Financial Accounting Multiple Choice Questions Answers (Accounting Quiz - 10)

1. Which of the following is true when a debtor pays his dues?
[A]The asset side of the balance sheet will decrease
[B]The asset side of the balance sheet will increase
[C]The liability side of the balance sheet will increase
[D]There is no change in total assets or total liabilities


2. Withdrawal of goods from stock by the owner of the business for personal use should be recorded by debiting
[A]Drawings account and crediting cash account
[B]Drawings account and crediting purchases account
[C]Capital account and crediting drawings account
[D]Purchases account and crediting drawings account


3. The cost price of a machine is Rs.1,20,000 and the depreciated value of the machine after 3 years will be Rs.66,000. If the company charges depreciation under straight-line method, the rate of depreciation will be
[A]25%
[B]20%
[C]18%
[D]15%


4. Consider the following data pertaining to a firm:
Credit balance as per bank column of cash book Rs.13,500
Bank interest on overdraft appeared only in the pass book Rs.2,100
Cheques deposited but not collected by the bank Rs.5,000
The balance as per pass book is
[A]Rs.20,600 (Dr. balance)
[B]Rs.18,500 (Dr. balance)
[C]Rs.18,500 (Cr. balance)
[D]Rs.15,600 (Dr. balance)


5. Consider the following data pertaining to a company for the year 2011-2012:
Opening balance of sundry debtors Rs. 45,000
Credit sales Rs.4,25,000
Cash sales Rs. 20,000
Cash collected from debtors Rs.4,00,000
Closing balance of sundry debtors Rs. 50,000
The bad debts of the company during the year are
[A]Rs.40,000
[B]Rs.35,000
[C]Rs.30,000
[D]Rs.20,000


6. The opening stock of a company is Rs.40,000 and the closing stock is Rs.50,000. If the purchases during the year are Rs.2,00,000 the cost of goods sold will be
[A]Rs.2,10,000
[B]Rs.2,00,000
[C]Rs.1,90,000
[D]Rs.1,80,000


7. The balance as per bank statement of a company is Rs.12,500 (Dr.). The company deposited two cheques worth Rs.8,500, out of which one cheque for Rs.2,800 was dishonoured which was not entered in the cash book. The credit balance as per cash book is
[A]Rs.21,000
[B]Rs.15,300
[C]Rs.23,800
[D]Rs. 9,700


8. During the year 2002-03, the profit of a business before charging manager’s commission was Rs.1,89,000. If the manager’s commission is 5% on profit after charging his commission, then the total amount of commission payable to manager is
[A]Rs.10,000
[B]Rs. 9,450
[C]Rs. 9,000
[D]Rs. 8,500


9. Which of the following statements is true?
[A]The losses from the sale of capital assets need not be deducted from the revenue to ascertain net income
[B]Going concern concept requires that always non-monetary assets should be valued and recorded at market value
[C]According to consistency concept, the results of one accounting period of a business cannot be compared with that of in the past
[D]In terms of conservatism concept all probable losses must be considered in computation of income


10. Which of the following ratios indicates the short-term liquidity of a business?
[A]Inventory turnover ratio
[B]Debt-equity ratio
[C]Acid test ratio
[D]Proprietary ratio


11. Which of the following should be deducted in the Balance Sheet of a company from the share capital to find out paid-up capital?
[A]Calls-in-advance
[B]Calls-in-arrears
[C]Share forfeiture
[D]Discount on issue of shares


12. Which of the following statements is false?
[A]The forfeited shares should not be issued at a premium
[B]At the time of forfeiture of shares, share premium should not be debited with the amount of premium already received
[C]Shares can be issued at a discount only after one year from the commencement of business
[D]Share premium cannot be utilized to redeem preference shares


13. Which of the following accounting treatments is/are true in respect of accrued commission appearing on the debit side of a trial balance?
[A]It is shown on the debit side of the profit and loss account
[B]It is shown on the credit side of the profit and loss account
[C]It is shown on the liabilities side of the balance sheet
[D]It is shown on the assets side of the balance sheet


14. The maximum amount beyond which a company is not allowed to raise funds by issue of shares is
[A]Issued capital
[B]Reserve capital
[C]Nominal capital
[D]Subscribed capital


15. The discount allowed on re-issue of forfeited shares is debited to
[A]Discount on re-issue of shares account
[B]Profit and loss account
[C]Share premium account
[D]Forfeited shares account