Monday, 24 August 2020

Accounting Multiple Choice Questions with answers | Download PDF for MCQs

 

MCQs BASED ON "FINANCIAL STATEMENTS"

1 The financial statements consist of

(a) Tribal balance

(b) Profit and Loss account

(c) Balance sheet

(d) Both (b) and (c)


2 Income statements includes

(a) Trading account

(b) Profit and Loss account

(c) Both (a) and (b)

(d) Balance sheet


3 Ram is the owner of a firm. He brought additional capital of ₹ 1,00,000 to the firm. The receipt of money in business is

(a) revenue receipt

(b) capital receipt

(c) revenue expenditure

(d) capital expenditure


4 Profit and loss account is prepared

(a) for the whole year

(b) for a particular period

(c) on a particular date

(d) None of the above


5 Choose the correct chronological order of ascertainment of the following profits from the profit and loss

(a) Operating Profit, Net Profit, Gross Profit

(b) Operating Profit, Gross Profit, Net Profit

(c) Gross Profit, Net Profit, Operating Profit

(d) Gross Profit, Net Profit, Operating Profit


6 Liability which is payable on the happening of an event is

(a) contingent liabilities

(b) fluctuating liabilities

(c) current liabilities

(d) None of the above


7 Capital expenditure ……….. the earning capacity or ………. the operating expenses of a business

(a) Increase, reduces

(b) Reduces, increases

(c) maintain, reduces

(d) reduces, maintains


8 Depreciation or the expired cost of fixed assets will be

(a) revenue expenditure

(b) capital expenditure

(c) deferred revenue expenditure

(d) None of the above


9 On which assumptions the expenditure is classified as capital and revenue expenditure?

(a) Going concern assumption

(b) Accrual assumptions

(c) Money measurement assumptions

(d) Consistency assumptions


10 While calculating operating profit, the following are not taken into account

(a) Normal transactions

(b) Abnormal items

(c) Expenses of a purely financial nature

(d) Both (b) and (c)


11 Capital gains are those profits

(a) which are earned as interest on investments

(b) which are earned by selling of goods

(c) which are earned by selling fixed assets of business

(d) which are related to discounts received from creditors


12 In which of the following cases, closing stock will not be shown in the trading account?

(a) When valuation of closing stock is on FIFO method

(b) When closing stock is nor ascertained accurately

(c) When closing stock is adjusted in the purchases

(d) When it is appearing outside the trial balance


13 Which of the following is correct?

(a) Net Sales = Cash Sales + Credit Sales – Sales Return

(b) Net Sales = Cash Sales + Credit Sales + Sales Return

(c) Net Sales = Total Sales – Credit Sales

(d) Net Sales = Sales + Credit Sales


14 Consider the following statement.

I. Balance sheet contains only the balances of personal and real accounts

II. Assets side of balance sheet is always equal to capital side.

III. Drawings are not shown in the balance sheet as it is a personal expense of the owner.

Choose the correct option.

(a) All are correct

(b) All are incorrect

(c) Only I. is correct

(d) Only II. And III. are correct


15 Which of the following statement(s) is/are true?

I. Revenue expenditure gives benefit within the accounting period.

II. Revenue expenditure are non-recurring in nature.

Choose the correct option.

(a) Both I and II

(b) Only I

(c) Only II

(d) Neither I nor II


16 Which of the following is correct?

(a) Operating Profit = Operating Profit – Non-operating expenses – Non-operating incomes

(b) Operating Profit = Net Profit + Non-operating expenses + Non-operating incomes

(c) Operating Profit = Net Profit + Net-operating expenses – Non-operating incomes

(d) Operating Profit = Net Profit – Non-operating expenses + Non-operating incomes


17 Match the following and tick the correct option.


Codes

        I II III IV

(a) (iv) (ii) (iii) (i)

(b) (i) (ii) (iii) (iv)

(c) (iii) (iv) (i) (ii)

(d) (iii) (iv) (ii) (i)


18 Net sales during the year, 2017 is ₹ 2,85,000. Gross profit is 25%on sales. Find out the cost of goods sold?

(a) ₹ 2,85,000

(b) ₹ 2,13,750

(c) ₹ 71,250

(d) Zero


19 Calculate the gross profit and choose the correct option, if rate of gross profit is 25% on sales and cost of goods sold is ₹ 1,80,000.

(a) ₹ 60,000

(b) ₹ 36,000

(c) ₹ 45,000

(d) ₹ 30,000


20 Find out the closing stock from the following.

Opening Stock = ₹ 20,000, Sales = ₹ 1,00,000, Purchases = ₹ 70,000.

