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

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

Unconsumed direct supplies are considered as:

• A) Inventory
• B) Marketing expenses
• C) Admin Expenses
• D) Selling expenses

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

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

Salaries expense of Rs. 5,000 is recorded as Rs. 500. What will be its effect on net profit?

• A) Overstated by Rs. 5,000
• B) Overstated by Rs. 4,500
• C) No effect
• D) Understated by Rs. 4,500

Sales Rs. 500, Returns outwards Rs. 50, Gross Profit Rs. 100, Net Sales =?

• A) Rs. 550
• B) Rs. 650
• C) Rs. 500
• D) Rs. 450

Which of the following is an example of direct materials cost?

• A) Polish and finishing material for chair
• B) A piece of wood for the production of chair
• C) Production worker’s wages
• D) Depreciation expenses

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

• A) Purchases account
• B) Finished goods account
• C) Material account
• D) Cash account

Unconsumed office supplies are considered as:

• A) Admin expense
• B) Inventory
• C) Selling expense
• D) Financial expense

Opening indirect material inventory is adjusted with ____________ of indirect material, to calculate the cost of sales.

• A) Sales
• B) Liabilities
• C) Purchases
• D) Income

Which of the following is a Revenue expenditure?

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

Which of the following is a Capital expenditure?

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

Cotton thread to make fabric in manufacturing concern is:

• A) Stock in trade
• B) Finished goods
• C) Raw material
• D) Work in process

Discount allowed to a debtor is credited under main head:

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

Total factory cost = Prime cost + ________.

• A) Factory overhead cost
• B) Direct Labor cost
• C) Other Direct cost
• D) Direct Material cost

Cost of inventory =

• A) Selling Price – Further Costs to Sell
• B) Selling Price + Further Costs to Sell
• C) Cost of purchase + conversion cost
• D) Cost of purchase - conversion cost

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

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

Which of the following should be credited when production is completed in manufacturing concern?

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

A minor repair to a photocopy machine was paid in cash. Correct entry was made to cash account but no entry was made to other account. What will be the credit effect of journal entry to rectify this error, if there is suspense account in trial balance?

• A) Suspense account
• B) Cash account
• C) Photocopy machine repair account
• D) Photocopy machine account

Under IAS 2, material available for use in the production process is known as:

• A) Expenses
• B) Costs
• C) Fixed assets
• D) Inventories

When the sum of more than one error cancels the accounting effect of each other, it is called:

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