Accounting & Auditing Paper 2005 - 2

Accounting & Auditing Paper 2005 - 2

1. Heavy expenditure on advertisement of a new product is a?

a) Capital expenditure
b) Revenue expenditure
c) Deferred revenue expenditure
d) None of these

2. At the time of admission of a new partner, goodwill raised should be written off in?

a) New profit sharing ratio
b) Old profit sharing ratio
c) Sacrificing ratio
d) Gaining ratio

3. A and B are partners in the ratio of 2 :1. They admit C for ¼ shares who contributes Rs. 3000 for his share of goodwill. The total value of the goodwill of the firm is?

a) Rs. 3,000
b) Rs. 9,000
c) Rs. 12,000
d) Rs. 15,000

4. Sales to Mustafa of Rs. 10,000 not recorded in the books would affect?

a) Sales account
b) Mustafa account
c) Sales account and Mustafa Account
d) None of these

5. Depreciation is a process of?

a) Valuation
b) Allocation
c) Both a & b
d) None of these

6. Loss on sale of an asset should be written off against?

a) Share premium account
b) Sales account
c) Depreciation fund account
d) None of these

7. Income and expenditure account reveals?

a) Cash in hand
b) Surplus or deficiency
c) Capital account
d) None of these

8. Which of the following is true regarding the work sheet?

a) It is the form, which an accountant uses for his own aid and convenience.
b) It assists in the orderly preparation of the adjustments and financial statements at the end of the account period
c) It can substitute for Journal and ledger
d) Only a & b are true

9. The post closing trial balance will?

a) Contain only income statement accounts
b) Contain only balance sheet accounts
c) Contain both income statement and balance sheet accounts
d) Be prepared before closing entries are posted to the ledger

10. The cost of goods and services used up in the process of obtaining revenue are called?
a) Net income
b) Revenue
c) Expenses
d) Liabilities

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