MGT101 QUIZ 3 FILE (MODULE 11,12,13 & 14)

1. Expired portion of direct cost is treated as: Handout page 276, chap 14
a. Expense b. Cost C. Liability D. Income

2. Discount received from a creditor is Credited under main head: Handout page 150
a. Expenses b. Income C. Assets D. Liabilities

3. Accumulated depreciation of furniture is a/an__________. Handout page 134

a. Expense account b. Contra asset account
c. Liability account d. Asset account

4. If Work in Process closing inventory is provided in trial balance, then that

inventory is treated in:
a. Balance Sheet only
b. Profit and loss account only
c. Both profit & loss account and balance sheet
d. Expense only

5. Factory overhead is a/an: Handout page 273, chap 14

a. Expense b. Liability c. Income d. Cost

6. Purchases Rs.500, Carriage outward Rs.50, Gross Sales Rs. 700 and Gross
Profit Rs. 100. Net Purchases = ?
a. Rs. 500 b. Rs.550 c. Rs. 600 d. Rs. 650

7. Carriage inward is Debited under main head: Handout page 259, chap 13
a. Expenses b. Income c. Assets d. Liabilities

8. Capital introduced by the owner is a __________. Handout page 253, chap 12

a. Capital Expenditure b. Revenue Expenditure
c. Capital Receipt d. Revenue Receipt

9. Factory overhead cost = Power & fuel cost + ____. Handout page 277, chap 14
a. Direct labor cost b. Direct material cost
c. Indirect material cost d. Other direct cost

10. Consumed direct supplies are considered as: Handout page 274, chap 14
a. Admin expense b. Cost of sales
c. Selling expense d. Financial expense

11. All of the following items may appear in Trade payable control account
EXCEPT: Handout page 232, chap 11
a. Purchases return b. Cheques paid to creditors
c. Bad debts d. Discount received

12. When correct accounting effect (Dr/Cr) is given in the wrong accounting
head as well as the wrong main head, it is known as: Handout page 247, chap 12
a. Error of omission b. Error of commission
 c. Error of principle d. Error of original entry

13. The unexpired portion of direct cost is treated as: Handout page 274, chap 14
a. Expense b. Asset c. Liability d. Income

14. A control account is an individual account that appears in the

Handout page 237, chap 11
a. Journal b. General ledger
c. Trial balance d. Invoice

15. Mr. X receives a discount of Rs. 50 from a supplier. The discount is debited
to discount allowed account. What will be its effect on net profit?
a. Overhead by Rs. 100 b. Understated by Rs. 100
c. Understated by Rs.50 d. No effect

16. A creditors’ control account is used to record all the transactions related to:
Handout page 232, chap 11
a. Cash sales b. Credit sales
c. Cash purchases d. Credit purchases

17. While preparing a Debtors Control Account, Credit side posted items
cause: Handout page 232, chap 11
a. Increase in debtors’ balance
b. Decrease in debtors’ balance
c. Both increase and decrease in debtors balance
d. Increase in creditor’s balance

18. Which of the following is a Revenue receipt? Handout page 253, chap 12
a. Purchase of a building b. Payment of salaries
c. Long term loan from bank d. Sales revenue

19. Direct cost is also known as: Handout page 274, chap 14
a. Factory overhead cost b. Conversion cost
c. Prime cost d. Cost of sales

20. A minor repair to a photocopy machine was paid in cash. Correct entry
was made to cash account but no entry was made to other account. What will be the
debit effect of journal entry to rectify this error, if there is suspense account in trial
balance? Handout page 251, chap 12
a. Photocopy machine repair account b. Suspense account
c. Photocopy machine account d. Cash account

21. A new accountant of ABC Corporation has prepared the trial balance. But
there is difference in total of both sides of trial balance: such difference
can be due to: Handout page 248, chap 12
a. Under casting of a ledger account
b. Omission of a particular account’s balance in trial balance
c. Over casting of a ledger account
d. All of the given options
 22. Mostly, control accounts are maintained for: Handout page 231,chap 11
a. Trade receivables
b. Trade payables
c. Inventory
d. All of the given options

23. When correct accounting effect (Dr/Cr) is given in the wrong accounting
head but the main head remains correct, is known as: Handout page 247, chap 12
a. Error of omission b. Error of commission
c. Error of principle d. Error of original entry

24. If the debit side of trial balance is heavier than the credit side, suspense
account will be written on __________ Handout page 248, chap 12
a. Credit side b. Debit side
c. Both debit and credit side d. None of the given options

25. Purchases Rs.500, Return inward Rs.50, Gross Sales Rs. 700 and Gross
Profit Rs. 100. Net Purchases = ?
a. Rs. 450 b. Rs.500 c. Rs. 550 d. Rs. 650

26. All of the following items appear on credit side of Trade receivable
control account EXCEPT: Handout page 232, chap 11
a. Cheques dishonored b. Cash received from debtors
c. Bad debts d. Discount allowed

27. Purchase return account is a/an _________. Handout page 134

a. Contra item b. Expense item c. Income item d. Liability item

28. Which of the following Organization converts raw material into finished
goods? Handout page 273, chap 14
a. Trading concern
b. Manufacturing concern
c. Merchandising concern
d. Service concern

29. If the credit side of trial balance is heavier than the debit side, suspense
account will be written on __________ Handout page 248, chap 12
a. Credit side b. Debit side
c. Both debit and credit side d. None of the given options

30. Carriage outward is Debited under main head: Handout page 259, chap 13
a. Expenses b. Income c. Assets d. Liabilities

