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Accounting Mcqs/MCQs

Accounting Mcqs – MCQs

1591 questions. Click to practice.

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1.A club has paid subscription fees amounting to ₹1,400, of which ₹200 is prepaid for the upcoming period. How should this transaction be recorded?

Debit Profit & Loss Account by ₹1,400Debit Profit & Loss Account by ₹1,200Record ₹200 as a current assetBoth debit Profit & Loss Account by ₹1,200 and record ₹200 as a current assetNone of the above

2.How should depreciation recorded in the Trial Balance be treated in the financial statements?

Charged as an expense in the Profit and Loss AccountPresented as a liability on the Balance SheetSubtracted from the related asset's value on the Balance SheetBoth charged to Profit and Loss Account and deducted from the asset on the Balance SheetNone of the above

3.How is prepaid insurance classified in the financial statements?

An asset that will be used within one yearA short-term obligation to be paid soonA long-term tangible assetRevenue earned in advanceNot recorded in the accounts

4.How are outstanding salaries typically classified in accounting records?

Recorded as an asset on the balance sheetConsidered a liabilityAdjusted within the Profit and Loss accountBoth options B and C are correctNone of the above

5.How are Property, Plant, and Equipment typically reported on the Balance Sheet?

Current replacement cost less accumulated depreciationOriginal purchase price minus expected residual valueAcquisition cost reduced by accumulated depreciationInitial cost updated for inflation adjustmentsNot disclosed on the Balance Sheet

6.Net sales is calculated by subtracting which of the following from total sales?

Goods returned by customersSales returnsCost of merchandise soldDelivery expenses on salesNone of the above

7.What term refers to the expense involved in transforming raw materials into final goods?

Direct costOut-of-pocket costBatch order costConversion costNot applicable

8.Which category of assets includes those that are anticipated to be liquidated or turned into cash within one year or less?

Current AssetsLong-Term AssetsBoth Current Assets and Current LiabilitiesAll the above categoriesNone of the above

9.What is the name of the income statement where every item is represented as a percentage of total sales?

Statement of financial positionCommon size income statementStandard income statementAll of the aboveNone of these

10.What term describes the payment made by a borrower to a lender, representing the borrower's expense for obtaining funds?

Interest rateExpected rate of returnNominal rate of interestEvery option listedNone of the above

11.Which of the following is classified as a period cost?

Selling expensesDirect labor costsManufacturing overheadBoth selling and administrative expensesNone of the above

12.Which financial document provides an accountant’s summary of a company’s financial position at a specific point in time?

Profit and Loss ReportStatement of Financial PositionCash Movement ReportStatement of Retained EarningsNone of the above

13.Among the listed types of business entities, which one faces the fewest regulatory requirements?

Sole proprietorshipGeneral partnershipLimited partnershipCorporationNone of the above

14.If the sales revenue for a period is Rs. 25,000 and accounts receivable grows by Rs. 8,000 during the same period, what is the total cash collected from customers?

Rs. 33,000Rs. 25,000Rs. 17,000Rs. 8,000Cannot be determined

15.The Average Accounting Return (AAR) evaluates accounting profit in relation to which of the following?

The book value of the investmentThe intrinsic worth of the assetThe initial expenditure incurredThe current market priceNone of the above

16.When an asset that was previously revalued is sold or discarded, where should the remaining balance in the Revaluation Reserve account related to that asset be transferred?

General Reserve AccountProfit and Loss AccountFixed Asset AccountCapital Reserve AccountNo transfer is required

17.When preparing the financial statements, to which account should the amount recovered from previously written-off bad debts be credited?

Accounts ReceivableIncome StatementProfit and Loss Adjustment AccountProfit and Loss Appropriation AccountNone of the above

18.Which of the following statements accurately describe the direct write-off method for recognizing bad debt expense?

Bad debt expense is recorded separately and does not correspond with the related sales period.Sales revenue tends to be inflated during the period the sales are made.This approach conflicts with the accounting matching principle.All of the above statements are correct.None of the above.

19.When making an adjustment to create a provision for doubtful debts, which accounting entry is required?

Debit the Profit and Loss Account and subtract the provision from debtorsCredit the Profit and Loss Account and reduce the debtors by the provision amountCredit the Profit and Loss Account and increase the debtors by the provisionDebit the Profit and Loss Account and add the provision to the debtors balanceNone of the above

20.What will happen to the Provision for Bad Debts Account if the actual bad debts exceed the amount set aside in the provision?

Provision for Bad Debts Account will show a credit balanceProvision for Bad Debts Account will have a debit balanceBad Debts Account will reflect a debit balanceDiscount on Debtors Account will carry a debit balanceNo change will occur

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