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MGT101 GRAND QUIZ SOLVED
Financial Accounting Quiz / MCQs With Answer
1. Which of the following should be shown on credit column of Trial Balance by considering the balance as normal?
a) Cash in Hand
b) Purchases
c) Debtor
d) Creditor
2. Which of the following is used to determine the cost of goods sold?
a) Beginning inventory + Purchases – Work in Process
b) Beginning inventory + Purchases – Sales
c) Beginning inventory + Purchases – Ending inventory
d) Ending inventory + Purchases – Beginning Inventory
3. The amount of depreciation charged on Furniture will be debited to:
a) Furniture Account
b) Depression Amount
c) Accumulated Depression Amount
d) Debtor
4. If current Assets RS 100,000, Current Liability Rs 50,000 and Fixed Assets Rs 200,000. What is Working capital?
a) Rs 50,000
b) Rs 100,000
c) Rs 150,000
d) Rs 300,000
5. Which of the following is an example of direct materials cost?
a) Production worker’s wages
b) Depreciation expenses
c) A piece of wood for the production of chair
d) Polish and finishing material for chair
6. Revenues, expenses and net profit are found on a/an;
a) Statement of Cash Flows
b) Income Statement
c) Statement of Owner’s equity
d) Balance Sheet
7. Payable amount of the business represents;
a) Loan given
b) Drawings
c) Assets
d) Liabilities
8. Which is one of the following is INCORRECT about closing stock?
a) It is added into current assets
b) It is deducted from materials available for use
c) It becomes opening stock of need year
d) It reduces the resources of business
9. Under the straight line method of depreciation;
a) Amount of depreciation increases every year
b) Amount of depreciation remains constant for every year
c) Amount of depreciation decreases every year
d) None of the given options
10. Which of the following accounts normally does NOT exist in the balance sheet of a manufacturing concern?
a) Work in Process Inventory
b) Raw Material Inventory
c) Merchandise Inventory
d) Finished Goods Inventory
11. Which of the following should be debited for issue of raw material to production department in manufacturing concern?
a) Material account
b) Work in process account
c) Finished goods account
d) Cash account
12. Which of the following changes the financial position of a business?
a) Monetary events
b) All Events
c) Non-monetary events
d) None of the given options
13. Which of the following should be shown on debit column of Trial Balance by considering the balance as normal?
a) Capital
b) Sales
c) Debtor
d) Creditor
14. A book that keeps separate record for each account is known as:
a) Trial Balance
b) Voucher
c) General Journal
d) General Ledger
15. Increase in an expense is recorded on the:
a) Left or credit side of the internet
b) Right or debit side oof the account
c) Left or debit side of the account
d) Right or credit side of the account
16. At the end of accounting period a list of all ledger balances is prepared. This list is called ___.
a) Journal
b) Ledger
c) Cash Book
d) Trial Balance
17. The cost of goods sold account will falls under which of the following classification of account:
a) Assets
b) Expenses
c) Liabilities
d) Revenues
18. Which of the following statement is TRUE about the positive working capital of company.
a) It shows that non-current assets are greater than non-current liability
b) It shows that current assets are greater than non-current liability
c) It shows that current assets are greater than current liability
d) It shows that current assets are greater than current assets
19. If debit side of a ledger is greater than credit side, the balance will be called as:
a) Debit Balance
b) Credit Balance
c) Excess Balance
d) None of the above
20. If resources in business are supplied by the outsiders (other than the owner) only then accounting equation looks like as:
a) Assets = Capital
b) Assets = Liabilities
c) Assets = Liabilities + Capital
d) Assets = Liabilities – Capital
21. A Balance Sheet discloses the financial position of a firm:
a) For a certain given period
b) At a particular point of time
c) After the fixed date
d) None of the given option
22. Which of the following should be included in sale account?
a) Sales on cash basis only
b) Sales on credit basis only
c) Both cash and credit sales
d) Sales of all assets
23. The total cost of an asset minus accumulated depreciation is equal to:
a) Current Market Value
b) Historical Cost
c) Book Value
d) Replacement Cost
24. Which of the following produces loss on disposal of fixed asset?
a) Book value > Sale price
b) Book value < Sale price
c) Cost value > Sale price
d) Cost value < Sale price
25. Which of the following should be considered as ready for sales in manufacturing concern?
a) Raw material
b) Work in process
c) Finished goods
d) Stock in trade
26. Net Profit = Gross Profit –
a) Selling expenses only
b) Administration expenses only
c) Financial expenses only
d) All of the given option
27. An accounting system in which there is a partial or no record of some of the transitions is called as:
a) Double Entry Accounting
a) Single Entry Accounting
a) Commercial Accounting
a) Accural Accounting
28) Which of the following is NOT Correct?
a) Decreases in Assets will be credited
a) Decreases in Liabilities will be credited
a) Increase in Expenses will be credited
a) Decrease in Revenue will be credited
29) Which of the following represents the cost spent by the business to generate income?
