Introduction to Financial Accounting – Corporate and Management Accounting MCQ

Students should practice Introduction to Financial Accounting – Corporate and Management Accounting CS Executive MCQ Questions with Answers based on the latest syllabus.

Introduction to Financial Accounting – Corporate and Management Accounting MCQ

Question 1.
Accounting policies followed by organizations
(A) Can be changed every year.
(B) Should be consistently followed from year to year
(C) Can be changed after 5 years
(D) None of the above
Answer:
(B) Should be consistently followed from year to year

Question 2.
When a change in accounting policy is justified?
(A) To comply with accounting standard
(B) To ensure the more appropriate presentation of the financial statement of the enterprise
(C) To comply with law
(D) All of the above
Answer:
(D) All of the above

Question 3.
It is essential to standardize the accounting principles and policies in order to ensure
(A) Transparency
(B) Profitability
(C) Reputation
(D) All of the above
Answer:
(A) Transparency

Question 4.
A specific accounting policy refers to
(A) Principles
(B) Methods of applying those principles
(C) Both (A) & (B)
(D) None of the above
Answer:
(C) Both (A) & (B)

Question 5.
The determination of the number of bad debts is an accounting
(A) Policy
(B) Estimate
(C) Parameter
(D) None of the above
Answer:
(B) Estimate

Question 6.
Generally, which of the following measurement bases are usually accepted in accounting parlance?
(A) Historical Cost
(B) Current Cost
(C) Realizable Value
(D) Any of the above
Answer:
(D) Any of the above

Question 7.
Book value & Market value of machinery on 31.3.2015 was ₹ 1,00,000 & ₹ 1,10,000 respectively. As of 31.3.2019, if the company values the machinery at ₹ 1,10,000, which of the following valuation principle is being followed
(A) Historical Cost
(B) Present Value
(C) Realisable Value
(D) Current Cost
Answer:
(C) Realisable Value

On the basis of the following information answer the next 4 questions.
Mohan purchased machinery amounting to ₹ 10,000 on 1.4.2010.
On 31.3.2019, similar machinery could be purchased for ₹ 20,000 but the realizable value of the machinery (purchased on 1.4.2010) was estimated at ₹ 15,000. The present discounted value of the future net cash inflows that the machinery was expected to generate in the normal course of business, was calculated as ₹ 12,000.

Question 8.
The current cost of the machinery is
(A) ₹ 10,000
(B) ₹ 20,000
(C) ₹ 15,000
(D) ₹ 12,000
Answer:
(B) ₹ 20,000

Question 9.
The present value of machinery is
(A) ₹ 10,000
(B) ₹ 20,000
(C) ₹ 15,000
(D) ₹ 12,000
Answer:
(D) ₹ 12,000

Question 10.
The historical cost of machinery is
(A) ₹ 10,000
(B) ₹ 20,000
(C) ₹ 15,000
(D) ₹ 12,000
Answer:
(A) ₹ 10,000

Question 11.
The realizable value of machinery is
(A) ₹ 10,000
(B) ₹ 20,000
(C) ₹ 15,000
(D) ₹ 12,000
Answer:
(C) ₹ 15,000

Question 12.
Property, plant, and equipment are conventionally presented in the balance sheet at
(A) Replacement cost less accumulated depreciation
(B) Historical cost less salvage value
(C) Historical cost less depreciation portion thereof
(D) Original cost adjusted for general price-level changes
Answer:
(C) Historical cost less depreciation portion thereof

Question 13.
All accounts are classified into
(A) Personal
(B) Real
(C) Nominal accounts
(D) Any of the above
Answer:
(D) Any of the above

Question 14.
Accounts recording transactions with a person or group of persons are known as
(A) Personal accounts
(B) Real accounts
(C) Nominal accounts
(D) impersonal accounts
Answer:
(A) Personal accounts

Question 15.
Personal accounts are of the following types:
(A) Natural, Real, Representative
(B) Artificial, Legal, Nominal
(C) Natural, Artificial, Representative
(D) Any of the above
Answer:
(C) Natural, Artificial, Representative

Question 16.
An account recording transaction with an individual human being is termed as a
(A) Artificial or legal person account
(B) Natural persons’ personal ac-count
(C) Representative personal accounts
(D) Any of the above
Answer:
(B) Natural persons’ personal ac-count

Question 17.
Accounts relating to properties or assets are known as
(A) Real Accounts
(B) Personal Accounts
(C) Nominal Accounts
(D) None of above
Answer:
(A) Real Accounts

Question 18.
An account recording financial transactions with an artificial person created by law or otherwise are termed as
(A) Artificial or legal person account
(B) Natural persons’ personal ac-count
(C) Representative personal ac-counts
(D) Any of the above
Answer:
(A) Artificial or legal person account

