accounting MCQs – Page 8

Practise multiple-choice questions from accounting for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

accounting Mcqs
351. The compensation paid by the borrower of fund to lender, from the borrower point of the cost of borrowing fund is called?
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A. Required rate of return

B. All of the above

C. Nominal interest rate

D. Interest Rate
352. Consider the following data for a company during the month of June 2012 Budgeted hours 4,000 Standard hours for actual production 4,400 Maximum possible hours in the budget period 4,800 Actual hours 3,800 The activity ratio of the company during the month is
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A. 117%

B. 95%

C. 111%

D. 120%

353. Tender is an_____________?
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A. estimation of profit.

B. estimation of selling price.

C. estimation of units.

D. estimation of cost.

354. When a person purchasing goods on credit he becomes a_________in the books of the seller?
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A. Creditor

B. Defaulter

C. Debtor

D. Offender

355. Which of these is not an essential feature of a bill of exchange?
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A. In writing

B. Unconditional

C. Amount to be paid in foreign currency

D. Certainty of amount

356. Costs that change in response to alternative courses of action are called___________?
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A. Differential costs

B. Target costs

C. Sunk costs

D. Relevant costs

357. Favorable balance of cash book implies that
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A. Credit balance of cash book

B. Debit balance of cash book

C. Adjusted balance of cash book

D. Bank overdraft

358. In the books of the drawer, the accounting treatment involved on receipt of a bill of exchange duly accepted by the drawee is?
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A. ="color: #003f1a;">i. Debit Bills Receivable Account
B. e="color: #003f1a;">iv. Credit Sales Account
C. e="color: #003f1a;">ii. Debit Drawees Account
D. e="color: #003f1a;">iii. Credit Drawees Account
359. Investment in own share A/c appears in____________?
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A. Asset side

B. Netted from Capital

C. Liability side

D. Profit & Loss A/c

360. Computers taken on hire by a business for a period of twelve months should be classified as:___________?
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A. Intangible assets

B. Deferred revenue expenditure

C. Current assets

D. Not an asset
361. Short term Assets expected to be converted into cash within 1 year or less than?
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A. Current Assets& current liabilities

B. All of the above

C. Current Assets

D. Fixed Assets

362. Which of the following is not an intangible asset?
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A. Franchise

B. Accounts Receivable

C. Secret Profit

D. Trade mark

363. Outstanding salaries is shown as___________?
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A. An Asset in the Balance Sheet

B. A Liability

C. By adjusting it in the P & L A/c

D. Both B. and C. above
364. The process of paying off debt over time in regular installment of interest & principal sufficient to repay the loan in fully by its maturity date.
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A. Liability

B. Securitization

C. Amortization

D. Loan Payment

365. Audit fess is a part of__________.
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A. works on cost.

B. selling overhead.

C. distribution overhead.

D. administration overhead
366. Closing entries are generally passed:
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A. During the course of accounting period any time

B. After certification of accounts

C. At the time of opening new books of account

D. At the time of closing the accounts
367. Sundry debtors as per Trial Balance is 43,000 which includes 2,200 due from ?H in respect of goods sent to him on approval basis, the cost price of which is 1,800. Rectification would involve:
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A. Adding 2,200 to closing stock

B. Deducting 1,800 from closing stock and deducting 2,200 each from debtors and sales

C. Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales

D. Deducting 1,800 from debtors

368. A credit balance in cash book indicates?
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A. Bank overdraft

B. Bank balance

C. Bank underdraft

D. Cash at bank

369. Negotiable Instrument Act was enacted in_________?
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A. 2001

B. 1871

C. 1881

D. 1981

370. Property, Plant and Equipment are conventionally presented in the Balance Sheet at _________?
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A. Replacement cost Accumulated Depreciation

B. Historical cost Depreciation portion thereof

C. Historical cost Salvage Value

D. Original cost adjusted for general price-level changes

371. How many parties are generally found in a Bill of Exchange?
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A. 3

B. 2

C. 5

D. 4

372. A company is currently operating at 80% capacity level. The production under normal capacity level is 1,50,000 units. The variable cost per unit is ` 14 and the total fixed costs are ` 8,00,000. If the company wants to earn a profit of ` 4,00,000, then the price of the product per unit should be
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A. 24.00

