Accountancy MCQ Quiz - Objective Question with Answer for Accountancy - Download Free PDF

The correct answer is ₹2,47,400.

Key Points

• The amount of subscription to be credited to the Income and Expenditure Account for the year 2017 can be calculated as follows:
  • Begin with the total subscriptions received in 2017: ₹ 2,45,000
  • Subtract the amount received for 2016 (which should be accounted for in the 2016 accounts, not 2017): ₹ 2,45,000 - ₹ 20,000 = ₹ 2,25,000
  • Also, subtract the amount received in advance for 2018 (which should be accounted for in the 2018 accounts, not 2017): ₹ 2,25,000 - ₹ 15,000 = ₹ 2,10,000
  • Now, add the subscription receivable from 2017 that has not yet been received by the end of the year: ₹ 2,10,000 + ₹ 19,000 = ₹ 2,29,000
  • Finally, add the subscription received in 2016 in advance for the year 2017. This actually belongs to 2017, so it's added to the 2017 total: ₹ 2,29,000 + ₹ 18,400 = ₹ 2,47,400
  • Therefore, the amount of subscription to be credited to the Income and Expenditure Account for the year 2017 is ₹ 2,47,400.
  • So, according to the options given, the correct answer is:
  • 4) ₹ 2,47,400

The correct answer is Rs. 22,000. 

Key Points

• Subscription is a membership fee paid by the member on annual basis. 
• This is the main source of income for non-profit organizations. 
• Subscription paid by the members is shown as a receipt in the Receipt and Payment Account and as income in the Income and Expenditure Account. 
• It may be noted that the Receipt and Payment Account shows the total amount of subscriptions actually received during the year. 
• However, the amount shown in the Income and Expenditure Account is confined to the figure related to the current period only irrespective of the fact whether it has been received or not.

Additional Information

• The Income and Expenditure Account will show Rs. 22,000 as income from subscriptions for the year 2016-17, the calculation of which is given as below:

Subscriptions received in 2016-17 - 25,000

Less: Subscriptions for the year 2015-16 - 2,000

Less: Subscription for the year 2017-18 - 1,500

Add: Subscriptions outstanding for the year 2016-17 - 500

Income from subscriptions for the year 2016-17 - 22,000

The correct answer is Rs. 85600

Solution

Calculation of Subscription for the year 2019-20

Key Points

•  Outstanding subscriptions for the current year are added to subscriptions received during the year because they are related to the current year. They will be subtracted from the subscription received next year when received.
•  Subscription received in advance for the year is accrued income. Hence, it is subtracted from the subscription received.
• Outstanding subscription received for the previous year is subtracted, as the accounting for the same has already been done in the previous year.
• The resultant amount is the amount to be credited to the Income and Expenditure account in respect of subscription.

Key Points

Statement of Salaries for the year ended December 31, 2018

Salaries chargeable to Income and Expenditure account = Rs. 1,06,500

The correct answer is Rs. 14,000. 

Key Points

• Subscription is a membership fee paid by the member on annual basis. 
• This is the main source of income for non-profit organizations. 
• Subscription paid by the members is shown as a receipt in the Receipt and Payment Account and as income in the Income and Expenditure Account. 
• It may be noted that the Receipt and Payment Account shows the total amount of subscriptions actually received during the year. 
• However, the amount shown in the Income and Expenditure Account is confined to the figure related to the current period only irrespective of the fact whether it has been received or not.

• The Income and Expenditure Account will show Rs. 14,000 as income from subscriptions for the year 2016-17, the calculation of which is given as below:

Subscription received during the year                        16,000
Less: Subscription received for 2017                           3,000  
Less: Subscription received for 2019                            5,000
Add: Subscription due for 2018                                     4,000 
Add: Received in advance in 2017 for 2018                  2,000 
Income from subscriptions for the year 2018                14,000

Solution:

Profit Ratio = A : B : C = 268 : 236 : 168 = 67 : 59 : 42

The correct answer is Microsoft Outlook.

Key Points:

• Microsoft SQL Server is a relational database management system developed by Microsoft. 
• MySQL Database Service is a fully managed database service to deploy cloud-native applications. 
• Microsoft Outlook is the email service provided by Microsoft.
  • Hence this is the answer.
• Microsoft Access is the only application software you need to create apps, utilize databases, and store data in SQL Server and Microsoft Azure SQL.

