Accounting — Mixed Practice — Part 3: 40 MCQs with Explanations

If actual bad debts are more than the provision for bad debts, then there will be a Debit balance of Provision for Bad Debts Account .

The creation of provision for doubtful debts given as an adjustment requires Debit Profit and Loss Account and deduct the provision from debtors .

All of the above is the correct answer to “Under the direct write-off method of recognizing a bad debt expense. Which of the following statements is/are true”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Profit & Loss A/c is the correct answer to “At the time of preparation of financial accounts, bad debt recovered account will be transferred to”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Capital Reserve A/c is the correct answer to “The balance of Revaluation Reserve pertaining to an asset that has been disposed off or retired can be transferred to”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Investment in own share A/c appears in Asset side .

If a company has contingent liabilities, they appear in the Notes on account to Balance Sheet .

Depreciation is calculated on the Cost+ Transport+ Installation expenses .

Obsolescence is the correct answer to “Which of the following is an external cause of depreciation”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Land is the correct answer to “Which of the following is not depreciated”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Inventory system is also known as Appraisal system of depreciation.

The entry for creating a Provision for bad debts is Debit Profit and Loss A/c and credit Provision for Bad Debts A/c. .

When a person purchasing goods on credit he becomes a Debtor in the books of the seller.

Tax deducted at source A/c appears in Assets side .

Depreciation is a process of Allocation .

The rate at which the asset is written off reduces year after year is the correct answer to “Which of the following statements is true with regard to written down value method of depreciation”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Passage of time, asset usage, and obsolescence is the correct answer to “Which of the following factors are primarily considered to determine the economic life of an asset”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Depreciation is a charge against profit is the correct answer to “Which of the following statements is correct about Depreciation”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Allocation of the cost of an asset to the periods in which services are received from the asset is the correct answer to “Which of the following statements best describes the purpose of depreciation”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Show the true financial position in the Balance Sheet is the correct answer to “The main objective of providing depreciation is to”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement is the correct answer to “The Bank Reconciliation Statement is prepared”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Bank reconciliation is a statement prepared to reconcile Cash as per cash book with bank balance as per bank pass book .

Bank reconciliation statement is a part of Cash book .

Benefits of preparing Bank Reconciliation Statement includes All the three .

Debit balance as per bank pass book mean Bank Overdraft .

Which of the following is not a cause of difference in balance as per cash book and balance as per bank pass book Cheques deposited and cleared .

Provision is created for Known Liabilities .

Discounted present value Method is the correct answer to “Which of the following is not a method of charging depreciation”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

The amount of depreciation decreases while the rate of depreciation remains the same is the correct answer to “Which of the following is true with respect to providing depreciation under diminishing balance method”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Credit balance as per Cash Book mean Bank overdraft .

Debit side of Bank Pass book corresponds to Credit side of Cash Book .

Difference in Bank Balance as per Pass Book and Cash Book may arise on account of Both and B. .

sale is effected is the correct answer to “Revenue is generally recognized as being earned at that point of time when”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Raw material consumed is the correct answer to “Which of the following is a revenue expenses”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Cost of stand by equipment is the correct answer to “Which of the following is a capital expenditure”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Maintenance of the Asset is the correct answer to “Which of these types of expenditure would not be treated as a Capital Expenditure”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Expenses of the following nature are treated as a Revenue expenses except Putting the new asset in working condition .

Cash received from debtors would be deemed as No flow of funds.

Current assets and current liabilities is the correct answer to “Generally the term fund is used to mean the difference between”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Trial Balance is the correct answer to “Which of these documents is not required for Bank Reconciliation”. Items of this type are drawn from the Accounting — Mixed Practice — Part 3 syllabus of Pakistani competitive exams, where the fact is tested verbatim.