Accounting Mcqs

Page No. 5

What does 'aged debtors analysis' signify?


ashows how long debts have been outstanding

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bHow old the customers are

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cHow long does a business take to repay the bank loans

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dMinimum number of old debtors

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A recovery of bad debt


aincreases net income

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bdecreases net income

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cincreases gross profit

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dincreases gross profit and net income

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View Answer increases net income

When it is certain that a debt won't be recovered. Which of the following is correct?


aProvision for bad debt is created

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bAccount receivable is credited

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cBad debts is credited

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dSales is debited

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A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debt omission?


aNet profit would decrease

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bNet profit would increase

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cGross profit would overstate

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dGross profit would understate

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Which of the following is the effect on net income if a business decreases its provision for bad debts?


aIt will increase net income

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bIt will decrease net income

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cNo effect

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dIt will increase gross profit and net income

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Which of the following is a biological asset?


aLand

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bBuilding

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cEnvironment

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dLiving plants and animals

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The term _______ is generally used for the depreciation of natural resources


aAmortization

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bDepletion

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cAppreciation

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dDisposal value

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View Answer Depletion

An increase in the value of fixed asset is referred to as:


aDepreciation

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bAppreciation

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cMarket capitalization

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dReverse depreciation

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View Answer Appreciation

Under which method of depreciation, the amount of depreciation expenses remains constant throughout the life of the asset?


aReducing balance method

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bUnit of activity method

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cStraight line method

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dNone of these

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View Answer Straight line method

In the calculation of depreciation, all of the following items are actually estimates except:


aUseful life

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bResidual value

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cHistorical cost

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dSalvage value

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View Answer Historical cost

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