Financial Accounting Multiple Choice Questions and Answers

1 Deewali advance given to an employee is

A Revenue Expenditure

B Capital Expenditure

C Not an Expenditure

D Deferred Revenue Expenditure

View Answer

Answer: Not an Expenditure

2 The process of recording financial data upto trial balance is

A Classifying

B Summarising

C Analyzing

D Book keeping

View Answer

Answer: Book keeping

3 Rohit carrying on real estate business sold a piece of land for Rs.4,00,00,000 (cost Rs.3,50,00,000) then the type of receipt is nature and profit on sale is

A Revenue & transferred to P & L a/c

B Capital & transferred to capital reserve

C Capital & transferred to P & L a/c

D Revenue & transferred to general reserve

View Answer

Answer: Revenue & transferred to P & L a/c

4 Which of the following is wrong?

A Rent is a personal account, outstanding rent is nominal account

B All real and personal accounts are transferred to balance sheet

C Nominal accounts are transferred to P &L account

D Each account is opened separately in ledger

View Answer

Answer: Rent is a personal account, outstanding rent is nominal account

5 Is root cause for financial accounting

A Social accounting

B Management accounting

C Human resource accounting

D Stewardship accounting

View Answer

Answer: Stewardship accounting

6 Fixed assets are held by business for

A Generating revenue

B Converting into cash

C Resale

D None of the above

View Answer

Answer: Generating revenue

7 Which accounting concept specifies thepractice of crediting closing stock to the trading account?

A Matching

B Cost

C Realisation

D Going concern

View Answer

Answer: Matching

8 Amount spent to increasing the earning capacity is a ...... expenditure

A Capital

B Deferred revenue

C Capital Loss

D Revenue

View Answer

Answer: Capital

9 Change in the capital A/c of proprietor may occur due to

A Capital Introduced

B Loss incurred

C Profit earned

D All of theabove

View Answer

Answer: All of theabove

10 Provision for discount on debtors is calculated on the amount of debtors.

A After deducting provision for doubtful debts

B Before deducting provision for doubtful debts

C Before deducting actual debts and provision for doubtful debts

D After adding actual bad and doubtful debts

View Answer

Answer: After deducting provision for doubtful debts

11 Which of the following is incorrect?

A Outstanding expenses -current asset

B Good will intangible asset

C Sundry debtors -current asset

D Loose tools tangible fixed asset

View Answer

Answer: Outstanding expenses -current asset

12 The nature of financial accounting is:

A Historical

B Analytical

C Social

D Forward looking

View Answer

Answer: Historical

13 Which of the following factor is not considered while selecting accounting policies?

A Accountancy

B Prudence

C Substance over form

D Materiality

View Answer

Answer: Accountancy

14 As per accrual concept, which of the followings is not true

A sales + gross profit = revenue

B revenue –profit = expenditure

C revenue –expenditure = profit

D revenue = profit + expenditure

View Answer

Answer: sales + gross profit = revenue

15 If nothing is written about the accounting assumption to be followed it is presumed that

A They have not been followed

B They are followed to some extent

C They are followed to some extent

D None

View Answer

Answer: They have not been followed

16 Valuation of stock in accounting follows the principle of cost price or which ever is lower.

A Net realizable Value

B Market Price

C Average Price

D None of these

View Answer

Answer: Net realizable Value

17 Which of the following is not a nominal Account?

A Salaries account

B Interest paid

C Commission received

D Outstanding salaries Account

View Answer

Answer: Outstanding salaries Account

18 Mr. X is a dealer in electronic goods (refrigerator, washing machine, air conditioners, televisions, etc.) He purchased two air conditioners and installed in his showroom. In the books of X the cost two air conditioners will be debited to

A Fixedassets

B Drawing account

C Capital Account

D None of the above

View Answer