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in Financial Accounting

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration in Computer Applications (BBA [CA]) , Bachelor of Business Administration (BBA) , Bachelor of Accounting and Finance (BAF) , Bachelor of Commerce (B Com) , Cost Accounting .

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101.	When forfeited shares (which were originally issued at a discount ) are reused at a premium, the amount of such premium will be credited to
A.	Shares forfeiture account
B.	security premium account
C.	capital reserve account
D.	none of these.
Answer» B. security premium account

102.	When an existing company offers its shares for sale to the existing shareholders, it is known as
A.	Private placement
B.	bonus shares
C.	right issue
D.	offer for sale
Answer» C. right issue

103.	Dividends are usually paid on
A.	Authorized capital
B.	issued capital
C.	called up capital
D.	paid up capital
Answer» D. paid up capital

104.	Which of the following should be deducted from the shares capital to find out paid up capital
A.	Calls in advance
B.	calls in arrears
C.	shares forfeited account
D.	discount on issue of shares.
Answer» B. calls in arrears

105.	Interest on debenture is
A.	Adjustment of profit
B.	appropriation of profit
C.	charge on profit
D.	none of these
Answer» C. charge on profit

106.	In the balance sheet of a company, debentures are shown under which heading
A.	Secured loan
B.	unsecured loan
C.	provisions
D.	reserves and surplus
Answer» A. Secured loan

107.	In the balance sheet of a company , the discount on issue of debentures is shown under which heading
A.	Fixed asset
B.	current asset
C.	investment
D.	miscellaneous expenditure
Answer» D. miscellaneous expenditure

108.	Advance payment of tax is in the nature of
A.	Capital expenditure
B.	prepaid expenses
C.	outstanding expenses
D.	revenue expenditure
Answer» B. prepaid expenses

109.	Debentures are shown in the balance sheet under head
A.	Current asset loans and advances
B.	investments
C.	secured loan
D.	unsecured loan
Answer» C. secured loan

110.	Preliminary expense Is an example of
A.	Fixed asset
B.	current asset
C.	investment
D.	fictitious asset
Answer» D. fictitious asset

111.	Divisible profit do not include
A.	Insurance fund
B.	reserve fund
C.	profit and loss account balance
D.	revaluation
Answer» D. revaluation

116.	The amount set aside to meet the loss of bad debt is
A.	Provision
B.	liability
C.	reserve
D.	contingent liability
Answer» A. Provision

117.	When the proposed dividend exceeds 20% of the paid up capital, percentage of profit to be transferred to reserve is
A.	10%
B.	7.5%
C.	2.5%
D.	5%
Answer» A. 10%

119.	Advance payment of tax should be shown on the
A.	Debit side of P/L a/c
B.	debit side of P/L appropriation a/c
C.	asset side of the B/S
D.	liability side of the B/S
Answer» C. asset side of the B/S

120.	Which of the following items will be taken in the P/L a/c below the line
A.	Provision for taxation
B.	transfer to sinking fund
C.	contribution to PF
D.	preliminary expenses written off
Answer» C. contribution to PF

112.	The transfer of profit to reserve should not exceed
A.	5% of profit
B.	10% of profit
C.	15% of profit
D.	20% of profit
Answer» B. 10% of profit

113.	Loose tools are shown in the balance sheet under
A.	Fixed asset
B.	investment
C.	current asset
D.	miscellaneous expenditure
Answer» C. current asset

114.	Discount on shares and debentures are shown in
A.	P/L Appropriation a/c
B.	asset side of the b/s
C.	liability side of the b/s
D.	none of these.
Answer» B. asset side of the b/s

115.	Calls in arrear Is
A.	Shown as current asset
B.	deducted from share capital
C.	shown as current liability
D.	shown under miscellaneous expenditure
Answer» B. deducted from share capital

118.	In the case of joint stock company, goodwill is sown on the asset side under the head
A.	Fixed asset
B.	investment
C.	current asset
D.	miscellaneous expenditure
Answer» A. Fixed asset

121.	Scrip dividend means
A.	Unclaimed dividend
B.	arrears of dividend
C.	dividend paid other than cash
D.	cash dividend
Answer» C. dividend paid other than cash

122.	Which of the following would not appear in a limited company’s appropriation a/c
A.	Transfer to revaluation reserve
B.	proposed taxation
C.	interim dividend
D.	transfer to general reserve.
Answer» B. proposed taxation

123.	As per the rules framed under the companies Act, 1956, if the dividend proposed by a company is 12% of the paid up capital, the amount to be transferred to reserve must not be less than
A.	5% of current year profit
B.	7.5% of the current year profit
C.	10% of the current year profit
D.	2.5% of the current year profit.
Answer» D. 2.5% of the current year profit.

