Financial Accounting ICOM Part 01 Top 500 + MCQS Download Pdf Chapter No 11

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Chapter #11

Adjustments and Their Effect on Final Account

Encircle the most appropriate answer from the following :

1. The system of accounting in which accounting entries are made only when cash received or paid is known as:

  1. Cash system
  2. Mercantile system
  3. Accrual system
  4. Single system

2. All those expenses which have become due but not paid are called:

  1. Accrued revenue
  2. Prepaid revenue
  3. Outstanding expenses
  4. Advance expenses

3.The accounting system in which accounting entries are made on the basis of amount having become due for payment or receipt, is called

  1. Cash system
  2. Outstanding system
  3. Accrual or mercantile system
  4. None of these

4. All those expenses which have not become due but paid in advance are called:

  1. Outstanding expenses
  2. Accrued expenses
  3. Payable expenses
  4. Prepaid expenses

5. An income which has earned but not received is called:

  1. Unearned income
  2. Revenue received in advance
  3. Accrued revenue
  4. None of these

6. A prepaid expense is:

  1. An Asset
  2. A liability
  3. An Expense
  4. An Income

7. The revenue that has not become due, but received in cash in current year is known as:

  1. Revenue received in advance
  2. Unearned revenue
  3. Accrued revenue
  4. Both 1 and 2

8. The accrued income or outstanding income will appear in balance sheet as:

  1. An expense
  2. A liability
  3. An asset
  4. Both a and b

9. Outstanding expense given in adjustment is called:

  1. An asset
  2. An expense
  3. A gain
  4. A liability

10. A gradual decrease in the value of fixed assets is called:

  1. Reduction
  2. Deprecation
  3. Revaluation
  4. None of these

11. Deprecation is:

  1. A Liability
  2. An Expense
  3. A Loss
  4. Both 2&3

12. From business point of view, Interest on capital is considered as:

  1. An income
  2. An expense
  3. A profit
  4. A liability

13. Interest due but not received is an

  1. Outstanding expense
  2. Unearned income
  3. Prepaid expense
  4. Accrued income

14. Interest on drawings is:

  1. An asset
  2. A liability
  3. An expense
  4. A Revenue

15. Net profit is always:

  1. Equal to gross profit
  2. More than gross profit
  3. Less than gross profit
  4. None of these

16. Wages paid for installing a machine should be debited to:

  1. Wages ale
  2. Machinery a/c
  3. Cash alc
  4. None of these

17. Net loss is always:

  1. Equal to gross loss
  2. More than gross loss
  3. Less than gross loss
  4. None of these

18. Income tax paid is a:

  1. Business expense
  2. Revenue for business
  3. Liability of business
  4. Personal expense

19. Patent is an example of:

  1. Assets
  2. Liabilities
  3. Income
  4. Expense

20. The amount becomes due from the customers is called:

  1. Allowance
  2. Debts
  3. Loan
  4. Doubtful debts

21. The debts, which are irrecoverable from the debtors, are called:

  1. Debts
  2. Good debts
  3. Doubtful debts
  4. Bad debts

22. Bad debts are business:

  1. Expenses
  2. Assets
  3. Liabilities
  4. Revenue

23. Bad debts recovered from debtors should be credited to:

  1. Debtors a/c
  2. Bad debts recovered a/c
  3. Bad debts a/c
  4. Cash a/c

24. The debts, the recovery or realization of which is uncertain are known as:

  1. Bad debts
  2. Provision for doubtful debts
  3. Doubtful debts
  4. Loan

25. Provision for the doubtful debts is debited to:

  1. Debtors alc
  2. Profit or loss a/c
  3. Provisions for bad debts a/c
  4. Bad debts recovered alc

26. Business allow cash discount on making prompt payment to its:

  1. Creditors
  2. Partners
  3. Debtors
  4. Investors

27. Business receive discount from its:

  1. Creditors
  2. Partners
  3. Debtors
  4. Owners

28. Withdrawal of goods by the owner for his personal use must be credited to:

  1. Drawings a/e
  2. Purchasers a/c
  3. Goods a/e
  4. Capital ac

29. If the closing stock appears in the trial balance it is taken only to the:

  1. Profit & loss account
  2. Trading account
  3. Balance sheet
  4. Final Account

30. The loss on the sale of old machinery is debited to:

  1. Machinery a/c
  2. Depreciation a/e
  3. Accumulated depreciation
  4. Profit & loss Account

31. Adjusting entries are made:

  1. During the accounting period
  2. At the end of accounting year
  3. In the beginning of the year
  4. At any time

32. Provisions for bad debts should appear in the balance sheet as:

  1. A fictitious asset
  2. A deduction from the debtors
  3. Part of the share capital
  4. An addition to the good will

33. Bad debts are debited to:

  1. Debtor’s a/e
  2. Provisions for bad debts a/e
  3. Creditors a/c
  4. Bad debts a/c

34. In the balance sheet pre-received income is shown on:

  1. Assets side
  2. Both assets & liabilities sides
  3. Liabilities side
  4. None of these

35. Provision for discount on creditors must be credited to:

  1. Creditors a/c
  2. Provisions for discount on creditors a/e
  3. Profit and loss a/c
  4. Cash a/c