230+ Financial Accounting 2 Solved MCQs

1.

All the transactions measurable in the terms of money are recorded in accounts is according to

A. business entity concept
B. going concern concept
C. money measurement concept
D. accounting period concept
Answer» C. money measurement concept
2.

Dividing the expenditure into capital and revenue is according to

A. business entity concept
B. going concern concept
C. money measurement concept
D. accounting period concept
Answer» D. accounting period concept
3.

While putting the value or price of an entity in financial records the lowest price is recorded not the current price or current market value. This is known as

A. business entity concept
B. conservatism
C. cost concept
D. money measurement concept
Answer» B. conservatism
4.

Co-operative societies is an example of

A. personal account
B. real account
C. nominal account
D. representative personal account
Answer» A. personal account
5.

Outstanding salary account is a

A. natural personal account
B. artificial personal account
C. representative personal account
D. real account
Answer» C. representative personal account
6.

Interest earned is a

A. personal account
B. real account
C. nominal account
D. representative personal account
Answer» C. nominal account
7.

Commission paid is a

A. personal account
B. real account
C. nominal account
D. representative personal account
Answer» C. nominal account
8.

Trading account is a

A. personal account
B. real account
C. nominal account
D. representative personal account
Answer» C. nominal account
9.

Profit and loss account is a

A. personal account
B. real account
C. nominal account
D. representative personal account
Answer» C. nominal account
10.

All revenue incomes are credited to

A. manufacturing account
B. trading account
C. profit and loss account
D. balance sheet
Answer» C. profit and loss account
11.

In profit and loss account, if credit is more than the debit, the difference is

A. net profit
B. net loss
C. gross profit
D. gross loss
Answer» A. net profit
12.

The process of recording financial data upto trial balance is

A. book keeping
B. classifying
C. summarising
D. analyzing
Answer» A. book keeping
13.

In income measurement & recognisation of assets & liabilities which of the following concepts goes together?

A. periodicity, accural, matching
B. cost, accural, matching
C. going concern, cost, realization
D. going concern, periodicity, reliability
Answer» A. periodicity, accural, matching
14.

Interpretation means

A. explanation of meaning and significance of the data in financial statements.
B. concerned with preparation and presentation of classified data
C. systematic analysis of recorded data
D. methodical classification of data given in financial statements.
Answer» A. explanation of meaning and significance of the data in financial statements.
15.

Which of the following is wrong?

A. all real and personal accounts are transferred to balance sheet
B. nominal accounts are transferred to p & l account
C. each account is opened separately in ledger
D. rent is a personal account, outstanding rent is nominal account
Answer» D. rent is a personal account, outstanding rent is nominal account
16.

_______ is root cause for financial accounting

A. stewardship accounting
B. social accounting
C. management accounting
D. human resource accounting
Answer» A. stewardship accounting
17.

The proprietor of the business is treated as creditor for the capital introduced by him due to_____ concept.

A. money measurement
B. cost
C. entity
D. dual aspect
Answer» C. entity
18.

Fixed assets are held by business for _____

A. converting into cash
B. generating revenue
C. resale
D. none of the above
Answer» B. generating revenue
19.

Which accounting concept specifies the practice of crediting closing stock to the trading account?

A. cost
B. realisation
C. going concern
D. matching
Answer» D. matching
20.

Amount spent to increasing the earning capacity is a ______ expenditure

A. capital
B. revenue
C. deferred revenue
D. capital loss
Answer» A. capital
21.

Human resources will not appear in the balance sheet according to ______ concept.

A. accrual
B. going concern
C. money measurement concept
D. none
Answer» C. money measurement concept
22.

Provision for discount on debtors is calculated on the amount of debtors.

A. before deducting provision for doubtful debts.
B. after deducting provision for doubtful debts.
C. before deducting actual debts and provision for doubtful debts.
D. after adding actual bad and doubtful debts.
Answer» B. after deducting provision for doubtful debts.
23.

Which of the following is not a Real Account?

A. cash a/c
B. investments a/c
C. outstanding rent a/c
D. purchases a/c
Answer» C. outstanding rent a/c
24.

Value of goods withdrawn by the proprietor for his personal use should be credited to ____

A. capital a/c
B. sales a/c
C. drawings a/c
D. purchases a/c
Answer» D. purchases a/c
25.

Which of the following is incorrect?

A. good will – intangible asset
B. sundry debtors – current asset
C. loose tools - tangible fixed asset
D. outstanding expenses – current asset
Answer» D. outstanding expenses – current asset
26.

