Tuesday 15 November 2011

Financial Accounting multiple choice questions-2

Greetings to fellow blog readers.....


1.    Window dressing is prohibited by the :
1. Accural concept                                                2. Convention of disclosure
3. Convention of conservatism                             4. Convention of materiality

2.    Qualitative transactions are not recorded in the accounts due to :
1. Accrual concept                                                2. Dual concept
3. Convention of materiality                                  4. Money measurement concept

3.    The concept of realization would imply ?
1.    When order is received
2.    When cash is received from debtors
3.    When goods are delivered to customer
4.    Meeting the plan targets

4.    Which of the following is the users of Accounting ?
1. Share holders                                                    2. Creditors
3. Labour                                                               4. All of the above

5.    Which of the following is correct equation ?
1. Assets = Liabilities + Capital                             2. Assets = Capital – Liabilities
3. Capital = Assets – Liabilities                             4. Both 1 & 3

6.    Financial Accounting is preparation of Accounting generally on what basis ?
1. Accrual basis                                                    2. Historical basis
3. Future basis                                                      4. None of these

7.    Which of the following represents the Accounting equation ?
1. Capital + Liabilities – Assets = 0                       2. Assets – Liabilities – Capital = 0
3. Liabilities = Assets – capital                              4. All of the above

8.    A principle is … to be the extent that the accounting information is not influenced by the personal bias of those who furnish the information ?
1. Going concern concept                                    2. Money measurement concept
3. Cost concept                                                     4. Objective concept

9.    According to the … concept, revenue is considered as being raised on the date at which it is realized ?
1. Assumption                                                       2. Basic condition
3. Both 1 & 2                                                         4. None of these

10.  Contingent liability is shown in the balance sheet because of :
1. convention of consistency                                2. Convention of materiality
3. Convention of disclosure                                  4. None of these

11.  Revenue is considered as being earned when ?
1. Cash is received                                               2. Production is done
3. Sale is effected                                                 4. None of the above

12.  Accounting does not record non-financial transaction because of :
1. Measurement concept                                      2. Accrual concept
3. Entity concept                                                   4. None of these

13.  The system of recording transactions based on dual concept is called ?
1. Double accounting system                               2. Double entry system
3. Single entry system                                         4. None of these

14.  A contractor usually takes up revenue and earnings on his project on the following basis ?
1. Cash basis                                                        2. Sales basis
3. Production basis                                               4. None of these

15.  When applied to the balance sheet, the convention of conservatism result in ?
1.    Understatement of assets
2.    Understatement of liabilities and provisions
3.    Overstatement of capital
4.    None of these

16.  The accounting equation is based on :
1. Going concern concept                                    2. Dual aspect concept
3. Business entity concept                                    4. None of these

17.  Market value of investments is shown as a footnote according to :
1. Going concern concept                                    2. Dual aspect concept
3. Business entity concept                                    4. None of these

18.  Market value of investments is shown as a footnote according to :
1. Convention of disclosure                                  2. Convention of consistency
3. convention of conservatism                             4. None of these

19.  Which is the correct ?
1. Capital = Assets + Liabilities                             2. Capital = Net Assets
3. Liabilities = Capital – Assets                             4. None of these

20.  The profit made by a  concern during the past one year would be, when the capital increased by Rs.40,000 and drawings amounted to Rs.10,000 :
1. Rs.50,000                                                          2. Rs.30,000
3. Rs.40,000                                                          4. None of these

21.  In each of the following cases indicate the alternative which you consider to be correct; the liabilities of firm are Rs.3,000. The capital of the proprietor is Rs.7,000 the total assets are :
1. Rs.7,000                        2. Rs.10,000                3. Rs.4,000                  4. Rs.4,500

22.  The assets of business on 31st March 1996 are worth Rs.50,000 and its capital is Rs.35,000. Its liabilities on that date shall be Rs. :
1. 85,000                           2. 15,000                     3. 35,000                     4. 80,000

23.  Cash book is an example of :
1. General Journal                                                2. Specific Journal
3. It is not a Journal                                               4. None of these

24.  Commission received in advance is of the nature of :
1. Real account                                                     2. Nominal account
3. Personal account                                              4. None of these

25.  Rebate on Bills discounted account is of the nature of :
1. Personal Account                                             2. Nominal Account
3. Real account                                                     4. None of these

26.  Patent rights account is of the nature of :
1. Nominal Account                                              2. Personal Account
3. Real account                                                     4. None of these
ANSWERS

1.4     2.4     3.3     4.4     5.4     6.3     7.4     8.4     9.2     10.3     11.3     12.1    13.2    14.4    
15.1     16.2     17.3     18.1     19.3     20.1     21.2     22.2     23.2     24.3    25.1     26.3

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