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![Q 67 Capital will reduce by
(a) Purchase of goods on credit
(b) Selling of goods for cash
(c) Furniture purchased for personal use
(d) Computer purchased for office use
Q 68 Amount spent in order to produce and sell the goods and services is called
a) Expense
b) Income
c) Revenue
d) Drawings
Q 69 Accounting -
[a] Describe relationship with one another in society
[b] Describe about production systems
[c] Keep accounts of goods purchase and sales
[d] Recording; Classifying and Explaining of all financial transactions
Q 70 The debts owing to others by the business is known as
a) Liabilities
b) Expenses
c) Debtors
d) Assets
Q 71 Assets minus liabilities is
a) Drawings
b) Capital
c) Credit
d) Expenses
Q 72 A written document in support of a transaction is called
a) Receipt
b) Credit note
c) Voucher
d) Debit note
Ans: C
Q 73 Business transactions may be classified into
A) Three
b) Two
c) One
d) Four
Ans: B](https://image.slidesharecdn.com/mcqaccountinganditsterminology-160927180445/75/Financial-accounting-MCQ-14-2048.jpg)
Uploaded byMd Yeakub Hossain
Financial accounting MCQ
The document contains 100 multiple choice questions related to accounting concepts, processes, financial statements, and the accounting equation. It tests understanding of key accounting terms like assets, liabilities, equity/capital, income, expenses. Several questions relate to the accounting cycle and identify the first step as identifying economic events or transactions. Other questions cover double-entry bookkeeping, preparation of financial statements, users of accounting information, and classification of accounts.
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Financial accounting MCQ
- 1. 1) The accountingprocess involves in recording: A) Quantifiable economic event B) Non quantifiable economic event C) All of them D) None of them 2) In accounting an Economic event is referred to as: A) Cash B) Bank statement C) Transaction D) Exchange of money 3) Identify the correct sequence of accounting process A) Communicating→Recording→Identifying B) Recording→Communicating→Identifying C) Identifying→communicating→recording D) Identifying→recording→communicating 4) Bookkeeping mainly concerns with which part of accounting process? A) Analysing B) Preparing financial statements C) Recording financial information D) Auditing the books of accounts
- 2. 5) Financial accountingprovides financial information to all of the following external users except: A) Government agencies B) investors C) Creditors D) Managers 6) For which step of accounting process the accountants of business entity prepare financial statements? A) Identification of economic event B) Communication of financial information C) Recording financial information D) Making decisions about business 7) Keeping the log of financial information in books of original entries is called A) Recording B) summarizing C) Grouping D) Processing 8) Auditing is what? A) Reporting the financial information B) Examination of financial statements C) Preparation financial statements D) maintaining the ledger records
- 3. 9) Which ofthe 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 10) 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 11) _________ is the first phase of accounting cycle A) Identifying an economic event or transaction B) Preparing journals C) Posting entries to ledger accounts D) Making decisions about business 12) Financial statements differ from management account because A) They are mainly prepared for external users of financial information B) They are more complex and hard to prepare C) The are the summary of accounting data D) The are prepared on basis of actual concept
- 4. 13) _______ isa separate legal entity that Total capital can be divided in many shares A) Partnership B) Sole proprietorship C) Company D) Non-profit organization 14) An asset posses which of the following? A) Future economic benefits for the business B) All kind of benefits for the business C) Expenses for the business D) Merits and Demerits for the business 15) Liabilities are which of the following? A) Resources B) Obligations C) Future benefits D) Expenses 16) _______ is the gross inflow of economic benefits A) Assets B) Liabilities C) Income D) Expenses
- 5. 17) The grossdecrease in economic benefits for the business are what? A) Expenses B) Obligations C) Creditors D) Income or gain 18) 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 19) Liability are arisen from which of the following events? A) Present event B) Future event C) Past event D) Non of them 20) Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting? A) Identifying transactions B) Preparing "T Accounts" C) Preparing financial statements D) Preparing trial balances
- 6. 21) Which isthe 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 22) What is the basic accounting equation? A) Capital+Liabilities=Assets B) Assets+ liabilities =Capital C) Capital+assets=liabilities D) Liabilities+Capital 23) Which of the following is a liability? A) Cash B) Equipment C) Debtors D) Creditors 24) What is equity? A) Cash from the business B) liability of a business C) Owner's claim on total assets D) Owner's claim on total liabilities
- 7. 25) Identify theasset from the following A) Cash and cash equivalent B) Creditors C) Notes payable D) Bank loan 26) ______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use A) Depreciation B) Drawings C) Outflow of cash D) Appreciation 27) 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 ` 28) Double entry implies that A) Recording entries in journal B) Recoding entries in Ledger account C) Recording two aspects of every transaction D) Recording every transaction in books
