sheet
C:-Audit
D:-Cash flow statement
Correct Answer:- Option-A
Question6:-What is the main purpose of Bank Reconciliation?
A:-To locate cashier's mistake
B:-Reconciliation of the cash book and bank balances
C:-To find out bank balances
D:-To find out cash balances
Correct Answer:- Option-B
Question7:-Sales day book is best described as
A:-A list of customers account
B:-A list containing real accounts
C:-A list of credit sales
D:-None of the above
Correct Answer:- Option-C
Question8:-Which is the most important characteristic that all assets of a business have? A:-Long life of assets
B:-Value of assets
C:-Intangible nature of assets
D:-Future economic benefits
Correct Answer:- Option-D
Question9:-Long term capital loss can be set off from which of the following?
A:-Short term capital gain only
B:-Long term capital gain only
C:-Income from business or profession
D:-Income from salary
Correct Answer:- Option-B
Question10:-Cost of goods sold is reported on the
A:-Cash flow statement
B:-Profit and Loss statement
C:-Balance sheet
D:-Trading account
Correct Answer:- Option-D
Question11:-Net loss occurs when
A:-Expenses are greater than income
B:-Expenses are less than income
C:-Expenses = Income
D:-Liabilities are greater than income
Correct Answer:- Option-A
Question12:-The following is also known as External Internal Equity ratio
A:-Current ratio
B:-Acid test ratio
C:-Debt equity ratio
D:-Debt service coverage ratio
Correct Answer:- Option-C
Question13:-Balance sheet is prepared
A:-Daily
B:-Weekly
C:-Monthly
D:-Annually
Correct Answer:- Option-D
Question14:-A cash discount is best described as a reduction in the sum to be paid A:-If payment is made within a previously agreed period
B:-If payment is made either by cash or cheque
C:-If purchases are made for cash, not on credit
D:-If payment is made by cash, not cheque
Correct Answer:- Option-A
Question15:-Liabilities payable in more than a year and are not be liquidated from current assets called A:-Current liabilities
B:-Fixed liabilities
C:-Contingent liabilities
D:-All of the above
Correct Answer:- Option-B
Question16:-In the absence of any agreement partners are liable to receive interest on their loans @ A:-12%
B:-10%
C:-6%
D:-8%
Correct Answer:- Option-C
Question17:-Auditing refers to
A:-Reporting the financial information
B:-Examination of financial information
C:-Preparation of financial statements
D:-Maintaining the ledger accounts
Correct Answer:- Option-B
Question18:-Earnings are the result of the difference between
A:-Revenue and assets
B:-Revenue and liabilities
C:-Liabilities and expenses
D:-Revenue and expenses
Correct Answer:- Option-D
Question19:-The measure of how efficiently the assets resources are employed by the firm is called A:-Liquidity ratio
B:-Leverage ratios
C:-Activity ratios
D:-Profitability ratios
Correct Answer:- Option-C
Question20:-Unpresented cheques also refered as
A:-Outstanding cheques
B:-Uncollected cheques
C:-Bounced cheques
D:-Uncredited cheques
Correct Answer:- Option-A
Question21:-The sales income of a business during a given period is called
A:-Transactions
B:-Sales returns
C:-Turnover
D:-Purchase returns
Correct Answer:- Option-C
Question22:-The credit entry for net profit is on the credit side of
A:-The capital account
B:-The drawing account
C:-The trading account
D:-Profit and loss account
Correct Answer:- Option-A
Question23:-Which financial statement uses the expanded accounting equation?
