NCERT Class 11 Chapter 10 Accountancy Financial Statement 2 MCQ

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1. Every adjusting entry affects?

A. Income statement account only

B. Balance sheet account only

C. Both A & B

D. None

2. Which of the following item provides the important function of shielding part of income from taxes?

A. Inventory

B. Supplies

C. Machinery

D. Depreciation

3. Outstanding expenses are those expenses which have became _____ during the accounting year

A. Payable

B. Payed

C. Received

D. Receivable

4. Depreciation is necessary to calculate:

A. Net profit

B. Net financial position

C. Tax

D. None of them

5. Prepaid expenses are also called:

A. Advance expenses

B. Deferred expenses

C. Unexpired expenses

D. All of these

6. HDFC bank has been named among 50 most valuable banks in 2014. It has got 45th rank. Wells Fargo & Co. has got first rank in this list. This bank belongs to which country?

A. UK

B. France

C. European Union

D. USA

7. Adjusting Entries?

A. Assign revenue to the period in which they are earned

B. Help to properly measure the period’s Net Profit / Loss

C. Bring asset and liability account to correct balances

D. All of about statements are true regarding Adjusting Entries

8. A liability account that reports amounts received in advance of providing goods and services?

A. Unearned Revenue

B. Earned liabilities

C. Earned Revenue

D. Revenue

9. The person to whom goods are sold on credit is called___________?"

A. Buyer

B. Seller

C. Debtor

D. Creditor

10. The adjustment to be made for income received in advance is:

A. Add income received in advance to respective income and show it as a liability

B. Deduct income received in advance from respective income and show it as a liability

C. Add income received in advance to respective income and show it as asset

D. Deduct income received in advance from respective income and show it as an asset in the Balance Sheet

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11. Which of the following is true for every adjusting entry?

A. They affect only income statement accounts

B. They affect balance sheet account and an income statement account

C. They affect only balance sheet accounts

D. They affect only accounts with normal debit balance

12. The purpose of adjusting entries is to?

A. Adjust the owner’s capital account for the revenue, expense and drawings recorded during the accounting period

B. Adjust daily the balances in asset, liability, revenue and expense accounts for the effects of business transactions

C. Apply the realization principle and the matching principle to transactions affecting two or more periods

D. Prepare revenue and expense accounts for recording the transactions of the next accounting period

13. Depreciation arises because of:

A. Wear and tear

B. Decrease in the value of assetswrong

C. Increase in the value of liability

D. Decrease in capital

14. The revenue receipt is shown in income statement as a?

A. Expense

B. Income

C. Other income

D. Other expense

15. The economic factor causing depreciation:

A. Time factor

B. Obsolescence and inadequacy

C. Wear and tear

D. Money valuation

16. Goods Return by the customer are termed as :

A. Purchase return

B. Customer return

C. Sales return

D. Inventory return

17. Which of the following is not a primary function of a Bank?

A. Granting Loans

B. Collecting Cheques/Drafts customers

C. Facilitating import of goods

D. Issuing Bank Drafts

18. The object of non – trading concerns-

A. Social service

B. Profit earning

C. Both of these

D. None of the above.

19. Question : Closing stock is generally valued at______________?

A. Cost Price

B. Market Price

C. Cost price or Market price whichever is higher

D. Cost price or Market price whichever is lower

20. Adjusting entries are made:

A. At the beginning of the year

B. At the end of the year

C. During the year

D. All of these

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21. In a recession:

A. Unemployment is likely to be low

B. Prices are likely to increase

C. Growth is negative

D. Growth is slow

22. Outstanding expenses are

A. Current Liability

B. Fixed Liability

C. Contingent Liability

D. None of these

23. Under the diminishing balance method, depreciation is calculated on:

A. Scrap value

B. on the original value

C. on book value

D. None of them

24. Trading Account discloses-

A. Gross profit

B. Net profit

C. Net loss

D. Gross profit or Gross loss

25. Direct Expenses are entered in:

A. Trading Account

B. profit & Loss Account

C. Balance sheet

D. None of these