Practice Test


1) Money spent Rs.10,000 as traveling expenses of the directors on trips abroad for purchase of capital assets is


2) Amount of Rs.5,000 spent as lawyers' fees to defend a suit claiming that the firm's factory site belonged to the plaintiff's land


3) Entrance fee of Rs. 2,000 received by Ram and Shyam Social Club


4) Subsidy of Rs.40,000 received from the govt by a manufacturing concern


5) Insurance claim received on account of machinery damaged completely by fire


6) Interest on investments received from UTI


7) Amount received from IDBI as a medium term loan for augmenting working capital


8) A bad debt recovered during the year


9) A second hand motor car was purchased for Rs.10,000, the amount of Rs. 1,000 is spent on its repairs , Rs.500 is incurred to get the car registered in owner's name and Rs.1,200 is paid as dealer's commission . The amount debited to car account will be


10) Revenue from Sale of products ordinarily is reported as part of the earning in the period


11) If repair cost is Rs.25,000, whitewash expenses are Rs.5,000,cost of extension of building is Rs.2,50,000 and cost of improvement in electrical wiring system is Rs.19,000;the amount to be expensed is


12) Rs.1,200 spent on the repairs of machine


13) Rs.2,500 spent on the overhaul of machines purchased second-hand


14) White washing expenses


15) Paper purchased for use as stationery


16) Advertising camping to launch a new to products


17) expenses on a foreign tour to purchase a machinery is


18) cost of machinery purchased is


19) insurance & freight on machinery purchased is


20) custom duty on imported machinery is


21) wages for erection of machinery is


22) installation charges of a machinery purchased is


23) expenses incurred on trial run is


24) cost of a second hand machinery purchased is


25) repair of a second hand machinery before put to use


26) interest on a term loan for the purchase of machinery where the commercial production has not begun till the last day of the accounting year is


27) money spent to reduce working expenses is


28) amount spent for replacement of a petrol driven engine by CNG Kits is


29) cost of rings & pistons of the engine of a motor car to get fuel efficiency is


30) overhauling expenses for engine of a motor car to get better fuel efficiency is


31) legal expenses to acquire better fuel efficiency is


32) legal expenses to defend a suit claiming that firm's factory site belong to plaintiff is


33) amount spent on a repainting an old building for the first time on purchase is


34) expenses to obtain a license for starting a factory is


35) amount spent for the construction of temporary huts for storing building material while constructing a building


36) deposit with Mahanagar Telephone Nigam Ltd.for installing telephone is


37) inauguration expenses on opening of a new branch of an existing business


38) legal expenses to recover dues from customers


39) amount spent on demolition of an old building to construct a bigger building on the same site is


40) cost of improvement in electric wiring system is


41) purchase of patents rights


42) purchase of goodwill is


43) purchase of technical know-how is


44) purchase of live stock by a farmer is


45) Amount spent on new sign board at airport


46) advance to supplier of goods is


47) festival advance to employees is


48) annual renewal fee of license for next year is


49) Interest on a term-loan for the purchase of machinery where the commercial production has already begun is


50) repair of a second hand machinery after put to use


51) amount spent for replacement of worn out part of machine is


52) annual maintenance fees of a machine is


53) amount spent on annual repainting of building is


54) expenses for removal of stock to a new site is


55) annual fire insurance (of building) Rs.12,000 paid on 01.01.2006 during accounting year ending on 31..3.2006 is


56) compensation for breach of stock to a new site is


57) compensation paid to employee who were retired is


58) compensation paid to worker under VRS scheme


59) import duty on purchase of material is


60) fines imposed is


61) imported goods confiscated by custom authorities is


62) loss on sale of machinery is


63) second hand machine was purchased for Rs.1,00,000 through a broker who charged 1 % .It was brought to factory after incurring transportation cost of Rs.2,000 & then was represented at a cost of Rs.3,000 & then installed at a cost of Rs.4,000 to take trial run production which cost Rs.5,000.The commercial production begun & continued upto 11 months at the end of which ,this machine was again repaired at a cost of Rs.6,000 . the amount debited to machinery account will be