A:-Income statement
B:-Cash flow statement
C:-Statement of stockholder's equity
D:-Balance sheet
Correct Answer:- Option-D
Question24:-An entry which is made on both sides of a cash book is called
A:-Cash entry
B:-Contra entry
C:-Payment entry
D:-Compound entry
Correct Answer:- Option-B
Question25:-The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as A:-Current assets
B:-Fixed assets
C:-Intangible assets
D:-Investments
Correct Answer:- Option-A
Question26:-Double entry implies that
A:-Recording entries in journal
B:-Recording entries in ledger account
C:-Recording two aspects of every transaction
D:-Recording every transaction in books
Correct Answer:- Option-C
Question27:-According to accounting equation assets are equal to
A:-Liabilities
B:-Liabilities and equities
C:-Equities
D:-None of these
Correct Answer:- Option-B
Question28:-Which of the following is a financial asset?
A:-Inventories
B:-Equipment
C:-Loan to an associate
D:-Accounts receivable
Correct Answer:- Option-D
Question29:-Which financial statement is used to show what the firm owns? A:-Income statement
B:-Balance sheet
C:-Statement of retained earnings
D:-Cash flow statement
Correct Answer:- Option-B
Question30:-Any written evidence in support of a business transaction is called A:-Journal
B:-Ledger
C:-Ledger posting
D:-Voucher
Correct Answer:- Option-D
Question31:-The debts, which are to be repaid within a short period (year or less) are known as A:-Current liabilities
B:-Fixed liabilities
C:-Contingent liabilities
D:-All of the above
Correct Answer:- Option-A
Question32:-What is the main purpose of financial accounting?
A:-Organize financial information
B:-Minimize company taxes
C:-Provide useful financial information to outsiders
D:-Keep track of company expenses
Correct Answer:- Option-C
Question33:-Accounting provides information on
A:-Cost and income for managers
B:-Company's tax liability for a particular year
C:-Financial conditions of an institution
D:-All of the above
Correct Answer:- Option-D
Question34:-The cost of Air-Conditioning of the Manager's office will be
A:-A capital expenditure
B:-A revenue expenditure
C:-A deferred revenue expenditure
D:-None of these
Correct Answer:- Option-A
Question35:-Liabilities are which of the following?
A:-Resources
B:-Obligations
C:-Future benefits
D:-Expenses
Correct Answer:- Option-B
Question36:-A minimum quantity of stock always held as precaution against out of stock situation is called A:-Zero stock
B:-Risk stock
C:-Base stock
D:-None of the above
Correct Answer:- Option-C
Question37:-Cash book records
A:-Cash payments and cash receipts
B:-Purchases and sales
C:-Cash payments
D:-Cash receipts
Correct Answer:- Option-A
Question38:-Petty cash fund is supposed to be replenished
A:-At the end of every quarter
B:-At the end of every month
C:-At the end of every accounting year
D:-At the end of every year
Correct Answer:- Option-C
Question39:-The characteristics of a budget
A:-It outlines projected activities
B:-Expressions are made in quantitative terms
C:-It is for a fixed period
D:-All of the above
Correct Answer:- Option-D
Question40:-Which of these best describes fixed assets?
A:-Which are bought to be used in the business
B:-Which are of long life and are not bought specifically for resale
C:-Which are expensive items bought for the business
D:-Which are items will not wear out quickly
Correct Answer:- Option-B
Question41:-The Four principal qualitative characteristics of useful financial statements are A:-Understandability, relevance, reliability, comparability
B:-Timelines, relevance, reliability, comparability
C:-Understandability, relevance, accuracy, comparability
D:-Understandability, relevance, reliability, simplicity
Correct Answer:- Option-D
Question42:-Given figures showing : Sales Rs. 8,200, Opening stock Rs. 1,300, Closing stock Rs. 900, Purchases Rs. 6,400, Carriage inwards Rs. 200, the cost of goods is
A:-Rs. 7,000
B:-Rs. 6,200
C:-Rs,. 6,800
D:-None of the above
Correct Answer:- Option-A
Question43:-Carriage inwards is charged to the trading account because
A:-It is not part of motor expenses
B:-Carriage outwards goes in the profit and loss account
C:-It is an expense connected with buying goods
D:-It should not go in the balance sheet
Correct Answer:- Option-C
Question44:-A loan can be described as a short-term loan if the period is
A:-Three years
B:-Less than one year
C:-Over one year
D:-More than two years
Correct Answer:- Option-B
Question45:-Capital of a business decreases if there is an increase in
A:-Drawings
B:-Income
C:-Gains
D:-Fresh capital
Correct Answer:- Option-A
Question46:-The left side of an account is known as ___________ and right side as __________.
