Accountancy / Financial Accounting MCQ Set 1
1) The Basic accounting equation is
A)
Asset=Expense +Income
B)
Assets=Cash+Capital
C)
Assets=Capital+Liabilities
D)
Assets=Expenses+Capital
2) Find out the value of assets if:
Liabilities=$5000 and Capital=$1000
A) $4000
B) $6000
C) $7000
D) $3000
3) Calculate the amount of cash if: Total
assets=$10,000 Total liabilities=$10,000 Total Capital=$5000
A) $6000
B) $10,000
C) $5000
D) $1000
4) Capital increases if ______ increases
A) Expenses
B) Drawings
C) Interest
on capital
D) Revenue
5) Capital of a business decreases if there is an
increase in
A) Drawings
B) Income
C) Gains
D) Fresh
capital
6) If the total liabilities of a business decrease
by $5000 what will be the effect on total asset? (assuming the amount of
capital remain same)
A) Remain
constant
B) Decrease
by $5000
C) Increase
by $5000
D) Increase
by $10,000
7) If the business's owner withdraws cash for
his/her personal use what will be the effect on capital?
A) Increase
in capital
B) Remain the
same
C) Decrease
in capital
D) No effect
on capital
8) Net income equal to Revenues minus
A) Gains
B)
Depreciation
C) Expenses
D) Capital
expenditures
9) Collection of account receivable will
A) Increase
assets and decrease assets
B) Increase
assets and decrease liabilities
C) Increase
assets and increase capital
D) Increase
assets and increase cash
10) Payment of expenses will ______ the assets
A) Increase
B) Reduce
C) apportion
D) Overstate
11) Which of the following is the practical implementation
of the accounting equation?
A) Cash flow
statement
B) Income
statement
C) Statement
of changes in equity
D) Statement
of financial position
12) Which of the following accounting equation is
correct?
A) Cash+Other
assets=Capital-Liabilities
B) Capital+
Liabilities=Assets+Income
C)
Assets-Liabilities=Capital
D)
Assets+Capital=Liabilities
13) Fresh capital introduction will increase
A) Assets and
liabilities
B) Assets and
equity
C)
Liabilities and equity and bank balance
D) Capital
and liabilities
14) Cash received for services rendered will
A) Increase
cash and liability
B) Increase
equity and liability
C) Increase
fixed assets and cash
D) Increase
cash and equity
15) Which of following best describes the increase
in equity expands_______
A) Business
operations
B) cash
outflows
C) Inflows of
cash
D)
Appropriation expenses
16) If Cash=$1000 inventories=$4000 Debtors=$5000
fixed assets=? Capital+Liabilities=$15000 What is the Amount of total assets?
A) $5000
B) $10,000
C) $15,000
D) $20,000
17) Depreciation decreases
A)
Liabilities
B) Cash
C) Bank
D) Capital
18) An increase in provision for bad debt will
A) Decrease
net income
B) Decrease
liabilities
C) Increase
net income
D) Increase
liabilities
19) Current assets - Current liabilities=?
A) Capital
B) Absorbed
capital
C) Net assets
D) Net
working capital
20) Assets-Liabilities=?
A) Cash
B) Equity
C) Net income
D) Net
expenses
1.
c
2.
b
3.
c
4.
d
5.
a
6.
b
7.
c
8.
c
9.
a
10.
b
11.
d
12.
c
13.
b
14.
d
15.
a
16.
a
17.
d
18.
a
19.
d
20.
b
Accountancy / Financial Accounting MCQ Set 2
1) The process of recording is done
A) Two times
a year
B) once a
year
C) Frequently
during the accounting period
D) At the end
of a accounting period
2) General journal is a book of _______ entries
A) First
B) Original
C) Secondary
D) Generic
3) The process of recording transactions in
different journals is called
A) Posting
B) Entry
making
C) Adjusting
D)
Journalizing
4) Every business transaction affects at least
________ accounts
A) One
B) Two
C) Three
D) Infinite
5) Discount allowed is a kind of deduction from
A) Account
payable
B) Account
receivable
C) Cash
account
D) Discount
account
6) The other name of journal is
A) Ledger
B) T account
C) Day book
D) Cash book
7) A journal entry in which two or more account is
debited or credited is referred as
A) Journal
entry
B) Multi
entry
C) Additional
entry
D) Compound
entry
8) The term 2/10-n/30 implies that ______ % discount
will be given if the payment is made within _____ days or full amount is
receivable within 30 days
A) 2,10
B) 10,2
C) 10,30
D) 3,15
9) Goods returned by customer should be debited to
which of the following accounts?
A) Sales
income account
B) Sales
account
C) Return
inward account
D) Expenses
account
10) Discount allowed is
A) Expense of
business
B) Income of
business
C) Loss of
business
D) Abnormal
loss of business
11) _________ is the evidence that a transaction
took place
A) Source
documents
B) Ledger
C) Bonds
D) Journals
12) Which of the following will be debited if a
business purchases goods on credit?
