Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: AccountingTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. Which principle states that financial statements should provide all relevant information to users? Consistency Materiality Full Disclosure C Matching None 2. Accrual concept means recording: Expenses when paid Revenues when earned Both revenues and expenses on a cash basis Both revenues and expenses on an accrual basis None 3. A statement showing financial position of a business is: Income Statement Cash Flow Statement Balance Sheet Trial Balance None 4. Outstanding expenses are shown in the balance sheet as: Current assets Current liabilities Non-current liabilities Equity None 5. Which of the following accounts has a normal debit balance? Capital account Sales account Accounts receivable Accounts payable None 6. The primary purpose of a trial balance is to: Record transactions Prepare financial statements Verify the arithmetic accuracy of ledger accounts Disclose the financial position of the business None 7. Depreciation is provided on fixed assets to: Allocate the cost of the asset over its useful life Provide for replacement Comply with tax laws Show the market value of the asset None 8. Under the straight-line method, the depreciation expense: Remains constant every year Increases every year Decreases every year Is based on actual usage None 9. Inventory valuation affects: Profit and loss account only Balance sheet only Both profit and loss account and balance sheet Neither profit and loss account nor balance sheet None 10. Which method of inventory valuation gives the highest profit during inflation? FIFO LIFO Weighted average Specific identification None 11. In the event of retirement of a partner, the retiring partner’s share of goodwill is: Transferred to the revaluation account Distributed among remaining partners in their gaining ratio Transferred to capital accounts of all partners equally Written off None 12. The profit-sharing ratio among partners is recorded in the: Partnership deed Profit and loss account Revaluation account Balance sheet None 13. Errors affecting the trial balance are: Errors of omission Errors of principle Clerical errors Errors of commission None 14. If goods purchased are incorrectly recorded in the sales account, it is: An error of omission An error of principle A compensating error A clerical error None 15. Preference shares have: Voting rights Priority in dividend payments No fixed return Priority in repayment of loans None 16. A company can issue shares at a discount under: No circumstances Special approval from the tribunal The Companies Act provisions Consent of shareholders only None 17. Cash paid to suppliers is classified under: Operating activities Financing activities Investing activities None of the above None 18. Sale of a fixed asset is shown in the cash flow statement under: Operating activities Investing activities Financing activities None of the above None 19. Del-credere commission is given to the consignee to: Encourage sales Cover bad debts risk Share profit Record consignment transactions None 20. When the consignee sells goods, they record: Purchase Sale Commission income None of the above None 21. Trade discount is: Shown in the books Deducted from sales in the profit and loss account Not recorded in the books Added to purchases None 22. A contingent liability is: An obligation arising from past events An obligation dependent on the occurrence of a future event A liability recorded in the balance sheet None of the above None 23. AS-2 deals with: Depreciation accounting Valuation of inventories Revenue recognition Cash flow statements None 24. AS-9 applies to: Revenue from leases Revenue from the sale of goods and services Valuation of fixed assets Foreign exchange None 25. A high current ratio indicates: Poor liquidity Good liquidity Overtrading Undertrading None 26. The debt-equity ratio measures: Liquidity Solvency Efficiency Profitability None 27. A trial balance is prepared: Before journalizing After posting to ledger After preparation of financial statements After the cash flow statement None 28. Adjusting entries are passed to: Rectify errors Record closing stock Match revenues and expenses Show cash flow None 29. Vouching refers to: Verification of assets Checking transactions with documentary evidence Preparing financial statements Preparing a trial balance None 30. Internal control aims to: Detect frauds Prevent errors and frauds Maintain ledger accounts Prepare financial statements None 31. Depreciation is charged to: Reduce the market value of the asset Allocate the cost of the asset over its useful life Create a fund for replacement Provide additional cash flow None 32. Under the written down value method, depreciation is calculated on: Original cost of the asset Residual value Reducing balance Accumulated depreciation None 33. Inventory includes: Raw materials Work-in-progress Finished goods All of the above None 34. Net realizable value is: Sales price less estimated selling costs Historical cost less depreciation Purchase cost less trade discount None of the above None 35. The entry to record goods purchased on credit is: Debit Purchases, Credit Cash Debit Cash, Credit Purchases Debit Purchases, Credit Accounts Payable Debit Accounts Payable, Credit Purchases None 36. Goods withdrawn by the owner for personal use are recorded by: Debiting Drawings and crediting Purchases Debiting Purchases and crediting Drawings Debiting Drawings and crediting Capital Debiting Purchases and crediting Capital None 37. Which of the following is not an operating expense? Rent expense Depreciation expense Interest expense Salaries expense None 38. The provision for doubtful debts is shown as: A liability A reduction from accounts receivable An expense in the profit and loss account Both B and C None 39. A credit entry in the bank passbook indicates: An increase in the bank balance A decrease in the bank balance A payment made by the bank An overdraft balance None 40. Cheques deposited but not yet cleared will: Increase the cash book balance Decrease the passbook balance Increase the passbook balance Have no effect on the cash book balance None 1 out of 4 Great job on taking the INCOC Test! 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