Which of the following is NOT a step in the accounting cycle? MCQ with Answer and Explanation

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Which of the following is NOT a step in the accounting cycle?

A. Journalizing

B. Preparing a budget

C. Preparing a trial balance

D. Posting

Answer: Option B

Solution (By JKSSB Mock Tests)

Budgeting is a management accounting tool for planning, not a step in the standard financial accounting cycle which ends with financial statements.

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Question #1

The formula to calculate Cost of Goods Sold (COGS) is:

A. Opening Stock + Purchases + Direct Expenses - Closing Stock

B. Sales - Net Profit

C. Purchases + Closing Stock - Opening Stock

D. Opening Stock - Purchases - Closing Stock

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Correct Answer: Option A

Explanation:
COGS accounts for all direct costs of making/buying the goods actually sold during the period.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

The working capital requirement of a business is ₹80,000; current ratio is 2:1. Current assets will be:

A. ₹40,000

B. ₹80,000

C. ₹1,60,000

D. ₹1,20,000

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Correct Answer: Option C

Explanation:
Working capital = CA - CL = 80,000; CA/CL = 2 => CA = 2CL. Then 2CL - CL = 80,000 => CL = 80,000; CA = 1,60,000.

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Question #3

Creating a provision for doubtful debts is an application of which accounting convention?

A. Materiality

B. Full Disclosure

C. Consistency

D. Conservatism

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Correct Answer: Option D

Explanation:
Conservatism (Prudence) requires anticipating potential future losses (like bad debts) and providing for them immediately.

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