Practice Paper

Set-1

Total qo: 50
Each qo. is of 1 mark

1. An accountant can handle _______ matters of a business or a person and he can

represent that business or person before the tax authorities and settle the tax liability under
the statute prevailing.
(a) Statutory Audit

(b) Internal Audit

(c) Taxation

(d) All of the above

(Ans c)

2. In Accounting, raising money through various sources is known as:

(a) Transaction
(b) Event
(c) Measurement
(d) None of the above
(Ans a)

3. Out of the following which is the final function of Accounting?

(a) Analysing
(b) Interpreting
(c) Classifying
(d) Recording
(Ans b)

4. Which is the basic function of Accounting while generating financial information.

(a) Classifying
(b) Interpreting
(c) Recording
(d) Summarizing
(Ans c)

5. What conditions need to be satisfied for Accounting Principles?

(a) It should be informative for users
(b) They should be based on real assumptions
(c) They should be followed consistently
(d) All of the above
(Ans d)

6. Which of the following is not a Fundamental Accounting Assumption?

(a) Prudence
(b) Going Concern
(c) Consistency
(d) Accrual
(Ans a)

7. The concept of Conservatism takes into account:

(a) All future profits and all future losses
(b) All future profits but leaves all future losses
(c) All future losses but leaves all future profits
(d) All of the above
(Ans c)

8. Unfavourable bank balances means:

(a) Debit balance in cashbook
(b) Debit balance in passbook
(c) Favourable balance in cashbook
(d) Both (b) and (c)
(Ans b)

9. While posting transaction in a Ledger we use words ____ on Debit and ____ on Credit
sides.
(a) To and By
(b) To and From
(c) From and To
(d) By and To
(Ans a)

10. The technique of finding the net balance of an account after considering the totals of
both debits and credits appearing in the account is known as:
a) Purchase
b) Posting
c) Balancing of an account
d) All of the above
(Ans c)

11. Which of the following balances are correctly placed in Debit and Credit column of
Trial Balance?
(a) Liabilities (dr.) and Assets (cr.)
(b) Profit (dr.) and Losses (cr.)
(c) Income (dr.) and Expense (cr.)
(d) Cash and Bank Balance (dr.) and Capital (cr.)
(Ans d)

12. If the Trial Balance does not tally after many efforts, then the ______ account is
opened.
(a) Purchase Account
(b) Suspense Account
(c) Sales Account
(d) None of the above
(Ans b)

13. Golden Rule of Accounting are:

(a) Debit What Comes In, Credit What Goes Out
(b) Debit the Receiver, Credit the Giver
(c) Debit All Expenses and Losses, Credit All Income and Gains
(d) All of the above
(Ans d)

14. The _______ must be adjusted so as to reflect the correct bank balance in the balance
sheet.
(a) Cashbook
(b) Passbook
(c) Bank Statement
(d) None of the above
(Ans a)
15. Before preparing the bank reconciliation statement, adjusting of a cashbook is
completely optional, only if:
(a) Reconciliation is done during same months
(b) Reconciliation is done during different months
(c) Reconciliation is done during same dates
(d) Reconciliation is done during different dates
(Ans b)

16. Closing entries are passed _________

(a) To rectify errors
(b) At the beginning of the year
(c) To under cast profit
(d) At the end of the financial year
(Ans d)

17. The adjusted cashbook is taken to:

(a) Trial Balance
(b) Ledger
(c) BRS
(d) None of the above
(Ans c)

18. What purpose does the trial balance serve in financial accounting?
(a) To check the accuracy of ledgers arithmetically
(b) To calculate profit and loss
(c) To tally the balance of cash and the bank
(d) All of the above
(Ans a)

19. What is the Journal entry for purchased goods on credit for Rs. 7,00,000.
(a) Purchases A/C 7,00,000
To Creditor A/C 7,00,000
(b) Creditor A/C 7,00,000
To Purchases A/C 7,00,000
(c) Bank A/C 7,00,000
 To Purchases A/C 7,00,000
(d) Purchases A/C 7,00,000
To Bank A/C 7,00,000
(Ans a)

20. The left side of ledger account is referred to as?

(a) Balance
(b) Credit Side
(c) Debit Side
(d) Cash
(Ans c)

21. What is the significance of the terms 'Surplus' and 'Deficit' in financial contexts?
(a) Excess of Income over Expenditure
(b) Excess of Expenditure over Income
(c) None of the above
(d) Both (a) and (b)
(Ans d)

22. What are the features of Receipt and Payments Account?

(a) It is the summary of the cash and bank transactions
(b) It starts with opening cash and bank balances and also ends with their closing balances.
(c) it shows only the Cash/Bank position and excludes all non-cash items
(d) All of the above
(Ans d)

23. Which of the following is not a current asset?

(a) Land
(b) Inventory
(c) Prepaid Insurance

(d) Accounts Receivable

(Ans a)

24. Which of the following item comes under Liability side of Balance Sheet:
(a) Earmarked Funds
(b) Fixed Assets
(c) Capital Work In Progress
(d) Sundry Debtors

(Ans a)

25. In the balance sheet under the "Funds" category on the liability side, how should all
funds be displayed?
(a) Aggregated into a single fund
(b) Excluded from the financial statement
(c) Separate Funds
(d) None of the above
(Ans c)

26. Fixed Assets include:

(a) Land & Building
(b) Plant & Machinery
(c) Office & Other Equipments
(d) All of the above

(Ans d)

