Olete.in – MCQs, Mock Tests & Government Job Prep | MBA MBA Accounting MCQ Question Set 3

Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

1. Fiscal year
2. Calendar year
3. Accounting period
4. Accrual period

✅ Correct Answer: 3

If the total assets of the company amount to Rs 1,50,000 and owner’s equity is Rs 70,000,the amount of liabilities will be

1. Rs 70,000
2. Rs 80,000
3. Rs 90,000
4. Rs 1,00,000

✅ Correct Answer: 2

The system of recording transaction based on dual aspect concept is called

1. Double account system
2. Double entry system
3. Single entry system
4. None of these

✅ Correct Answer: 2

The convention of conservatism is applicable

1. In providing for discount on creditors
2. In making provision for bad doubtful debts
3. Providing depreciation
4. None of these

✅ Correct Answer: 2

Rules of action or conduct adopted by the accountants universally while recording accounting transaction

1. Accounting convention
2. Accounting concepts
3. Accounting principles
4. None of these

✅ Correct Answer: 3

Which of the following items would not fall under the definition of an asset?

1. Land
2. Machine
3. Cash
4. Milk

✅ Correct Answer: 4

Basic assumptions or conditions upon which the science of accounting is based.

1. Accounting convention
2. Accounting concepts
3. Accounting principles
4. None of these.

✅ Correct Answer: 2

Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

1. Fiscal year
2. Calendar year
3. Accounting period
4. Accrual period

✅ Correct Answer: 3

The system of recording based on dual aspect concept is called:

1. Double account system
2. Double entry system
3. Single entry system
4. All the above

✅ Correct Answer: 2

Preliminary expenses are recorded in _____

1. Equity and liabilities-Liability side of B/S
2. Current liabilities- Liability side of B/S
3. Fixed assets- Asset side of B/S
4. Asset side of B/S

✅ Correct Answer: 4

____ is a person or item for which cost may be ascertained.

1. Cost unit
2. Cost centre
3. Cost object
4. Cost estimation

✅ Correct Answer: 2

____ is a person or item for which cost may be ascertained.

1. Cost unit
2. Cost centre
3. Cost object
4. Cost estimation

✅ Correct Answer: 2

Which of the following is not a fixed asset?

1. Building
2. Bank Balance
3. Plant Patents
4. Goodwill

✅ Correct Answer: 2

According to which concept business is treated as a unit apart from owner

1. Dual concept
2. Divider concept
3. Entity concept
4. Landlord concept

✅ Correct Answer: 3

The reduction in the value of the fixed assets which can arise due to time factor is

1. Discount
2. Depreciation
3. Reduction
4. None of the above

✅ Correct Answer: 2

Which of the following should not be called sales?

1. Good sold on credit
2. Office fixtures sold
3. Sale of item previously included in purchase
4. Good sold for cash

✅ Correct Answer: 2

Which of the following is not regarded as the fundamental accounting concept?

1. The going concern concept
2. The separate entity concept
3. The prudence (conservatism) concept
4. Correction concept

✅ Correct Answer: 4

Outstanding salaries are shown as:

1. Added to Salaries while preparing P & La/c
2. Shown in liability side of Balance sheet under current Liability
3. (a) &(b) above
4. None of the above

✅ Correct Answer: 3

Marginal costing is concerned with:

1. Fixed cost
2. Variable cost
3. Semi variable cost
4. None of the above

✅ Correct Answer: 2

Which of the following account balance will be shown on debit side of Trial Balance?

1. Outstanding expenses
2. Cash a/c
3. Short term loan
4. creditors

✅ Correct Answer: 4

Cash Purchases:

1. Increases assets
2. Results in no change in the total assets
3. Decreases assets
4. Increases liability

✅ Correct Answer: 3

The practice of appending notes regarding contingent liabilities in accounting statements is in pursuance to:

1. Convention of consistency
2. Money measurement concept
3. Convention of conservatism
4. Convention of disclosure

✅ Correct Answer: 4

Sales are equal to:

1. Cost of goods sold + gross profit
2. Cost of goods sold - gross profit
3. Gross profit- Cost of goods sold
4. None of the above

✅ Correct Answer: 2

Identify which is wrong rule

1. Nominal account- debit all expenses & losses
2. Real account- credit what comes in
3. Nominal account- credit all incomes & gains
4. Personal account- debit the receiver

✅ Correct Answer: 2

The work of factory employees that can be physically associated with converting raw material into finished goods is classified as-