A) Cash
B) Debtor
C) Creditor
D) Purchases
13) Which of the following accounts will be debited
if the business's owner withdraws cash from business for his personal use?
A) Drawings
B) Cash
C) Business
D) Stock
14) Journals are also referred as
A) Book of
entries
B) Book of
original entries
C) T account
D) Books of
economic event
15) The standard format of journal does not include
which of the following?
A) Assets
column
B) Date
column
C)
Description column
D) Amount
column
16) In which of the following orders data is entered
in journal?
A)
Alphabetical order
B) Numeric
order
C) Bullets
order
D)
Chronological order
17) Which of the following accounts will be credited
if a company purchases building for cash?
A) Capital
account
B) Fixed
assets account
C) Building
account
D) Cash
account
18) Discount for quick repayment of debt is normally
referred as
A) Trade
discount
B) Prompt
payment discount
C) Cash
discount
D) Bulk
discount
19) The first step in accounting process is
A) Recording
the transaction
B)
Identifying the transaction
C) Posting
the transaction
D) Preparing
the source documents
20) A chart of accounts generally start with which
of the following types of accounts?
A) Assets
accounts
B) liability
accounts
C) Cash
accounts
D) Revenue
accounts
1.
C
2.
B
3.
D
4.
B
5.
B
6.
C
7.
D
8.
A
9.
C
10.
A
11.
A
12.
D
13.
A
14.
B
15.
A
16.
D
17.
D
18.
C
19.
B
20.
A
Accountancy / Financial Accounting MCQ Set 3
1) Which of the following specialised journals records "goods returned by customers"?
A) Purchase
journal
B) Sales
journal
C) Purchases
return journal
D) Sales
return journal
2) Sales on credit is recorded in which of the
following journal?
A) Purchase
journal
B) Sales
journal
C) Purchases
return journal
D) Sales
return journal
3) Transactions that a business doesn't record in
any specialised journal are recorded in which of the following journals or day
books?
A) Cash
payments journal
B) Cash
receipts journal
C) Purchases
return journal
D) General
journal
4) Another name of journal is
A)
Specialized journal
B) Day book
C) Cash book
D) Record
book
5) Which of the following specialised journals will
record "goods returned by the business"?
A) Purchase
journal
B) Sales
journal
C) Purchases
return journal
D) Sales
return journal
6 Sales and purchase journal don't record
A) Credit
sales
B) Credit
purchases
C) Credit
sales and purchases
D) Cash sales
and purchases
7) Cash received from debtor is recorded in which of
the following specialized journals?
A) Purchase
journal
B) Sales
journal
C) Cash
receipts
D) Cash
payments journal
8) Which of the following is a type of cash receipt
journal + cash payment journal?
A) Bank
statement
B) Statement
of cash flow
C) Cash book
D) Cash
documents
9) Cash purchases is recorded in which of the
following specialized journals?
A) Purchase
journal
B) Sales
journal
C) Purchases
return journal
D) Cash
payments journal
10) A brief explanation recorded below every entry
in general journal is commonly known as
A) Narration
B)
Explanation
C) Summary
D) Other
information
11) Credit purchase of plant and machinery is
recorded in which of the following specialized journals?
A) General
journal
B) Cash
journal
C) Purchase
journal
D) Purchase
return journal
12) Debit note is the basis for recoding a
transaction in which of the following journals?
A) General
journal
B) Cash
journal
C) Purchase
journal
D) Purchase
return journal
13) "Sale of old furniture" will be
recorded in which of the following specialised journals?
A) Purchase
journal
B) Sales
journal
C) General
journal
D) Cash
receipt journal
14) Credit note is the basis for recording a transaction
in which of the following specialized journals?
A) Purchase
journal
B) Sales
return journal
C) General
journal
D) Cash
receipt journal
15) Specialized journals are more adequate for which
type of businesses?
A) Small
businesses
B) Big businesses
C) Sole
proprietorship
D)
Partnership
16) Which of the following is known as an evidence
that a transaction took place?
A) Cash
receipts journal
B) General
journal
C) Source
document
D) Cash book
17) "Business paid rent amounting to $100"
which of the following specialized journals records this transaction?
A) Cash
receipts journal
B) Cash
payments journal
C) Sales
journal
D) Purchase
journal
18) Credit memo or credit note No. is entered in
which of the following journal?
A) General journal
B) Cash
journal
C) Purchase
journal
D) Sales
return day book
1. D
2. B
3. D
4. B
5. C
6. D
7. C
8. C
9. D
10. A
11. A
12. A
13. C
14. B
15. B
16. C
17. B
18. A
Accountancy / Financial Accounting MCQ Set 4
1) Trial balance is prepared to check accuracy of
A) Ledger
accounts balances
B) Balance
sheet balances
C) Income
statement balances
D) Cash flow
statement balances
2) If a transaction is completely omitted from the
books of accounts, will it affect the agreement of a trial balance?