M/s Stationery Mart will debit the purchase of stationery to _______

A. purchases a/c
B. general expenses a/c
C. stationery a/c
D. none
Answer» A. purchases a/c
27.

Small items like, pencils, pens, files, etc. are written off within a year according to ___ concept.

A. materiality
B. consistency
C. conservatism
D. realisation
Answer» A. materiality
28.

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

A. money measurement concept
B. matching concept
C. entity concept
D. dual aspect concept
Answer» C. entity concept
29.

The policy of anticipate no profit and provide for all possible losses arise due to the concept of _____

A. consistency
B. disclosure
C. conservatism
D. matching
Answer» C. conservatism
30.

According to which concept, the proprietor pays interest on drawings

A. accrual concept
B. conservatism concept
C. entity concept
D. dual aspect concept
Answer» C. entity concept
31.

Cost concept basically recognises ____

A. fair market value
B. historical cost
C. realisable value
D. replacement cost
Answer» B. historical cost
32.

If the Market value of closing Inventory is less than its cost price, inventory will he shown at ____

A. marketable value
B. fair market value
C. both
D. none
Answer» A. marketable value
33.

The Market price of good declined than the cost price. Then the concept that plays a key role is ____

A. materiality
B. going concern concept
C. realization
D. consistency
Answer» C. realization
34.

Fixed assets are double the current assets and half the capital. The current assets are Rs.3,00,000 and investments are Rs.4,00,000. Then the current liabilities recorded in balance sheet will be

A. 2,00,000
B. 1,00,000
C. 3,00,000
D. 4,00,000
Answer» B. 1,00,000
35.

Which of the following provide frame work and accounting policies so that the financial statements of different enterprises become comparable.

A. business standards
B. accounting standards
C. market standards
D. none
Answer» B. accounting standards
36.

Which of the following factor is not considered while selecting accounting policies?

A. prudence
B. substance over form
C. accountancy
D. materiality
Answer» C. accountancy
37.

Debit the receiver & credit the giver is _____ account

A. personal
B. real
C. nominal
D. all the above
Answer» A. personal
38.

Cash a/c is a ______

A. real a/c
B. nominal
C. personal
D. none
Answer» A. real a/c
39.

As per accrual concept, which of the followings is not true

A. revenue – expenditure = profit
B. revenue – profit = expenditure
C. sales + gross profit = revenue
D. revenue = profit + expenditure
Answer» C. sales + gross profit = revenue
40.

Mr. X sold goods to Mr. Y ask Mr. X to keep the goods with him for some time

A. symbolic delivery
B. actual delivery
C. constructive delivery
D. none of these
Answer» A. symbolic delivery
41.

If nothing is written about the accounting assumption to be followed it is presumed that

A. they have been followed
B. they have not been followed
C. they are followed to some extent
D. none of these
Answer» B. they have not been followed
42.

Capital A/c is a _______ A/c.

A. personal
B. real
C. nominal
D. none
Answer» A. personal
43.

Cash A/c is a ________ A/c.

A. personal
B. real
C. nominal
D. none
Answer» B. real
44.

The principle “Debit the receiver and credit the giver” is related to_____

A. personal a/c
B. real a/c
C. nominal a/c
D. none
Answer» A. personal a/c
45.

Which of the following is a Real A/c?

A. building a/c
B. capital a/c
C. shyam a/c
D. rent a/c
Answer» A. building a/c
46.

Valuation of stock in accounting follows the principle of cost price or ____ whichever is lower.

A. market price
B. average price
C. net realizable value
D. none of these.
Answer» C. net realizable value
47.

Which of the following is not a nominal Account?

A. outstanding salaries account
B. salaries account
C. interest paid
D. commission received
Answer» A. outstanding salaries account
48.

For every debit there will be an equal credit according to

A. matching concept
B. cost concept
C. money measurement concept
D. dual aspect concept
Answer» D. dual aspect concept
49.

Historical cost concept requires the valuation of an asset at

A. original cost
B. replacement value
C. net realizable value
D. market value
Answer» A. original cost
50.

The comparison of financial statement of one year with that of another is possible only when _______ concept is followed

A. going concern
B. accrual
C. consistency
D. materiality
Answer» C. consistency
51.

Profit and loss is calculated at the stage of

A. recording
B. posting
C. classifying
D. summarising
Answer» D. summarising
52.

Which of the following is not the main objective of accounting?

A. systematic recording of transactions
B. ascertaining profit or loss
C. ascertainment of financial position
D. solving tax disputes with tax authorities
Answer» D. solving tax disputes with tax authorities
53.