27. In BRS, If opening balances are not same then items are divided into two categories.
They are:
(a) Reconciliation of debit balance and credit balance
(b) Reconciliation of opening balance and closing balance
(c) None of the above
(d) Both (a) and (b)
(Ans b)

28. The wages to be paid to the workers for installing new machine equipment would be
debited to:
(a) Wages Account
(b) Machinery Account
(c) Fixed Overhead Account
(d) Factory Expenses Account
(Ans b)

29. In which financial statement is the Miscellaneous Expenses A/C f or writing off
debenture issued expenses typically displayed?
(a) Balance Sheet Asset Side
(b) P&L A/C in Credit Side
(c) Balance Sheet in Liabilities Side
(d) P&L A/C in Debit Side
(Ans d)

30. What points need to be kept in mind while adjusting the Cashbook:
(a) Entry posted twice in the cashbook
(b) Bank charges recorded in passbook only
(c) Over/ Under casting of balance
(d) All of the above
(Ans d)

31. A municipal corporation got government grant 300 lakhs for adult education; it spent `
150 lakhs for purchasing literacy kits, paid 100 lakhs to the teachers and is left with a
balance of 50 lakhs. These are termed as:
(a) Transactions
(b) Events
(c) Either (a) or (b)
(d) Both (a) and (b)
(Ans d)

32. Expenses incurred under _________ scheme is an event having financial character.
(a) GAAP
(b) IFRS
(c) MGNNREGA
(d) None of the above
(Ans c)

33. Which of the following best defines Communicating in generating financial

statements?
(a) The transmission of summarised, analysed and interpreted information to the end-users
(b) The financial statements will not help anyone unless they are in a simplified form
(c) The preparation and presentation of the classified data in a manner useful to the internal as
 well as the external users
(d) All of the above
(Ans a)

34. __________ accounting is an attempt to identify, quantify and report investments made
in an organization?
(a) Social Responsibility
(b) Cost
(c) Human Resource
(d) None of the above
(Ans c)

35. Goethe had called the accountant’s profession as:

(a) The fairest invention of the human mind
(b) An instrument of socio-economic change and welfare of the society
(c) The fields relating to financial policies, budgetary policies and even economic principles
(d) All of the above
(Ans a)

36. Which of the following are the theory base of accounting?

(a) Conceptual Framework
(b) Accounting Standards
(c) GAAPs
(d) All of the above
(Ans d)

37. Match the following:

1 Personal Account a Debit: what comes in
Credit: what goes out
2 Real Account b Debit the Receiver ,
credit the giver
3 Nominal Account c Heads of income and
expenses

(a) 1-a, 2-c, 3-b

(b) 1-c, 2-b, 3-a
(c) 1-b, 2-a, 3-c
(d) None of the above
(Ans c)
38. How many accounts are affected in every transaction of double entry system?
(a) One
(b) Two
(c) Three
(d) Four
(Ans b)

39. To avoid confusion and to achieve uniformity, accounting process is applied within the
conceptual framework of _________.
(a) GAAP
(b) IFRS
(c) MGNNREGA
(d) None of the above
(Ans a)
40. If Rs. 200 is received in cash for a house tax then what will be the effect ob both debit
and credit side?
(a) Debit is more than Credit
(b) Credit is more than Debit
(c) Debit is equal to Credit
(d) Debit is less than Credit
(Ans c)

41. Which of the following relates to; the entry in the cash book is made immediately on
issue of cheque but naturally entry will be made by the bank only when the cheque is
presented for payment?
(a) Cheques issued but not presented for payment
(b) Cheques deposited with the bank but not cleared
(c) Interest allowed by bank
(d) Either (a) or (b)
(Ans a)

42. What is the journal entry for interest charged by bank?

(a) Interest Paid (Dr.) Bank A/C (cr.)
(b) Bank A/C (Dr.) Interest Paid (Cr.)
(c) Cash A/C (Dr.) Interest Paid (Cr.)
(d) Either (a) or (c)
(Ans a)

43. The concept on which basic accounting equation is based on:

(a) Conservatism Concept
(b) Accrual Concept
(c) Dual Aspect Concept
(d) Consistency Concept
(Ans c)
44. What items come under the head Current Liabilities and Provisions?
(a) Deposit Received
(b) Other Liabilities
(c) Provisions
(d) All of the above
(Ans d)

45. What do you mean by a cause of difference are not known while doing
reconciliation?
(a) One has to compare the debit entries of cash book with the credit entries of the pass-book
and vice-versa
(b) The balance of the other book can be either more or less on account of the said causes
(c) Either (a) or (b)
(d) None of the above
(Ans a)

46. What will be the effect of Locker rent levied by bank on favourable and
unfavourable balance in passbook on Credit side?
(a) Favourable (-) unfavourable (+)
(b) Unfavourable (-) favourable (+)
(c) Neither (a) nor (b)
(d) Both (a) and (b)
(Ans a)

47. What is the first step in the process of accounting in generating financial information?
(a) Recording events and transactions
(b) Interpreting events and transactions
(c) Classification of events and transactions
(d) None of the above
(Ans a)

48. Which of the following is concerned with the systematic analysis of the recorded data?
(a) Interpreting
(b) Summarizing
(c) Classifying
(d) Analysing
(Ans c)

49. A science of rational decision-making about the use of scarce resources relates to?
(a) Accounting and Management
(b) Accounting and Statistics
(c) Accounting and Law
(d) Accounting and Economics
(Ans d)

50. What are the different methods of depreciation on fixed assets?

(a) Straight line method
(b) Written down method
(c) Both (a) and (b)
(d) None of the above
(Ans c)