International Commerce Olympiad

1. Mohan purchased goods for ₹ 15, 00,000 and sold 4/5th of goods ₹ 18, 00,000 and met expenditure of ₹ 2, 50,000 during the year 2017. He counted net profit as ₹ 3, 50,000. Which of the accounting concepts was followed by him?

(a) Entity (b) Periodicity

Ans: (c) Matching

2. Confidence and trust that the reported information is a reasonable representation of the actual items and events, that have occurred, depicts which qualitative characteristic of accounting information

(a) Reliability (b) Relevance

Ans: (a) Reliability

3. Current Liabilities do not include:

(a) Bills Payable (b) Creditors

Ans: (d) Debentures

4. Profit for the business is:

(a) An assets (b) A liability

Ans: (b) A liability

5. Which of the following transaction is of a financial character and will be recorded in the business?

(a) Goods taken from the business by the proprietor for her personal use

(b) Interviewing the candidates for employment

(d) Received an order for sales of goods

Ans: (a) Goods taken from the business by the proprietor for her personal use

6. Which of the following is the correct sequence of the ‘Process of Accounting’?

(a) Prime Documents—Primary Accounting Records—Trial Balance—Final Accounts

(b) Primary Accounting Records—Prime Documents—Trial Balance—Final Accounts

(d) Trial Balance—Prime Documents—Primary Accounting Records—Final Accounts

Ans: (a) Prime Documents—Primary Accounting Records—Trial Balance—Final Accounts

7. Purchases refers to the buying of

(a) Stationery for office use (b) Assets for the factory

Ans: (c) Goods for resale

8. Which of the following limitations of accounting states that accounts may be manipulated to conceal vital facts:

(a) Accounting is not fully exact

(b) Accounting may lead to window dressing

(d) Accounting ignores qualitative elements

Ans: (b) Accounting may lead to window dressing

9. Provision for bad debts is created as per which Accounting convention?

(a) Materiality (b) Consistency

Ans: (c) Prudence

10. Due to which of the following, contingent liabilities are shown in the financial statements?

(a) Convention of Full Disclosure (b) Convention of Conservatism

Ans: (a) Convention of Full Disclosure

11. Which of the following Accounting Concepts restricts recording of existence of cordial relations among employees in the books of accounts?

(a) Accounting Entity (b) Going concern

Ans: (c) Money measurement

12. The matching concept is based on the:

(a) Accounting period concept (b) Duality concept

Ans: (d) Accrual concept

13. Of the following transactions which will not be recorded in the books of Accounts of the business?

(a) Bought furniture of ₹ 15,000 for business.

(b) Paid for Salaries to employees ₹ 5,000.

(d) Paid Son’s fees from the business ₹ 2,000.

Ans: (c) Paid Son’s fees from Personal Bank Account ₹ 2,000.

14. Which of the following statements is INCORRECT regarding Accounting Standards?

(a) Accounting Standards provide the norms on the basis of which the financial statements should be prepared.

(b) Accounting standards result in preparation of diverse accounting statements, which might hinder comparability.

(d) Accounting standards help auditors in auditing accounts.

Ans: (b) Accounting standards result in preparation of diverse accounting statements, which might hinder comparability.

15. Closing Stock is valued at

(a) Cost Price

(b) Cost Price or Market Price whichever is less

(d) Cost Price or Market Price whichever is higher

Ans: (b) Cost Price or Market Price whichever is less

16. Pick out a source voucher/document from the following:

(a) Debit voucher (b) Credit voucher

Ans: (d) Invoice

17. Accounting records

(a) Financial transactions only

(b) Financial as well as non financial transactions.

(d) None of these

Ans: (a) Financial transactions only

18. The assets which are purchased to improve the profitability in the business and not for the purpose of resale are called?

(a) Tangible Assets (b) Current Assets

Ans: (c) Fixed Assets

19. Which of the following is not a limitation of Accounting?

(a) Based on Accounting conventions.

(b) Evidence in legal matters

(d) Omission of Qualitative Information

Ans: (b) Evidence in legal matters

20. Which of the following is the most relevant accounting information for taxation authorities?

(a) Cash Balance of the firm (b) Book Value of the Fixed Assets

Ans: (d) Profit generated during the year

21. Which of the following is the Capital expenditure?

(a) Wages paid for repair of building

(b) Wages paid for white washing of building

(d) Wages paid for cleaning of building

Ans: (c) Wages paid for construction of building

22. Trade discount is allowed at the time of .................. .

(a) Receiving the payment for sale of goods.

