Q. How is inventory valued in a partnership firm?
-
A.
At cost or market value, whichever is lower
-
B.
At market value only
-
C.
At cost only
-
D.
At replacement cost
Solution
Inventory in a partnership firm is valued at cost or market value, whichever is lower, in accordance with accounting principles.
Correct Answer:
A
— At cost or market value, whichever is lower
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Q. How is inventory valued in a partnership?
-
A.
At cost or market value, whichever is lower
-
B.
At market value only
-
C.
At cost only
-
D.
At replacement cost
Solution
Inventory is valued at the lower of cost or market value according to accounting principles.
Correct Answer:
A
— At cost or market value, whichever is lower
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Q. How is inventory valued under the FIFO method?
-
A.
Based on the most recent purchases
-
B.
Based on the oldest purchases
-
C.
At the average cost of all items
-
D.
At the lower of cost or market
Solution
FIFO (First In, First Out) values inventory based on the oldest purchases, assuming that the oldest items are sold first.
Correct Answer:
B
— Based on the oldest purchases
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Q. How is net profit calculated in the final accounts?
-
A.
Total Revenue - Total Expenses
-
B.
Total Assets - Total Liabilities
-
C.
Total Income - Total Drawings
-
D.
Total Sales - Cost of Goods Sold
Solution
Net profit is calculated as Total Revenue - Total Expenses.
Correct Answer:
A
— Total Revenue - Total Expenses
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Q. How is straight-line depreciation calculated for an asset costing $10,000 with a useful life of 5 years?
-
A.
$1,000 per year
-
B.
$2,000 per year
-
C.
$500 per year
-
D.
$1,500 per year
Solution
Straight-line depreciation is calculated by dividing the cost of the asset by its useful life: $10,000 / 5 years = $2,000 per year.
Correct Answer:
A
— $1,000 per year
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Q. How is straight-line depreciation calculated?
-
A.
Cost of asset - Salvage value / Useful life
-
B.
Cost of asset / Useful life
-
C.
Cost of asset - Salvage value
-
D.
Cost of asset / Salvage value
Solution
Straight-line depreciation is calculated by taking the cost of the asset minus its salvage value and dividing it by its useful life.
Correct Answer:
A
— Cost of asset - Salvage value / Useful life
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Q. How is taxable income calculated for an individual taxpayer?
-
A.
Gross income - Deductions
-
B.
Gross income + Deductions
-
C.
Net income - Exemptions
-
D.
Net income + Exemptions
Solution
Taxable income is calculated as Gross income minus Deductions.
Correct Answer:
A
— Gross income - Deductions
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Q. How is taxable income calculated for an individual?
-
A.
Gross income - Deductions
-
B.
Net income + Exemptions
-
C.
Gross income + Deductions
-
D.
Net income - Exemptions
Solution
Taxable income is calculated as Gross income minus Deductions.
Correct Answer:
A
— Gross income - Deductions
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Q. How is taxable income calculated?
-
A.
Gross income - Deductions
-
B.
Gross income + Deductions
-
C.
Net income - Exemptions
-
D.
Net income + Exemptions
Solution
Taxable income is calculated as Gross income minus Deductions.
Correct Answer:
A
— Gross income - Deductions
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Q. How is the closing capital calculated in the final accounts of a sole trader?
-
A.
Opening Capital + Net Profit - Drawings
-
B.
Opening Capital - Net Profit + Drawings
-
C.
Net Profit - Drawings
-
D.
Opening Capital + Drawings
Solution
Closing capital is calculated as Opening Capital plus Net Profit minus Drawings.
Correct Answer:
A
— Opening Capital + Net Profit - Drawings
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Q. How is the closing inventory valued under the FIFO method?
-
A.
Based on the oldest inventory costs
-
B.
Based on the most recent inventory costs
-
C.
Average cost of all inventory
-
D.
Based on the cost of goods sold
Solution
Under the FIFO (First In, First Out) method, closing inventory is valued based on the most recent inventory costs.
Correct Answer:
B
— Based on the most recent inventory costs
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Q. How is the current ratio calculated?
-
A.
Current Assets / Current Liabilities
-
B.
Current Liabilities / Current Assets
-
C.
Total Assets / Total Liabilities
-
D.
Total Liabilities / Total Assets
Solution
The current ratio is calculated by dividing current assets by current liabilities.
Correct Answer:
A
— Current Assets / Current Liabilities
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Q. How is the double declining balance method calculated?
-
A.
Asset cost divided by useful life multiplied by 2.
-
B.
Asset cost multiplied by 2 divided by useful life.
-
C.
Asset cost minus salvage value divided by useful life.
-
D.
Asset cost multiplied by salvage value.
Solution
The double declining balance method calculates depreciation by taking the asset's cost, multiplying it by 2, and then dividing by the useful life.
Correct Answer:
B
— Asset cost multiplied by 2 divided by useful life.
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Q. How is the net profit of a partnership firm distributed among partners?
-
A.
Equally among all partners
-
B.
Based on their capital contribution
-
C.
As per the partnership agreement
-
D.
Based on the number of partners
Solution
The net profit is distributed according to the terms specified in the partnership agreement.
Correct Answer:
C
— As per the partnership agreement
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Q. How is the profit or loss of a partnership typically distributed among partners?
-
A.
Equally among all partners
-
B.
Based on the capital contribution ratio
-
C.
