CAQs For A&F Flashcards by Ramiro Cruz

Every transaction has to reported as ultimately related to money

Money Measurement Concept

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In Double Entry system of Book-keeping, every business transaction affects which of these options?

Two accounts

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Who are Creditors for supplying goods to the Company?

To whom the Company owes Money

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Which of the following is not the causes of depreciation?

Actual cost of the asset

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Amount of salary paid to Kamal should be debited to which account head?

Salary Account

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What is the nature of financial accounting?

Historical

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What does Money Measurement Concept as a convention of Financial Accounting refer to ?

Accounting only transactions which can be measured in money

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In which method of Depreciation does the the depreciation amount is the same every year?

Straight Line Method

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Metrpol acquired a machine for Rs. 5,40,000 on 1st April 2009. Depreciation was to be charged at 20%p.a. Calculate Depreciation if the accounting year ends on 31st March

1,08,000

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The amount brought in by the proprietor is called as what?

Capital

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A machine costing Rs. 120,000 has accumulated depreciation of Rs. 50,000. What is the book value of machine?

Rs. 70000

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ABC Pvt. Ltd company invests money in shares of another company, PQR Pvt. Ltd. Where is this investment recorded in?

Asset side of Balance Sheet

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What is the process of recording the transactions into a journal called as ?

Journalising

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Which term is used to denote the value of the asset at the end of its useful life?

Salvage value

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Copyrights, Patents and Trademarks are which type of assets?

Intangible assets

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Purchase of furniture will have what effect on total assets?

Increase

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Which of the following expenses is a non cash expense in business?

Depreciation

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Which of the following is not a Real Account?

Outstanding rent A/c

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Depreciation is necessary for which category of accounts?

Fixed Assets and Intangible Assets

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Capital is shown under liabilities of the balance sheet. Which principle is followed here?

Business Entity concept

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How to provide depreciation if the fixed asset is purchased in the middle of the year?

Provide for proportionate period of actual utilisation i.e from the day put to use

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Who issues Indian Accounting Principles?

IFRS

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What is the other name of Actual cost?

Historical cost

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Which account should be debited when a customer returns goods?

Sales return account

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The auditor noticed that the financial statements of Alpha Company were missing some footnotes important for users for decision making. This action of the management is a violation of which concept?

Full disclosure concept

What is the system of recording based on dual aspect concept called?

Double entry system

Which of the following assets do not come under "current asset"?

Car

Which of the following would not be a basis for estimating the useful life of a piece of equipment?

Weight of the equipment

Goods returned to supplier should be debited to which account?

Supplier's account

Which principle requires that the same accounting method should be used from one accounting period to the next?

Consistency

Which of the following is not a current asset?

Furniture

A trader purchased a small machinery for Rs. 10,000 in Apr 2015. Depreciation is charged @ 25% under diminishing balance method. At the end of third year, 31st March 2018, what shall be the closing Written Down Value of the machinery ?

Rs. 4219

Which is the Indian Accounting body based in London, known as?

IASB

How is Net Working Capital Arrived at?

Total Current Assets less Total Current Liabilities

Cash Balance Rs. 15,000; Trade Receivables Rs. 35,000; Inventory Rs. 40,000; Machinery Rs. 25000, Trade Payables Rs. 24,000 and Bank Overdraft is Rs. 6,000; Loans Rs. 55000. What is the Current Ratio?

3:1

Which one of these most appropriately describes the need for making depreciation adjustment while preparing final accounts?

Adjustment becomes necessary while drawing the financial statements in order to reflect proper operating results and financial position as depreciation involves reduction in value of assets and its productivity on account of use, wear and tear, etc.,

When cheque is returned by bank due to insufficient fund, what is that cheque called as?

Dishonoured cheque

Which accounting concept mentions that the owners are separate from the business?

Separate entity

What does a high p/v ratio imply about the organisation?

Making huge profits

If profit - 1,00,000; Contribution- Rs 5,00,000 then calculate fixed cost

4,00,000

The amount paid out of the profits of the company to its shareholders is known as

Dividend

Where are the initial business transactions recorded?

