1870+ Financial Accounting Solved MCQs

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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801.	The amount of Owners‘ equity in a business is not affected by
A.	The percentage of Total Assets held in cash
B.	Investments made in the business by the owner
C.	The profitability of the business
D.	The amount of dividends paid to Stock holders
Answer» A. The percentage of Total Assets held in cash

802.	When a Fixed Asset is obtained as a gift, the account to be credited is
A.	Goodwill A/c
B.	Capital Reserve A/c
C.	Donor‘s A/c
D.	General Reserve A/c
Answer» B. Capital Reserve A/c

803.	Which of the following is/are fixed asset(s)?
A.	Closing inventory
B.	Fixed Deposits in a bank
C.	Patents
D.	Prepaid expenses
Answer» C. Patents

804.	Bank Overdraft is shown as a
A.	Current Liability ;
B.	Contingent Liability ;
C.	Unsecured Loan ;
D.	Provision
Answer» A. Current Liability ;

805.	Which of the following is NOT a characteristic of Cash Book?
A.	It has two identical sides—left hand side, the debit side and right hand side, the credit side
B.	It verifies the arithmetic accuracy of posting of entries from the Journal to the Ledger
C.	The difference between the total of two sides of cash book shows cash in hand
D.	It always shows debit balance. It can never show credit balance
Answer» D. It always shows debit balance. It can never show credit balance

806.	If Machinery Account is debited with the amount of repairs incurred on the machine, this is an example of
A.	Compensating error
B.	Error of principle
C.	Error of commission
D.	Error of omission
Answer» B. Error of principle

807.	Which of the following is true?
A.	Bank Account is a Personal Account
B.	Stock of stationery Account is a Nominal Account
C.	Returns Inward Account is a Personal Account
D.	Outstanding rent Account is a Nominal Account
Answer» A. Bank Account is a Personal Account

808.	Which of the following is a liability of a firm?
A.	Debit balance of analytical Petty Cash Book
B.	Credit balance of Bank Pass book
C.	Debit balance of Bank column of Cash Book
D.	Credit balance of Bank column of Cash Book
Answer» D. Credit balance of Bank column of Cash Book

809.	Which of the following errors is an error of principle?
A.	Total sales figure was taken as ` 19,373 instead of ` 19,733
B.	A discount of ` 30 allowed to Mr. A was not recorded in the discount allowed account
C.	Legal charges for acquisition of building for ` 500 was entered in the Legal Expenses Account
D.	1,000 received from Mr. X was posted to the credit of Mr. M
Answer» C. Legal charges for acquisition of building for ` 500 was entered in the Legal Expenses Account

810.	The book which all accounts of the firm are maintained is known as
A.	Cash book ;
B.	Ledger ;
C.	Journal ;
D.	Daybook
Answer» B. Ledger ;

811.	` 500 paid as cartage on new Plant and Machinery, this was debited to Carriage Inward A/c. This is an error of-
A.	Principle ;
B.	Omission ;
C.	Commission ;
D.	Compensating
Answer» A. Principle ;

813.	While checking the accounts of ABC the following discrepancies were noticed, even though the Trial Balance was made to balance by putting the difference to Suspense A/c. (i) Sales day book for the month of June‘12 was found overcast by ` 7,000. (ii) A credit purchase of ` 3,000 was omitted to be recorded in the days book. (iii) ` 4,300. Received from A credited to A A/c ` 3,400. (iv) Purchase of Office Equipment worth ` 5,000 included in trading purchases. From the above details what would have been the difference in Trial Balance which was made to balance by opening Suspense A/c.
A.	Debit side short by ` 9,100 ;
B.	Credit side short by ` 9,100 ;
C.	Debit side more by ` 7,900 ;
D.	Credit side more by ` 6,100
Answer» D. Credit side more by ` 6,100

818.	The total of debit side of discount column of Cash Book is-
A.	Balanced with credit side of discount column ;
B.	Posted to Discount Allowed A/c;
C.	Posted to Discount Received A/c ;
D.	Posted to Profit & Loss A/c
Answer» B. Posted to Discount Allowed A/c;

821.	Nominal A/c represents-
A.	Profit/Gain ;
B.	Loss/Expenses ;
C.	None ;
D.	Both (a) and (b)
Answer» D. Both (a) and (b)

824.	The Sales Returns Day Book would include:
A.	Goods bought on credit ;
B.	Fixed Assets bought that are inappropriate for business ;
C.	Stock that customers have returned ;
D.	Goods bought on credit that are returned to the original supplier
Answer» C. Stock that customers have returned ;

812.	` 4,500 paid to Madan as salary for the month of December‘12, this was debited to his A/c, this is a/an ……………………… error.
A.	Principle ;
B.	Omission ;
C.	Commission ;
D.	Compensating
Answer» C. Commission ;

814.	Cash Account is a –
A.	Personal A/c ;
B.	Nominal A/c ;
C.	Real A/c ;
D.	Dummy A/c
Answer» C. Real A/c ;

815.	Rent outstanding for the month of December‘12 will appear on-
A.	Debit side of Cash Book ;
B.	Credit side of Cash Book ;
C.	Either side ;
D.	Nowhere
Answer» D. Nowhere

816.	Goods worth ` 5,000 purchased from A on credit will be recorded on-
A.	Debit side of Cash Book ;
B.	Credit side of Cash Book ;
C.	Nowhere in the Cash Book ;
D.	Either (a) or (b)
Answer» C. Nowhere in the Cash Book ;

817.	Which column of Cash Book is never balanced.
A.	Discount Column ;
B.	Cash ;
C.	Bank ;
D.	Petty Cash
Answer» A. Discount Column ;