Rate of gross profit on cost = 3313%

(a) ₹ 20,000

(b) ₹ 35,000

(c) ₹ 15,000

(d) ₹ 45,000


21 Need or objective for adjustments in preparation of final accounts is

(a) to know the correct financial position

(b) to provide for all losses

(c) to reduce the liability

(d) to increase the assets


22 Entries which need to be accounted for in the books of accounts at the time of preparing final accounts are called

(a) opening entries

(b) closing entries

(c) adjustment entries

(d) final account entry


23 in case of sole proprietor business, income tax is considered as

(a) business expense

(b) proprietor’s expense

(c) capital expense

(d) All the above


24 If the rent of one month is still to be paid the adjustment entry will be

(a) debit outstanding rent account and credit rent account

(b) debit profit and loss account and credit rent account

(c) debit rent account and credit profit and loss account

(d) debit rent account and credit outstanding rent account


25 If the rent received in advance ₹2,000. The adjustment entry will be

(a) debit profit and loss account and credit rent account

(b) debit rent account and credit rent received in advance account

(c) debit rent received in advance account and credit rent account

(d) None of the above


26 Good distributed ass free sample. The effect of this entry will be

(a) it is the proprietor drawings

(b) it is deducted from purchases in the trading account

(c) it will be shown on the debit side of the profit and loss account

(d) Both (b) and (c)


27 Manager’s commission is always treated as…………..

(a) outstanding

(b) accrued

(c) unearned

(d) prepaid


28 If the insurance premium paid ₹ 1,000 and pre-paid insurance ₹ 300. The amount of insurance premium shown in profit and loss account will be

(a) ₹ 1,300

(b) ₹ 1,000

(c) ₹ 300

(d) ₹ 700


29 Consider the following statement.

I. Interest on capital is an expense for the proprietor.

II. Interest on capital is shown on the debit side of profit and loss account.

III. It is added to the capital in the balance sheet.

Choose the correct option.

(a) I, II, III are correct

(b) Both I and II are correct

(c) Both II and III are correct

(d) I, II, III are incorrect


30 Match the following.


Codes

        I II III IV

(a) (iii) (iv) (ii) (i)

(b) (iii) (i) (iv) (ii)

(c) (iii) (iv) (i) (ii)

(d) (iii) (ii) (i) (iv)


31 Loan from bank @ 12% per annum is ₹ 8,00,000. Interest on loan is due for the whole year. Amount shown on liabilities side of balance sheet will be

(a) ₹ 8,00,000

(b) ₹ 8,12,000

(c) ₹ 8,90,000

(d) ₹ 8,96,000


32 If the opening capital is ₹ 50,000 as 1st April, 2016 and additional capital introduced ₹ 10,000 in 1st January, 2017. Interest charge on capital 10% p.a. The amount of interest on capital shown in profit and loss account as on 31st March, 2017 will be

(a) ₹ 5,250

(b) ₹ 6,000

(c) ₹ 4,000

(d) ₹ 3,000


33 Consider the following information

Cost of new Machine Purchased = ₹ 1,20,000

Installation Expenses = ₹ 30,000

Estimated life of Machine = 5 years

Residual Value after 5 years = ₹ 25,000

Company started the production with this machine from 1st October, 2017. Assuming that the firm closes its accounts in 31st December every year, find the adjusted value of machine on 31st December, 2017?

(a) ₹ 1,43,750

(b) ₹ 1,25,000

(c) ₹ 1,75,000

(d) None of these


34 If capital of a firm = ₹ 5,00,000

Rate of interest @ 10%

Drawings = ₹ 30,000

What will be the net capital?

(a) ₹ 5,30,000

(b) ₹ 5,80,000

(c) ₹ 5,00,000

(d) ₹ 5,20,000


35 Rahul’s trial balance provide you the following information.

Debtors ₹ 80,000

Bad debts ₹ 2,000

Provision of doubtful debts ₹ 4,000

It is desired to maintain a provision for bad debts of ₹ 1,000 state the amount to be debited/ credited in profit and loss account.

(a) ₹ 5,000 (Debit)

(b) ₹ 3,000 (Debit)

(c) ₹ 1,000 (Credit)

(d) None of these


Answers to Financial Statements:

1. (d)

2. (c)

3. (b)

4. (b)

5. (c)

6. (a)

7. (a)

8. (a)

9. (a)

10. (d)

11. (c)

12. (c)

13. (a)

14. (c)

15. (b)

16. (c)

17. (c)

18. (b)

19. (a)

20. (c)

21. (a)

22. (c)

23. (b)

24. (d)

25. (b)

26. (d)

27. (a)

28. (d)

29. (c)

30. (b)

31. (d)

32. (a)

33. (a)

34. (d)

35. (c)

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