31. In a manufacturing concern, rent of office building is included in __________.

a. Cost of sales b. Preliminary expenses
c. Cost of goods sold d. Operating expense
32. Income = ?
a. Profit – expenses b. Expenses – profit
c. Assets + profit d. Loss + expenses

33. A payables ledger control account had a closing balance of Rs 9,000. A

credit purchase of Rs. 500 had been omitted to record in this control
account. What should be the correct balance of payables control account?
a. Rs. 8,000 credit b. Rs. 8,500 credit
c. Rs. 9,500 credit d. Rs, 10,000 credit

34. All of the following items may appear in Trade payable control account
EXCEPT: Handout page 232, chap 11
a. Credit purchases b. Discount received
c. Cash paid to creditors d. Cash purchases

35. Which of the following is an error of principle? Handout page 247, chap 12
a. Bank charges being deducted by the bank without our knowledge.
b. A payment to a debtor Mr. A is recorded in the account of another
debtor Mr. B.
c. Purchases of vehicle is recorded in repairs account
d. A receipt of Rs. 50,000 from a debtor is recorded as Rs. 5,000 in his account.

36. When correct accounting entry is recorded in the books of accounts but
the amount in both according effect (Dr & Cr) is wrong, it is known as:
Handout page 247, chap 12
a. Error of omission b. Error of commission
c. Error of principle d. Error of original entry

37. Total factory cost = Prime cost + ___________. Handout page 274, chap 14
a. Factory overhead cost b. Direct Labor cost
c. Direct Material cost d. Other Direct cost

38. Unconsumed shipping supplies are considered as:

a. Admin expense b. Current asset
c. Selling expense d. Financial expense

39. Leather to make jackets in manufacturing concern is: Handout page 273, chap 14
a. Raw material b. Work in process
c. Finished goods d. Stock in trade

40. Which of the following is/are the function of financial accounting?

a. Recording
b. Posting
c. Reporting
d. All of the given options.

41. Work in process closing inventory is a/an:

a. Expense b. Liability c. Income d. Asset
 42. A payables ledger control account had a closing balance of Rs 9,000. A
credit sales of Rs. 500 had been omitted to record in this control
account. What should be the correct balance of payables control account?
a. Rs. 8,000 credit b. Rs. 8,500 credit
c. Rs. 9,000 credit d. Rs, 10,000 credit

Note (33 & 42 credit purchases = (payable control account) and

credit sales = (receivables control account).

43. A debtors’ control account is used to record all the transactions related to:
Handout page 232, chap 11
a. Cash sales b. Credit sales
c. Cash purchases d. Credit purchases

44. Discount allowed to a debtor is Debited under main head:

Handout page 259, chap 13
a. Expenses b. Income c. Assets d. Liabilities

45. A receivables ledger control account had a closing balance of Rs. 9,000. A
dishonored cheque of Rs. 500 had been omitted to record in the control
account. What should be the correct balance of receivables control account?
Handout page 232, chap 11
a. Rs. 8,000 debit b. Rs. 8,500 debit c. Rs. 9,500 debit d. Rs. 10,000 debit

46. Unconsumed direct supplies are considered as: Handout page 276, chap 14
a. Inventory
b. Admin Expenses
c. Selling expenses
d. Marketing expenses

47. Unfinished goods are called: Handout page 276, chap 14

a. Raw material
b. Work in process
c. Stock in trade
d. None of the given options

48. Salaries expense of Rs. 5,000 is recorded as Rs. 500. What will be its effect
on net profit?
a. Overstated by Rs. 5,000 b. Overstated by Rs. 4,500
c. Understated by Rs. 4,500 d. No effect

49. All of the following items may appear in Trade receivable control account
EXCEPT: Handout page 232, chap 11
a. Credit Purchases b. Cash received from debtors
c. Bad debts d. Discount allowed

50. Expenditure incurred to acquire the patent right for the business is an
example of:
 a. Revenue expenditure b. Administrative expenditure
c. Deferred revenue expenditure d. Capital expenditure

51. Loss on revaluation of fixed asset should be charged to:

a. Balance Sheet b. Profit and loss account
c. Revaluation reserve account d. Accumalated depreciation account

52. While preparing a Debtors Control Account, Debit side posted items
cause: Handout page 232, chap 11
a. Increase in debtors’ balance
b. Decrease in debtors’ balance
c. Both increase and decrease in debtors balance
d. Increase in creditor’s balance

53. Expenses are also known as: Handout page 274, chap 14
a. Prepaid expense b. Expired portion of cost
c. Cost incurred during production d. Cost incurred on asset acquired

54. An income statement is prepared for a specific period, which is also known
as: Handout page 257, chap 13
a. Reporting period b. Reporting date
c. Statement of cash flow d. Financial health

55. Which of the following is a Capital expenditure? Handout page 253, chap 12
a. Purchase of a building b. Payment of salaries
c. Long term loan from bank d. Sales revenue

56. A purchase of plant and machinery is a _____________ Handout page 253, chap 12
a. Capital Expenditure b. Revenue Expenditure
c. Capital Receipt d. Revenue Receipt

57. Discount allowed to a debtor is credited under main head: Handout page 259, chap 13
a. Expenses b. Income c. Assets d. Liabilities

58. Which of the following is a Revenue expenditure? Handout page 259, chap 13
a. Purchase of a building b. Payment of salaries
c. Long term loan from bank d. Sales revenue

59. In a trading concern, salaries of marketing staff is included in ___________.

Handout page 269, chap 13
a. Cost of sales b. Preliminary expense
c. Cost of goods sold d. Operating expense