124.	Banks show the provision for income tax under the head
A.	Contingent assets
B.	contingent liabilities
C.	other liabilities and provisions
D.	borrowings.
Answer» C. other liabilities and provisions

125.	Rebate on bills discounted is
A.	An item of income
B.	a liability
C.	income received in advance
D.	accrued income.
Answer» C. income received in advance

1680+ more mcqs Solved MCQs

When forfeited shares (which were originally issued at a discount ) are reused at a premium, the amount of such premium will be credited to

When an existing company offers its shares for sale to the existing shareholders, it is known as

Dividends are usually paid on

Which of the following should be deducted from the shares capital to find out paid up capital

Interest on debenture is

In the balance sheet of a company, debentures are shown under which heading

In the balance sheet of a company , the discount on issue of debentures is shown under which heading

Advance payment of tax is in the nature of

Debentures are shown in the balance sheet under head

Preliminary expense Is an example of

Divisible profit do not include

The transfer of profit to reserve should not exceed

Loose tools are shown in the balance sheet under

Discount on shares and debentures are shown in

Calls in arrear Is

The amount set aside to meet the loss of bad debt is

When the proposed dividend exceeds 20% of the paid up capital, percentage of profit to be transferred to reserve is

In the case of joint stock company, goodwill is sown on the asset side under the head

Advance payment of tax should be shown on the

Which of the following items will be taken in the P/L a/c below the line

Scrip dividend means

Which of the following would not appear in a limited company’s appropriation a/c

As per the rules framed under the companies Act, 1956, if the dividend proposed by a company is 12% of the paid up capital, the amount to be transferred to reserve must not be less than

Banks show the provision for income tax under the head

Rebate on bills discounted is

Which of the following does not include under the head “other asset”

A non banking asset is

In a bank balance sheet, unclaimed dividend will be shown under the head

With effect from 31/03/2005, a doubt full asset is none which has remained in the substandard category for

Provision created for substandard is

Provision created for unsecured doubtful debt is

General insurance policies are taken

When policy matures on the death of the insured, it is expressed as

In the revenue account bonus in reduction of premium is shown as

The fixed assets of an insurance company are shown in

Insurance regulation and development authorities act came into effect in

Which of the following of an insurance company does not fall under income from investment

Which of the following of an insurance company is included in other assets

Reserve for unexpired risk is shown under

Which of the following is not an advantage of having a conceptual framework of accounting ?

A conceptual framework for accounting is …

Which of the following relate to financial position in a set of financial statements?

GAAP stands for

The global key professional accounting body is -----

The original cost at which an asset or liability is acquired is known as --------

The international accounting standards committee was set up in -------------

The process of converting foreign – subsidiary financial statements into the home currency is known as------------

……………… is an artificial person created by law

The liability of shareholders of a company is ………………..

A company is managed by its…………….

126.	Which of the following does not include under the head “other asset”
A.	Silver
B.	interest accrued
C.	gold
D.	inter office adjustment
Answer» C. gold

127.	A non banking asset is
A.	An item of office equipment
B.	any asset required from the debtors in satisfaction of claim
C.	money at call and short notice
D.	furniture and fixtures
Answer» B. any asset required from the debtors in satisfaction of claim

128.	In a bank balance sheet, unclaimed dividend will be shown under the head
A.	Contingent liabilities
B.	other liabilities
C.	borrowings
D.	none of these.
Answer» B. other liabilities

129.	With effect from 31/03/2005, a doubt full asset is none which has remained in the substandard category for
A.	18 month
B.	12 month
C.	6 month
D.	none of these
Answer» B. 12 month

130.	Provision created for substandard is
A.	10%
B.	155
C.	20%
D.	none of these.
Answer» A. 10%

131.	Provision created for unsecured doubtful debt is
A.	50%
B.	75%
C.	100%
D.	none of these.
Answer» C. 100%

132.	General insurance policies are taken
A.	One year
B.	two year
C.	three year
D.	none of these
Answer» A. One year

133.	When policy matures on the death of the insured, it is expressed as
A.	With profit policy
B.	without profit policy
C.	whole life policy
D.	none of these
Answer» A. With profit policy

134.	In the revenue account bonus in reduction of premium is shown as
A.	Liability
B.	income
C.	expense
D.	none of these
Answer» C. expense

135.	The fixed assets of an insurance company are shown in
A.	Schedule 6
B.	schedule 7
C.	schedule 8
D.	none of these
Answer» D. none of these