Tag: meaning, objectives and need of adjustments

Questions Related to meaning, objectives and need of adjustments

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.

More MCQs on Foreign Exchange Management 1. Which of the following is not an example of an international trade draft?

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

  1. Time draft.

  2. Sight draft.

  3. Both the first and second answers are correct

  4. Usance draft

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Correct Option: C

Constant growth rate is 7.2% and an expected rate of return is 12.5% then expected dividend yield will be ___________.

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

  1. 5.30%

  2. 19.70%

  3. -5.30%

  4. 17.36%

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Correct Option: A

Committee, launched the process of reforms of financial system in India __________________.

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

  1. Gadgil committee

  2. Nariman committee

  3. Narasimham committee

  4. khanna Committee

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Correct Option: C
Explanation:

The Narasimham-II Committee was tasked with the progress review of the implementation of the banking reforms since 1992 with the aim of further strengthening the financial institutions of India. It focussed on issues like size of banks and capital adequacy ratio among other things.

After all closing entries have been posted, the balance of the P & L Account will be ________________.

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

  1. A debit if a net income has been earned

  2. A debit if a net loss has been incurred

  3. A credit if a net loss has been incurred

  4. Zero

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Correct Option: B

Consider the following statements.
A credit purchase during the accounting year which was not recorded in the books of account but included in the closing stock is to be.
I. Added to the credit purchases account
II. Added to the creditors account
III. Subtracted from the closing stock
IV. Added to the opening stock
Which of the statements given is/are correct?

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

  1. III only

  2. I and II

  3. II and III

  4. II, III and IV

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Correct Option: B
Explanation:

Credit purchase during the accounting year which was not recorded in the books of account but included in the closing stock is to be added to the credit purchase A/c and Creditors A/c.

Financial capital is also referred to ______________.

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

  1. Money capital

  2. Current assets

  3. Fluid

  4. Long term debt

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Correct Option: A
Explanation:

Financial capital is the money used to help pay for the acquisition of plants, equipment, and other items needed to build products or offer services. Hence, it can be referred to money capital. 

Outstanding salary is shown as _______________.

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

  1. An asset in the balance sheet

  2. A liability

  3. By adjusting it in the P & L A/c

  4. Both B and C

Show answer
Correct Option: D
Explanation:

Outstanding expense are those expenses which are due but not paid. These are expenses like salary for the month of March is not paid but the services are already taken.

To find out the correct profitability, all expenses pertaining to the financial year should be debited to profit & loss account. Hence out standing salary to be added in salary expenses in profit & loss account and shown as current liability in the balance sheet.

Outstanding Expenses is shown on the _______ side of the balance sheet.

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

  1. Assets

  2. Liabilities

  3. Both

  4. None of the above

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Correct Option: B
Explanation:
The above entry opens a new account called Outstanding Expenses which is shown on the liabilities side of the balance sheet. The amount of outstanding expenses is added to the total of expenses under a particular head for the purpose of preparing trading and profit and loss account.

________ represents the cost of unsold goods lying in the stores at the end of the accounting period.

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

  1. Closing stock

  2. Opening stock

  3. Purchases

  4. Sales

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Correct Option: A
Explanation:

Closing stock represents the cost of unsold goods lying in the stores at the end of accounting period.
The closing stock is calculated as:
Opening Stock + Purchases - Sales = Closing Stock.