(b) Sale of goods

(d) Making payment for purchase of goods

Ans: (b) Sale of goods

23. Providing depreciation on fixed asset is in accordance with which of the following principles/concepts.

(i) Going concern (ii) Matching principle (iii) Materiality

(a) (ii) and (iii) (b) (i) and (ii)

Ans: (b) (i) and (ii)

24. The owner of the firm records his medical expenses in the firms income statement. Indicate the principle that is violated.

(a) Cost principle (b) Prudence

Ans: (d) Entity concept

25. M/s Future Ltd. has invested ₹ 10,000 in the shares of Relicam Industries Ltd. Current market value of these shares is ₹ 10,500. Accountant of Future Ltd wants to show ₹ 10,500 as value of investment in the books of accounts, which accounting convention restricts him from doing so?

(a) Full disclosure (b) Consistency

Ans: (c) Historical cost concept

26. Accrual concept is based on

(a) Matching concept (b) Dualaspect

Ans: (a) Matching concept

27. “IFRS” stands for:

(a) Indian Financial Reporting System

(b) International Financial Reporting Standards

(d) International Financial Reporting System

Ans: (b) International Financial Reporting Standards

28. Which of these is not a fundamental accounting assumption?

(a) Going Concern (b) Consistency

Ans: (d) Materiality

29. Omission of paise and showing the round figures in financial statements is based on .................. .

(a) Conservatism concept (b) Consistency concept

Ans: (c) Materiality concept

30. Which of these account has debit balance?

(a) Income received in advance (b) Bank loan

Ans: (c) Prepaid insurance premium

31. Which of the following is known as “Principal Book of Accounting”?

(a) Ledger (b) Journal

Ans: (a)

32. Journal records a transaction of a firm in a

(a) Periodical manner (b) Chronological order

Ans: (b) Chronological order

33. Which of the following is NOT correct statement(s) related to accounting?

(I) Accounting can help the managers to fix selling price of goods.

(II) Accounting involves only recording the transactions

(III) Accounting is mechanical in nature.

Choose the correct option:

(a) I and II (b) II and III

Ans: (b) II and III

34. Which of the following will not be recorded in books of accounts?

(a) Investment in shares

(b) Use of office stationery for owners’ kids

(d) Import of goods for exporting them

Ans: (c) Hiring of new employee

35. Match the following:

A. Liability of business towards (i) Purchases owner

B. Buying of Goods for resale (ii) Capital

C. Amount receivable against (iii) Non-current liability rendering of services

D. Liability which is not to be (iv) Revenue settled within 12 months

Choose the correct option:

(a) A-(iv), B-(i), C-(ii), D-(iii) (b) A-(iii), B-(i), C-(iv), D-(ii)

Ans: (c) A-(ii), B-(i), C-(iv), D-(iii)

36. By following which accounting principle “Contingent liabilities shown by way of footnote to accounts”?

(a) Materiality (b) Full Disclosure

Ans: (b) Full Disclosure

37. What is the full form of GAAP?

(a) Generally Accepted Accounting Principles.

(b) Generally Applicable Accounting Principles.

(d) Government Accredited Accounting Practices.

Ans: (a) Generally Accepted Accounting Principles

38. Which of the following statements is most appropriate for Accrued income and Advance income?

(a) Former is liability, latter is asset

(b) Both are not shown under accrual basis of accounting

(d) Both are not shown under cash basis of accounting

Ans: (c) Former is asset, latter is a liability

39. How will depreciation be treated under cash basis of accounting?

(a) It will be ignored

(b) It will be subtracted from total cash receipts, to get profit

(d) None of the above

Ans: (a) It will be ignored

40. “Expenses which are related to current year are only considered for the calculation of profit.” This statement is the outcome of which of the following principle of accounting?

(a) Consistency principle (b) Materiality principle

Ans: (d) Accrual principle

41. Which principle is formulated based on the understanding that actual profit or loss can be ascertained only at the time of winding up of business but to provide information to users, the life of business is divided into regular intervals?

