Accounting Mcqs

Page No. 54

Which one of the following should be considered a revenue expenditure?


a1000 paid for the execution of a new plant


bLoss of 10,000 incurred in increasing the sitting accommodation of a hotel


cDamage paid on account of breach of a contract to supply certain goods


dRepair to machinery purchased, second hand.



The balance of which of the following accounts do not disappear, once they are debited/credited to Trading Account?


aSales


bPurchases


cInward


dClosing stock


View Answer Closing stock

Which of the following is an item of capital expenditure?


aResearch and development costs during the year


bInterest on borrowed fund utilized for acquisition of Office Furniture


cInstallation charges paid in conjunction with the purchase of Office Equipment


dMonthly rent of a machinery used in the business



Any donation received for a specific purpose is a_________?


aLiability


bAssets


cRevenue receipts


dCapital receipts


View Answer Capital receipts

Capital expenditure is an expenditure which


aBenefits the current accounting period


bWill benefit the next accounting period


cResults in the acquisition of a permanent asset


dResults in the acquisition of a current asset



Which of the following should not be treated as revenue expenditure?


aInterest on loans and debentures


bAnnual fire insurance premiums on Plant and Equipment


cSales tax paid in connection with the purchase of office equipment


dSmall expenditures on long- lived assets, such as ` 20 for a paper weight.



Which of the following errors affects the agreement of a Trial Balance?


aMistake in balancing an account


bOmitting to record a transaction entirely in the subsidiary books


cRecording of a wrong entry in the subsidiary books


dPosting an entry on the correct side but in the wrong account



The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The Company has not passed any rectification entries and the error is not detected through the bank reconciliation. The impact of this error is


aThe Trial Balance will not agree


bThe balance of creditors is understated


cThe purchases are understated


dThe favorable bank balance as per Pass Book is less than the Bank balance as per Cash book



The beginnings inventory of the current year is overstated by 5,000 and closing inventory is overstated by 12,000. These errors will cause the net income for the current year by


a17,000 (overstated.


b12,000 (understated.


c7,000 (overstated.


d7,000 (understated.


View Answer 7,000 (overstated.

Purchase journal is kept to record_____________?


aAll purchases of goods


bAll credit purchases of goods


cAll credit purchases


dNone of these



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