Accounting and Finance MCQs Test 1
ABOUT THIS QUIZ:
- Chapter: Accounting and Finance
- Quiz Type: Multiple choice questions (MCQs)
- Number of MCQs:40
- Total Points: 40
- Approximate Time Required: 10 – 15 minutes
Quiz-summary
0 of 40 questions completed
Questions:
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- 11
- 12
- 13
- 14
- 15
- 16
- 17
- 18
- 19
- 20
- 21
- 22
- 23
- 24
- 25
- 26
- 27
- 28
- 29
- 30
- 31
- 32
- 33
- 34
- 35
- 36
- 37
- 38
- 39
- 40
Information
Accounting and Finance MCQs Test
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 40 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
- Not categorized 0%
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- 11
- 12
- 13
- 14
- 15
- 16
- 17
- 18
- 19
- 20
- 21
- 22
- 23
- 24
- 25
- 26
- 27
- 28
- 29
- 30
- 31
- 32
- 33
- 34
- 35
- 36
- 37
- 38
- 39
- 40
- Answered
- Review
- Question 1 of 40
1. Question
H buys goods on credit from J. The goods are unsuitable and H returns them to J. What is the name of the document, which H sends to J with the goods?
Correct
Awesome! your answer is correct.
Explanation:
As H is buyer of goods so when he returns goods to J; then he Will send J a debit note to indicate
that J’s account has been debited.Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explanation:
As H is buyer of goods so when he returns goods to J; then he Will send J a debit note to indicate
that J’s account has been debited. - Question 2 of 40
2. Question
Why is the General journal used to correct errors in the ledger?
CorrectAwesome! your answer is correct.Incorrect Your answer is incorrect. The Correct answer is (option 3). - Question 3 of 40
3. Question
Which book of prime entry is part of the double entry system?
CorrectAwesome! your answer is correct.
Explanation:
Option “A” is correct as it has two sides of debit and credit and also acts as an account.Incorrect Your answer is incorrect. The Correct answer is (option 1).
Explanation:
Option “A” is correct as it has two sides of debit and credit and also acts as an account. - Question 4 of 40
4. Question
In which of the following will cash discount allowed be first recorded?
CorrectAwesome! your answer is correct.
Explanation:
Cash book is the book to record transactions relating to cash in hand, cash at bank and cash
discounts.Incorrect Your answer is incorrect. The Correct answer is (option 1).
Explanation:
Cash book is the book to record transactions relating to cash in hand, cash at bank and cash
discounts. - Question 5 of 40
5. Question
A cash book has separate columns for bank and cash transactions.
At 1 March the balance on the cash account was $200. Transactions during March were:Cash banked $30 Checque drawn for cash $70 What was the balance on the cash account at the end of March?
CorrectAwesome! your answer is correct.
Explanation:
Incorrect Your answer is incorrect. The Correct answer is (option 4).
Explanation:
- Question 6 of 40
6. Question
A cash book (bank column) showed a balance of $1973 (credit) at 31 March. The following items
did not appear in the bank statement at that date:Unpresented cheques $942 Cheques banked $865 What was the balance on the bank statement at 31 March?
CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
- Question 7 of 40
7. Question
The discount column on the debit Qf the cashbook totaled $842. It was posted to the
Discount Received Account.
The discount column on the credit side of the cashbook totaled $613 “and was posted to the
Discount Allowed Account.
Which entries correct these errors?CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 3).
Explaination
- Question 8 of 40
8. Question
The owner of a business takes inventory for her own use.
What are the ledger account entries to record this?CorrectAwesome! your answer is correct.Incorrect Your answer is incorrect. The Correct answer is (option 1). - Question 9 of 40
9. Question
In a business’s books, the ledger account of J Brown, a customer, shows a debit balance of $450.
What does this mean?CorrectAwesome! your answer is correct.
