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Accounting For Managers
Accounting For Managers MCQs
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Creating Provision against fluctuation in the price of investment is an example of which accounting convention
Convention of conservatism
Convention of full disclosure
Convention of materiality
Convention of consistency
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Return of goods by a customer should be debited to
Customers account
Sales return account
Goods account
Purchase account
?
Cash discount allowed to a debtor should be credited to
Discount account
Customer’s account
Sales account
Cash account
?
The concept of separate entity is applicable to which of following types of businesses?
Sole proprietorship
Corporation
Partnership
All of them
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Accounting principles are generally based upon:
Practicability
Subjectivity
Convenience in recording
None of the above
?
Debit the receiver credit the giver rule for
Real a/c
Personal a/c
Nominal a/c
None of these
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Managerial accounting information is generally prepared for
Shareholders
Creditors
Managers
Regulatory agencies
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True & fair profit and loss a/c of a company know by
Preparing trial balance
Preparing respective ledger of account
Preparing trading a/c
Preparing trading & profit & loss a/c
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Which one of the following items would fall under the definition of a liability
Cash
Debtor
Owner’s equity
None of these
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The basic sequence in the accounting process can best be described as:
Transaction, journal entry, source document, ledger account, trial balance.
Source document, transaction, ledger account, journal entry, trial balance.
Transaction, source document, journal entry, trial balance, ledger account.
Transaction, source document, journal entry, ledger account, trial balance.
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Amount brought in by proprietor should be credited to
cash account
capital account
drawings account
creditors account
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Which of the following is a real (permanent) account?
Goodwill
Sales
Accounts Receivable
Both Goodwill and Accounts Receivable
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Which of the following errors will be disclosed in the preparation of a trial balance?
Recording transactions in the wrong account.
Duplication of a transaction in the accounting records.
Posting only the debit portion of a particular journal entry.
Recording the wrong amount for a transaction to both the account debited and the account credited.
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Management Accounting provides invaluable services to management in performing
All management function
Interpret financial data
Controlling function
None of these
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If closing stock appears in the trial balance, it should be
Credited to the trading account
Credited to the profit and loss account
Deducted from the purchases in the trading account
Shown on the liability side of the Balance sheet
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Financial information should be neutral and bias free" is the dictation of which one of the following?
Completeness concept
Faithful representation Concept
Objectivity Concept
Duality Concept
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Which of the following statements is not an objective of financial reporting?
Provide information that is useful in investment and credit decisions.
Provide information regarding policy of organization
Provide information that is useful in assessing cash flow prospective
None of theses
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A company’s telephone bill consisting of a Rs.200 monthly base amount, plus long distance charges, would be classified as a:
Variable cost
Committed fixed cost
Direct cost
Semi variable cost
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A book containing a chronological record of business transaction & original record
Journal
Ledger
Trial balance
None of these
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Which of these items would be accounted for as an expense?
Repayment of bank Loan
Dividend to stock holders
The purchase of land
Payment of current period rent
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The amount of salary paid to Suresh should be debited to
The account of Suresh
Salaries a/c
Cash a/c
Bank a/c
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The cash discount allowed to a debtor should be credited to
Discount a/c
Customer a/c
Sales a/c
None of these
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Accounting does not record non-financial transactions because of:
Accrual concept
Cost concept
Continuity concept
Money measurement concept
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Accounting is the process of matching
Benefits & Costs
Revenues & Costs
Cash Inflow & Cash Outflow
Potential & Real Performance
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The primary objective of cost accounting is
Ascertain the cost of goods and services
Ascertain the profit
Presentation of all data
None of these
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Of the following account types, which would be increased by a debit?
Liabilities and expenses.
Assets and equity.
Assets and expenses.
Equity and revenues.
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Which of the following statements about differences between financial and managerial accounting is incorrect?
Managerial accounting information is prepared primarily for external parties such as stockholders and creditors; financial accounting is directed at internal users.
Financial accounting is aggregated; managerial accounting is focused on products and departments.
Managerial accounting pertains to both past and future items; financial accounting focuses primarily on past transactions and events.
Financial accounting is based on generally accepted accounting practices; managerial accounting faces no similar constraining factors.
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Custom and traditions which guide the accountant while preparing the accounting statements
Accounting convention
Accounting concepts
Accounting principles
None of these
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Balance Sheet is a statement of
Assets
Liabilities
Capital
All of these
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The convention of disclosure implies that all material information should be
Disclosed in the account
Disclosed in the accounts which is required to owner
Not disclosed
None of these
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Outstanding salary is shown as:
An asset in the balance sheet
A liability
By adjusting it in the P & L a/c
Both b and c above
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Proprietor (owner) is treated as creditor of business due to:
Periodicity concept
Materiality Principle
Entity Concept
Consistency concept
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Which of the following is correct
Profit does not alter capital
Capital can only come from profit
Profit reduces capital
Profit increases capital
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Interest , rent, electricity bill are types of account
Personal a/c
Impersonal a/c
Real a/c
Nominal a/c
?
