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Financial Accounting Mcqs with Answers
You may find chapter-by-chapter Financial Accounting MCQs with Answers for exams like the B.Com, ADC, BBA, MBA, CMA, CA CS, and ICAI on this special website. You will also get MCQs for fundamentals of financial accounting, basics of accounting MBA MCQs, and principles of accounting MCQs chapter-wise in this article. For chapter-by-chapter financial accounting MCQs, you may also check out the numerous links provided below in the post.
Financial Accounting Overview:
Financial accounting is a primary source of financial information on which all the stakeholders are trusted to reach their respective decisions for investment and other purposes. The main aim of financial accounting is to keep a record of all transactions of the organisation to find the profit or loss of the business for a specific accounting period. Below you will find important Financial Accounting MCQs with Answers.
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Accounting MCQs with Answers
1. Accounting provides information on:
A) Cost and income for managers (B) Company’s tax liability for a particular year
C) Financial conditions of an institutions (D) All of the above
Answer : (D) All of the above
2. 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
Answer : C) Turnover
3. Any return evidence in support of a business transaction is called
A) Journal (B) Ledger
C) Ledger posting D) Voucher
Answer : D) Voucher
4. Which of the following best describes a manual accounting system?
A) Slow and prone to error (B) Limited in the volume of data it can process
C) Fast and accurate (D) A and B, but not C
Answer : (D) A and B, but not C
5. According to this concept, it is assumed that business will exist for indefinite time
period:
A) Realization concepts (B) Going Concern concepts
C) Matching concepts (D) Dual Aspect concepts
Answer : (B) Going Concern concepts
6. The art of recording, classifying and summarising is called:
A) Journalizing (B) Accounting
C) Bookkeeping (D) Record Keeping
Answer : (B) Accounting
7. Bookkeeping provides the:
A) Primary information (B) Secondary information
C) Final information (D) None of the these
Answer : A) Primary information
8. If assets are Rs.8,000 and capital is Rs.6,000, liabilities will be:
A) Rs. 8,000 (B) Rs. 2,000
C) Rs. 14,000 (D) None of the above
Answer : (B) Rs. 2,000
9. A journal entry that requires more than two accounts is called:
A) Simple entry. (B) Double entry
C) Compound entry. D) Single entry
Answer : C) Compound entry.
10. Explanation below entry is called:
A Entry (B) Narration
C) Double Entry (D) None
Answer : (B) Narration
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11. The claim of the outsiders against the assets of the business is called:
A) Loans (B) Sundry Creditors
C) Liabilities (D) Capital
Answer : C) Liabilities
12. Books of original entry are called:
A) Ledger book (B) Classified book
C) Trial Balance (D) Journal
Answer : (D) Journal
13. Favorable bank balance means:
A) Credit balance of cash book (B) Debit balance of cash book
C) Debit balance of pass book D) None of these
Answer : (B) Debit balance of cash book
14. Bank reconciliation statement is prepared by:
A) Banker (B) Accountant
C) Auditor (D) None of these
Answer : (B) Accountant
15. Which of the following does not describe accounting?
A) Language of business (B) Is an end rather than a means to an end.
C) Useful for decision making. (D) Used by business, government, nonprofit organisations, and individuals.
Answer : (B) Is an end rather than a means to an end.
16. Which of the following fi nancial statements is generally prepared first?
A) Income statement. (B) Balance sheet.
C) Statement of retained earnings. (D) Statement of cash flows
17. A cheque which is returned by bank unpaid:
A) Honored Cheque (B) Dishonoured Cheque
C) Rejected Cheque (D) Crossed Cheque
Answer : (B) Dishonoured Cheque.
18. Trading account is prepared to know:
A) Net profit (B) Gross profit
C) Net loss (D) Gross loss
Answer : (B) Gross profit
19. Indicate all correct answers. In the accounting cycle:
A) Transactions are posted before they are journalized
(B) A trial balance is prepared after journal entries have been posted
C) The Retained Earnings account is not shown as an up-to date figure in the trial balance
D) Journal entries are posted to appropriate ledger accounts.
Answer : (B) A trial balance is prepared after journal entries have been posted
(D) Journal entries are posted to appropriate ledger accounts.
20. Waterworld Boat Shop purchased a truck for $12,000, making a down payment of $5,000
cash and signing a $7,000 note payable due in 60 days. As a result of this transaction:
A) Total assets increased by $12,000.
(B) Total liabilities increased by $7,000
C) From the viewpoint of a short-term creditor, this transaction makes the business more liquid.
(D) This transaction had no immediate effect on the owners’ equity in the business.
Answer : (B) Total liabilities increased by $7,000
Accounting provides information on:
The sales income (Credit and Cash) of a business during a given period is called :
Any return evidence in support of a business transaction is called:
Which of the following best describes a manual accounting system?
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According to this concept, it is assumed that business will exist for indefinite time period:
Who is most responsible for the operation of the accounting system in an organization?
The account that records expenses, gains and losses is:
If assets are Rs.8,000 and capital is Rs.6,000, liabilities will be:
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A journal entry that requires more than two accounts is called:
Which of the following is NOT an objective of all information systems?
The art of recording, classifying and summarizing is called:
Bookkeeping provides the:
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Explanation below entry is called:
Bank does not issue cheque book on:
Bank issue bank statement on:
Bank gives overdraft facility on:
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