2081 + Mcqs in Accounting Page 41 McqOptions

2001.	_______ is the gross inflow of economic benefits
A.	Assets
B.	Liabilities
C.	Income
D.	Expenses
Answer» D. Expenses

Discussion

2002.	Liabilities are which of the following?
A.	Resources
B.	Obligations
C.	Future benefits
D.	Expenses
Answer» C. Future benefits

Discussion

2003.	______ is a separate legal entity whose total capital can be divided into many shares
A.	Partnership
B.	Sole Proprietorship
C.	Company
D.	Non-profit organization
Answer» D. Non-profit organization

Discussion

2004.	An asset possesses which of the following?
A.	Future economic benefits for the business
B.	All kinds of benefits for the business
C.	Expenses for the business
D.	Merits & Demerits for the business
Answer» B. All kinds of benefits for the business

Discussion

2005.	Which of the following is the internal user of financial statements?
A.	Creditor of the business
B.	Government agency
C.	Shareholder of the business
D.	Manager of the business
Answer» E.

Discussion

2006.	Which of the following is the external user of financial statements?
A.	Manager of the business
B.	CEO of the business
C.	Creditor of the business
D.	Controller of the business
Answer» D. Controller of the business

Discussion

2007.	Bookkeeping mainly consists of which part of accounting process?
A.	Analysing
B.	Preparing financial statements
C.	Recording financial information
D.	Auditing the books of accounts
Answer» D. Auditing the books of accounts

Discussion

2008.	Auditing refers to
A.	Reporting the financial information
B.	Examination of financial information
C.	Preparation of financial statements
D.	Maintaining the ledger accounts
Answer» C. Preparation of financial statements

Discussion

2009.	In accounting, an economic event is referred to as
A.	Cash
B.	Bank statement
C.	Transaction
D.	Exchange of money
Answer» D. Exchange of money

Discussion

2010.	A Master Budget consists of
A.	Sales budget
B.	Production budget
C.	Material budget
D.	All of the above
Answer» E.

Discussion

2011.	The accounting process involves recording
A.	Quantifiable economic event
B.	Non Quantifiable economic event
C.	All of them
D.	None of them
Answer» B. Non Quantifiable economic event

Discussion

2012.	Budgeting is difficult to apply in the following cases
A.	Products subjected to rapid changes
B.	Job order manufacturing
C.	Uncertain market condition
D.	All of the above
Answer» E.

Discussion

2013.	Return on Investment Ratio (ROI) =
A.	(Gross profit / Net sales) x 100
B.	(Gross profit x Sales / Fixed assets) x 100
C.	(Net profit / Sales) x 100
D.	(Net profit / Total assets) x 100
Answer» E.

Discussion

2014.	A low Return on Investment Ratio (ROI) indicates
A.	Improper utilization of resources
B.	Over investment in assets
C.	Both A and B
D.	None of the above
Answer» D. None of the above

Discussion

2015.	Lower the Debt Equity ratio
A.	Lower the protection to creditors
B.	Higher the protection to creditors
C.	It does not affect the creditors
D.	None of the above
Answer» C. It does not affect the creditors

Discussion

2016.	A higher inventory ratio indicates
A.	Better inventory management
B.	Quicker turnover
C.	Both A and B
D.	None of the above
Answer» D. None of the above

Discussion

2017.	The measure of how efficiently the assets resources are employed by the firm is called
A.	Liquidity ratio
B.	Leverage ratio
C.	Activity ratio
D.	Profitability ratio
Answer» D. Profitability ratio

Discussion

2018.	Current ratio =
A.	Quick assets/Current liabilities
B.	Current assets/Current liabilities
C.	Debt/Equity
D.	Current assets/Equity
Answer» C. Debt/Equity

Discussion

2019.	The ratios that refer to the ability of the firm to meet the short term obligations out of its short term resources
A.	Liquidity ratio
B.	Leverage ratio
C.	Activity ratio
D.	Profitability ratio
Answer» B. Leverage ratio

Discussion

2020.	The following is a statement of revenues and expenses for a specific period of time
A.	Trading account
B.	Trial Balance
C.	Profit & Loss statements
D.	Balance Sheet
Answer» D. Balance Sheet

Discussion

2021.	The following is (are) the current liability (ies)
A.	Bills payable
B.	Outstanding expenses
C.	Bank Overdraft
D.	All of the above
Answer» E.

