I B.COM [ ] SEMESTER - II CORE:FINANCIAL ACCOUNTING - 202A Multiple Choice Questions.

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1 1 of 22 1/23/ :04 AM Dr.G.R.Damodaran College of Science (Autonomous, affiliated to the Bharathiar University, recognized by the UGC)Re-accredited at the 'A' Grade Level by the NAAC and ISO 9001:2008 Certified CRISL rated 'A' (TN) for MBA and MIB Programmes 1. Depreciation is a process of. A. valuation. B. allocation. C. reduction. D. appreciation. I B.COM [ ] SEMESTER - II CORE:FINANCIAL ACCOUNTING - 202A Multiple Choice Questions. 2. The main objective of providing depreciation is. A. to calculate true profit. B. to calculate financial position. C. to reduce tax burden. D. to reduce profit. 3. Depreciation arises because of. A. fall in the market value of an asset. B. physical wear and tear. C. fall in the value of money. D. rise in the value of money. 4. Under the straight line method of charging depreciation, depreciation. A. increases every year. B. decreases every year. C. is constant. D. fluctuate every year. 5. Under the diminishing balance method depreciation is calculated on. A. original value. B. written down value. C. scrap value. D. market value. 6. The amount of depreciation charged on machinery will be debited to. A. machinery account.

2 2 of 22 1/23/ :04 AM B. depreciation account. C. cash account. D. bank account. 7. Examples of non-trading concerns are A. Commercial banks B. Civil hospital C. Joint stock company D. Private educational institutions 8. The accounts of non-trading concerns are generally maintained according to A. Mercantile accounting system B. Cash accounting system C. Double entry book keeping system D. Single entry system 9. Depreciation is provided on. A. current asset. B. fixed assets. C. fictitious assets. D. investment. 10. The permanent, continuing and gradual shrinkage in the book value of a fixed asset is called. A. depreciation. B. appreciation. C. reduction. D. computation. 11. Depreciation is charged on the. A. market value. B. Depreciable value. C. purchase value. D. sale value. 12. Depreciation is charged on. A. continuous basis. B. temporary basis. C. daily basis. D. monthly basis. 13. Loss of usefulness occasioned by improved production methods is known as. A. physical deterioration. B. obsolescence.

3 3 of 22 1/23/ :04 AM C. disuse. D. inadequacy. 14. Mines, quarries, oilfields and forest are example of. A. fixed assets. B. current assets. C. wasting assets. D. intangible assets. 15. Depreciation applies to. A. current assets. B. wasting assets. C. intangible assets. D. fixed assets. 16. The main source of income for non-trading concern is A. Subscription B. Sales C. Dividend on investment D. entrance fee 17. The control of non-trading concern rest in the hand of A. Directors B. Managing agents C. Governing body D. Promoters 18. Estimated sale value of the asset at the end of its economic life is known as. A. purchase value. B. market value. C. written down value. D. residual value. 19. Provision for depreciation account appears on the. A. Asset side. B. Liability side. C. P & L account debit side. D. P & L account credit side. 20. If the asset is sold, the provision for depreciation relating to the asset sold is transferred to. A. asset account. B. liability account. C. P & L account. D. trading account.

4 4 of 22 1/23/ :04 AM 21. The asset account appears in the books at original cost when a. A. P & L account is maintained. B. balance sheet is maintained. C. provision for depreciation account is maintained. D. provision for depreciation account is not maintained. 22. The value of asset can be reduced to zero under this method. A. straight line method. B. written down value method. C. annuity method. D. depreciation fund method. 23. The balance in the asset account will not be reduced to zero under this method. A. straight line method. B. written down value method. C. annuity method. D. depreciation fund method. 24. Income tax authorities recognize this method. A. straight line method. B. written down value method. C. annuity method. D. depreciation fund method. 25. Under which method of depreciation, the earlier year of the life of the asset, profits are more. A. straight line method. B. written down value method. C. annuity method. D. depreciation fund method. 26. If debit side of receipt and payment account exceeds credit, it represents A. Cash at bank B. Bank overdraft C. Deficit balance D. Surplus balance 27. Diminishing balance method is also called. A. written down value method. B. annuity method. C. depreciation fund method. D. Fixed installment method.