A:-Credit, Debit
B:-Debit, Credit
C:-Liability, Asset
D:-None of the above
Correct Answer:- Option-B
Question47:-Which of the following accounting equation is correct?
A:-Cash + Other assets = Capital - Liabilities
B:-Capital + Liabilities = Assets + Income
C:-Assets - Liabilities = Capital
D:-Assets + Capital = Liabilities
Correct Answer:- Option-C
Question48:-Identify the correct sequence of accounting process
A:-Recording - Communicating - Identifying
B:-Communicating - Recording - Identifying
C:-Identifying - Communicating - Recording
D:-Identifying - Recording - Communicating
Correct Answer:- Option-D
Question49:-Given a purchases invoice showing 5 items of Rs. 80/- each, less trade discount of 25% and cash discount of 5%, if paid within the credit period, your cheque would be made out for
A:-Rs. 260
B:-Rs. 280
C:-Rs. 285
D:-Rs. 400
Correct Answer:- Option-C
Question50:-An alternative name for a sales journal is
A:-Sales day book
B:-Sales ledger
C:-Sales invoices
D:-Daily sales
Correct Answer:- Option-A
Question51:-If a Trial Balance totals do not agree, the difference must be entered in A:-Capital Account
B:-Nominal Account
C:-Profit and Loss Account
D:-Suspense account
Correct Answer:- Option-D
Question52:-Credit notes issued by us will be entered in our
A:-Sales account
B:-Returns inwards journal
C:-Return outwards journal
D:-Returns inwards account
Correct Answer:- Option-B
Question53:-If the market value of closing inventory is less than its cost price, inventory will be shown at A:-Market value
B:-Fair market value
C:-Both
D:-None
Correct Answer:- Option-A
Question54:-Financially, shareholders are rewarded by
A:-Interest
B:-Profits
C:-Dividends
D:-None of these
Correct Answer:- Option-C
Question55:-Which account is not a liability account?
A:-Accounts payable
B:-Accrued expenses
C:-Notes payable
D:-Cash
Correct Answer:- Option-D
Question56:-_____________ is also called as purchase ledger.
A:-Personal ledger
B:-Creditors ledger
C:-Debtors ledger
D:-Nominal ledger
Correct Answer:- Option-B
Question57:-Last activities list on the cash flow statement
A:-Financing activities
B:-Withdrawals
C:-Expenditures
D:-Outstanding liabilities
Correct Answer:- Option-A
Question58:-Debit the receiver and credit the giver is ____________ account.
A:-Real
B:-Personal
C:-Nominal
D:-All of the above
Correct Answer:- Option-B
Question59:-Unearned revenues are reported on the
A:-Income statement
B:-Profit and Loss statement
C:-Balance sheet
D:-Cash flow statement
Correct Answer:- Option-C
Question60:-The accounting cycle represents a series of steps that a business uses A:-To record and classify the transactions
B:-To summarize the transactions
C:-To communicate financial events
D:-For all of these
Correct Answer:- Option-D
Question61:-Which of these best describes a balance sheet?
A:-A statement of assets
B:-A listing of balances
C:-A record of closing entries
D:-An account proving the book balance
Correct Answer:- Option-B
Question62:-Which of the following is not a Real Account?
