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By Accounting Mcqs No Comments

Which of the following items should not be capitalized relating to fixed assets?

A. Interest payable on loans or deferred credits taken for the acquisition or construction of fixed assets before they are ready for use
B. Stand by equipment and servicing equipment
C. Expenditure incurred on test runs and experimental production
D. Administration and general expenses

Only those expenses which relate to and specifically attributable to the asset are
capitalized. Administration and general expenses cannot be specifically attributable to the asset
and hence cannot be capitalized.

Related Mcqs:

  1. If Cash=$1000 inventories=$4000 Debtors=$5000 fixed assets=? Capital+Liabilities=$15000 What is the Amount of total assets?

    A. $5000
    B. $10,000
    C. $15,000
    D. $20,000

  2. The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is_________?

    A. Depreciation
    B. Physical deterioration of the asset
    C. Decrease in market value of the asset
    D. Valuation of an asset at a point of time

  3. Which of these items are taken into consideration for preparation of adjusted Cash Book

    A. Mistake in Cash Book
    B. Mistake in Pass Book
    C. Cheque issued but not presented for payment
    D. Cheques deposited but not cleared

  4. Which of the following assets is/are to be valued at the lower of cost and net realizable value?

    A. Goodwill
    B. Inventories
    C. Investments
    D. Both B. and C. above.

  5. Which of the following are current assets of a business?

    i. Income received in advance
    ii. Stock
    iii. Debtors
    iv. Pre-paid expenses
    v. Accrued income

    A. Both (i) and (iv) above
    B. Both (ii) and (iii) above
    C. (i),(ii) and (iii) above
    D. (ii),(iii),(iv) and (v) above

  6. Which is the most important characteristic that all assets of a business have?

    A. Long life of assets
    B. Value of assets
    C. Intangible nature of assets
    D. Future economic benefits

  7. The real accounts are accounts of Assets, liabilities and ___________?

    A. Expenses
    B. Revenues
    C. Capital
    D. Drawing

  8. Find out the value of assets if: Liabilities=$5000 and Capital=$1000

    A. $4000
    B. $6000
    C. $7000
    D. $3000

  9. Current assets – Current liabilities=?

    A. Capital
    B. Absorbed capital
    C. Net assets
    D. Net working capital

  10. Short term Assets expected to be converted into cash within 1 year or less than?

    A. Current Assets
    B. Fixed Assets
    C. Current Assets& current liabilities
    D. All of the above

    Submitted by: Maneesh Kumar

The correct answer to the question: "Which of the following items should not be capitalized relating to fixed assets?" is "Administration and general expenses".

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