- 8. 29) Identify thenominal account A) Machinery account B) Building account C) Creditors account D) Rent expenses account 30) Which of the following accounts can be classified as a real account? A) Rent expenses account B) Rent income account C) insurance expenses account D) Cash account 30) What is the method of summarizing and classifying the record of financial transaction in monetary terms? Options: A- Book Keeping B- Auditing C- Accountancy D- Cost Accounting 31) Accounting is the process of matching: Options: A- Benefits and Costs B- Revenues and Costs C- Cash Inflows and Outflows D- Potential and Real Performance 32) Choose the correct statement: Options: A- Keeping systematic record of business transaction is not the function of financial accounting. B- Accounting is concerned with monetary transactions. C- Accounting is concerned with past as well as future transactions. D- Business and Businessman are one and the same from accounting point of view. 33) Which of the following is NOT an example of intangible assets? Options: A- Goodwill B- Copyrights C- Patents D- Land
- 9. 34) Assets areusually reported on the balance sheet at which amount? Options: A- Cost B- Current Market Value C- Expected Selling Price D- Replacement Cost 35) Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as __________. Options: A- Capital B- Profit C- Liabilities D- Assets 36) Balance Sheet is a statement of……………. A. Assets B. Liabilities C. Capital D. All of these 37 ) Depreciation is a charge against – A. Profit B. Assets C. Company D. Books of A/c 38) Which expenses is a Capital Nature? A. Depreciation B. Wages C. Salary D. Stationary Q39 ____________ is the art of recording, classifying, summarizing the transaction and events of a business and interpreting the results thereof (a) Book Keeping (b) Accounting (c) Management (d) Statistics Q40. Which one is smallest in scope? (a) Accountancy (b) Accounting (c) Book Keeping (d) None of them
- 10. Q41 The firststep in accounting process is (a) Recording the transaction (b) Identifying the transaction (c) Posting the transaction (d) Preparing the source documents Q42. The process of recording is done (a) Two times a year (b) once a year (c) Frequently during the accounting period (d) At the end of a accounting period Q43. ____________ is concerned with establishment of relationship between the various items of financial statements (a) Interpreting (b) Identifying the transaction (c) Communicating (d) Analysing Q44. ____________ is concerned with explaining the meaning and significance of relationship between two items of financial statements (a) Interpreting (b) Identifying the transaction (c) Communicating (d) Analysing Q45. Which one is not an advantage of financial accounting? (a) It facilitates to replace memory. (b) It helps in a comparative study. (c) Accountant can choose any method of inventory valuation. (d) It acts as legal evidence.
- 11. Q46 Which oneis a limitation of financial accounting? (a) It ignores the qualitative elements (b) It ignores price level changes. (c) It is not free from bias. (d) All the Above Q47. _________ is the evidence that a transaction took place (a) Source documents (b) Ledger (c) Bonds (d) Journals Q48. Double entry system was propounded by (a) Chanakya (b) Lee (c) Confucius (d) Luca Pacioli Q49. Which of the following is a not an asset? (a) Land and Building (b) Debtors (c) Cash Balance (d) Loan from Bank Q50. Cash or Goods withdrawn by the proprietor for personal use is called __________ (a) Depreciation (b) Drawing (c) Debtors (d) Goodwill Q51. Which of the following is the practical implementation of the accounting equation? (a) Cash flow statement (b) Income statement (c) Statement of changes in equity (d) Statement of financial position
- 12. Q 52 Discountallowed is (a) Expense of business (b) Income of business (c) Loss of business (d) Abnormal loss of business Q53 Discount for quick repayment of debt is normally referred as (a) Trade discount (b) Prompt payment discount (c) Cash discount (d) Bulk discount Q 54 Owner of the business is called ………………. (a) Entrepreneur (b) Proprietor (c) Industrialist (d) Director Q 55 The amount which the proprietor has invested in the business is called …………….. (a) Cash (b) Assets (c) Capital (d) Income Q 56 Accounting begins where ……………….. ends (a) Book Keeping (b) Transactions (c) Financial year (d) Production Q 57 Every business transactions reveals ……….. aspects (a) One (b) Two (c) Three (d) Four Q 58 Which of the following will not be recorded in the books of accounts? (a) Sales of goods (b) Payment of Salary (c) Purchase of goods (d) Quality of staff
- 13. Q 59 Bookkeeping is mainly concerned with (a) Recording financial data relating to business operations (b) Designing for systems recording classifying and summarizing recorded data (c) Interpreting data for internal and external users (d) All of the above Q 60 Which of the following is not a business transaction? (a) Purchase of goods for resale amounted to Rs.10,000 (b) Paid salaries amounted to Rs. 5,000 (c) Give an appointment letter to Mr.Sharama (d) Paid rent for office premises Rs.3,000 Q 61 A person who owes money to a firm is called a ……………………. (a) Customer (b) Supplier (c) Debtor (d) Creditor Q 62 Purchase refers to the purchase of (a) Goods for resale (b) Stationery for office use (c) Assets for the factory (d) None of these Q 63 Which of the following is not a fixed asset? (a) Building (b) Balance with bank (c) Furniture & Fittings (d) Plant & Machinery Q 64 Goodwill is an example of (a) Tangible account (b) Personal account (c) Intangible account (d) Nominal account Q 65 Bank overdraft is (a) Short term liability (b) Long term liability (c) Owners’ liability (d) Contingent liability Q 66 Liabilities increase by (a) Purchasing goods on credit (b) Taking loan from bank (c) Rent due (d) All of these