Cost of asset should always be equal to the cost of the liabilities. This concept is
Double Entry Bookkeeping
Matching Concept
Consistency
Money measurement Concept
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P& l a/c is prepared for a period of one year by following:
Consistency concept
Conservatism concept
Accounting period concept
Cost Concept
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Prepaid expense is treated as
Current asset
Current liability
Short term liability
None of these
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Which of the following is a liability?
Loan from Mr.Y
loan to Mr.y
Both (a) (b)
None of these
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Advantages of cost accounting accrue:
Only to workers
Only to government
Only to consumers
To management, workers, consumers and government
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Marginal costing is concerned with:
Fixed cost
Variable cost
Semi variable cost
None of the above
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The books to be compulsorily maintained by a company are:
Cash book and ledger
Sales and purchase book
Journal
All of above
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Which of the following best describes a trial balance?
It is a list of balances on the books
It is a special account
Shows the financial position of a business
Shows all the entries in the books
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Which of the following equation is related with Dual Aspect Concept?
Total Assets = Total Liabilities
Total Assets = Capital + Outsider’s Liabilities
Capital = Total Assets - Outsider’s Liabilities
All of the above
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The prime function of accounting is to
To record economic data
Provide the information basis of action
Classifying and recording business transaction
Attainment of economic goal
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According to schedule VI Companies Act which item is not shown on Asset side of Balance sheet
Investment
Current Loan & Advances
Provision
Lease Holds
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Salary paid to factory manager is an item of:
Prime cost
Factory overhead
Selling overhead
Office overhead
?
Carriage outward is charged to
Debit side Profit & Loss a/c
Debit side Trading a/c
Credit side of Profit & Loss a/c
Credit side of trading a/c
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Payment received from Debtor
Decreases the Total Assets
Increases the Total Assets
Results in no change in the Total Assets
Increases the Total Liabilities
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Which one of the following is not an example of Intangible Assets?
Patents
Trade Marks
Copyright
Land
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Creating provision against fluctuation in the price of investment is application of accounting concept
Convention of conservatism
Convention of full disclosure
Convention of consistency
None of these
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Debit what come in Credit what goes out rule for
Real a/c
Personal a/c
Nominal a/c
None of these
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The following comments each relate to the recording of journal entries. Which statement is true?
For any given journal entry, debits must exceed credits.
It is customary to record credits on the left and debits on the right.
The chart of accounts reveals the amount to debit and credit to the affected accounts.
Journalization is the process of converting transactions and events into debit/credit format.
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Going concern concept assumes
Business as a dissolving concern
Business on relishing values
Business as a going concern
Asset = liability
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Management Accounting relates to
Recording of accounting data
Recording of cost data
Presentation of account data
None of the above
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Which items does not come under the balance sheet
sales
Share capital
Reserves and surplus
Unsecured loan
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Which of the following is not related with Money Measurement Concept ?
All business transaction should be expressed only in money
The transactions which cannot be expressed in money, will not be recorded in accounting books
Business is treated as separate from the proprietor
None of These
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Depreciation is a charge against
Profit
Assets
Company
Books of A/c
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Fixed assets and current assets are categorized as per concept of:
Separate entity
Going concern
Consistency
Time period
?
Management accounting is applicable to
Service entities
Manufacturing entities
Non profit entities
All of these
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Insurance prepaid is shown as
Current assets
Current liabilities
Fixed asset
Fixed liability
?
Financial accounting is concerned with
Recording of business expenses and revenue
Recording of costs of products and services
Recording of day to day business transactions
None of the above
?
Goods given as samples should be credited to:
Advertisement account
Sales account
Purchase account
None of the above
?
Investment of X company profit in shares of other company PQR Pvt. ltd are recorded in
Asset side of Balance Sheet
Liability side of Balance Sheet
Profit & Loss a/c
Not recorded in Balance Sheet
?
Sales made to Mahesh for cash should be debited to
Cash account
Mahesh Account
Sales account
Purchase account
?
Income tax paid by a sole proprietor on his business income should be:
Debited to trading account
Debited to profit and loss account
Deducted from capital account in the balance sheet
None of the above
?
What comes in is to be debited, what goes out is to be credited.
