134. Any
donation received for a specific
purpose is a
(a) Liability
(b)
Assets
(c) Revenue receipts
(d)
Capital receipts
135. Which of the following is an item of capital expenditure?
(a) Research and development costs
during the year
(b) Interest
on borrowed fund utilized for acquisition of Office Furniture
(c) Installation charges paid in conjunction with the purchase
of
Office Equipment
(d)
Monthly rent
of a machinery used in the business
[Hints: (c) A capital expenditure is a non- recurring expenditure
whose benefit lasts
for
more than one accounting period. Installation charges paid in conjunction with
the purchase of office
equipment is an one-time expenditure whose benefit lasts for
more than one accounting
period.]
136. Which of the following statements is true?
(a) Provision for doubtful debts
represents the amount that cannot be collected
(b)
The distinction between capital
and
revenue items is important
because it
is of fundamental importance to the
determination of profits
(c) Goods lost
by fire need not be accounted for since they
are
not sales
(d) Free samples received are business gains
137. The balance of which of the following accounts do not disappear,
once they are
debited/credited to
Trading Account.
(a)
Sales
(b) Purchases
(c) Inward returns
(d)
Closing stock
[Hints: (d) The
closing stock (d)
is the value of goods which remain unsold at
the end of the period whose balance appears once in Trading Account and once in Balance Sheet of the business. All other accounts sales (a), purchases (b) and Inward Returns (c)
are closed once they are absorbed by the
Trading Account.
Thus (d)
is the correct
answer.]
138. Which one of the following should be considered a
revenue expenditure?
(a)
'1000 paid for the execution
of a new plant
(b) Loss of
'10,000 incurred in increasing
the sitting accommodation of a
hotel
(c) Damage paid on account of breach of a
contract
to supply certain goods
(d) Repair to machinery
purchased, second hand.
139. Which of the following statements are / is
true? “Events
after Balance Sheet” are
(a)
All the significant
events after the Balance Sheet
date
(b)
The events after Balance Sheet date but before submitting it to the Registrar of
Companies
(c) The events
after Balance Sheet
date but before its
approval
by the board
(d)
All changes
after Balance Sheet date
before its approval
[Hints: (c) Events occurring after the Balance
Sheet date
are those significant events,
both favourable and unfavourable, that occur between the Balance Sheet date and the date on which the
financial statements
are approved by the Board of Directors in
the case of a company, and by the corresponding approving
authority in the case of any
other entity.]
140. Which one of the following is a capital expenditure?
(a)
Compensation
paid to Directors on termination of their
services
(b) Expenditure incurred in connection with
the
renewal
of a
Trade Mark.
(c) Gratuities paid to
Directors on termination of their
services.
(d) Royalty
paid
in installments for the purchase
of
rights to manufacture and sell
patient
medicines.
141. Which of the following enhances the earning capacity
of an asset?
(a) Increase in working
capacity
of an asset
(b) Reduction
in
operating costs
(c) Replacing
damaged parts of an asset
(d) Both (a) and (c) above
[Hints: (d) Enhancement
of earning capacity can be by way of replacement
of worn
out or damaged parts which retarded the earning capacity and increase in
the working capacity
increases
the earning
capacity
of the asset.]
142. Which of the following items
should not be capitalized relating
to fixed assets?
(a) Interest
payable on loans or deferred credits taken for the acquisition or
construction of
fixed assets before they
are
ready for use
(b)
Stand by equipment
and servicing equipment
(c) Expenditure
incurred on test runs and experimental
production
(d)
Administration and general
expenses
[Hints: (d) Only those expenses which relate to and specifically attributable to the asset are capitalized. Administration and general expenses cannot be
specifically
attributable
to the asset and hence cannot be capitalized.]
