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 shares who contribute ₹ 3000 for his share of goodwill. Total value of the goodwill of the firm is:

a. ₹ 3000

b. ₹ 9000

c. ₹ 12000

d. 15000

Answer. c.

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

a. ₹ 10,000

b. ₹ 11,000

c. ₹ 11,200

d. None of these

Answer. c.

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

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

b. ₹ 45000

c. ₹ 39700

d. ₹ 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.