a) Income
b) Profit
c) Expense
d) Liability
30. Which of the following is considered as “Condition” in accounting?
a) Provision for depreciation
b) Loss by accident
c) Foreign exchange loss
d) Foreign exchange gain
31. Income and gains accounts are falls in which of the following accounts?
a) Real account
b) Nominal account
c) Personal account
d) Valuable account
32. The creditor account will fall under which of the following classification of accounts?
a) Liabilities
b) Expenses
c) Assets
d) Revenue
33. Commission paid will fall under which of the following classification of accounts?
a) Revenues
b) Assets
c) Liabilities
d) Expenses
34. Which of the following is a “Contra account”?
a) Sales return
b) Sales
c) Fixed Asset
d) Account receivable
35. All of the following are liabilities EXCEPT:
a) Loan from bank
b) Account payable
c) Accrued rent
d) Prepaid insurance
36. Which group of account is DEBITED, when it is decreased?
a) Asset and Liability
b) Assets and Income
c) Income and Liability
d) Assets and Expenses
37. Which of the following needs NOT to be adjusted in cash book?
a) Cheque deposited but not credited
b) Direct payment by a customer into the bank
c) Bank charges deducted by the bank
d) Interest on bank deposit
38. In case of increase in provision for doubtful debt, ___ is credited.
a) Payable account
b) Provision for doubtful debts account
c) Doubtful debts account
d) Receivable account
39. All of the following are the expenses EXCEPT
a) Rent payable
b) Interest
c) Wages
d) Utilities
40. Which of the following is a source for preparation of a Trail balance
a) Ledger
b) Invoice
c) Journal
d) Journal entry
41. ___ is posted in credit side of debtors account
a) None of the given option
b) Trade discount
c) Balance b/f of debtors
d) Purchase return
42. After specific intervals, sum of sales journal is posted to the credit side of ___
a) None of the given options
b) Total creditors account
c) Sales account
d) Total debtors account
43. Which of the following is the components of financial statement as per international accounting standard (IAS)?
a) Statement of monetary record
b) Statement of asset and profit
c) Statement of financial position
d) Statement of asset and loss
44. In case of creating provision for doubtful debt, ___ is debited.
a) Payable account
b) Provision account
c) Bad debts account
d) Receivable account
45. Which of the following is NOT an Operating expense?
a) Telephone bill
b) Bad debts
c) Purchases
d) Advertisement
46. Credit note is issued by the seller when ___ are returned.
a) Cash sales
b) Cash purchase
c) Credit purchase
d) Credit sales
47. Expense account is closed at the end of the accounting period in:
a) Income statement
b) Balance sheet
c) Income account
d) General journal
48. A debit balance in the bank statement indicates:
a) Cash in hand
b) Cash at bank
c) Overpayment to creditors
d) Bank overdraft
49. Profitability of an entity is referred as:
a) Financial performance during the period
b) All of the given option
c) Financial strength on a specific date
d) Cash flow during the period
50. Expenses incurred but not yet paid bill the end of the accounting period is treated in balance sheet as:
a) Drawing
b) Asset
c) Capital
d) Liability
51. Good sold on cash increase:
a) Creditor
b) Assets
c) Liabilities
d) Expenses
52. Which of the following accounts will be DEBITED, when we acquire building of Rs 500,000 on Credit?
a) Cash account
b) Building account
c) Capital Account
d) Bank Account
53. Which of the following is WORNG?
a) Nature of Expenses id Debit
b) Nature of Liabilities is Debit
c) Nature of Assets is Debit
d) Nature of Owners Equity is Credit
54. True and Fair performance of any business entity is measurable under:
a) Both accrual and cash basis
b) Cash basis
c) Accrual basis
d) None of the given options
55. Which of the following is also known as “Day book”?
a) Trial balance
b) Balance sheet
c) Ledger
d) Journal
56. All of the following are contra account EXCPET
a) Purchases
b) Provision for doubtful debts
c) Sales return
d) Drawings
57. Which of the following is also known as Balance sheet?
a) Statement of Profit or Loss
b) Statement of Changes in equity
c) Statement of Cash Flows
d) Statement of Financial Position
58. Advance receipt at the end of the period is treated as
a) Liability
b) Drawings
c) Expenses
d) Assets
59. ___ is prepared to known the financial performance of an entity.
a) Statement of Financial Position
b) Statement of Profit or Loss
c) Statement of Cash Flows
d) Statement of Changes in equity
60. Which of the following represents the basic ideology of a Balance sheet?
a) Profit = Incomes + Expenses
b) Assets = Owners equity – Liabilities
c) Assets = Owners equity + Liabilities
d) Profit = Incomes – Expenses
61. Which of the following is also known as Income Statement?
a) Statement of Cash Flows
b) Statement of Profit or Loss
c) Statement of Financial Position
d) Statement of Changes in Equity
62. If the receipt of transaction is made on sales of goods then the transaction is called:
a) Barter transaction
b) Credit transaction
c) Paper transaction
d) Cash transaction
63. ___ is debited for closing the commission income for the period.
a) Commission income
b) Commission expense
c) Income statement
d) Accrued commission
64. Comparison of bank column of cash book and bank statement is needed while preparing.
a) Income statement
b) Bank reconciliation statement
c) Financial statement
d) Statement of changes in equity
65. ___ is posted in credit side of debtors account.
a) Receipt from debtors
b) All of the given options
c) Discount allowed account
d) Sales return account
66. Financial position of business can be changed due to:
a) Any event
b) Any information
c) Monetary event
d) Meeting plan
67. At the closing date of the period, the sum of purchase journal is Debited to:
a) None of the given option
b) Total debtors account
c) Purchases account
d) Total creditors account
68. Which voucher is used as proof that debtor Mr. A has cleared his/her outstanding amount or balance?
a) Bank payment voucher
b) Cash receipt voucher
c) Cash payment voucher
d) Petty cash voucher
69. Irrecoverable debts are also known as:
a) Bad debts
b) Short term debts
c) Long term debts
d) Doubtful debts
70. Excess of expenses over income in a specific accounting period is called:
a) Profit
b) Loss
c) Resources
d) Surplus
71. Furniture is purchased for Rs. 55,000 from Mr. ABC on credit basis. The effects of this transaction are:
a) Increase in Asset increase in liability
b) Increase in Asset Decrease in Asset
c) Increase in Asset Decrease in Liability
d) Decrease in Asset Increase in liability
72. ___ is the detail of transactions in one’s account provided by the bank.
