Financial Accounting

1.    What is accounting cycle?    

2.    What is the difference between trading account and manufacturing account?    

3.    Discuss the concept of going concern concept.    

4.    Explain the P&L account.    

5.    Differentiate between manufacturing and trading account.    

6.    Explain prudence convention.    

7.    Explain the accounting errors.

8.    Elaborate the concept of double entry system of book keeping.

Assignment C

Question No.  1    Marks - 10
Which of the following is NOT an element of Balance Sheet?    

Options    
Assets    
Equity    
Expenses    
Liabilities

Question No.  2    Marks - 10
Financial statements are prepared    

Options    
Only for publicly owned business organizations    
For corporations, but not for sole proprietorships or partnerships    
Primarily for the benefit of persons outside of the business organization    
In either monetary or nonmonetary terms, depending upon the need of the decision maker

Question No.  3    Marks - 10
A Balance Sheet provides financial information    

Options    
For a period of time    
At a given point in time    
For some point of time in the future    
In the mid of the fiscal year    

Question No.  4    Marks - 10
During a period of steadily rising prices, which of the following methods of measuring the cost of goods sold is likely to result in reporting the highest gross profit?    

Options    
LIFO    
FIFO    
Average Cost    
Specific Identification

Question No.  5    Marks - 10
Bills Payable is    

Options    
An Asset    
A Liability    
An Expense    
A Loss    

Question No.  6    Marks - 10
An artificial account that appears in "trial balance" to account for undetected errors is called    

Options    
Trading Account    
Rectification Account    
Suspense Account    
Artificial Account

Question No.  7    Marks - 10
An income statement communicates information regarding revenues and expenses    

Options    
For a period of time    
At a given point in time    
For some point of time in the future    
At the beginning of the fiscal year

Question No.  8    Marks - 10
Which of the following is a part of Fixed Assets?    

Options    
Debtors    
Bills Receivables    
Capital    
Building

Question No.  9    Marks - 10
Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the information needs of    

Options    
Investors and creditors    
Government agencies such as the Internal Revenue Service    
Customers    
Trade associations and labor unions

Question No.  10    Marks - 10
The financial statement which shows cash activity (receipts and disbursements) during the accounting period is called a(n)    

Options    
Bank statement    
Income statement    
Statement of cash flows    
Bank reconciliation

Question No.  11    Marks - 10
A company which uses the direct write-off method recognizes uncollectible accounts expense    

Options    
As a percentage of net sales during the period    
As a percentage of net credit sales during the period    
As indicated by aging the accounts receivable at the end of the period    
As specific accounts receivable are determined to be worthless

Question No.  12    Marks - 10
A triple column cash book records     

Options    
Cash, Bank, Discount    
Cash, Bank, Sales    
Cash, Discount, Sales    
Cash, Bank, Gains

Question No.  13    Marks - 10
Which of the following denotes "Gross Block"?    

Options    
Depreciated costs of fixed Assets    
Historical cost of fixed assets    
Liabilities payable    
Gross Profits

Question No.  14    Marks - 10
All of the following are characteristics of managerial accounting, except    

Options    
Reports are used primarily by insiders rather than by persons outside of the business entity    
Its purpose is to assist managers in planning and controlling business operations    
Information must be developed in conformity with generally accepted accounting principles or with income tax regulations    
Information may be tailored to assist in specific managerial decisions

Question No.  15    Marks - 10
Which of the following statements is correct?    

Options    
Accounting profit is the difference between cash receipts and cash paid in a period
Accounting profit is the total of cash sales in the year less the expenses for the period
Accounting profit is the difference between revenue income and expenses for the period    
Accounting profit is the difference between revenue income and cash payments for the period    

Question No.  16    Marks - 10
Which of the following is NOT a type of Voucher    

Options    
Journal Voucher    
Receipt Voucher    
Asset Voucher    
Payment Voucher

Question No.  17    Marks - 10
An ordinary share dividend is:    

Options    
Part of the company profits used to reward the shareholders for their investment    
Interest on money lent to the company by its shareholders    
An expense of running the company    
The directors’ remuneration

Question No.  18    Marks - 10
When an item appears in the trial balance, it appears in final accounts    

Options    
only once    
twice    
three times    
will not appear again in final accounts

