A payment of Rs. 1,000 to a creditor Mr. A is recorded in the account of another creditor Mr. B. What will be its effect on net profit?

• A) Understated by Rs. 1,000
• B) No effect
• C) Overstated by Rs. 1,000
• D) Understated by Rs. 2,000

Which of the following is/are the function of financial accounting?

• A) Recording
• B) Posting
• C) All of the given options
• D) Reporting

Carriage inward is Debited under main head:

• A) Income
• B) Expenses
• C) Liabilities
• D) Assets

Mr. X receives a discount of Rs. 50 from a supplier. The discount is debited to discount allowed account. What will be its effect on net profit?

• A) Overstated by Rs.100
• B) Understated by Rs.100
• C) Understated by Rs.50
• D) No effect

Purchase return account is a/an __________.

• A) Expense item
• B) Liability item
• C) Income item
• D) Contra item

Mr. A recorded a cash payment of Rs.300,000 as salaries. Both the salaries and cash account were debited. What would be the debit effect of journal entry to rectify this error, if there is suspense account in trial balance?

• A) Bank account
• B) Cash account
• C) Suspense account
• D) Salaries account

Current year’s depreciation of furniture is a/an _________.

• A) Contra asset account
• B) Expense account
• C) Liability account
• D) Asset account

Direct cost is also known as:

• A) Factory overhead cost
• B) Prime cost
• C) Conversion cost
• D) Cost of sales

Which of the following should be debited for issue of raw material to production department in manufacturing concern?

• A) Finished goods account
• B) Work in process account
• C) Material account
• D) Cash account

Under perpetual system of recording inventory, purchase of inventory is debited to _______________.

• A) Inventory purchase account
• B) Purchase account
• C) Debtors account
• D) Bank account

Which of the following is a Revenue receipt?

• A) Sales revenue
• B) Long term loan from bank
• C) Purchase of a building
• D) Payment of salaries

Which of the following should be credited on purchase of raw material on credit basis in manufacturing concern?

• A) Purchases account
• B) Voucher payable account
• C) Debtors account
• D) Material account

Discount allowed to a debtor is Debited under main head:

• A) Liabilities
• B) Assets
• C) Expenses
• D) Income

Sole proprietor can prepare following financial statements as final accounts:

• A) Balance sheet & statement of changes in equity
• B) Balance sheet & income statement
• C) Balance sheet & notes to the financial statements
• D) Balance sheet & statement of cash flows

Which of the following should be debited on sale of completed goods on credit basis in manufacturing concern?

• A) Cash account
• B) Debtors account
• C) Sales account
• D) Creditors account

Carriage outward is Debited under main head:

• A) Expenses
• B) Income
• C) Assets
• D) Libilities

Discount received from a creditor is Debited under main head:

• A) Liabilities
• B) Assets
• C) Income
• D) Expenses

When correct accounting effect (Dr/Cr) is given in the wrong accounting head as well as the wrong main head, it is known as:

• A) Error of commission
• B) Error of omission
• C) Error of principle
• D) Error of original entry

The unexpired portion of direct cost is treated as:

• A) Expense
• B) Income
• C) Liability
• D) Asset

In a manufacturing concern, salary of supervisor is included in _________.

• A) Operating expense
• B) Selling expenses
• C) Administrative expense
• D) Cost of goods sold