A) Yes
B) No
C)
Transactions can't be omitted
3) ________ is the common base for preparing a trial
balance
A) Ledger
accounts
B) General
Journal
C)
Specialized journals
D) Balance
sheet
4) Which of the following is true about a trial
balance?
A) It lists
down the balances of accounts
B) It lists
down the balances of a balance sheet
C) It is a
kind of financial statement
D) It is not
a part of accounting cycle
5) Debit balance = Credit balance in a trial balance
indicates that
A) No error
in recording transactions
B) No error
in posting entries to ledger accounts
C) Account
balances are correct
D)
Mathematically Capital+Liabilities=Assets
6) Trial balance is commonly prepared
A) Frequently
during the year
B) At the end
of an accounting period
C) At the end
of a month
D) At the end
of a year
7) Which of the following will affect the agreement
of a trial balance?
A) Complete
omission of a transaction
B) Partial
omission of a transaction
C) Error of
principle
D)
Compensating errors
8) If debit balances = credit balances, trial
balance only shows or check the ____________ and it does not indicate that no
errors were made during recording and posting
A) Arithmetic
accuracy
B) Errors of
commission
C) Omissions
of economic events
D)
Understatements of balances
9) Which of the following account with normal
balance is shown at the debit side of a trial balance?
A) Rent
income account
B) Creditors
account
C) Unearned
income account
D) Cash
account
10) Which of the following account with normal
balance is shown at the credit side of a trial balance?
A) Cash
account
B) Bank
account
C) Equipment
account
D) Accrued
expenses account
11) The closing balance of petty cash book is
considered as
A) Liability
B) Asset
C) Expenses
D) Income
12) Payment of rent expenses is recorded on which
side of cash book?
A) Receipts
B) Payments
C) Income
D) Expense
13) An entry which is made on both sides of a cash
book is called
A) Cash entry
B) Contra
entry
C) Payment
entry
D) Compound
entry
14) A cash book with cash, bank and discount column
is commonly referred as
A) Cash book
B) Two
columns cash book
C) Three
columns cash book
D) Petty cash
book
15) Cash book records
A) Cash
payments
B) Cash
receipts
C) Cash
payments and cash receipts
D) Neither
cash payments nor cash receipts
16) Cash discount is allowed on _______ repayment of
debt
A) Lump sum
B) Prompt
C) Actual
D) None of
them
17) Cash book is prepared by
A) Bank
B) Accountant
of business
C) Manager of
a company
D) Bank's
cashier
18) The most common imprest system is the ________
system
A) petty cash
B) Cash book
C) Cash
receipt
D) Discount
19) Discount received is recorded on which of the
following side of a cash book?
A) Receipts
B) Payments
C) Incomes
D)
Expenditures
20) Drawings by owner of business are generally
recorded on which of the following side of a cash book?
A) Receipts
B) Payments
C) Incomes
D)
Expenditures
21) Introduction capital by owner of business is
recorded on which side of a cash book?
A) Receipts
B) Payments
C) Incomes
D)
Expenditures
22) Cash book with cash and discount column is
mostly referred as
A) Simple
cash book
B) Two column
cash book
C) Three
column cash book
D) Petty cash
book
23) A cash book that is used to record the small
payments of cash is generally referred as
A) Simple
cash book
B) Two column
cash book
C) Three
column cash book
D) Petty cash
book
24) A simple or one column cash book usually has
which of the following main columns?
A) Bank
B) Payments
C) Discount
D) Cash
25) Purchase of office equipment for cash will be
recorded on which of the following sides of a cash book?
A) Receipts
B) Payments
C) Incomes
D)
Expenditures
26) Postdated checks are considered as
A) Cash
B) Bank
balance
C) Accounts
receivable
D) Cash
reserve
27) Postage stamps on hand are considered as
A) Bank
B) Prepaid
expenses
C) Accounts
receivable
D) Creditor
28) Petty cash fund is supposed to be replenished
A) Every day
B) Every half
year
C) Every year
D) At the end
of every accounting period
29) Which of the following is generally not the
party to a check?
A) Payee
B) Payer
C) Bank
D) Seller
30) A credit balance in cash book indicates
A) Bank
balance
B) Cash at
bank
C) Bank
overdraft
D) Bank
underdraft
1. A
2. B
3. A
4. A
5. D
6. B
7. B
8. A
9. D
10.
D
11.
B
12.
B
13.
B
14.
C
15.
C
16.
B
17.
B
18.
A
19.
B
20.
B
21.
A
22.
B
23.
D
24.
D
25.
B
26.
C
27.
B
28.
D
29.
D
30.
C
Accountancy / Financial Accounting MCQ Set 5
1) Transferring entries from journal to ledger account is commonly known as
A) Recording
B)
Transferring
C) Posting
D) Entry
making
2) An account records the ___________ in the balance
of an item
A) Increase
B) Decrease
C) Increase
or decrease
D)
Appreciation
3) If credit side of a bank account is greater than
the debit side, it indicates which of the following?
A) Bank
overdraft
B) Cash at
bank
C) Bank
balance
D) Current
Asset
4) If debit side of a bank account is greater than
credit side it indicates which of the following?
