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UGC NET SET | COMMERCE | Accounting and Auditing MCQ SET 1
UGC NET SET | COMMERCE | Free Accounting and Auditing MCQ SET 1
We offering you a various mcqs on UGC NET SET | COMMERCE | Free Accounting and Auditing MCQ SET 1 for practicing or studying of UGC NET-SET examination. These mcq helps to you for better study.
Answer of MCQ’s are shows in bold format.
Answer of MCQ’s are shows in bold format.
UGC NET SET | Accounting and Auditing MCQ SET 1
MCQ 1 to 5👇
MCQ.1. What are the important objectives of accounting?
I. To maintain records of a business
II. Calculation of profit or loss
III. Depiction of financial position
IV. To make information available to various groups and users
(A) I and II
(B) I and III
(C) I, II and III
(D) I, II, III and IV
MCQ.2. Which of the following Accounts /Statements shows the financial position of the business?
(A) Profit and Loss Account
(B) Balance Sheet
(C) Funds Flow Statement
(D) Cash-Book
MCQ.3. Which of the following is not included in category of ‘Intangible Assets’?
(A) Patents rights
(B) Copy rights
(C) Competitive benefit and privileges
(D) Machinery
MCQ.4. Which of the following statements is true in relation to liabilities?
(A) Claims against the resources.
(B) Currently existing obligations which the firm intends to meet at some time in the future.
(C) It must be capable of being expressed in money terms.
(D) All of the above
MCQ.5. Functions of accounting include
I. Keeping systematic records
II. Protecting properties of the business
III. Communicating the results
IV. Meeting legal requirements
(A) I and II
(B) I and III
(C) I, III and IV
(D) I, II, III and IV
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 6 to 10👇
MCQ.6. Accounting is also defined as an information system’ because
(A) The function of accounting is to provide quantitative information, primarily financial in nature, about economic entities.
(B) Every system is ‘information system’.
(C) Anyone can get required information from accounting
(D) All of the above
MCQ.7.What are the limitations of money measurement concept?
(A) Any transaction / event inspire of being very important cannot be recorded in the books of accounts, if it cannot be expressed in money value.
(B) As per this concept, a transaction is recorded at its money value on the date of occurrence and the subsequent changes in the money value are conveniently ignored.
(C) Both (A) and (B)
(D) None of the above
Accounting and Auditing MCQ SET 1
MCQ.8. According to which of the following concepts, fixed assets are depreciated over their useful life rather than over a shorter period on the expectation of early liquidation?
(A) Cost concept
(B) Matching concept
(C) Going concern concept
(D) Business entity concept
MCQ.9. Which of the following accounting equations is not correct?
(A) Assets= Liabilities + Capital
(B) Capital= Assets- Liabilities
(C) Liabilities =Assets-Capital
(D) Liabilities =Assets + Capital
MCQ.10. Stock is valued in the books of accounts at
(A) Cost price
(B) Market price
(C) Cost price of market price whichever is less
(D) Depends whether LIFO method is used t or FIFO method is used
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 11 to 15👇
MCQ.11. Contingent liability is shown due to
(A) Convention of full disclosure
(B) Convention of conservatism
(C) Convention of materiality
(D) Dual aspect concept
MCQ.12. Owner’s equity (Capital) stands or
(A) Total assets minus total liabilities
(B) Fixed assets minus fixed liabilities
(C) Current assets minus fixed liabilities
(D) Fixed assets minus current liabilities
MCQ.13. The fundamental accounting equation ‘Assets = Liabilities + Capital’ is the formal expression of
(A) Dual aspect concept
(B) Matching concept
(C) Going concern concept
(D) Money measurement concept
Accounting and Auditing MCQ SET 1
MCQ.14. Which one of the following branches of accounting primarily deals with processing and presenting of accounting data for internal use?
(A) Financial accounting
(B) Tax accounting
(C) Management accounting
(D) Inflation accounting
MCQ.15. Suppose P starts a business with Rs. 50,000 cash and then buys furniture from F.F. Co. on credit for Rs. 2,000, Now, the accounting equation
Assets = Capital + Liabilities will be:
(A) 52,000 = 50,000 + 2,000
(B) 50,000 = 50,000 + 0
(C) 50,000 = 48,000 + 2,000
(D) 48,000 = 50,000 – 2,000
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 16 to 20 👇
MCQ.16. All capital expenditures and receipts are taken to
(A) Trading and Profit and Loss Account
(B) Balance sheet
(C) Trial balance
(D) None of the above
MCQ.17. Which of the following can be treated as capital expenditure?
(A) Acquisition of land, building, machinery etc.
(B) Amount spent on increasing the sitting accommodation in picture hall.
(C) Expenditure incurred for acquiring the right to carry on a business, for example, patent rights, copyright, goodwill.
(D) All of the above
MCQ.18. Which of the following can be treated as revenue expenditure?
(A) Expenses incurred in the normal course of business, for example, expenses of administration, expenses incurred in manufacturing and selling products. Examples of such expenses are salaries, rent, insurance, postage, stationary, repairs to assets.
