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Competitive Exams: Commerce MCQs (Practice-Test 1 of 99)

1. Which one of the following is an ingredient of the entity convention of accounting?

a. The owner of a unit and the unit itself is one and the same

b. The owner and the unit are treated separately

c. No separate accounts for the unit is required

d. The unit is a private affair of the owner, hence no accounting is required

2. Which one of the following accounting equations is correct?

a. Assets = Owner's Equity

b. Assets = Liabilities + Owner's Equity

c. Assets = Liabilities-Owner's Equity

d. Assets + Liabilities = Owner's Equity

3. Which one of the following accounting conventions stipulates that contingent assets
appear as a footnote in the balance sheet?

a. Materiality

b. Consistency

c. Disclosure

d. Conservatism

4. Which one of the following is NOT related to the convention of conservatism?

a. Making provision for doubtful debts and discount on debtors in anticipation of

actual bad debts and discount

b. Valuation of stock at Market Price or Cost Price which ever is higher

c. Charging of small capital items as Revenue

d. Adopting Written-down Value

Method of depreciation as against

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Straight-line Method

5. Match List I (Standards issued by ICAI) with List II (Objects/areas covered) and select the
correct answer:

List-I List-II

a. AS-1 a. Valuation of Inventories

b. AS-2 b. Cash Flow Statement

c. AS-3 c. Revenue Recognition

d. AS-9 d. Disclosure of Accounting Policies

A B C D

a. 4 1 2 3

b. 4 1 3 2

c. 1 4 3 2

d. 1 4 2 3

6. On 31st March 2001, the closing stock of X Ltd. Was Rs. 3, 45, 000. On April 1, 2001, stock
of Rs. 2, 25, 000 was destroyed by fire. The company closes its account on 31st March. If
the balance sheet of the company on 31st March 2001 was finalized on 25th April 2001,
then the balance sheet will show the closing stock at

a. Rs. 3, 45, 000 with no mention of fire

b. Rs. 1, 20, 000 with no mention of fire

c. Rs. 3, 45, 000 showing loss by fire in footnote

d. Rs. 1, 20, 000 showing loss by fire in footnote

7. Consider the following The investment portfolio of a business as on 31 − 12 − 2000 stood

as follows

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a. 8% Debentures of X Co. Ltd (Rs. 6, 000). Interest payable on 31st March and 30th
September.

b. 7% Debentures of Y Co. Ltd (Rs. 4, 000). Interest payable on 30th June and 31st
December.

c. 10% Debentures of Z Co. Ltd (Rs. 9, 000). Interest payable on 1st June and 1st
December.

Amount of interest accrued on the closing date will be.

a. Rs. 335

b. Rs. 1, 025

c. Rs. 195

d. Rs. 830

8. Which one of the following is correct with respect to going concern convention?

a. The enterprise is not going to terminate its operations in the period ahead

b. The enterprise may go out of business in the next accounting period

c. The enterprise may not divest or diversify its operational spheres

d. The enterprise may not revalue its assets during the current accounting

Period

9. Consider the following statements: Continuous evaluation of the relevance of generally

accepted accounting principles is required, because

a. They are the everlasting operating realities.

b. The environment, in which business operates, undergoes constant change.

c. The business enterprises can develop financial statements of value to the end-users.

d. Realities of social, economic and legal framework have to be considered by

professional accountants. Which of the above statements are correct?

i. 1, 2 and 3

ii. 2, 3 and 4

iii. 3 and 4

iv. 1 and 4

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10. Which one of the following will lead to understate merit of net profit?

a. Amortization of Fictitious Assets

b. Treating capital expenditure as revenue expenditure

c. Treating revenue expenditure as capital expenditure

d. Creation of general reserve

11. Which one of the following items is considered revenue expenditure?

a. Expenditure by way of maintenance that has increased productivity

b. Repair of gearbox in a car that has enhanced its operational life

c. Complete overhaul of a machine, spending around 20% of its value

d. Changing a small component of a machine to maintain its operating efficiency

12. After the construction of their new factory building M/s XYZ Co. Shifted to it. During this
process Rs. 20, 000 were s1d on pulling down the old structure and Rs. 2, 000 were spent
on shifting the stocks to new building. These expenditures are to be classified as

a. Capital expenditure

b. Revenue expenditure

c. Capital and Revenue expenditure respectively

d. Deferred Revenue expenditure

13. Match List I with List II and select the correct answer

List-I List-II

a. Reducing capital a. Contribution margin

b. Sales greater than Variable cost b. Reorganization

c. Sales greater than Break-even sales c. Absorption

d. Take-over of firm d. Margin of safety

A B C D

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a. 2 1 3 4

b. 1 2 3 4

c. 1 2 4 3

d. 2 1 4 3

14. Preparation of Trial Balance helps, mainly, in

a. summarizing business transactions

b. verifying that ‘generally accepted accounting principles’ have been observed

c. finalizing the ‘sources and uses of funds’ statement

d. locating errors, if any, in books of accounts

15. Match List I with List II and select the correct answer:

List-I List-II

a. Goodwill a. Current liability

b. Overdraft b. Fixed assets

c. Preliminary expenses c. Reserves and surpluses

d. Premium on issue of Shares d. Fictitious assets

A B C D

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a. 2 1 4 3

b. 1 2 4 3

c. 1 2 3 4

d. 2 1 3 4

16. If opening stock = Rs. 2, 45, 000; purchases = Rs. 15, 00, 000; sales = Rs. 17, 40, 000 and
rate of gross profit = 20% on cost of goods sold, then the closing stock would be at

a. Rs. 3, 53, 000

b. Rs. 2, 95, 000

c. Rs. 2, 45, 000

d. Rs. 1, 95, 000

Discussions & Questions

Commerce-MCQs-Practice-Test-1 to 99. where can i get the answers? ( - he...@ on 31-May-

2017)

1 Answer

We are currently providing only the questions.

- Examrace on 08-Jun-2017

MCQ related to all fields of Commerce and Management ( - na...@ on 21-Dec-2016)

1 Answer

For solved MCQs on commerce and management visit -

https://www.doorsteptutor.com/Exams/UGC/
- Examrace on 02-Jan-2017

Sir, I request to provide material related to NET exam, through which i will prepare myself
properly. ( - ja...@ on 12-Dec-2016)

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1 Answer

For Paper1 refer - https://www.examrace.com/CBSE-UGC-NET/CBSE-UGC-NET-

FlexiPrep-Program/Postal-Courses/Examrace-CBSE-UGC-NET-Paper-I-Series.htm
- Examrace on 23-Dec-2016

How Can I get answers of the mcq (practise set 1-99) in commerce section ( - ca...@ on 16-
May-2016)

1 Answer

We are currently not providing answer key for commerce. However, solved commerce
questions are available at - https://www.doorsteptutor.com/Exams/UGC/
- Examrace on 23-May-2016

Objective question set with answer for prepare JAO exam 2015 ( - ca...@ on 26-Dec-2014)

1 Answer

We are not dealing with BSNL JAO exam presently, we will be including this exam ASAP.
- Examrace on 26-Dec-2014

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