Financial Accounting MCQs with Answers pdf | Financial Accounting MCQs with Answers

1. Book-keeping is mainly concerned with

(a) designing for systems of recording, classifying and summarising recorded data

(b) recording financial data relating to business operations

(c) interpreting data for internal and external users

(d) All of the above

Ans. b

2. The basic function of financial accounting is to

(a) record all business transactions

(b) interpret financial data

(c) assist the management in performing functions effectively

(d) None of the above

Ans. a

3. Which of the following is not an internal user of financial statements?

(a) Lenders

(b) Managers

(c) Board of Directors

(d) Employees

Ans. a

4. Which of the following will not be recorded in the books of accounts?

(a) Paid rent for office premises rs.10,000

(b) Paid commission for purchase of raw material rs. 200

(c) Purchased goods on credit rs. 15,000 for resale

(d) Resignation of manager Mr Mohan

Ans. d

5. Transactions are posted into ledger accounts from

(a) journal 

(b) vouchers

(c) subsidiary books

(d) Both a and c

Ans. d

6. Petty cash book has a balance of rs.500. This represents

(a) a profit 

(b) an asset

(c) a liability

(d) a loss

Ans. b

7. Purchase book is a part of

(a) ledger 

(b) journal

(c) profit and loss account

(d) trading account

Ans. b

8. Sales book records the

(a) cash sales of goods

(b) credit sales of goods dealt in

(c) all sales of goods dealt in

(d) all sales of either goods or assets

Ans. b

9. Wages paid on the installation of machinery rs. 500, had been debited to wages account. It is an error of

(a) ommission 

(b) commission

(c) principle

(d) compensating

Ans. c

10. A sale of rs. 2,500 was entered in the books as rs. 250, It is an error of

(a) principle 

(b) partial ommission

(c) commission

(d) None of these

Ans. c

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11. A trial balance is a part of

(a) an account

(b) book of original entry

(c) a summary of accounts

(d) All of these

Ans. c

12. Sales account will have a

(a) debit balance

(b) credit balance

(c) either a debit or a credit balance

(d) no balance

Ans. b

13. Income is measured on the basis of

(a) mätching concept

(b) consistency concept

(c) cost concept

(d) None of these

Ans. a

14. Which of the following is not an intangible asset?  

(a) Investment

(b) Goodwill

(c) Copyright

(d) Patent right

Ans. a

15. Santosh deposited a cheque on 25th January, 2011 for a sum of rs. 20,000. The cheque was collected on 2nd February, 2011. If the bank balance as per pass book as on 31st January, 2011 is rs. 60,000, then the balance as per cash book will be

(a) rs. 60,000 

(b) rs. 40.000

(c) rs. 70,000

(d) rs. 80,000

Ans. d

16. Calculate the gross profit if rate of gross profit is 25% on sales and cost of goods sold is rs. 1,80,000.

(a) rs. 60,000

(b) rs. 36,000

(c) rs. 45,000

(d) rs. 30,000

Ans. a

17. Consider the following items.

1. Prepaid salary

2. Accrued interest (receivable)

3. Loan (short-term)

4. Bank overdraft Current liability would include

(a) 1.2, 3, 4

(b) 2, 3, 4

(c) 4, 3, 1

(d) 3 and 4


18. A’s trial balance contains the following information. New provision required at the end of the year rs. 10,000. Provisions for bad debts in the beginning of the year  rs. 4,000. Bad debts ? 6,000. The amount to be debited to profit and loss account will be

(a) rs. 20.000

(b) rs. 8,000

(c) rs.12,000

(d) Nil

Ans. c

19. If capital at the end of the year is rs. 40,000: capital introduced during the year is rs. 30,000; drawings for the year is rs 20,000 and loss of the year is rs 60,000, then capital in the beginning of the year was

(a) rs. 90,000 

(b) rs. 80,000

(c) rs. 70.000

(d) rs. 10,000

Ans. a

20. Valuation of inventory is dealt with

(a) AS 2

(b) AS

(c) AS 4

(d) AS 5

Ans. a

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21. Bill is drawn on 20th January, 2010 for 2 months. After sight, date of acceptance is 29th January, 2010. The maturity date of bill will be

(a) 1st April, 2010 

(b) 23rd March, 2010

(c) 20th March, 2010

(d) 29th March, 2010

Ans. a

22. General manager gets 10% commission on net profit after charging such commission. Gross profit is rs. 70,000 and general expenses other than manager’s commission are rs. 12,000. Commission amount will be

(a) rs. 5,272.72

(b) rs. 6,072.72

(c) rs. 5,372.72

(d) rs. 5,172.72  

Ans. a

24. Errors are  

(a) undetected mistakes

(b) intentional mistakes

(c) frauds

(d) unintentional mistakes

Ans. b

25. In which area, different accounting policies are adopted?

(a) Vakuation of inventones 

(b) Valuation of investment

(c) Depreciation

(d) All of these

Ans. d

26. Heavy amount spent for the advertisement of new company’s product is

(a) revenue expenditure

(b) deferred revenue expenditure

(c) capital expenditure

(d) Either ‘a’ or ‘c

Ans. b

27. Income in case of sole trader is treated as

(a) personal expense 

(b) debtors expense

(c) business expense

(d) None of these

Ans. a

28. Which error cannot be revealed on the preparation of trial balance?

(a) Wrong totalling of account

(b) Cormpensatory error

(c) Error of commission

(d) Wrong balancing of an account

Ans. b

29. If sales are rs. 2,000 and the rate of gross profit on cost of goods sold is 25%, then the cost of goods sold will be

