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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1001.	Closing entries are generally passed —
A.	At the time of opening new books of account ;
B.	At the time of closing the accounts;
C.	During the course of accounting period any time ;
D.	After certification of accounts
Answer» B. At the time of closing the accounts;

1002.	Closing stock appearing in the Trial Balance is shown in –
A.	Trading A/c and Balance Sheet ;
B.	Profit and Loss A/c ;
C.	Balance Sheet only
D.	Trading A/c only
Answer» C. Balance Sheet only

1003.	Depreciation Account appearing in the Trial Balance is shown in —
A.	Profit and Loss A/c ;
B.	Trading A/c ;
C.	Deducted from the concerned assets A/c;
D.	Shown on the liability side
Answer» A. Profit and Loss A/c ;

1004.	Profit on sale of old plant is shown –
A.	In Trading A/c ;
B.	In Profit and Loss Appropriation A/c ;
C.	Profit and Loss A/c
D.	Being a non operating item ignored
Answer» C. Profit and Loss A/c

1005.	Carriage on goods purchased is shown in —
A.	Profit and Loss A/c ;
B.	Capitalized with work in progress ;
C.	Trading A/c;
D.	Shown in Balance Sheet
Answer» C. Trading A/c;

1006.	Which of these is not an operating income
A.	Income from sale of trading goods ;
B.	Bad debts recovered ;
C.	Interest on FDs ;
D.	None
Answer» C. Interest on FDs ;

1007.	ABC holds an average inventory of ` 36,000(CP) with an inventory turnover of 5 times. If the firm makes a gross profit of 25% on sales, find the total sales of the company
A.	2,40,000 ;
B.	2,10,000 ;
C.	2,00,000 ;
D.	1,80,000
Answer» A. 2,40,000 ;

1008.	From the following details what will be the partners‘ commission? Net profit before charging partners‘ commission `65,000. Partners‘ commission @ 11% after charging such commission
A.	6441 ;
B.	5431 ;
C.	7654 ;
D.	9876
Answer» A. 6441 ;

1009.	From the following details what will be the partners‘ commission? Net profit before charging partners‘ commission `65,000. Partners‘ commission 11% before charging such commission
A.	6441 ;
B.	5431 ;
C.	7150 ;
D.	5876
Answer» C. 7150 ;

1010.	Arrangement of Balance Sheet in a logical order is known as —
A.	Dressing Balance Sheet ;
B.	Marshalling Balance Sheet;
C.	Formatting Balance Sheet ;
D.	Make up of Balance Sheet
Answer» B. Marshalling Balance Sheet;

1011.	Improper valuation of inventory effects—
A.	Profitability ;
B.	Financial position ;
C.	Both ;
D.	Cash inflows
Answer» C. Both ;

1012.	Find the cost of goods sold if goods are sold for ` 2,000 at 25% profit on cost
A.	1,600 ;
B.	1,500 ;
C.	1,000 ;
D.	1,800
Answer» A. 1,600 ;

1013.	Find the value of opening stock from the following data. Purchases ` 1,50,000, Closing stock ` 30,000 , Sales `2,20,000, Gross profit ` 40,000.
A.	50,000 ;
B.	55,000 ;
C.	60,000 ;
D.	65,000
Answer» C. 60,000 ;

1014.	A Bill of Exchange is drawn on 1st April, 2012 payable after 3 months. The due date of the bill is
A.	30th June,2012
B.	1st July,2012
C.	4th July,2012
D.	4th August,2012
Answer» C. 4th July,2012

1015.	Which of the following statements is/are true?
A.	Noting charges are paid by the holder of the bill on the date of default
B.	A bill can be endorsed only thrice
C.	On renewal of bill the old bill is canceled
D.	Both (a) and (c) above
Answer» D. Both (a) and (c) above

1016.	When bill discounted with the bank is dishonoured?
A.	Acceptor‘s Account is debited in the books of drawer
B.	Bills Receivable Account is credited in the books of drawer
C.	Bank Account is debited in the books of drawer
D.	Bills Payable Account is debited in the books of drawer
Answer» A. Acceptor‘s Account is debited in the books of drawer

