Accounting For Managers

121. The practice of appending notes regarding contingent liabilities in accounting statements is in pursuance to:

  1. Convention of consistency
  2. Money measurement concept
  3. Convention of conservatism
  4. Convention of disclosure
Correct answer: (D)
Convention of disclosure

122. Sales are equal to:

  1. Cost of goods sold + gross profit
  2. Cost of goods sold - gross profit
  3. Gross profit- Cost of goods sold
  4. None of the above
Correct answer: (B)
Cost of goods sold + gross profit

123. Identify which is wrong rule

  1. Nominal account- debit all expenses & losses
  2. Real account- credit what comes in
  3. Nominal account- credit all incomes & gains
  4. Personal account- debit the receiver
Correct answer: (B)
Real account- credit what comes in

124. The work of factory employees that can be physically associated with converting raw material into finished goods is classified as-

  1. Manufacturing overhead
  2. Indirect materials
  3. Indirect labour
  4. Direct labour
Correct answer: (D)
Direct labour

125. ______________ cost will still be incurred although a plant is shut down temporarily.

  1. Cost of raw material
  2. Advertising
  3. Depreciation
  4. Carriage
Correct answer: (D)
Depreciation

126. According to which concept business is treated as a unit apart from owner

  1. Dual concept
  2. Divider concept
  3. Entity concept
  4. Landlord concept
Correct answer: (C)
Entity concept

127. Variable cost per unit

  1. Remains fixed
  2. Fluctuates with volume of production
  3. Varies in consideration with the volume of sales
  4. None of the above
Correct answer: (B)
Fluctuates with volume of production

128. Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount is an example for which concept

  1. Conservatism concept
  2. Continuity concept
  3. Realization concept
  4. All of these
Correct answer: (A)
Conservatism concept

129. liabilities in balance sheet include the following items

  1. Long term loan
  2. Short term loan
  3. Owner’s fund
  4. All of these
Correct answer: (D)
All of these

130. Net profit is calculated in

  1. Trading a/c
  2. Balancesheet
  3. Profit & loss a/c
  4. Trial balance.
Correct answer: (C)
Profit & loss a/c
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