5 5 of 22 1/23/ :04 AM 28. Deficit balance can be shown in balance sheet as A. Liability B. Assets C. Owner's equity D. None of above 29. If debit side of income and expenditure account is greater it is termed as A. Excess of income over expenditure B. Net income C. Surplus balance D. Deficit balance 30. Under annuity method the amount of depreciation is found out from. A. log tables. B. sinking fund tables. C. annuity tables. D. present value tables. 31. Depreciation fund is also called. A. reserve fund. B. compensation fund. C. workers fund. D. sinking fund. 32. Under depreciation fund method, the amount of depreciation is calculated with reference to. A. log tables B. sinking fund tables C. annuity tables D. present value tables 33. Under depreciation fund method depreciation is charged to. A. profit and loss account. B. trading account. C. balance sheet. D. p & l appropriation account. 34. Reciept and payment account includes A. Revenue items B. Capital items C. Both capital and revenue items D. None of above 35. The receipts and payments account of a non-profit organization is a

6 6 of 22 1/23/ :04 AM A. Nominal account B. Real account C. Income statement account D. Financial statement 36. The difference between the book value at the beginning and at the end (revaluation amount) is. A. depreciation. B. appreciation. C. reduction. D. computation. 37. An advance receipt of subscription from a member of the non-profit organization is considered as an A. Expense B. Liability C. Equity D. Asset 38. Income and expenditure account is based on A. Cash accounting B. Accrual accounting C. Government accounting D. Management accounting 39. Expenses which can be directly identified with or incurred for particular department are called. A. direct expenses.. B. indirect expenses. C. monthly expenses. D. weekly expenses. 40. Expenses which cannot be identified with a particular department are called. A. direct expenses. B. indirect expenses. C. monthly expenses. D. weekly expenses. 41. Selling expenses should be divided among the different department on the basis of. A. light points. B. H.P of machine. C. sales ratio. D. floor area.

7 7 of 22 1/23/ :04 AM 42. Rent and rates should be divided among the different departments on the basis of. A. light points. B. H.P of machine. C. sales ratio. D. floor area. 43. Fire insurance and repairs on assets should be divided among the different departments on the basis of. A. light points. B. H.P of machine. C. value of each assets. D. floor area. 44. Repairs to buildings, maintenance of premises should be divided among the different departments on the basis of. A. light points. B. H.P of machine. C. sales ratio. D. floor area. 45. Lighting expenses should be divided among the different departments on the basis of. A. light points. B. H.P of machine. C. sales ratio. D. floor area. 46. Carriage inward expenses should be divided among the different departments on the basis of. A. light points. B. purchase value. C. sales ratio. D. floor area. 47. Power expenses should be divided among the different departments on the basis of. A. light points. B. H.P of machine. C. sales ratio. D. floor area. 48. Workmen's amenities and welfare expenses should be divided among the different departments on the basis of. A. number of worker in each department. B. number of machines in each department. C. wages of each department. D. floor area occupied by each department.

8 8 of 22 1/23/ :04 AM 49. ESI, PF payable by employer should be divided among the different departments on the basis of. A. number of worker in each department. B. number of machines in each department. C. wages of each department. D. floor area occupied by each department. 50. Factory manger's salary should be divided among the different departments on the basis of. A. time devoted to each department. B. time spent in each department. C. time assigned to each department. D. time wasted in each department. 51. Indirect expenses is also called. A. prime cost. B. common expenses. C. direct expenses. D. management expenses. 52. under branch account, debtors system cash sales is shown in the. A. debit B. credit C. asset D. none 53. Expenses which cannot be apportioned to department must be shown in the. A. balance sheet. B. trading account. C. P & L account. D. P & L Appropriation account. 54. When goods are transferred from one department to other department, they are called. A. inter-departmental transfers. B. outer-departmental transfers. C. not a transfer. D. regular transfer. 55. When goods are transferred from one department to other, the department transferring the goods should be. A. debited. B. credited. C. added.

