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Question 1:

How is the sale of goods on credit treated in the final accounts?

As a deduction from purchases in the trading account As an addition to sales in the trading account As a liability in the balance sheet As an expense in the profit and loss account

Question 2:

Bad debts of INR 15,000 were written off during the year, and a provision for doubtful debts is to be created at 5% on debtors (INR 100,000). The total charge to the Profit and Loss Account will be:

INR 5,000 INR 25,000 INR 20,000 INR 15,000

Question 3:

What is the primary objective of accounting?

To advise on investment strategies. To create financial statements quarterly. To record financial transactions systematically. To calculate profit only.

Question 4:

Which of the following is not a type of ledger account?

Nominal Account. Real Account. Personal Account. Tangible Account.

Question 5:

How does the Three-Column Cash Book help in efficient bookkeeping?

By consolidating cash, bank transactions, and discount received and given on the same page, it simplifies reconciliation and provides a clearer financial overview. By separating operational, financial, and investment transactions into three columns. By requiring entries to be made in triplicate, reducing errors. By allowing for triple-entry bookkeeping, enhancing accuracy.

Question 6:

What is the purpose of creating a provision for bad and doubtful debts in the final accounts?

To account for potential future losses on receivables To increase the value of receivables To increase the net profit To decrease the gross profit

Question 7:

What is the primary purpose of preparing a trading account?

To record all sales and purchases To determine the gross profit or loss To summarize all business transactions To calculate the net profit or loss

Question 8:

What is the significance of the profit and loss account in the final accounts?

To provide a record of all cash transactions To summarize the financial position of the business To record all sales and purchases of the business To determine the net profit or loss of the business

Question 9:

If the gross profit is INR 150,000 and the sales are INR 450,000, what is the cost of goods sold (COGS)?

INR 300,000 INR 150,000 INR 450,000 INR 600,000

Question 10:

Which statement is used to reconcile the cash book balance with the bank statement balance?

Balance Sheet Bank Reconciliation Statement Income Statement Cash Flow Statement

Quiz: Fundamentals of Accounting