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MBA Accounting MCQ Question Set 3
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1. Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?
Fiscal year
Calendar year
Accounting period
Accrual period
2. 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
Rs 70,000
Rs 80,000
Rs 90,000
Rs 1,00,000
3. The system of recording transaction based on dual aspect concept is called
Double account system
Double entry system
Single entry system
None of these
4. The convention of conservatism is applicable
In providing for discount on creditors
In making provision for bad doubtful debts
Providing depreciation
None of these
5. Rules of action or conduct adopted by the accountants universally while recording accounting transaction
Accounting convention
Accounting concepts
Accounting principles
None of these
6. Which of the following items would not fall under the definition of an asset?
Land
Machine
Cash
Milk
7. Basic assumptions or conditions upon which the science of accounting is based.
Accounting convention
Accounting concepts
Accounting principles
None of these.
8. Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?
Fiscal year
Calendar year
Accounting period
Accrual period
9. The system of recording based on dual aspect concept is called:
Double account system
Double entry system
Single entry system
All the above
10. Preliminary expenses are recorded in _____
Equity and liabilities-Liability side of B/S
Current liabilities- Liability side of B/S
Fixed assets- Asset side of B/S
Asset side of B/S
11. ____ is a person or item for which cost may be ascertained.
Cost unit
Cost centre
Cost object
Cost estimation
12. ____ is a person or item for which cost may be ascertained.
Cost unit
Cost centre
Cost object
Cost estimation
13. Which of the following is not a fixed asset?
Building
Bank Balance
Plant Patents
Goodwill
14. According to which concept business is treated as a unit apart from owner
Dual concept
Divider concept
Entity concept
Landlord concept
15. The reduction in the value of the fixed assets which can arise due to time factor is
Discount
Depreciation
Reduction
None of the above
16. Which of the following should not be called sales?
Good sold on credit
Office fixtures sold
Sale of item previously included in purchase
Good sold for cash
17. Which of the following is not regarded as the fundamental accounting concept?
The going concern concept
The separate entity concept
The prudence (conservatism) concept
Correction concept
18. Outstanding salaries are shown as:
Added to Salaries while preparing P & La/c
Shown in liability side of Balance sheet under current Liability
(a) &(b) above
None of the above
19. Marginal costing is concerned with:
Fixed cost
Variable cost
Semi variable cost
None of the above
20. Which of the following account balance will be shown on debit side of Trial Balance?
Outstanding expenses
Cash a/c
Short term loan
creditors
21. Cash Purchases:
Increases assets
Results in no change in the total assets
Decreases assets
Increases liability
22. The practice of appending notes regarding contingent liabilities in accounting statements is in pursuance to:
Convention of consistency
Money measurement concept
Convention of conservatism
Convention of disclosure
23. Sales are equal to:
Cost of goods sold + gross profit
Cost of goods sold - gross profit
Gross profit- Cost of goods sold
None of the above
24. Identify which is wrong rule
Nominal account- debit all expenses & losses
Real account- credit what comes in
Nominal account- credit all incomes & gains
Personal account- debit the receiver
25. The work of factory employees that can be physically associated with converting raw material into finished goods is classified as-
Manufacturing overhead
Indirect materials
Indirect labour
Direct labour
26. _______ cost will still be incurred although a plant is shut down temporarily.
Cost of raw material
Advertising
Depreciation
Carriage
27. According to which concept business is treated as a unit apart from owner
Dual concept
Divider concept
Entity concept
Landlord concept
28. Variable cost per unit
Remains fixed
Fluctuates with volume of production
Varies in consideration with the volume of sales
None of the above
29. Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount is an example for which concept
Conservatism concept
Continuity concept
Realization concept
All of these
30. liabilities in balance sheet include the following items
Long term loan
Short term loan
Owner’s fund
All of these
31. liabilities in balance sheet include the following items
Long term loan
Short term loan
Owner’s fund
All of these
32. Net profit is calculated in
Trading a/c
Balancesheet
Profit & loss a/c
Trial balance.
