MGT101- Financial Accounting 01

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Quizzes Created: 23 | Total Attempts: 33,340
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  • 1/19 Questions

    What will be debited, if business purchased Vehicle on cash?

    • Vehicle account
    • Business account
    • Cash account
    • Business account
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About This Quiz

This quiz covers key concepts in financial accounting such as operating expenses, error types, depreciation methods, trial balance issues, and asset disposal entries, aligned with MGT101 course objectives.

MGT101- Financial Accounting 01 - Quiz

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  • 2. 

    Which of the following particular is NOT included in journal voucher?

    • Name of organization

    • Bank receipt number

    • Debit amount

    • Credit amount

    Correct Answer
    A. Bank receipt number
    Explanation
    A journal voucher is a document used to record financial transactions in a company's general ledger. It includes the name of the organization, debit amount, and credit amount. However, the bank receipt number is not typically included in a journal voucher as it is a unique identifier for a specific transaction and is usually recorded separately in the bank's records.

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  • 3. 

    Office salaries, advertising and sales commissions are the examples of:

    • Financial Expenses

    • Operating Expenses

    • Marketing Expenses

    • Direct Expenses

    Correct Answer
    A. Operating Expenses
    Explanation
    BECAUSE

    An operating expense, operating expenditure, operational expense,
    operational expenditure or OPEX is an on-going cost for running a
    product, business, or system. Its counterpart, a capital expenditure
    (CAPEX), is the cost of developing or providing non-consumable parts
    for the product or system. For example, the purchase of a photocopier
    is the CAand the annual paper and toner cost is the OPEX. For larger
    systems like businesses, OPEX may also include the cost of workers and
    facility expenses such as rent and utilities.

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  • 4. 

    The balance in drawings account is transferred to which of the following at the end of the year.

    • Capital account

    • Shareholder account

    • Cash account

    • Expense account

    Correct Answer
    A. Capital account
    Explanation
    At the end of the year, the balance in the drawings account is transferred to the Capital account. This is because the drawings account is used to track the withdrawals made by the owner(s) from the business for personal use. By transferring the balance to the Capital account, it reflects the reduction in the owner's equity due to the withdrawals. The Capital account represents the owner's investment in the business, so it is appropriate to adjust it by the amount of the drawings.

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  • 5. 

    What is the next step to Journalizing in Accounting cycle?

    • Recording

    • Posting

    • Balancing

    • Analyzing

    Correct Answer
    A. Posting
    Explanation
    After recording the transactions in the journal, the next step in the accounting cycle is posting. Posting involves transferring the information from the journal to the respective accounts in the general ledger. This step ensures that all transactions are properly categorized and organized in the correct accounts. By posting, the financial information is accurately recorded and can be used for further analysis and preparation of financial statements.

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  • 6. 

    Goods sold to Mr. Salman for RS. 6,000 have been forgotten to enter in books of accounts, this is an example of

    • Error of Omission

    • Error of Commission

    • Error of Principle

    • Error of Original entry

    Correct Answer
    A. Error of Omission
    Explanation
    This scenario is an example of an error of omission because the goods sold to Mr. Salman were not recorded in the books of accounts. This means that the transaction was completely left out and not included in the financial records.

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  • 7. 

    Which of the following is NOT correct?

    • Decrease in Assets will be debit

    • Decrease in Liabilities will be debit

    • Decrease in Expenses will be credit

    • Decrease in Revenue will be debit

    Correct Answer
    A. Decrease in Assets will be debit
    Explanation
    A decrease in assets is recorded as a credit, not a debit. When an asset decreases, it means that the company has less of that asset, which is a reduction in value. In accounting, credits are used to record decreases in assets, while debits are used to record increases. Therefore, the statement "Decrease in Assets will be debit" is incorrect.

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  • 8. 

    If salaries are Rs. 2500, purchases Rs. 18,000 and rent Rs. 400; what will be administrative expenses?

    • Rs.20, 900

    • Rs. 2,900

    • Rs. 2,500

    • Rs. 400

    Correct Answer
    A. Rs. 2,900
    Explanation
    The administrative expenses can be calculated by subtracting the sum of salaries, purchases, and rent from the total expenses. In this case, the total expenses would be Rs. 2500 + Rs. 18000 + Rs. 400 = Rs. 20800. Subtracting this from the total expenses gives us Rs. 2900, which is the administrative expenses.

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  • 9. 

    Which of the following assets are shown at written down value in balance sheet?

    • Current assets

    • Liquid assets

    • Floating assets

    • Fixed assets

    Correct Answer
    A. Fixed assets
    Explanation
    Fixed assets are shown at written down value in the balance sheet. This means that their value is reduced over time to reflect depreciation. Current assets, liquid assets, and floating assets are typically shown at their original or market value in the balance sheet.

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  • 10. 

    Sales to Mr. A of Rs. 336 have been debited to Mr. B account, this will be rectified by:

    • Debiting Mr. A’s account and crediting Mr. B’s account

    • Debiting Mr. B’s account and crediting Mr. A’s account

    • Crediting both accounts

    • Debiting both accounts

    Correct Answer
    A. Debiting Mr. A’s account and crediting Mr. B’s account
    Explanation
    The correct answer is Debiting Mr. A’s account and crediting Mr. B’s account. This is because the sales of Rs. 336 were mistakenly debited to Mr. B's account instead of Mr. A's account. To rectify this error, the amount needs to be debited from Mr. B's account and credited to Mr. A's account, ensuring that the correct accounts reflect the transaction.

