FINANCIAL ACCOUNTING MCQ WITH ANSWERS PDF – MULTIPLE CHOICE QUESTION FOR CMA INTERMEDIATE GROUP FIRST (MCQ – FINANCIAL ACCOUNTING )

• Which of the following is of capital nature?
  • Commission on purchases
  • Cost of repairs
  • Rent of factory
  • Wages paid for installation of machinery

• Outward Invoice issued is a source document of
  • Purchase Book
  • Sales Book
  • Return Inward Book
  • Return Outward Book

• A resource owned by the business with purpose of using it for generating future profit, is known as
  • Capital
  • Asset
  • Liability
  • Surplus

• As on 31st March, 2017 debtors and additional bad debts are $ 8,00,000 and $ 10,000 respectively. If the provision for bad debts is made at 5% on debtors then amount of such provision will be
  (a) $40,000
  (b) $50,000
  (c) $39,500
  (d) $40,500

• Income and Expenditure Account is a
  • Nominal Account
  • Real Account
  • Personal Account
  • Artificial Personal Account

• Creditors ledger adjustment account is opened in
  • General Ledger
  • Debtors Ledger
  • Creditors Ledger
  • Either (b) or (c)

• Receipts and Payments account is a
  • Nominal Account
  • Real Account
  • Personal Account
  • Artificial Personal Account

• If an employee of the business files a legal suit on business, it is considered in the books as
  • Legal Expense
  • Liability
  • Contingent Asset
  • Contingent Liability

• At the end of the accounting year the capital expenditures are shown in the
  • assets side of the Balance Sheet.
  • liabilities side of the Balance Sheet.
  • debit side of the Profit and Loss A/c.
  • credit side of the Profit and Loss A/c.

• Which of the following is not a method of charging depreciation?
  • Sinking Fund Method
  • Sum of years Digit Method
  • Working hours Method
  • Asset’s Life-cycle Method

• If average inventory is $1,25,000 and closing inventory is $10,000 less than opening inventory then the value of closing inventory will be
  (a) $1,35,000
  (b) $ 1,15,000
  (c) $ 1,30,000
  (d) $ 1,20,000

• The Accommodation bill is drawn
  • to finance actual purchase or sale of goods.
  • to facilitate trade transmission.
  • when both parties are in need of funds.
  • None of the above

• Balance of X’s account in creditors ledger is transferred to X’s account in debtors ledger, in this case
  • X’s account in debtors ledger will be debited.
  • X’s account in creditors ledger will be debited.
  • Suspense account will be debited.
  • None of the above

FINANCIAL ACCOUNTING MCQ WITH ANSWERS PDF

• Ground rent or surface rent means
  • Minimum rent
  • Maximum royalty payable
  • Minimum royalty payable
  • Fixed rent payable in addition to minimum rent

• Accounting standard in India are issued by
  • Government of India
  • Reserve Bank of India
  • The Institute of Chartered Accountants of India
  • The Institute of Accounting Standard of India

• Which of the following is an example of Capital Expenditure?
  • Inventory of raw materials, work-in-progress and finished goods;
  • Insurance premium;
  • Taxes and legal expenses;
  • None of the above.

• Which of the following errors is not disclosed by a Trial Balance?
  • Errors of Omission
  • Errors of Commission
  • Compensating Errors
  • All of the above

•   ________________  is specially suited to mines, oil wells, quarries, sandpits and similar assets of a wasting character.
  • Depletion
  • Depreciation
  • Amortisation
  • Dilapidation

• The following account has a credit balance
  • Plant and Equipment A/c
  • Loans A/c
  • Purchase A/c
  • None of the above

• From the following details estimate the capital as on 31.03.2017. Capital as on 01.04.2016 – $4,10,000. Drawings $40,000, Profit during the year $50,000
  • (a) $4,10,000
  • (b) $4,50,000
  • (c) $4,20,000
  • (d) $4,00,000

• A and B purchased a piece of land for $30,000 and sold it for $60,000 in 2016.Originally A had contributed $12,000 and B $8,000. The profit on venture will be
  • (a) $30,000
  • (b) $20,000
  • (c) $60,000
  • (d) Nil

• AB Ltd. has signed at 31st December, 2017 the Balance Sheet date, a contract where the Total Revenue is estimated at ` 15 Crores and Total Cost is estimated at ` 20 Crores. No work began on the contract. Is the Contractor required to give any accounting effect for the year ended 31st December, 2017?
  • Recognize expected loss of `5 Crores
  • Recognize `15 Crores as Profit
  • No entry
  • None of the above