(a) Going concern (b) Accounting period

Ans: (b) Accounting period

42. “Closing stock is valued “at cost price or at market price, whichever is less” This is in accordance with which principle of accounting?

(a) Conservatism (b) Full disclosure

Ans: (a) Conservatism

43. Fill in the blank with the correct option:

Accounting information is said to be .................. if it meets the needs of the users of accounting.

(a) Reliable (b) Comparable

Ans: (d) Relevant

44. Which of the following will lead to increase in liability and decrease in capital?

(a) Accrued income (b) Outstanding salary

Ans: (b) Outstanding salary

45. Which of the following party is interested in looking at financial information with a viewpoint of making internal as well as external comparisons in their attempt to evaluate the performance?

(a) Owners (b) Managers

Ans: (a) Owners

46. .................. deals with the provision of necessary accounting information to people within the organisation to enable them in decision-making, planning and controlling business operations.

(a) Management Accounting (b) Cost Accounting

Ans: (a) Management Accounting

47. Pick the odd one out:

(a) Paid ₹ 50,000 for purchase of office furniture.

(b) Paid son’s fee of ₹ 5,000 out of personal bank account.

(d) Paid office rent of ₹ 15,000.

Ans: (b) Paid son’s fee of ₹ 5,000 out of personal bank account.

48. Furniture of book value ₹ 25,000 was sold for ₹ 35,000. Difference of ₹ 10,000 will be termed as

(a) Profit (b) Income

Ans: (d) Gain

49. Use of common unit of measurement and common format of reporting helps in

(a) Understandability (b) Relevance

Ans: (c) Comparability

50. .................. connotes customs or traditions as a guide to the preparation of accounting statements.

(a) Conventions (b) Principles

Ans: (a) Conventions

51. Mr. Harish purchased a motorcycle for his son on credit and recorded as purchase of asset in business records. He has violated which accounting principle?

(a) Periodicity Principle (b) Accounting Entity Principle

Ans: (b) Accounting Entity Principle

52. The accounting concept that refers to the tendency of accountants to resolve uncertainty and doubt in favour of understating assets and revenues and overstating liabilities and expenses is known as

(a) Going Concern (b) Money Measurement

Ans: (d) Conservatism

53. There is unearned Income of ₹ 25,000 during the year ended 31 March, 2016. Which basis of accounting will show lesser profits?

(a) Cash Basis (b) Accrual Basis

Ans: (b) Accrual Basis

54. Which of the following group of activities are covered under the process of Accounting?

(a) Recording and Classifying

(b) Recording, Classifying and Summarizing

(d) Identifying, Measuring and Communication

Ans: (c) Summarizing, Analyzing and Interpreting

55. Sumit is a furniture dealer. Which one of the following is not recorded in his books?

(a) Sofa Set purchased for personal use ₹ 80,000 and cheque issued

(b) A table worth ₹ 8,000 taken to his home out of business

(d) A Cheque of ₹ 12,000 issued for tuition fees of his children out of his personal Bank account

Ans: (d) A Cheque of ₹ 12,000 issued for tuition fees of his children out of his personal Bank account

56. Which of the following is most relevant information form point of view of taxation authorities?

(a) Bank Balance

(b) Market value of fixed assets

(d) Net sales during the year

Ans: (c) (c) Profit generated during the year

57. When accounting information are verifiable and free from personal bias, it show the following qualitative characteristics of accounting?

(a) Relevance (b) Reliability

Ans: (d) Comparability

58. Raman Ltd. has land and building worth ₹ 50 lakhs. Current market value of Land and building is now ₹ 80 lakhs. Now accountant wants to show Land and Building at ₹ 80 lakhs in the books Which accounting concept/convention restrict him from doing so?

(a) Conservatism convention (b) Historical cost concept

Ans: (b) Historical cost concept

59. A company purchased goods worth ₹ 4,00,000 and 80% of such goods sold for ₹ 5,00,000. Market value of remaining goods valued ₹ 1,00,000, the company wants to show it in the books at market value. Which convention is being violated here?

(a) Conservatism convention (b) Historical cost concept

Ans: (a) Conservatism convention

60. There is an accrued income of ₹ 50,000 for the year ended 31st March, 2017. Which basis of accounting will show lesser profit due to this?