Rules of Personal
Rules of Real
Rules of Nominal
All of these
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Which of the following is not an example of real a/c:
Machinery
Building
Cash
Creditor
?
Purchases of goods on credit from A is recorded as:
Debit purchases a/c; credit cash a/c
Debit A a/c; credit purchases a/c
Debit purchases a/c; credit A a/c
Debit A a/c; credit stock a/c
?
The transferring of debit and credit items from journal to the respective accounts in the ledger is called as
Ledger
Posting
Forward journal
None of these
?
The following comments all relate to the recording process. Which of these statements is correct?
The general ledger is a chronological record of transactions.
The general ledger is posted from transactions recorded in the general journal.
The trial balance provides the primary source document for recording transactions into the general journal.
Transposition is the transfer of information from the general journal to the general ledger.
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Cost accounting information can be used for:
Budget control and evaluation.
Determining standard costs and variances.
Pricing and inventory valuation decisions.
All of these
?
Current liability does not include
Sundry creditors
Acceptances
Unclaimed dividend
Short term investment
?
The term Management Accounting was first used in
1910
1939
1950
1960
?
______________ system records only actual cash receipts and payments
Cash basis
Accrual basis
Mercantile basis
Single entry basis
?
Aggregate of direct costs is known as:
Direct material costs
Direct Wages
Direct Expenses
Prime Cost
?
Information about an item is ______________ if its omission or misstatement might influence the financial decision of the users taken on the basis of ...
Concrete
Complete
Immaterial
Material
?
Proposed dividends" is shown in the Balance Sheet of a company under the head:
Provisions
Reserves and Surplus
Current Liabilities
Other Liabilities
?
Authorized capital, also known as
nominal capital
Paid up capital
Issues capital
None of these
?
Trade Payables are recorded in ______________
Asset side of B/S
Liability side of B/S
P & L a/c
None of the above
?
Cost accounting emerged mainly on account of:
Statutory requirements
Competition in the market
Labour unrest
Limitations of financial accounting
?
Rent paid to landlord should be credited to
Landlords account
Rent account
Cash account
Expense account
?
The primary objective of management accounting is
Prepare final a/c
Provide management complete and true information
Both (a) & (b)
None of these
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Cost of goods sold= opening stock+ net purchases+ expenses on Purchases – sales Which part of formula is wrong?
opening stock
net purchases
expenses on Purchases
sales
?
Interest on drawings is:
Expenditure for the business
Cost for the business
Gain for the business
None of the above
?
The basic concepts related to p& l a/c are:
Realization Concept
Matching Concept
Cost Concept
Both a and b above
?
All those to whom business owes money are:
Debtors
Investors
Creditors
Shareholders
?
All direct & indirect expenses related to business are charged:
Profit and loss account
Trading account
Trading account Profit and Loss account
Directly to Balance sheet
?
If loan have been guaranteed by managers and directors is called as
Loan
Unsecured Loan
Secured Loan
Advance by Manager & director
?
Opening stock + ______________ + Direct Expenses (Carriage on Raw material)-Closing Stock = ______________
Sales, Purchases
Sales, Sales return
Purchases, Cost of goods produced
Purchases, Cost of goods sold
?
Credit balance of profit & loss a/c shown on
Asset side of balance sheet
Liability side of balance sheet
Not shown in balance sheet
Half on asset side and half on liability side
?
Outstanding expenses are charged to
Asset side of balance sheet
Liability side of balance sheet
Not charged to balance sheet
None of these
?
The revenue recognition principal dictates that all types of incomes should be recorded or recognized when
Cash is received
At the end of accounting period
When they are earned
When interest is paid
?
Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?
Fiscal year
Calendar year
Accounting period
Accrual period
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If the total assets of the company amount to Rs 1,50,000 and owner’s equity is Rs 70,000,the amount of liabilities will be
Rs 70,000
Rs 80,000
Rs 90,000
Rs 1,00,000
?
The system of recording transaction based on dual aspect concept is called
Double account system
Double entry system
Single entry system
None of these
?
The convention of conservatism is applicable
In providing for discount on creditors
In making provision for bad doubtful debts
Providing depreciation
None of these
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Rules of action or conduct adopted by the accountants universally while recording accounting transaction
Accounting convention
Accounting concepts
Accounting principles
None of these
?
Which of the following items would not fall under the definition of an asset?
Land
Machine
Cash
Milk
?
Basic assumptions or conditions upon which the science of accounting is based.
Accounting convention
Accounting concepts
Accounting principles
None of these.
?
Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?
Fiscal year
Calendar year
Accounting period
Accrual period