Accounting Mcqs

Page No. 5

What does 'aged debtors analysis' signify?


ashows how long debts have been outstanding


bHow old the customers are


cHow long does a business take to repay the bank loans


dMinimum number of old debtors



A recovery of bad debt


aincreases net income


bdecreases net income


cincreases gross profit


dincreases gross profit and net income


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


bAccount receivable is credited


cBad debts is credited


dSales is debited



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


bNet profit would increase


cGross profit would overstate


dGross profit would understate



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


aIt will increase net income


bIt will decrease net income


cNo effect


dIt will increase gross profit and net income



Which of the following is a biological asset?


aLand


bBuilding


cEnvironment


dLiving plants and animals



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


aAmortization


bDepletion


cAppreciation


dDisposal value


View Answer Depletion

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


aDepreciation


bAppreciation


cMarket capitalization


dReverse depreciation


View Answer Appreciation

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


aReducing balance method


bUnit of activity method


cStraight line method


dNone of these


View Answer Straight line method

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


aUseful life


bResidual value


cHistorical cost


dSalvage value


View Answer Historical cost

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