(a) Accrual Basis (b) Cash Basis

Ans: (b) Cash Basis

61. Who is known as founder of Double entry system?

(a) J. R . Batliboi (b) William Pickles

Ans: (d) Luca Pacioli

62. The following are the steps of Accounting process:

(i) Recording (ii) Summarising

(iii) Identification of Financial transaction (iv) Classification (v) Interpretation

Identify the correct order:

(a) (ii), (i), (iii), (iv), (v) (c) (iii), (ii), (iv), (i), (v)

(b) (iii), (i), (iv), (ii), (v) (d) (iii), (i), (ii), (v), (iv)

Ans: (b)

63. Shri Ram College of Commerce is an example of:

(a) Natural Personal Account

(b) Artificial Personal Account

(d) Intangible Personal Account

Ans: (b) Artificial Personal Account

64. Pick the odd one out in terms of preparation of Accounting voucher.

(a) Furniture purchased for ₹ 30,000

(b) Building sold for ₹ 30,000

(d) Goods purchased for ₹ 30,000

(d) Computer sold on credit for ₹ 40,000

Ans: (d) Computer sold on credit for ₹ 40,000

65. Which group of interested party is most interested in judging the credit worthiness of the organisation?

(a) Investors and Potential Investors

(b) Government and other regulators

(d) Lenders and Financial Institution

Ans: (d) Lenders and Financial Institution

66. Pick the odd one out

(a) Goods given as charity costing ₹ 15,000.

(b) Goods purchased from Rajeev for ₹ 15,000.

(d) Goods lost by fire ₹ 25,000.

Ans: (d) Goods lost by fire ₹ 25,000.

67. .................. is a deduction in list price at agreed percentage given at the time of selling of goods.

(a) Cash Discount (b) Sale Price

Ans: (b) Sale Price

68. Given Equation is A – B = C, If B is Expenses and C is Profit, then what is A?

(a) Revenue (b) Cost

Ans: (a) Revenue

69. Cost of Machinery: ₹ 10,00,000

Installation Charges: ₹ 1,00,000

Market value on 31.3.2016 ₹ 12,00,000

While finalizing the accounts, if the company values its machinery at ₹ 12,00,000. Which concept is violated by company?

(a) Conservatism (b) Realisation

Ans: (a) Conservatism

70. The term connotes customs or traditions as a guide to the preparation of accounting statements.

(a) Principles (b) Assumptions

Ans: (d) Concepts

71. Which of the following is not the sub field of Accounting?

(a) Book Keeping (b) Management Accounting

Ans: (c) Cost Accounting

72. There is an outstanding expense of ₹ 36,000 during the year ended 31 March, 2017. Which basis of accounting will show higher profits?

(a) Accrual Basis (b) Cash Basis

Ans: (a) Accrual Basis

73. This accounting concept/assumption reflects a pessimist attitude adopted by the accountants but is an important way of dealing with uncertainty and protecting the interest of lenders against an unwanted distribution of firm’s Assets. It is

(a) Going Concern (b) Materiality

Ans: (b) Materiality

74. Process of recording financial data up to preparation of Trial Balance is

(a) Book Keeping (b) Classifying

Ans: (b) Classifying

75. Ram is a furniture dealer. Which one of the following will not be recorded in the books?

(a) Purchase of timber for ₹ 10,000

(b) Sofa set worth of ₹ 20,000 taken to his home

(d) Dining table of ₹ 15,000 given to his friend as gift.

Ans: (d) Dining table of ₹ 15,000 given to his friend as gift.

76. Which of the following source documents needed for recording in the Purchase Return Book?

(a) Invoice (b) Debit note

Ans: (c) Credit note

77. It is the way to reduce the list price of Goods and thereby selling more quantity. What is it?

(a) Advantage of Cash discount (b) Advantage of Credit Sale

Ans: (a) Advantage of Cash discount

78. .................. is the collective process of identifying, recording and classifying the accounting events of a company.

