Accounting MCQs Quiz Multiple Choice Questions & Answers

1. Budgeting is difficult to apply in the following cases

1. Products subjected to rapid changes
2. Job order manufacturing
3. Uncertain market conditions
4. All of the above

2. The following is (are) the type(s) of Journal

1. Purchase journal
2. Sales journal
3. Cash journal
4. All of the above

3. Current ratio =

1. Quick assets / Current liabilities
2. Current assets / Current liabilities
3. Debt. / Equity
4. Current assets / Equity

4. A Master Budget consists of

1. Sales budget
2. Production budget
3. Material budget
4. All of the above

5. In journal, the business transaction is recorded

1. Same day
2. Next day
3. Once in a week
4. Once in a month

6. The following is not a type of liability

1. Short term
2. Current
3. Fixed
4. Contingent

7. Which of the following would not be found on a standardized balance sheet?

1. Tangible Assets
2. Amounts written off Investments
3. Debtors
4. Share Premium Account

8. The following is a statement showing the financial status of the company at any given time

1. Trading account
2. Profit and Loss statements
3. Balance sheet
4. Cash book

9. The following is a statement of revenues and expenses for a specific period of time

1. Trading account
2. Trial balance
3. Profit and loss statements
4. Balance sheet

10. The sales income (Credit and Cash) of a business during a given period is called

1. Transactions
2. Sales returns
3. Turnover
4. Purchase returns

11. Which of the following would not be found on a standardized income statement?

1. Turnover
2. Other Operating Income
3. Value of Intangible Non-current Assets
4. Distribution Costs

12. Which of the following is not an expense?

1. Wages and Salaries
2. Dividend Payments
3. Stationery
4. Materials

13. Which of the following is not a debit balance?

1. Wages and Salaries
2. Cost of Buildings
3. Taxation Paid
4. Capital Account

14. In which year was the Limited Liability Act passed?

1. 1494
2. 1855
3. 1844
4. 1948

15. Return on Investment Ratio (ROI) =

1. (Gross profit / Net sales) x 100
2. (Gross profit x Sales / Fixed assets) x 100
3. (Net profit / Sales) x 100
4. (Net profit / Total assets) x 100

16. Which account is not a liability account?

1. Accounts payable
2. Accrued expenses
3. Cash
4. Notes payable

17. Which of the following is not a liability?

1. Accrued Accountancy Fees
2. Hire Purchase Creditor
3. Bank Overdraft
4. Depreciation on Motor Vehicle

18. Which of the following is not a credit balance?

1. Accumulated Depreciation of Fixtures and Fittings
2. Sales Income
3. Interest Paid
4. Interest Received

19. Sales expenditure budget is prepared by estimating the expense(s) of

1. Advertisement
2. Market analysis
3. Salesmans salary
4. All of the above

20. Which of these is not included as a separate item in the basic accounting equation?

1. Assets
2. Liabilities
3. Revenues
4. Stockholders equity

21. Balance sheet is a statement of

1. Assets
2. Liability
3. Capital
4. All of the above

22. Which of the following balance sheet equations is wrong?

1. Assets + Liabilities = Capital
2. Assets - Liabilities = Capital
3. Assets - Capital = Liabilities
4. Liabilities + Capital = Assets

23. Which of the following source books will not be required in a cash business?

1. Bank Account
2. Petty Cash Account
3. Sales Ledger
4. Nominal Ledger

24. A higher inventory ratio indicates

1. Better inventory management
2. Quicker turnover
3. Both A and B
4. None of the above

25. The following is (are) the current liability (ies)

1. Bills payable
2. Outstanding expenses
3. Bank overdraft
4. All of the above

26. Accounting provides information on

1. Cost and income for managers
2. Companys tax liability for a particular year
3. Financial conditions of an institution
4. All of the above

27. Which of the following would not be found on a standardized income statement?

1. Cost of Sales
2. Amounts written off Investments
3. Tax on Income on Ordinary Activities
4. Provisions for Liabilities and Charges

28. The long term assets that have no physical existence but are rights that have value is known as

1. Current assets
2. Fixed assets
3. Intangible assets
4. Investments

29. The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as

1. Current assets
2. Fixed assets
3. Intangible assets
4. Investments

30. Patents, Copyrights and Trademarks are

1. Current assets
2. Fixed assets
3. Intangible assets
4. Investments

31. Liquid or Quick assets =

1. Current assets – (stock + work in progress)
2. Current assets + stock + work in progress
3. (Current assets + stock) + work in progress
4. (Current assets + work in progress) – stock

32. The liabilities that are payable in more than a year and are not be liquidated from current assets

1. Current liabilities
2. Fixed liabilities
3. Contingent liabilities
4. All of the above

33. The debts, which are to be repaid within a short period (year or less) are known as

1. Current liabilities
2. Fixed liabilities
3. Contingent liabilities
4. All of the above

34. The following is also known as External Internal Equity ratio

1. Current ratio
2. Acid test ratio
3. Debt Equity ratio
4. Debt service coverage ratio

35. Balance sheets are prepared

1. Daily
2. Weekly
3. Monthly
4. Annually

36. Real accounts records

1. Dealings with creditors or debtors
2. Dealings in commodities
3. Gains and losses
4. All of the above

37. Asset accounts have what type of balance?

1. Debit
2. Credit
3. Contra
4. All of the above

38. A contra asset account has what type of balance?

1. Debit
2. Credit
3. Contra
4. All of the above

39. The accrual basis of accounting records revenues when they are:

1. Earned
2. Collected
3. Contracted
4. Readily available for use

40. Which account increases equity?

1. Expenses
2. Withdrawals
3. Treasury stock
4. Revenues

41. which EC directive standardized the form of accounts to which financial reports for external users must conform?

1. First
2. Second
3. Eighth
4. Fourth

42. The account format that displays debits, credits, balances, and headings.

1. General journal
2. General ledger
3. T-account
4. Ledger account

43. A Low Return on Investment Ratio (ROI) indicates

1. Improper utilization of resources
2. Over investment in assets
3. Both A and B
4. None of the above

44. Which financial statement displays the revenues and expenses of a company for a period of time?

1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Stackholders Equity

45. Which financial statement uses the expanded accounting equation?

1. Income statement
2. Balance sheet
3. Cash flow statement
4. Statement of stockholders equity

46. Which of the following would not be found on a standardized balance sheet?

1. Inventory
2. Accruals and Deferred Income
3. Extraordinary Charges
4. Creditors due and payable after more than one year

47. Following is (are) the characteristic(s) of a budget

1. It outlines projected activities
2. Expressions are made in quantitative terms
3. It is for a fixed period
4. All of the above

48. Any written evidence in support of a business transaction is called

1. Journal
2. Ledger
3. Ledger posting
4. Voucher

49. The ratios that refer to the ability of the firm to meet the short term obligations out of its short term resources

1. Liquidity ratio
2. Leverage ratios
3. Activity ratios
4. Profitability ratios

50. The measure of how efficiently the assets resources are employed by the firm is called

1. Liquidity ratio
2. Leverage ratios
3. Activity ratios
4. Profitability ratios