9 9 of 22 1/23/ :04 AM D. subtracted. 56. When goods are transferred from one department to other, the department transferring the goods should be credited and department receiving the goods should be. A. debited. B. credited. C. added. D. subtracted. 57. In departmental accounts expenses like director fees, interest is transferred to. A. balance sheet. B. trading account. C. general P & L account. D. P & L Appropriation account. 58. The departmental accounting enables a business firm to maximize. A. profit. B. losses. C. cash. D. assets. 59. Branch which does not maintain its own set of books is. A. dependent branch. B. independent branch. C. foreign branch. D. local branch. 60. The business policies and the administration of a branch are wholly controlled by the head office the type of branch is. A. independent branch. B. dependent branch. C. local branch. D. foreign branch. 61. A branch set up merely for booking orders which are executed by head office is. A. dependent branch. B. independent branch. C. foreign branch. D. local branch. 62. Branches not keeping full system of accounting are. A. independent branch. B. dependent branch. C. local branch.

10 10 of 22 1/23/ :04 AM D. foreign branch. 63. All branch expenses such as rent, salary, are paid by the head office in case of. A. independent branch. B. local branch. C. local branch. D. dependent branch. 64. Dependent branch make. A. only cash sales. B. only credit sales. C. cash and credit sales. D. installment sales. 65. Under stock and debtors system the head office opens. A. branch adjustment account. B. branch debtors account. C. branch creditors account. D. branch cash account. 66. Which of the following is to be recorded in an income and expenditure account? A. Purchase of a fixed asset B. Capital expenditure incurred on a fixed asset C. Profit on the sale of a fixed asset D. Sale of a fixed asset 67. Under branch accounts debtors system, the depreciation of an asset is. A. show in debtors account. B. shown in debit side of branch account. C. not shown in branch account. D. shown in credit side of branch account. 68. Under branch accounts debtors system, opening balance of assets are recorded in. A. credit side. B. debit side. C. first credit and debit side. D. first debit and credit side. 69. Under branch accounts debtors system, closing balance of assets are recorded in. A. credit side. B. debit side. C. first credit and debit side. D. first debit and credit side.

11 11 of 22 1/23/ :04 AM 70. Under branch accounts debtors system, opening balance of liabilities are recorded in. A. first credit and debit side. B. first debit and credit side. C. credit side. D. debit side. 71. Under branch accounts debtors system, closing balance of liabilities are recorded in. A. first credit and debit side. B. first debit and credit side. C. credit side. D. debit side. 72. Under branch accounts debtors system, goods sent to branch account is recorded in. A. debit side. B. credit side. C. asset side. D. liabilities side. 73. Under branch accounts debtors system, loading on goods sent to branch adjusted in. A. debit side. B. credit side. C. asset side. D. liabilities side. 74. Under branch accounts debtors system, bad debts, discount allowed to debtors is. A. shown in debit side. B. shown in credit side. C. shown in asset side. D. not shown. 75. Under branch accounts debtors system, credit sales is. A. shown in debit side. B. shown in credit side. C. shown in asset side. D. not shown. 76. The difference between goods sent by head office and received by the branch is known as. A. goods in transit. B. goods in godown. C. goods in production. D. goods in warehouse.

12 12 of 22 1/23/ :04 AM 77. Under stock and debtors system of branch account, branch adjustment account is opened when goods sent to branch is at. A. cost price. B. invoice price. C. market price. D. normal price. 78. Under stock and debtors system of branch account, the account prepared to record all the transactions relating to branch debtors is recorded in. A. branch expenses account. B. branch adjustment account. C. branch debtors account. D. branch creditors account. 79. In pure single entry which account is recorded? A. Personal. B. Real. C. Nominal. D. Asset. 80. All personal, real and nominal accounts are opened in. A. single entry system. B. double entry system. C. accrual system. D. mercantile system. 81. Only personal account and cash account are opened in. A. single entry system. B. double entry system. C. accrual system. D. mercantile system. 82. Trial balance can be prepared in. A. single entry system. B. double entry system. C. accrual system. D. mercantile system. 83. Honorarium is a kind of remuneration paid to a person who is not the employee of a non-profit organization. Which of the following statements is true about the honorarium payment? A. Its a revenue expenditure B. Its a Capital expenditure C. It is not recorded in the books of accounts D. None of the above

13 13 of 22 1/23/ :04 AM 84. Which of the following is the accounting equation for a non-profit organization? A. Asset = Capital + Liabilities B. Capital + Liabilities = Assets C. Accumulated fund + Liabilities = Assets D. Liabilities = Asset + Accumulated fund 85. Balance sheet cannot be prepared. A. in single entry system. B. in double entry system. C. with the help of cash book. D. with the help of bank account. 86. In single entry system, net worth method is also called. A. double entry system. B. mercantile system. C. statement of affairs method. D. accrual system. 87. Difference between net worth at the beginning of the year and at the end of the year represents. A. capital balance. B. cash balance. C. pass book balance. D. profit or loss. 88. Opening capital can be found by preparing. A. cash book. B. bank account. C. statement of affairs. D. statement of bank pass book. 89. A statement of affairs is just like a. A. balance sheet. B. profit and loss account. C. cash account. D. trading account. 90. In statement of affairs assets are shown on the. A. right hand side. B. left hand side. C. left hand side top. D. left hand side bottom.