1. Manufacturing overhead
2. Indirect materials
3. Indirect labour
4. Direct labour

✅ Correct Answer: 4

_______ cost will still be incurred although a plant is shut down temporarily.

1. Cost of raw material
2. Advertising
3. Depreciation
4. Carriage

✅ Correct Answer: 4

According to which concept business is treated as a unit apart from owner

1. Dual concept
2. Divider concept
3. Entity concept
4. Landlord concept

✅ Correct Answer: 3

Variable cost per unit

1. Remains fixed
2. Fluctuates with volume of production
3. Varies in consideration with the volume of sales
4. None of the above

✅ Correct Answer: 2

Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount is an example for which concept

1. Conservatism concept
2. Continuity concept
3. Realization concept
4. All of these

✅ Correct Answer: 1

liabilities in balance sheet include the following items

1. Long term loan
2. Short term loan
3. Owner’s fund
4. All of these

✅ Correct Answer: 4

liabilities in balance sheet include the following items

1. Long term loan
2. Short term loan
3. Owner’s fund
4. All of these

✅ Correct Answer: 4

Net profit is calculated in

1. Trading a/c
2. Balancesheet
3. Profit & loss a/c
4. Trial balance.

✅ Correct Answer: 3

The going concern concept assumes that

1. The entity continue running for foreseeable future
2. The entity continue running until the end of accounting period
3. The entity will close its operating in 10 years
4. The entity can't be liquidated

✅ Correct Answer: 1

Accounting principles are divided into two types. These are _________

1. Accounting Concepts
2. Accounting Conventions
3. Accounting Standards
4. Accounting Concepts &Accounting Conventions

✅ Correct Answer: 4

Which expenses is a Capital Nature?

1. Depreciation
2. Wages
3. Salary
4. Stationary

✅ Correct Answer: 1

The basic function of financial accounting is to

1. Record all business transaction
2. Assist the management in performing function effectively
3. Interpret financial data
4. Practicability

✅ Correct Answer: 3

Accounting principles are generally based on

1. Practicability
2. Subjectivity
3. Convenience in recording
4. None of these

✅ Correct Answer: 1

According to the money measurement concept the following will be recorded in the books of accounts of the business

1. Health of the managing director of the company
2. Quality of company goods
3. Value of plant and machinery
4. Health of labour in factory

✅ Correct Answer: 3

In case of a debt becoming bad, the amount should be credited to

1. Debtors Accounts
2. Bad debts a/c
3. Sales a/c
4. Convention of conservatism

✅ Correct Answer: 1

Accountant should follow the same principles of accounting continuously is as per which accounting convention

1. Convention of conservatism
2. Convention of full disclosure
3. Convention of consistency
4. None of these

✅ Correct Answer: 3

A system in which accounting entries are made on the basis of amounts having become due for payment or receipt is called

1. Cash concept
2. Accrual concept
3. Matching concept
4. On-going concept

✅ Correct Answer: 2

Debit all expenses and losses Credit all gains and income.

1. Real a/c
2. Personal a/c
3. Nominal a/c
4. None of these

✅ Correct Answer: 3

Transferring the debit and credit item from the journal to the respective accounts is called

1. Compound Journal
2. Ledger
3. Trial balance
4. None of these

✅ Correct Answer: 2

A statement containing the various ledgers balances on particular date

1. Compound Journal
2. Ledger
3. Trial balance
4. None of these

✅ Correct Answer: 3

Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?

1. Net Loss
2. Net income
3. Dividend
4. Investment by share holder

✅ Correct Answer: 2

The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?

1. All information related to an entity's business and operating objectives is required to be disclosed in the financial statements.
2. Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements.
3. Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision.
4. Disclosure of any financial facts significant enough to influence the judgment of an informed reader

✅ Correct Answer: 4

The trial balance is ______

1. Is a formal financial statement.
2. Is used to prove that there are no errors in the journal or ledger.
3. Provides a listing of every account in the chart of accounts.
4. Provides a listing of the balance of each account in active use.

✅ Correct Answer: 4

Investment in Bonds should be disclosed on the balance sheet.

1. On liability side of balance sheet
2. On Assets side of balance sheet
3. On both side of Balance sheet
4. None of these

✅ Correct Answer: 2

Which of the following functions is managerial accounting intended to facilitate?

