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Question 1:

What type of account is "Rent Expense"?

Mixed Account. Nominal Account. Personal Account. Real Account.

Question 2:

Which account is debited when a company makes a sale on credit?

Creditors Account. Debtors Account. Cash Account. Sales Account.

Question 3:

A business purchases machinery for INR 200,000 and the depreciation for the year is 10%. What entry is made in the final accounts?

Machinery Account debited with INR 200,000 and Depreciation Account credited with INR 20,000 in the Balance Sheet. Machinery Account debited with INR 180,000 and Depreciation Account credited with INR 20,000. Depreciation Expense INR 20,000 in the Profit and Loss Account and Accumulated Depreciation INR 20,000 on the assets side of the Balance Sheet. Depreciation Account debited with INR 20,000 and Profit and Loss Account credited with INR 20,000.

Question 4:

If the gross profit is INR 150,000 and the sales are INR 450,000, what is the cost of goods sold (COGS)?

INR 300,000 INR 150,000 INR 450,000 INR 600,000

Question 5:

In accounting, what does the term "ledger" refer to?

A summary of sales only. A detailed list of all transactions. A book or other collection of financial accounts. The first entry in bookkeeping.

Question 6:

The Sales Book records:

Credit sales of goods only. Returns inwards. Cash and credit sales of goods. Sales of fixed assets on credit.

Question 7:

When preparing a bank reconciliation statement, what is the treatment of interest earned?

Added to the cash book balance Deducted from the cash book balance Deducted from the bank statement balance Not considered in the reconciliation

Question 8:

Which accounting concept states that a business will continue to operate indefinitely?

Cost. Periodicity. Going Concern. Money Measurement.

Question 9:

In final accounts, how is depreciation on fixed assets treated?

As an expense in the profit and loss account As revenue in the profit and loss account As a liability in the balance sheet As an asset in the balance sheet

Question 10:

The net profit as per the Profit and Loss Account is INR 120,000. Directors propose a dividend of 10%. The company's share capital is INR 1,000,000. How is this recorded in the final accounts?

Profit and Loss Appropriation Account debited with INR 100,000. Dividend INR 100,000 shown as an appropriation in the Profit and Loss Appropriation Account. Dividend INR 120,000 shown as an expense in the Profit and Loss Account. Dividend INR 100,000 shown as a liability in the Balance Sheet.

Quiz: Fundamentals of Accounting