The correct answer is Both personal accounts

Important Points

When Furniture is purchased from Ramesh on credit for personal use, the following journal entry will be passed:

Explanation:

• When the furniture is purchased for personal use, it is considered as drawings of the proprietor. Therefore, the amount must be debited to Drawings A/c. Drawings A/c is Representative Personal Account 
• As the furniture is purchased on credit from Ramesh, he is the giver, so his account will be credited. Ramesh A/c is a Personal account. 

So, when Furniture is purchased from Ramesh for personal use, two personal accounts will be affected.

Additional Information

Three Golden Rules

• Personal Account - debit the receiver, credit the giver
• Real Account - debit what comes in, credit what goes out
• Nominal Account - debit all the expenses and losses, credit all the incomes and gains

The correct answer is Share Market.

• The term insider trading is associated with the share market.
• Insider trading is the buying or selling of a publicly-traded company's stock by someone who has non-public, material information about that stock.

Key Points

• Material non-public information is any information that could substantially impact an investor's decision to buy or sell the stocks that have not been made available to the public.
• Insider trading is illegal and comes with stern penalties including both potential fines and jail time.
• Securities and Exchange Board of India (SEBI) have stringent rules to prevent insider trading.

Additional Information

• Hawala: Hawala is the underground, cheap and instant medium to transfer the huge amount of money.
  • Hawala is cheaper and less cumbersome than formal remittance channels such as banks, Western Union or Money Gram.
  • Hawala system is used by Criminals, Businessmen, and Nonresidents to remit money.
  • Halawa system is the backbone of the underworld, drugs/arms mafias, terrorists and smugglers. Businessmen use it transfer money to evade tax.

The correct answer is  Bombay Stock Exchange (BSE).

• Sensex, also known as the S&P BSE Sensex index, is the benchmark index of India's BSE, formerly known as the Bombay Stock Exchange.

Key Points

• Stock Exchange: Stock Exchange is a marketplace where financial securities such as shares, bonds, commodities, etc issued by the companies are bought and sold.
• The first stock exchange Amsterdam Stock exchange was established in 1602  by the Dutch East India Company. (Verenigde Oostindische Compagnie or VOC).

Important Points

• Indian Commodity Exchange Ltd (ICEX) was established in 2008, headquartered in Mumbai. The ICEX index is named 'ICEX Main'.
• Bombay Stock Exchange was established in 1875, headquartered in Mumbai. The BSE index is named as 'Sensex- Sensitivity Index'.
• Calcutta Stock Exchange was established in 1908, headquartered in Kolkata. The CSE index is named as 'CSE40'
• The National Stock exchange was established in 1992, headquartered in Mumbai. The NSE index is named 'NIFTY50'.

The correct option is it contains only the items of revenue nature of the current accounting period only.

Key Points
Income and Expenditure: An Income and Expenditure Account is a complete breakdown of all income and expenses incurred by a non-profit organization over the course of a fiscal year.

Characteristics of Income and Expenditure account:

• It is prepared by a not-for-profit organization.
• Only the revenue items of the current accounting period are recorded in this account. No capital item is included.
• It is based on the accrual basis of accounting.
• It is prepared the same way as a Profit and Loss account is prepared in a for-profit business entity.
• It is prepared by stringently following the double-entry system.
• All expenses are recorded on the Debit side and all revenues on the credit side of the Income & Expenditure Account.

​The correct answer is All of the above.

• An Excel spreadsheet helps in Sorting data, Arranging data easily, and Calculating numerical data.

