CBSE Class 11 Accountancy Financial Statements - II MCQs Set A

MCQs

Question : Every adjusting entry affects?
(a) Income statement account only
(b) Balance sheet account only
(c) Both A & B
(d) None
Answer : C

Question : Which of the following item provides the important function of shielding part of income from taxes?
(a) Inventory
(b) Supplies
(c) Machinery
(d) Depreciation
Answer : D

Question : Outstanding expenses are those expenses which have became _____ during the accounting year
(a) Payable
(b) Payed
(c) Received
(d) Receivable
Answer : A

Question : Depreciation is necessary to calculate:
(a) Net profitcorrect
(b) Net financial position
(c) Tax
(d) None of them
Answer : A

Question : Prepaid expenses are also called:
(a) Advance expenses
(b) Deferred expenses
(c) Unexpired expenses
(d) All of these
Answer : D

Question : HDFC bank has been named among 50 most valuable banks in 2014. It has got 45th rank. Wells Fargo & Co. has got first rank in this list. This bank belongs to which country?
(a) UK
(b) France
(c) European Union
(d) USA
Answer : D

Question : Adjusting Entries?
(a) Assign revenue to the period in which they are earned
(b) Help to properly measure the period’s Net Profit / Loss
(c) Bring asset and liability account to correct balances
(d) All of about statements are true regarding Adjusting Entries
Answer : D

Question : A liability account that reports amounts received in advance of providing goods and services?
(a) Unearned Revenue
(b) Earned liabilities
(c) Earned Revenue
(d) Revenue
Answer : A

Question : The person to whom goods are sold on credit is called___________?"
(a) Buyer
(b) Seller
(c) Debtor
(d) Creditor
Answer : C

Question : The adjustment to be made for income received in advance is:
(a) Add income received in advance to respective income and show it as a liability
(b) Deduct income received in advance from respective income and show it as a liability
(c) Add income received in advance to respective income and show it as asset
(d) Deduct income received in advance from respective income and show it as an asset in the Balance Sheet
Answer : B

Question : Which of the following is true for every adjusting entry?
(a) They affect only income statement accounts
(b) They affect balance sheet account and an income statement account
(c) They affect only balance sheet accounts
(d) They affect only accounts with normal debit balance
Answer : B

Question : The purpose of adjusting entries is to?
(a) Adjust the owner’s capital account for the revenue, expense and drawings recorded during the accounting period
(b) Adjust daily the balances in asset, liability, revenue and expense accounts for the effects of business transactions
(c) Apply the realization principle and the matching principle to transactions affecting two or more periods
(d) Prepare revenue and expense accounts for recording the transactions of the next accounting period
Answer : C

Question : Depreciation arises because of:
(a) Wear and tearcorrect
(b) Decrease in the value of assetswrong
(c) Increase in the value of liability
(d) Decrease in capital
Answer : A

Question : The revenue receipt is shown in income statement as a?
(a) Expense
(b) Income
(c) Other income
(d) Other expense
Answer : B

Question : The economic factor causing depreciation:
(a) Time factor
(b) Obsolescence and inadequacycorrect
(c) Wear and tear
(d) Money valuation
Answer : B

Question : Goods Return by the customer are termed as :
(a) Purchase return
(b) Customer return
(c) Sales return
(d) Inventory return
Answer : C

Question : Which of the following is not a primary function of a Bank?
(a) Granting Loans
(b) Collecting Cheques/Drafts customers
(c) Facilitating import of goods
(d) Issuing Bank Drafts
Answer : C

Question : The object of non – trading concerns-
(a) Social service
(b) Profit earning
(c) Both of these
(d) None of the above.
Answer : A

Question : Closing stock is generally valued at______________?
(a) Cost Price
(b) Market Price
(c) Cost price or Market price whichever is higher
(d) Cost price or Market price whichever is lower
Answer : D

Question : Adjusting entries are made:
(a) At the beginning of the year
(b) At the end of the yearcorrect
(c) During the yearwrong
(d) All of these
Answer : B

Question : In a recession:
(a) Unemployment is likely to be low
(b) Prices are likely to increase
(c) Growth is negativecorrect
(d) Growth is slow
Answer : C

Question : Outstanding expenses are
(a) Current Liability
(b) Fixed Liability
(c) Contingent Liability
(d) None of these
Answer : A

Question : Under the diminishing balance method, depreciation is calculated on:
(a) Scrap value
(b) on original value
(c) on book valuecorrect
(d) None of them
Answer : C

Question : Accrued income is
(a) A liability
(b) Revenue
(c) An Asset
(d) An Expense
Answer : C

Question : If a closing stock appears in trial balance then it will be appearing in.
(a) Trading Account
(b) Balance Sheet
(c) Profit & Loss Account
(d) Trading & Balance sheet account
Answer : B

Question : If the rent of one month is still to be paid the adjustment entry will be
(a) Debit outstanding rent account and Credit rent account.
(b) Debit profit and loss account and Credit rent account.
(c) Debit rent account and Credit profit and loss account.
(d) Debit rent account and Credit outstanding rent account.
Answer : D

Question : If the opening capital is Rs. 50,000 as on April 1, 2005 and additional capital introduced Rs. 10,000 on January 1,2006. Interest charge on capital 10% p.a. The amount of interest on capital shown in profit and loss account as on March 31, 2006 will be:
(a) Rs. 5,250
(b) Rs. 6,000
(c) Rs. 4,000
(d) Rs. 3,000
Answer : A
 

HOTs Questions

Question : What journal account will be passed for outstanding salary?
Answer : Salary A/c Dr. To Outstanding Salary A/c

Question : Accrued income and income due but not received are the same. Is it true or false?
Answer : True

Question : For doubtful debts under which accounting concept provision is made?
Answer : Prudence Concept

Question :  In balance sheet assets side represents a debit balance
Answer : True

Question : Bank overdraft is a contingent account
Answer : False
 

Fill in the blanks with suitable words.

Question :  Trading and Profit & Loss Account shows the ………………. or ………………..
Answer : profit, loss

Question :  Items of income and expenditure which do not pertain to the accounting period should be ……………….
Answer : excluded

Question : Expenses related to the current accounting period but have not been paid are known as ……………….
Answer : outstanding expenses

Question :  Income earned but not received till the end of the accounting year is termed as ……………….
Answer : accrued income

Question :  While making a provision for possible bad debts or for doubtful debts, we ………………. Reserves Debts Account.
Answer : credit
 

Mention whether the following are true or false

Question :  Income received in advance is written on the liabilities side of the balance sheet.
Answer : True

Question : Outstanding expenses appearing inside the trial balance are shown on the debit side of the profit & loss account.
Answer : False

Question : Salary outstanding account is a personal account.
Answer : True

Question : Outstanding salaries appearing in the trial balance is shown in Profit & Loss Account.
Answer : False

Question. Deferred revenue expenditure is partly debited to Profit & Loss Account and the balance is shown in the Balance Sheet.
Answer : True