Accounting Multiple Choice Questions and Answers

31. 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

32. Which financial statement uses the expanded accounting equation?

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

33. 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

34. 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

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

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

36. 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

37. 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

38. Lower the Debt Equity ratio

1. Lower the protection to creditors
2. Higher the protection to creditors
3. It does not affect creditors
4. None of the above

39. Which of the following is not an asset?

1. Motor Vehicle
2. Loan to buy Equipment
3. Building
4. Computer

40. What is the main purpose of financial accounting?

1. Organize financial information
2. Keep track of company expenses
3. Minimize company taxes
4. Provide useful, financial information to outsiders