33. The going concern concept assumes that
The entity continue running for foreseeable future
The entity continue running until the end of accounting period
The entity will close its operating in 10 years
The entity can't be liquidated
34. Accounting principles are divided into two types. These are _________
Accounting Concepts
Accounting Conventions
Accounting Standards
Accounting Concepts &Accounting Conventions
35. Which expenses is a Capital Nature?
Depreciation
Wages
Salary
Stationary
36. The basic function of financial accounting is to
Record all business transaction
Assist the management in performing function effectively
Interpret financial data
Practicability
37. Accounting principles are generally based on
Practicability
Subjectivity
Convenience in recording
None of these
38. According to the money measurement concept the following will be recorded in the books of accounts of the business
Health of the managing director of the company
Quality of company goods
Value of plant and machinery
Health of labour in factory
39. In case of a debt becoming bad, the amount should be credited to
Debtors Accounts
Bad debts a/c
Sales a/c
Convention of conservatism
40. Accountant should follow the same principles of accounting continuously is as per which accounting convention
Convention of conservatism
Convention of full disclosure
Convention of consistency
None of these
41. A system in which accounting entries are made on the basis of amounts having become due for payment or receipt is called
Cash concept
Accrual concept
Matching concept
On-going concept
42. Debit all expenses and losses Credit all gains and income.
Real a/c
Personal a/c
Nominal a/c
None of these
43. Transferring the debit and credit item from the journal to the respective accounts is called
Compound Journal
Ledger
Trial balance
None of these
44. A statement containing the various ledgers balances on particular date
Compound Journal
Ledger
Trial balance
None of these
45. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?
Net Loss
Net income
Dividend
Investment by share holder
46. The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?
All information related to an entity's business and operating objectives is required to be disclosed in the financial statements.
Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements.
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.
Disclosure of any financial facts significant enough to influence the judgment of an informed reader
47. The trial balance is ______
Is a formal financial statement.
Is used to prove that there are no errors in the journal or ledger.
Provides a listing of every account in the chart of accounts.
Provides a listing of the balance of each account in active use.
48. Investment in Bonds should be disclosed on the balance sheet.
On liability side of balance sheet
On Assets side of balance sheet
On both side of Balance sheet
None of these
49. Which of the following functions is managerial accounting intended to facilitate?
Planning
Decision making
Control
All of these
50. Accounting principles are
As definite as principles of physics and chemistry
Unlike principles of physical sciences.
Verifiable through observations and records
Thoughts of accountant
51. Business entity concept distinguishes between:
Individual and business
Business and business
Owners
Debtors and creditors
52. Financial account provide summary of:
Asset
Liability
Accounts
Debtors and creditors
53. User of financial statement is:
Management
Creditors
Bankers
All of the above
54. Inventory accounts should be classified in which section of a balance sheet?
Current assets
Investments
Property, plant, and equipment
Intangible assets
55. The Cash account on the balance sheet should not include which of the following items?
Travel advances to employees
Currency
Money orders
Deposits in transit
56. In accounting all business transaction are recorded as having
Single aspect
Dual aspect
Triple aspect
None of these
57. Which of the following would not be included on a balance sheet?
Accounts payable
Accounts receivable
Sales
Cash
58. Contingent liabilities should be recorded in the accounts when:
It is probable that the future event will occur.
The amount of the liability can be reasonably estimated.
Both (a) and (b).
Either (a) or (b).
59. The cost concept records the figures at
Market values
Actual amount paid
Actual amount or market values whichever is less.
MRP maximum retail price
60. Financial statements are:
Estimates of facets
Anticipated facts
Recorded facts
MRP maximum retail price
61. The term Management Accounting was first used in
1910
1939
1950
1960
62. Which does not comes under the head of asset:
Fixed asset
Investment
Current asset
Owners equity
63. The word accounting can be classified in to:
Financial accounting and management accounting
Financial accounting and cost accounting
Financial accounting, management accounting and cost accounting
Cannot be classified
64. The work of a book keeper is ______________ in nature.
Analytical
Clerical
Executive
Non – executive
65. Which of the following is true for: – "In accounts recording is done of_ _ _ _
only financial transaction
only non- financial transaction
Both
Personal transaction of Proprietor
66. Salary is one of the ______________ expenses
Capital
Revenue
Revenue
Non – cash
67. A company's telephone bill consisting of a Rs.200 monthly base amount, plus long distance charges, would be classified as a:
Variable cost
Committed fixed cost
Direct cost
Semi variable cost
68. The practice of appending notes regarding contingent liabilities in accounting statement is pursuant of
Convention of consistency
Money measurement concept
Convention of conservatism
Convention of disclosure
69. In manufacturing a product, prime costs are:
Raw materials and manufacturing overhead
Indirect materials and manufacturing overhead
Indirect labour and manufacturing overhead
Direct materials and direct labour
70. Because of automation, which component of product cost is declining?
Direct labour
Direct materials
Manufacturing overhead
Advertising
71. Salary paid to factory manager is an item of:
Prime Cost
Factory Overhead
Selling overhead
Office overhead
72. Aggregate of cost of goods sold and selling and distribution overheads is known as:
Total Cost
Office Cost
Cost of sales
Selling overhead
73. Cost accounting information can be used for:
Budget control and evaluation.
