Accountancy Quiz MCQ: Exam!

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| By Deepika.msd123
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Deepika.msd123
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Quizzes Created: 2 | Total Attempts: 652
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  • 1/15 Questions

    The Accounting Convention of Matching means:

    • Profit for the period to be matched with sales revenue
    • Profit for the period to be matched with investment
    • Expenses of one period to be matched against the expenses of another period
    • Expenses of one period to be matched against the revenue of the same period
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About This Quiz

This Accountancy Quiz MCQ: Exam assesses knowledge in financial accounting, focusing on bad debts, account types, and the basic accounting equation. It evaluates understanding of liabilities, events in business, and transaction impacts, essential for finance professionals and students.

Accountancy Quiz MCQ: Exam! - Quiz

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  • 2. 

    The obligations of an enterprise other than the owner's fund are known as

    • Assets

    • Liabilities

    • Capital

    • None of these

    Correct Answer
    A. Liabilities
    Explanation
    Liabilities refer to the obligations or debts that an enterprise has to pay or fulfill in the future. These obligations can include loans, accounts payable, salaries payable, and other financial obligations. Liabilities are separate from the owner's funds or capital, which represent the owner's investment in the enterprise. Therefore, liabilities are the correct answer as they represent the obligations of the enterprise other than the owner's fund.

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  • 3. 

    The owner of a company included his personal medical expenses in the company's income statement. Indicate the principle that is violated.

    • Cost principle

    • Conservatism

    • Disclosure

    • Entity Concept

    Correct Answer
    A. Entity Concept
    Explanation
    The principle that is violated in this scenario is the Entity Concept. The Entity Concept states that the financial transactions of a business should be kept separate from the personal transactions of its owner. By including his personal medical expenses in the company's income statement, the owner is not adhering to this principle and is mixing personal and business expenses together.

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  • 4. 

    The __________ concept means that similar items in a set of accounts should be given similar accounting treatment and it should be applied for one period after another.

    • Going concern

    • Prudence

    • Consistency

    • Materiality

    Correct Answer
    A. Consistency
    Explanation
    Consistency concept in accounting means that similar items in a set of accounts should be given similar accounting treatment and it should be applied for one period after another. This means that once an accounting method or principle is chosen for a particular type of transaction or event, it should be consistently applied in the same way for all similar transactions or events in the future. This ensures that financial statements are comparable over time and allows users to make meaningful comparisons and analysis.

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  • 5. 

    Opening stock Rs. 10000 Purchases      Rs. 110000 Closing stock Rs. 20000 Find out total sales if the profit margin is 30% on the cost of sales:

    • Rs. 120000

    • Rs. 130000

    • Rs. 110000

    • Rs. 125000

    Correct Answer
    A. Rs. 130000
    Explanation
    The total sales can be calculated by adding the opening stock, purchases, and closing stock, and then subtracting the cost of sales. The cost of sales can be calculated by multiplying the purchases by the profit margin percentage (30%).

    Opening stock + Purchases + Closing stock - Cost of sales = Total sales

    In this case, the purchases are Rs. 110000, and the profit margin is 30% of the cost of sales. So, the cost of sales would be 30% of Rs. 110000, which is Rs. 33000.

    Therefore, the total sales would be Rs. 10000 + Rs. 110000 + Rs. 20000 - Rs. 33000 = Rs. 130000.

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  • 6. 

    As per basic accounting Equation Assets = Capital + Liabilities which of the following equation will be true if Suparshwa starts a business with Rs. 550000 and then buy goods worth Rs. 150000 from Neminath on credit?

