SAccounting Practice MCQs Competitive Exams Set 14

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(16) A working paper which is prepared by the accountant for his own convenience is called:

(a) Work sheet

(b) Cash flows statement

(c) Balance sheet

(d) Final accounts

Answer. (a)

(17) Any expenditure incurred to increase the profit earning capacity of the concern is a:

(a) Revenue expenditure

(b) Capital expenditure

(c) Deferred revenue expenditure

(d) Capital expenditure

Answer. (a)

(18) Depreciation on fixed assets is an example of:

(a) Revenue expenditure

(b) Capital expenditure

(c) Deferred revenue expenditure

(d) None of these

Answer. (b)

(19) The capital receipts are shown in the balance sheet on the:

(a) Liability

(b) Asset side

(c) Debit side

(d) None of these

Answer. (a)

(20) Error due to wrong allocation as expenditure between capital and revenue is regarded as:

(a) Error of omission

(b) Error of principle

(c) Compensation errors

(d) Error of commission

Answer. (b)

(1) The purchase of machinery on account would

(a) Increase an asset and decrease another asset

(b) Increase an asset and decrease liability

(c) Increase an asset and increase liability

(d) Decrease an asset and increase liability

Answer. (c)

(2) In general, the accounts in the income statement are known as:

(a) Real account

(b) Contra asset

(c) Nominal account

(d) Unrecorded revenue account

Answer. (c)

(3) In general terms, financial assets appear in the balance sheet at:

(a) Face value

(b) Current cash value

(c) Cash

(d) Estimated future sales value

Answer. (a)

(4) A limited Co. sold marketable securities cost ₹ 80,000 for ₹ 92,000 cash. In Co. ′ s income statement and statement of cash flows respectively, this will appear as:

(a) A ₹ 12,000 gain and ₹ 92,000 cash receive

(b) A ₹ 92,000 gain and ₹ 8,000 cash receive

(c) A ₹ 12,000 gain and ₹ 80,000 cash receive

(d) A ₹ 92,000 sales and ₹ 92,000 cash receive

Answer. (a)

(5) Which of the following is least important as a measure of short term liquidity?

(a) Debtor ratio

(b) Current ratio

(c) Cash flow from operating activities

(d) Quick ratio

Answer. (c)