(B) Expenses incurred to maintain the business, for example, replacements for maintaining the existing permanent assets cost of stores consumed in the course of manufacturing, for example, oil, cotton-waste, machinery, spares consumed.
(C) Depreciation on fixed assets, interest on loans for business, loss from sale of fixed asset.
(D) All of the above
Accounting and Auditing MCQ SET 1
MCQ.19. Which of the following cannot be treated as revenue expenditure?
(A) Cost of goods purchased for resale.
(B) Wages paid for the erection of plant and machinery
(C) Obsolescence cost.
(D) Expenses incurred by way of repairs of existing assets which do not in any way add to their earning capacity.
MCQ.20. Which of the following is not deferred revenue expenditure?
(A) Heavy advertisement expenditure.
(B) Expenses incurred in removing the business to more convenient premises.
(C) Preliminary expenses.
(D) Depreciation on fixed assets.
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 21 to 25 👇
MCQ.21. How the deferred revenue expenses are treated in the books of accounts?
(A) Such expenses are taken to Profit and Loss Account in part every year and thus unwritten off portion may be allowed to stand in the balance sheet on the asset side.
(B) Such expenses are charged fully to the Profit and Loss Account of the year in which these are incurred.
(C) Either (A) or (B)
(D) None of the above
MCQ.22. Legal expenses incurred to defend a suit for breach of a contract to supply goods will be treated as
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Accounting and Auditing MCQ SET 1
MCQ.23. Choose the wrong statements –
(A) Any expenditure which is unreasonably large is capital expenditure
(B) Any expenditure intended to benefit the current period is revenue expenditure
(C) Capital expenditure is any expenditure benefiting a future period.
(D) Amount paid for acquiring goodwill is capital expenditure
MCQ.24. Amount spent on an advertisement campaign, the benefit of which is likely to last for three years is a
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
MCQ.25. Accounting Standard Board was set up by
(A) Institute of Chartered Accountants of India
(B) Institute of Cost and Works Accountants of India
(C) Institute of Company Secretaries of India
(D) Government of India
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 26 to 30 👇
MCQ.26. Match List I with List I and select correct answer using the codes given below
List I List II
a. AS-2 I. AS m fixed assets
b. AS-6 II. AS on revenue recognition
c. AS-9 III. AS on depreciation accounting
d. AS-10 IV. AS on valuation of inventory
Codes:
abcd
(A) IV III II I
(B) I II III IV
(C) II I IV III
(D) III II I IV
MCQ.27. Valuation of inventory is dealt with in
(A) AS-1
(B) AS-2
(C) AS-3
(D) AS-4
MCQ.28. Accounting standard on inventory valuation is not applicable to
(A) Construction contracts
(B) Inventories of livestock, agricultural and forest products
(C) Stocks of mineral oils, ores and gases
(D) All of the above
Accounting and Auditing MCQ SET 1
MCQ.29. As per AS – 2, inventory is to be valued at
(A) Actual cost
(B) Sales value
(C) Net realizable value
(D) The lower of cost, or net realizable value
MCQ.30. Cost of inventories includes
(A) Direct Material + Direct Expenses
(B) Direct Labour + Direct Expenses
(C) All costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition
(D) Direct material only
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 31 to 35 👇
MCQ.31. Which of the following Accounting standards is recommendatory and not mandatory?
(A) AS – 1 – Disclosure of accounting policies
(B) AS-2 (Revised) – Valuation of inventories
(C) AS-3-Cash Flow Statement
(D) AS – 4 – Contingencies and Events occurring after the Balance Sheet date
MCQ.32. In reference to the accounting standards, choose the correct statement:
(A) Accounting standards codify the generally accepted accounting principles
(B) They lay down the norms of accounting policies and practices by way of codes or guidelines
(C) The main purpose of accounting standards is to provide information to the user as to the basis on which the accounts have been prepared
(D) All of the above
MCQ.33. Which of the following factors should be considered while estimating the useful life of a depreciable asset?
(A) Expected physical wear and tear
(B) Obsolescence
(C) Legal or other limits on the use of asset
(D) All of the above
Accounting and Auditing MCQ SET 1
MCQ.34. According to AS-6, Depreciable assets’ are assets which
(A) Are expected to be used during more than one accounting period
(B) Have limited useful life
(C) Are held by an enterprise for use in the production or supply of goods and services, for rental to others, or for administrative purposes and not for the purpose of sale in the ordinary course of business
(D) All of the above
MCQ.35. AS – 6 deals with depreciation accounting and applies to all depreciable assets, except
(A) Forests, plantations and similar regenerative natural resources
(B) Wasting assets and expenditure on research and development
(C) Goodwill and livestock
(D) All of the above
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 36 to 40 👇
MCQ.36. Assessment of depreciation and the amount to be charged in respect thereof in an accounting period are usually not based on
(A) Market value of the asset
(B) Historical cost or other amount substituted for the historical cost of the depreciable asset when the asset had been revalued
(C) Expected useful life of the depreciable asset
(D) Estimated residual value of the depreciable asset
MCQ.37. Choose the correct statement:
(A) According to AS – 6, depreciation is to be provided on land
(B) According to AS-6, depreciation is not to be provided on land under any situation
(C) According to AS-6, depreciation is not to be provided on land unless it has a limited useful life for the enterprise
(D) AS – 6 is silent on the question of providing depreciation on land
MCQ.38. Which of the following is not required to be disclosed according to AS-6?
