Attempt all questions.

Multiple choice questions -

1. Goodwill account is a
(a) Personal Account. (b) Real Account.
(c) Nominal Account. (d) None of these.
2. Current Liabilities include:
(a) Bills Payable (b) Creditors
(c) Outstanding Expense
(d) All of the above
3. Basic function of financial accounting is to
(a) record all business transactions.
(b) interpret financial data.
(c) assist the management.
(d) None of these.
4. Which of the following is not a long-term liability?
(a) Creditors (b) Term-loan (c) Debentures (d) Capital
5. Which of the following accounts has a credit balance?
(a) Carriage Inward (b) Discount Received (c) Carriage Outward (d) Discount Allowed 6.
Cash, goods or assets invested by the proprietor in the business for earning profit is called-
(a) Profit (b) Capital
(c) Fixed assets (d) None of these.
7. Which of the following will not be recorded in the books of account?
(a) Sales of goods (b) Payment of salary (c) Quality of staff (d) Purchase of Goods
8. Which of the following transaction is not of financial character?
(a) Purchase of asset on credit
(b) Purchase of asset for cash
(c) Withdrawing of money by proprietor from business (d) Strike by employees
9. Accounting provides data or information on
A) Income and cost for the manager
B) Financial conditions of the institutions C) Company’s tax liability for a particular year
D) All the above
10. Long term assets without any physical existence but, possessing a value are called
A) Intangible assets B) Fixed assets
C) Current assets D) Investments
11. The assets that can be easily converted into cash within a short period, i.e., 1 year or
less are known as
(A) Current assets( B) Fixed assets
( C) Intangible assets (D) Investments
12. Copyrights, Patents and Trademarks are examples of
(A) Current assets( B) Fixed assets
( C) Intangible assets( D) Investments
13. The debts which are to be repaid within a short period (a year or less) are referred to as,
(A) Current Liabilities( B) Fixed liabilities (C) Contingent liabilities (D) All the above 14.
Bookkeeping is ______.
(a) An art (b) A science (c) Both an art as well as science (d) None of these
15. ___________ is the last step of accounting as a process of information.
(a) Recording of data in the books of accounts
(b) Preparations of summaries in the form of financial statement
(c) Communication of information
(d) Analysis and interpretation of information
16. The person, firm, or institution who does not pay the price in cash for the goods
purchased or the services received is called ______.
(a) Creditor (b) Proprietor (c) Debtor
(d) None of these.
17. Use of a common unit of measurement and common format of reporting promotes
_____.
(a) Comparability (b) Understandability
(c) Relevance (d) Reliability
18. Cash, goods, or assets invested by the proprietor in the business for earning profit is
called ______.
(a) Profit (b) Capital (c) Fixed assets
(d) None of these
19. Which is the last step of accounting as a process of information?
(i) Recording of data in the books of accounts
(ii) Preparation of summaries in the form of financial statements
(iii) Communication of information
(iv) Analysis and interpretation of information
20. Goodwill account is a
(i) Personal Account. (ii) Real Account. (iii) Nominal Account. (iv) None of these. 21. Internal
users of accounting information are :
(i) Creditors (ii) Potential investors
(iii) Managers (iv) Researchers
22. Cash, goods or assets invested by the proprietor in the business for earning profit is
called-
(i) Profit
(ii) Capital
(iii) Fixed assets
(iv) None of these
. 23. Use of common unit of measurement and common format of reporting promotes (i)
Comparability. (ii) Understandability
(iii) Relevance. (iv) Reliability
24. Basic function of financial accounting is to
(i) record all business transactions.
(ii) interpret financial data.
(iii) assist the management.
(iv) None of these.
25. The Pioneer of Accounting is:
(i) Arthur Field House. (ii) Gitman
(iii) William Pickles (iv) Lucas Pacioli
26.During the life-time of an entity, accounting produces financial statements in accordance
with which of the following accounting concept?
(a) Matching (b) Conservatism
(c) Accounting period (d) Cost
27. As per Dual Aspect Concept:
 (a) Assets = Liabilities – Capital
(b) Assets = Capital – Liabilities
(c) Assets = Liabilities + Capital
(d) Capital = Assets + Liabilities
28. M/s Future Ltd. has invested Rs. 10,000 in the shares of Relicam Industries Ltd. Current
market value of these shares is Rs. 10,500. Accountant of Future Ltd. wants to show Rs.
10,500 as value of investment in the books of accounts, which accounting convention
restricts him from doing so?
(a) Full disclosure. (b) Consistency
(c) Conservatism. (d) Materiality
29.Omission of paise and showing the round figures in financial statements is based on ……
.
(a) Conservatism convention
(b) Consistency concept
(c) Materiality convention
(d) Money measurement concept
30. According to the Cost Concept
(a) Assets are recorded at lower of cost and market value.
(b) Assets are recorded by estimating the market value at the time of purchase.
(c) Assets are recorded at the value paid for acquiring it.
(d) Assets are not recorde.
31. X Ltd. follows the Written Down Value Method of depreciating machinery year after year
due to
(a) comparability. (b) convenience.
(c) consistency. (d) All of these.
32. The Trading and Profit and Loss Account is prepared under which attribute of
accounting:
(a) Summarising
(b) Recording
(c) Classifying
(d) Analysis and Interpretation
33. According to Convention of Conservatism closing stock is valued at: (a) At cost Price
(b) At Realisable value
(c) Cost price or realisable
(d) At Real value value whichever is less
34. Generally the duration of an Accounting period is of-
(a) 6 months (b) 3 months
(c) 12 months (d) 1 month.
35.The sum of Liabilities and Capital is- (a) Expense (b) Income
(c) Drawings (d) Assets.
36. In India, the accounting standard board was set up in the year-
(a) 1972 (b) 1977
(c) 1956 (d) 1932.
37. The basic accounting postulates are denoted by –
(a) Concepts (b) Book – keeping
(c) Accounting standards
(d) None of these.
36. The amount drawn by businessmen for his personal use is-
(a) Capital (b) Drawing
(c) Expenditure (d) Loss.
38. Meaning of credibility of going concern is:
(a) Closing of business
(b) Opening of business.
(c) Continuing of business
(d) None of these.
39.The primary qualities that make accounting information useful for decision making are
_______.
(a) Relevance and freedom from bias
(b) Reliability and comparability
(c) Comparability and consistency
(d) None of the above
40.

Answer the following questions -

1. To whom and for what process the accountant provides information?
2. Describe four nature of accounting.
3. Differentiate between profit and gain?
4.Explain reasons why users need accounting information.
5. Define in what way accounting is the source of information.
6.What are the different roles of accounting?
7. Explain the types of information external users of accounting information are interested.
8. Role of accountant in today’s environment and how they help management?