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Finance Accounting Notes For SSC CGL Tier-2 (AAO)

Finance Accounting Notes For SSC CGL Tier-2 (AAO)

Finance Accounting Notes For SSC CGL Tier-2 (AAO)

Q121. Which of the following cost flow assumption methods of inventory valuation uses unique identification codes?

(A) FIFO assumption

(B) LIFO assumption

(C) AVCO assumption

(D) Specific identification assumption

Q122. Which of the following cost flow assumption methods of inventory valuation assumes that the most recently purchased inventory in stores is sold first?

(A) FIFO assumption

(B) LIFO assumption

(C) AVCO assumption

(D) Any of the above as they all produce the same result

Q123. Which of the following cost flow assumption methods of inventory valuation assumes that the inventory being sold represents the average cost of the inventory in stores?

(A) FIFO assumption

(B) LIFO assumption

(C) AVCO assumption

(D) Any of the above as they all produce the same result

Q124. Under IAS 2 which of the following is regarded as the correct invoice amount to include as the purchase cost of inventory?

(A) Invoice price (excluding trade discount and excluding value added tax)

(B) Invoice price (including trade discount and including value added tax)

(C) Invoice amount (excluding trade discount but including value added tax)

(D) Invoice amount (including trade discount but excluding value added tax)

Q125.  Under which method of inventory costing a pre-determined cost is assigned to all items of inventory?

(A)  Replacement cost method

(B)  Standard cost method

(C)  AVCO method

(D)  FIFO method

Q126. Which of the following is generally considered as a non profit oriented organization?

(A)  Charitable organization

(B)  Corporation

(C)  Audit firms

(D)  Insurance companies

Q127. The receipts and payments account of a non-profit organization is a

(A)  Nominal account

(B)  Real account

(C)  Income statement account

(D)  Financial statement

Q128. Non-profit organizations prepare all of the following accounts except the

(A)  Receipts and payment accounts

(B)  Income and Expenditure accounts

(C)  Balance sheet

(D)  Income statement

Q129. Expenditures greater than incomes of a non-profit organization give rise to a

(A)  Loss

(B)  Profit

(C)  Surplus

(D)  Deficit

Q130. Rent expense of a non-profit organization paid in advance. Which of the following is the correct classification of rent?

(A)  Expense

(B)  Liability

(C)  Equity

(D)  Asset

Q131. In a manufacturing business, which of the following is not a fixed asset?

(A) Loose tools and equipment

(B) Delivery vans

(C) Assembly plant

(D) Finished products

Q132. What is prime cost?

(A) The total of all the direct materials costs and all of the direct labour costs

(B) The total cost of all the most important costs

(C) The total of all the direct costs and all of the manufacturing overhead

(D) The total of all the direct material costs, all of the direct labour costs and all other direct expenses

Q133. What are the double entry procedures for dealing with a manufacturing profit?

(A) Debit: profit and loss account Credit: manufacturing account

(B) Debit: manufacturing account Credit: profit and loss account

(C) Debit: trading account Credit: manufacturing account

(D) Debit: manufacturing account Credit: dividends account

Q134. What account would a social club be recommended to use for recording details of its incomes and payments for a particular financial year?

(A) Profit and loss

(B) Accumulated fund

(C) Income and expenditure

(D) Receipts and payments

Q135. Which of the following types of entities would not normally prepare a trading account?

(A) A golf club

(B) A government department

(C) A charity

(D) A firm of solicitors

Q136. Which of the following is correct: Where accounting records are maintained on accrual basis:

(A) Income and expenditure relating to the accounting period should be fully accounted for even if income is still to be received and expenditure is yet to be paid for.

(B) Income should be accounted for only when received

(C) Income should be accounted on accruals basis and expenditure on payments basis

(D) Expenditure should be accounted for only to the extent they have been paid for

Q137. An accrued expense amounting to £18,000 was overlooked when ascertaining the profit for the year. The effect of this error is that:

(A) Net profit as well as liability are understated

(B) Net profit as well as liability are overstated

(C) Net profit is overstated and liability understated

(D) Net profit is not affected but liability is understated

Q138. Expenses relevant to the accounting period which remain unpaid by period end should be:

(A) included in with expenses paid and shown as a liability at the period end

(B) ignored until they are paid for in the next period.

(C) included with expenses paid and shown as an asset at the period end

(D) deducted from amount already paid and shown as a liability at the period end

Q139. Staff salary remaining unpaid as at the year-end should be accounted for as:

(A) Debit Salary accrued account and credit Staff salary account

(B) Debit Staff salary account and credit Salary accrued account

(C) Debit Pre-paid Salary account and credit Staff salary account

(D) Debit Staff salary account and credit Cash account

Finance Accounting Notes
Q140. The year-end trial balance as at 31st March 2011 reports a debit balance of £9,800 in the Insurance account. This figure includes £6,000 paid on 1st January 2011 as insurance for the year ended 31st December 2011. Ascertain the amount to be charged in the Income Statement as insurance for the year ended 31st March 2011.

(A) £5,300

(B) £9,800

(C) £6,000

(D) £15,800

Q141. A Transporter’s trial balance at year end on 31 December 2010 reports the balance in Motor Vehicle Maintenance account as £216,500. This amount includes £27,000 paid on 1 August 2010 for servicing the fleet of vehicles over three years from that date. The amounts to be expensed in 2010 and reported as prepaid as at the year-end are:

(A) Expense: £239,750; Prepayment : £23,250.

