Multiple Choice Questions

1. Financial Accounting
B.Com. Part I (Semester I)
Prepared by
Mr. Sushil Bhimrao Bansode
Q. 1. Accounting provides information on
a. Company's tax liability for a particular year
b. Financial conditions of an institutions
c. Cost and income for managers
d. All of the above
Q. 2. The long term assets that have no physical existence but are rights that have value
is known as
a. Current assets
b. Fixed assets
c. Intangible assets
d. Investments
Q. 3. 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
Q. 4. Patents, Copyrights and Trademarks are
a. Current assets
b. Fixed assets
c. Intangible assets
d. Investments
Q. 5. 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
Q. 6. .The sales income (Credit and Cash) of a business during a given period is called
a. Transactions
b. Sales Returns
c. Turnover
d. Purchase Returns

2. Q. 7. Any written evidence in support of a business transaction is called
a. Journal
b. Ledger
c. Ledger posting
d. Voucher
Q. 8. The account that records expenses, gains and losses is
a. Personal account
b. Real account
c. Nominal account
d. None of the above
Q. 9.Real account records
a. Dealings with creditors or debtors
b. Dealings in commodities
c. Gains and losses
d. All of the abov
Q.10. In Journal, the business transaction is recorded
a. Same day
b. Next day
c. Once in a week
d. Once in a month
Q. 11. The following is (are) the type(s) of Journal
a. Purchase Journal
b. Sales Journal
c. Cash Journal
d. All of the above
Q. 12.The process of entering all transactions from the Journal to Ledger is called
a. Posting
b. Entry
c. Accounting
d. None of the above
Q. 13.The following is a statement showing the financial status of the company at any
given time
a. Trading account
b. Profit & Loss statement
c. Balance Sheet
d. Cash Book

3. Q. 14.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
Q. 15.Balance sheet is a statement of
a. Assets
b. Liabilities
c. Capital
d. All of the above
Q. 16. Balance sheets are prepared
a. Daily
b. Weekly
c. Monthly
d. Annually
Q. 19. The following is (are) the current liability (ies)
a. Bills payable
b. Outstanding expenses
c. Bank Overdraft
d. All of the above
Q. 20. Why are accounting Standard important ?
a. For making financial statements
b. For correct valuation of inventories
c. For correct treatment of depreciation and lease and investment.
d. All of above
Q. 21. Accounting standards in India are issued by-
a. Central Government
b. State Government
c. The institute of Chartered Accountants of India
d. Reserve Bank of India
Q. 22. Accounting Standards-
a. Harmonise accounting policies
b. Eliminate the non-comparability of financial statements
c. Improve the reliability of financial statement
d. All of the above
Q. 23. Accounting for Amalgamation are related to –
a. AS-1
b. AS-12
c. AS-13
d. AS-14

4. Q. 24. When an owner withdraw goods, it is debited to his drawing account because of –
a. Continuity concept
b. Conservatism
c. Entity concept
d. None of the above
Q. 25. Sale income is said to be realized when-
a. Goods are sold
b. Cash is received
c. Production is completed
d. None of the above
Q. 26. Work in Progress is valued on the basis of cost incurred because of principle of –
a. Conservatism
b. Realisation
c. Going Concern
d. None of the above
Q. 27. Fixed Assets are not shown at their realizable value in accounts because of –
a. Concept of Objectivity
b. Matching cost
c. Going Concern
d. None of the above
Q. 28. Why are the total of two sides of the balance sheet equal ?
a. Cost Concept
b. Dual aspect concept
c. Entity concept
d. All of the above
Q. 29. Pre-received income is deducted from income in the current year’s P&L
account, the underlying assumption being-
a. Matching cost against revenue
b. Conservatism
c. Realisation
d. None of the above
Q. 30. Change in the value of Fixed Assets are not recorded in accounts because of
principle of –
a. Conservatism
b. Objectivity
c. Going Concern
d. None of the above

