1. Statement of financial position produced from incomplete accounting record is commonly known as? (a) Balance sheet (b) Cash flow statement (c) Statement of affairs (d) Statement of financial operations Answer: c
2. Which of the following businesses usually maintain incomplete accounting record of the business activities? (a) Large businesses (b) Companies (c) Big partnership firms (d) Small businesses Answer: d
3. In which of the following systems of recording the financial statements reflect true and fair view of an entity and accounting records are considered to be more accurate? (a) Single entry system (b) Double entry system (c) Cash based system (d) Credit based system Answer: b
4. Identify the correct formula used to ascertain the closing balance of capital: (a) Opening capital + Net income – Drawing – Assets = Closing capital (b) Closing capital = Opening Capital + Net loss – Drawings (c) Closing Capital = Opening capital + Assets + Incomes – Expenses (d) Closing capital = Opening capital + Net income – Drawings Answer: d
5. Which of the following formulas is used to calculated the net income for an accounting period? (a) Net income = opening capital + Drawings + Ending capital (b) Net income = – Opening capital + Drawings – Ending capital (c) Net income = – Opening capital + Drawings + Ending capital (d) Net income = Opening capital – Total assets Answer: c
6. Which of the following statement is correct: (a) The main purpose of any business is to earn profit (b) If expenses exceed revenue then business is running loss (c) Both (a) and (b) (d) None of the above Answer: a
7. Which of the following statement is correct: (a) Dual aspect assume an indefinite life of the entity (b) In accounting, accrual basis is used for recording transactions (c) Both (a) and (b) (d) None of the above Answer: a
8. Which one of the following accounts is supposed to be used to get the figure of credit purchases made during the current accounting period? (a) Debtor account (b) Revenue account (c) Creditors account (d) Expenses account Answer: c
9. To obtain the amount of credit sales made during an accounting period, which account is generally used in single entry and incomplete records? (a) A/c payable account (b) Total revenue account (c) Debtors account (d) Stock account Answer: c
10. Which of the following is used to work out the balance of cash drawings for an accounting period? (a) Debtor account (b) Credit account (c) Cash payments journal (d) Cash book Answer: d