Cost of goods sold is calculated by which of the following formulae?

Opening stock + Purchases + Direct expenses - Closing stock

Withdrawal by proprietor

Reduce assets and reduce owner's equity

Working capital is the excess of

Current asset over current liability

The value of closing stock is equal to

Sales - Opening stock - Purchases - Gross profit

Cost of goods sold + Gross profit

The balance sheet is a sheet which discloses the names of all the

Such accounts which shows balances

which of the following is true?

Bank account is a personal account

According to convention of conservatism, the stock in trade is valued at

Market price or Cost price which ever is less

outstanding rent is shown

Both as liability & by adjusting it in the P&L account

Net result of the business operation is reflected in

The profit earned or loss suffered in a particular period

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Financial Accounting Basics

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Quiz competition among B.com first year students on the topic basics of financial accounting

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Questions 40

Answers

1
The fundamental accounting equation 'Assets = Liabilities' is the formal expression of
Dual aspect concept
Going concern concept
Money measurement concept
Matching concept
2
Closing stock appearing in trial balance will taken to
Trading account and balance sheet
Trading account only
Balance sheet only
Profit and loss account
3
Cost of goods sold is calculated by which of the following formulae?
Opening stock + Purchases + Direct expenses - Closing stock
Opening stock - Purchases + Direct expenses - Closing stock
Opening stock + Purchases - Direct expenses - Closing stock
Opening stock + Purchases + Direct expenses + Closing stock
4
Withdrawal by proprietor
Reduce assets and increase liabilities
Reduce assets and reduce owner's equity
Reduce owner's equity and increase assets
Reduce owner's equity and increase liabilities
5
Which of the following accounting equations is not correct
Capital = Assets - Liabilities
Liabilities = Assets - Capital
Assets = Liabilities + Capital
Liabilities = Assets + Capital
6
Working capital is the excess of
Fixed asset over fixed liability
Fixed asset over current liability
Total asset over Total liability
Current asset over current liability
7
The value of closing stock is equal to
Sales + Opening stock - Purchases
Sales + Opening stock - Purchases - Gross profit
Sales - Opening stock - Purchases - Gross profit
Sales - Opening stock + Purchases
8
Sales are equal to
Cost of goods sold + Net profit
Purchases + Gross profit
Cost of goods sold + Gross profit
Purchases + Net profit
9
While preparing financial statements, the balance of prepaid rent account should be treated as
Nominal account
None of the above
Real account
Personal account
10
Advance received from customers is
An item of non-current liability
An item of non-current asset
An item of current liability
An item of current asset
11
Which of the following is not an example of direct expenses
Audit fees
Customs duty and excise duty
Royalty
Dock charges
12
The balance sheet is a sheet which discloses the names of all the
Liabilities
Such accounts in which debit balances are left
Such accounts which shows balances
Assets
13
which of the following is true?
Stock of stationery is a nominal account
Bank account is a personal account
Capital account is a real account
Return inward account is a personal account
14
Provision for bad debts is made as per the
Time period concept
Consistency concept
Conservatism concept
Cost concept
15
Contingent liability is shown due to
Dual aspect concept
Convention of materiality
Convention of full disclosure
Convention of conservatism
16
The useful life of a depreciable asset depends on
All of the above
Wear and tear
Obsolescence
Legal or contractual limit
17
Purchase of machinery for cash
Keeps total assets unchanged
Increase total asset
None of the above
Decrease total asset
18
Preliminary expense is an example of
Fictitious asset
Prepaid expenses
Current asset
Tangible asset
19
Interest on drawings is .............. for the business
Expenses
Neither expenses nor gain
Gain
Expenses or gain depending on the situation
20
Which of the following assets does not depreciate
Petents
Plant and machinery
Land
Furniture
21
Which of the following is non-current liability
Sundry creditors
Bank overdraft
Current liabilities
Long term loans
22
The debit balance of personal account shows
Liability
The amount receivable
The amount payable
Cash in hand
23
Which of the following securities/security put a burden on the company in the absence of profit
Debentures
Equity shares
All of the above
Preference shares
24
All capital expenditure and receipts are taken to
Balance sheet
Trading account
Profit and loss account
Capital account
25
From the accounting point of view, loss means
Decrease in asset
Decrease in owner's equity
Increase in owner's equity
Increase in liability
26
Current asset do not include
Debtors
Prepaid expenses
Outstanding expenses
Cash
27
obsolescence means decline in the value due to
Efflux of time
Fall in the market price
Physical wear and tear
Innovation and inventions
28
According to convention of conservatism, the stock in trade is valued at
Market price
Market price or Cost price which ever is less
Market price or Cost price which ever is more
Cost price
29
Insignificant events are not recorded in the books of accounts due to
Verifiable objective concept
Materiality concept
Business entity concept
Cost concept
30
Under which method of depreciation the value of machinery never comes to zero
Straight line
Diminishing value
Sinking fund
Sum of year's digit method
31
outstanding rent is shown
As a liability
As an asset in the balance sheet
Both as liability & by adjusting it in the P&L account
By adjusting it in the P&L account
32
Net result of the business operation is reflected in
Sum total of the value of liabilities
The profit earned or loss suffered in a particular period
The financial position of the business concern
Total Value of the assets
33
All those to whom business owes money are
Owners
Creditors
Investors
Debtors
34
Income is measured on the basis of
Business entity Concept
Consistency concept
Matching concept
Accounting period concept
35
The preparation of trial balance helps in locating
Errors of complete omission
Compensating errors
None of the above
Clerical errors
36
Balance appearing on the debit side of the trial balance is
All of the above
An asset
A loss
An expense
37
which concept states, the asset purchased are to be recorded at the actual amount paid?
Going concern concept
Money measurement concept
Business entity concept
Cost concept
38
The resources of an accounting entity are called
Cash balance only
Cash and Bank balances
Liabilities
Assets
39
The term depletion is used in relation to
Fixed assets
Wasting assets
Current assets
Intangible assets
40
Interest payable is a
Asset
Revenue
Expenses
Liability

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