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CBSE Questions for Class 11 Commerce Accountancy Financial Statements 1 Quiz 1 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Financial Statements 1
Quiz 1
Cost of goods sold is calculated by which of the following:
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$$Opening\ stock + Purchases + Direct\ expenses - Closing\ stock$$
0%
$$Opening\ stock + Purchases + Direct\ expenses + Closing\ stock$$
0%
$$Purchases + Direct\ expenses$$
0%
$$Sales - Net\ profit$$
Explanation
Cost of goods sold = Opening stock + Purchases + Direct expenses − Closing stock
Therefore, A is the correct option.
Closing stock of the previous year becomes the opening stock of the current year.
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0%
True
0%
False
Explanation
Closing stock means the number of goods at the end of accounting year and opening stock is the amount of goods at the start of accounting year.
The stock left at the end of year is carried froward to be used next year and hence, the closing stock of previous year becomes opening stock of current year.
A purchased goods costing Rs 42,B sold goods costing Rs 40,000 at Rs 50,Balance goods were taken over by A at same gross profit percentage as in case of sale. The amount of goods taken over will be ____________.
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0%
Rs 3,125
0%
Rs 2,500
0%
Rs 3,000
0%
None of these
Type of bonds that are issued by foreign governments or foreign corporations are classified as ______________.
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0%
zero risk bonds
0%
zero bonds
0%
foreign bonds
0%
government bonds
Explanation
An international bond is a debt obligation that is issued in a country by a non-domestic entity in its native currency. International bonds are usually corporate bonds.
Therefore, C is the correct option.
Bond call provision that is not practiced even after several years of issuance is classified as ______________.
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0%
original provision
0%
deferred call
0%
deferred provision
0%
permanent provision
Explanation
If
the bond
is called, investors are paid any accrued interest defined within
the provision
up to
the
date of recall.
The
investor will also receive
the
return of their invested principal. Also, some debt securities have a freely-
callable provision
. This option allows them to be called at any time.
Goods purchased Rs 1,00,Sales Rs 90,Margin 20% on cost. Closing Stock = ?
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0%
12,000
0%
10,000
0%
25,000
0%
28,000
Journal entry for transfer of Purchases is -
Trading A/c Dr.
To Purchases A/c
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True
0%
False
Explanation
The given journal entry to transfer purchases is correct because the purcahses account which is to be credited and trading which is to be debited is done right.
Debit an item means reducing the balance whereas credit an item means increasing the balance.
Purchases account is to be credited because at the start of year stock is purchased that means the balance of purchasses account will be raaised since it records the stock bought. Hence, the new stock bought at the start of year has raised the balance of purchases account. The item to be debited now must be any income statement and the best income statement for this purpose is trading account because it records transactions related to purchasse.
Journal entry for transfer of Purchase return is -
Purchase return A/c Dr.
To Trading A/c
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0%
True
0%
False
Explanation
Purchase return is the amount of goods returned by firm while purchase of goods. Trading account is divided into two sides, credit and debit side. Debit side records items related to purchase and credit side records items related to sale. As purchase return is related to purchase and thus has to be debited. Purchase return is subtracted from purchases in trading account.
Hence, given journal entry to transfer purchase return is correct.
Which of the following account is the odd one?
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Office furniture & equipment
0%
freehold land & buildings
0%
Stock of materials
0%
Plant & machinery
Explanation
Office furniture and equipment, Freehold land and buildings and Plant and machinery are the non-current assets because these assets cannot be converted into cash easily and are mostly meant for long-term investments. The liquidity associated with such assets is generally low whereas, Stock of materials are current assets because stock of materials is expected to be converted to cash within a year.
Therefore, C is the correct option.
Carriage inward means the transport expenses incurred to carry the goods purchased by the firm.
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0%
True
0%
False
Explanation
Carriage inwards is the expense paid by firm while purchasing the goods like transporation of goods, Transporting goods from one place to another needs conveyance and firm has to pay for the conveyance Thus, the given statement is true.