(A) The depreciation methods used
(B) The total depreciation for the period for each class of assets
(C) The gross amount of each class of depreciable assets and the related accumulated depreciation
(D) Depreciated value of the assets
Accounting and Auditing MCQ SET 1
MCQ.39. The method of depreciation is applied consistently to provide comparability of the results of the operations of the enterprise from period to period. A change from one method of providing depreciation to another is made only
(A) If the adoption of the new method is required by statute
(B) For compliance with an accounting standard
(C) If it is considered that the change would result in a more appropriate preparation or presentation of the financial statements of the enterprise
(D) All of the above
MCQ.40. In case the depreciable assets are revalued, the provision for depreciation is based on
(A) The revalued amount on the estimate of the remaining useful life of such assets
(B) Original cost of the assets
(C) Depreciated value of the assets
(D) AS-6 is silent in this regard
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 41 to 45 👇
MCQ.41. AS – 9 (Revenue Recognition) is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from
(A) The sale of goods
(B) The rendering of services
(C) The use by others of enterprise resources yielding interest, royalties and dividends
(D) All of the above
MCQ.42. Which of the following aspects of revenue recognition is not dealt by AS-9?
(A) Revenue arising from construction contracts
(B) Revenue arising from hire-purchase, lease agreements
(C) Revenue arising from governments grants and other similar subsidies
(D) All of the above
MCQ.43. Which of the following ways can be used to create ‘Secret Reserves’?
(A) Writing off excessive depreciation
(B) Charging capital expenditure to Profit and Loss Account
(C) Showing a contingent liability as an actual liability
(D) All of the above
Accounting and Auditing MCQ SET 1
MCQ.44. Which of the following information related to fixed assets should be disclosed in the financial statements as per Accounting Standard – 10 (Accounting Standard on Fixed Assets)?
(A) Gross and net book values of fixed assets at the beginning and end of an accounting period showing additions, disposals, acquisitions and other movements
(B) Expenditure incurred on account of fixed assets in the course of construction or acquisition
(C) Revalued amount substituted for historical cost of fixed assets, the method adopted to compute the revalued amounts, the nature of any indices used, the year of any appraisal made and whether an external value was involved, in case where fixed assets are stated at revalued amounts
(D) All of the above
MCQ.45. Which of the following assets are dealt with by AS – 10 (Accounting Standard on Fixed Assets)?
(A) Land, building, plant and machinery, vehicles, furniture and fittings
(B) Goodwill and patents
(C) Trademarks and designs
(D) All of the above
UGC NET SET |Accounting and Auditing MCQ SET 1
MCQ 46 to 50 👇
MCQ.46. AS-10 (Accounting Standard on Fixed Assets) does not deal with accounting for the following items to which special considerations apply
(A) Forests, plantations and similar regenerative natural resources
(B) Wasting assets including material rights, expenditure on the exploration for and extraction of minerals, oil, natural gas and similar non-regenerative resources
(C) Expenditure on real estate development and livestock
(D) None of the above
MCQ.47. Goodwill should be recorded in the books
(A) When management is interested to show goodwill in the books of accounts
(B) When some consideration in money or money’s worth has been paid for it
(C) When firms in the same industry show goodwill in their books of accounts
(D) When company is going to issue shares or debentures for public subscription
MCQ.48. Which of the following companies are allowed to maintain secret reserves under the provisions of the Companies Act, 1956?
(A) Banking, insurance and electricity supply companies
(B) Trading companies
(C) Industrial companies
(D) All of the above
Accounting and Auditing MCQ SET 1
MCQ.49. Which of the following are the advantages of Secret Reserves?
(1) The working capital of the concern can be increased
(II) Heavy losses of an exceptional nature can be met without disclosing the fact in the published statements and without disturbing the normal profits of the business
(III) Profit need not be disclosed to competitors, thus financial interests of the business are promoted
(IV) Dividend may be equalized more effectively
(V) It makes it financially stronger and the business can survive without help
Code:
(A) I and II
(B) III and IV
(C) I, II, III and IV
(D) I, II, III, IV and V
MCQ.50. A capital reserve is generally created out of profits or gains of a capital nature. Which of the following is not a profit or gain of capital nature?
(A) Profit on reissue of forfeited shares
(B) Profit on sale of fixed assets
(C) Profit prior to incorporation
(D) Profit on sale of goods
UGC NET SET |Accounting and Auditing MCQ SET 1
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