961. The balance of which of the following accounts do not disappear, once they are debited/credited to Trading Account?
A: Sales
B: Purchases
C: Inward returns
D: Closing stock
962. If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as 1,570, then
A: Net Profit will decrease by 3,140
B: Gross Profit will increase by 3,320
C: Gross Profit will decrease by 3,500
D: Gross Profit will decrease by 3,320
963. Purchase journal is kept to record_____________?
A: All purchases of goods
B: All credit purchases of goods
C: All credit purchases
D: None of these
964. The beginning inventory of the current year is overstated by 5,000, and closing inventory is overstated by 12,000. These errors will cause the net income for the current year by
A: 17,000 (overstated)
B: 12,000 (understated)
C: 7,000 (understated)
D: 7,000 (overstated)
965. The accountant of Leo Ltd. recorded a payment by cheque to a creditor for the supply of materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The Company has not passed any rectification entries and the error is not detected through the bank reconciliation. The impact of this error is
A: The Trial Balance will not agree
B: The balance of creditors is understated
C: The purchases are understated
D: The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book
966. Which of the following errors affects the agreement of a Trial Balance?
A: Mistake in balancing an account
B: Omitting to record a transaction entirely in the subsidiary books
C: Recording a wrong entry in the subsidiary books
D: Posting an entry on the correct side but in the wrong account
967. Which of the following should not be treated as revenue expenditure?
A: Interest on loans and debentures
B: Annual fire insurance premiums on Plant and Equipment
C: Sales tax paid in connection with the purchase of office equipment
D: Small expenditures on long-lived assets, such as ` 20 for a paperweight.
968. Capital expenditure is an expenditure that
A: Benefits the current accounting period
B: Will benefit the next accounting period
C: Results in the acquisition of a permanent asset
D: Results in the acquisition of a current asset
969. Only those errors affect the profit of the business which is related to:
A: Profit and loss account for trading
B: Balance sheet
C: Trading account only
D: Profit and loss account only
970. If any expense account or revenue account is wrongly debited, the profit will decrease and when it is rectified:
A: The profit will become double
B: The profit will become half
C: The profit will increase
D: The profit will be less
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