Goods destroyed by fire should be credited to______.
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0%
Purchases account
0%
Sales account
0%
Loss of goods by fire account
0%
Insurance account
Explanation
Loss of goods by fire, it is just possible that some goods may catch fire and result in loss to the business. This is definitely loss, so "Loss of goods by fire" account will be debited. Such goods have been destroyed, not sold, so their valuation will be made at cost price. So, purchases account will be credited. The journal entry for this transaction will be made as under:
Loss of goods by fire A/c Dr.
To Purchases A/c
If there is a prize fund and prizes are awarded, expenses and income are transferred to ___________.
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Income and Expenditure Account
0%
Assets side of the Balance Sheet
0%
The Liabilities side of the Balance Sheet
0%
Trading Account
Explanation
Prize fund is a specific fund which need to be shown as liability. Any expenses pertains to the prize awarded, need to be transferred to liabilities side of the balance sheet by deducting the amount from fund account.
Donation received for a specific purpose should _________________.
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0%
Be credited to a separate account and shown on the liabilities side of the balance sheet
0%
Be credited to income and expenditure account
0%
Not be recorded at all
0%
Be debited to income and expenditure account
Explanation
Donation received for a specific purpose is to be utilized for the specific activity. This kind of donations are capital receipts and to recorded separatly. It should be kept in a separate account and expense to be reduced from this account only. Balance of this account to be shown as liability in the balance sheet.
Which one of the following is an example of an intangible asset?
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Preliminary expenses
0%
Discount on issue of debentures
0%
Investments
0%
Copyrights
Explanation
Fixed assets are of 2 types:
1. Tangible
2. Intangible
Intangible assets are such assets that cannot be seen or touched. Goodwill, Patents, Trademarks, are some of the examples of intangible assets.
Provision for bad debts is calculated on __________.
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0%
creditors
0%
sales
0%
purchases
0%
debtors
Explanation
Provisions are created by debiting the profit and loss account. In the balance sheet, the amount of provision may be shown by the way of deduction from the concerned asset on asset side. For e.g. provision for doubtful debts is shown as deduction from the amount of sundry debtors and provision for depreciation as a deduction from the concerned fixed asset.
Which of the following accounts have only credit balance?
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0%
Accounts payable account
0%
Salaries outstanding account
0%
Reserve fund account
0%
All of the above accounts
Explanation
An accounts assigned normal balance is on the side where increases go because the increases in any account are usually greater than the decreases. Therefore, asset, expense, and owner's drawing accounts normally have debit balances. Liabilities, revenue, and owner's capital accounts normally have credit balances.
__________ are costs which have been applied against revenue of particular accounting period.
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0%
Expenses
0%
Income
0%
Loss
0%
None of these
Explanation
Costs incurred by a business in the process of earning revenue are known as expenses. Generally, expenses are measured by the cost of assets consumed or services used during an accounting period. The usual items of expenses are depreciation, rent, wages, salaries, interest, cost of heater, light and water, telephone etc.
Wages paid to workers must be debited to _________ account.
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0%
Wages
0%
Machinery
0%
Factory expenses
0%
Office expenses
Explanation
Wages is a direct expenses and should be debited to wages account as an expense in trading account as a direct cost. Wages is nominal account.
The balance sheet is a __________ of the assets, liabilities and capital of concern as on particular date.
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0%
Statement
0%
Document
0%
Picture
0%
Balance
Explanation
The balance sheet indicates the financial position of a firm on a particular date. It is prepared as a statement showing all the assets and liabilities of the firm.
The take over of a company in which most of the purchase price is paid with borrowed money is referred to as __________.
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0%
Hostile takeover
0%
Illegal takeover
0%
Leveraged buy-out
0%
Management buy-out
Explanation
A leveraged buy out (LBO) is financial transaction in which a company purchased another company by using the borrowed money.
A
leveraged buyout
is the
acquisition
of another
company
using a significant amount of
borrowed money
(bonds or loans) to meet the
cost
of
acquisition
.