(a) rs. 1,600 

(b) rs. 1,500

(c) rs. 1,700

(d) rs. 1,800

Ans. a

30. Ram drew a bill on Shyam for rs.50,000 for 3 months, the proceeds of which are to be shared equally. Ram gets the bill discounted at 12% per annum and remits proceeds to Shyam. The amount of such remittance will be tal

(a) rs.16167 

(b) rs.32,333

(c) rs.24,250

(d) rs.25000

Ans. c

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31. Arun purchased goods for rs. 10,00,000 and sold 70% of such goods during the year ended 31st December, 2009. The market value of the remaining goods was ? 2,00,000. He valued the closing stock at cost. He violated the concept of

(a) periodicity 

(b) money measurement

(c) canservatism

(d) cost

Ans. c

32. A building was purchased for rs. 4,00,000 on Ist March, 2009. On 31st March, 2010, its net realisable value was rs 5.00,000. The value of building to be shown in the books as on 31st March, 2010 will be at

(a) cost price

(b) net realisable value

(c) cost or net realisable value whichever is less

(d) cost or net realisable value whichever is more

Ans. a

33. Cash sales rs. 70,000 Cash collected from debtors rs. 2,00,000 Bad debts rs. 77,000 Opening debtors rs. 30,000 Closing debtors rs. 16,000 Total sales will be

(a) rs. 2.33,000 

(b) rs. 2.63,000

(c) rs. 2.43,000

(d) rs. 2.60 000

Ans. b

34. Goods worth rs. 7,000 given as charity should be credited

(a) trustee acDount 

(b) sales account 

(c) purchse account

(d) charity account

Ans. c

35. Parul accepted a bill for 90 days of rs. 10,000 drawn Rahul on 10th February, 2010. On 18th March, 2010, Pan wished to retire the bill, Rahul offered rebate e 12% pe annun. Considering the year of 360 days, rebate amount will be

(a) rs. 184

(b) rs. 150 

(c) rs. 180

(d) None of these

Ans. c

36. Sohan draws a 40 days bill on Rohan on 20th January 2010. The bill matures on

(a) 4th March, 2010 

(b) 29th Februiary, 2010

(c) 1st March, 2010

(d) None of these

Ans. a

37. The trial balance checks

(a) valuation of closing stock

(b) valuation of assets

(c) valuation of liabilities

(d) arithrnetical accuracy of books of accounts

Ans. d

38. If total sales during the year amounted to rs.1,00,000; cash sales rs. 2,00,000 and outstanding debtors at the end of the year were rs. 30,000, then cash received from debtoEN during the year will be

(a) rs. 70,000 

(b) rs. 1,10,000

(c) rs. 50,000

(d) rs. 90,000

Ans. c

39. Cost of goods sold rs.150,000 Closing stock rs. 40,000 Opening stock rs. 60,000 Amount of purchases will be

(a) rs. 130,000 

(b) rs. 1,70,000

(c) rs. 50,000

(d) Nane of these

Ans. a

40. If a bill of exchange matures on 15th August but it is a public holiday, then the bill will mature on

(a) 15th August

(b) 16th August

(c) 14th August

(d) 18th August  

Ans. c

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41. The bank charged rs. 1,000 as bank charges from a client and communicates the same to him. The accountant records it in the bank account in the books. Later on the bank realises that the charges were wrongly charged and reverses the same but forgot to communicate the same to the client. If the accountant is starting with bank balance as per bank account in books, what will be the treatment in bank reconciliation to arrive at bank balance as per bank statement?

(a) Reduce rs. 1.000

(b) Add rs. 1.000

(c) Add rs. 2,000

(d) No treatrnent

Ans. b

42. Return inwards are deducted from

(a) purchase

(b) sales 

(c) return outwards

(d) closing stock

Ans. b

44. Rent of proprietor’s house paid from account on cash will

(a) decrease the profit

(b) increase the protit

(c) reduce the capital of business

(d) reduce the cash as well as capital of the business

Ans. d

45. Opening stock understated by ? 20,000 and closing stock overstated by ? 25,000. The net profit is

(a) overstated by rs. 5,000

(b) overstated by rs. 45.000

(c) understated by rs. 5,000

(d) understated by rs. 45.000

Ans. b

46. Bill at sight has a grace period of

(a) 1 day 

(b) 2 days

(c) 3 days

(d) None of these

Ans. d

47. When a bill is endorsed, credit is given to

(a) bill receivable account

(b) endorsee’s account 

(c) acceptor’s account

(d) None of these

Ans. a

48. Cash sales rs. 50,000, credit sales rs. 3,50,000, sales returns rs. 50,000. Out of rs. 3,50,000, goods costing rs. 40,000 were sent on approval basis for rs. 50,000 and the approval is not yet received, then the net sales are

(a) rs. 3,50,000 

(b) rs. 3,25.000

(c) rs.  3,20,000

(d) rs. 300,000

Ans. d

49. Bank charges rs 5,000 are debited twice in the pass book. Then what should be done in bank reconciliation statement if overdraft as per cash book is the starting point?

(a) rs. 5,000 must be deducted

(b) rs. 5,000 must be added

(c) rs.10,000 must be deducted

(d) rs. 10,000 must be added

Ans. b