64) A second hand car is purchased for Rs.20,000 ,the amount of Rs.3,000 is spent to its repairs , Rs.1,000 is incurred to get the car registered in owner's name & Rs.2,000 is paid as dealer commission.The amount debited to car account will be


65) if repair cost is Rs.50,000, whitewash expenses are Rs.10,000,cost of extension of building is Rs.5,00,000 and cost of improvement in electrical wiring system is Rs.40,000;the amount to be expensed is


66) Cost of Rs.1,80,000 for dismantling, removing & reinstalling plant by a cotton mill incurred in connection with removal of works to a more suitable locality is


67) sale of plant & machinery is


68) sale of investments is


69) loans raised is


70) insurance claim for machinery damaged by fire is


71) subsidy received from the govt for plot of land is


72) general subsidy received from govt is


73) bad debts recovered is


74) scrap value of machinery is


75) premium received on issue of shares


76) capital introduced is


77) interest received on investment is


78) interest accrued on investment is


79) cash received from debtor is


80) B/R collected is


81) sale of goods for cash is


82) sale of goods for credit is


83) insurance claim for stock damaged by fire is


84) Contingent asset usually arises from unplanned or unexpected event that give rise to


85) If an inflow of economics benefits is probable then a contingent asset is disclosed


86) In case of ____either outflow of resources to settle the obligations is not probable or the amount expected to be paid to settle the Liability cannot be measured with sufficient reliability


87) Present Liability of uncertain amount , which can be measured reliably by using a substantial degree of estimation is termed as


88) In the financial statement , contingent Liability is


89) Contingent Liability usually arises from unplanned or unexpected event that give rise to


90) In the financial statement , contingent asset is


91) In the financial statement , provision is


92) if a reliable estimates of probable outflow of resources to settle a present obligation can be made ,it is


93) If a reliable estimates of probable outflow of resources to settle a possible obligation can be made ,it is


94) If a reliable estimates of probable outflow of resources to settle a possible obligation cannot be made ,it is


95) When obligation is not problem or the amount expected to be paid to settle the liability cannot to be measured with sufficient reliability, it is called


96) Contingent asset, usually arise from unexpected events which give rise to


97) Equipment can be classified as________


98) Accounts payable/creditors can be classified as________


99) Stock can be classified as_______


100) Profit can be classified as__________


101) Building can be classified as_______


102) Accounts receivable/debtors can be classified as________


103) Capital can be classified as______


104) ________is that expenditure which result in acquisition of an asset or which result in an increase in the earning capacity of a business


105) Expenses whose benefit expires within the year of expenditure and which are incurred to maintain the earning capacity of existing assets are termed as________.


106) There are certain expenses which may be in the nature of revenue but their benefit may not be consumed in the year in which such expenditure has been incurred,rather the benefit may extend over a number of year are termed as______


107) The benefit of capital expenditure lasts for a________of time


108) Which of the following is/are example of capital expenditure ?


109) Amount paid for wages,salary,carriage of goods,repairs,rent and interest,etc, are items of_______


110) Cost incurred to acquire an asset are_______but costs incurred to keep them in working condition or to defend their ownership are______


111) Which of the following is/are not example of capital expenditure


112) Which of the following is/are not example of capital expenditure


113) Depreciation on fixed assets is______


114) All sums spent up to the point an asset is ready for use should also be treated as_____


115) Fees paid to lawyer for drawings a purchase deed of land is_____


116) Interest on loans taken to acquire fixed assets only for the period before the asset become operational is______


117) Amount paid for wages,salary,carriage of goods,repairs,rent and interest,etc,are items of_______


118) Fee paid to lawyer for checking whether all the papers are in order before land is purchased is_______but if later a suit is filed against the purchaser,the legal costs will be______


119) Which of the following is/are deferred revenue expenditure ?


