Financial Accounting Question Answers MCQ (Accounting Quiz - 9)

1. Which of the following appears under the head “Miscellaneous expenditure” on the assets side of a balance sheet?
[A]Bills discounted from bank
[B]Prepaid insurance premium
[C]Directors’ remuneration
[D]Discount on issue of shares


2. Which of the following is not a source of fund?
[A]Sale of an asset
[B]Collection of bills receivable
[C]Issue of shares
[D]Borrowing from banks


3. Future maintainable profits of West Ltd. for the last 5 years were as follows:
1998-1999 Rs.1,32,000
1999-2000 Rs.2,44,000
2000-2001 Rs.2,74,000
2001-2002 Rs.3,15,000
2002-2003 Rs.3,32,000
The weighted average profits of the company are
[A]Rs.14,54,000
[B]Rs.10,90,500
[C]Rs. 8,72,400
[D]Rs. 2,90,800


4. According to section 78 of the Companies Act, the amount in the share premium account cannot be used for the purpose of
[A]Issue of fully paid bonus shares
[B]Writing off losses of the company
[C]Writing off preliminary expenses
[D]Writing off commission or discount on issue of shares


5. The three column cash book represents
[A]Real accounts
[B]Nominal accounts
[C]Nominal and personal accounts
[D]Real, personal and nominal accounts


6. Carriage inward refers to the cost of transportation for
[A]Purchase of materials
[B]Sale of products
[C]Returns outward
[D]Return of unsold goods


7. Jasmine Ltd. has a share capital of 6,000 equity shares of Rs.100 each having a market value of Rs.176 per share. The company wants to raise additional funds and offers to its existing equity shareholders the right to apply for a new share at Rs.120 per share for every three shares held by them. The value of right is
[A]Rs.176
[B]Rs.120
[C]Rs. 56
[D]Rs. 14


8. A credit sale to Mr. Gupta for Rs.7,500 was recorded in purchases book as Rs.5,700 and was posted to the debit side of Mr. Gupta’s account as Rs.7,500. The effect of this mistake, in trail balance is
[A]Debit is more by Rs.13,200
[B]Debit is more by Rs.7,500
[C]Credit is more by Rs.5,700
[D]Debit is less by Rs.7,500


9. The periodical total of a purchases returns book is recorded to the
[A]Debit side of the purchases account
[B]Debit side of the purchases returns account
[C]Credit side of the purchases account
[D]Credit side of the purchases returns account


10. The average capital employed of Sun Ltd. is Rs.12,00,000. The net trading profits of the company after payment of tax for the past 3 years were Rs.2,20,200, Rs.1,80,000 and Rs.2,21,400 respectively. If the normal rate of return is 10%, the super profits of the company are
[A]Rs. 62,160
[B]Rs. 87,200
[C]Rs.1,20,000
[D]Rs.1,90,800


11. Sanmit Ltd. issued shares of Rs.10 each at a discount of 10%. Mr. Ravi who applied for 30 shares and paid Rs.2 on application and failed to pay the allotment money of Rs.3. If the company forfeites his entire shares, the forfeiture account will be credited by
[A]Rs.90
[B]Rs.81
[C]Rs.60
[D]Rs.54


12. Which of the following methods of valuation of inventory is based on the assumption that costs are charged against revenue in the order in which they occur?
[A]FIFO method
[B]LIFO method
[C]Weighted average method
[D]Moving average method


13. Which of the following errors will cause a mismatch in the trial balance?
[A]Errors of complete omission
[B]Compensating errors
[C]Errors of principle
[D]Errors of partial omission


14. AB & Co. purchased a machine for Rs.10,00,000 on April 1, 2002. The salvage value of the machine is Rs.40,000. The useful life of the machine is 8 years. If the firm intends to depreciate the machinery on straight-line method, the rate of depreciation will be
[A]16%
[B]15%
[C]14%
[D]12%


15. If the purchases day book of a firm is overcast, it will
[A]Increase gross profit and reduce net profit
[B]Reduce gross profit and increase net profit
[C]Reduce gross profit as well as net profit
[D]Increase gross profit as well as net profit