CBSE Class 11 Accountancy Financial Statements - II MCQs Set 02

Question: Prepaid expenses are shown in?
a) Asset side
b) Liability side
c) Assets or Liability side
d) None of the options
Answer: a

Question: If the opening capital is ₹ 100,000 as of April 1, 2006, and additional capital introduced is Rs. 20,000 on January 1, 2007. Interest charged on capital is 10% p.a. The amount of interest on capital shown in the profit and loss account as of March 31, 2007, will be?
a) ₹ 10,500
b) ₹ 12,000
c) ₹ 10,000
d) ₹ 11,500
Answer: a

Question: Bad debts mentioned in Trial Balance will be shown in
a) Trading Account
b) Profit & Loss Account
c) Assets
d) None of the options
Answer: b

Question: Which of the following is recorded in income & expenditure account?
a) Revenue items
b) Capital items
c) Revenue and capital items
d) None of the options
Answer: a

Question: Bad debts is ________ to business concern.
a) profit
b) loss
c) income
d) expense
Answer: b

Question: Irrecoverable part of debtors is called as ______.
a) Creditor
b) Discount
c) Bad debts
d) Earnings
Answer: c

Question: If Shiv paid a total salary of ₹25,000, which includes an advance payment of ₹5,000, what is the correct salary expense to be reported in the profit and loss account?
a) ₹20,000
b) ₹25,000
c) ₹30,000
d) ₹15,000
Answer: a

Question: Outstanding Expenses are related to–
a) Current year
b) Next year
c) Last year
d) None of the options
Answer: a

Question: What does the accrual basis of accounting emphasise?
a) Revenues on a receipt basis
b) Revenues on an earned basis
c) Expenses on a paid basis
d) None of the options
Answer: b

Question: How should Ankit record the journal entry for wages outstanding?
a) Wages outstanding A/c Dr. To Wages A/c
b) Wages A/c Dr. To Wages outstanding A/c
c) Outstanding expenses A/c Dr. To Wages A/c
d) Wages A/c Dr. To Cash A/c
Answer: b

Question: Such persons who earn remuneration against their services are called –
a) Seller
b) Purchaser
c) Professional
d) None of the options
Answer: c

Question: If the rent of one month is yet 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 outstanding rent account
d) Debit rent account and Credit profit and loss account
Answer: c

Question: Receipt and payment account is a summary of-
a) Income & Expenditure account
b) Profit & Loss A/c
c) Cash book
d) None of the options
Answer: c

Question: If the manager is entitled to a 5% commission on sales before deducting his commission, he will receive a commission of how many rupees on a ₹ 8400 profit?
a) 400
b) 420
c) 442
d) 440
Answer: b

Question: If the insurance premium paid is Rs. 1,000 and prepaid insurance is Rs. 300, the amount of insurance premium shown in the profit and loss account will be?
a) ₹ 700
b) ₹ 1,000
c) ₹ 300
d) ₹ 1,300
Answer: a

Question: Which entry reflects the adjustment of closing stock in the accounts?
a) Closing stock A/c Dr. To Purchases A/c
b) Closing stock A/c Dr. To Trading A/c
c) Purchases A/c Dr. To Closing stock A/c
d) Trading A/c Dr. To Closing stock A/c
Answer: b

Question: If an insurance premium of ₹1,200 is paid on July 1, 2016, and covers 12 months, how much should be charged to the profit and loss account for the year ending March 31, 2017?
a) ₹1,200
b) ₹900
c) ₹300
d) ₹1,000
Answer: b

Question: What are outstanding expenses?
a) Expenses that have been paid
b) Expenses that are unpaid at the end of the accounting period
c) Expenses related to future periods
d) Revenue earned in advance
Answer: b

Question: Calculate gross profit if rate of gross profit is 20% on cost of goods sold and cost of goods sold is ₹ 120000.
a) 15000
b) 10000
c) 24000
d) None of the options
Answer: c

