Top 1000+ Solved Financial Accounting MCQ Questions Answer
Q. A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case
a. P&L A/C is debited with ` 1,400
b. P&L A/C is debited with ` 1,200
c. 200 is shown as current asset
d. Both (b) and (c) above
Q. Bad debts recovered is
a. Credited to P&L A/c
b. Debited to P&L A/c
c. Reduced from debtors in Balance Sheet
d. Added to debtors in Balance Sheet
Q. The adjustment to be made for prepaid expenses is
a. Add prepaid expenses to respective expenses and show it as an asset
b. Deduct prepaid expenses from respective expenses and show it as an asset
c. Add prepaid expenses to respective expenses and show it as a liability
d. Deduct prepaid expenses from respective expenses and show it as a liability
Q. On scrutiny of a firm‘s books of accounts, it was observed that the following errors have occurred in the previous years but have not yet been rectified. i. Depreciation for 2011-2012- ` 7,000 understated ii. Accrued expenses as at March 31, 2013 - ` 10,000 understated The impact of this on the reported net income for the year ending March 31, 2013 is
a. 7,000 Overstated
b. 10,000 Overstated
c. 17,000 Understated
d. 17,000 Overstated
Q. Which of the following entries is correct in respect of reserve for discounts on accounts payable?
a. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c
b. Debit Accounts Payable A/c and Credit P&L 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
Q. Goods in stock worth ` 800 are destroyed by fire and the Insurance Co. is accepted the claim for ` 600. Adjustment would involve:
a. Debit of ` 800 to Trading Account and credit of ` 600 and ` 200 to insurance company and Profit and Loss Account respectively
b. Deduct the ` 800 from closing stock in the Trading Account
c. Credit insurance company for ` 600
d. Debit of ` 600 and ` 200 to insurance company and Profit and Loss Account respectively and
Q. Prepaid expenses are valued on the Balance Sheet at
a. Replacement cost
b. Current cost
c. Cost to acquire less accumulated amortization
d. Cost less expired portion
Q. Which of the following relationships is/are false?
a. Net Profit = Gross Profit – Administration and Other expenses
b. Net Profit = Gross Profit + Administration expenses and Other expenses
c. Opening Stock + Purchases – Closing Stock = Cost of Sales
d. Both (b) and (c) above
Q. Gross Profit is equal to
a. Sales – Cost of goods sold ;
b. Sales – Closing Stock + Purchases
c. Opening Stock + Purchases – Closing Stock ;
d. None of the above
Q. Which of the following shall not be deducted from net profit while calculating managerialremuneration?
a. Loss on sale of undertaking
b. Debts considered bad and written off
c. Liability arising from a breach of contract
d. Director‘s remuneration
Q. Which of the following equations is correct?
a. Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock
b. Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock
c. Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales
d. Gross Profit – Opening Stock + Direct expenses + Purchases +Closing stock = Sales
Q. Which of the following is not true with regard to preparation of Profit & Loss Account?
a. Profit & Loss Account is prepared for a certain period and hence it is an interim statement
b. Profit & Loss Account does not disclose the effect of non-financial items
c. Net Profits are ascertained on the basis of current costs
d. Net Profits as disclosed by P&L Account is not absolute
Q. The Profit and Loss Account shows the
a. Financial results of the concern for a period
b. Financial position of the concern on a particular date
c. Financial results of the concern on a particular date
d. Cost of goods sold during the period
Q. Which of the following statements is true?
a. Provision for doubtful debts represents the amount that cannot be collected
b. Cash balance on hand shows whether the business has earned Profit or Loss
c. Free samples received are business gains
d. The WDV of an asset depreciated on the reducing balance method can never become zero
Q. Cash Profit is
a. Net profit – Non-trading Profit – Depreciation and provision
b. Gross Profit – Non-trading Profit + Depreciation and provision
c. Net Profit + Depreciation and provision
d. Gross Profit – Operational expenses