1. Planning
2. Decision making
3. Control
4. All of these

✅ Correct Answer: 4

Accounting principles are

1. As definite as principles of physics and chemistry
2. Unlike principles of physical sciences.
3. Verifiable through observations and records
4. Thoughts of accountant

✅ Correct Answer: 2

Business entity concept distinguishes between:

1. Individual and business
2. Business and business
3. Owners
4. Debtors and creditors

✅ Correct Answer: 1

Financial account provide summary of:

1. Asset
2. Liability
3. Accounts
4. Debtors and creditors

✅ Correct Answer: 3

User of financial statement is:

1. Management
2. Creditors
3. Bankers
4. All of the above

✅ Correct Answer: 4

Inventory accounts should be classified in which section of a balance sheet?

1. Current assets
2. Investments
3. Property, plant, and equipment
4. Intangible assets

✅ Correct Answer: 1

The Cash account on the balance sheet should not include which of the following items?

1. Travel advances to employees
2. Currency
3. Money orders
4. Deposits in transit

✅ Correct Answer: 1

In accounting all business transaction are recorded as having

1. Single aspect
2. Dual aspect
3. Triple aspect
4. None of these

✅ Correct Answer: 2

Which of the following would not be included on a balance sheet?

1. Accounts payable
2. Accounts receivable
3. Sales
4. Cash

✅ Correct Answer: 3

Contingent liabilities should be recorded in the accounts when:

1. It is probable that the future event will occur.
2. The amount of the liability can be reasonably estimated.
3. Both (a) and (b).
4. Either (a) or (b).

✅ Correct Answer: 3

The cost concept records the figures at

1. Market values
2. Actual amount paid
3. Actual amount or market values whichever is less.
4. MRP maximum retail price

✅ Correct Answer: 2

Financial statements are:

1. Estimates of facets
2. Anticipated facts
3. Recorded facts
4. MRP maximum retail price

✅ Correct Answer: 3

The term Management Accounting was first used in

1. 1910
2. 1939
3. 1950
4. 1960

✅ Correct Answer: 3

Which does not comes under the head of asset:

1. Fixed asset
2. Investment
3. Current asset
4. Owners equity

✅ Correct Answer: 4

The word accounting can be classified in to:

1. Financial accounting and management accounting
2. Financial accounting and cost accounting
3. Financial accounting, management accounting and cost accounting
4. Cannot be classified

✅ Correct Answer: 3

The work of a book keeper is ______________ in nature.

1. Analytical
2. Clerical
3. Executive
4. Non – executive

✅ Correct Answer: 2

Which of the following is true for: – "In accounts recording is done of_ _ _ _

1. only financial transaction
2. only non- financial transaction
3. Both
4. Personal transaction of Proprietor

✅ Correct Answer: 1

Salary is one of the ______________ expenses

1. Capital
2. Revenue
3. Revenue
4. Non – cash

✅ Correct Answer: 2

A company's telephone bill consisting of a Rs.200 monthly base amount, plus long distance charges, would be classified as a:

1. Variable cost
2. Committed fixed cost
3. Direct cost
4. Semi variable cost

✅ Correct Answer: 4

The practice of appending notes regarding contingent liabilities in accounting statement is pursuant of

1. Convention of consistency
2. Money measurement concept
3. Convention of conservatism
4. Convention of disclosure

✅ Correct Answer: 3

In manufacturing a product, prime costs are:

1. Raw materials and manufacturing overhead
2. Indirect materials and manufacturing overhead
3. Indirect labour and manufacturing overhead
4. Direct materials and direct labour

✅ Correct Answer: 4

Because of automation, which component of product cost is declining?

1. Direct labour
2. Direct materials
3. Manufacturing overhead
4. Advertising

✅ Correct Answer: 1

Salary paid to factory manager is an item of:

1. Prime Cost
2. Factory Overhead
3. Selling overhead
4. Office overhead

✅ Correct Answer: 2

Aggregate of cost of goods sold and selling and distribution overheads is known as:

1. Total Cost
2. Office Cost
3. Cost of sales
4. Selling overhead

✅ Correct Answer: 1

Cost accounting information can be used for:

1. Budget control and evaluation.
2. Determining standard costs and variances.
3. Pricing and inventory valuation decisions.
4. All of these

✅ Correct Answer: 4

Which one of the following would not be classified as manufacturing overhead?

1. Indirect labour
2. Direct materials
3. Insurance on factory building
4. Indirect materials

✅ Correct Answer: 2

A manufacturing process requires small amounts of glue. The glue used in the process is classified as

1. A prime cost
2. An indirect material
3. A direct material
4. Miscellaneous expense

✅ Correct Answer: 2

Lubricants, used regularly in a production process, are classified as

1. Miscellaneous expense
2. Direct materials
3. Indirect materials
4. Immaterial items

✅ Correct Answer: 3

Manufacturing costs are also known as product costs. Which of the following best describes those costs which are considered to be manufacturing costs?