Question: Every adjusting entry affects?
a) Income statement account only
b) Balance sheet account only
c) Both Income statement account only & Balance sheet account only
d) None of the options
Answer: c

Question: Interest on capital is added to_______.
a) profit
b) cash
c) capital
d) interest
Answer: c

Question: Prepaid expenses are valued on the Balance Sheet at:
a) Replacement cost
b) Current cost
c) Cost to acquire less accumulated amortization
d) Cost less expired portion
Answer: d

Question: Which of the following statements is/are NOT correct?
a) Provision for bad debts appears as a liability on the balance sheet
b) The provision for bad debts is owed to the proprietor
c) Bad debts could be less than the provision for bad debts
d) Bad debts could exceed the provision for bad debts
Answer: b

Question: The effect of adjustment of depreciation on net profit will be that _____.
a) it will decline
b) it will increase
c) no effect
d) None of the options
Answer: a

Question: A prepayment of insurance premium will appear in the Balance Sheet and in the Insurance Account respectively as:
a) A liability and a debit balance
b) An asset and a debit balance
c) An asset and a credit balance
d) None of the options
Answer: b

Question: If prepaid rent appears in trial balance, while preparing the final accounts it will be shown in ____________.
a) Profit & Loss A/c and Assets side of Balance Sheet
b) Profit & Loss A/c and Liabilities side of Balance Sheet
c) Assets side of Balance Sheet
d) Liabilities side of Balance Sheet
Answer: c

Question: Which account reflects a liability in the trial balance?
a) Debtors
b) Bank
c) Long-term loan
d) Furniture
Answer: c

Question: New bad debt is deducted from ______.
a) Old bad debts account
b) Creditors account
c) Debtors account
d) Profit & loss account
Answer: c

Question: Net profit of a business is ₹220 before charging commission. If the manager is entitled to 15% of the profit before charging such commission, the commission will be _____.
a) ₹44
b) ₹33
c) ₹20
d) ₹30
Answer: b

Question: Charity of goods is–
a) Expenses
b) Loss
c) Profit
d) None of the options
Answer: b

Question: Which of the following is not an item of income of a non–trading concern?
a) Entrance fees
b) Interest
c) Govt. Aid
d) Salary
Answer: d

Question: If a person fails to pay his debt, such amount is considered as–
a) Bad debts
b) Bad debts recovered
c) Provision for Bad debt
d) None of the options
Answer: a

Question: Advance received from customers is___________.
a) an item of current liability
b) an item of non-current asset
c) an item of contingent liability
d) an item of non-cash cost
Answer: a

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

Question: Goods given as samples are debited to:
a) General Expenses
b) Sales promotion exp.
c) Staff welfare expenses
d) None of the options
Answer: b

Question: In case of final accounts of manufacturing concerns, closing stock of finished goods appears in __________ & ____________.
a) Manufacturing Account, Balance Sheet
b) Trading Account, Balance Sheet
c) Profit & Loss Account, Balance Sheet
d) Manufacturing Account, Trading Account
Answer: b

Question: The adjustment to be made for prepaid expenses is ___________.
a) Add prepaid expenses to respective expenses and show it as an asset
b) Deduct prepaid expenses from respective expenses and show it as an asset
c) Add prepaid expenses to respective expenses and show it as a liability
d) Deduct prepaid expenses from respective expenses and show it as a liability
Answer: b

Question: If actual bad debts are more than the provision for bad debts, then there will be a:
a) Credit balance of provision for bad debts account
b) Debit balance of provision for bad debts account
c) Debit balance of bad debts account
d) Debit balance of discount on debtors account
Answer: c

Question: Which of the following is recorded in the income and expenditure account?
a) Revenue items
b) Capital items
c) Revenue and capital items
d) None of the options
Answer: a

Question: Wages and Salaries account is shown in:
a) Profit & Loss Account
b) Assets
c) Trading Account
d) None of the options
Answer: c