While finalizing the current year‘s accounts, the company realized that an error was made in the calculation of closing stock of the previous year. In the previous year, closing stock was valued more by 50,000. As a result

Related Mcqs:

1. Find the value of opening stock from the following data. Purchases 1,50,000, Closing stock 30,000 Sales 2,20,000, Gross profit 40,000.

   A. 50,000
   B. 55,000
   C. 60,000
   D. 65,000

2. Budgeted sales for the next year is 5,00,000 units. Desired ending finished goods inventory is 1,50,000 units and equivalent units in ending W-I-P inventory is 60,000 units. The opening finished goods inventory for the next year is 80,000 units, with 50,000 equivalent units in beginning W-I-P inventory How many equivalent units should be produced?

   A. 5,80,000
   B. 5,50,000
   C. 5,00,000
   D. 5,75,000

3. 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

   A. 17,000 (overstated.
   B. 12,000 (understated.
   C. 7,000 (overstated.
   D. 7,000 (understated.

4. Closing stock is generally valued at______________?

   A. Cost Price
   B. Market Price
   C. Cost price or Market price whichever is higher
   D. Cost price or Market price whichever is lower

5. A company is currently operating at 80% capacity level. The production under normal capacity level is 1,50,000 units. The variable cost per unit is ` 14 and the total fixed costs are ` 8,00,000. If the company wants to earn a profit of ` 4,00,000, then the price of the product per unit should be

   A. 37.50
   B. 38.25
   C. 24.00
   D. 35.00

6. If the minimum stock level and average stock level of raw material are 4,000 and 9,000 units respectively, find out its reorder quantity.

   A. 8,000 units
   B. 11,000 units
   C. 10,000 units
   D. 9,000 units

7. For the past 3 years, DK Ltd. has failed to accrue unpaid wages earned by workers during the last week of the year. The amounts omitted, which were considered material, were as follows:
   March 31,2010 – ` 56,000
   March 31, 2011 – ` 51,000
   March 31, 2012 – ` 64,000
   The entry on March 31, 2012 to rectify these omissions would include a

   A. Credit to wage expense for ` 64,000
   B. Debit to wage expense for ` 64,000
   C. Debit to wage expense for ` 51,000
   D. Debit to wage expense for ` 13,000

8. During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which of the following is true?

   A. The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013
   B. The income was overstated during 2011-12 and closing inventory will be overstated during 2012-2013
   C. The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013
   D. The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013

9. During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period?

   A. Rs. 33,000
   B. Rs. 25,000
   C. Rs. 17,000
   D. Rs. 8,000

10. 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

    A. The Trial Balance will not agree
    B. The balance of creditors is understated
    C. The purchases are understated
    D. The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book