Explaination
Question shows position (balance) of an account at a particular date. “A” and “C” options are examples of accounting transactions and do not represent balances, whereas “D” option represents a liability on part of the business. Moreover debit balance indicates an asset (receivable) so “B” option is correct.Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
Question shows position (balance) of an account at a particular date. “A” and “C” options are examples of accounting transactions and do not represent balances, whereas “D” option represents a liability on part of the business. Moreover debit balance indicates an asset (receivable) so “B” option is correct. - Question 10 of 40
10. Question
A suspense account was opened with a credit balance of $840.
Which error caused this?CorrectAwesome! your answer is correct.
Explaination
“A” option is correct as it involves the following effects:
Incorrect Your answer is incorrect. The Correct answer is (option 1).
Explaination
“A” option is correct as it involves the following effects:
- Question 11 of 40
11. Question
A truck cost $8 000. The price included $36 for petrol. The total payment of $8 000 was debited
the Truck Account.
What is the effect on the Income statement and Balance Sheet?CorrectAwesome! your answer is correct.
Explaination
The error of wrong inclusion of petrol expense in the truck account has the following effects.
Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
The error of wrong inclusion of petrol expense in the truck account has the following effects.
- Question 12 of 40
12. Question
A bookkeeper mistakenly treats a capital expenditure item as revenue expenditure. What is the
effect of this error?CorrectAwesome! your answer is correct.
Explaination
Effects of this error are
Incorrect<img class=”alignnone size-full wp-image-54″ src=”https://www.playaccounting.com/wp-content/uploads/2016/01/sad.png” alt=”sad” width=”32″ height=”32″ /> Your answer is incorrect. The Correct answer is (option 4).
Explaination
Effects of this error are
- Question 13 of 40
13. Question
X and C have to obtain two machines to make one of their products. Machines P and Q may be
purchased or, if preferred, similar machines may be hired. The table shows details of the
machines.All the machines will produce the same revenue each year.
Which choice of machines will produce the greatest net profit in the first year?CorrectAwesome! your answer is correct.
Explaination
As annual cost of machine Q is lowest so it should be chosen with one of the rental machines
which have costs lower than machine P; so “C” option is correct.Incorrect Your answer is incorrect. The Correct answer is (option 3).
Explaination
As annual cost of machine Q is lowest so it should be chosen with one of the rental machines
which have costs lower than machine P; so “3” option is correct. - Question 14 of 40
14. Question
A vehicle costing $20 000 is depreciated by 20% per annum on the diminishing balance method.
What is the depreciation charge at the end of the second year?CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 1).
Explaination
- Question 15 of 40
15. Question
A machine bought two years ago for $20 000 is sold for •$13 000. Plant and Machinery is
depreciated by 10% on cost.
What is the balance on the Provision for Depreciation of Plant and Machinery Account after this
sale, if provision for depreciation before this sale was $28 000?CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
- Question 16 of 40
16. Question
What happens to the balance of the Bad Debts Account at the end of a financial year?
CorrectAwesome! your answer is correct.
Explaination
“C” option is correct as like all other Income statement items bad debts are closed to Income statement.Incorrect Your answer is incorrect. The Correct answer is (option 3).
Explaination
“C” option is correct as like all other Income statement items bad debts are closed to Income statement. - Question 17 of 40
17. Question
A social club’s receipts and payments account for 1996 showed rent paid as $4 000. On 1 January
1996 rent owed by the club was $800. On 31 December 1996 Rent owed by the club was $1000.
What is the amount charged for rent in the income and expenditure account for 1996?CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
- Question 18 of 40
18. Question
A business rented premises to a tenant from 1 April 1996 for $10 000 a year. Rent received by the
business was $5 000 on 1 May 1996 and $5 000 on 1 November 2018.1n the business’s Income
statement for the year ended 31 December 2018, what is the amount shown for rent?CorrectAwesome! your answer is correct.