(a) Accounting Cycle (b) Journal

Ans: (c) Ledger

79. Book keeping covers only the following activities:

(a) Recording and classifying

(b) Recording, classifying, summarising and analysing

(d) Identifying, measuring and communication

Ans: (b) Recording, classifying, summarising and analysing

80. Which of the following is not an objective of Accounting?

(a) To keep systematic records

(b) To ascertain operational profit or loss

(d) To ascertain financial position of the business

Ans: (c) To provide information of personal assets and liabilities

81. Revenue expenditure is:

(a) Expenditure to procure assets (b) Expenditure to earn revenue

Ans: (b) Expenditure to earn revenue

82. A person or an institution which gives money to the business on interest is

(a) Creditor (b) Investor

Ans: (d) Lender

83. The first step in the Accounting process is

(a) Recording of transactions (b) Identifying the transaction

Ans: (b) Identifying the transaction

84. Use of common unit of measurement and common format of reporting promotes

(a) Comparability (b) Understandability

Ans: (a) Comparability

85. According to which assumption/s fixed assets are kept in the business for generating benefits in the future and not for immediate sale?

(i) Going concern (ii) Accrual (iii) Consistency

Select from the following options:

(a) (i) and (ii) (b) (ii) and (iii)

Ans: (c) only (i)

86. Accrued interest is application of

(a) Matching principle (b) Conservatism

Ans: (a) Matching principle

87. Which of the following is/are incorrect for Double entry system?

(i) Any transaction will be recorded twice

(ii) Any transaction will have only effect on two accounts only

(iii) Any transaction will have equal effect on debit and credit

(iv) Any transaction will be recorded at least in two accounts Select from the following options:-

(a) (i) and (iii) are correct (b) (ii) correct only

Ans: (c) (i) and (ii) are incorrect

88. The concept/principle which calls for adjustment to be made in respect of prepaid and outstanding expenses:

(a) Prudence principle (b) Accrual principle

Ans: (b) Accrual principle

89. Issuing authority of Accounting Standards in India is:

(a) Reserve Bank of India

(b) Ministry of Corporate Affairs

(d) Comptroller and Auditor General of India

Ans: (c) Institute of Chartered Accountants of India

90. Which one of the following is not the objective of Accounting Standards?

(a) To improve the credibility and reliability of financial statements

(b) To guide auditors and accountants

(d) To provide convenience in calculation of profit & loss of any firm

Ans: (c) To determine managerial accountability

91. Which of the following is not one of the objectives of accounting?

(a) Providing information to its users

(b) Purchasing machinery for the business

(d) Computation of annual profits

Ans: (b) Purchasing machinery for the business

92. Creditors are mainly interested in .................. .

(a) Profit of the business (b) Timely payment of their dues

Ans: (b) Timely payment of their dues

93. Scope of Accounting is than that of Book Keeping.

(a) Double (b) Narrow

Ans: (c) Wider

94. Which of the following transaction will not be recorded in the books of accounts?

(a) Payment of salary to staff

(b) Cash paid to Creditors

(d) Cash withdrawn by the proprietor from the business for his personal use

Ans: (c) Placed order for goods to a supplier of goods

95. The term ‘Intangible Asset’ is used for

(a) Goodwill (b) Plant

Ans: (a) Goodwill

96. The term ‘Income’ denotes

(a) Revenue earned from business

(b) The excess of revenue over expense

(d) The excess of expense over revenue

Ans: (b) The excess of revenue over expense

97. Which of the following practices is not an example of the convention of conservatism?

(a) Creating provision for doubtful debts

(b) Creating provision for discount on creditors

(d) Creating provision for tax

Ans: (b) Creating provision for discount on creditors

98. Accounting does not record non-financial transactions because of

(a) Accrual assumption (b) Cost concept

Ans: (d) Money measurement concept

99. Fixed assets and current assets are categorised as per

(a) Separate entity concept (b) Going concern assumption

Ans: (b) Going concern assumption

100. Value of the Asset is not changed according to the change in market value of the asset due to ……………

(a) Matching concept (b) Historical cost principle

Ans: (b) Historical cost principle

101. ‘Abhishek Limited’ purchased goods of ₹ 10,00,000, and sold 90% of goods and the remaining goods having market value of ₹ 90,000, were recorded at ₹ 1,00,000. Which concept did he violate?

(a) Materiality concept (b) Cost concept

Ans: (d) Conservatism concept

102. I.A.S.B. stands for

(a) International Accounting Standards Board

(b) Indian Accounting Standard Board

(d) Indian Academic Standard Board

Ans: (a) International Accounting Standards Board