Q. If a product has a selling price of $100, variable costs of $60, and fixed costs of $10, what is the break-even point in sales dollars?
A.
$1000
B.
$2000
C.
$5000
D.
$3000
Show solution
Solution
Break-even point in sales dollars = Fixed Costs / Contribution Margin Ratio. Contribution Margin = Selling Price - Variable Costs = $100 - $60 = $40. Contribution Margin Ratio = $40 / $100 = 0.4. Break-even Sales = $10 / 0.4 = $25. Therefore, Break-even point in sales dollars = $25 * $100 = $3000.
Correct Answer:
D
— $3000
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Q. If a product has a selling price of $50, variable costs of $30, and fixed costs of $10, what is the contribution margin?
A.
$10
B.
$20
C.
$30
D.
$40
Show solution
Solution
Contribution Margin = Selling Price - Variable Costs = $50 - $30 = $20.
Correct Answer:
B
— $20
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Q. If a product is marked at $300 and a discount of 10% is offered, what is the selling price?
A.
$270
B.
$300
C.
$280
D.
$290
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Solution
Discount = 10% of 300 = 30. Selling Price = Marked Price - Discount = 300 - 30 = $270.
Correct Answer:
A
— $270
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Q. If a product is sold for $240 after a discount of 20%, what was the original price?
A.
$300
B.
$280
C.
$250
D.
$320
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Solution
Let the original price be x. Selling Price = x - (20% of x) = x - 0.2x = 0.8x. Therefore, 0.8x = 240, x = 240 / 0.8 = $300.
Correct Answer:
A
— $300
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Q. If a product sells for $100 and has a variable cost of $60, what is the contribution margin per unit?
A.
$40
B.
$60
C.
$100
D.
$20
Show solution
Solution
Contribution Margin = Selling Price - Variable Cost = $100 - $60 = $40.
Correct Answer:
A
— $40
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Q. If a product sells for $100 and has variable costs of $60, what is the contribution margin?
A.
$40
B.
$60
C.
$100
D.
$20
Show solution
Solution
Contribution margin = Sales ($100) - Variable Costs ($60) = $40.
Correct Answer:
A
— $40
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Q. If a resident individual earns income from a foreign source, how is it taxed in India?
A.
Only the foreign income is taxed
B.
Only the Indian income is taxed
C.
Both Indian and foreign income are taxed
D.
No tax is applicable
Show solution
Solution
Both Indian and foreign income are taxed in India for a resident individual.
Correct Answer:
C
— Both Indian and foreign income are taxed
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Q. If a resident individual has income from foreign sources, how is it taxed in India?
A.
Only if it is repatriated
B.
Only if it exceeds Rs. 2,50,000
C.
Taxed as per Indian tax laws
D.
Not taxed at all
Show solution
Solution
Income from foreign sources is taxed in India as per Indian tax laws for resident individuals.
Correct Answer:
C
— Taxed as per Indian tax laws
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Q. If a sole trader has a net profit of $50,000 and drawings of $10,000, what is the closing balance of the capital account?
A.
$40,000
B.
$50,000
C.
$60,000
D.
$70,000
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Solution
The closing balance of the capital account is calculated as net profit minus drawings: $50,000 - $10,000 = $40,000.
Correct Answer:
C
— $60,000
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Q. If a sole trader has a trial balance showing total debits of $50,000 and total credits of $48,000, what is the amount of the discrepancy?
A.
$1,000
B.
$2,000
C.
$3,000
D.
$4,000
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Solution
The discrepancy is $2,000, calculated as total debits ($50,000) minus total credits ($48,000).
Correct Answer:
B
— $2,000
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Q. If a sole trader has total assets of $50,000 and total liabilities of $30,000, what is the owner's equity?
A.
$20,000
B.
$30,000
C.
$50,000
D.
$80,000
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Solution
Owner's equity is calculated as Total Assets minus Total Liabilities, which is $50,000 - $30,000 = $20,000.