Explaination
Realisation and Matching concepts state that income is recorded in the books when it is earned whether received or not. As rental receipt of $10 000 covers a period of 12 months from 1 April 2018 to 31 March 1997 whereas business year ends on 31 December 2018. So up to that date
rent of only 9 months have expired i.e. from 1 April 2018 to 31 December 2018; so $7 500 ($10000 x %) will be reported as rental income for the year. As income has a credit nature so it will be shown in the income statement as a credit entry.Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
Realisation and Matching concepts state that income is recorded in the books when it is earned whether received or not. As rental receipt of $10 000 covers a period of 12 months from 1 April 2018 to 31 March 1997 whereas business year ends on 31 December 2018. So up to that date
rent of only 9 months have expired i.e. from 1 April 2018 to 31 December 2018; so $7 500 ($10000 x %) will be reported as rental income for the year. As income has a credit nature so it will be shown in the income statement as a credit entry. - Question 19 of 40
19. Question
A business allowed Smith, a customer, $30 cash discount. This was entered correctly in the
Discount Allowed Account, but omitted from Smith’s account. A suspense account was opened.
Which correcting entries are required to close the suspense account?CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 3).
Explaination
- Question 20 of 40
20. Question
Which item would not appear in a Sales Ledger Control Account?
CorrectAwesome! your answer is correct.
Explaination
“C” is the right option. As provision for bad debts is created out of profits i.e. when it increases; profit reduces and vice-e-versa for the contrary. So it is not recorded in the total trade receivables account or sales ledger control account.Incorrect Your answer is incorrect. The Correct answer is (option 3).
Explaination
“C” is the right option. As provision for bad debts is created out of profits i.e. when it increases; profit reduces and vice-e-versa for the contrary. So it is not recorded in the total trade receivables account or sales ledger control account. - Question 21 of 40
21. Question
What is the purpose of control accounts?
CorrectAwesome! your answer is correct.
Explaination
There are many other items in the trial balance in addition to control account items so it cannot help to make the trial balance balanced on its own (“3” option), As errors would have already incurred so control accounts cannot prevent errors (“4” option). Errors in the personal accounts and in the books of prime entry can be detected by comparing their respective balances so “2” option is correct.Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
There are many other items in the trial balance in addition to control account items so it cannot help to make the trial balance balanced on its own (“3” option), As errors would have already incurred so control accounts cannot prevent errors (“4” option). Errors in the personal accounts and in the books of prime entry can be detected by comparing their respective balances so “2” option is correct. - Question 22 of 40
22. Question
Inventory at 31 December 2017 overstated by $6 000.
What was the effect on the gross profit for the year to 31 December 2018?CorrectAwesome! your answer is correct.
Explaination
Inventory at 31 December 2017 will be the opening inventory of 2018. So its overstatement will increase cost of sales of 2018 to which it is added which will ultimately understate profits by $6 000.Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
Inventory at 31 December 2017 will be the opening inventory of 2018. So its overstatement will increase cost of sales of 2018 to which it is added which will ultimately understate profits by $6 000. - Question 23 of 40
23. Question
The table shows data relating to two departments of the same business.
Head office expenses will not be reduced by the closure of a department.
Which action will result in the highest profit?CorrectAwesome! your answer is correct.
Explaination
Department 1 should not be closed as it is generating positive profits Of $20 000 whereas although department 2 is not producing any profit but if it is closed then head office expenses of S30 000 allotted to the department 2 will be charged to department 1 which will reduce existing profits of S20000 ($20 000 + Nil) to a loss of $10 OOO ($20 000 – $30 000).Incorrect Your answer is incorrect. The Correct answer is (option 4).
Explaination
Department 1 should not be closed as it is generating positive profits Of $20 000 whereas although department 2 is not producing any profit but if it is closed then head office expenses of S30 000 allotted to the department 2 will be charged to department 1 which will reduce existing profits of S20000 ($20 000 + Nil) to a loss of $10 OOO ($20 000 – $30 000). - Question 24 of 40
24. Question
A Trial Balance showed:
The Provision is to be maintained at 5% of Trade receivables.
