Financial Accounting & Management MCQs [set-1]

1. The assets that can be easily converted into cash within a short period, i.e., 1 year              or less are known as

            A. Current assets 

            B. Fixed assets 

            C. Intangible assets 

            D. Investments 

        Answer: A

    2. According to which principle the same accounting methods should be used                each year: 

            A. Prudence 

            B. Full disclosure 

            C. Materiality 

            D. Consistency 

    Answer: D 

    3. The elements of the accounting equation are 

            A. Assets, Liabilities,Capital 

            B. Liabilities,Capital 

            C. Liabilities 

            D. Capital 

    Answer: A

    4. Arun is a Book-seller, which item will be goods for his business ? 

            A. Purchase of Computer 

            B. Purchase of Fan 

            C. Purchase of Furniture 

            D. Purchase of Stationery 

    Answer: D 

    5. The expenses due but not paid is known as - 

            A. Prepaid Expenses 

            B. Debtors 

            C. Outstanding Expense

            D. Bills Receivable 

    Answer: C 

   6. Which is correct. 

         I)Dr. the receiver, Cr. the Giver 

        II)Dr. what goes out, Cr. what comes in 

        III)Dr. all Expenses, Cr. All Losses 

            A. Only I 

            B. Only II and III

             C. ALL I,II and III 

            D. Only I and II 

    Answer: A 

    7. Goods destroyed by fire should be credited to 

            A. Puchases A/c 

            B. Sales A/c

            C. Loss by fire A/c

            D. Insurance A/c 

    Answer: A 

    8. In the books of account if a transaction is completely deleted, will it affect the trial         balance? 

            A. No 

            B. Yes 

            C. A transaction cannot be omitted 

            D. May be 

    Answer: A 

    9. The respective normal account balances of Sales, Sales Returns , and                        Discounts allowed are? 

            A. Credit, Credit, Credit 

            B. Debit, credit, debit 

            C. Credit, Debit, Debit 

            D. Credit, Debit, Credit 

    Answer: C

    10. Trial balance is not a conclusive proof of accuracy due to which errors. 

        I)Error of omission 

        II)Error of Principle 

        III)Error of Commission 

        IV)Compensatory Errors 

            A. All I,II,III and IV 

            B. Only I,II and III 

            C. Only I,II and IV 

            D. Only II and III 

    Answer: A 

    11. Which of the following is not the external user of accounting information? 

            A. Government 

            B. Shareholders 

            C. Tax Authorities 

            D. Financial institutions

    Answer: B 

    12.  ..............refers to the order in which the various assets and liabilities are                   shown in the Balance Sheet. 

            A. Grouping 

            B. Order of permanence 

            C. Marshalling 

            D. Order of liquidity 

    Answer: C 

    13. If closing stock is mentioned in trial balance,Where is it shown in Final                          Accounts? 

            A. Credit side of Trading A/c 

            B. Asset side of Balance Sheet 

            C. Both A and B 

            D. Not shown anywhere 

    Answer: B 

    14. Which one is false. 

        I)Capital Expenditure is non recurring in nature and shown in P&L account.            II)Revenue expenditure is incurred to conduct day to day activities 

            A. Both I and II 

            B. Only I 

            C. Only II 

            D. None is false 

    Answer: B 

    15. Where do we show Provision of bad debts in final accounts if given in                      adjustments? 

        I)Debit side of P&L 
        II)Credit side of P&L 
        III)Deduct from Debtors in Balance Sheet 
        IV)Add to Debtors in Balance Sheet 

            A. I and III 

            B. II and IV 

            C. II and III 

            D. I and IV 

    Answer: A 

    16. Which is true. I)Fixed installation method is recognised by income tax                      department. II)The amount of depreciation in WDV method remains same. 

            A. Both I and II 

            B. None is true 

            C. Only II 

            D. Only I 

    Answer: B 

    17. Cost of machine=1,90,000 Installation=10,000 Scrap=50,000 Life=6 yrs                      Calculate depreciation as per SLM method 

            A. 25,000 

            B. 23,333 

            C. 33,333 

            D. 21,666 

    Answer: A 

    18. Machinery purchased on 1 Oct,2016 for 40,000.This machinery was sold on              Dec 2017.Calculate the total depreciation charged on machinery till date if co           charges 10% as per WDV method if accounts are closed on 31st March every           year.

            A. 6700 

            B. 8000 

            C. 5000 

            D. 4850 

    Answer: D 

    19. 1 oct Opening balance=400 units @Rs 20 each, 3 Oct: Purchase=300 units                  @Rs 10 ,5 Oct Sales=500 units. What will be total Sales value(in Rs) as per              FIFO Method? 

            A. Rs 9000 

            B. Rs 15000 

            C. Rs 10000 

            D. Rs 7500 

    Answer: A 

    20. 2 oct Opening balance=200 units @Rs 15 each, 4 Oct: Purchase=500 units                  @Rs 10 ,5 Oct Sales=600 units. What will be Closing Inventory value (in Rs)            as per LIFO Method? 

            A. Rs 1000 

            B. Rs 500 

            C. Rs 8000 

            D. Rs 1500 

    Answer: D 

    21. Business enterprise is separate from its owner according to concept. 

            A. Money measurement 

            B. Cost 

            C. business entity concept 

            D. Dual aspect 

    Answer: C 

    22. When proprietor withdrew cash from business for personal use , it is known               as - 

            A. Drawings 

            B. Investment 

            C. Furniture 

            D. Bills Receivable

    Answer: A 

    23. In trial balance, which accounts with is/are recorded at the credit side?

        I)Sales 
        II)Sales return 
        III)Cash I
        V)Loan 

            A. Only I and II 

            B. All of these 

            C. Only I,II and IV 

            D. Only I and IV 

    Answer: D 

    24. When Salary is paid by cheque, which account is credited.

            A. Cash A/c 

            B. Bank A/c 

            C. Salary A/c 

            D. Personal A/c 

    Answer: B 

    25. The process of transferring the debit and credit items from a journal to their           respective account in the ledger is termed as? 

            A. Balancing 

            B. Posting 

            C. Arithmetic 

            D. Entry 

    Answer: B