Correct Answer:
A
— $20,000
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Q. If a sole trader purchases equipment for $5,000 and expects it to last 5 years with no salvage value, what is the annual depreciation using straight-line method?
A.
$1,000
B.
$500
C.
$2,500
D.
$1,500
Show solution
Solution
Annual depreciation using the straight-line method is calculated as Cost divided by Useful Life, which is $5,000 / 5 = $1,000.
Correct Answer:
A
— $1,000
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Q. If a sole trader's net profit is $20,000 and drawings are $5,000, what is the closing capital?
A.
$15,000
B.
$20,000
C.
$25,000
D.
$30,000
Show solution
Solution
Closing capital is calculated as net profit plus opening capital minus drawings. Assuming opening capital is $10,000, it would be $20,000 + $10,000 - $5,000 = $25,000.
Correct Answer:
C
— $25,000
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Q. If a taxpayer has a gross total income of ₹10,00,000 and has made a donation of ₹1,00,000 to a charitable organization, what is the maximum deduction they can claim under Section 80G?
A.
₹1,00,000
B.
₹50,000
C.
₹75,000
D.
₹25,000
Show solution
Solution
The maximum deduction under Section 80G can be up to 100% of the donation amount, subject to conditions.
Correct Answer:
A
— ₹1,00,000
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Q. If a taxpayer has a salary of ₹6,00,000 and earns ₹2,00,000 from other sources, what is their gross total income?
A.
₹6,00,000
B.
₹8,00,000
C.
₹7,00,000
D.
₹5,00,000
Show solution
Solution
Gross total income is the sum of all income sources: ₹6,00,000 + ₹2,00,000 = ₹8,00,000.
Correct Answer:
B
— ₹8,00,000
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Q. If a taxpayer's residential status is 'Resident and Ordinarily Resident', which of the following incomes is taxable?
A.
Income earned in India
B.
Income earned outside India
C.
Both A and B
D.
None of the above
Show solution
Solution
Both income earned in India and income earned outside India are taxable for a Resident and Ordinarily Resident.
Correct Answer:
C
— Both A and B
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Q. If a taxpayer's total taxable income is ₹10,00,000, what is the income tax liability for an individual below 60 years under the old tax regime?
A.
₹1,00,000
B.
₹1,50,000
C.
₹1,20,000
D.
₹1,80,000
Show solution
Solution
Under the old tax regime, the income tax liability for ₹10,00,000 is ₹1,50,000 after applying the applicable slabs.
Correct Answer:
B
— ₹1,50,000
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Q. If an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5 years, what is the annual depreciation using the straight-line method?
A.
$1,800
B.
$2,000
C.
$1,500
D.
$1,200
Show solution
Solution
Annual depreciation = (Cost - Salvage Value) / Useful Life = ($10,000 - $1,000) / 5 = $2,000.
Correct Answer:
B
— $2,000
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Q. If an asset has a cost of $10,000, a salvage value of $1,000, and a useful life of 5 years, what is the annual depreciation using the Straight-Line Method?
A.
$1,800
B.
$2,000
C.
$1,500
D.
$2,500
Show solution
Solution
Annual depreciation is calculated as (Cost - Salvage Value) / Useful Life = ($10,000 - $1,000) / 5 = $2,000.
Correct Answer:
B
— $2,000
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Q. If an asset has a cost of $10,000, a salvage value of $1,000, and a useful life of 5 years, what is the annual depreciation expense using the Straight-Line Method?
A.
$1,800
B.
$2,000
C.
$1,500
D.
$1,200
Show solution
Solution
The annual depreciation expense using the Straight-Line Method is calculated as (Cost - Salvage Value) / Useful Life = ($10,000 - $1,000) / 5 = $1,800.
Correct Answer:
B
— $2,000
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Q. If an asset has a useful life of 10 years and a salvage value of $5,000, what is the annual depreciation using the straight-line method if the cost is $50,000?
