Accounting Practice MCQs Competitive Exams Set 15

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(6) Uzma Ltd. Net income was ₹ 4,00, 000 in 2003 and ₹ 1,60, 000, in 2004. What percentage increase in net income must achieve in 2005 to offset the decline in profits in 2004?

(a) 60 %

(b) 150 %

(c) 200 %

(d) 70 %

Answer. (b)

(7) Which of the following does not describe accounting?

(a) Language of Business

(b) Is an end rather than a mean to an end

(c) Useful for decision making

(d) Used by business government, nonprofit organizations, and individuals.

Answer. (b)

(8) External uses of financial accounting information include all of the following except:

(a) Investors

(b) Labour unions

(c) Line manager

(d) General public

Answer. (c)

(9) A fixed budget is:

(a) A budget for single level of activity

(b) A budget which ignored inflation

(c) Used only for fixed cost

(d) An overhead cost budget

Answer. (a)

(10) Heavy expenditure on advertisement of a new product is a:

(a) Capital expenditure

(b) Revenue expenditure

(c) Deferred revenue expenditure

(d) None of these

Answer. (c)

(11) Subscriptions received in advance is:

(a) An income

(b) An asset

(c) A liability

(d) A loss

Answer. (c)

(12) At the time of admission of a new partner, goodwill raised should be written off in:

(a) New profit-sharing ratio

(b) Old profit-sharing ratio

(c) Sacrificing ratio

(d) Gaining ratio

Answer. (b)

(13) A and B are partners in the ratio of 2: 1. They admit C for shares who contributes ₹ 3000 for his share of goodwill. The total value of the goodwill of the firm is:

(a) ₹ 3,000

(b) ₹ 9,000

(c) ₹ 12,000

(d) ₹ 15,000

Answer. (c)

(14) Sales to Mustafa of ₹ 10,000 not recorded in the books would affect:

(a) Sales account

(b) Mustafa account

(c) Sales account and Mustafa Account

(d) None of these

Answer. (c)

(15) Depreciation is a process of:

(a) Valuation

(b) Allocation

(c) Both a & b

(d) None of these

Answer. (b)