Question # 1

We can say that business in profit when

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Assets exceeds expenditure

Assets exceeds liabilities

income exceeds expenditure

income exceeds liabilities

What would be the affects on component of the accounting equation if goods are purchased on cash?

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increase in cash and decrease in equity

increase in cash and increase in goods

increase in cash and decrease in goods

Cost incurred for the maintenance of shop in considered as

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revenue expenses

capital expenses

deferred expenses

The favourable balance of profit and loss account should be:

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added in liabilities

subtracted from current assets

Subtracted from liabilities

added in capital

The time span in which financial statements of the business are prepared is called

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Financial year

Accounting period

Business life cycle

Accounting Cycle

Word credit is derived from

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Latin

English

French

Chinese

What will be the effect on accounting equation ,which payment is made to the creditor of the business?

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Decrease in an asset ,decrease in liability

Increase in asset,increase in liability

Increase in asset ,increase in owner equity

Which of the following is not depreciated?

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factory building

office equipment

Plant

Land

In accounting accumulated depreciation is :

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Treated as reserve

Treated as a contra asset

Treated as surplus

Treated as expense

Which of the following account balance will be shown on debit side of trial balance?

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Cash account

Furniture account

Motor account

all of the above

The cost of moving planet and machinery to a new site will be treated as:

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Revenue expenses

Capital expenses

Operating expenses

Administrative expenses

Which one of the following is CORRECT about closing stock?

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It appears in the asset side of the balance sheet

it decrease the value of cost of goods sold

It becomes the opening stock of the next year

All of the above

Firm charges each year

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to ensure there is enough money in the firm to replace the asset

to spread the cost of the asset over its working file

because the law states they must be reduced

In cost of goods sold statement the total factory cost is equal to

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l cost of material + Labor cost

cost of material consumed + conversion cost

cost of material consumed + total factory cost

According to double entry system of accounting,an accounting that obtain benefit is

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Debit

Credit

Income

What type of expense are paid out of gross profit?

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Selling expenses

general expenses

financial expenses

All of the above

The amount of depreciation charged on machinery will be debited to:

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machinery account

depreciation account

cash account

Firms chargers depreciation each year :

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To ensure there is enough money in the firm to replace the asset

To spread the cost of the asset over its working life

Because the law state must be reduced

The product that are ready for sale are known as

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raw material

work in process

finished in goods

closing stock

Which of the following shows summary of a company financial position at a specific date?

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Profit and loss account

Cash flow statement

Balance Sheet

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