A) Cash at
bank
B) Bank
understatement
C) Bank
overdraft
D) Balance
overstatement
5) _________ will be credited if goods are given as
charity
A) Cash
B) Charity
C) Purchases
D) Sales
6) Which of the following is known as the base for
preparing trial balance?
A) Journal
B) Cash
account
C) Ledger
account
D) Balance
sheet
7) If debit balance is greater than creadit balance
then the account blance will be:
A) Credit
balance
B) Debit and
credit balance
C) Cash
balance
D) Debit
balance
8) The normal balance of capital account is
A) Credit
balance
B) Debit
balance
C) Cash
balance
D) Neither
debit nor credit balance
9) The normal balance of asset account is
A) Credit balance
B) Debit
balance
C) Cash
balance
D) Neither
debit nor credit balance
10) The normal balance of liability account is
A) Debit
balance
B) Credit
balance C) Cash balance
D) Neither
debit nor credit balance
11) Which of the following statements is incorrect
regarding capital account?
A) Debit
increases the capital account balance
B) Credit
increases the capital account balance
C) Fresh
capital increases the capital account balance
D) Net income
increases the capital account balance
12) Which of the following is the normal balance of
a rent expense account?
A) Credit
balance
B) Cash
balance
C) Overdraft
D) Debit
balance
13) Revenue and expense accounts are referred as
A) Nominal
accounts
B) Real
account
C) Cash
accounts
D) Banks
account
14) The real accounts are accounts of Assets,
liabilities and ________
A) Expenses
B) Revenues
C) Capital
D) Drawing
15) Building account is classified as _________
account
A) Nominal
B) Real
C) Cash
D) Capital
16) Office equipments account is classifed as
_________ account
A) Nominal
B) Real
C) Cash
D) Capital
17) ___________ helps business to classify
transactions according to their nature
A) General
journal
B) Real
accounts
C) Ledger
accounts
D) Cash
accounts
18) Which of the following is a real account?
A) Office
equipment
B) Rent
expenses
C) Rent
income
D) Insurance
expense
19) Which of the following accounts are closed at the
end of an accounting period?
A) Nominal
accounts
B) Balance
sheet accounts
C) Real
accounts
D) None of
them
20) Which of the following is the closing balance of
a ledger account?
A) Blance c/d
B) Balance
b/d
C) Balance
e/d
D) Balance
f/c
1. C
2. C
3. A
4. A
5. C
6. C
7. D
8. A
9. B
10.
B
11.
A
12.
D
13.
A
14.
C
15.
B
16.
B
17.
C
18.
A
19.
A
20.
A
Accountancy / Financial Accounting MCQ Set 6
1) Favourable balance of cash book implies that
A) Credit
balance of cash book
B) Debit
balance of cash book
C) Bank
overdraft
D) Adjusted
balance of cash book
2) A cash deposit made by business appears on the
bank statement as _______ balance
A) Debit
B) Credit
C) Expenses
D) Liability
3) Bank reconciliation statement is the comparison
of a bank statement (sent by bank) with the _________ (prepared by business)
A) Cash
receipt journal
B) Cash
payment journal
C) Cash book
D) Financial
statements
4) A check returned by bank marked "NSF"
means that
A) Bank can't
verify your identity
B) There are
not sufficient funds in your account
C) Check has
been forged
D) Check
can't be cashed being illegal
5) In the Bank reconciliation statement
"Deposit in transit" is usually
A) Subtracted
from bank balance
B) Added to
bank balance
C) Added to
Cash book balance
D) Subtracted
from cash book balance
6) Bank reconciliation statement is prepared by
A) Accountant
of the business
B) Manager of
the business
C) Controller
of the bank
D) Accountant
of the bank
7) Which of the following error results in
unadjusted cash book balance?