120) Expenditure incurred for reconditioning to restore the operating efficiency of the used property acquired for the business are_____


121) Expenses incurred to maintain the business,cost of store consumed in the course of manufacturing e.g.oil ,cotton-waste are___


122) Expenditures incurred in normal course of business and whose benefit expires within the year is known as_______while_____is that expenditure which result in acquisition of an asset or which result in an increase in earning capacity of business.


123) The main purpose of the incurring capital expenditure is to____of the business.The main purpose of incurring revenue expenditures is to_____of the business.


124) Capital expenditure normally appears on______


125) Revenue expenditure are balanced and is transferred to____


126) Deferred revenue expenditure appears in balance sheet at assets side under the heading_____


127) Which of the following is/are recurring in nature ?


128) Which of the following is/are non-recurring in nature ?


129) The main feature of capital expenditure is that it result in a benefit which will accrue to the business enterprise for a long time say______


130) Deferred revenue expenditure also results in a benefit which will accrue in future period but generally for____


131) Which of the following is/are not usually capable of being reconverted into cash ?


132) Heavy loss such as loss due to earthquake is treated as_____in the sense that they are write off over a period of 3 to 5 years.


133) which of the following are of capital nature ?


134) Select the false statement.


135) Amount received from sale of capital asset per contribution made by proprietor towards the capital of the business are knows as_____


136) ______is the outcome of a firm's activity in the accounting period,part of its rewards for offering goods or services to the public


137) Which of the following is/are revenue receipt ?


138) Which of the following is/are capital receipt ?


139) Which of the following is/are not capital receipt ?


140) Which of the following is/are not revenue receipt ?


141) _______and______have no bearing on the profit or loss for the accounting period.


142) Amount realized by the sale of fixed assets or by issue of share or debentures is a _____while amount realized by sale of goods or rendering services is always______


143) Payment in to the business by proprietor is_____receipt


144) A receipt in substitution of a source of income is a_______


145) A receipt in substitution of an income is a______


146) Amount received for surrender of certain rights under an agreement is a_______when a capital asset is being given up in the form of these rights.


147) Amount received as compensation under an agreement for the loss of future profits is a_____


148) Amount realized from the sale of a capital asset or investment is______however amount realized from the sale of an asset kept for sale is______


149) _______are earned in the ordinary course of business


150) _____are those which are earned as a result of selling some fixed assets, or in connection with raising capital for the firm


151) ______appear in the profit and loss account and are available for distribution as profit,or for creating reserve and funds,or for being used in the business


152) Capital profits are_____


153) Capital losses are shown in the_____


154) Discount on issue of debentures is a______


155) If capital losses are negligible,they are_______of the year in which they occur.


156) A contingent asset is a possible asset that arises from_____the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise.


157) A contingent asset is a possible asset that arises from past events the existence of which will be confirmed only by the _____ or ______ of one or more uncertain future events not wholly within the control of the enterprise.


158) A contingent liability is a possible obligation that arises from_______ and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise.It is a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefit will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be determined"


159) Which of the following expenditures is/are capital expenditure


160) Which of the following expenditures is/are not capital expenditure


161) Which of the following expenditure is deferred revenue expenditure ?


162) Which of the following expenditure is/are not revenue expenditure ?


163) Which of the following expenditure is/are revenue expenditure ?


164) Which of the following expenditure is/are revenue expenditure ?


165) A building purchase for Rs.1,50,000 was subsequently sold for Rs.1,75,000,difference Rs.25,000 will be______


166) When a company issues its shares of the face value Rs.100 for Rs.105 each, it is said that shares have been issued at a premium,which is_____


167) Which of the following expenditure is/are capital expenditure ?


168) Which of the following expenditure is/are capital expenditure ?


169) Which of the following expenditure is/are revenue expenditure ?


170) Rs. 15,000 customs duty was paid on import of a machinery for modernization of factory in the current year & Rs.5,000 paid as import duty on raw materials -


171) A Machine with a written down value of Rs. 10,000 has been sold for Rs. 13,000. The amount realized is a -


172) Which of the following is not a difference between provision & contingent liability


173) A contingent asset is _____


174) If a reliable estimates of probable outflow of resources to settle a possible obligation cannot be made ,it is