819.	Prepaid rent is a –
A.	Nominal A/c ;
B.	Representative Personal A/c ;
C.	Tangible Assets A/c ;
D.	None
Answer» B. Representative Personal A/c ;

820.	Which of the following assets is a fictitious asset
A.	Goodwill A/c ;
B.	Prepaid Rent A/c ;
C.	Outstanding Salary A/c ;
D.	Preliminary expenses A/c
Answer» D. Preliminary expenses A/c

822.	SBI A/c is a –
A.	Nominal A/c ;
B.	Artificial Personal A/c ;
C.	Representative Personal A/c ;
D.	None
Answer» B. Artificial Personal A/c ;

823.	Liability A/c has……………. Balance
A.	Debit ;
B.	Credit ;
C.	No balance ;
D.	Either (a) or (b)
Answer» B. Credit ;

825.	An Investment in one asset A/c may lead to –
A.	Increase in liability A/c ;
B.	Decrease in A/c asset ;
C.	Each a or b ;
D.	Both a/b.
Answer» C. Each a or b ;

1870+ Financial Accounting Solved MCQs

The amount of Owners‘ equity in a business is not affected by

When a Fixed Asset is obtained as a gift, the account to be credited is

Which of the following is/are fixed asset(s)?

Bank Overdraft is shown as a

Which of the following is NOT a characteristic of Cash Book?

If Machinery Account is debited with the amount of repairs incurred on the machine, this is an example of

Which of the following is true?

Which of the following is a liability of a firm?

Which of the following errors is an error of principle?

The book which all accounts of the firm are maintained is known as

` 500 paid as cartage on new Plant and Machinery, this was debited to Carriage Inward A/c. This is an error of-

` 4,500 paid to Madan as salary for the month of December‘12, this was debited to his A/c, this is a/an ……………………… error.

Cash Account is a –

Rent outstanding for the month of December‘12 will appear on-

Goods worth ` 5,000 purchased from A on credit will be recorded on-

Which column of Cash Book is never balanced.

The total of debit side of discount column of Cash Book is-

Prepaid rent is a –

Which of the following assets is a fictitious asset

Nominal A/c represents-

SBI A/c is a –

Liability A/c has……………. Balance

The Sales Returns Day Book would include:

An Investment in one asset A/c may lead to –

The process of recording business transaction in a book of original entry is known as-

The type of A/c with a named credit balance is-

Overcasting of purchases journal would affect

Any income or profit derived by carrying on the business or during the course of business is called-

Amount received from the proprietors as capital or loan receipt is treated as-

When the benefits of revenue expenditure is available for a period of two or three years, the expenditure is known as-

Endowment fund receipt is traded as-

Legacy are generally-

Interest Account will have-

Purchase A/c will have-

Which of the following voucher is used to record transactions that do not affect bank & cash?

Opening entries are generally passed through-

Purchases made on credit not recorded at all would affect

Which of the following is the example of contingencies?

Which of the following is not a contingent liability?

In an account if debit side > credit side, the balance is known as the:

Total depreciation of an asset cannot exceed its:

Amount paid to Gagan posted to the credit side of his account would affect

Which of the following statements is/are true ?

Which of the following is true regarding closing entries?

Closing stock is generally valued at

Which of the following assets is/are to be valued at the lower of cost and net realizable value?

Which of the following methods is not a practical way of realizing revenue?

The amount payable to a person as consideration for the use of rights vested in him is

826.	The process of recording business transaction in a book of original entry is known as-
A.	Journals ;
B.	Balance ;
C.	Posting ;
D.	None
Answer» A. Journals ;

827.	The type of A/c with a named credit balance is-
A.	Expenses A/c ;
B.	Assets A/c ;
C.	Revenue A/c ;
D.	Suspense A/c
Answer» C. Revenue A/c ;

828.	Overcasting of purchases journal would affect
A.	Sales account ;
B.	Purchase account ;
C.	Supplier's account and purchase account
D.	None of these
Answer» B. Purchase account ;

829.	Any income or profit derived by carrying on the business or during the course of business is called-
A.	Capital Receipt ;
B.	Revenue Receipt ;
C.	Revenue Gain ;
D.	Capital Gain
Answer» B. Revenue Receipt ;

830.	Amount received from the proprietors as capital or loan receipt is treated as-
A.	Capital Receipt ;
B.	Revenue Receipt ;
C.	Revenue Income ;
D.	Capital Income
Answer» A. Capital Receipt ;

831.	When the benefits of revenue expenditure is available for a period of two or three years, the expenditure is known as-
A.	Revenue Expenditure ;
B.	Deferred Revenue Expenditure ;
C.	Capital Expenditure ;
D.	Depreciation.
Answer» B. Deferred Revenue Expenditure ;

832.	Endowment fund receipt is traded as-
A.	Casual Receipt ;
B.	Revenue Receipt ;
C.	Loss ;
D.	Expenses
Answer» A. Casual Receipt ;

833.	Legacy are generally-
A.	Capitalized ;
B.	Treated Loss ;
C.	Revenue Expenses ;
D.	Deferred Revenue expenses.
Answer» A. Capitalized ;

834.	Interest Account will have-
A.	Debit balance only ;
B.	Credit balance only ;
C.	Debit or Credit balance ;
D.	No balance at all
Answer» C. Debit or Credit balance ;

835.	Purchase A/c will have-
A.	No balance at all ;
B.	Debit balance ;
C.	Credit balance ;
D.	Debit or Credit
Answer» B. Debit balance ;