Question No.  19    Marks - 10
Outstanding Expense is an item of    

Options    
Assets    
Liabilities    
Debtors    
Investments

Question No.  20    Marks - 10
Marshalling of "Balance Sheet" means    

Options    
The ordering of Assets and Liabilities    
The totaling of Assets and Liabilities    
Assets - Liabilities    
Separate heading of Fixed Assets and Long-term Liabilities    

Question No.  21    Marks - 10
The profitability and solvency of a business should be measured    

Options    
After each transaction    
At the end of Accounting Period    
At the end of each month    
Every Day

Question No.  22    Marks - 10
Sales are recognized as ‘Income'    

Options    
At the point of Sale    
After the expiry of Credit period allowed to debtors    
At the end of Accounting Period    
after the money is collected from debtors

Question No.  23    Marks - 10
The Term "Goodwill" comes under the heading of     

Options    
Liabilities    
Assets    
Debtors    
Equity    

Question No.  24    Marks - 10
Financial Year is also called as    

Options    
Accounting Year    
Accounts Year    
Accountable Year    
None of these  

Question No.  25    Marks - 10
The nature of an asset is best described as    

Options    
Something with physical form that is valued at cost in the accounting records    
An economic resource owned by a business and expected to benefit future operations
An economic resource representing cash or the right to receive cash in the near future
Something owned by a business that has a ready market value    

Question No.  26    Marks - 10
The external events that involve transfer of value between two entities is known as    

Options    
Transactions    
Events    
Divisions    
Happenings

Question No.  27    Marks - 10
Which of the following is TRUE?    

Options    
Assets=Liablities+Equity    
Assets=Liabilities-Equity    
Assets= Liabilities-Losses    
Assets=Liabilities+Profits    

Question No.  28    Marks - 10
The personal expense of Proprietor are known as    

Options    
Proprietary Expenses    
Personal Expense    
Drawings    
Business Expense

Question No.  29    Marks - 10
Which "Book" records all residual transactions?    

Options    
Cash Book    
Journal proper    
Purchase Day Book    
Sales Day book

Question No.  30    Marks - 10
A "Debit" balance in Cash Book shows    

Options    
Cash Sales    
Cash paid to creditors    
Cash expenses made    
Cash paid for buying land

Question No.  31    Marks - 10
Which of the following is a type of "reserve"?    

Options    
Losses reserve    
Payment Reserves    
Non-free reserves    
Specific Reserves

Question No.  32    Marks - 10
Which of the following is a part of "Petty Expenses"?    

Options    
Postage Stamps purchased    
Purchased Truck    
Paid Carriage for goods purchased    
Tools purchased

Question No.  33    Marks - 10
Which of the following is recorded on "Credit" side of "trial Balance"?    

Options    
Trade Expenses    
Sales    
Carriage Inward    
Carriage Outward

Question No.  34    Marks - 10
DRR refers to    

Options    
Debenture Rate Reserve    
Debtors Rate Reserve    
Dividend Rates Reserve    
Debentive Redemption Reserve

Question No.  35    Marks - 10
A Trial Balance is prepared to locate    

Options    
Errors of principle    
Errors of omission    
Compensating Errors    
none of these

Question No.  36    Marks - 10
Stock can be classified as    

Options    
Fixed Asset    
Intangible Asset    
Current Asset    
Current Liability

Question No.  37    Marks - 10
Bills Receivables is     

Options    
An Asset    
A Liability    
An Expense    
Part of Equity

Question No.  38    Marks - 10
The basic purpose of an accounting system is to    

Options    
Develop financial statements in conformity with generally accepted accounting principles.    
Provide as much useful information to decision makers as possible, regardless of cost
Record changes in the financial position of an organization by applying the concepts of double-entry accounting    
Meet an organization's need for accounting information as efficiently as possible

Question No.  39    Marks - 10
Information is cost effective when    

Options    
The information aids management in controlling costs    
The information is based upon historical costs, rather than upon estimated market values    
The value of the information exceeds the cost of producing it    
The information is generated by a computer-based accounting system    

Question No.  40    Marks - 10
A complete set of financial statements for Hartman Company, at December 31, 1999, would include each of the following, except    

Options    
Balance sheet as of December 31, 1999    
Income statement for the year ended December 31, 1999    
Statement of projected cash flows for 2000    
Notes containing additional information that is useful in interpreting the financial statements