In the name of ALLAH, the most beneficient, the most merciful

Financial Accounting (MGT101)

Multiple Choice Questions (MCQs)

 

Objective Questions

Question

The main purpose of ___________ is to ascertain true result of the business operation during particular period of time.

  1. Cost Accounting
  2. Financial Accounting
  3. Managerial Accounting
  4. Tax Accounting

Answer: 2 Chapter No. 1 

Question

An accounting system is used by a business to:

  1. Analyze transactions
  2. Handle routine bookkeeping tasks
  3. Structure information
  4. All of the given

Answer: 4 Chapter No. 1 

Question

Generally Accepted Accounting Principles (GAAP) are necessary because financial statements

  1. are publicly available
  2. should be standardized
  3. should be understandable
  4. All of the given

Answer: 4 Chapter No. 1 

Question

All of the following are Non-commercial (Non-Profit Oriented) organizations, EXCEPT:

  1. NGO's (Non-government Organizations)
  2. Trusts
  3. Limited Companies
  4. Societies

Answer: 3 Chapter No. 2 

Question

What does single entry accounting mean?

  1. It means to record debit only
  2. It means to record one side of entry only
  3. It means to record cash only
  4. It means to record credit only

Answer: 3 Chapter No. 2 

Question

Commercial Accounting is done through a system that is known as:

  1. Single entry system of Accounting
  2. Accrual system of Accounting
  3. Double Entry system of Accounting
  4. Cash system of Accounting

Answer: 3 Chapter No. 2 

Question

The journal entry to record purchase of furniture on credit would include a:

  1. Credit to furniture A/c
  2. Credit to Cash A/c
  3. Credit to Payables A/c
  4. Credit to Receivables A/c

Answer: 3 Chapter No. 3 

Question

Another name of net income or positive financial return is:

  1. Profit
  2. Contribution Margin
  3. Revenue
  4. Credit

Answer: 1 Chapter No. 3 

Question

The proper classification of Suppliers account is:

  1. Assets
  2. Expenses
  3. Revenues
  4. Liabilities

Answer: 4 Chapter No. 5 

Question

Find out the missing value of an Accounting Equation with the help of given data: Owner’s equity Rs. 22,500 Total Liabilities Rs. 80, 385 Cash Rs. 1,000 Bank Rs. 2,000 Debtors Rs. 500

  1. Rs. 102,885 other assets
  2. Rs. 102,885 current liabilities
  3. Rs. 99,885 current liabilities
  4. Rs. 99,385 other assets

Answer: 4 Chapter No. 5 

Question

A sum of Rs. 8,000 paid as wages to repair the office furniture should be debited to:

  1. Repair Account
  2. Furniture Account
  3. Cash Account
  4. Office expense Account

Answer: 4 Chapter No. 5 

Question

At the end of accounting period a list of all ledger balances is prepared. This list is called ______.

  1. Journal
  2. Ledger
  3. Cash Book
  4. Trial Balance

Answer: 4 Chapter No. 7 

Question

If debit side of a ledger is greater than credit side, the balance will be called as:

  1. Debit Balance
  2. Credit Balance
  3. Excess Balance
  4. None of the given

Answer: 1 Chapter No. 7 

Question

Which of the following is used to calculate Gross Profit?

  1. Expenses + Revenues
  2. Assets – Liabilities
  3. Revenue – Labor
  4. Net Revenue – Cost of Goods Sold

Answer: 4 Chapter No. 8 

Question

Revenues, expenses and net profit are found on a:

  1. Statement of Cash Flows
  2. Income Statement
  3. Statement of Owner’s Equity
  4. Balance Sheet

Answer: 2 Chapter No. 8 

Question

Which of the following expenses are called financial expenses?

  1. Payment of rent & Salary expense
  2. Markup on loan& Bank Charges
  3. Interest & advertisement expense
  4. Wages and Depreciation expense

Answer: 2 Chapter No. 8 

Question

A Balance Sheet discloses the financial position of a firm:

  1. For a certain given period
  2. At a particular point of time
  3. After the fixed date
  4. None of the given options

Answer: 2 Chapter No. 9 

Question

Following information is extracted from Mr. A’s balance sheet: Cash Rs.100 Accounts Receivable 500 Accounts Payable 2 00 Bank Loans 1,000 Based on the information provided, what are Mr. A’s assets?

  1. Rs.200
  2. Rs. 600
  3. Rs. 900
  4. Rs. 1700

Answer: 2 Chapter No. 9 

Question

What will be debited, If Mr. “A” started business with Rs. 2, 00,000.

  1. Capital account
  2. Cash account
  3. Mr. A’s account
  4. Business account

Answer: 1 Chapter No. 10 

Question

In which of the following statement opening stock is shown?

  1. Profit and loss account
  2. Balance sheet
  3. Cash flow statement
  4. Owner’s equity

Answer: 2 Chapter No. 12 

Question

Which one of the following is INCORRECT about closing Stock?

  1. It is added into current assets
  2. It is deducted from Material available for use
  3. It becomes opening stock of next year
  4. It reduces the resources of business

Answer: 2 Chapter No. 12 

Question

Working capital Rs. 20,000, Current liabilities Rs. 30,000 and fixed assets Rs. 100,000; calculate current assets?

  1. Rs. 10,000
  2. Rs. 50,000
  3. Rs. 110,000
  4. Rs. 120,000

Answer: 2 Chapter No. 12 

Question

_______ is the basic part of an item, which is processed to make a complete item:

  1. Factory overhead
  2. Raw material
  3. Finished goods
  4. Work in process

Answer: 2 Chapter No. 14 

Question

Cost of goods manufactured + opening finished goods – ending finished goods =?

  1. Total factory cost
  2. Cost of goods sold
  3. Prime cost
  4. Conversion cost

Answer: 2 Chapter No. 16 

Question

The total of all costs incurred to convert raw material into finished goods is known as:

  1. Prime cost
  2. Conversion cost
  3. Sunk cost
  4. Opportunity cost

Answer: 2 Chapter No. 16 

Question

According to diminishing balance method of charging depreciation:

  1. The amount of depreciation remains constant every year
  2. The rate percent as well as amount reduces every year
  3. The amount of depreciation reduces year to year
  4. The rate percent of depreciation declines year to year

Answer: 3 Chapter No. 17 

Question

Total depreciation of an asset can not exceed its:

  1. Scrap value
  2. Residual value
  3. Market value
  4. Depreciable value

Answer: 4 Chapter No. 17