1017.	Which of the following statements is/are false?
A.	Accommodation bills are drawn for the benefit of drawer only
B.	Bills sent for collection is an asset
C.	Bills of exchange cannot be drawn on a banker
D.	Both (a) and (c) above
Answer» D. Both (a) and (c) above

1018.	In the books of the drawer, the accounting treatment involved on receipt of a bill of exchange duly accepted by the drawee is i. Debit Bills Receivable Account ii. Debit Drawee‘s Account iii. Credit Drawee‘s Account iv. Credit Sales Account
A.	Only (i) above
B.	Both (ii) and (iv) above
C.	Both (i) and (iii) above
D.	Both (i) and (iv) above
Answer» C. Both (i) and (iii) above

1019.	The noting charges levied on dishonour of an endorsed bill by the Notary Public are to be borne by
A.	The drawer of the bill
B.	The person responsible for dishonour
C.	The holder of the bill
D.	The endorser of the bill
Answer» B. The person responsible for dishonour

1020.	The drawer of a trade bill passes relevant entries with regard to the transaction involved in it. But, in case of an accommodation bill, he passes an entry in addition to the usual entries. The additional entry so passed is with respect to
A.	Discounting of the bill with the bank
B.	Payment of the bill on due date
C.	Remitting or receiving the amount
D.	Sending the bill to bank for collection
Answer» C. Remitting or receiving the amount

1021.	Under which of the following situations, is journal entry not passed in the books of the drawer?
A.	When a discounted bill is honoured by the drawee on the due date
B.	When a bill is sent to the bank for collection
C.	When a bill is renewed at the request of the drawee
D.	When a debtor accepts a bill drawn by the drawer
Answer» A. When a discounted bill is honoured by the drawee on the due date

1022.	Which of the following is not a feature of a promissory note?
A.	It must be in writing
B.	It contains an unconditional promise to pay
C.	It is payable to the bearer
D.	It must be signed by the maker
Answer» C. It is payable to the bearer

1023.	How many parties are generally found in a Bill of Exchange
A.	4 ;
B.	2 ;
C.	3 ;
D.	5
Answer» C. 3 ;

1024.	X draws a Bill of Exchange on Y for ` 10,000 on 1-1-2013 for 3 months. The due date of the bill will be —
A.	4-4-2013 ;
B.	3-4-2013 ;
C.	1-4-2013 ;
D.	31-3-2013
Answer» A. 4-4-2013 ;

1025.	When a B/R is endorsed by the Drawer what entry is passed by the Drawee—
A.	B/R A/c Dr. to Drawer A/c Cr. ;
B.	B/P A/c Dr. to Drawer A/c Cr.
C.	3rd Party‘s A/c Dr. to B/P A/c Cr. ;
D.	No entry at all
Answer» D. No entry at all

1870+ Financial Accounting Solved MCQs

Closing entries are generally passed —

Closing stock appearing in the Trial Balance is shown in –

Depreciation Account appearing in the Trial Balance is shown in —

Profit on sale of old plant is shown –

Carriage on goods purchased is shown in —

Which of these is not an operating income

ABC holds an average inventory of ` 36,000(CP) with an inventory turnover of 5 times. If the firm makes a gross profit of 25% on sales, find the total sales of the company

From the following details what will be the partners‘ commission? Net profit before charging partners‘ commission `65,000. Partners‘ commission @ 11% after charging such commission

From the following details what will be the partners‘ commission? Net profit before charging partners‘ commission `65,000. Partners‘ commission 11% before charging such commission

Arrangement of Balance Sheet in a logical order is known as —

Improper valuation of inventory effects—

Find the cost of goods sold if goods are sold for ` 2,000 at 25% profit on cost

Find the value of opening stock from the following data. Purchases ` 1,50,000, Closing stock ` 30,000 , Sales `2,20,000, Gross profit ` 40,000.

A Bill of Exchange is drawn on 1st April, 2012 payable after 3 months. The due date of the bill is

Which of the following statements is/are true?

When bill discounted with the bank is dishonoured?

Which of the following statements is/are false?

In the books of the drawer, the accounting treatment involved on receipt of a bill of exchange duly accepted by the drawee is i. Debit Bills Receivable Account ii. Debit Drawee‘s Account iii. Credit Drawee‘s Account iv. Credit Sales Account

The noting charges levied on dishonour of an endorsed bill by the Notary Public are to be borne by

The drawer of a trade bill passes relevant entries with regard to the transaction involved in it. But, in case of an accommodation bill, he passes an entry in addition to the usual entries. The additional entry so passed is with respect to

Under which of the following situations, is journal entry not passed in the books of the drawer?