A:-Cash A/c
B:-Investments A/c
C:-Purchases A/c
D:-Outstanding rent A/c
Correct Answer:- Option-D
Question63:-The long term assets that have no physical existence but are rights that have value is known as A:-Current assets
B:-Fixed assets
C:-Intangible assets
D:-Investments
Correct Answer:- Option-C
Question64:-Cash deposit made by business appears on the bank statement as ___________ balance. A:-Credit
B:-Debit
C:-Expenses
D:-Liability
Correct Answer:- Option-A
Question65:-Sales expenditure budget is prepared by estimating the expenses of
A:-Advertisement
B:-Market analysis
C:-Salesman's salary
D:-All of the above
Correct Answer:- Option-D
Question66:-Liquid or Quick assets =
A:-Current assets - (Stock + Work in progress)
B:-Current assets + Stock + Work in progress
C:-(Current assets + Stock) + Work in progress
D:-(Current assets + Work in progress) - Stock
Correct Answer:- Option-A
Question67:-A higher inventory ratio indicates
A:-Better inventory management
B:-Quicker turnover
C:-Both (1) and (2)
D:-None of the above
Correct Answer:- Option-C
Question68:-Lower the Debt Equity ratio
A:-Lower the protection to creditors
B:-Higher the protection to creditors
C:-It does not affect the creditors
D:-None of the above
Correct Answer:- Option-B
Question69:-Patents, copyrights and Trademarks are
A:-Current assets
B:-Fixed assets
C:-Intangible assets
D:-Investments
Correct Answer:- Option-C
Question70:-What is the minimum number of parties in a consignment? A:-1
B:-2
C:-3
D:-5
Correct Answer:- Option-B
Question71:-Which of the following is not a current assets?
A:-Accounts receivable
B:-Inventory of finished products
C:-Inventory of raw materials
D:-Land
Correct Answer:- Option-D
Question72:-Asset accounts have what type of balance?
A:-Debit
B:-Credit
C:-Contra
D:-All of the above
Correct Answer:- Option-A
Question73:-Dead rent is also called
A:-Outstanding rent
B:-Minimum rent
C:-Prepaid rent
D:-Future rent
Correct Answer:- Option-B
Question74:-Operating activities are reported on the __________ before financing activities. A:-Income statement
B:-Balance sheet
C:-Statement of equity
D:-Cash flow statement
Correct Answer:- Option-D
Question75:-The account that records expenses, gains and losses is
A:-Personal account
B:-Real account
C:-Nominal account
D:-None of the above
Correct Answer:- Option-C
Question76:-Financial statement that lists only temporary accounts
A:-Income statement
B:-Profit and Loss statement
C:-Balance sheet
D:-Cash flow statement
Correct Answer:- Option-A
Question77:-The statement that shows the cause of change in the financial position of an organization is known as A:-Balance Sheet
B:-Funds flow statement
C:-Statement of financial position
D:-None of these
Correct Answer:- Option-C
Question78:-Capital A/c is a ____________ A/c.
A:-Personal
B:-Real
C:-Nominal
D:-None
Correct Answer:- Option-A
Question79:-The current liability includes
A:-Bills payable
B:-Outstanding expenses
C:-Bank overdraft
D:-All of the above
Correct Answer:- Option-D
Question80:-Auditing begins where _____________ ends.
A:-Selling
B:-Accounting
C:-Inventory valuation
D:-Purchases
Correct Answer:- Option-B
Question81:-In which cases accounting estimates are needed?
A:-Employees benefit scheme
B:-Impairment of losses
C:-Inventory obsolescence
D:-All of the above
Correct Answer:- Option-D
Question82:-An audit which is compulsory by the law ___________.
A:-Government audit
B:-Internal audit
C:-Statutory audit
D:-Cost audit
Correct Answer:- Option-C
Question83:-Place where extra financial information is attached to financial statements A:-Annextures
B:-Footnotes
C:-Statements
D:-None of the above
Correct Answer:- Option-B
Question84:-Current liabilities need to be paid
A:-Within one accounting cycle
B:-Beyond one accounting cycle
C:-Within 3 years
D:-Within 6 months
Correct Answer:- Option-A
Question85:-___________ is the evidence that a transaction took place.