Based on the time invested by each partner
-
D.
At the discretion of the managing partner
Solution
Profits or losses are usually distributed based on the capital contribution ratio unless otherwise agreed.
Correct Answer:
B
— Based on the capital contribution ratio
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Q. How is the profit shared among partners if no agreement exists?
-
A.
Equally
-
B.
In the ratio of their capital contributions
-
C.
In the ratio of their drawings
-
D.
As per the discretion of the managing partner
Solution
In the absence of a partnership agreement, profits are shared equally among partners.
Correct Answer:
A
— Equally
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Q. How is the profit-sharing ratio determined in a partnership?
-
A.
Equal distribution among partners
-
B.
Based on capital contribution
-
C.
Based on the partnership agreement
-
D.
Based on the age of partners
Solution
The profit-sharing ratio is determined based on the partnership agreement, which outlines how profits and losses are to be shared.
Correct Answer:
C
— Based on the partnership agreement
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Q. How is the profit-sharing ratio determined when a new partner is admitted?
-
A.
Equal distribution among all partners
-
B.
Based on capital contribution
-
C.
Based on previous profit-sharing ratios
-
D.
Negotiated among partners
Solution
The profit-sharing ratio is typically negotiated among partners, considering their contributions and agreements.
Correct Answer:
D
— Negotiated among partners
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Q. How is the straight-line method of depreciation calculated?
-
A.
Cost - Salvage Value / Useful Life
-
B.
Cost + Salvage Value / Useful Life
-
C.
Cost / Useful Life
-
D.
Cost - Useful Life
Solution
The straight-line method of depreciation is calculated as (Cost - Salvage Value) / Useful Life.
Correct Answer:
A
— Cost - Salvage Value / Useful Life
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Q. How often should a trial balance be prepared?
-
A.
Daily
-
B.
Monthly
-
C.
Annually
-
D.
As needed
Solution
A trial balance should be prepared as needed, typically at the end of an accounting period or when discrepancies are suspected.
Correct Answer:
D
— As needed
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Q. How should goodwill be treated in the accounts of a partnership?
-
A.
As an asset
-
B.
As a liability
-
C.
Not recorded
-
D.
As an expense
Solution
Goodwill is treated as an intangible asset in the accounts of a partnership.
Correct Answer:
A
— As an asset
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Q. If a business has a market share of 25% in a market worth $2,000,000, what is the business's revenue from that market?
-
A.
$400,000
-
B.
$500,000
-
C.
$600,000
-
D.
$700,000
Solution
Revenue from the market is calculated as market share multiplied by total market value. Thus, 25% of $2,000,000 = 0.25 * $2,000,000 = $500,000.
Correct Answer:
A
— $400,000
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Q. If a business has total revenues of $500,000 and total expenses of $350,000, what is the profit margin?
-
A.
10%
-
B.
20%
-
C.
30%
-
D.
40%
Solution
Profit margin is calculated as (Total Revenues - Total Expenses) / Total Revenues. Here, ($500,000 - $350,000) / $500,000 = 30%.
Correct Answer:
C
— 30%
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Q. If a business spends $1,500 on advertising and gains 150 new customers, what is the cost per acquisition (CPA)?
-
A.
$5
-
B.
$10
-
C.
$15
-
D.
$20
Solution
CPA = Total Advertising Cost / Number of New Customers = $1,500 / 150 = $10.
Correct Answer:
B
— $10
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Q. If a business spends $500 on advertising and gains 50 new customers, what is the cost per acquisition (CPA)?
-
A.
$5
-
B.
$10
-
C.
$15
-
D.
$20
Solution
CPA = Total Advertising Cost / Number of New Customers = $500 / 50 = $10.
Correct Answer:
B
— $10
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Q. If a business's revenue increases from $500,000 to $600,000, what is the percentage increase in revenue?
-
A.
15%
-
B.
20%
-
C.
25%
-
D.
30%
Solution
The increase is $100,000, which is 20% of the original $500,000.
Correct Answer:
B
— 20%
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Q. If a company budgeted $200,000 for direct materials but actually spent $220,000, what is the direct materials variance?
-
A.
$20,000 Favorable
-
B.
$20,000 Unfavorable
-
C.
$40,000 Favorable
-
D.
$40,000 Unfavorable
Solution
Direct Materials Variance = Actual Cost - Budgeted Cost = $220,000 - $200,000 = $20,000 (Unfavorable)
Correct Answer:
B
— $20,000 Unfavorable
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Q. If a company changes its depreciation method, what must it disclose?
-
A.
The reason for the change.
-
B.
The new method used.
-
C.
The financial impact of the change.
-
D.
All of the above.
Solution
Companies must disclose the reason for the change, the new method, and the financial impact to ensure transparency.
Correct Answer:
D
— All of the above.
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Q. If a company expects to sell 1,000 units at a selling price of $250 each and has variable costs of $150 per unit, what is the total contribution?
-
A.
$100,000
-
B.
$150,000
-
C.
$250,000
-
D.
$200,000
Solution
Total Contribution = (Selling Price - Variable Costs) * Number of Units = ($250 - $150) * 1,000 = $100,000.
Correct Answer:
D
— $200,000
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Q. If a company has 100 employees and plans to increase its workforce by 20%, how many new employees will be hired?
Solution
20% of 100 employees is 20 new employees.
Correct Answer:
B
— 20
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