A)
Outstanding checks
B)
Unpresented checks
C) Deposit in
transit
D) Omission
of Bank charges
8) Bank charges amounting to $5000 was not entered
in the cash book. Identify the correct adjustment in cash book
A) Bank
charges will be debited in cash book
B) Bank
charges will be added to cash book balance
C) Bank
charges will be credited in cash book
D) Bank
charges need no adjustment in cash book
9) Unpresented checks also referred as
A)
Uncollected checks
B) Uncredited
checks
C)
Outstanding checks
D) Bounced
checks
10) ________ are checks that are issued by the
business but not yet presented to bank
A)
Uncollected checks
B) Uncredited
checks
C)
Outstanding checks
D) Bounced
checks
Bank reconciliation statement MCQs
11) _________ Checks that are presented to bank but
not yet credited by the bank
A)
Unpresented checks
B) Uncredited
checks
C)
Outstanding checks
D) Bounced
checks
12) Uncollected checks also referred as
A)
Unpresented checks
B) Uncredited
checks
C)
Outstanding checks
D) Bounced
checks
13) Favourable balance of bank statement implies
that
A) Credit
balance
B) Debit
balance
C) Bank
overdraft
D) Adjusted
balance
14) Standing orders are ________
A) Credited
in the cash book
B) Debited in
the cash book
C) Entered in
the bank statement
D) Entered in
the petty cash balance
15) A company was entered in hire purchase agreement
and had to pay $1000 per month.Three payments were made via bank account but no
entry was found in cash book. Identify the correct adjustment in cash book
A) $1000 will
be added to cash book balance
B) $2000 will
be deducted from cash book balance
C) $3000 will
be added to cash book balance
D) $3000 will
be subtracted from cash book balance
16) $5000 deposited in bank account was entered
twice in the cash book. Identify the correct adjustment in cash book
A) $5000 will
be credited
B) $5000 will
be debited
C) $10,000
will be credited
D) $10,000
will be debited
17) Bank sent debit advice of $500 to company being
interest on overdraft. It wasn't entered in cash book. Identify the correct
adjustment in cash book
A) $500 will be
debited
B) $500 will
be credited
C)
Non-adjustable
D) $1000 will
be subtracted
18) In bank reconciliation statement the amount of
outstanding checks is added to ________ balance of cash book
A) Adjusted
B) Unadjusted
C)
Understated
D) Overstated
19) Balance as per cash book(adjusted)=$1000,
Unpresented checks=$2000, Uncredited checks=$500, Deposit in transit=$500.
Compute the balance as per bank statement
A) $2000
B) Zero
C) $3000
D) $2500
20) A discount of $2000 was given to a supplier on
his prompt repayment of debt but the cashier entered the gross amount in cash
book. What should be the adjustment in cash to work out the correct balance of
cash book?
A) $2000 will
be debited in cash book
B) $2000 will
be credited in cash book
C) $4000 will
be debited in cash book
D) $4000 will
be credited in the cash book
1. B
2. B
3. C
4. B
5. B
6. A
7. D
8. C
9. C
10.
C
11.
B
12.
B
13.
A
14.
A
15.
D
16.
A
17.
B
18.
A
19.
A
20.
B
Accountancy / Financial Accounting MCQ Set 7
1) Accrued expenses are considered as
A) Asset
B) Liability
C) Gain
D) Income
2) Prepaid expenses are regarded as
A) Asset
B) Liability
C) Loss
D) Capital
3) Which of the following adjusting double entries
is correct for Unearned income?
A) DEBIT=
Income, CREDIT= Unearned income
B) DEBIT=
Unearned income, CREDIT= Income
C) DEBIT=
Cash, CREDIT= Unearned income
D) DEBIT=
Income, CREDIT= Cash
4) Earned but not yet received income is treated as
A) Asset
B) Liability
C) Loss
D) Capital
5) Which of the following adjusting double entries
is correct for accrued expenses?
A) DEBIT=
Expenses, CREDIT= Accrued expenses
B) DEBIT=
Accrued expenses, CREDIT= Expenses
C) DEBIT=
Cash, CREDIT= Accrued expenses
D) DEBIT=
Expenses, CREDIT= Cash
6) Which of the following adjusting double entries
is correct for Prepaid expenses?
A) DEBIT=
Expenses, CREDIT= Prepaid expenses
B) DEBIT=
Prepaid expenses, CREDIT= Expenses
C) DEBIT=
Cash, CREDIT= Prepaid expenses
D) DEBIT=
Expenses, CREDIT= Cash
7) Unearned income is classified as
A) Asset
B) Liability
C) Loss
D) Capital
8) Which of the following adjusting double entries
is correct for earned income?
A) DEBIT=
Income, CREDIT= Earned income
B) DEBIT=
Earned income, CREDIT= Income
C) DEBIT=
Cash, CREDIT= Earned income
D) DEBIT=
Income, CREDIT= Cash
9) Failure to make adjusting entries for accrued
income results in
A)
Overstatement of expenses
B)
Understatement of expenses
C)
Understatement of capital
D)
Overstatement of income
10) Identify the consequences of not making
adjustment entry for accrued expense
A)
Overstatement of liabilities
B)
Understatement of liabilities
C)
Overstatement of expenses
D)
Understatement of capital
11) An adjusting entry for prepaid expenses affects
A) Assets and
expenses
B) Assets and
income
C)
Liabilities and expenses
D)
Liabilities and assets
12) Adjusting entries convert cash based account
into _________ based accounting
A) Capital
B) Asset
C) Accrual
D) Prepaid
13) An unearned income adjusting entry affects
A) Asset and
liabilities
B) Cash and
income
C) Income and
liabilities
D) Cash and
liabilities
14) A business paid 3 month rent amounting to $3000
out of this amount one month rent pertains to the next accounting period.
Identify the correct amount prepaid expense
A) $3000
B) $1000
C) $2000
D) $4000
15) Adjusting entries help allocating incomes and
expenses to their ________
A) Cash
balances
B)
Appropriate accounting periods
C) Credit
balances
D) Received
or paid cash balances
16) A customer paid you $100,000 for some
construction work. However, at the end of your accounting period only 1/4 of
work was completed. What amount of income should be shown in income statement?
