Category: Accounting Mcqs

Which one of the following is a capital expenditure?

A. Compensation paid to Directors on termination of their services
B. Expenditure incurred in connection with the renewal of a Trade Mark.
C. Gratuities paid to Directors on termination of their services.
D. Royalty paid in installments for the purchase of rights to manufacture and sell patient medicines.

During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which of the following is true?

A. The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013
B. The income was overstated during 2011-12 and closing inventory will be overstated during 2012-2013
C. The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013
D. The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013

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