Additional Information

• Microsoft Excel is part of the Microsoft Office suite of programs and was developed by Microsoft in 1987.
• Microsoft Excel is a spreadsheet program used to record and analyze numerical and statistical data.
• Microsoft Excel provides multiple features to perform various operations like calculations, pivot tables, graph tools, macro programming, etc.
• An Excel spreadsheet can be understood as a collection of columns and rows that form a table.
• A worksheet is made of rows and columns that intersect each other to form cells where data is entered.
• Alphabetical letters are usually assigned to columns, and numbers are usually assigned to rows.
• The point where a column and a row meet is called a cell.
• The address of a cell is given by the letter representing the column and the number representing a row.
• The main features of MS Excel are:
  • AutoFormat: It allows Excel users to use predefined table formatting options.
  • AutoSum: AutoSum feature helps us to calculate the sum of a row or column automatically by inserting an addition formula for a range of cells.
  • List AutoFill: It automatically develops cell formatting when a new component is added to the end of a list.
  • AutoFill: This feature allows us to quickly fill cells with a repetitive or sequential record such as chronological dates or numbers and repeated documents. AutoFill can also be used to copy functions. We can also alter text and numbers with this feature.
  • AutoShapes: AutoShapes toolbar will allow us to draw some geometrical shapes, arrows, flowchart items, stars, and more. With these shapes, we can draw our graphs.
  • Wizard: It guides us to work effectively while we work by displaying several helpful tips and techniques based on what we are doing. The drag and Drop feature will help us to reposition the record and text by simply dragging the data with the help of the mouse.
  • Charts: This feature will help you to present the data in graphical form by using Pie, Bar, Line charts, and more.
  • PivotTable: It flips and sums data in seconds and allows us to execute data analysis and generating documents like periodic financial statements, statistical documents, etc. We can also analyze complex data relationships graphically.
  • Shortcut Menu: The shortcut menu helps users to make the work done through shortcut commands that need a lengthy process.

Important Points

• The founder of Microsoft - Bill Gates and Paul Allen.
• The CEO of Microsoft - Satya Nadella.

The correct answer is historical cost.

 Key PointsFixed assets - Long-term tangible assets employed in corporate operations are referred to as fixed assets.

They are categorized as property, plant, and equipment (PP&E) on the balance sheet because they offer long-term financial benefits and have a useful life of more than a year.Important PointsGross Book Value of a fixed assets - 

• A fixed asset's gross book value is its historical cost or a sum that has been substituted for historical cost in the accounting records or financial statements.
• This number is known as net book value when it is displayed after cumulative depreciation.

Thus , Gross Book Value of Fixed assets is known as historical cost.

Key Points

• Real Accounts: These account types are related to assets or properties. They are further classified as Tangible real account and Intangible real accounts.

 Important PointsTangible Real Accounts: These include assets that have a physical existence and can be touched. For example – Building A/c, cash A/c, stationery A/c, inventory A/c, etc.

Intangible Real Accounts: These assets do not have any physical existence and cannot be touched. However, these can be measured in terms of money and have value. For Example – Goodwill, Patent, Copyright, Trademark, etc.

Real Account Rules:

• Debit what comes into the business.
• Credit what goes out of business.

For Example: Furniture purchased by an entity in cash. Debit furniture A/c  and credit cash A/c.

Note: Asset value increases when a real account is debited, while asset value decreases when a real account is credited. In the aforementioned example, furniture is acquired, which causes an increase in furniture and a decrease in cash.

Hence, it can be concluded that a credit entry in a real account means a decrease in value of an asset.

The correct answer is Notes to Account of Balance Sheet.

Contingent liabilities reflect in footnotes of financial statements.

Key Points Meaning- 

Liabilities that are depend on the outcome of an uncertain event are known as contingent liabilities.

Reporting of Contingent Liabilities-

• These liabilities are recorded in financial statements only when it is possible to estimate the value of contingent liabilities and the probability of happening of the event is more than 50 %.
• When probability of happening of uncertain event is less than 50 % or cannot be properly estimated, it is recorded in footnotes (Notes to Account of financial statements) of financial statements.

Additional Information Chairman's report- 

• A report by the chair of a company to the members of the company, included in the annual report and accounts, that provides a summary of the company's actions throughout the financial period.

Shareholders notice-

• When a shareholder notifies the company and the selling shareholder in writing that they plan to use their secondary refusal right with regard to a portion of the transfer shares in connection with a proposed shareholder transfer, this is referred to as a "Shareholder Notice."

Balance sheet-

• A financial statement that summarizes a company's assets, liabilities, and shareholder equity at end of the accounting period is referred to as a balance sheet.