a) Bank reconciliation statement
b) Bank statement
c) Income statement
d) Financial statement
73. Good purchased on Cash increase:
a) Creditors
b) Expenses
c) Liabilities
d) Cash
74. Increase in liability can cause increase in:
a) Profit
b) Receivables
c) Equity
d) Goods
75. ___ is posted in debit side of debtors account.
a) Cash sales and credit sales
b) Credit sales and opening balance of debtors
c) Opening and closing balance of creditors
d) Cash and credit purchase
76. Posting is done in ___.
a) Journal
b) Invoice
c) Trial balance
d) Ledger
77. Expenses are recorded when incurred either paid or not according to:
a) Management accounting
b) Cost accounting
c) Accrual accounting
d) Cash accounting
78. Which of the following is TRUE regarding a closing stock?
a) It is an un-expired cost and a liability
b) It an expired cost and a liability
c) It is an expired cost and an asset
d) It is an un-expected cost and an asset
79. Journal voucher is used to record transaction in ___.
a) General Journal
b) General ledger
c) Income statement
d) Trial balance
80. In case of goods sold on credit basis, ___ is debited.
a) Debit account
b) Bank account
c) Credit account
d) Debtors account
81. Expenses payable at the end of the period is treated as:
a) Income
b) Drawings
c) Asset
d) Liability
82. Which of the following is considered as liability for the bank?
a) Credit balance as per cash book (bank column)
b) Debit balance as per cash book (bank column)
c) Overdrawn balance as per bank statement
d) Debit balance as per bank statement
83. ABC & CO purchased goods for resale purpose on cash. Which one of the following account head will increase?
a) Loss
b) Capital
c) Expenses
d) Creditor
84. Cash received from sale is recorded in cash register only. It is an example of which of the following?
a) Accrual accounting
b) Double entry book keeping
c) Commercial accounting
d) Single entry book keeping
85. The commission earned account falls under which of the following classification of accounts?
a) Income
b) Liability
c) Expenses
d) Assets
86. Which of the following is NOT an operating expense?
a) Stationary
b) Salaries & Wages
c) Loan from bank
d) Repair
87. Accrued expense at the end of the period is treated as:
a) Assets
b) Drawing
c) Liability
d) Income
88. Another name of net income or positive financial return is ___.
a) Profit
b) Resources
c) Contribution Margin
d) Creditor
89. Profitability of an entity is referred as:
a) All of the given options
b) Financial performance during the period
c) Financial strength on a specific date
d) Cash flow during the period
90. All of the following are liabilities EXCEPT
a) Prepaid insurance
b) Accounts payable
c) Accrued rent
d) Loan from bank
91. Identify the two accounting heads that are affected from the transaction of Rent received through cheque
a) Rent income and cash account
b) Rent expense and cash account
c) Rent income and bank account
d) Bank Reconciliation Statement
92. Which of the following is prepared in chronological order?
a) Trail balance
b) All of the given options
c) Ledger
d) Journal
93. Which of the following is a ‘Contra account’?
a) Sales
b) Debt
c) Capital
d) Purchases return
94. In case of writing off debtors as bad debt ___
a) Debtors account
b) Payable account
c) Doubtful debts account
d) Provision
95. Which of the following is an example of a current liability
a) Bank overdraft
b) Closing stock
d) Discount received
d) Furniture
96. Sales – Cost of goods sold = ?
a) Net profit
b) Current assets
c) Gross profit
d) Operating profit
97. Journal voucher is used to record transaction in ____
a) General ledger
b) Trail balance
c) General journal
d) Income statement
98. Which of the following needs NOT to be adjusted in cash book
a) Bank charges deducted by the bank
b) Direct payment by a customer into the bank
c) Interest on bank deposit
d) Cheques deposited but not credited
99. Cash invested by the owner in his business is also considered as ___ for entity
a) Income
b) Sources
c) Liabilities
d) Expense
100. Contra account for purchases is:
a) Purchases return
b) Total purchases
c) Cash purchases
d) Credit purchases
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