Accounting mcqs

✅ The correct answer is D.
In balance sheet, fixed assets are shown at Written Down Value (WDV). If the asset is not impaired and the company operates under GAAP, then the cost model must be used.

✅ The correct answer is D.
Goodwill is classified as Intangible assets. The goodwill amounts to the excess of the “purchase consideration” (the money paid to purchase the asset or business) over the total value of the assets and liabilities. It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched.

✅ The correct answer is B.
Under Standard cost method of inventory costing, a pre-determined cost is assigned to all items of inventory. A standard cost is described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or as the “should be” cost. Standard costs are often an integral part of a manufacturer’s annual profit plan and operating budgets.

✅ The correct answer is C.
Customs duty paid in connection with the import of equipment is not an item of revenue expenditure. Customs duty paid on import of raw materials. It is capital expenditure.

✅ The correct answer is D.
The expenses related to the main operations of a business are referred to as Operating expense. The operating expenses refer to the specific costs after gross revenue is defined in the income statement.

✅ The correct answer is B.
Revenue expenditure does not improve the financial position of the business. Revenue expenditures are typically referred to as ongoing operating expenses.

✅ The correct answer is C.
Under diminishing balance method, depreciation decreases every year. Since the book value reduces every year, hence the amount of depreciation also reduces every year. Under this method, the value of the asset never reduces to zero.

✅ The correct answer is A.
Current assets are also known as Gross working capital. Gross working capital is the sum of all of a company’s current assets (assets that are convertible to cash within a year or less).

✅ The correct answer is D.
Increase in working capacity of an asset and Replacing damage parts of an asset enhances the earning capacity of an asset.

✅ The correct answer is D.
Fixed asset are shown at written down value in Balance sheet. If the asset is not impaired and the company operates under GAAP, then the cost model must be used.