The rule debit all expenses and losses and credit all income and gains relates to

A. personal account
B. real account
C. nominal accounts
D. all
Answer» C. nominal accounts
54.

Matching concept means

A. assets = capital + liabilities
B. transactions recorded at accrual concept
C. anticipate no profit but recognize all losses
D. expenses should be matched with the revenue of the period. branch accounts
Answer» D. expenses should be matched with the revenue of the period. branch accounts
55.

When Branch pays expenses for H.O. the following account is debited in the books of the branch _______

A. expenses is debited
B. h.o. a/c is debited
C. branch is debited
D. none
Answer» B. h.o. a/c is debited
56.

Under the stock and debtor system, Branch A/c is treated as ______

A. joint a/c
B. nominal a/c
C. personal a/c
D. real a/c
Answer» D. real a/c
57.

Goods are sent to branch at cost plus 20%. If closing stock of the branch is Rs 60,000 at invoice price, Rs ______ will be credited to stock reserve a/c.

A. rs 10000
B. rs 12000
C. rs 6000
D. rs 12600
Answer» A. rs 10000
58.

HO sends goods to branch at 20% profit on invoice price, therefore the percentage of profit on cost comes to ______

A. 15%
B. 25%
C. 33.33%
D. 20%
Answer» B. 25%
59.

HO sends goods to branch at invoice price after adding 25% on cost price, so profit would be ___ % of invoice price

A. 33.33%
B. 40%
C. 20%
D. 25%
Answer» C. 20%
60.

For finding the amount of sundry expenses paid by the branch, the following a/c should be prepared.

A. computer a/c
B. creditors
C. petty cash a/c
D. debtors
Answer» C. petty cash a/c
61.

If the opening balance of petty cash is Rs 1000, closing balance is Rs 500 and the petty cash received from HO is Rs 700, then what will be the amount of sundry expenses _____

A. rs 1200
B. rs 800
C. rs 700
D. rs 500
Answer» A. rs 1200
62.

H.O. sent Rs 5000 as petty cash to branch during the year. Opening and closing balances of petty cash was Rs 1400 and Rs 400 respectively. Then petty expenses of the branch during the year will be ______

A. rs 5000
B. rs 6400
C. rs 4600
D. rs 6000
Answer» D. rs 6000
63.

Which of the following branches, taking into consideration the scope of authority and responsibility, prepares its own independent final accounts?

A. independent branch
B. foreign branch
C. dependent branch
D. independent and foreign branch both
Answer» A. independent branch
64.

Opening balance of debtors a/c is Rs 1,40,000. Credit sales is Rs 10,74,000 and closing balance of Debtors a/c is Rs 1,90,000. What is the amount of cash collection from the debtors?

A. rs 10,24,000
B. rs 8,84,000
C. rs 11, 52,000
D. rs 8,42,000
Answer» A. rs 10,24,000
65.

Goods in transit are shown in the balance sheet at ______

A. head office
B. branch
C. both
D. none of above
Answer» A. head office
66.

H.O. has sent goods on invoice price worth Rs 2,40,000 which are 25% above cost price. What is the loading element?

A. rs 60000
B. rs 240000
C. rs 48000
D. rs 160000
Answer» C. rs 48000
67.

The adjusting entry for difference between the invoice price and cost price of goods are shown in ________

A. balance sheet
B. p & l a/c
C. branch adjustment a/c
D. none of above
Answer» C. branch adjustment a/c
68.

Stock and debtors system is generally used when goods are sent to the branch at _____

A. cost price
B. invoice price
C. both
D. none
Answer» B. invoice price
69.

H.O. sent goods to branch at invoice price 50% plus on original price. How many percentage of profit will be on Invoice price?

A. 20%
B. 25%
C. 33.33%
D. 16.67%
Answer» C. 33.33%
70.

Goods sent by HO but not received by branch before the end of the year, by debiting it to goods in transit, which account should be credited?

A. cash a/c
B. h.o. a/c
C. trading a/c
D. branch a/c
Answer» D. branch a/c
71.

If the opening balance of debtors is Rs 16,000 and closing balance is Rs 80,000, cash received from debtors is Rs 35,000 and bad debts is Rs 1,000, then what will be the amount of credit sales?

A. rs 95000
B. rs 105000
C. rs 100000
D. rs 110000
Answer» C. rs 100000
72.

The system of keeping accounts generally adopted by small size branches are:

A. debtors system
B. stock & debtors system
C. wholesale branch system
D. final account system
Answer» A. debtors system
73.