General Journal

Which expense is an appropriation of profit?

Dividend

Which of the following are not the causes of depreciation?

Actual cost of the asset

Patents, Trademark, Copyrights are also 'Assets' to an organisation. Which of these is the most appropriate accounting classification?

Intangible assets

Which one of these statement explains the causes of the difference between the cash/bank book (as per books) vis-a vis the bank statement

Bank Reconciliation Statement

What is the ideal ratio of quick ratio ?

1:1

The formula to calculate average collection period is

365/Average receivables turnover ratio

A product is sold at Rs. 150 per unit and its variable cost is Rs. 70 per unit. The fixed expenses of the business are Rs. 8,000 per year. What is the Break-even point in terms of units?

100 units

What does 'Capital Employed' mean?

Networth+ Long term liabilites

The depreciation method used for natural assets like coal mines, oil wells etc. is:

Depletion method

When goods are sold on credit to a party Mahesh, the account to be debited will be:

Mahesh account

Which of the following amount will be deducted from balance as per cash book while preparing bank reconciliation statement?

Cheque deposited but not yet collected

What is the process of recording transactions from the journal, cash book, etc to the ledger known as ?

Posting

Which of the following amounts will be added to balance as per cash book while preparing bank reconciliation statement?

Cheque issued but not yet presented for payment

What is the formula to calculate contribution ?

Operating income plus fixed costs

What is the amount of closing stock if opening stock is Rs.4500, cost of goods sold is Rs.54500, purchases are Rs.60000?

Rs. 10000

A machinery with a cost of Rs. 9,00,000 and accumulated depreciation of Rs. 8,00,000 is sold for Rs. 80,000. What is the amount of the gain or loss on the disposal of the machinery?

Rs. 20000 loss

In case of a Limited Company, which one of these is true in case of any change in method of depreciation ?

Permitted in all cases. However the change and the impact of the same on the financials needs to be informed separately under the Notes forming part of the Accounts in order to enable the users/readers of the financial statements be informed suitably.

If sales amounts to Rs 2,40,000; Gross Profit is Rs 60,000; What would be the Gross Profit Ratio?

25%

Which account is credited when the goods purchased are returned by the firm?

Purchase return

Which ratios measure an organisations performance in generating earnings over related expenses over a specified time period?

Profitability ratios

Which one of them is a statement or document that reflects in a single place the summary of respective debit and credit balances of all the ledgers forming part of the books of accounts?

Trial Balance

Who prepares the Bank Reconciliation Statement?

Accountant

What do we refer Trading and Profit and Loss Account and Balance Sheet, all together as?

Final Accounts

The credit effect for prepaid rent will appear as

Deduction from rent paid

What is the term used to describe when a cheque is issued to a creditor, but is not presented for payment?

Outstanding cheque

The loyalty of workers being intangible cannot be quantified, and thus the same can find no place in the books of accounts. This is an example of which accounting principle?

Money Measurement Concept

What to do we refer to those expenses, which have been incurred, but not paid?

Outstanding Expenses

A product is sold at a price of Rs. 120 per unit and its variable cost is Rs. 80 per unit. The fixed expenses of the business are Rs. 8,000 per year. What is the Break-even point?

Rs. 24000

Where the entity reaches a scenario where there is no profit and loss and the costs equals revenues, What is the strange situation referred to as ?

Break-even point/Indifference Point

From the information, Find BEP : Variable cost per unit - Rs 12; Fixed expenses - Rs 60,000; Selling price per unit - Rs 18

10000 units

Which ratios measure the ability of a company to meet its short term obligations?

Liquidity ratios

The current account of a businessman shows Rs. 10000 as overdrawn. On examining the bank statement, it was observed that one of the customers has deposited Rs. 4000 directly into the account and that the bank charges were Rs. 200. What is the bank statement balance?

Rs. 6200

In cash book, what does favourable balance indicates?

Debit balance