Question 19.
Real accounts can be further classified into
(A) Tangible
(B) Intangible
(C) (A)or(B)
(D) None of above
Answer:
(C) (A)or(B)

Question 20.
Accounts that represent a certain person or group of persons are termed as
(A) Artificial or legal person account
(B) Natural persons personal account
(C) Representative personal ac-counts
(D) Any of the above
Answer:
(C) Representative personal ac-counts

Question 21.
The process of balancing an account involves the equalization of both sides of the account. If the debit side of an account exceeds the credit side, the difference is put on the credit side. The said balance is
(i) A debit balance
(ii) A credit balance
(iii) An expenditure or an asset
(iv) An income or a liability
Select the correct answer from the options given below:
(A) Only (ii) above
(B) Only (iv) above
(C) Both (i) and (iii) above
(D) Both (ii) and (iii) above
Answer:
(C) Both (i) and (iii) above

Question 22.
Which of the following types of accounts represent assets and properties which can be seen, touched, felt, measured, purchased, and sold?
(A) Tangible real accounts
(B) Intangible real accounts
(C) Representative personal accounts
(D) Artificial or legal person account
Answer:
(A) Tangible real accounts

Question 23.
Accounts relating to income, revenue, gain expenses, and losses are termed as:
(A) Real Accounts
(B) Personal Accounts
(C) Nominal Accounts
(D) None of above
Answer:
(C) Nominal Accounts

Question 24.
accounts represent assets and properties which cannot be seen, touched, or felt but can be measured in terms of money.
(A) Tangible real accounts
(B) Intangible real accounts
(C) Representative personal accounts
(D) Artificial or legal person account
Answer:
(B) Intangible real accounts

Question 25.
The rule for nominal accounts is
(A) Debit the Receiver, Credit the giver
(B) Debit what comes in, Credit what goes out
(C) Debit all expenses and losses, Credit all incomes and gains
(D) All of the above
Answer:
(C) Debit all expenses and losses, Credit all incomes and gains

Question 26.
Current Assets Current liabilities =?
(A) Working capital
(B) Capital
(C) Debtors
(D) Owners equity
Answer:
(A) Working capital

Question 27.
On 1.1.2019, CS N. S. Zad paid rent of ₹ 25,000 for Zads Professional Academy. This can be classified as
(A) An event
(B) A transaction
(C) A transaction as well as an event
(D) Neither a transaction nor an event
Answer:
(A) An event

Question 28.
Mr. Bhandari purchased a car for ₹ 50,000, making a down payment of ₹ 10,000 and signing a ₹ 40,000 bill payable due in 60 days. As a result of this transaction:
(A) Total assets increased by ₹ 50,000
(B) Total liabilities increased by ₹ 40,000
(C) Total assets increased by ₹ 40,000
(D) Total assets increased by ₹ 40,000 with a corresponding increase in liabilities by ₹ 40,000
Answer:
(D) Total assets increased by ₹ 40,000 with a corresponding increase in liabilities by ₹ 40,000

Question 29.
The accounting policy for inventories of X Ltd. states that inventories are valued at a lower cost or net realizable value. Which accounting principle is followed in adopting the above policy?
(A) Materiality
(B) Prudence
(C) Substance over form
(D) All of the above
Answer:
(B) Prudence

Question 30.
On 31.3.2019 after the sale of goods ₹ 2,000, Neelam is left with the closing inventory of ₹ 10,000. This is
(A) An event
(B) A transaction
(C) A transaction as well as an event
(D) Neither a transaction nor an event
Answer:
(A) An event

Question 31.
‘Provisions for doubtful debts’ and ‘provision for discount on debtors’ are based on
(A) Prudence
(B) Substance over from
(C) Materiality
(D) All of the above
Answer:
(A) Prudence

Question 32.
Purposes of an accounting system include all the following except
(A) Interpret and record the effects of business transaction
(B) Classifytheeffectsoftransactions to facilitate the preparation of reports
(C) Summarize and communicate information to decision-makers
(D) Dictate the specific types of business enterprise transactions that the enterprises may engage in.
Answer:
(D) Dictate the specific types of business enterprise transactions that the enterprises may engage in.