A) 100,000
B) 50,000
C) 10,000
D) 25,000
17) A business paid $5000 for technical services but
used up the services for only $2000 until the end of its accounting period. The
remaining $3000 would be referred as
A) Accrued
expenses
B) Accrued
income
C) Prepaid
income
D) Prepaid
expenses
18) Revenue earned but not yet received by the
business is known as
A) Contra
asset revenue
B) Accrued
expenses
C) Accrued
revenue
D) Unearned
revenue
19) Another name of accrued revenue is
A)
Outstanding asset
B) Earned
asset
C) Unearned revenue
D) Earned
revenue
20) If Rent expenses=$5000, Insurance
expenses=$4000, Prepaid rent expenses=$3000. What amount of total expenses will
be shown in income statement?
A) $9000
B) $12000
C) $8000
D) $6000
1. B
2. A
3. A
4. A
5. A
6. B
7. B
8. B
9. C
10.
B
11.
A
12.
C
13.
C
14.
B
15.
B
16.
D
17.
D
18.
C
19.
D
20.
D
Accountancy / Financial Accounting MCQ Set 8
1) Which of the following is not regarded as the fundamental concept that is identified by IAS-1
A) The going
concern concept
B) The separate
entity concept
C) The
prudence concept
D) Correction
concept
2) Using "lower of cost and net realisable
value" for the purpose of inventory valuation is the implementation of
which of the following concepts?
A) The going
concern concept
B) The separate
entity concept
C) The
prudence concept
D) Matching
concept
3) The concept of separate entity is applicable to
which of following types of businesses?
A) Sole
proprietorship
B)
Corporation
C)
Partnership
D) All of
them
4) Does Prudence concept allow a business to build
substantially higher reserves or provisions than that are actually required?
A) Yes
B) No
C) To some
extent
D) It depends
on the type of business
5) The revenue recognition principal dictates that
all types of incomes should be recorded or recognized when
A) Cash is
received
B) At the end
of accounting period
C) When they
are earned
D) When
interest is paid
6) The matching concept matches which of the
following?
A) Asset with
liabilities
B) Capital
with income
C) Revenues
with expenses
D) Expenses
with capital
7) The allocation of owner's private expenses to
his/her business violates which of the following?
A) Accrual
concept
B) Matching
concept
C) Separate
business entity concept
D)
Consistency concept
8) The going concern concept assumes that
A) The entity
continue running for foreseeable future
B) The entity
continue running until the end of accounting period
C) The entity
will close its operating in 10 years
D) The entity
can't be liquidated
9) American companies prepare their their financial
statement in dollars whereas Japanese companies produce financial statements in
yens. Ths is an example of:
A) Stable
monetary unit Concept
B) Unit of
measurement Concept
C) Money
value concept
D) Current
swap concept
10) Which of the following is time span into which
the total life of a business is divided for the purpose of preparing financial
statements?
A) Fiscal
year
B) Calendar
year
C) Accounting
period
D) Accrual
period
11) Showing purchased office equipments in financial
statements is the application of which accounting concept?
A) Historical
cost convention
B)
Materiality
C) Prudence
D) Matching
concept
12) Assets can't be offset against liabilities. This
the dictation of which of the following accounting concepts?
A) Matching
concept
B) Accrual
concept
C) Prudence
concept
D) Offsetting
concept
13) Information about an item is ________ if its
omission or misstatement might influence the financial decision of the users
taken on the basis of that information
A) Concrete
B) Complete
C) Immaterial
D) Material
14) Exercising a degree of caution in the case of
judgments needed under the condition of uncertainty is assumption of which of
the following accounting concepts?
A) Matching
concept
B) Timeliness
concept
C) Accrual
concept
D) Prudence
concept
15) Which one of the following concepts states that
the publication or presentation financial statements should not be delayed?
A)
Objectivity Concept
B) Timing
concept
C) Timeliness
Concept
D)
Reliability Concept
16) land on lease should be shown in balance sheet
contrary to fact that company doesn't own this piece of land. This is the
statement of what accounting concepts?
A) Matching
concept
B) Accrual
concept
C) Prudence
concept
D) Substance
over form Concept
17) "Financial information should be neutral
and bias free" is the dictation of which one of the following?
A)
Completeness concept
B) Faithful
representation Concept
C)
Objectivity Concept
D) Duality
Concept
18) A business was commenced on 1st January and it
purchased 5 vehicles, each costing $5000. During the year the business managed
to sell 2 vehicles at the price of $12000. How should the remaining 3 vehicles
be valued if the business is going to continue its operations in the next year?
A) At the
breakup value
B) On the
basis of going concern
C)
Liquidation value
D) More than
market value
19) A company received cash $1000 in advance for
auditing service. However, the company neither earned this revenue nor made any
adjusting entry in its books. Identify the effect of this omission?
A) Total liabilities
to be understated
B) Total
expenses to be overstated
C) Total
income to be overstated
D) Total
assets to be understated
20) Depreciation is charged on fixed asse to comply
with which of the following accounting principles or concepts?