- 14. Q 67 Capitalwill reduce by (a) Purchase of goods on credit (b) Selling of goods for cash (c) Furniture purchased for personal use (d) Computer purchased for office use Q 68 Amount spent in order to produce and sell the goods and services is called a) Expense b) Income c) Revenue d) Drawings Q 69 Accounting - [a] Describe relationship with one another in society [b] Describe about production systems [c] Keep accounts of goods purchase and sales [d] Recording; Classifying and Explaining of all financial transactions Q 70 The debts owing to others by the business is known as a) Liabilities b) Expenses c) Debtors d) Assets Q 71 Assets minus liabilities is a) Drawings b) Capital c) Credit d) Expenses Q 72 A written document in support of a transaction is called a) Receipt b) Credit note c) Voucher d) Debit note Ans: C Q 73 Business transactions may be classified into A) Three b) Two c) One d) Four Ans: B
- 15. Q 74 Purchasesreturn means goods returned to the supplier due to a) Good quality b) Defective quality c) Super quality d) Excellent quality Ans: B Q75_________ is the first phase of accounting cycle A) Identifying an economic event or transaction B) Preparing journals C) Posting entries to ledger accounts D) Making decisions about business Ans: A Q 76 Financial statements differ from management account because A) They are mainly prepared for external users of financial information B) They are more complex and hard to prepare C) The are the summary of accounting data D) The are prepared on basis of actual concept Ans: A Q 77 ________ is a separate legal entity that Total capital can be divided in many shares A) Partnership B) Sole proprietorship C) Company D) Non-profit organization Ans: C Q78 An asset posses which of the following? A) Future economic benefits for the business B) All kind of benefits for the business C) Expenses for the business D) Merits and Demerits for the business Ans : A Q79 Liabilities are which of the following? A) Resources B) Obligations C) Future benefits D) Expenses Ans: B Q 80 ________ is the gross inflow of economic benefits A) Assets B) Liabilities C) Income D) Expenses Ans: C
- 16. Q 90 Thegross decrease in economic benefits for the business are what? A) Expenses B) Obligations C) Creditors D) Income or gain Ans: A Q 91 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 Ans: C Q 92 Liability are arisen from which of the following events? A) Present event B) Future event C) Past event D) None of them Ans: C Q 93 Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting? A) Identifying transactions B) Preparing "T Accounts" C) Preparing financial statements D) Preparing trial balances Ans: C Q94 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 Ans : D Q 95 What is the basic accounting equation? A) Capital + Liabilities=Assets B) Assets+ liabilities =Capital C) Capital + assets=liabilities D) Liabilities + Capital Ans: A Q 95 Which of the following is a liability? A) Cash B) Equipment C) Debtors D) Creditors Ans: D
- 17. Q 96 Whatis equity? A) Cash from the business B) liability of a business C) Owner's claim on total assets D) Owner's claim on total liabilities Ans: C Q 97 Identify the asset from the following A) Cash and cash equivalent B) Creditors C) Notes payable D) Bank loan Ans: A Q 98 _______ 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 Ans: B Q 99 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 Ans: A Q100 Double entry implies that A) Recording entries in journal B) Recoding entries in Ledger account C) Recording two aspects of every transaction D) Recording every transaction in books Ans: C 101. Bank overdraft is (a) Short term liability (b) Long term liability (c) Contingent liability 102. A liability arises because of (a) Cash transaction (b) Credit transaction (c) Cash and Credit transaction 103. Which of the following is not a fixed asset (a) Building (b) Plant and Machinery (c) Balance with bank
- 18. 104. Which ofthe following is not a long term liability? (a) Creditors (b) Term Loan (c) Debentures 105. A person to whom money is owned by a firm is called ………….. (a) Creditor (b) Debtor (c) None of these 106. Withdrawal by proprietor would reduce : (a) Owners equity and liabilities (b) Both assets and Owner’s equity (c) Assets and liabilities 107. Assets minutes liabilities is (a) Drawings (b) Capital (c) Income 108 Amount spent in order to produce goods and sell the goods and services called (a) Liability (b) Revenue (c) Expense 109 . As per the business entity assumption, the business is different from (a) Owner (b) Government (c) Foreigner 109 Commission received is an example of (a) Real account (b) Personal account (c) Nominal account 110 Drawings account is classified under (a) Real account (b) Personal account (c) Nominal account 111The Accounting equation is connected with (a) Assets and Liabilities (b) Capital and Liabilities (c) Assets, Capital and Liabilities 112 Good will is an example of (a) Tangible account (b) Intangible account (c) Nominal account