Determining standard costs and variances.
Pricing and inventory valuation decisions.
All of these
74. Which one of the following would not be classified as manufacturing overhead?
Indirect labour
Direct materials
Insurance on factory building
Indirect materials
75. A manufacturing process requires small amounts of glue. The glue used in the process is classified as
A prime cost
An indirect material
A direct material
Miscellaneous expense
76. Lubricants, used regularly in a production process, are classified as
Miscellaneous expense
Direct materials
Indirect materials
Immaterial items
77. Manufacturing costs are also known as product costs. Which of the following best describes those costs which are considered to be manufacturing costs?
Direct materials, direct labor, and factory overhead.
Direct materials and direct labor only.
Direct materials, direct labor, factory overhead, and administrative overhead.
Direct labor and factory overhead.
78. Accounting principles are ______________ which are adopted by the accountant universally while recording accounting transaction.
Rules of action or conduct
Which u can change as per accountant
Which keep changing every year
None of these
79. Showing purchased office equipments in financial statements is the application of which accounting concept?
Historical cost convention
Materiality
Prudence
Matching concept
80. Which of the following should not be called sales?
Good sold on credit
Office fixtures sold
Sale of item previously included in purchase
Good sold for cash
81. Material concept tell about
Disclosure of loss
Disclosure of profit
Disclosure of all information which are important for investor
Disclosure of all information which are important for management
82. 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?
The going concern concept
The separate entity concept
The prudence concept
Matching concept
83. Which financial statement represents the accounting equation ASSETS = LIABILITIES + OWNER'S EQUITY
Income Statement
Cash Flow Statement
Balance Sheet
Fund Flow Statement
84. Cost accounting aims at ascertain ______________ of product
Cost
Net profit
Gross profit
Selling price
85. The purpose of financial accounts is reporting to
Management only
Government only
Investor only
All of these
86. Financial accounting use data
Projected data
External data only
Historic data
Manager data only
87. What comes in is to be debited, what goes out is to be credited.
Rules of Personal
Rules of Real
Rules of Nominal
All of these
88. Payment of salary is recorded by:
Debiting salary a/c; crediting cash a/c
Debiting cash a/c; crediting salary a/c
Debiting employee a/c; crediting cash a/c
Debiting employee a/c; crediting salary a/c
89. Amortization of intangible Asset Such as Goodwill which has indefinite life is an example of accounting concept
Conservatism Concept
Continuity Concept
Realisation Concept
Measurement Concept
90. ________ cost refers to those cost which have already been incurred and cannot be altered by any decision in the future.
Opportunity cost
Sunk Cost
Incremental cost
Decremental cost
91. The main object of cost accounting is:
To record day to day transactions of the business
To reveal managerial efficiency
To ascertain true cost of products and services
To determine tender price
92. The nature of financial accounting is
Historical
Forward looking
Analytical
Social
93. An accounting that deals with the accounting and reporting of information to management regarding the detail information is
Financial accounting
Management accounting
Cost accounting
Real Accounting
94. Bad debt amount should be credited to
Debtors account
Bad debts account
Sales account
creditors account
95. Management accounting concentrates on _______
Opening books of account
Preparation of financial statements
Control of business activities
None of these
96. Which of the following is not an internal user of management information?
Creditor
Department manager
Controller
Treasurer
97. Double entry system is used in which type of accounting
Cost
Financial
Management
All of these
98. Which type of asset class includes those assets which have only definite use and become valueless when the yield is over?
Fixed asset
Current asset
Fictitious asset
Wasting asset
99. Cost accounting is applied to:
Public undertakings only
Large business enterprise only
Small business concerns only
Manufacturing and service concern
100. Reserve for doubtful debts appearing in the trial balance should be:
credited to P & L a/c
Shown as liability side in balance sheet
Reduced from related asset in the balance sheet
Both a and c
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