Financial Statements - Adjustments(11th Grade > Accountancy ) Questions and answers for exam Preparation

11th Grade > Accountancy

FINANCIAL STATEMENTS - ADJUSTMENTS MCQs

Total Questions : 30 | Page 2 of 3 pages

Question 11. Which account is debited while passing the adjustment entry for outstanding expenses?

Outstanding expense account
Prepaid expense account
Expense account
None of the above

Discuss Question

Answer: Option C. -> Expense account
:
C
The correct adjusting entry is
ExpenseA/cDr
To Outstanding expenseA/c

Question 12. Rent has been paid on 1st January 2018 for a period of 6 months amounting to Rs 60,000 @ 10,000 per month. By what amount shall the prepaid expenses account be debited, while passing the adjustment entry?

It shall be debited by Rs 10,000
It shall be debited by Rs 30,000
It shall not be debited
It shall be debited by Rs 20,000

Discuss Question

Answer: Option B. -> It shall be debited by Rs 30,000
:
B
It shall be debited by Rs 30,000 for the period of 3 months(April to June).

Question 13. The purpose of adjustments is ___

to assign appropriate portion of revenue and expenses to the appropriate accounting period.
to make sure that revenue is recognised in the period in which it is earned and expenses are recognised in the period in which they are incurred.
to update the accounts to confirm with the accrual concept.
All of the above

Discuss Question

Answer: Option D. -> All of the above
:
D
All of the above are the purpose of doing adjustements in financial statements.

Question 14. Which account is credited while recording the entry of bad debts of Mr. Ram amounting to Rs 10,000 given in adjustments?

Ram`s account
Bad debts account
Profit & loss account
None of the above

Discuss Question

Answer: Option A. -> Ram`s account
:
A
The entry shall be
Bad debts A/c Dr 1,000
To Ram A/c 1,000

Question 15. Which of the following account will be credited, when the interest on drawings is charged?

Asset account
Interest on drawings account
Partner's / Proprietor's capital account
Profit & loss account

Discuss Question

Answer: Option B. -> Interest on drawings account
:
B
The correct adjusting entry is:
Drawings A/c Dr
To Interest on Drawings A/c

Question 16. Drawings are shown as _______ in the vertical form of the balance sheet.

addition to current assets
deduction from current liabilities
addition to equity/capital
deduction from equity/ capital

Discuss Question

Answer: Option D. -> deduction from equity/ capital
:
D
Drawings are shown as a deduction from equity/ capital in the vertical form of the balance sheet.

Question 17. What do you understand by outstanding expenses?

Expenses which have been incurred & paid
Expenses which have been paid for a period exceeding the current financial year
Expenses which have been incurred but not been paid
Expenses which have not been incurred

Discuss Question

Answer: Option C. -> Expenses which have been incurred but not been paid
:
C
Outstanding expenses are the expenses which have been incurred but not been paid yet.

Question 18. If the Depreciation is not accounted, the net profit for the period will be ______

Overstated
Understated
Uneffected
None of the above

Discuss Question

Answer: Option A. -> Overstated
:
A
If the Depreciation is not accounted, the net profit for the period will be overstated.

Question 19. Salary paid to Ramesh is Rs 20,000 per month. Salary is paid to him on 5th of next month for the services rendered by him during the previous month. What shall be the amount of outstanding salary as on 31st March 2018?

Rs. 40,000
Rs. 3,500
Rs. 20,000
Rs. 10,000

Discuss Question

Answer: Option C. -> Rs. 20,000
:
C
The amount of outstanding salary is the salary for the month of March i.e. Rs. 20,000.

Question 20. When will adjustment of closing stock be required to be done?

When it is given in trial balance
When it is given in the trading account
When it is given in the additional information
None of these

Discuss Question

Answer: Option C. -> When it is given in the additional information
:
C
Adjustment of closing stock is required to be done only when it is given in the additional information.