How would the Provision be shown in the Balance Sheet?CorrectAwesome! your answer is correct.
Explaination
Provision for bad debts is a contra asset so it is deducted from trade receivables. Moreover its
amount be S1 250 (S25 000 5%); so “4” option is correct.Incorrect Your answer is incorrect. The Correct answer is (option 4).
Explaination
Provision for bad debts is a contra asset so it is deducted from trade receivables. Moreover its
amount be S1 250 (S25 000 5%); so “4” option is correct. - Question 25 of 40
25. Question
A business had working capital of $6 000 at 31 January. On 2 February, trade receivables paid $1
150 in full settlement of debts $1 200, and damaged inventory costing $200 was written off.
What was the working capital at close of business on 2 February?CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
- Question 26 of 40
26. Question
How is an invoice for an expense owing shown in the Balance Sheet?
CorrectAwesome! your answer is correct.
Explaination
Expense owing means expense, which has been incurred, but payment for it is yet to be made; so it is a liability. Moreover as its amount is payable within one year so is shown as a current liability.Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
Expense owing means expense, which has been incurred, but payment for it is yet to be made; so it is a liability. Moreover as its amount is payable within one year so is shown as a current liability. - Question 27 of 40
27. Question
How are non-current assets normally recorded in a balance sheet?
CorrectAwesome! your answer is correct.Incorrect Your answer is incorrect. The Correct answer is (option 1). - Question 28 of 40
28. Question
If partners do not have any agreement, how should profits or losses be shared?
CorrectAwesome! your answer is correct.Incorrect Your answer is incorrect. The Correct answer is (option 1). - Question 29 of 40
29. Question
A manufacturer buys a machine for $20 000. Its estimated life is five years with a scrap value of
$10 000. Depreciation is charged on the straight-line method.
What is the percentage rate of depreciation on an annual basis?CorrectAwesome! your answer is correct.
Explaination
Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
- Question 30 of 40
30. Question
Bill and Ben are in partnership sharing profit; and losses in the ratio 3:2. Bill receives a salary of
$12,000 per year. The firm’s net profit for the year is $52,000.
What are the amounts to be credited to the partners’ Current Accounts?CorrectAwesome! your answer is correct.
Explaination
Amounts to be credited to the partner’s current accounts will be
Incorrect Your answer is incorrect. The Correct answer is (option 3).
Explaination
Amounts to be credited to the partner’s current accounts will be
- Question 31 of 40
31. Question
Which of the following is similar to a club’s receipts and payments account?
CorrectAwesome! your answer is correct.
Explaination
“2” option is correct as cash or bank account also shows details of receipts and payments Of cash.Incorrect Your answer is incorrect. The Correct answer is (option 2).
Explaination
“2” option is correct as cash or bank account also shows details of receipts and payments Of cash. - Question 32 of 40
32. Question
The following information is taken from a sole trader’s accounts:
Opening Capital $12 000
Closing Capital $13 800
Net Profit $3 000
What are the trader’s drawings?CorrectAwesome! your answer is correct.
Explaination
As through “Financed by” section of a sale trader; we know
As we have amounts of three items given in the above formula, so we can interpolate the figures to find out amount of drawings i.e.
Incorrect Your answer is incorrect. The Correct answer is (option 1).
Explaination
As through “Financed by” section of a sale trader; we know
As we have amounts of three items given in the above formula, so we can interpolate the figures to find out amount of drawings i.e.
- Question 33 of 40
33. Question
What is a limited company’s authorized capital?
CorrectAwesome! your answer is correct.Incorrect Your answer is incorrect. The Correct answer is (option 1). - Question 34 of 40
34. Question
What is the main reason for preparing a manufacturing account?
CorrectAwesome! your answer is correct.
Explaination
“2” option is correct as is also the answer (last item) of the manufacturing account; whereas the remaining items are simply used to calculate cost of production.Incorrect
Awesome! your answer is correct.
Your answer is incorrect. The Correct answer is (option 2).
