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CA Foundation Accounting Concepts — practice questions

Explore 98 free Accounting Concepts questions in CA Foundation Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Accounting Concepts questions and exercises with answers

Showing questions 1–30 of 98.

CA Foundation · Accounting · Accounting Concepts ↔ DefinitionRead the answer and worked solution →Trading Account is prepared mainly to ascertain:Read the answer and worked solution →Closing stock is shown on:Read the answer and worked solution →Outstanding salaries at year end appear as:Read the answer and worked solution →Carriage inwards is debited to:Read the answer and worked solution →Profit and Loss Account begins with:Read the answer and worked solution →Sales ₹2,00,000; Returns inwards ₹10,000; Opening stock ₹15,000; Purchases ₹1,30,000; Closing stock ₹20,000. Gross profit:Read the answer and worked solution →Salaries paid ₹25,000; Outstanding ₹1,500. P&L charge:Read the answer and worked solution →Income received in advance is shown as:Read the answer and worked solution →Prepaid insurance at year end is shown as:Read the answer and worked solution →A loss due to fire (not insured) is treated as:Read the answer and worked solution →Depreciation on machinery is:Read the answer and worked solution →Accrued commission earned is:Read the answer and worked solution →In a trading firm, octroi paid on purchases is debited to:Read the answer and worked solution →Trial balance shows opening stock ₹50,000, purchases ₹2,00,000, sales ₹3,50,000. Closing stock ₹70,000. Gross profit:Read the answer and worked solution →Wages and salaries ₹40,000 paid; the heading combines factory and office portion. Convention:Read the answer and worked solution →Goods costing ₹20,000 distributed as free samples:Read the answer and worked solution →Bad debts ₹5,000; provision for doubtful debts opening ₹3,000; required closing provision ₹4,000. P&L charge:Read the answer and worked solution →Drawings of ₹15,000 by proprietor are:Read the answer and worked solution →Manager's commission is 10% of net profit after such commission. Net profit before commission ₹1,10,000. Commission:Read the answer and worked solution →Closing stock includes goods sent on consignment ₹15,000 (sold not yet). They should be:Read the answer and worked solution →Goods costing ₹10,000 used by proprietor personally:Read the answer and worked solution →Interest on capital is treated as:Read the answer and worked solution →Bills receivable shown as ₹20,000 in trial balance; ₹5,000 discounted but not yet matured at year end. Contingent liability:Read the answer and worked solution →Trial balance: capital ₹2,00,000; drawings ₹15,000; net profit for year ₹35,000. Closing capital:Read the answer and worked solution →Goods worth ₹8,000 destroyed by fire; ₹6,000 recovered from insurance. The loss debited to P&L:Read the answer and worked solution →Which Italian friar is known as the Father of Accounting?Read the answer and worked solution →Pacioli's Summa de arithmetica, the first printed work on double entry, appeared in which year?Read the answer and worked solution →Financial accounting reports are mainly meant for which group?Read the answer and worked solution →Which branch is not required to follow GAAP in internal reports?Read the answer and worked solution →

Worked practice questions

CA Foundation · Accounting · Accounting Concepts ↔ Definition

Read exercise and reference answers
Matching pairs
  1. Left
    Going Concern
    Right
    Business will continue indefinitely
  2. Left
    Accrual
    Right
    Income recognised when earned
  3. Left
    Matching
    Right
    Expenses matched with related revenues
Instructions
Match each accounting concept to its meaning.

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Trading Account is prepared mainly to ascertain:

  1. Gross profit for the year
  2. Net profit for the year
  3. Cash balance at year end
  4. Outstanding expenses owed
Show answer and solution

Correct answer: A. Gross profit for the year

1. Trading Account compares sales with cost of goods sold and direct expenses. 2. The balancing figure is Gross Profit (or Gross Loss). 3. Net Profit is computed in the Profit and Loss Account afterwards. _Source: ICAI BoS Foundation Paper 1, Ch 7 U1 "Final Accounts", §1.3 ¶1_

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Closing stock is shown on:

  1. Debit of Trading Account
  2. Credit of Trading Account
  3. Debit of Profit & Loss A/c
  4. Liabilities of Balance Sheet
Show answer and solution

Correct answer: B. Credit of Trading Account

1. Closing stock is credited to Trading Account at year end. 2. It is also shown as a current asset on the Balance Sheet. 3. Opening stock, by contrast, is debited to Trading Account. _Source: ICAI BoS Foundation Paper 1, Ch 7 U1 "Final Accounts", §1.3 closing stock_

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More Accounting topics

Bills of Exchange and Promissory NotesCompany AccountsDepreciation and AmortisationFinal Accounts of Sole ProprietorsInventoriesPartnershipBank Reconciliation StatementPartnership Accounts