Discussion

2022.	Balance sheet is a statement of
A.	Assets
B.	Liabilities
C.	Capital
D.	All of the above
Answer» E.

Discussion

2023.	The following is a statement showing the financial status of the comapany at any given time
A.	Trading account
B.	Profit & Loss statement
C.	Balance Sheet
D.	Cash Book
Answer» D. Cash Book

Discussion

2024.	The process of entering all transactions from the Journal to Ledger is called
A.	Posting
B.	Entry
C.	Accounting
D.	None of the above
Answer» B. Entry

Discussion

2025.	In Journal, the business transaction is recorded
A.	Same day
B.	Next day
C.	Once in a week
D.	Once in a month
Answer» B. Next day

Discussion

2026.	Real account records
A.	Dealings with creditors or debtors
B.	Dealings in commodities
C.	Gains and losses
D.	All of the above
Answer» C. Gains and losses

Discussion

2027.	The account that records expenses, gains and losses is
A.	Personal account
B.	Real account
C.	Nominal account
D.	None of the above
Answer» D. None of the above

Discussion

2028.	Any return evidence in support of a business transaction is called
A.	Journal
B.	Ledger
C.	Ledger posting
D.	Voucher
Answer» E.

Discussion

2029.	The debts which are to be repaid within a short period (year or less) are known as
A.	Current liabilities
B.	Fixed liabilities
C.	Contingent liabilities
D.	All of the above
Answer» B. Fixed liabilities

Discussion

2030.	Patents, Copyrights and Trademarks are
A.	Current assets
B.	Fixed assets
C.	Intangible assets
D.	Investments
Answer» D. Investments

Discussion

2031.	The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as
A.	Current assets
B.	Fixed assets
C.	Intangible assets
D.	Investments
Answer» B. Fixed assets

Discussion

2032.	Identify the nominal account
A.	Machinery account
B.	Building account
C.	Creditors account
D.	Rent expenses account
Answer» E.

Discussion

2033.	Double entry implies that
A.	Recording entries in Journal
B.	Recording entries in Ledger account
C.	Recording two aspects of every transaction
D.	Recording every transaction in books
Answer» D. Recording every transaction in books

Discussion

2034.	Net loss occurs when
A.	Expenses are greater than income
B.	Expenses are less than income
C.	Expenses = Income
D.	Liabilities are greater than income
Answer» B. Expenses are less than income

Discussion

2035.	______ is the withdrawal of cash and goods by the owner of the business for his/her personal use
A.	Depreciation
B.	Drawings
C.	Outflow of cash
D.	Appreciation
Answer» C. Outflow of cash

Discussion

2036.	Identify the asset from the following
A.	Cash and cash equivalent
B.	Creditors
C.	Notes payable
D.	Bank loan
Answer» B. Creditors

Discussion

2037.	What is equity?
A.	Cash from the business
B.	Liability of a business
C.	Owners claim on total assets
D.	Owners claim on total liabilities
Answer» D. Owners claim on total liabilities

Discussion

2038.	Which of the following is a liability?
A.	Cash
B.	Equipment
C.	Debtors
D.	Creditors
Answer» E.

Discussion

2039.	What is the basic accounting equation?
A.	Capital + Liabilities = assets
B.	Assets + Liabilities = Capital
C.	Capital + Assets = Liabilities
D.	Liabilities - Capital = Assets
Answer» B. Assets + Liabilities = Capital

Discussion

2040.	Which is the most important characteristic that all assets of a business have?
A.	Long life of assets
B.	Value of assets
C.	Intangible nature of assets
D.	Future economic benefits
Answer» E.

Discussion

2041.	An asset must be ________ by the business to be shown as an asset in its balance sheet.
A.	Possessed
B.	Owned
C.	Controlled
D.	Used
Answer» D. Used

Discussion

2042.	_______ is the gross inflow of economic benefits
A.	Assets
B.	Liabilities
C.	Income
D.	Expenses
Answer» D. Expenses

Discussion

2043.	Liabilities are which of the following?
A.	Resources
B.	Obligations
C.	Future benefits
D.	Expenses
Answer» C. Future benefits

Discussion

2044.	An asset possesses which of the following?
A.	Future economic benefits for the business
B.	All kinds of benefits for the business
C.	Expenses for the business
D.	Merits & Demerits for the business
Answer» B. All kinds of benefits for the business

Discussion

2045.	______ is a separate legal entity whose total capital can be divided into many shares
A.	Partnership
B.	Sole Proprietorship
C.	Company
D.	Non-profit organization
Answer» D. Non-profit organization

Discussion

2046.	________ is the first phase of accounting cycl
A.	Identifying an economic event or transaction
B.	Preparing Journal
C.	Posting entries to Ledger accounts
D.	Making decisions about business
Answer» B. Preparing Journal

Discussion

2047.	Which of the following is the internal user of financial statements?
A.	Creditor of the business
B.	Government agency
C.	Shareholder of the business
D.	Manager of the business
Answer» E.

Discussion

2048.	Which of the following is the external user of financial statements?
A.	Manager of the business
B.	CEO of the business
C.	Creditor of the business
D.	Controller of the business
Answer» D. Controller of the business

Discussion

2049.	Auditing refers to
A.	Reporting the financial information
B.	Examination of financial information
C.	Preparation of financial statements
D.	Maintaining the ledger accounts
Answer» C. Preparation of financial statements

Discussion

2050.	Bookkeeping mainly consists of which part of accounting process?
A.	Analysing
B.	Preparing financial statements
C.	Recording financial information
D.	Auditing the books of accounts
Answer» D. Auditing the books of accounts

Discussion

Explore topic-wise MCQs in Finance & Accounting.