A) Matching
concept
B) Prudence
concept
C) Timeliness
concept
D)
Reliability concept
1. D
2. C
3. D
4. B
5. C
6. C
7. C
8. A
9. B
10. C
11. B
12. D
13. D
14. D
15. B
16. D
17. C
18. B
19. A
20. A
1) Financial statements are prepared mainly for
A) Internal
users of financial information
B) External
users of financial informaiton
C) Creditors
of the business
D) Managers
of the business
2) Net profit is computed in which of the following?
A) Balance
sheet
B) Income
statement
C) Cash flow
statement
D) Statement
of changes in equity
3) Which of the following should be the most
appropiate order of current asset in a balance sheet?
A) cash, debtor,
bank, stock
B) Bank,
cash, stock, debtor
C) Stock,
bank, cash, debtor
D) Cash,
bank, debtor, stock
4) In income statement, gross profit is always equal
to
A)
Sales-expenses
B)
Incomes-expenses
C) Sales-cost
of goods sold
D)
Sales-selling costs
5) Office equipment is a ________ asset for a
computer manufacturer and the same office equipment is a _________ asset for a
company that deals in these equipments
A) Current,
Fixed
B) Fixed,
intangible
C) Tangible,
intangible
D) Fixed,
current
6) Identify the external user of financial
information or financial statements
A) Management
of the business
B) CFO of the
business
C) Employees
of the business
D) Investors
of the business
7) A statement or report that records the fluctuation
in business's capital is referred as
A) Balance
sheet
B) Income
statement
C) Cash flow
statement
D) Statement
of changes in equity
8) Financial statements mainly help in
A) Assumption
of economic events
B)
Anticipation of economic events
C) Recording
of economic events
D)
Communication of economic events
9) Purchases +opening stock-closing stock=?
A) Amount of
sales
B) Gross
profit
C) Cost of
goods sold
D) Net income
10) Which of the following financial statements
shows the financial position of a business at a specific date?
A) Balance
sheet
B) Income
statement
C) Cash flow
statement
D) Statement
of changes in equity
11) Which of the following financial reports shows
the profitable of a business?
A) Income
statement
B) Balance
sheet
C) Cash flow
statement
D) Statement
of changes in equity
12) Assets minus liabilities equal to
A) Goodwill
B) Working
capital
C) Net income
D) Capital
13) Which of the following financial statements
shows the movement of cash and cash equivalents in during an accounting period?
A) Income
statement
B) Balance
sheet
C) Cash flow
statement
D) Statement
of changes in equity
14) Goodwill is classified as which one of the
following assets?
A) Fixed
B) Long term
C) Current
D) Intangible
15) Which of the following does not appear in
Balance sheet?
A) Building
B) Cash
C) Goodwill
D) Rent
expenses
16) Which of the following lists down the balances
to asset accounts, liability accounts and capital account balances?
A) Income
statement
B) Balance
sheet
C) Cash flow
statement
D) Statement
of changes in equity
17) Current assets are also known as
A) Working
capital
B) Invested
capital
C) Assets
D) Cash
18) The expenses related to the main operations of
business are referred as
A)
Administration expense
B)
Non-administration expense
C) Selling
expenses
D) Operating
expenses
19) Cash receipt from the sales fixed assets is
recorded under the heading of
A) Operating
activities
B) Financing
activities
C) Investing
activities
D) Other
activities
20) A current asset that is convertible to cash
within 3 months can be referred to as
A) Cash asset
B) Operating
asset
C) Intangible
asset
D) Cash
equivalent
1. B
2. B
3. D
4. C
5. D
6. D
7. D
8. D
9. C
10. A
11. A
12. D
13. C
14. D
15. D
16. A
17. A
18. D
19. C
20. D
Accountancy / Financial Accounting MCQ Set 10
1) What is the minimum number of partners required
to commence a partnership business?
A) 20
B) 10
C) 2
D) 4
2) Partnership type of business is formed by the
mutual agreement of partners. What kind of agreement is it?
A) Oral
agreement
B) Written
agreement
C) Oral or
written agreement
D) None of
them
3) In the general form of partnership, liabilities
of partners are:
A) Limited
B) Unlimited
C) Limited to
the business capital
4) Is partnership type of business considered as a
separate legal entity?
A) No
B) Yes
5) can a partner transfer his/her share of business
to a third party without other partners consent?
A) No
B) Yes
6) Is it compulsory for all partners to contribute
equal amount of capital in the business?
A) No
B) Yes
7) Interest on drawings is:
A) Debited to
partner’s current a/c
B) Credited
to partner’s current a/c
C) Not shown
in current account
8) The written agreement of partnership is most
commonly referred to as:
A) Agreement
B)
Partnership deed
C)
Partnership contract
D)
Partnership Act
9) Where there is no partnership agreement exists
between partners, what will be the profit sharing ratio between the partners?