143. Which of these
errors affect only one account
(a) Errors of casting
(b) Errors of carry
forward
(c) Errors of posting
(d)
All the three
144. Which of these
errors affect two or more accounts
(a) Errors of complete omission
(b) Errors of principle
(c) Errors of posting
to wrong account
(d)
All the three
145. Which of the following error is
an error of principle
(a)
? 5,000 received from Sham credited to Ram A/c
(b)
? 5,000 incurred on installation of new plant debited to
travelling
expenses A/c
(c)
? 500 paid for wages
debited to
salary A/c
(d)
? 500 being purchase
of raw material debited to purchase
A/c ? 50
146. Which of the following is an one sided error
(a)
? 500 purchase of old equipment
not recorded in the books of A/c at
all
(b)
? 500 being expense on travelling expense credited to
travelling expenses
(c) Both
(d) None
147. Any gain on the sale of non-current
assets should be from the net profit and
the loss
must be to
the net profit in determining
fund
from operation
(a)
Added, Reduced
(b)
Added, Added
(c) Deducted,
Added
(d) Deducted, Deducted
148. Cash
book
records—
(a)
Only cash sales
(b)
All types of cash receipts
and
payments
(c) Only
revenue receipts
(d)
Only capital
receipts
149. In a three column cash book ......does not exist
(a)
Cash column
(b) Bank column
(c) Petty cash column
(d) Discount column
150. Which of these transactions will not be recorded in cash book—
(a)
Cash received from debtors
(b)
Cash paid to creditors
(c)
Salary remained outstanding
(d)
Cash deposited with bank
151. The closing balance of a petty cash book is
a / an —
(a) Liability
(b)
Gain (c) Assets (d) Loss
152. Which column of a cash book will not have
credit balance —
(a) Bank column
(b) Discount column
(c) Cash column
(d) None
153. Petty cash balance is
a/an
—
(a)
Assets
(b) Expenditure
(c) Liability
(d) None
154. Which of these is
a Part of cash in hand
(a) Postage stamps
(b) B/R
(c) Cheque Deposited with Bank
(d) B/R endorsed
155. Which of the following is a Real
A/c
(a)
Salary A/c
(b) Bank A/c
(c) Building A/c
(d)
Goodwill
A/c
156. Which of the following is a Personal A/c
(a)
Outstanding Salary
A/c
(b) Rent A/c
(c)
SBI A/c
(d) Bad debts
A/c
157. Which of the following is a representative Personal A/c
(a)
Outstanding Salary
A/c
(b) Rent A/c
(c)
SBI A/c
(d) Bad debts
A/c
158. Which of the following is a Nominal A/c
(a)
Outstanding Salary
A/c
(b) Rent A/c
(c) SBI A/c
(d) Debtors
A/c
159.
Goodwill
A/c is a/an —
(a) Nominal
A/c
(b)
Tangible
Asset
(c) Intangible Asset
(d) Fictitious Asset
160.
Posting
is the process of —
(a) Posting the letters
in drop box
(b) Posting suitable person to
a suitable job
(c) Entering in the ledger
the information contained
in
the ledger
(d)
All the three
161. A
book wherein various
accounts
are
opened is
called—
(a)
Subsidiary books
(b)
Journal
(c) Ledger
(d)
Trial Balance
Capital
expenses are shown in —
(a) Balance Sheet
(b) Profit and Loss A/c
(c)
Trading A/c
(d) None of
these
Revenue receipts
are
shown in —
(a) Balance Sheet
(b) Profit and Loss appropriation A/c
(c) Manufacturing
A/c
(d)
Trading and Profit
and Loss A/c
Revenue
is generally recognised as being
earned at that point
of time when
(a)
sale is effected
(b)
cash is received
(c) production is
completed
(d)
debts are collected
Which of the following is
a revenue expenses
(a) Raw material consumed
(b) Plant purchased
(c) Long
term loan raised from bank
(d)
Share Capital
Which of the following is
a capital expenditure
(a) Repair of
plant and machinery
(b)
Salary paid to workers
(c) Cost
of stand by equipment
(d)
Annual whitewash of the office building
Which
of these types of
expenditure would not be treated as a Capital
Expenditure
(a)
Acquisition of an Asset
(b) Extension of an Asset
(c) Improvement of the existing Asset
(d)
Maintenance of the Asset
171. Expenses of the following nature are treated as a Revenue expenses except
—
(a) Expenses for day
to day running
of
the business
(b) Putting the new asset in working condition
(c) Depreciation
(d) Purchase of raw material
172. Cash received
from debtors
would be deemed as ..of funds.
(a) No flow
(b)
Sources (c) Uses
(d)
Gain
173. Purchase day book records
(a)
All cash purchases
(b)
All credit
purchases
(c) Only
credit purchase of
raw
material or goods purchased for resale
(d)
All purchases
174. Journal
is also known by —
(a)
Memorandum A/c
(b) Kaccha books
(c) Books
of original
entry
(d) Proper books
175. Generally the
term fund is
used to
mean the difference between
(a)
Current
assets and current liabilities
(b) Profit and loss A/C
and Balance sheet
(c) Current assets
and non-current liabilities
(d)
Current
liabilities and non-current
liabilities
176. The periodic
total
of purchase
day book is posted to —
(a)
Creditors A/c
(b) Debtors
A/c (c) Purchase A/c (d) None
177. Which
of these
documents is not required for Bank Reconciliation
(a) Bank column of Cash Book
(b) Bank Pass
Book (c) Bank
Statement (d)
Trial Balance
178. Which
of these will not affect Bank and Cash balance
(a)
Cash received from X credited to
Y
(b)
Cheques
issued to A but
debited to B
(c) Cheques deposited and cleared on the same date
(d)
All the three