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  • 11. 

    Cash book is a part of _________ .

    • Voucher

    • General Journal

    • General Ledger

    • Trial Balance

    Correct Answer
    A. General Ledger
    Explanation
    The cash book is a part of the general ledger. The general ledger is the main accounting record that contains all the financial transactions of a company. It is organized into different accounts, such as cash, accounts receivable, and accounts payable. The cash book specifically tracks all cash transactions, including receipts and payments. By recording these transactions in the cash book, they can be accurately reflected in the general ledger, providing a complete and accurate picture of the company's financial position.

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  • 12. 

    In a single entry system, it is NOT possible to prepare:

    • Trial balance

    • Statement of affairs

    • Balance Sheet

    • Sales accounts

    Correct Answer
    A. Trial balance
    Explanation
    In a single entry system, only one aspect of a transaction is recorded, typically the cash aspect. This means that there is no double-entry bookkeeping, which is necessary for preparing a trial balance. A trial balance is a statement that lists all the debit and credit balances in the ledger accounts to ensure that they are equal and the books are in balance. In a single entry system, since only one aspect of a transaction is recorded, it is not possible to prepare a trial balance.

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  • 13. 

    Under the diminishing balance method, depreciation is calculated on:

    • The original cost

    • The scrap value

    • Book value

    • Both original cost and Scrap value

    Correct Answer
    A. Book value
    Explanation
    Under the diminishing balance method, depreciation is calculated based on the book value of the asset. The book value is the original cost of the asset minus the accumulated depreciation. This method assumes that the asset will lose more value in the earlier years of its useful life and less value in the later years. By calculating depreciation based on the book value, the diminishing balance method allows for a faster depreciation expense in the earlier years, reflecting the higher rate of value loss.

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  • 14. 

    Which of the following is CORRECT if depreciation is given in trial balance?

    • It means depreciation has already been deducted from concerned asset

    • It will be shown as expense in income statement only

    • It will not deduct from concerned asset in Balance Sheet

    • All of the given options are correct

    Correct Answer
    A. All of the given options are correct
    Explanation
    If depreciation is given in the trial balance, it means that the depreciation amount has already been deducted from the concerned asset. This is because depreciation is an expense that represents the decrease in value of an asset over time. Therefore, it will be shown as an expense in the income statement only. It will not be deducted from the concerned asset in the balance sheet. All of the given options are correct as they accurately describe the implications of depreciation being given in the trial balance.

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  • 15. 

    (Amount of new provision + Amount of bad debts) < Amount of old provision then the resulting figure will be shown at:

    • Debit side of Profit & Loss account

    • Credit side of Profit & Loss account

    • Asset side of Balance Sheet

    • Asset side of Balance Sheet

    Correct Answer
    A. Credit side of Profit & Loss account
    Explanation
    If the amount of new provision and the amount of bad debts combined is less than the amount of old provision, it means that the company has set aside more money than necessary for potential losses. In this case, the excess provision is considered as income and is shown on the credit side of the Profit & Loss account. This is because it increases the company's profits for the period.

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  • 16. 

    Which of the following is an example of operating expense?

    • Purchasing operating equipment

    • Purchasing cleaning services

    • Purchasing an investment in another company

    • Purchasing a computer for the accounting office

    Correct Answer
    A. Purchasing cleaning services
    Explanation
    Purchasing cleaning services is an example of an operating expense because it is a cost incurred in the day-to-day operations of a business. It is a necessary expense to maintain the cleanliness and hygiene of the business premises, which directly supports the business's operations. Unlike the other options listed, purchasing cleaning services does not involve acquiring assets or making investments in other companies, which are usually classified as capital expenditures.

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  • 17. 

    Sale of goods to Amir is wrongly debited to Umair A/c instead ofAmir A/c. Both are debtors of business, this is an example of:

    • Error of Omission

    • Error of Commission

    • Error of Principle

    • Error of Original entry

    Correct Answer
    A. Error of Commission
    Explanation
    1-error of original entery is to enter wrong amount
    2-error of ommission is to forget to make entry
    3-error of principle is to make entry in a wrong head of account like instead of making entry in debtors account , to make entry in creditors account
    4-error of commission is to record entry in wrong head of account but account types would be same

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  • 18. 

    What will be the entry of disposal of an asset at cost price?

    • Debit Fixed Asset Disposal and Credit Fixed Asset Cost

    • Debit Accumulated Dep. and Credit Fixed Asset Disposal

    • Debit Cash / Bank and Credit Fixed Asset Disposal

    • None of the given options

    Correct Answer
    A. Debit Fixed Asset Disposal and Credit Fixed Asset Cost
    Explanation
    When an asset is disposed of at its cost price, the entry would be to debit the Fixed Asset Disposal account to recognize the disposal of the asset, and to credit the Fixed Asset Cost account to reduce the value of the asset on the books. This entry reflects that the asset has been removed from the company's records and the cost of the asset is being adjusted accordingly.

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  • 19. 

    Under the straight line method of depreciation:

    • Amount of depreciation increases every year

    • Amount of depreciation remains constant for every year

    • Amount of depreciation decreases every year

    • None of the given options

    Correct Answer
    A. Amount of depreciation remains constant for every year
    Explanation
    In the straight-line method, depreciation is calculated by dividing the cost of the asset by its useful life. Since the cost and useful life remain constant, the amount of depreciation remains the same each year.

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  • Current Version
  • Mar 08, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Jun 03, 2009
    Quiz Created by
    Zubair
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