14 14 of 22 1/23/ :04 AM 91. In statement of affairs liabilities are shown on the. A. right hand side. B. left hand side. C. right hand side top. D. right hand side bottom. 92. Under single entry system, closing capital can be found by preparing a statement of affairs. A. at the end of the year. B. at the beginning of the year. C. at the end of every month. D. at the end of every quarter. 93. Under single entry system, opening capital can be found by preparing a statement of affairs. A. at the end of the year. B. at the beginning of the year. C. at the end of every month. D. at the end of every quarter. 94. Under single entry system in net worth method, drawings is added with. A. opening capital. B. closing capital. C. additional capital. D. drawings. 95. Under single entry system in net worth method, additional capital is deducted with. A. opening capital. B. closing capital. C. additional capital. D. drawings. 96. Under single entry system in net worth method, opening capital is subtracted from. A. opening capital. B. closing capital. C. additional capital. D. drawings. 97. Under single entry system in conversion method, a total debtors account is prepared to find out. A. credit sales. B. cash sales. C. credit purchases. D. cash purchases.

15 15 of 22 1/23/ :04 AM 98. Under single entry system in conversion method, a total debtors account is prepared to find out. A. credit purchases. B. cash purchases. C. purchase returns. D. closing balance of debtors. 99. Subscription received but not yet earned is considered as an A. Asset B. Liability C. Income D. Expenditure 100. Total creditors account is prepared to find out. A. credit sales. B. cash sales. C. credit purchases. D. cash purchases Total creditors account is prepared to find out. A. opening balance of debtors. B. closing balance of debtors. C. opening balance of creditors. D. closing balance of creditors A bills receivable account is prepared to ascertain bills. A. accepted. B. received. C. drawn. D. endorsed A bills payable account is prepared to ascertain bills. A. accepted. B. received. C. drawn. D. endorsed Bills receivable dishonored will be posted to side of debtors account. A. debit. B. credit. C. outside. D. inside.

16 16 of 22 1/23/ :04 AM 105. Bills receivable dishonored will be posted in. A. debit. B. credit. C. outside. D. inside Bills payable dishonoured will be posted in which side of bills payable account? A. Debit. B. Credit. C. Outside. D. Inside Opening balance of debtors will be posted in which side of debtors account? A. Debit. B. Credit. C. Outside. D. Inside Closing balance of creditors will be posted in which side of creditors account? A. Debit. B. Credit. C. Outside. D. Inside Opening balance of creditors will be posted in which side of creditors account? A. Debit. B. Credit. C. Outside. D. Inside Cash account opening balance will appear in. A. debit. B. credit. C. outside. D. inside Cash account closing balance will appear in. A. debit. B. credit. C. outside. D. inside Bills payable account opening balance will appear in. A. debit.

17 17 of 22 1/23/ :04 AM B. credit. C. outside. D. inside Bills payable account closing balance will appear in. A. debit. B. credit. C. outside. D. inside Bills receivable account opening balance will appear in. A. debit. B. credit. C. outside. D. inside An agreement of hiring with option to buy is. A. installment system. B. credit system. C. hire purchase system. D. cash system Under which system, ownership is transferred on payment of final installment? A. Installment system. B. Credit system. C. Hire purchase system. D. Cash system Under which system ownership is transferred on signing of the agreement? A. Installment system. B. Credit system. C. Hire purchase system. D. Cash system Under hire purchase system the buyer is called. A. buyer. B. hirer. C. hire vendor. D. debtor Under hire purchase system the seller is called. A. buyer. B. hirer. C. hire vendor.