    • Rs. 700000 = Rs. 550000 + Rs. 150000

    • Rs. 700000 = Rs. 650000 + Rs. 50000

    • Rs. 550000 = Rs. 400000 + Rs. 150000

    • Rs. 550000 = Rs. 700000 - Rs. 150000

    Correct Answer
    A. Rs. 700000 = Rs. 550000 + Rs. 150000
    Explanation
    The given equation, Rs. 700000 = Rs. 550000 + Rs. 150000, is true because it represents the basic accounting equation Assets = Capital + Liabilities. In this case, the assets of Rs. 700000 are equal to the capital invested by Suparshwa (Rs. 550000) plus the liabilities in the form of goods purchased on credit from Neminath (Rs. 150000). This equation shows that the total value of assets is equal to the total value of capital and liabilities, which is the fundamental principle of accounting.

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  • 7. 

    In accounting equation (Assets = Liabilities + Owner’s equity), the liabilities means the claim of external creditors against:

    • The profit of the business

    • The assets of the business

    • The revenue of the business

    • The goodwill of the business

    Correct Answer
    A. The assets of the business
    Explanation
    Liabilities in the accounting equation represent the claims of external creditors against the assets of the business. This means that external creditors have a legal right to the assets of the business in order to satisfy the business's obligations. Liabilities do not represent claims against the profit, revenue, or goodwill of the business, but rather against the specific assets owned by the business.

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  • 8. 

    Omission of paise and showing the round figures in financial statements is based on:

    • Conservatism concept

    • Consistency concept

    • Materiality concept

    • Realization concept

    Correct Answer
    A. Materiality concept
    Explanation
    The omission of paise and showing round figures in financial statements is based on the materiality concept. This concept states that financial information should only be included in the statements if it is significant enough to influence the decisions of the users. In the case of paise, which are the smallest unit of currency in India, their omission and rounding off to the nearest rupee is done because the amount is not considered material and does not have a significant impact on the overall financial position of the company.

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  • 9. 

    Which one of the following is not a real account?

    • Machinery account

    • Sales account

    • Goodwill account

    • Equipment account

    Correct Answer
    A. Sales account
    Explanation
    The sales account is not a real account because it is a nominal account. Real accounts are those that represent tangible assets, such as machinery, equipment, and goodwill, which are all included in the given options. Nominal accounts, on the other hand, represent revenues, expenses, and gains or losses. Therefore, the sales account does not fall under the category of real accounts.

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  • 10. 

    Received Rs 20,000 from Kunthunath & Co., against receivable of Rs 21,000. Agreed to settle the account. This results in:

    • Total assets increased by Rs. 20000 with the corresponding increase in expense Rs. 1000

    • Total assets increased by Rs. 21000 with the corresponding increase in liability Rs. 1000

    • Total assets decreased by Rs. 1000 with the corresponding increase in expense Rs. 1000

    • Insufficient Information

    Correct Answer
    A. Total assets decreased by Rs. 1000 with the corresponding increase in expense Rs. 1000
  • 11. 

    Which of the following is true, if the going concern concept is no longer valid for a company?

    • All the prepaid expenses should be written off

    • Land held as an investment would be valued at its net realizable value

    • Total contributed capital and retained earnings would remain unchanged

    • The bills receivable from debtors will be taken as zero

    Correct Answer
    A. Land held as an investment would be valued at its net realizable value
    Explanation
    If the going concern concept is no longer valid for a company, it means that the company is not expected to continue its operations in the foreseeable future. In this case, land held as an investment would be valued at its net realizable value. This means that the land would be valued based on the amount of cash that could be obtained from selling it in the current market conditions, rather than its historical cost or any potential future value. This is because the company is no longer expected to use the land for its intended purpose or generate any future economic benefits from it.

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  • 12. 

    A company had a doubtful debt provision of £14,000 on 31 December 2008. Its trade receivables at 31 December 2009 were £198,200. The company considers that receivables totaling £12,200 will not be paid and in addition planned to make a doubtful debt provision for 10% of its net receivables on 31 December 2009. What is the charge for bad and doubtful debts in the income statement for the year ended 31 December 2009?

