A financial statement__________ that summarizes company revenue and expenses is?

A. Balance sheet
B. Statement of owner equity
C. Income statement
D. Cash flow statement
ANSWER: C

A Profit is earned if_____________?

A. Assets exceed Expenditure
B. Income exceeds Expenditure
C. Cash Inflow exceeds Cash Outflow
D. Income exceeds Liabilities
ANSWER: B

According to the rules of debit and credit for balance sheet accounts is
______________?
A. Increase in assets, liabilities and owner equity recorded by debit
B. Decrease in asset and liability are recorded by credit
C. Increase in asset and owner’s equity are recorded by debiT
D. Decrease in liability and owner’s equity are recorded by debit
ANSWER: D

An asset was purchased for Rs.1000000 w ith the down payment of Rs.200000 and
bills accepted for Rs.800000/ What__________ would be the effect on the total asset
and total liabilities in the balance sheet?
A. Assets increased by Rs.800,000 and liabilities decreased by Rs.800,000
B. Assets decreased by Rs.800,000 and liabilities increased by Rs.800,000
C. Assets increased by Rs.1000,000 and liabilities increased by Rs.800,000
D. Assets increased by Rs.800,000 and liabilities increased by Rs.800,000
ANSWER: D

If the assets of a business are Rs. 100,000 and equity is Rs. 20,000, the value of
liability will be?
A. Rs.100,000
B. Rs.80,000
C. Rs.120,000
D. Rs.20,000
ANSWER: B

Is it true that the trial balance totals should agree?

A. Yes, always
B. No, because it is not a balance sheet
C. Yes, except where the trial balance is extracted at the year end
D. No, there are sometimes good reasons why they differ
ANSWER: A

Of the following account types, which would be increased by a debit?

A. Liabilities and expenses
B. Assets and equity
C. Assets and expenses
D. Equity and revenues
ANSWER: C

Purchased goods from Ahmed for cash should be credited to ____________?

A. Account Payable _ Ahmed
B. Cash A/c
C. Purchases A/c
D. Account Receivable _ Ahmed
ANSWER: B
Sales-Gross Profit = ________?
A. Cost of goods sold
B. Net sales
C. Gross Sales
D. Liabilities
ANSWER: A

Sales made to Ahmed on credit should be debited to ________?

A. Accounts Payable
B. Cash
C. Accounts Receivables-Ahmed
D. Sales
ASNWER: C

Subtracting all expenses from revenues yields _________?

A. Net profit/Loss
B. Carrying value
C. Long-term assets
D. Net liabilities
ANSWER: A

The amount brought in by owner of the business should be credited to __________?

A. Owner Equity
B. Drawings
C. Cash
D. Account payable
ANSWER: A

The collection of accounts receivable is recorded by a?

A. Credit to Cash and a credit to Accounts Receivable
B. Debit to Cash and a debit to Accounts Receivable
C. Credit to Cash and a debit to Accounts Receivable
D. Debit to Cash and a credit to Accounts Receivable
ANSWER: D

The type of account with a normal credit balance is ______________?

A. An asset
B. An expense
C. Drawing
D. Revenue
ANSWER: D

Which financial statement ________________ presents a summary of the Assets,

Liabilities, and Owners' Equity of a firm?
A. General ledger
B. Work sheet
C. Balance sheet
D. Cash flow statement
ANSWER: C

Which of the following statements is incorrect?

A. Liabilities + Assets = Capital
B. Liabilities + Capital = Assets
C. Assets - Capital =Liabilities
D. Assets – Liabilities = Capital
ANSWER: A

Which one of the following tangible fixed assets would not normally be depreciated?
A. Buildings
B. Machinery
C. Land
D. Equipment
ANSWER: C

Which one of the following s intangible asset?

A. Land
B. Good-will
C. Machinery
D. Furniture
ANSWER: B

Which of the following is current asset?

A. Account Payable
B. Capital stock
C. Cash
D. Drawings
ANSWER: C

As per double entry accounting principle which of the following option is true?
A. Debit side= credid side
B. Positive debit balance
C. Positive credit balance
ANSWER: A

Which of the following is a liability?

A. Cash
B. Account Payable
C. Debtors
ANSWER: B