Goods are supplied by the head office to dependent branches are at:

A. cost price
B. invoice price
C. market price
D. cost or invoice price
Answer» D. cost or invoice price
74.

Under debtors system which account is prepared by head office to calculate profit or loss of each branch:

A. capital account
B. debtors account
C. branch account
D. branch adjustment account
Answer» C. branch account
75.

Under debtors system depreciation on fixed asset is ________

A. credited to branch a/c
B. debited to branch a/c
C. not shown in branch a/c
D. shown in debtors a/c
Answer» C. not shown in branch a/c
76.

Branch Trading &Profit & Loss A/c is only a _________ account not forming part of the full accounting system.

A. single
B. memorandum
C. capital
D. double
Answer» B. memorandum
77.

In final account system, Branch Trading and Profit & Loss A/c is prepared at ________

A. invoice price
B. cost price
C. cost & invoice price
D. market price
Answer» C. cost & invoice price
78.

Under Final A/c system, the profit or loss made by the branch is determined by preparing

A. branch stock a/c
B. branch debtors a/c
C. branch adjustment a/c
D. branch trading & profit &loss a/c
Answer» D. branch trading & profit &loss a/c
79.

The Branch Account prepared under Final Account System is the nature of:

A. nominal account
B. real account
C. personal account
D. general account
Answer» A. nominal account
80.

Dependent branch makes:

A. cash sales only
B. credit sales only
C. cash & credit sales
D. instalment sales
Answer» C. cash & credit sales
81.

All branch expenses such as rent, salary are paid by H.O in case of:

A. independent branch
B. local branch
C. dependent branch
D. foreign branch
Answer» C. dependent branch
82.

Branch Trading & Profit & Loss A/c is prepared to incorporate all _____

A. revenue items
B. capital items
C. asset items
D. past items
Answer» A. revenue items
83.

The difference between goods sent by H.O. and received by branch is known as _______

A. goods in transit
B. goods in warehouse
C. goods in production
D. goods in godown
Answer» A. goods in transit
84.

The stock reserve for unrealised profit will be ________ to the H.O profit & Loss A/C

A. debited
B. credited
C. first credited then debited
D. not shown
Answer» D. not shown
85.

____________ account is prepared to adjust the loads included in the value of opening stock and closing stock.

A. branch stock
B. branch adjustment
C. stock reserve
D. branch p&l
Answer» B. branch adjustment
86.

____________ account shows the shortage or surplus of stock.

A. branch adjustment
B. branch stock
C. goods sent to branch
D. branch p&l
Answer» B. branch stock
87.

The profit included in surplus or shortage of stock is transferred to ______ account

A. branch stock
B. branch expenses
C. branch adjustment
D. branch p&l
Answer» C. branch adjustment
88.

The balance of branch adjustment account is transferred to _________ account

A. branch stock
B. branch p&l
C. branch debtors
D. branch expenses
Answer» B. branch p&l
89.

An ordinary partnership business can have:

A. not more than 50 partners
B. not more than 20 partners.
C. any number of partners.
D. any number than 2 partners.
Answer» B. not more than 20 partners.
90.

In the absence of an agreement profit and loss are divided by partners in the ratio of:

A. capital
B. equally
C. time devoted by each partners
D. none of these.
Answer» B. equally
91.

In the absence of an agreement, Interest on loan advanced by the partner to the firm is allowed at the rate of:

A. 6%
B. 5%
C. 12%
D. 9%
Answer» A. 6%
92.

Current accounts of the partners should be opened when the capitals are:

A. fluctuating
B. fixed
C. either fixed or fluctuating
D. none of these
Answer» B. fixed
93.

Investment in partnership is made by introducing:

A. cash
B. none – cash assets
C. cash or non – cash assets
D. none of these.
Answer» C. cash or non – cash assets
94.

Partnership is formed by the partners by:

A. written agreement
B. oral agreement
C. written or oral
D. none of these
Answer» C. written or oral
95.

Any partner who investments in the business but does not take active part in the business is:

A. secret partner
B. sleeping partner
C. active partner
D. nominal partner
Answer» B. sleeping partner
96.

The written agreement of partnership is called:

A. partnership deed
B. articles of association
C. memorandum of association
D. certificate of incorporation
Answer» A. partnership deed
97.

Under fixed capital methods, profit will be credited to:

A. capital account
B. drawings
C. current a/c
D. profit & loss
Answer» C. current a/c
98.

The members of partnership firm are individually called as:

A. director
B. investor
C. partner
D. manager
Answer» C. partner
99.

Liability of partners in a partnership business is:

A. limited
B. un-limited
C. limited & unlimited
D. none of these
Answer» B. un-limited
100.

Capital of the partners are maintained by:

A. fixed capital method
B. fluctuating capital methods
C. by any two above methods
D. none of them.
Answer» C. by any two above methods
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