Accounting mcqs

✅ The correct answer is C.
3 days of grace are allowed in case of time bills, for calculating date of maturity. Legal due date of a term/usance bill will be the last day of grace ( maturity date plus three days of grace is the legal due date).

✅ The correct answer is A.
Municipal tax Rs.6000 under dispute is a Contingent liability. Contingent liabilities are liabilities that may be incurred by an entity depending on the outcome of an uncertain future event such as the outcome of a pending lawsuit.

✅ The correct answer is B.
Cash account is a real account. Real accounts show up on a company’s balance sheet, which is the financial statement that lists all the accounts that a company has and their balances.

✅ The correct answer is A.
FIFO methods of inventory costing produces ending stock cost close to the market value of the inventory. FIFO (First-in, first-out) method is based on the perception that the first inventories purchased are the first ones to be sold. It is a cost flow assumption for most companies. Since the theory perfectly matches to the actual flow of goods, therefore it is considered as the right way to value inventory.

✅ The correct answer is A.
The assumption underlying the fixed installment method of depreciation is that of Equal usage of the asset over its useful life.

✅ The correct answer is B.
Articles of association contains rules and regulations for internal management of the business. Articles of Association is a document which prescribes the rules and bye-laws for the general management of the company and for the attainment of its object as given in the memorandum.

✅ The correct answer is A.
The portion of the acquisition cost of an asset yet to be allocated is known as Written down value. Written-down value is the value of an asset after accounting for depreciation or amortization.

✅ The correct answer is A.
Outsider’s claim against the assets of the business is called Liability. Liabilities are defined as a company’s legal financial debts or obligations that arise during the course of business operations.

✅ The correct answer is C.
Capital expenditures are recorded in the Balance sheet. A capital expenditure is recorded as an asset, rather than charging it immediately to expense. It is classified as a fixed asset, which is then charged to expense over the useful life of the asset, using depreciation.

✅ The correct answer is D.
Financial statements mainly help in Communication of economic events.