B. 35

C. 38.25

D. 37.5

373. Net sales equals, sales minus:
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A. cost of goods sold

B. Return inwards

C. carriage on sales

D. Return outwords

374. In bank reconciliation statement the amount of outstanding checks is added to ________ balance of cash book.
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A. Unadjusted

B. Adjusted

C. Overstated

D. Understated

375. Which of the following is an external cause of depreciation?
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A. Routine repair and maintenance

B. Obsolescence

C. Misuse

D. Wear and tear

376. If the asset turnover and profit margin of a company are 1.85 and 0.35 respectively, the return on investment is.
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A. 1.5

B. 5.29

C. 0.65

D. 0.35

377. Bad debts recovered account will be transferred to______________?
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A. Provision for Doubtful Debt Account

B. Debtors Account

C. Profit and Loss Account

D. Either (b )or C. above
378. Which of the following equations is correct?
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A. Gross Profit Opening Stock + Direct expenses + Purchases +Closing stock = Sales

B. Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock

C. Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock

D. Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales
379. Which of the following form of business organization is least regulated?
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A. General Partnership

B. Corporation

C. Limited Partnership

D. Sole-proprietorship
380. Which of the following are/is a current asset?
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A. Stock

B. Prepaid insurance

C. Sundry Debtors

D. All of A. B. and C. above
381. Which of the following entries is correct in respect of reserve for discounts on accounts payable?
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A. Debit Accounts Payable A/c and Credit P&L A/c

B. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c

C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c

D. Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c

382. If the minimum stock level and average stock level of raw material are 4,000 and 9,000 units respectively, find out its reorder quantity.
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A. 8,000 units

B. 11,000 units

C. 10,000 units

D. 9,000 units

383. A worker has a time rate of 15/hr. He makes 720 units of component (standard time : 5 minutes/ unit) in a week of 48 hours. His total wages including Rowan bonus for the week is
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A. 840

B. 864

C. 820

D. 792

384. The closing balance of petty cash book is considered as_________?
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A. Income

B. Asset

C. Liability

D. Expenses

385. Prepaid expenses are valued on the Balance Sheet at
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A. Current cost

B. Cost to acquire less accumulated amortization

C. Cost less expired portion

D. Replacement cost

386. The most common imprest system is the ________ system?
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A. Petty cash

B. Discount

C. Cash receipt

D. Cash book

387. Purchase of office equipment for cash will be recorded on which of the following sides of a cash book?
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A. Expenditures

B. Payments

C. Receipts

D. Incomes

388. Discount received is recorded on which of the following side of a cash book?
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A. Payments

B. Receipts

C. Incomes

D. Expenditures

389. The balance of Revaluation Reserve pertaining to an asset that has been disposed off or retired can be transferred to?
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A. Capital Reserve A/c

B. Asset A/c

C. General Reserve A/c

D. Profit & Loss A/c

390. Which of the following is not a financial statement?
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A. Balance Sheet

B. Funds Flow Statement

C. Profit and Loss Account

D. Trial Balance
391. Which of the following is not depreciated?
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A. Plant and Machinery

B. Land

C. Building

D. Office equipment

392. The creation of provision for doubtful debts given as an adjustment requires____________?
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A. Debit Profit & Loss Account and add the provision to debtors

B. Credit Profit & Loss Account and deduct the provision from debtors

C. Credit Profit and Loss Account and add the provision to debtors

D. Debit Profit and Loss Account and deduct the provision from debtors
393. A simple or one column cash book usually has which of the following main columns?
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A. Bank

B. Discount

C. Payments

D. Cash
394. _________is the cost of converting raw material into finished products?
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A. Job order cost

B. Conversion cost

C. Explicit cost

D. Prime cost

395. Which of the following statements is correct about Depreciation?
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A. Depreciation is a charge against profit

B. Depreciation is provided in the books only when there is profit

C. Depreciation is an appropriation of profit

D. Depreciation cannot be provided in case of loss in a financial year

396. Which of the following is generally not the party to a check?
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A. Payee

B. Payer

C. Bank

D. Seller
397. From the following details what will be the partners commission? Net profit before charging partners commission 65,000. Partners commission 11% before charging such commission
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A. 7150

B. 5431

C. 6441

D. 5876