A:-Journal
B:-Source document
C:-Ledger
D:-Cash Book
Correct Answer:- Option-B
Question86:-The total of purchase journal is transferred to the
A:-Debit side of the Purchase Account
B:-Debit side of the Purchase Date Book
C:-Credit side of the Purchase Account
D:-Credit side of the Purchase Book
Correct Answer:- Option-A
Question87:-When a petty cash book is kept, there will be
A:-No entries made at all in the general ledger for items paid by petty cash B:-The same number of entries in the general ledger
C:-Fewer entries made in the general ledger
D:-More entries made in the general ledger
Correct Answer:- Option-C
Question88:-A credit balance of Rs. 250 on the cash columns of the book would mean A:-The person have Rs. 250 cash in hand
B:-Somebody has stolen Rs. 250
C:-The person has spent Rs. 250 more than he received
D:-The accountant has made a mistake
Correct Answer:- Option-D
Question89:-The debit balance of Rs. 250 in a cash account shows that
A:-There was Rs. 250 cash in hand
B:-Rs. 250 was the total of cash paid out
C:-Cash has been over spend by Rs. 250
D:-Total cash received was less than Rs. 250
Correct Answer:- Option-A
Question90:-Manufacturing account is calculated
A:-The production costs paid in the year
B:-The production cost of goods completed in the period
C:-The gross profit of the goods sold
D:-The total cost of goods produced
Correct Answer:- Option-B
Question91:-When Mr. X makes out a cheque for Rs. 2,500 and sent it to Mr. Z, then Mr. X is known as A:-The payee
B:-The banker
C:-The drawer
D:-The creditor
Correct Answer:- Option-C
Question92:-Which account increases equity?
A:-Expenses
B:-Withdrawals
C:-Treasury stock
D:-Revenues
Correct Answer:- Option-D
Question93:-Operating profit is
A:-Profit after deducting normal operating expenses including depreciation
B:-Profit after deducting taxes
C:-Profit after deducting financial costs
D:-Equal to net profit
Correct Answer:- Option-A
Question94:-Depreciation is _____________.
A:-A credit to shareholders
B:-The increase in the value of an asset
C:-An appreciation to the company
D:-The decrease in the value of an asset
Correct Answer:- Option-D
Question95:-Which of the following should not be called sales?
A:-Goods sold for cash
B:-Office fixtures sold
C:-Goods sold on credit
D:-None of the above
Correct Answer:- Option-B
Question96:-Accountancy work is done throughout the accounting period although auditing work is done A:-From the second month of accounting period
B:-In the middle of accounting period
C:-After the end of accounting period
D:-After the end of one month
Correct Answer:- Option-C
Question97:-Current ratio =
A:-Current assets / Current liabilities
B:-Quick assets / Current liabilities
C:-Debt / Equity
D:-Current assets / Equity
Correct Answer:- Option-A
Question98:-Which of the following is correct?
A:-Profit reduce capital
B:-Profit increases capital
C:-Profit does not alter capital
D:-Capital can only come from profit
Correct Answer:- Option-B
Question99:-When the final accounts are prepared, the Bad Debts Accounts is closed and transferred to the A:-Trading Account
B:-Balance Sheet
C:-Profit and Loss Account
D:-Provision for doubtful debts account
Correct Answer:- Option-C
Question100:-Balance sheet as at 31 March 2018
In Rs.
Non-current assets 20,000 Inventories 5,000 Trade receivables 3,000 Investments 1,500
Cash and bank 500 Bank overdraft 1,650 Trade payables 6,000 Taxation 1,000 Dividend proposed 200 Loan 1,000 Ordinary shares 4,000 Share premium 4,650 Retained earnings 11,500
What is the Current Liabilities?
A:-Rs. 7,200
B:-Rs. 7,650
C:-Rs. 7,000
D:-Rs. 8,850
Correct Answer:- Option-D