Question 33.
The accounting cycle or accounting process includes
(X) Journalizing (Summarizing)
(Y) Posting to the ledger (Recording)
(Z) Final account (Classifying)
Find the correct match.
(A) (X)
(B) (Y)
(C) All (X), (Y) & (Z)
(D) None of the above
Answer:
(D) None of the above

Question 34.
____includes identifying, recording, classifying, and summarizing the transactions.
(A) Accounting posting
(B) Accounting cycle
(C) Tally of accounts
(D) All of the above
Answer:
(B) Accounting cycle

Question 35.
In which order the accounting transactions and events are recorded in the books?
(A) Journal, Subsidiary books, Led-ger and Trial Balance
(B) Ledger, Journal, Ledger and Trial Balance.
(C) Subsidiary books, Ledger and Trial Balance and Journal.
(D) Profit and loss account, Ledger, Balance Sheet, Journal.
Answer:
(A) Journal, Subsidiary books, Led-ger and Trial Balance

Question 36.
Journal is the book in which every transaction is recorded before being posted into the ledger.
(A) Primary entry
(B) Secondary entry
(C) Third entry
(D) None of above
Answer:
(A) Primary entry

Question 37.
is a book in which all the business transactions are originally recorded in chronological order and from which they are posted to the ledger accounts at any convenient time.
(A) Ledger
(B) Journal
(C) Purchases returns books
(D) Sales book
Answer:
(B) Journal

Question 38.
Journal has columns.
(A) 4
(B) 5
(C) 3
(D) 6
Answer:
(B) 5

Question 39.
Transactions that are inter-connected and have taken place simultaneously are recorded by means of a
(A) Adjustment entry
(B) Combined journal entry
(C) Either (a) or (b)
(D) Closing entry
Answer:
(B) Combined journal entry

Question 40.
_____ is the principal book of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded.
(A) Ledger
(B) Journal
(C) Purchases returns books
(D) Sales book
Answer:
(A) Ledger

Question 41.
Ledger is the____of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded.
(A) Principal book
(B) Primary entry book
(C) Third entry book
(D) None of above
Answer:
(A) Principal book

Question 42.
_____ is a book of account; in which all types of accounts relating to assets, liabilities, capital, expenses, and revenues are maintained.
(A) Ledger
(B) Journal
(C) Primary entry book
(D) None of above
Answer:
(B) Journal

Question 43.
The process of recording transaction in the journal is termed as:
(A) Balancing
(B) Posting
(C) Journalizing
(D) None of above
Answer:
(C) Journalizing

Question 44.
The process of recording transaction in the ledger is known as:
(A) Balancing
(B) Posting
(C) Journalizing
(D) None of above
Answer:
(B) Posting

Question 45.
Journal is a book of:
(A) Analytical record
(B) Chronological record
(C) Alphabetical record
(D) None of above
Answer:
(B) Chronological record

Question 46.
Ledger is the book for
(A) Analytical record
(B) Chronological record
(C) Alphabetical record
(D) None of above
Answer:
(A) Analytical record

Question 47.
The process of equalizing the two sides of an account by putting the difference on the side where the amount is short is known as
(A) Balancing
(B) Posting
(C) Journalizing
(D) None of above
Answer:
(A) Balancing

Question 48.
Journal and ledger records transactions in
(A) A chronological order and analytical order respectively.
(B) An analytical order and chrono-logical order respectively.
(C) A chronological order only
(D) An analytical order only.
Answer:
(A) A chronological order and analytical order respectively.

Question 49.
Ledger book is popularly known as
(A) Secondary book of accounts
(B) Principal book of accounts
(C) Subsidiary book of accounts
(D) None of the above
Answer:
(B) Principal book of accounts

Question 50.
At the end of the accounting year, all the nominal accounts of the ledger book are
(A) Balanced but not transferred to profit and loss account
(B) Not balanced and also the balance is not transferred to the profit and loss account
(C) Balanced and the balance is transferred to the balance sheet
(D) Not balanced and their balance is transferred to the profit and loss account.
Answer:
(D) Not balanced and their balance is transferred to the profit and loss account.

Question 51.
An allowance of ₹ 50 was offered for early payment of cash of ₹ 1,050. It will be recorded in
(A) Sales Book
(B) Purchase Book
(C) Journal Proper (General Journal)
(D) Cash Book
Answer:
(D) Cash Book

Question 52.
A second-hand motor car was purchased on credit from B & Co. for ₹ 10,000. It will be recorded in
(A) Journal Proper (General Journal)
(B) Cash Book
(C) Purchase Book
(D) Sales Book
Answer:
(A) Journal Proper (General Journal)

Question 53.
Goods were sold on a credit basis to Mr. Ram for ₹ 10,000. It will be recorded in
(A) Journal Proper (General Journal)
(B) Cash Book
(C) Purchase Book
(D) Sales Book
Answer:
(D) Sales Book

Question 54.
Accounting for recovery from Mr. C of an amount of ₹ 2,000 earlier written off as bad debt will be recorded in
(A) Sales book
(B) Purchase book
(C) Journal Proper (General Journal)
(D) Cashbook
Answer:
(D) Cashbook