18 18 of 22 1/23/ :04 AM D. debtor Under hire purchase system the relationship of hirer and hire vendor is. A. buyer and seller. B. bailor and bailee. C. pawner and pawnee. D. debtor and creditor Under installment system the relationship between the buyer and seller is that of a. A. buyer and seller. B. bailor and bailee. C. pawner and pawnee. D. debtor and creditor Under hire purchase system, the risk of loss is borne by. A. buyer. B. hirer. C. hire vendor. D. debtor Under installment system the risk of loss is borne by. A. buyer. B. hirer. C. hire vendor. D. debtor Under hire purchase system who has the right of sell. A. buyer. B. hirer. C. hire vendor. D. debtor Under hire purchase system, if installment is not paid the hire vendor has right to. A. sell the goods. B. repossession of goods. C. repair the goods. D. purchase the goods Under hire purchase system, the agreement can be. A. renewed. B. registered. C. terminated. D. endorsed.

19 19 of 22 1/23/ :04 AM 127. Hire purchase system is governed by. A. Hire Purchase Act B. Hire Purchase Act C. Hire Purchase Act D. Hire Purchase Act Installment system is governed by. A. Hire Purchase Act. B. Sale of Goods Act. C. Installment Act. D. Properties Registration Act Under hire purchase system, the retail price of the articles is called. A. MRP. B. wholesale price. C. retail price. D. cash price Cash price plus interest is. A. installment price. B. hire purchase price. C. maximum retail price. D. retail price The advance amount under hire purchase system is called. A. cash price. B. retail price. C. interest. D. down payment Under hire purchase system, each installment is treated as. A. interest. B. cash price. C. hire charges. D. advance Under hire purchase system, interest is calculated on. A. cash price. B. hire purchase price. C. MRP. D. outstanding balance If the hire purchaser fails to make payment of any installment, it is called.

20 20 of 22 1/23/ :04 AM A. default. B. repossession. C. sale. D. purchase If the hire vendor may take away all the goods on which there is default of installment it is called. A. repossession. B. partial repossession. C. complete repossession. D. purchase The hire vendor takes away only a portion of the goods on which there is default of Installments it is called. A. repossession. B. partial repossession. C. complete repossession. D. purchase In the books of hirer, for payment of down payment, hire vendor account will be. A. debited. B. credited. C. rectified. D. reversed In the books of hirer, for payment of installment hire vendor account will be. A. debited. B. credited. C. rectified. D. reversed In the books of hirer, for interest due at the end of the year hire vendor account will be. A. debited. B. credited. C. rectified. D. reversed In the books of Hirer, the interest and depreciation account will be transferred to. A. Trading account. B. P & L account. C. P & L appropriation account. D. Balance sheet In the books of hirer, when the asset is repossessed hire vendor account will be.

21 21 of 22 1/23/ :04 AM A. debited. B. credited. C. rectified. D. reversed In the books of hirer, when the asset is repossessed, asset account will be. A. debited. B. credited. C. rectified. D. reversed In the books of hire vendor, which account will be debited for hire sales. A. buyer. B. hirer. C. hire vendor. D. debtor What is depreciation? A. Cost of a fixed asset B. Cost of a fixed assets repair C. The residual value of fixed asset D. Portion of a fixed assets cost consumed during the current accounting period 145. A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to be Rs What is the annual amount of deprecation using straight line method of depreciation? A. Rs.1000 B. Rs.2000 C. Rs.3000 D. Rs What is the accumulated deprecation? A. Sum of all depreciation expenses of a fixed asset B. Depreciation expenses C. Cost of depletion of assets D. Future value of fixed asset 147. A fixed asset was bought for Rs Its accumulated depreciation is Rs.3000 and rate of depreciation is 20%. Calculate its depreciation expenses for the current accounting period using reducing balance method? A. Rs.600 B. Rs.500 C. Rs.400 D. Rs.750

22 22 of 22 1/23/ :04 AM 148. Revenue Reserve does not include A. Profit & Loss Account B. Secret Reserve C. General Reserve D. Securities Premium 149. In single entry system of accounting A. Dual aspects of a transaction is recorded B. Single aspect of a transaction is recorded C. Important transactions are recorded D. All of them 150. Statement of financial position produced from incomplete accounting record is commonly known as A. Balance sheet B. Cash flow statement C. Statement of affairs D. Statement of financial operations Staff Name Dr R Vennila.