5. Q. 31. Entries are made in Accounts on the basis of supporting vouchers-
a. Realisation Concept
b. Objecctivity
c. Conservatism
d. None of the above
Q. 32. Commission on sale is debited to Profit and Loss account in the year in which
sale is effected because of –
a. Concept of conservatism
b. Matching cost with revenue
c. Realisation concept
d. None of the above
Q. 33. In the trading account, sales is written on credit side and on the opposite side
purchases and purchase expenses are shown. What is the principle involved-
a. Concept of conservatism
b. Matching cost with revenue
c. Realisation concept
d. None of the above
Q. 34. In relation to consignment accounts –
a. Consignor sends ‘Account Sale’ to consignee;
b. Debtors sends ‘Account Sale’ to consignor;
c. Consignee sends ‘Account Sale’ to consignor;
d. Consignee sends ‘Account Sale’ to consignor.
Q.33. Which of the following items is not included in the ‘Account Sale?’
a. Goods sold by consignee
b. Expenses of consignment incurred by consignee
c. Claim paid by insurance company
d. Advance against consignment paid to consignee
Q. 34. In case of ‘del-credere’ commission being allowed to consignee, any bad-debt in
consignment business, following entry will be passed;
a. Consignor’s account shall be debited
b. Debtor’s account shall be debited
c. Commission account shall be debited
d. Consignor’s account shall be credited
Q. 35. When Consignment account is prepared at Invoice price, the profit element
included in the closing stock valued at invoice price shall be –
a. Debited to ‘Goods sent on consignment account’
b. Debited to ‘Consignee account’
c. Credited to’Consignment Stock Reserve account’
d. Debited to ‘Consignment Stock Reserve account’

6. Q.36. If market price of closing stock is also known while preparing Consignment
account –
a. Closing stock will be valued at cost
b. Closing stock will be valued at market price
c. Closing stock is to be valued at cost or market price, whichever is lower
d. Closing stock is to be valued at cost or market price, whichever is higher
Q.37. A of Ahmedabad consigned goods of Rs. 20,000 to B of Baroda and pays Rs. 2,000
for expenses. Goods worth Rs. 4,000 was burnt in transit and the insurance
company accepted a claim of Rs. 3,000, then abnormal loss is;
a. Rs 1400
b. Rs 1000
c. Rs 4000
d. Nothing
Q.38. A of Anand consigned goods of Rs 40,000 to G of Gondal and paid Rs 2,000 for
expenses. The consignee paid Rs 400 for freight and Rs 200 for octroi, 80% of goods
was sold and commission of Rs 2,000 was paid, then the value of closing stock is
Rs…..
a. Rs 8400
b. Rs 8,520
c. Rs 8,000
d. Rs 10,400
Q.39. The abnormal loss of Rs 80,000 occurred in consignment business, the insurance
company accepted 60% claim. The abnormal loss is –
a. Rs 80,000
b. Rs 40,000
c. Rs 32,000
d. Nothing
Q. 40. The abnormal loss is debited to following accounts;
a. Consigment
b. General Profit and Loss A/c
c. Consignee
d. Insurance company
Q. 41. Consignee received del credere commission, sold goods worth Rs 40,000 on credit.
Out of it one debtor of Rs 1,000 became bankrupt, 25 paisa in a rupee is received
from him. Then in the books of consignee bad debts is recorded as –
a. 750
b. 250
c. 1100
d. Nothing

7. Q.42. Babu consigned 3,000 litres of oil to Mamu at the rate of Rs 50 per litre, and paid
expenses of Rs 21,000. Due to evaporation there was a loss of 150 litres. Consignee
sold 2550 litres at the rate of Rs 75 per litre. What will be the value of Closing
stock?
a. Rs 15000
b. Rs 15600
c. Rs 17100
d. Rs 18000
Q. 43. Matching concept means
a. Assets = capital + liabilities
b. Transactions recorded at accrual concept
c. Anticipate no profit but recognize all losses
d. Expenses should be matched with the revenue of the period.
Q. 44. Which of the following is not the main objective of accounting?
a. Systematic recording of transactions
b. Ascertaining profit or loss
c. Ascertainment of financial position
d. Solving tax disputes with tax authorities
Q. 45. For every debit there will be an equal credit according to
a. Matching concept
b. Cost concept
c. Money measurement concept
d. Dual aspect concept
Q. 46. Income and Expenditure accunt is a …………………
a. Nominal account
b. Personal Account
c. Real Account
d. Non of the above
Q. 47. When two or more companies carrying on similar business decide to combine, a
new company is formed, it is known as ..................
a. Amalgamation
b. Absorption
c. Internal reconstruction
d. External reconstruction
Q.48. In accounting Consignment means…………………………..
a. Goods forwarded from one place to another
b. Goods forwarded by a person to another
c. Goods sent by its owner to his agent
d. Goods sent by its owner to his agent for the purpose by sale

