Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

Inventories are assets __________________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Held for sale in the ordinary course of business

  2. In the production process for such sale

  3. In the form of material or supplied to be consumed in the production process or in the rendering of service

  4. All of the above

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Correct Option: D

Cost of inventories includes ___________________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Direct Material $+$ Direct Expenses

  2. Direct Labour $+$ Direct Expenses

  3. All cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition

  4. Direct material only

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Correct Option: C

Which one of the following methods of inventory valuation matches current cost with current revenues?

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Last in first out (LIFO)

  2. Fist in first out (FIFO)

  3. Simple average

  4. Weighted average

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Correct Option: A

Net realizable value is ____________________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. The estimated selling price less the estimated costs of the sale

  2. Total sales

  3. Sales minus sales return

  4. Sales minus purchases

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Correct Option: A

FIFO is advisable in case of _____________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Rising prices

  2. Falling prices

  3. Constant prices

  4. Fluctuating prices

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Correct Option: B

The success of perpetual inventory system depends upon ______________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Placing order for materials at regular intervals

  2. Exercising control over the issue of materials

  3. Recording the receipt and issue of materials immediately after each transaction

  4. Recording the receipt of materials by storekeeper in the 'Bin Cards'

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Correct Option: C

Which one of the following statements are correct?
(i) Inventory includes raw materials, finished goods and goods in process
(ii) Inventory is a part of the working capital
(iii) Inventory includes goods likely to be purchased in the coming months
Select the correct answer using the codes given below.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. I, II and III

  2. II and III

  3. I and III

  4. I and II

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Correct Option: D

Goods withdrawn by the proprietor for his personal use are_________. 

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. shown as a deduction from the purchases

  2. shown as a deduction from the sales

  3. treated as sales at cost price

  4. added to the purchases

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Correct Option: A

Which of the following is not classified as inventory in the financial statements?

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Finished goods

  2. Work-in-progress

  3. Stored and spares

  4. Advance payments made to suppliers for raw materials

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Correct Option: D

Rs. $1,250$ paid for the residential telephone bill of the proprietor which of these accounts will be debited _________________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Household A/c

  2. Drawing A/c

  3. Telephone A/c

  4. None

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Correct Option: B
Explanation:

Business entity concept of accounting defines that the owner and the business are considered two separate entity in the eyes of law. Hence any amount is spent from the business for personal use, has to be debited to drawing account. Drawing will be deducted from capital account.