_______ is the gross inflow of economic benefits

Liabilities are which of the following?

______ is a separate legal entity whose total capital can be divided into many shares

An asset possesses which of the following?

Which of the following is the internal user of financial statements?

Which of the following is the external user of financial statements?

Bookkeeping mainly consists of which part of accounting process?

Auditing refers to

In accounting, an economic event is referred to as

A Master Budget consists of

The accounting process involves recording

Budgeting is difficult to apply in the following cases

Return on Investment Ratio (ROI) =

A low Return on Investment Ratio (ROI) indicates

Lower the Debt Equity ratio

A higher inventory ratio indicates

The measure of how efficiently the assets resources are employed by the firm is called

Current ratio =

The ratios that refer to the ability of the firm to meet the short term obligations out of its short term resources

The following is a statement of revenues and expenses for a specific period of time

The following is (are) the current liability (ies)

Balance sheet is a statement of

The following is a statement showing the financial status of the comapany at any given time

The process of entering all transactions from the Journal to Ledger is called

In Journal, the business transaction is recorded

Real account records

The account that records expenses, gains and losses is

Any return evidence in support of a business transaction is called

The debts which are to be repaid within a short period (year or less) are known as

Patents, Copyrights and Trademarks are

The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as

Identify&nbsp;the&nbsp;nominal&nbsp;account

Double&nbsp;entry&nbsp;implies&nbsp;that

Net&nbsp;loss&nbsp;occurs&nbsp;when

______&nbsp;is&nbsp;the&nbsp;withdrawal&nbsp;of&nbsp;cash&nbsp;and&nbsp;goods&nbsp;by&nbsp;the&nbsp;owner&nbsp;of&nbsp;the&nbsp;business&nbsp;for&nbsp;his/her&nbsp;personal&nbsp;use

Identify&nbsp;the&nbsp;asset&nbsp;from&nbsp;the&nbsp;following

What&nbsp;is&nbsp;equity?

Which&nbsp;of&nbsp;the&nbsp;following&nbsp;is&nbsp;a&nbsp;liability?

What&nbsp;is&nbsp;the&nbsp;basic&nbsp;accounting&nbsp;equation?

Which&nbsp;is&nbsp;the&nbsp;most&nbsp;important&nbsp;characteristic&nbsp;that&nbsp;all&nbsp;assets&nbsp;of&nbsp;a&nbsp;business&nbsp;have?

An&nbsp;asset&nbsp;must&nbsp;be&nbsp;________&nbsp;by&nbsp;the&nbsp;business&nbsp;to&nbsp;be&nbsp;shown&nbsp;as&nbsp;an&nbsp;asset&nbsp;in&nbsp;its&nbsp;balance&nbsp;sheet.

_______&nbsp;is&nbsp;the&nbsp;gross&nbsp;inflow&nbsp;of&nbsp;economic&nbsp;benefits

Liabilities&nbsp;are&nbsp;which&nbsp;of&nbsp;the&nbsp;following?

An&nbsp;asset&nbsp;possesses&nbsp;which&nbsp;of&nbsp;the&nbsp;following?

______&nbsp;is&nbsp;a&nbsp;separate&nbsp;legal&nbsp;entity&nbsp;whose&nbsp;total&nbsp;capital&nbsp;can&nbsp;be&nbsp;divided&nbsp;into&nbsp;many&nbsp;shares

________&nbsp;is&nbsp;the&nbsp;first&nbsp;phase&nbsp;of&nbsp;accounting&nbsp;cycl

Which&nbsp;of&nbsp;the&nbsp;following&nbsp;is&nbsp;the&nbsp;internal&nbsp;user&nbsp;of&nbsp;financial&nbsp;statements?

Which&nbsp;of&nbsp;the&nbsp;following&nbsp;is&nbsp;the&nbsp;external&nbsp;user&nbsp;of&nbsp;financial&nbsp;statements?

Auditing&nbsp;refers&nbsp;to

Bookkeeping&nbsp;mainly&nbsp;consists&nbsp;of&nbsp;which&nbsp;part&nbsp;of&nbsp;accounting&nbsp;process?

Identify the nominal account

Double entry implies that

Net loss occurs when

______ is the withdrawal of cash and goods by the owner of the business for his/her personal use

Identify the asset from the following

What is equity?

Which of the following is a liability?

What is the basic accounting equation?

Which is the most important characteristic that all assets of a business have?

An asset must be ________ by the business to be shown as an asset in its balance sheet.

_______ is the gross inflow of economic benefits

Liabilities are which of the following?

An asset possesses which of the following?

______ is a separate legal entity whose total capital can be divided into many shares

________ is the first phase of accounting cycl

Which of the following is the internal user of financial statements?

Which of the following is the external user of financial statements?

Auditing refers to

Bookkeeping mainly consists of which part of accounting process?