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By Accounting Mcqs 1 Comment

Which of the following statements is/are true ?

A. A sale of an asset is recorded in the Sales Book
B. Total of Return Outward Book is debited to Return Outward Account
C. The balance of Petty Cash Book is a liability
D. Cash Book is a subsidiary book as well as a ledger

The sale of an asset is recorded in the Asset Account and not in the Sales book (which
pertains to sale of goods). Statement A. is false.

Total of Return Outwards book (being purchase return) has a credit balance. The total is transferred at the end of the period to the credit of the Purchase Account and not debited to Return Outwards Account. Statement B. is false.

The balance of Petty Cash book is not a liability, it is an asset as it is the balance of cash left with the petty cashier. Statement C. is incorrect.

Cash Book is both a subsidiary book or book of original entry where all cash transactions are directly recorded and a ledger, it plays the role as a Cash Account (a ledger). Hence statement
D. is true.

Related Mcqs:

  1. Which of the following statements is true?

    A. If a Trial Balance tallies, it always means that none of the transactions has been completely omitted
    B. A Trial Balance will not tally if a transaction is omitted
    C. A customer to whom goods have been sold on credit cannot avail himself of a cash discount
    D. A credit balance in the Pass Book indicates excess of deposits over withdrawals

  2. Which of the following statements are / is true? – Events after Balance Sheet are?

    A. All the significant events after the Balance Sheet date
    B. The events after Balance Sheet date but before submitting it to the Registrar of Companies
    C. The events after Balance Sheet date but before its approval by the board
    D. All changes after Balance Sheet date before its approval

  3. Which of the following statements is true with regard to written down value method of depreciation?
    i. The rate at which the asset is written off reduces year after year
    ii. The amount of depreciation provided reduces from year to year
    iii. The rate of depreciation as well as the amount of depreciation reduce year after year
    iv. The value of the asset gets reduced to zero over a period of time

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

  4. Under the direct write-off method of recognizing a bad debt expense. Which of the following statements is/are true?

    A. The bad debt expense is not matched with the related sales
    B. Revenue is overstated in the year of sales
    C. It violates the matching principle of accounting
    D. All of the above

  5. Which of the following statements is incorrect regarding capital account?

    A. Debit increases the capital account balance
    B. Credit increases the capital account balance
    C. Fresh capital increases the capital account balance
    D. Net income increases the capital account balance

  6. Which of the following is the external user of financial statements?

    A. Manager of the business
    B. CEO of the business
    C. Creditor of the business
    D. Controller of the business

  7. Which of the following statements is correct about Trial Balance?

    A. The Trial Balance is prepared after preparing the Profit and Loss Account
    B. The Trial Balance shows only balances of Assets and Liabilities
    C. The Trial Balance shows only nominal account balances
    D. The Trial Balance has no statutory importance from the point of view of law

  8. Which of the following statements best describes the purpose of depreciation?

    A. Regular reduction of asset value to correspond to changes in market value as the asset ages
    B. A process of correlating the market value of an asset with its gradual decline in physical efficiency
    C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value
    D. Allocation of the cost of an asset to the periods in which services are received from the asset

  9. Which of the following statements is correct about Depreciation?

    A. Depreciation cannot be provided in case of loss in a financial year
    B. Depreciation is a charge against profit
    C. Depreciation is provided in the books only when there is profit
    D. Depreciation is an appropriation of profit

  10. Which of the following statements is false ? select the false from below options

    A. Balance Sheet discloses financial position of the business
    B. A person who owes to the business is called Debtor
    C. Decrease in the value of the asset could decrease the value of a liability
    D. Assets are to be shown in the Balance Sheet at the realizable value

The correct answer to the question: "Which of the following statements is/are true ?" is "Cash Book is a subsidiary book as well as a ledger".

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