Accounting Practice MCQs Competitive Exams Set 20

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9. What percentage of profit a bank has to transferrers to statutory reserve until it inflates to paid-up capital of the bank:

a. 5%

b. 10%

c. 20%

d. 25%

Answer. a.

10. Identify the correct answers with regards to depreciation expense:

a. Is an application of the matching principle?

b. Is a closing entry?

c. Usually includes an offsetting credit either to cash or accounts payable.

d. Is not an adjusting entry?

Answer. a.

11. Comparison of a company’s financial condition and performance across time is a:

a. Ratio analysis

b. Horizontal analysis

c. Vertical analysis

d. None of these

Answer. c.

12. Income and expenditure account in a non-trading institution records transection of:

a. Revenue nature only

b. Capital nature only

c. Both (a) & (b)

d. Income of revenue nature and expenditure of revenue and capital nature

Answer. a.

13. 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.

14. A and B are partners in the ratio of 2:1. They admit C for ¼ shares who contribute Rs. 3000 for his share of goodwill. Total value of the goodwill of the firm is:

a. Rs. 3000

b. Rs. 9000

c. Rs. 12000

d. 15000

Answer. c.

15. Second hand machinery worth Rs. 10, 000 was purchased, repairing of the machinery cost Rs. 1,000. The machinery was installed by own workers. Wage for this being Rs. 200, the machinery account should be debited for:

a. Rs. 10,000

b. Rs. 11,000

c. Rs. 11,200

d. None of these

Answer. c.

16. If net sales Rs. 100,000 cost of goods sold Rs. 55,000, administrative expenses Rs. 5300, selling expenses Rs. 4375, Interest expense Rs. 500, the operating profit is:

a. Rs.35325 (operating profit does not include interest income/expense and Taxes))

b. Rs.45000

c. Rs.39700

d. Rs.34825

Answer. a.

17. Which of the ratio best reflects a company’s ability to meet immediate interest payment?

a. Debit ratio

b. Equity ratio

c. Times interest earned

d. None of these

Answer. c.

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