Top 1000+ Solved Financial Accounting MCQ Questions Answer
Q. Benefits of preparing Bank Reconciliation Statement includes —
a. It bring out any errors committed in preparation of Cash book / Bank Pass Book
b. Highlights under delay in clearance of cheques deposited but not credited
c. Help know actual bank balance ;
d. All the three
Q. Debit balance as per bank pass book mean —
a. Surplus cash ;
b. Bank Overdraft ;
c. Terms deposits with bank ;
d. None of these
Q. Which of the following is not a cause of difference in balance as per cash book and balance as perbank pass book—
a. Errors in cash book ;
b. Errors in pass book ;
c. Cheques deposited and cleared;
d. Cheques issued but not presented for payment
Q. Provision is created for —
a. Unknown Liabilities ;
b. Known Liabilities ;
c. Creation of Secret Reserves ;
d. All the Three
Q. Which of the following is not a method of charging depreciation
a. Straight line Method ;
b. Written down value Method ;
c. Discounted present value Method ;
d. Sum of digits Method
Q. A second hand car is purchased for ` 2,00,000 and sold at ` 1,40,000 after two years. If depreciation ischarged @ 10% on SLM method, find the profit or loss on sale of the car.
a. 20,000 Loss ;
b. 20,000 Profit ;
c. 10,000 Loss ;
d. 10,000 Profit
Q. In the above question if the depreciation is charged @10% on written down value method, find theprofit or loss on sale of the Second hand car.
a. Loss of ` 20,000 ;
b. Loss of ` 22,000 ;
c. Loss of ` 11,000 ;
d. Profit of ` 11,000
Q. Which of the following is true with respect to providing depreciation under diminishing balance method?
a. The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing
b. The amount of depreciation and the rate of depreciation decrease every year
c. The amount of depreciation decreases while the rate of depreciation remains the same
d. The amount of depreciation and the rate of depreciation increases every year
Q. Which of the following statements best describes the purpose of depreciation?
a. Regular reduction of asset value to correspond to changes in market value as the asset ages
b. A process of correlating the market value of an asset with its gradual decline in physical efficiency
c. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value
d. Allocation of the cost of an asset to the periods in which services are received from the asset
Q. The main objective of providing depreciation is to
a. Calculate the true profit
b. Show the true financial position in the Balance Sheet
c. Provide funds for replacement of fixed assets
d. Both (a) and (b) above
Q. Depreciation is a process of
a. Valuation
b. Valuation and allocation
c. Allocation
d. Appropriation
Q. The portion of the acquisition cost of the asset yet to be allocated is known as
a. Written down value
b. Accumulated value
c. Salvage value
d. Residual Value
Q. Which of the following statements is true with regard to written down value method of depreciation? i. The rate at which the asset is written off reduces year after year ii. The amount of depreciation provided reduces from year to year iii. The rate of depreciation as well as the amount of depreciation reduce year after year iv. The value of the asset gets reduced to zero over a period of time
a. Only (i) above
b. Only (ii) above
c. Both (i) and (ii) above
d. (i),(ii) and (iii) above
Q. The accounting process of gradually converting the unexpired cost of fixed assets into expenses overa series of accounting periods is
a. Depreciation
b. Physical deterioration of the asset
c. Decrease in market value of the asset
d. Valuation of an asset at a point of time
Q. Which of the following factors are primarily considered to determine the economic life of an asset?
a. Passage of time, asset usage, and obsolescence
b. Tax regulations and SEBI guidelines
c. Tax regulations and asset usage
d. SEBI guidelines and Asset usage