1. A no. of notes are appended to the balance sheet by companies which include information such
as contingent liabilities, market value of investments etc. This is due to compliance of which of
the following accounting concepts:
a. Business entity concept
b. Money measurement concept
c. Realization concept
d. Accounting of full disclosure concept
Ans: (D)
2. The principal of conservatism in accounting concepts stands for:
a. Anticipate no profit and provide for all possible losses
b. Conserve all the financial resources
c. Use the resources of the organization very carefully
d. Do not overstate the assets or liabilities
Ans: (A)
3. A firm records the income and expenditure when it is actually received and incurred. The firm is
following which of the following accounting system:
a. Accrual system
b. Hybrid system
c. Mercantile system
d. A and c both
Ans: (C)
4. Complete the following accounting equation (assets Rs.110000-liabilities Rs.______ = capital
Rs.80000:
a. Rs.190000
b. Rs.110000
c. Rs.80000
d. Rs.30000
Ans: (D)
5. Which of the following are not properly matched in terms of classification of accounts:
a. Machinery- real account
b. Ramesh (buyer of goods from the firm on credit)- personal account
c. Bank account – real account
d. Salary paid- nominal account
Ans: (C)
6. The preparation of trial balance and final accounts with a view to ascertain the profit or loss
made during a particular period and the financial position of the business on a particular date is
called:
a. Recording of transactions
b. Classifying the transactions
c. Summarizing the transactions
d. All the above
Ans (C)
7. Which of the features of the journal and ledger given as under is not correct:
a. Journal is book of original entry
b. Journal is a book of analytical record
c. Ledger is a book of secondary record
d. Process of recording the transaction in ledger is called posting
Ans: (B)
8. Nominal accounts relate to (a) incomes (b) expenses (c) assets (d) liabilities:
a. A to d all
b. A and b only
c. B and c only
d. A and c only
Ans: (B)
9. The journal entries are posted in the ledger:
a. In order of their category
b. In order of their dates
c. In order of their importance
d. As per discretion of the firm
Ans: (B)
10. Which of the following accounts is called valuation account or contra account (a) provision for
depreciation account (b) provision for doubtful debts account (c) stock reserve account (d)
reserves and surpluses account:
a. A to d all
b. A, b and c only
c. A, c and d only
d. B, c and d only
Ans: (B)
11. A double columnar cash book has two columns on each side (which one is false):
a. One column is meant for cash and another for discount
b. The discount column on the debit side represents the discount allowed
c. The cash column on the credit side represents cash received
d. The discount column on the credit side means the discount allowed and cash column on the
debit side means cash received.
Ans: (D)
12. In a business firm, the chief cashier hands over some cash to the petty cashier who submits the
account of petty cash after a fixed time interval. This system is called (which is most
appropriate):
a. Petty cash system
b. Petty cash book system
c. Imprest system of petty cash book
d. Advance system of petty cash book
Ans: (C)
13. Which of the following matches:
a. Purchase book- both credit and cash purchases are recorded
b. Sales book- both credit and cash purchases are recorded
c. Purchase book- only cash purchases are recorded
d. Sales book- only credit purchases are recorded
Ans: (D)
14. When there is one debit and several credits equal the debit amount OR there is one credit and
several debits to match the amount of credit, this is called:
a. Simple journal entry
b. Multiple journal entry
c. Compound journal entry
d. Aggregated journal entry
Ans: (C)
15. (a) when goods are purchased, the ‘purchases account’ is used (b) when goods are sold, the
‘sales account’ is used (c) when goods are returned by the customers of the firm, the ‘returns
outward’ is used (d) when the goods are returned by the firm to its suppliers, the ‘purchases
returns’ is used. Which is correct:
a. A to d all
b. B, c and d
c. A, b and d
d. A, b and c
Ans: (C)