8. Q.49. In the books of consignor the balance of the consignment stock account would be
shown:
a. As an asset in the balance sheet
b. As liability in the balance sheet
c. On the credit side of trading account
d. On the debit side of consignment account
Q.50. On the dispatch of goods, the entry in the books of consignee would be:
a. Consignment A/c will be debited and goods sent on consignment A/c will be credited
b. Consignment A/c debit and consignee A/c credit
c. No entry
d. None of above
Q.51. The consignor is:
a. Principal
b. Agent
c. Debtor
d. None of them
Q.52. The consignee is:
a. Principal
b. Agent
c. Buyer
d. Seller
Q.53. Account sales is submitted by:
a. Consignor
b. Consignee
c. Principal to his agent
d. Debtor to creditor
Q.54. In the books of consignor, the expenses incurred by consignor should be debited
to:
a. Consignees A/c
b. Consignment A/c
c. Expenses A/c
d. Consignor’s A/c
Q.55. In the books of consignor, the expenses incurred by consignee should be debited
to:
a. Consignee A/c
b. Consignment A/c
c. Expenses A/c
d. Consignor’s A/c

9. Q.56. In the books of consignor the acceptance of bills of exchange by the consignee will
be credited to:
a. Consignment A/c
b. Consignment A/c
c. Income A/c
d. Consignor’s A/c
Q.57. In the books of consignor the acceptance of bills of exchange by the consignee will
be credited to:
a. Consignment A/c
b. Consignee’s A/c
c. Bill receivable A/c
d. Bills payable A/c
Q. 58. In the books of consignor the abnormal loss should be credited to:
a. Profit & loss A/c
b. Consignment A/c
c. Trading A/c
d. Consignees A/c
Q. 59. In case of delcreder commission, the liability for bad debits is on:
a. Consignor
b. Consignee
c. Customer
d. None of the above
Q. 60. In the books of consignor, the balance in the goods sent on consignment account
is shown:
a. On the asset side to balance sheet.
b. On the liability side of balance sheet.
c. On the credit side of trading A/c
d. On the credit side of consignment A/c
Q. 61. In the books of consignee the expenses incurred by him on consignment are
debited to:
a. Consignment A/c
b. Cash A/c
c. Consignor’s A/c
d. Expense A/c
Q. 62. In the books of consignee, the sale of goods is credited to:
a. Consignor’s A/c
b. Sales A/c
c. Consignee’s A/c
d. Cash A/c

10. Q. 63. The term A/c and sale A/c are ________________ in nature.
a. Parallel
b. Some
c. Equal
d. Different
Q. 64. The consignment inward book or journal is maintained by ________.
a. Customer
b. Consignee
c. Debtor
d. Customer
Q.65. The consignee acts entirely on behalf of the:
a. Customer
b. Debtor
c. Consignor
d. Creditor
Q.66. Del – creder commission is calculated on:
a. Credit sales
b. Cash sales
c. Total sale
d. Both (a) and (b)
Q.67. Consignee A/c is the nature of:
a. Nominal A/c
b. Personal A/c
c. Real A/c
d. None
Q.68. Normal losses are due to:
a. Avoidable factor
b. Unavoidable
c. Contingent
d. None
Q. 69. In consignee book, the acceptance of bill of exchange by consignee will be debited
to:
a. Trading A/c
b. Consignor A/c
c. Balance payable A/c
d. Consignee A/c

11. Q. 70 In accounting consignment, signifies
a. goods forwarded from one place to another
b. goods forwarded by a person to another.
c. goods despatched by its owner to its agent
d. goods despatched by it owner to his agent for the purpose of sale
Q. 71. Goods sent on consignment should be debited by consignor to:
a. consignment account
b. goods sent on consignment account
c. consignors account
d. consignee account
Q.72. In the books of consignor the balance of the consignment stock would be shown:
a. as an asset in the balance sheet
b. as liability in the balance sheet
c. On the credit side of the trading account.
d. On the debit side of the trading account.
Q. 73. In the books of consignee, on despatch of goods by the consignor the entry
would be:
a. consignment account [Dr.]
b. to goods sent on consignment account [Cr.]
c. consignment account [Dr.] To consignor account [Cr.]
d. No entry
Q. 74. In the books of consignee the expenses incurred by him on consignment are
debited to:
a. consignment account
b. cash account
c. consignor’s account
d. Consignee’s Account
Q.75 In the books of consignee the sale of goods is credited to:
a. consignor’s account
b. sales account
c. consignee’s account
d. Consignment account
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