Accounting - Practice Test

[#1901] Which of the followingstatements istrue?

(A) Capital expenditure does not affectthe profitability of a concern, but revenue expenditure does affect the profitability of a concern

(B) Capital expenditure affects the profitability of a concern directly,but revenueexpenditure does not affectdirectly

(C) Capital expenditure affects the profitability of a concern indirectly, but revenue expenditure affects directly

(D) Both capital expenditure and revenue expenditure affectthe profitability of a concern directly

Correct Answer

(C) Capital expenditure affects the profitability of a concern indirectly, but revenue expenditure affects directly

[#1902] Adjustment entry for outstanding rent will be

(A) Outstanding rent A/c Dr - To Rent A/c

(B) Rent A/c Dr - To outstanding A/c

(C) Profit and Loss A/c Dr - To rent A/c

(D) Outstanding rent A/c Dr - To Profit and Loss A/c

Correct Answer

(B) Rent A/c Dr - To outstanding A/c

[#1903] Which of the following correctly depicts the difference between a merger and an acquisition of srock?

(A) Acquisition of stock results in the total absorption of a firm, but a merger does not

(B) In case of a merger, the firm can deal directly with the shareholders of the acquired firm, but not in the caseof acquisition of stock

(C) Shareholders of the acquired or target firm vote by their response to a tender offer in the acquisition of stock, but cast a formal vote in a merger situation

(D) A formal vote by the acquired firm's shareholders is required for the acquisition of stock but not for a merger

Correct Answer

(C) Shareholders of the acquired or target firm vote by their response to a tender offer in the acquisition of stock, but cast a formal vote in a merger situation

[#1904] Debt-Equity Ratio is a kind of

(A) Liquidity Ratio

(B) Profitability Ratio

(C) Capital Structure Ratio

(D) Ratio of Efficiency

Correct Answer

(C) Capital Structure Ratio

[#1905] Who was insolvent in Garner vs. Murray case:

(A) Murray

(B) Wilkins

(C) Garner

(D) Garry

Correct Answer

(B) Wilkins

Accounting - Study Mode

[#1901] Which of the followingstatements istrue?

Correct Answer

[#1902] Adjustment entry for outstanding rent will be

Correct Answer

[#1903] Which of the following correctly depicts the difference between a merger and an acquisition of srock?

Correct Answer

[#1904] Debt-Equity Ratio is a kind of

Correct Answer

[#1905] Who was insolvent in Garner vs. Murray case:

Correct Answer