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. The concept which states that the transactions of the business should be recorded separately from those of the owners is known as: Business entity concept Going concern concept Matching concept Accrual concept None 2. Which of the following is the basic objective of financial accounting? To determine the amount of profit To assist in management decision-making To provide a clear picture of the financial position of a business To record all transactions of the business None 3. In which of the following cases is the going concern concept applied? A business is about to close down A business has significant debts A business continues its operations indefinitely None of the above None 4. A mistake in which an entry is recorded in the wrong account but with the correct amount is called: Error of omission Error of commission Compensating error Principle error None 5. Which of the following is the correct rectification entry when a sale of ₹10,000 is wrongly recorded as ₹1,000? Debit Sales ₹9,000; Credit Profit and Loss Account ₹9,000 Debit Profit and Loss Account ₹9,000; Credit Sales ₹9,000 C. Debit Accounts Receivable ₹9,000; Credit Sales ₹9,000 D. Debit Sales ₹9,000; Credit Accounts Receivable ₹9,000 Debit Accounts Receivable ₹9,000; Credit Sales ₹9,000 Debit Sales ₹9,000; Credit Accounts Receivable ₹9,000 None 6. Which of the following is true about the balance sheet? It shows the revenue generated by the business It shows the assets, liabilities, and equity of the business It records the operating income of the business It is prepared after the profit and loss account None 7. Which of the following is not included in the profit and loss account? Revenue from operations Interest income Assets purchased Expenses incurred None 8. If the residual value of an asset is ₹10,000, and its useful life is 5 years, the straight-line depreciation method will result in an annual depreciation of ₹20,000 for an asset purchased at ₹100,000. What is the depreciable amount? ₹100,000 ₹90,000 ₹80,000 ₹110,000 None 9. Under which depreciation method is depreciation calculated on the book value of an asset? Straight-line method Sum of digits method Written-down value method . Units of production method None 10. Which of the following is an advantage of using the FIFO method of inventory valuation? It reduces the value of ending inventory during inflation It reflects current market prices more accurately It results in higher profits during periods of rising prices It results in lower profits during periods of rising prices None 11. In which of the following methods of inventory valuation is the cost of goods sold based on the assumption that the most recently acquired goods are sold first? FIFO LIFO Weighted average method Specific identification method None 12. In a partnership, when goodwill is revalued, the change in its value is shared by the partners according to: Their capital ratio Their profit-sharing ratio Their salary or commission ratio The ratio of their capitals plus profits None 13. Which of the following is true about a partnership agreement? It must be in writing It is not required by law It must include a provision for division of profit and losses All of the above None 14. The income and expenditure account of a non-profit organization is similar to: Profit and loss account Trading account Statement of affairs Cash flow statement None 15. The primary objective of a non-profit organization is to: Make profits for the owners Promote social welfare Distribute dividends to members Collect donations for personal use None 16. Cash flows from investing activities include: Sale of goods and services Purchase and sale of fixed assets Payment of wages Issue of shares None 17. A decrease in accounts payable would result in a: Cash inflow Cash outflow No impact on cash flow Increase in net income None 18. A bill of exchange is drawn on a debtor for ₹5,000. The drawee accepts it. What is the impact on the accounting records? The seller records a credit sale and debits Accounts Receivable The buyer records a credit purchase and credits Accounts Payable Both A and B are true None of the above None 19. A dishonored bill of exchange results in: A gain to the creditor A liability for the debtor The debtor being discharged from liability A penalty for the creditor None 20. An error of principle occurs when: A transaction is omitted A transaction is recorded in the wrong account A transaction is recorded in violation of accounting principles D. A transaction is recorded at an incorrect amoun A transaction is recorded at an incorrect amoun None 21. Which of the following errors will not affect the trial balance? Error of omission Error of commission Compensating error All of the above None 22. The quick ratio is more stringent than the current ratio because it excludes: Inventory Cash and cash equivalents Trade receivables Accounts payable None 23. The formula for calculating the debt-to-equity ratio is: Total liabilities / Shareholders' equity Total assets / Shareholders' equity Total liabilities / Total assets . Total debt / Total equity None 24. An increase in prepayments would result in a: Decrease in net income Decrease in cash flow Increase in liabilities Increase in cash flow None 25. Which of the following is an example of a non-operating expense? Rent paid Salaries paid Interest on loan Purchases made for resale None 26. When shares are issued at a premium, the premium amount is credited to: Share capital account Capital reserve account Profit and loss account Securities premium account None 27. If a company forfeits shares, the amount received on those shares is credited to: Share capital account Forfeited shares account Shareholders' equity Share premium account None 28. Under the revaluation method of accounting for fixed assets, revaluation surplus is transferred to: Profit and loss account Revaluation reserve Capital reserve General reserve None 29. Which of the following is not a characteristic of a partnership firm? Mutual agency Unlimited liability Separate legal entity Profit-sharing None 30. The provision for income tax is recorded in the: Profit and loss account Balance sheet Cash flow statement Income tax return None 31. Deferred tax liabilities arise when: Taxable income is less than accounting income Taxable income is more than accounting income There is a temporary difference between accounting income and taxable income There is no difference between taxable and accounting income None 32. A lease that transfers substantially all the risks and rewards of ownership to the lessee is called a: Operating lease Financial lease Hire purchase Capital lease None 33. In an operating lease, the lessor records the leased asset as: A fixed asset An expense A liability A current asset None 34. The payment of a dividend affects: Only the profit and loss account Only the balance sheet Both the profit and loss account and balance sheet Neither the profit and loss account nor balance sheet None 35. Dividend declared but not paid is shown as: An asset A liability A profit A reduction in share capital None 36. The purpose of preparing the trading account is to calculate: Net income Gross profit Profit from operations Net worth None 37. The term ‘profit before tax’ refers to: Gross profit Operating profit Net profit Pre-tax income None 38. The matching concept ensures that: Income and expenses are recorded in the same accounting period Expenses are recorded before income Assets are matched with their market value Income is recognized only when cash is received None 39. Bad debts are: Debited to the Profit and Loss Account Debited to the Balance Sheet Credited to the Profit and Loss Account Credited to the Balance Sheet None 40. An increase in accounts payable is shown as: A cash inflow A cash outflow No effect on cash flow A financing activity None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test.Look out for results and future opportunities.Stay Connected !! Your quiz time is about to finish. 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