Accounting Multiple Choice Questions with answers | Download PDF for MCQs

MCQs BASED ON TRADING ACCOUNT AND PROFIT LOSS ACCOUNT AND BALANCE SHEET


1. Current assets are converted into cash

a) Within one year

b) Within two year

c) With in three year

d) None of these

2. Stock owned by a firm are classified as

a) Fixed asset

b) Current asset

c) Current liability

d) None of these


3. Loss by fire of goods is credited to

a) Profit and loss a/c

b) purchase a/c

c) loss by fire a/c

d) None of these


4. Cost are equal to

a) Cost of good sold + gross profit

b) Cost of good sold - gross profit

c) Gross profit - cash of good sold

d) None of these


5. Wages paid by a trader is shown

a) On the debit side of trading account

b) On the debit side of profit and loss account

c) as deduction from capital in balance sheet

d) as addition to capital in balance sheet


6. Preliminary expense will be a

a) Fictitious assets

b) Tangible assets

c) Intangible assets

d) Expenses


7. Return outward appearing in the trial balance is deducted from

a) Purchases

b) Sales

c) Return outward

d) None of these


8. Balance in input IGST account is shown

a) In the assets side of balance sheet

b) In the liabilities side of balance sheet

c) In the expense in profit and loss account

d) at an income in profit and loss account


9. Balance in output CGST account is shown

a) In the asset side of balance sheet

b) In the liability side of balance sheet

c) as an expense in profit and loss account

d) as on income in profit and loss account

10. Statement prepared to know profit or loss and financial position of the business are called

a) Financial statement

b) Bank Reconciliation

c) Trial Balance

d) All of these


11. Account which shows gross profit or gross loss of the business is.

a) Profit and loss account

b) Balance sheet

c) Trial balance

d) Trading account


12. Trading account is prepared to know

a) Net profit or loss of business

b) Gross profit or loss of business

c) Both (a) and (b)

d) Financial position of business


13. On debit side of trading account we record

a) Direct expenses

b) Indirect expenses

c) Both of above

d) None of these


14. Closing stock is recorded in

a) Profit & Loss Account

b) Trading Account and Balance Sheet

c) Balance Sheet only

d) None of these


15. Profit and loss account shows the

a) Total capital employed

b) Profit and loss through sale of assets

c) Profit earned by business

d) None of these


16. Operating expense are recorded in

a) Trading Account

b) Profit and Loss Account

c) Balance Sheet

d) All of these


17. Expenses relating to sale of goods are shown in

a) Profit and loss account

b) Trading account

c) Trading and profit and loss account

d) Balance sheet


18. Carriage outward is an example of

a) Direct expenses

b) Indirect expenses

c) Indirect income

d) Direct income


19. Which are indirect expenses of the followings

a) Salary expenses

b) Insurance expense

c) Rent expense

d) All of these


20. Income earned from other than routine activities is called

a) General Income

b) Direct Income

c) Indirect Income

d) None of these


21. Balance sheet is a statement of

a) Assets

b) Capital

c) Liabilities

d) All


22. Properties, things and receivable having certain value owned by business are called

a) Assets

b) Liabilities

c) Goods

d) None of these


23. Any physical thing that has money value is

a) Intangible assets

b) Fictitious assets

c) Goodwill

d) Tangible Assets


24. Assets which do not have physical existence are called

a) Tangible assets

b) intangible assets

c) Contingent Liabilities

d) none of the above


25. Accounting furnishes data on

a) Income and cash for the Manager

b) Financial conditions of the institutions

c) Company's tax liabilities for a particular year


26. Copyright, patent and trademarks are

a) Current assets

b) Fixed assets

c) Intangible assets

d) Investment


27. Gross profit is

a) Cost of good sold + opening stock

b) Sale - Cost of good sold

c) Sale of stock

d) None of these


28. Net profit is computed in the

a) Profit + Loss Account

b) Balance Sheet

c) Trial Balance

d) Trading Account


29. Suppliers personal account are seen in the

a) Sale Ledger

b) Purchase Ledger

c) Nominal Ledger

d) General Ledger


30. Sales invoice are first entered in

a) The Cash Book

b) The Purchases Journal

c) The Sale Journal

d) The Sale Account


31. Outstanding income is

a) an asset

b) a liability

c) an expense

d) an income


32. If we take goods for own use we should

a) Debit drawings account and credit purchases account

b) Debit drawing account and credit stock account

c) Debit sales account credit stock account

d) Debit purchases account, credit drawing account


33. We can say that the business is in profit when

a) Assets exceeds expenditure

b) Income exceeds liabilities

c) Income exceeds expenditure

d) Income exceeds liabilities


34. Which types of expenses are paid out of gross profit?

a) General expenses

b) Financial expenses

c) Selling Expenses

d) All of above


35. Which of the following is an example of business liability

a) Land

b) Building

c) Cash

d) bank loan


36. The unfavourable balance of profit + loss account should be

a) Added in liabilities

b) Subtracted from assets

c) Subtracted from capital

d) None of these


37. What kind of expenses are paid from trading account?

a) Selling expenses

b) Financial expenses

c) General expenses

d) none of these


38. Which option given a review report on the form's financial status at a specified date?

a) Income and expenditure account

b) Balance sheet

c) Cash flow statement

d) Profit loss account


39. Which of the option is an example of business liability

a) Creditor

b) Cash

c) Building

d) Land


40. Depreciation is provided on

a) Current assets

b) Intangible assets

c) Fixed assets

d) All of these


41. Outstanding expense is

a) an assets

b) a liability

c) an expenses

d) an income


42. The Manager is entitled to a commission of 10% on profit before deducted his commission. The profit is 9000, therefore the commission will be

a) 1000

b) 900

c) 800

d) 1100


43. Accrued income is shown as

a) An asset

b) A liability

c) An expense

d) An Income


44. Indirect expense is shown at

a) credit side of trading account

b) debit side of trading account

c) credit side of P/L a/c

d) debit side of P/L a/c

Answers to Trading, P/L Account and balance sheet

1) A

2) B

3) B

4) D

5) A

6) A

7) A

8) A

9) B

10) A

11) D

12) B

13) A

14) B

15) C

16) B

17) A

18) B

19) D

20) C

21) A

22) A

23) D

24) B

25) B

26) C

27) B

28) A

29) B

30) C

31) A

32) A

33) C

34) D

35) D

36) C

37) D

38) B

39) A

40) C

41) B

42) A

43) A

44) B

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