Accounting MCQs

Given:
Cash in hand: Rs. 10,000
Debtor: Rs. 20,000
Bills receivable: Rs. 5,000
Plant : Rs. 5,000
Creditor: Rs. 15,000
Net Working Capital will be

Match the items of List-I with those of the List-II and indicate the correct answer:

List-I	List-II
a. Debtors Turnover Ratio	1. Solvency Ratio
b. Proprietary Ratio	2. Liquidity Ratio
c. Operating Ratio	3. Activity Ratio
d. Acid Test Ratio	4. Profitability Ratio

On the basis of the following information, what will be the EBIT corresponding to financial indifference point?
Total capital outlay Rs. 60,00,000
Financing Plans
1. 100% Equity @ Rs. 10/- per share
2. Debt - equity ratio 2 : 1
Rate of interest 18% p.a., corporate tax rate 40%

A company issued 50,000 Equity shares of Rs. 10 each, Rs. 8 paid up and 50,000 8% Preference shares of Rs. 100 each. Expected profits are Rs. 10,00,000 Normal rate of dividend on Equity shares is 16%, Provision for taxation 60% and 10% of the profit is transferred to reserves.
The value of equity share will be:

Match the following:

List-I	List-II
a. Measurement of income	1. Accrues to the equility of curves
b. Recognition of expense	2. Recognition of revenue
c. Basis of realisation	3. Matching revenue with expenses
d. Identification of revenue	4. Accounting period

Net loss	Rs. 20,000
Depreciation on Machinery	Rs. 50,000
Amortisation of goodwill	Rs. 5,000
Loss on the sale of old furniture	Rs. 3,500
Profit on the sale of land	Rs. 8,500

Funds from operation are

Which of the following statements is correct in regards to life-cycle costing?
1. It analyses the process of evaluating product profitability.
2. It helps planners to control costs more effectively.

Match the following

List I	List II
a. Revenue means the income of a . . . . . . . . nature.	1. Fixed assets
b. Premium paid on the life insurance policy of the proprietor will be debited to . . . . . . . . account.	2. Regular
c. Going concern concept is relevant for . . . . . . . .	3. Matching
d. Recognition of cost in the same period as associated revenues is called . . . . . . . . principle.	4. Drawings

Assertion (A) Sinking fund is a charge against profit and loss account.
Reason (R) Sinking fund is created for repayment of a long-term liability.