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Tuesday, November 26, 2013

MCQ - Final Accounts


Tick the correct answer to each of the following statement given below:
1.       Unearned income is classified as Current liability.
2.       The balance of petty cash is an asset.
3.       Goodwill is an Intangible asset.
4.       Fixed assets are kept in the business for use over a long period for earing income.
5.       Closing stock is valued at cost of market price whichever is Lower.
6.       Medicine given to the office staff by a manufacturer of medicines will be debited to Salaries account.
7.       The claim admitted in respect of stock destroyed by fire will be credited to Trading Account and will go to the assets side of the Balance Sheet.
8.       Manufacturing account is prepared to ascertain the cost of goods manufactured.
9.       The profit and loss account shows operating efficiency/ net profit earned during a particular period.
10.   Balance sheet shows the financial position of the concern.
11.   Deferred expenses to the extent not written off is shown as an asset in the balance sheet.

State whether the following statement is True or False:
1.       Trading and profit and loss account is prepared for a particular period.  T
2.       Balance sheet is prepared on a particular date.  T
3.       Sales – cost of goods solde = Gross Profit.  T
4.       The provision for doubtful debts is debited to Profit and Loss Account.  T
5.       The provision for discount on creditors is generally not provided in the books of account keeping in view the principle of conservatism. F
6.       If closing stock is appeared in trial balance, it is credited to Trading account.  F
7.       The bad debts previously written off, if recovered subsequenlty are credited to debtor account.  F
8.       Income tax paid on behalf of the proprietor is debited to profit and loss account.  F
9.       Income tax and life insurance premium is treated as drawings.  T
10.   Prepaid rent appearing in the trial balance is taken only to profit and loss account.  F
11.   The expression depreciation at 5% and 5% p.a. coney the same meaning.  F
12.   Heavy advertising to launch a new product is a Deferred revenue expenditure.  T
13.   Unearned income is an asset.  F