KPMG Assessment 1 PDF

## Accounting Principles Test ### Question 1 When appeared in the company's financial statements, provision for doubtful debts accounts will carry which balance? - Debit - Credit **Answer:** Credit ### Question 2 Receivables Management involves which of the following accounting tools? - Pla...

## Accounting Principles Test ### Question 1 When appeared in the company's financial statements, provision for doubtful debts accounts will carry which balance? - Debit - Credit **Answer:** Credit ### Question 2 Receivables Management involves which of the following accounting tools? - Planning of receivables - Organizing of receivables - Controlling of receivables - All of the given options **Answer:** All of the given options ### Question 3 What would be the due date of bills receivable issued on 1st March for three months if 4th June is a public holiday? - 5th July - 4th June - 5th June - 3rd June **Answer:** 3rd June ### Question 4 Companies report receivables in the financial statements under the name of which of the following accounting terms? - Liability - Asset - Profit - Loss **Answer:** Asset ### Question 5 With regards to the promissory note, which of the following terms is another word used for discount? - Fair value - Interest - Maturity value - Buying more than face value **Answer:** Interest ### Question 6 What is the result on accounts receivables when a merchandiser sells goods on credit? - It increases the accounts receivable - It decreases the accounts receivable - No effect on accounts receivable - None of the given options **Answer:** It increases the accounts receivable ### Question 7 "Payment received from debtor" is recorded in which of the following accounting books? - Cash book - Purchase book - Bill receivable book - Sales day book **Answer:** Cash book ### Question 8 A note receivable is recorded at which of the following values? - Its face value - Its fair market value - Its present value - Its maturity value **Answer:** Its face value ### Question 9 Which of the following principles best describes the application of generally accepted accounting principles to the valuation of accounts receivables? - Realization principle - Matching principle - Cost principle - Principle of conservatism **Answer:** Matching principle ### Question 10 Calculate balance of accumulated depreciation at the end of the year from the following information, assuming straight-line method @ 10%. - Opening balance of machinery is Rs. 10,00,000/- and closing balance of machinery is Rs. 8,00,000/- - Machinery sold at the beginning of the year for Rs. 80,000/- and was purchased four years ago - Opening balance of accumulated depreciation is Rs. 2,50,000/- - Rs. 3,30,000/- - Rs. 2,50,000/- - Rs. 1,70,000/- - Rs. 2,00,000/- **Answer:** Rs. 2,50,000/- ### Question 11 When can dunning notices be sent? - Anytime - As per the schedule - Once a week - Twice a month **Answer:** As per the schedule ### Question 12 How would you record dividends earned but not received? - A credit to an asset and a debit to a liability - A debit to an asset and a credit to income - A debit to an cash and a credit to a liability - A debit to a liability and a credit to cash **Answer:** A debit to an asset and a credit to income ### Question 13 Which of the following measures does not strengthen internal control over cash receipts? - The use of cash registers - The deposit of cash receipts intact in the bank on a holiday basis - The use of a voucher system - Preparation of a daily listing of all checks received through the mail **Answer:** The deposit of cash receipts intact in the bank on a holiday basis ### Question 14 When does a merchandiser record accounts receivable? - When the amount is received - At the time of sale of merchandise - When the merchandiser sends dunning letter - When the collection process starts **Answer:** At the time of sale of merchandise ### Question 15 ABC company's provision for Doubtful accounts has Rs. 36,000/- as credit balance. It needs to write off one of its accounts receivable worth Rs. 1,500/- . Based on the given scenario, which account would be debited while writing off and which account would be credited while writing off? - Debit: Allowance for doubtful debts A/C, Credit: Bad debts expense A/C - Debit: Accounts receivable A/C, Credit: Allowance for doubtful debts A/C - Debit: Allowance for doubtful debts A/C, Credit: Accounts receivable A/C - Debit: Bad debts expense A/C, Credit: Accounts receivables A/C **Answer:** Debit: Allowance for doubtful debts A/C, Credit: Accounts receivable A/C ### Question 16 In general terms, financial assets appear in the balance sheet at what value? - Face value - Current value - Market value - Estimated future sales value **Answer:** Market value ### Question 17 Calculate the interest on Rs. 6,000/- if, rate of interest is 8% on 240 days- note receivables. - Rs. 320/- - Rs. 480/- - Rs. 32/- - Rs. 48/- **Answer:** Rs. 320/- ### Question 18 If XYZ Ltd. has sales of Rs. 30,00,000/- for the year and bad debts is estimated to be 2% of sales, what is the amount that needs to be added to the allowance account? - Rs. 50,000/- - Rs. 20,000/- - Rs. 80,000/- - Rs. 60,000/- **Answer:** Rs. 60,000/- ### Question 19 John was not expecting a payment from Sam, who is one of his customers. Hence, he has written off Sam's account as receivable. After a few days, John received full payment from Sam. When payment is being received, which of the following accounts will not be involved? - Debit: Bad debts expense A/C, Credit: Bad debts recovered A/C - Debit: Bad debts expense A/C, Credit: Accounts receivable A/C - Debit: Bad debts recovered A/C, Credit: Bad debts expense A/C - None of the given options **Answer:** None of the given options ### Question 20 What would be the maturity date for a 90-day note dated, September 13, 2013? - December 10, 2013 - December 11, 2013 - December 12, 2013 - December 13, 2013 **Answer:** December 12, 2013 ### Question 21 Fill in the blanks. To calculate the receivable turnover ratio, one needs to divide the _______ for the year by the _______ during the year. - average amount of accounts receivables; net credit sales - net cash sales; average amount of debtors - gross sales; average amount of accounts receivables - net credit sales; average amount of accounts receivables **Answer:** net credit sales; average amount of accounts receivables ### Question 22 Which of the following statements is false? - Wages paid on installation of machinery should be credited to Cash A/C. - The sale of a computer used in the business should be debited to Cash A/C. - Error of posting a correctly recorded transaction affects one or more accounts. - Repairs of purchased second-hand machinery should be debited to Machinery A/C. - Withdrawal of goods by the proprietor of the business should be credited to Capital A/C. **Answer:** Wages paid on installation of machinery should be credited to Cash A/C. ### Question 23 Which of the following methods is/are used to account for uncollectible accounts? - Direct write-off method - Allowance method - Reducing method - Only A - Only B - Only C - Both A and B **Answer:** Both A and B ### Question 24 Which of the following terms best describes Allowance account? - Loss account - Contra-liability account - Contra-asset account - Profit account **Answer:** Contra-asset account ### Question 25 The amount of the accounts receivable that will be un-collectible can be estimated by using which of the following methods? - Percentage of sales method - Aging of the accounts receivables - Only A - Only B - Both A and B - None of the given options **Answer:** Both A and B