A) Equal
B) Unequal
C) It will
depend on a partner’s capital
D) It will
depend on the experience of a partner
10) Salary of a partner is _________ to current
account
A) Debited
B) Credited
11) New investment by any partner in the partnership
type of business is _______ to the partner’s capital account
A) Debited
B) Credited
12) Under fluctuation method of capital, what is the
treatment of “interest on capital”?
A) Credited
to capital account
B) Debited to
capital account
C) No
treatment or adjustment needed
D) Credited
to current account
13) Which of the following is NOT generally the
characteristic of a partnership business?
A) Limited
life
B) Ease of
formation
C) Mutual agency
D) Limited
liability
14) In which of the following types of partnership
the liability of at least one partner is unlimited whereas the liability of
other partners is limited?
A) General
partnership
B) Particular
partnership
C)
Partnership-at-will
D) Limited
partnership
15) In which of the following types of partnership
there is no agreement regarding the duration of partnership?
A) General
partnership
B)
Partnership-at-will
C) Limited
partnership
D) Registered
partnership
16) A&B are partners sharing profit or loss
equally. A new partner enters in the partnership and invests a piece of land
that had historical cost of $50,000, book value = $25000 and current market
value = $30,000. By what amount the new partner’s account should be increased?
A) $25000
B) $50,000
C) $30,000
D) $75000
17) X and Y are partners sharing profit and loss at
the ratio of 1/3 and 2/3 respectively. The net income for this accounting
period is $10 while salary of X = $2, interest on Y’s drawings = $3 and
interest on X’s capital = $2. What is the X’s share of profit or loss after the
adjustment for partner’s salary, interest on capital and interest on drawings?
A) $3
B) $6
C) $9
D) $11
18) Which of the following is known as the value
addition to a business because of business reputation, customers’ loyalty,
brand name etc.
A) Assets
B) Market
capitalization
C) Goodwill
D) Market
penetration
19) Which of following is the correct double entry
for revaluation surplus?
A)
Revaluation = Debit and Partners capital accounts = Credit
B) Partners
capital accounts = Debit and Revaluation surplus = Credit
20) A and B share profit and loss in the ratio of
3/5 and 2/5 respectively and having capital account balances of $100,000 each.
At the time of revaluation, the firm’s total asset book value was $60,000 while
they can only be sold for $40,000. Which of the following is the balance of A’s
capital account after revaluation of firm’s assets?
A) $100,000
B) $112,000
C) $88,000
D) $72,000
21) Which one of the following double entries is
correct regarding the cost of firm or partnership dissolution?
A) Credit
realization a/c and Debit partners’ capital a/c
B) Credit
realization a/c and Debit bank a/c
C) Debit
realization a/c and Credit bank/cash
22) Identify the correct double entry for
realization profit at time dissolution of partnership
A) Debit
realization a/c and Credit bank a/c
B) Debit bank
a/c and Credit realization account
C) Debit
realization account and Credit partners’ capital accounts
23) Partner ‘A’ took firm’s vehicle worth $5000
without payment at the time of firm’s disbanding. Identify the correct
adjustment in the capital account of partner ‘A’
A) $5000 will
be debited
B) $5000 will
be credited
C) No
adjusted needed in capital a/c
24) During the process of dissolution of
partnership, the carrying value of machinery=$5000 and building = $20,000 while
both fixed assets were disposed at the cumulative price of $10,000 and
realization cost was up to $2000. Identify what total amount needed to credit
or debit in the partners capital accounts
A) $12000
Debit
B) $13000
Credit
C) $13000
Debit
C) $10,000
Debit
25) A and B are the partners in a small firm, their
profit or loss sharing ratio is 6:4. A new partner C admitted in the firm that
will share profit or loss at the ratio of 1/4. Which of the following is the
new profit or loss sharing ratio among the partners A, B and C?
A) 6:4:1
B) 18:12:10
C) 10:12:18
D) 6:4:4
26) Which one of the following is the method of goodwill
valuation?
A) Average
capital method
B) Super
capital method
C) Capital
intensity method
D) Super
profit method
27) Under capitalization method of goodwill
valuation, which of the following formulas is used to calculate the “value of whole
business”?
A) Value of
whole business=Profit / Reasonable rate of return X 100
B) Value of
whole business= Total assets / Reasonable rate of return X 100
C) Value of
whole business= Equity-Net assets
28) Which of the following is not recorded in the
partners current accounts?
A) Drawings
B) Interest
on Drawings
C) Partners
salaries
D)
Administrative expenses
29) A partner that doesn’t take part in the
management of business, but he/she has made investment in business and liable
to creditors of the business is known as:
A) Active
partner
B) Nominal
partner
C) Junior
partner
D) Dormant
partner
1. C
2. C
3. B
4. A
5. A
6. A
7. A
8. B
9. A
10.
B
11.
B
12.
A
13.
D
14.
D
15.
B
16.
C
17.
A
18.
C
19.
A
20.
C
21.
C
22.
C
23.
A
24.
C
25.
B
26.
D
27.
A
28.
A
29.
D
