Multiple choice questions regarding accounting principles and calculations.

Here are the solutions to the multiple-choice questions: 1) The format of 'statement of affairs' is similar to: A statement of affairs is a financial statement used in a single-entry system to determine capital, and it lists assets and liabilities, making its format similar to a Balance sheet. The correct answer is Balance sheet 2) Cash paid to creditors can be ascertained by preparing: To determine the amount of cash paid to creditors, one needs to analyze the Total creditors account, which tracks all transactions with creditors. The correct answer is Total creditors account 3) If the cost of goods sold is Rs. 140,000, gross loss on sales is 20% then the value of sales will be: Let Sales be S. Cost of Goods Sold (COGS) = Rs. 140,000. Gross Loss = 20% of Sales = 0.20S. The formula for gross loss is: Sales - COGS = -Gross Loss S - 140,000 = -0.20S S + 0.20S = 140,000 1.20S = 140,000 S = (140,000)/(1.20) S = 116,666.67 The closest value among the options is Rs. 116,667. The correct answer is 116,667 4) Income and expenditure account records transactions of: The Income and Expenditure account, used by non-profit organizations, records transactions that are of a Revenue nature, similar to a profit and loss account for commercial entities. The correct answer is Revenue nature 5) Sale of sports material should be treated as: For a business dealing in sports material, the sale of such material is its primary source of revenue and is therefore treated as Income. The correct answer is Income 6) In consignment the risk attached to goods delivered is with: In a consignment arrangement, the consignor remains the owner of the goods until they are sold. Therefore, the risk of loss or damage to the goods remains with the Consignor. The correct answer is Consignor 7) It shows the detail about sale of goods expenses paid by consignee etc. The document prepared by the consignee for the consignor, detailing sales, expenses, and commission, is called an Account sale. The correct answer is Account sale 8) A company is managed by: A company is legally managed by its Directors, who are elected by the shareholders to oversee the company's operations. The correct answer is Directors 9) This is the value of a share as quoted on the stock exchange: The value of a share as quoted on the stock exchange is its Market value, which fluctuates based on supply and demand. The correct answer is Market value 10) If depreciation is not taken into account, the value of asset in the books: Depreciation reduces the book value of an asset over its useful life. If depreciation is not recorded, the asset's value in the books will be higher than its actual depreciated value, meaning it May be more. The correct answer is May be more 11) The decrease in the value of mines, quarries etc. is termed as: The systematic allocation of the cost of natural resources (like mines, quarries, and oil wells) over the period of their extraction is known as Depletion. The correct answer is Depletion 12) The debit balance of interest on loan account is transferred to: Interest on loan is an expense for the business. All expenses are typically transferred to the Profit and loss account to determine the net profit or loss for the accounting period. The correct answer is Profit and loss account 13) Partner's current account should be opened when capital accounts are: Partner's current accounts are opened when the capital accounts are Fixed. This is done to record transactions like interest on capital, drawings, and share of profit/loss, keeping the capital account balance constant. The correct answer is Fixed 14) In case of retirement of a partner, full goodwill is credited to the accounts of: When goodwill is raised (brought into the books) at the time of a partner's retirement, it is credited to All the partner(s) in their old profit-sharing ratio. The correct answer is All the partner(s) 15) The end or termination of partnership is called: The complete cessation of the business of a partnership firm is known as Dissolution. The correct answer is Dissolution 16) In case of dissolution, the payment of liabilities should be credited to: When liabilities are paid during the dissolution of a firm, the cash or bank account is credited. The journal entry is Realization A/c Dr. to Cash/Bank A/c. The correct answer is Cash account 17) Due to the fresh capital introduced during the year, the closing capital will: When fresh capital is introduced into the business, it increases the total capital. Therefore, the closing capital will Increase. The correct answer is Increase 18) The opening and closing balance of bills receivable can be calculated by preparing: To determine the opening and closing balances of bills receivable, one needs to prepare the Bill receivable account. The correct answer is Bill receivable account 19) The amount received by the concern as per the will of the donor is known as: An amount received by an organization according to the will of a deceased person is specifically termed a Legacy. The correct answer is Legacy 20) In the book of consignor's abnormal loss of goods should be credited to: When an abnormal loss occurs in a consignment, the value of the lost goods is removed from the Consignment account by crediting it. The correct answer is Consignment account