1. Direct materials, direct labor, and factory overhead.
2. Direct materials and direct labor only.
3. Direct materials, direct labor, factory overhead, and administrative overhead.
4. Direct labor and factory overhead.

✅ Correct Answer: 3

Accounting principles are ______________ which are adopted by the accountant universally while recording accounting transaction.

1. Rules of action or conduct
2. Which u can change as per accountant
3. Which keep changing every year
4. None of these

✅ Correct Answer: 3

Showing purchased office equipments in financial statements is the application of which accounting concept?

1. Historical cost convention
2. Materiality
3. Prudence
4. Matching concept

✅ Correct Answer: 2

Which of the following should not be called sales?

1. Good sold on credit
2. Office fixtures sold
3. Sale of item previously included in purchase
4. Good sold for cash

✅ Correct Answer: 2

Material concept tell about

1. Disclosure of loss
2. Disclosure of profit
3. Disclosure of all information which are important for investor
4. Disclosure of all information which are important for management

✅ Correct Answer: 3

Using "lower of cost and net realisable value(Market Value)" for the purpose of inventory valuation is the implementation of which of the following concepts?

1. The going concern concept
2. The separate entity concept
3. The prudence concept
4. Matching concept

✅ Correct Answer: 3

Which financial statement represents the accounting equation ASSETS = LIABILITIES + OWNER'S EQUITY

1. Income Statement
2. Cash Flow Statement
3. Balance Sheet
4. Fund Flow Statement

✅ Correct Answer: 3

Cost accounting aims at ascertain ______________ of product

1. Cost
2. Net profit
3. Gross profit
4. Selling price

✅ Correct Answer: 1

The purpose of financial accounts is reporting to

1. Management only
2. Government only
3. Investor only
4. All of these

✅ Correct Answer: 4

Financial accounting use data

1. Projected data
2. External data only
3. Historic data
4. Manager data only

✅ Correct Answer: 3

What comes in is to be debited, what goes out is to be credited.

1. Rules of Personal
2. Rules of Real
3. Rules of Nominal
4. All of these

✅ Correct Answer: 3

Payment of salary is recorded by:

1. Debiting salary a/c; crediting cash a/c
2. Debiting cash a/c; crediting salary a/c
3. Debiting employee a/c; crediting cash a/c
4. Debiting employee a/c; crediting salary a/c

✅ Correct Answer: 1

Amortization of intangible Asset Such as Goodwill which has indefinite life is an example of accounting concept

1. Conservatism Concept
2. Continuity Concept
3. Realisation Concept
4. Measurement Concept

✅ Correct Answer: 1

________ cost refers to those cost which have already been incurred and cannot be altered by any decision in the future.

1. Opportunity cost
2. Sunk Cost
3. Incremental cost
4. Decremental cost

✅ Correct Answer: 2

The main object of cost accounting is:

1. To record day to day transactions of the business
2. To reveal managerial efficiency
3. To ascertain true cost of products and services
4. To determine tender price

✅ Correct Answer: 3

The nature of financial accounting is

1. Historical
2. Forward looking
3. Analytical
4. Social

✅ Correct Answer: 1

An accounting that deals with the accounting and reporting of information to management regarding the detail information is

1. Financial accounting
2. Management accounting
3. Cost accounting
4. Real Accounting

✅ Correct Answer: 2

Bad debt amount should be credited to

1. Debtors account
2. Bad debts account
3. Sales account
4. creditors account

✅ Correct Answer: 1

Management accounting concentrates on _______

1. Opening books of account
2. Preparation of financial statements
3. Control of business activities
4. None of these

✅ Correct Answer: 3

Which of the following is not an internal user of management information?

1. Creditor
2. Department manager
3. Controller
4. Treasurer

✅ Correct Answer: 1

Double entry system is used in which type of accounting

1. Cost
2. Financial
3. Management
4. All of these

✅ Correct Answer: 1

Which type of asset class includes those assets which have only definite use and become valueless when the yield is over?

1. Fixed asset
2. Current asset
3. Fictitious asset
4. Wasting asset

✅ Correct Answer: 4

Cost accounting is applied to:

1. Public undertakings only
2. Large business enterprise only
3. Small business concerns only
4. Manufacturing and service concern

✅ Correct Answer: 4

Reserve for doubtful debts appearing in the trial balance should be:

1. credited to P & L a/c
2. Shown as liability side in balance sheet
3. Reduced from related asset in the balance sheet
4. Both a and c

✅ Correct Answer: 4