Which of the following is true?

Related Mcqs:

1. Which of the following is true about a trial balance?

   A. It lists down the balances of accounts
   B. It lists down the balances of a balance sheet
   C. It is a kind of financial statement
   D. It is not a part of accounting cycle

2. 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

3. Which of the following is true regarding closing entries?

   A. They must be followed by reversing entries
   B. They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss Account
   C. They must be made after the reversing entries but before the adjusting entries
   D. They must be made after the adjusting entries but before the reversing entries

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 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

6. 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

7. Which of the following is true with respect to providing depreciation under diminishing balance method?

   A. The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing
   B. The amount of depreciation and the rate of depreciation decrease every year
   C. The amount of depreciation decreases while the rate of depreciation remains the same
   D. The amount of depreciation and the rate of depreciation increases every year

8. 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

9. Which of the following is not true with regard to preparation of Profit & Loss Account?

   A. Profit & Loss Account is prepared for a certain period and hence it is an interim statement
   B. Profit & Loss Account does not disclose the effect of non-financial items
   C. Net Profits are ascertained on the basis of current costs
   D. Net Profits as disclosed by P&L Account is not absolute

10. When production is equal to sales, which of the following is TRUE?

    A. No change occurs to inventories for either use absorption costing or variable costing methods
    B. The use of absorption costing produces a higher net income than the use of variable costing
    C. The use of absorption costing produces a lower net income than the use of variable costing
    D. The use of absorption costing causes inventory value to increase more than they would though the use of variable costing