(B) Expense: £216,500; Prepayment : £27,000.

(C) Expense: £193,250; Prepayment : £23,250.

(D) Expense: £189,500; Prepayment : £27,000.

Q142. If an accrual as at year-end of £1,500 was treated as a prepayment, the net profit for the year would be:

(A) overstated by £1,500.

(B) understated by £3,000.

(C) understated by £1,500.

(D) overstated by £3,000.

Q143. A loan of £30,000 at 6% interest per year, was given to a member of staff, in the previous year. No interest has been received during the year. The accounting entries for accruing interest income are:

(A) Debit Interest receivable account and credit Staff loan account

(B) Debit Staff Loan account and credit Interest earnings account

(C) Debit Cash account and credit Interest earning account

(D) Debit Interest receivable account and credit Interest earnings account

Q144. A retailer paid £75,000 as rent and treated the whole amount as expenditure for the year, overlooking the fact that the amount was for a five year period commencing from the beginning of that year. The effect of this error would be:

(A) Net profit and current assets are understated by £75,000.

(B) Net profit and current liabilities will be understated by £75,000.

(C) Net profit and current assets are understated by £60,000.

(D) Net profit and current assets are overstated by £60,000.

Q145. After reporting the profit for the year it is found that £13,200 of stationery reported as an asset by the year end has in fact been fully used. The effect of the correction of this error would be:

(A) The gross profit as well as net profit would both increase by £13,200.

(B) The gross profit would decrease by £13,200 but net profit would remain unchanged.

(C) The gross profit and net profit would both decrease by £13,200.

(D) The gross profit will remain unchanged but net profit will decrease by £13,200.

Q146. Your business may be vulnerable to significant and irretrievable losses

(A) If you fail to understand the rules of negotiable instruments

(B) If – although you understand the rules of negotiable instruments generally – you miss a technicality

(C) If you depend upon flexibility or openness in a court’s understanding of your interpretation of rights and defences associated with negotiable instrument rules

(D) All of these

Q147. A negotiable instrument

(A) Is a written document that passes title to the rights contained in the document

(B) Is a document which transfers title to a piece of property

(C) Is a document which transfers title to a building

(D) Is a document which permits someone to use a piece of property or building

Q148. The Bills of Exchange Act

(A) Is a federal statute

(B) Provides rules dealing with the use of cheques, bills of exchange and promissory notes

(C) Is applied uniformly throughout Canada & Was first introduced in 1890

(D) All of these

Q149. Bills of exchange are attractive because

(A) They reduce the risk of transporting money

(B) They may be used to create credit

(C) They are easy to negotiate

(D) All of these

Q150. If an assessment of the risk is undertaken between an assignment of a contractual right compared to a transfer of a negotiable instrument, it will be evident that

(A) The assignee acquires the same rights under a contract as the assignor had with the third party

(B) The transferee of a negotiable instrument acquires the same rights as the transferor of the bill had with a third party

(C) The transferee of a negotiable instrument will not acquire a better right to payment than the transferor of the bill had with a third party

(D) All of these

Q151. The Bills of Exchange Act requires the following in order for a bill to be valid

(A) The bill must be in writing

(B) The bill must be signed by the person giving it

(C) The bill must be addressed to a particular person & the bill must be for a fixed sum of money

(D) All of these

Q152. When a drawee accepts a bill of exchange

(A) He or she becomes liable to pay the bill at the date and place fixed for payment

(B) He or she bears all risk of loss

(C) He or she is only responsible for payment of the portion of the bill which he accepts

(D) He or she is not responsible for further payment or liability associated with the bill

Q153. Transferring entries from journal to ledger account is commonly known as

(A)  Recording

(B)  Transferring

(C)  Posting

(D)  Entry making

Q154. An account records the ___________ in the balance of an item

(A)  Increase

(B)  Decrease

(C)  Increase or decrease

(D)  Appreciation

Q155.If credit side of a bank account is greater than the debit side, it indicates which of the following?

(A)  Bank overdraft

(B)  Cash at bank

(C)  Bank balance

(D)  Current Asset

Q156. Which Article in the Constitution on India provides for the post of Comptroller and Auditor General of India (CAG)?

(a) Article 148

(b) Article 343

(c) Article 266

(d) Article 248

Finance Accounting Notes
Q157. Who was the first Comptroller and Auditor General of India (CAG)?

(a) V. Narahari Rao

(b) A.K. Chanda

(c) A.K. Roy

(d) S. Ranganathan

Q158. Who is the current Comptroller and Auditor General of India (CAG) – as of Jan 2015?

(a) Vinod Rai

(b) Shashi Kant Sharma

(c) A.K. Roy

(d) S. Ranganathan

Q159. Which Comptroller and Auditor General of India (CAG) came into limelight for his exposure of 2G scam, Commonwealth games, etc?

(a) Vinod Rai

(b) Shashi Kant Sharma

(c) A.K. Roy

(d) S. Ranganathan

Q160. Who appoints the Comptroller and Auditor General of India (CAG)?

(a) Prime Minister

(b) Chief Justice of India

(c) Vice-President

(d) President

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