    • £32,600

    • £44,800

    • £16,800

    • £12,200

    Correct Answer
    A. £16,800
    Explanation
    The charge for bad and doubtful debts in the income statement for the year ended 31 December 2009 is £16,800. This is calculated by taking the receivables totaling £12,200 that the company considers will not be paid, and adding it to the planned doubtful debt provision of 10% of the net receivables on 31 December 2009 (£198,200 x 10% = £19,820). Therefore, the total charge for bad and doubtful debts is £12,200 + £19,820 = £32,020. However, since the company already had a doubtful debt provision of £14,000 on 31 December 2008, the net charge for bad and doubtful debts is £32,020 - £14,000 = £16,800.

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  • 13. 

    At the end of the financial year, Mr.Yagna earns a profit of Rs. 57,000 in his business. This is

    • A transaction

    • An event

    • A transaction as well as an event

    • Neither a transaction nor an event

    Correct Answer
    A. An event
    Explanation
    The profit of Rs. 57,000 earned by Mr. Yagna at the end of the financial year is considered an event. An event refers to a specific occurrence or happening that has significance or impact. In this case, the profit earned by Mr. Yagna is a significant occurrence that has implications for his business and financial situation. It is not classified as a transaction because a transaction typically involves the exchange of goods, services, or money between two parties. In this scenario, there is no specific exchange involved, making it solely an event.

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  • 14. 

    A firm has reported a profit of Rs. 147000 at the end of the financial year after taking into consideration the following amount i)    The cost of an asset of Rs. 23000 has been taken as an expense ii)    The partner anticipated a profit of Rs. 12000 on the future sale of a car shown as an asset in his books iii)   Salary of Rs. 7000 payable in the financial year has not been taken into account iv)   An asset of Rs. 85000 was purchased for Rs. 75000 and was recorded in the books as Rs. 85000 What is the correct amount of profit to be reported in the books?

    • Rs. 147000

    • Rs. 151000

    • Rs. 163000

    • Rs. 141000

    Correct Answer
    A. Rs. 151000
    Explanation
    The correct amount of profit to be reported in the books is Rs. 151000. This is because the given profit of Rs. 147000 needs to be adjusted for the following items:
    i) The cost of an asset of Rs. 23000 has been taken as an expense, so it needs to be added back to the profit.
    ii) The partner anticipated a profit of Rs. 12000 on the future sale of a car shown as an asset in his books, so it needs to be added back to the profit.
    iii) Salary of Rs. 7000 payable in the financial year has not been taken into account, so it needs to be deducted from the profit.
    iv) An asset of Rs. 85000 was purchased for Rs. 75000 and was recorded in the books as Rs. 85000, so the extra Rs. 10000 needs to be deducted from the profit.
    After adjusting for these items, the correct profit amount is Rs. 151000.

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  • 15. 

    A trader started a retail business. During the year he sold goods worth Rs. 60000 for Rs. 120000 out of which only Rs. 100000 was collected during the year. He had a closing stock of Rs. 10000. His other business expenses for the period were Rs. 20000 out of which Rs. 5000 was outstanding at year-end. His total profit for the year 2019-2020 as per the terms of the accrual concept was:

    • Rs. 30000

    • Rs. 40000

    • Rs. 45000

    • Rs. 20000

    Correct Answer
    A. Rs. 40000
    Explanation
    The total profit for the year 2019-2020 can be calculated by subtracting the cost of goods sold and other business expenses from the total sales revenue. The cost of goods sold can be determined by subtracting the closing stock from the goods sold during the year, which is Rs. 60000 - Rs. 10000 = Rs. 50000. The other business expenses after adjusting for the outstanding amount are Rs. 20000 - Rs. 5000 = Rs. 15000. Therefore, the total profit is Rs. 120000 - Rs. 50000 - Rs. 15000 = Rs. 55000. Since the profit as per the accrual concept is Rs. 40000, the correct answer is Rs. 40000.

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  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 10, 2019
    Quiz Created by
    Deepika.msd123
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