A.
$4,500
B.
$5,000
C.
$4,000
D.
$4,800
Show solution
Solution
Annual Depreciation = (Cost - Salvage Value) / Useful Life = ($50,000 - $5,000) / 10 = $4,500.
Correct Answer:
A
— $4,500
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Q. If an asset is purchased for $10,000 with a useful life of 5 years and no salvage value, what is the annual depreciation using the straight-line method?
A.
$1,000
B.
$2,000
C.
$500
D.
$2,500
Show solution
Solution
The annual depreciation is calculated as (Cost - Salvage Value) / Useful Life = ($10,000 - $0) / 5 = $2,000.
Correct Answer:
B
— $2,000
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Q. If an asset is sold before the end of its useful life, what must be calculated?
A.
Book Value
B.
Depreciation Expense
C.
Market Value
D.
Residual Value
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Solution
When an asset is sold before the end of its useful life, the Book Value must be calculated to determine any gain or loss on the sale.
Correct Answer:
A
— Book Value
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Q. If an asset is sold for more than its book value, what is the accounting treatment?
A.
Record a loss
B.
Record a gain
C.
No entry required
D.
Adjust the depreciation method
Show solution
Solution
If an asset is sold for more than its book value, a gain is recorded in the financial statements.
Correct Answer:
B
— Record a gain
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Q. If an error is found in the trial balance, what is the first step to correct it?
A.
Recalculate the trial balance
B.
Identify the source of the error
C.
Prepare adjusting entries
D.
Consult with an accountant
Show solution
Solution
The first step to correct an error in the trial balance is to identify the source of the error before making any adjustments.
Correct Answer:
B
— Identify the source of the error
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Q. If an individual earns a salary of Rs. 6,00,000 and has deductions of Rs. 1,50,000, what is the taxable income?
A.
4,50,000
B.
5,00,000
C.
6,00,000
D.
7,50,000
Show solution
Solution
Taxable income is calculated as Gross Salary minus Deductions. Therefore, 6,00,000 - 1,50,000 = 4,50,000.
Correct Answer:
A
— 4,50,000
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Q. If an individual earns Rs. 6,00,000 in a financial year and has a deduction of Rs. 1,50,000 under Section 80C, what is the taxable income?
A.
Rs. 4,50,000
B.
Rs. 5,00,000
C.
Rs. 6,00,000
D.
Rs. 7,50,000
Show solution
Solution
The taxable income is Rs. 6,00,000 - Rs. 1,50,000 = Rs. 4,50,000.
Correct Answer:
A
— Rs. 4,50,000
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Q. If an individual has a total income of 8 lakhs and claims deductions of 1.5 lakhs, what is the taxable income?
A.
6.5 lakhs
B.
7 lakhs
C.
8 lakhs
D.
9.5 lakhs
Show solution
Solution
The taxable income is calculated as total income minus deductions: 8 lakhs - 1.5 lakhs = 6.5 lakhs.
Correct Answer:
A
— 6.5 lakhs
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Q. If an individual has a total income of ₹10,00,000 and claims deductions of ₹1,50,000, what is the taxable income?
A.
₹8,50,000
B.
₹10,00,000
C.
₹9,00,000
D.
₹7,50,000
Show solution
Solution
Taxable income is calculated as total income minus deductions: ₹10,00,000 - ₹1,50,000 = ₹8,50,000.
Correct Answer:
A
— ₹8,50,000
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Q. If an individual has a total income of ₹8,00,000 and claims deductions of ₹1,50,000, what is the taxable income?
A.
₹6,50,000
B.
₹8,00,000
C.
₹7,50,000
D.
₹5,50,000
Show solution
Solution
Taxable income = Total income - Deductions = ₹8,00,000 - ₹1,50,000 = ₹6,50,000.
Correct Answer:
A
— ₹6,50,000
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