• Which of the following item does not match with receipts and payments account?
  • It is a summarized cash book
  • Transactions are recorded in it on cash basis
  • It records revenue transactions only
  • It serves the purpose of a real account

• Which of the following is/ are the basic features of a Joint Venture
  • The profit or loss on joint venture is shared between the co-venturers in the agreed ratio
  • The co-venturers may or may not contribute initial capital
  • The JV is dissolved once the purpose of the business is over
  • All of the above

• Excess of hire purchase price over cash price is known as
  • Installment
  • Cash down payment
  • Interest
  • Capital value of asset

• Which of the following is/are revenue expenditure?
  • Consumable Stores
  • Taxes and legal expenses
  • Rent of factory building
  • All of Above

• AS-9 is related to
  • Revenue Recognition
  • Cash Flow Statement
  • Accounting for Fixed Assets
  • Disclosure of Accounting policies

• The person to whom bill is endorsed is known as _                .
  • Endorsee
  • Drawee
  • Drawer
  • None of the above

• Which of the following is/are feature/features of Income and Expenditure Account?
  • It follows Nominal Account
  • All Capital incomes and expenditures are excluded
  • Profit on sale of asset is credited
  • All of the above

• The debts which are not bad is known as
  • Good debt
  • Bad Debt
  • Doubtful Debt
  • None of the above

• A transaction without immediate cash settlement is known as
  • Cash Transaction;
  • Credit Transaction;
  • Deferred Transaction;
  • None of the above.

• _____________________liabilities represent proprietor’s equity, i.e. all those amount which are entitled to the proprietor
  • External;
  • Debenture;
  • Internal;
  • None of the above.

• Goods are transferred from Department X to Department Y at a price so as  to include a profit of 33.33% on cost. If the value of closing stock of Department Y is $ 48,000, then the amount of stock reserve on closing stock will be
  • (a) $12,000
  • (b) $9,000
  • (c) $18,000
  • (d) None of the above

• Bad debts Recovered $1,000. It will be
  • Credited to Bad debts A/c
  • Credited to debtor’s personal A/c
  • Debited to creditor’s personal A/c
  • Credited to bad debts recovered A/c

• Which of the following purpose is served from the preparation of Trial Balance?
  • To check the arithmetical accuracy of the recorded transactions;
  • To ascertain the balance of any ledger account;
  • To facilitate the preparation of final accounts promptly;
  • All of the above.

•  ________________ contains the transactions relating to goods that are returned by us to our creditors
  • Return Inward;
  • Return Outward;
  • Sales Day book;
  • None of the above.

• The  basic principles of __________concept is that business is assumed to exist for an indefinite period
  • Going Concern;
  • Business Entity;
  • Money Measurement;
  • None of the above.

• Capital Profit arises from which of the following?
  • Profit prior to incorporation;
  • Premium received on issue of shares;
  • Profit made on re-issue of forfeited shares;
  • All of the above.

• Which of the following cannot be detected by Trial Balance?
  • Errors of Omission;
  • Errors of Principal;
  • Errors of Misposting;
  • All of the above.

• The concept that business is assumed to exist for an indefinite period and is not established with the objective of closing down is referred to as
  • Money Measurement concept
  • Going Concern concept
  • Full Disclosure concept
  • Dual Aspect concept

• In the hire purchase system interest charged by vendor is calculated on the basis of
  • Outstanding cash Price
  • Hire purchase Price
  • Installment amount
  • None of the above

• Goods are transferred from Department A to Department B at a price so as to include a profit of 33.33% on cost. If the value of closing stock of Department Y is $36,000, then the amount of stock reserve on closing stock will be
  • (a) $12,000
  • (b) $9,000
  • (c) $18,000
  • (d) None of the above

• Bad debts Recovered `750. It will be
  • Credited to Bad debts A/c
  • Credited to debtor‘s personal A/c
  • Debited to creditor‘s personal A/c
  • Credited to bad debts recovered A/c

• Which of the following is a function of journal:
  • Analytical Function
  • Recording Function
  • Historical Function
  • All of the above

• The out flow of funds to acquire an asset that will benefit the business for more than one accounting period is referred to as —
  • Miscellaneous Expenditure
  • Revenue Expenditure
  • Capital expenditure
  • Deferred Revenue Expenditure

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