Professional Documents
Culture Documents
SECTION A
Each Question carries 1 mark each
1. According to the Entity concept, a business is an _________ distinct from its proprietor(s).
a. Business Entity
b. Artificial Entity
c. Corporate Entity
d. Separate Entity
2. According to the Cost concept, assets such as land, building etc should be recorded at
a. Historical cost
b. Actual cost
c. Opportunity cost
d. Sunk cost
3. Assets (A) = Liabilities + ________
a. Drawings
b. Equity
c. Shareholder funds
d. Creditors
4. A cashbook is a ______ as well as ledger
a. Subsidiary book
b. Secondary book
c. Journal
d. Primary book
5. Double entry concept has two aspects debit and ________
a. Credit
b. Decrease
c. Dual
d. Increase
6. Posting refers to the recording of transactions from _________ to ledger
a. Trial balance
b. Journal
c. Primary book
d. Cash book
7. A/c is an abbreviation of _______
a. Brought down
b. Carried down
c. Accountancy
d. Account
8. The arithmetical accuracy of ledger balances can be checked with the help of
a. Journal
b. Ledger
c. Trial balance
d. Cashbook
9. Trial balance becomes the source document for preparing ____________
a. Final accounts
b. Trading accounts
c. Balance accounts
d. P&L account
10. An error committed because of lack of knowledge of the basic accounting principles is called an error of _____
a. Error commission
b. Error of omission
c. Error of principle
d. Compensating error
11. Popularly, final accounts consist of two statements, profit & loss A/c and ________
a. Income statement
b. Trading account
c. Balance account
d. P & l A/c
12. Compensating error is the error of posting the account in one account instead of
a. Another account
b. Wrong account
c. Same account
d. Right account
13. Liquidity ratios involve two important and basic ratios: current ratio and
a. Quick ratio
b. Debt equity ratio
c. Solvency ratio
d. Liquidity ratio
14. An acceptable norm for debt equity ratio
a. 2:1
b. 3:1
c. 4:1
d. 1:1
15. Debt equity ratio is used to judge the _________ financial solvency of the business
a. Long term
b. Mid term
c. Short term
d. Long lasting
16. Ratio Analysis is mainly a _________ or an analysis of the past financial data
a. Historical analysis
b. Critical analysis
c. Crucial analysis
d. Hypothetical analysis
17. For the purpose of fund flow statements the term fund means _________
a. Cash
b. Working capital
c. Current assets
d. Long term assets
18. Fund flow statement is a technical device designed to highlight the changes in the financial condition of a
business enterprise between __________ balance sheets
a. Two
b. Three
c. Four
d. None
19. Cash flow statement helps in _________ financial decisions relating to liquidity
a. Long term
b. Short term
c. Sound
d. Strong
20. Cash flow statement reveals the inflow and outflow of _________ during a particular period.
a. Cash
b. Funds
c. Working capital
d. Assets
21. ________ cost is also called period cost
a. Sunk cost
b. Fixed cost
c. Historical cost
d. Current cost
22. Direct material cost and direct labor cost are a good examples of________ costs
a. Variable
b. Fixed
c. Semi-variable
d. Semi-fixed
23. The concept of marginal costing is developed to overcome the deficiencies of _________ costing.
a. Direct
b. Absorption
c. Variable
d. Differential
26. The difference between Actual sales and break even sales is called ________
a. Margin of safety
b. Margin of Line
c. Break even point
d. CVP
27. Break even chart shows the relation between cost, volume and _________
a. Output
b. Sales
c. Product
d. Profit
28. Budget is a formal expression of anticipated __________ and expenditure for a definite future period
a. Income
b. Loss
c. Profit
d. Expense
29. The standards for materials include material quantity (usage) standard and material _________ standard
a. Price
b. Yield
c. Cost
d. None
30. When standard cost is more than actual cost, it is called _________ variance
a. Favorable
b. Adverse
c. Reverse
d. Unfavorable
31. Material Cost Variance = Material price variance + Material _________ variance
a. Labor
b. Usage
c. Idle
d. Volume
32. Variable cost is one, which in the aggregate varies in proportion to the volume of production.
a. Direct
b. Does not change
c. Reverse
d. None of these.
33. Quick ratio is also known as ________
a. Liquidity ratio
b. Liquid ratio
c. Current ratio
d. Quick asset ratio
34. Earning per equity ratio = Dividend paid to equity shareholders/?
a. No. Of equity share
b. No. Of profit share
c. Total profit
d. Net profit
35. Decision making is linked with planning and ___________
a. Organizing
b. Staffing
c. Control
d. Directing
36. The excess of credit over debit is known as net profit, and the excess of debit side total over the credit side total
is known as
a. Net Loss
b. Net gain
c. Gross loss
d. Gross profit
37. If the amount received from Mr. X is wrongly posted in the account of Mr. Y, an error of _____ has occurred
a. Commission
b. Omission
c. Principle
d. Compensating error
38. Purchases Day Book records credit _________
a. Sales
b. Purchases
c. Expenses
d. Income
39. _________ is a book of original or prime entry
a. Journal
b. Ledger
c. Subsidiary
d. Cash
40. A has a current ratio of 4.5 to 1 and liquidity ratio is 3:1. Its stock is Rs. 24, 000, Find out the total current
liabilities
a. 15, 000
b. 16, 000
c. 26, 000
d. 30, 000
SECTION B
1 The success of a business entity depends on:
1. Land
2. Labor
3. Capital
4. Management
a. 1, 2
b. 3, 4
c. All of the above
d. None of the above
a. Only 1
b. None of the above
c. 2, 3
d. Only 4
10. Liquidity ratios include:
1. Current ratio
2. Acid test ratio
3. Debt ratio
4. Gross profit ratio
a. 1, 2
b. 1, 2, 3
c. 1, 3
d. All of the above
11. Fund flow statement is also known by other names such as:
1. A statement of sources and uses of fund
2. Where got and where gone statement
3. Cash flow statement
4. Inflow and outflow of fund statement
a. 1, 2
b. 1, 2, 3
c. 1, 2, 4
d. All of the above
12. The main purposes of fund flow statement are:
1. To help to understand the changes in assets and asset sources
2. To inform as to how the loans to the business have been used
3. To point out the financial strengths and weakness of the business
a. 1, 2
b. Only 3
c. All of the above
d. None of the above
13. Uses of cash flow statement include:
1. It explains the reasons for low cash balance
2. It shows the major sources and uses of cash
3. Future projections can be made from past year statements
a. 1, 2
b. 2, 3
c. Only 3
d. All of the above
14. Inflow of cash results from the following activities
1. Cash from operations
2. Payment of tax
3. Sale of assets
4. Collection from debtors
a. 1, 2, 3
b. 2, 3, 4
c. Only 1
d. 1, 3, 4