MEFA Bits for second mid exam

1) What is the significance and need of capital. [ ]

a) To wind up b) expand and diversify c) promote business d) Evaluating solution
2) Which of the following is not the current asset [ ]
a) cash in hand b) stock of raw materials c) creditors d) debtors
3) Pre-paid expenses is a [ ]
a) Asset b) current liability c) current asset d) all
4) The written agreement among the partners is called as [ ]
a) bond b) written agreement c) partnership deed d) partnership agreement
5) Sole trade form of business suffers from [ ]
a) secrecy b) total control c) unlimited liability d) prompt decision making
6) joint stock company involves [ ]
a) voluntary association of persons b) common seal c) Both a & b d) job security
7) Ability of the firm to meet its short term commitments [ ]
a) profit ratio b) asset ratio c) liquidity ratio d) Activity ratio
8) Capital is divided into shares can be seen in which type of business [ ]
a) sole trader b) partnership c) None d) Both a & b
9) Who are the users of accounting information [ ]
a) owners b) Govt or tax authorities c) All d) employees
10) Left hand side of the account is called as [ ]
a) credit b) LHS c) debit d) debt
11) debit what comes in and credit what goes out is the rule for [ ]
a) personal account b)nominal account c) real account d)none
12) IRR stands for [ ]
a)interest rate of return b)international rate of return c) internal rate of return d)none
13.) single person having ownership in the business is called [ ]
a) Share holder b) owner c)sole trader d)creditor
14) Journal is the _______ book of record [ ]
a) Second b) third c) first d) last
15) NPV stands for [ ]
a) Not present value b) non present value c) net present value d) negative present value
16) How many types of accounts are maintained to record all types of business transactions? ( )
(a) Five (b) four (c) Three (d) Two
17). Which connects the link between Journal and Trial Balance? ( )
(a) Trading Account (b) Profit & Loss account (c) Ledger (d) Balance sheet
18) Which assets can be converted into cash in short period? ( )
(a) Fixed Assets (b) Intangible Assets (c) Current Assets (d) Tangible Assets
19). “Bank over draft” is a ________. ( )
(a) Asset (b) Expense (c) Liability (d) Income
20. Profit and Loss account is prepared to find out the business ____. ( )
(a) Gross result (b) Financial position (c) Net result (d) Liquidity position
21. The statement of “Debit and credit balances of Ledger accounts” is called as ____. ( )
(a) Journal (b) Ledger (c) Trial balance (d) Balance sheet
22. The statement reveals the financial positions of a business at any given date is called ___( )
(a) Trading account (b) Profit and loss account (c) Balance sheet (d) Trial balance
23) _____ is called as ‘Book of Original Entry’. ( )
(a) Ledger (b) Trial Balance (c) Journal (d) Trading account
24. Debit what comes in; Credit what goes out is ____ account principle? ( )
(a) Nominal (b) Personal (c) Real (d) None
25. The process of entering transactions into Ledge accounts known as __. ( )

(a) Journal entry (b) First entry (c) Posting (d) None
26. Debit Expenses and Losses; Credit Incomes and Gains is ___ account Principle ( )
(a) Personal b) Real c) Nominal (d) None
27. Acid Test Ratio is also called as ________. ( )
(a) Current Ratio (b) Absolute Liquid Ratio (c) Quick Ratio (d) Debt-Equity Ratio
28. The relationship between two numerical values is called as ____. ( )
(a) Account ) Ledger (c) Ratio (d) Discount
29. “Gross Profit” can be finding by preparing _______. ( )
(a) Profit and Loss account (b) Balance sheet (c) Trading account (d) Trial balance
30. “Net Profit” can be finding by preparing _______. ( )
(a) Trading account (b) Trial balance (c) Profit and Loss account (d) Balance sheet

NOTE: Answer is “C” for all the above questions.