Which of the following is true regarding closing entries?

Related Mcqs:

1. 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

   A. Previous year‘s profit is overstated and current year‘s profit is also overstated.
   B. Previous year‘s profit is understated and current year‘s profit is overstated.
   C. Previous year‘s profit is overstated and current year‘s profit is understated.
   D. There will be no impact on the profit of either the previous year or the current year.

2. Closing entries are generally passed:

   A. At the time of opening new books of account
   B. At the time of closing the accounts
   C. During the course of accounting period any time
   D. After certification of accounts

3. The drawer of a trade bill passes relevant entries with regard to the transaction involved in it. But, in case of an accommodation bill, he passes an entry in addition to the usual entries. The additional entry so passed is with respect to

   A. Discounting of the bill with the bank
   B. Payment of the bill on due date
   C. Remitting or receiving the amount
   D. Sending the bill to bank for collection

4. 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

5. Which of the following is the closing balance of a ledger account?

   A. Balance c/d
   B. Balance b/d
   C. Balance e/d
   D. Balance f/c

6. 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

7. Which of the following entries is correct in respect of reserve for discounts on accounts payable?

   A. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c
   B. Debit Accounts Payable A/c and Credit P&L A/c
   C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c
   D. Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c

8. 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

9. Closing stock in the Trial Balance implies that______________?

   A. It is already adjusted in the opening stock
   B. It is adjusted in the Purchase A/c
   C. It is adjusted in the Cost of Sale A/c
   D. It is adjusted in the Profit &Loss A/c

10. Closing stock appearing in the Trial Balance is shown in:

    A. Trading A/c and Balance Sheet
    B. Profit and Loss A/c
    C. Balance Sheet only
    D. Trading A/c only