Balance Sheet is a statement of ________.
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Assets
0%
Liabilities
0%
Capital
0%
All of the above
Explanation
Balance sheet is statement prepared for every financial year to know the state of affairs of the company on a particular date. Balance sheet has two major components i.e. assets and liabilities.
Assets side of the balance sheet is having current assets, fixed assets. On the side, i.e. liability side will have capital and long term & short term liabilities.
Legacies are generally __________.
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capitalized and taken to balance sheet
0%
treated as income
0%
treated as expenditure
0%
treated as other incomes
Explanation
An amount received by a non profit organization as per will is called as legacy. It should be considered as receipts and to be recorded in the receipts and payment account. Legacy should be recorded as capital receipt because it it received for a specific purpose. This has to be added to capital fund and to be taken in the balance sheet.
Which financial statement represents the accounting equation:
ASSETS = LIABILITIES + OWNER'S EQUITY?
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Income Statement
0%
Cash Flow Statement
0%
Balance Sheet
0%
Fund Flow Statement
Explanation
Balance sheet is a statement of affairs of the business on a particular date. Balance sheet shows assets , liabilities and capital of the business.
Accounting equation may be defines as:
Owner's Equity+ Liabilities=Total Assets
Owner's Equity+ Liabilities=Current Assets+Fixed Assets
Balance sheet is a(n) ____.
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0%
Statement
0%
Account
0%
Ledger
0%
Book
Explanation
Balance sheet is an statement prepared on a particular date for showing the financial position of the firm as on the date. This includes assets and liabilities.
Investment of X company , profit in shares of other company PQR Pvt. Ltd are recorded in ________
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0%
Asset side of balance sheet
0%
Liability side of
balance sheet
0%
Profit & loss a/c
0%
Not recorded in
balance sheet
Explanation
Investment helps in generating future cash flow for the business therefore they are assets of the company.
Hence, the Investment of X company will be recorded in the assets side of the balance sheet of the POR Pvt. Ltd.
True & fair profit/loss of a company is known by _____________.
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0%
preparing trial balance
0%
preparing respective ledger of account
0%
preparing trading account
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preparing trading and profit & loss account
Explanation
Accounting is based on certain concepts and conventions. All such concepts and convention should be followed while preparing the financial statement of the firm.
When the trading and profit or loss account is prepared in compliance with all such concepts and conventions, they shall depict a true picture of the profitability of the business entity.
Which of the following are current assets?
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0%
Bank loan for three years.
0%
Account receivable.
0%
Long-term investments.
0%
Debentures sinking fund investments.
Explanation
Current assets are those which are convertible into cash in short period of time i.e within a year. Accounts receivable reflects the amount to be received from the debtors for the sales made. Since, such amounts for sales made are receivable in the short period, accounts receivable
are classified as current assets.
If the operating expenses exceed gross profit, the excess is referred to as ______________.
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0%
Operating income
0%
Operating loss
0%
Non-operating expenses
0%
Non-operating income
Explanation
This can be represented as:
Sales 120000
Less: Cost of Goods Sold 80000
---------------
Gross Profit 40000
Less: Operating Expenses 60000
---------------
Operating Loss (20000)
----------------
Income tax paid by a sole proprietor on his business income should be ____________.
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0%
Debited to Trading Account
0%
Debited to Profit and Loss account
0%
Deducted from Capital account in the Balance Sheet
0%
None of the Above
Explanation
In sole proprietorship, all profits are transferred to the owner. Income tax is a personal tax which need to be paid by the individual in case of proprietorship.
This will be considered as personal expense or drawings and should be deducted from the capital a/c.
'Bank over draft' should be classified as ____________.
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0%
Current Asset
0%
Current Liability
0%
Regular Asset
0%
Intangible Asset
Explanation
Bank overdraft is a temporary facility provided by the bank to business. Business is permitted to withdraw the amount more than the amount available in bank account. Its a short term liability hence to be consider as current liability.
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Practice Class 11 Commerce Accountancy Quiz Questions and Answers
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