Tag: accounting equations and transactions

Questions Related to accounting equations and transactions

Which of the following is correct?

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Gross profit + Purchase + Sales = Net profit

  2. Gross profit + Purchases + Administrative and other expenses = Net profit

  3. Gross profit + Sales + Administrative and other expenses = Net profit

  4. Gross profit - Administrative and selling expenses = Net profit

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Correct Option: D

Closing entries are those which are passed______.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. at the end of the year

  2. at the beginning of the year

  3. for rectification of errors

  4. for suppressing profit

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Correct Option: A

Which of the following would appear as an operating expense in the P/L A/c of a trading firm?

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Freight inward

  2. Freight outward

  3. Sales returns and allowances

  4. Purchases returns and allowances.

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Correct Option: B

Type of financial securities that matures in less than a year are classified as ___________________.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Money market securities

  2. Capital market securities

  3. Saving intermediaries

  4. Discounted intermediaries

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Correct Option: A
Explanation:

The money market is part of the fixed-income market that specializes in short-term debt securities that mature in less than one year. Most money market investments often mature in three months or less. 

SEBI was given statutory status on __________.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. 3011992

  2. 111992

  3. 431992

  4. 441992

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Correct Option: A

Which of the following is correct?

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Gross profit + Sales + Direct expenses + Purchases + Closing stock = Opening stock

  2. Gross profit + Direct expenses + Purchases + Closing stock - Opening stock = Sales

  3. Gross profit + Direct expenses + Purchases + Opening stock - Closing stock = Sales

  4. Gross profit + Indirect expenses + Purchases + Opening stock - Closing stock = Sales

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Correct Option: C

Adjustment entries are those which are passed________.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. at the end of the year

  2. at the beginning of the year

  3. for adjustment of prepaid and outstanding expenses/income

  4. for suffering profit

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Correct Option: C

The closing stock of the year becomes the ______ of the next year.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Liabilities

  2. Asset

  3. Opening stock

  4. Dead stock

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Correct Option: C
Explanation:

The closing stock represents the cost of unsold goods lying in the stores at the end of the accounting period. The adjustment with regard to the closing stock is done by crediting it to the trading profit and loss account and by showing  it on the asset side of the balance sheet. The closing stock of the year becomes the opening stock of the next year and is reflected in the trial balance of the next year.

A shopkeeper wants to stock shoes. The best suitable average for him will be?

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Arithmetic mean

  2. Median

  3. Mode

  4. Geometric mean

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Correct Option: D

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is ________________.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Forwards.

  2. Futures.

  3. Options.

  4. Swaps.

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Correct Option: C
Explanation:

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is Options. Options are financial instruments that are derivatives based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell depending on the type of contract they hold the underlying asset.