Assertion Reason MCQs of Adjustments in Preparation of Financial Statements Class 11 with Answers
Assertion Reason MCQs of Adjustments in Preparation of Financial Statements Class 11 with Answers for CBSE, ISC and State Boards
Assertion (A): Financial Statements may be prepared either on case basis or on accrual basis of accounting.
Reason (R): Financial Statements are prepared on accrual basis of accounting.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Expenses paid in advance are called prepaid expenses or unexpired expenses.
Reason (R): The period for which it has been paid has not expired.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): While preparing financial statements, provision for doubtful debts is created because of prudence conept.
Reason (R): Provision for doubtful debts is created because of going concern concept.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Liabilities side of Balance Sheet are credit balances
Reason (R): Liabilities accounts have always credit balance.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): Adjustments are recorded once in Trading and Profit & Loss Account and again in Balance Sheet because of matching conept.
Reason (R): Adjustments are recorded twice because of dual aspect concept.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Closing Stock is always given outside of Trial Balance.
Reason (R): Closing Stock may be in the Trial Balance if an adjusting entry for Closing Stock is already passed.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (d)
Assertion (A): Indirect expenses are recorded in Profit & Loss Account.
Reason (R): Indirect expenses are recorded in Trading Account.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Provision for Discount on Debtors is calculated after dedcuting Provision for Doubtful Debts from Debtors.
Reason (R): Discount is allowed to those debtors which make timely payments. As doubtful debts are unlikely to be received, such debts are deducted from debtors to provide for discount.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): If rent amounting ₹ 10,000 is outstanding and CGST and SGST @ 6% each are levied, rent shown on debit side of P&L A/c will be ₹ 11,200.
Reason (R): Rent shown on debit side of P&L A/c will be ₹ 10,000.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Debit balance in Profit & Loss Account is profit.
Reason (R): Debit balance in Profit & Loss Account is net loss becuase expenses are more than revenue.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (d)
Assertion (A): If Input CGST exceeds the Output CGST, the excess amount is shown on the debit side of Profit and Loss Account.
Reason (R): Excess amount of Input CGST is shown on the Assets side of the Balance Sheet.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Closing Stock is valued at the lower of Cost or Net Realisable Value (Market Price).
Reason (R): According to Prudence Principle, Stock is valued at Cost or Net Realisable value (Market Price), whicever is less.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): Heavy amount spent on the advertisement of a new product is revenue expenditure and will be debited to Profit & Loss Account.
Reason (R): Such amount is deferred revenue expenditure and the unwritten off portion will be shown on the assets side of the Balance Sheet.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Goods taken by proprietor from business fo his personal use are debited to Sales Account.
Reason (R): It is accounted as drawings an deducted from purchases.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (d)
Assertion (A): In case ₹ 20 Lac is spent on advertisement of a new product and it is to be written off in 5 years, ₹ 8 Lac will be shown on the assets side after 3 years.
Reason (R): ₹ 12 Lac will be shown on the assets side after 3 years.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Sundry Debtors are current assets.
Reason (R): These are convertible into cash within a period of 12 months.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): Overvalutaion of Closing Stock of the current year will result in increase of gross profit.
Reason (R): Overvaluation of Closing Stock will result in decrease of Cost of sales and in turn will result in increase of gross profit.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (a)
Assertion (A): Profit & Loss Account is balanced and balance is either net profit or net loss.
Reason (R): Profit & Loss Account shows the financial performance of an enterprise for an accounting period.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (a)
Assertion (A): Debts written off as bad, if recovered subsequently, are credited to Profit & Loss Account.
Reason (R): Such an amount is transferred to the credit side of Debtor’s Account.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Prepaid expenses given in Trial Balance are shown only in Balance Sheet.
Reason (R): Items inside the Trial Balance are written only at one place, i.e., either in Trading Account or in the Profit & Loss Account or in the Balance Sheet.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): Provision for Doubtful Debts shows credit balance.
Reason (R): Prepaid Expenses shows Debit balance.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (b)