Which of the following is not a feature of a promissory note?

How many parties are generally found in a Bill of Exchange

X draws a Bill of Exchange on Y for ` 10,000 on 1-1-2013 for 3 months. The due date of the bill will be —

When a B/R is endorsed by the Drawer what entry is passed by the Drawee—

When a B/R is discounted, what entry is passed by the Drawee—

Noting charges are ultimately borne by—

Negotiable Instrument Act was enacted in—

Which of these is not an essential feature of a bill of exchange

A foreign bill of exchange is generally drawn up in —

Which of these are not required in a promissory note

Accommodation bills are generally for —

Which of these is not true about a promissory note

Drawee means a person who –

Retirement of a bill of exchange means —

Early payment of a Bill of Exchange is known as —

On early retirement of a B/E who suffers loss of interest –

Sudhir of Simla consigned 100kg of vegetables to D of Delhi for ` 1500. He spent ` 75 on transportation. 10kg were found unfit for resale due to weather conditions and of the remaining 85 kg were sold for ` 1675. Find the value of closing stock.

Sudhir of Simla consigned 100kg of vegetables to D of Delhi for ` 1500. He spent ` 75 on transportation. 10kg were found stolen during transit and of the remaining 85 kg were sold for ` 1675. Find the value of closing stock.

Loss of goods in transit is borne by—

A consignor is entitled to ——————

A consignee is entitled to ———————

Which of these is a normal loss —

Del credere commission is allowed to —

Balance left in Consignment A/c shows —

If the consignee is allowed del credere commission, then he bears —

On 1st April 2013 Abhay of Patna consigned goods costing `7500 to Bhola of Ranchi at a proforma invoice price of 25% profit on sales. The Consignment A/c will be credited for stock loading by –

As per Partnership Act, which of these rights are available to a partner ——

What does the balance in Memorandum Joint Venture A/c shows—

Which of these is not a part of double entry system

1026.	When a B/R is discounted, what entry is passed by the Drawee—
A.	Bank A/c Dr. to B/R Cr. ;
B.	Drawer A/c Dr. to B/R A/c Cr.
C.	B/R A/c Dr. to B/P A/c Cr. ;
D.	No entry
Answer» D. No entry

1027.	Noting charges are ultimately borne by—
A.	Drawee ;
B.	Drawer ;
C.	Payee ;
D.	None
Answer» A. Drawee ;

1028.	Negotiable Instrument Act was enacted in—
A.	1981 ;
B.	1881 ;
C.	1871 ;
D.	2001
Answer» B. 1881 ;

1029.	Which of these is not an essential feature of a bill of exchange
A.	Unconditional ;
B.	Certainty of amount ;
C.	In writing;
D.	Amount to be paid in foreign currency
Answer» D. Amount to be paid in foreign currency

1030.	A foreign bill of exchange is generally drawn up in —
A.	Triplicate ;
B.	Duplicate ;
C.	Single ;
D.	Quadruplicate
Answer» A. Triplicate ;

1031.	Which of these are not required in a promissory note
A.	Acceptance ;
B.	Unconditional promise to pay ;
C.	Properly stamped;
D.	Payment to be made legal currency
Answer» A. Acceptance ;

1032.	Accommodation bills are generally for —
A.	Genuine trade reasons ;
B.	For mutual financial accommodation;
C.	To help augment money supply ;
D.	All the three
Answer» B. For mutual financial accommodation;

1033.	Which of these is not true about a promissory note
A.	Unconditional promise ;
B.	Crossing ;
C.	Certainty of amount ;
D.	Payee to a certain person
Answer» B. Crossing ;

1034.	Drawee means a person who –
A.	Makes the order ;
B.	Accepts it ;
C.	Takes the payment on due date ;
D.	Creditor
Answer» B. Accepts it ;

1035.	Retirement of a bill of exchange means —
A.	Cancellation of bill ;
B.	Premature payment of bill ;
C.	Discounting of bill;
D.	Endorsement of bill
Answer» B. Premature payment of bill ;