Question 55.
Credit purchase of stationery worth ₹ 5,000 by a stationery dealer will be recorded in
(A) Journal Proper (General Journal)
(B) Cashbook
(C) Purchase book
(D) Sales book
Answer:
(C) Purchase book

Question 56.
A bill receivable of ₹ 10,000, which was received from a debtor in full settlement for a claim of ₹ 11,000 dishonored will be recorded in
(A) Bills receivable book
(B) Journal proper (General Journal)
(C) Purchases return Book
(D) Purchase book
Answer:
(A) Bills receivable book

Question 57.
Outstanding salary ₹ 34,000 to be provided in the accounts will be recorded in
(A) Bills receivable book
(B) Journal proper (General Journal)
(C) Purchases Return Book
(D) Purchase book
Answer:
(B) Journal proper (General Journal)

Question 58.
A debit note for ₹ 20,000 issued to Mr. Z for goods returned by us is to be accounted for in
(A) Bills receivable book
(B) General journal
(C) Purchases return a book
(D) Purchase book
Answer:
(C) Purchases return the book

Question 59.
The investment was sold in cash for ₹ 1,00,000 at par will be recorded in
(A) Cashbook
(B) General journal
(C) Purchases return a book
(D) Purchase book
Answer:
(A) Cashbook

Question 60.
The investment was sold on credit for ₹ 1,00,000 at par will be recorded in
(A) Cashbook
(B) General journal
(C) Purchases return the book
(D) Purchase book
Answer:
(B) General journal

Question 61.
Salary paid in cash ₹ 50,000 will be recorded in
(A) General journal
(B) Cashbook
(C) Purchases return the book
(D) Purchase book
Answer:
(B) Cashbook

Question 62.
NSZ Ltd. makes payments to its sundry creditors through cheques and the cash discount received on these payments is recorded in the triple-columnar cash book. In the event of dishonor of any such cheques, the discount so received should be written back through:
(i) A debit to discount column of the cash book.
(ii) A credit to the discount column of the cash book.
(iii) A credit to the bank column of the cash book.
(iv) A debit to discount account through journal proper.
(v) A credit to creditor’s account through journal proper.
Select the correct answer from the options given below
(A) Only (i) above
(B) Only (ii) above
(C) Both (i) & (iii) above
(D) Both (iv) & (v) above
Answer:
(D) Both (iv) & (v) above

Question 63.
Which of the following statements is correct?
(A) The trial balance is prepared after preparing the profit and loss account.
(B) The trial balance shows only balances of assets and liabilities
(C) The trial balance shows only nominal account balances.
(D) The trial balance has no statutory importance from the point of view of the law.
Answer:
(D) The trial balance has no statutory importance from the point of view of the law.

Question 64.
is that expenditure that results in the acquisition of an asset or which results in an increase in the earning capacity of a business.
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Answer:
(A) Capital expenditure

Question 65.
Expenses whose benefit expires within the year of expenditure and which are incurred to maintain the earning capacity of existing assets are termed as
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Answer:
(B) Revenue expenditure

Question 66.
There are certain expenses that may be in the nature of revenue but their benefit may not be consumed in the year in which such expenditure has been incurred; rather the benefit may extend over a number of years are termed as
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Answer:
(C) Deferred revenue expenditure

Question 67.
Which of the following is/are examples of capital expenditure?
(A) Purchases of land & buildings by the property dealer
(B) Purchases of machinery by machinery dealer
(C) Expenses incurred for getting patents
(D) All of the above
Answer:
(C) Expenses incurred for getting patents

Question 68.
Which of the following is/are examples of capital expenditure?
(A) Fees paid to a lawyer for drawing a purchase deed of land
(B) Overhauling expenses of second-hand machinery
(C) Cartage paid for bringing machinery to the factory from the supplier’s premises
(D) All of the above
Answer:
(D) All of the above

Question 69.
Amounts paid for wages, salary, carriage of goods, repairs, rent, and interest, etc. are items of
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Answer:
(B) Revenue expenditure

Question 70.
Costs incurred to acquire an asset are but costs incurred to keep them in working condition or to defend their ownership are
(A) Capital expenditure, Revenue expenditure
(B) Revenue expenditure, Revenue expenditure
(C) Deferred revenue expenditure. Revenue expenditure
(D) Revenue expenditure, Capital expenditure
Answer:
(A) Capital expenditure, Revenue expenditure

Question 71.
Which of the following is/are not an example of capital expenditure
(A) Money spent to reduce working expenses like conversion of hand-driven machinery to pow-er-driven machinery
(B) Money paid for goodwill (like the right to use the established name of an outgoing firm)
(C) Expenditure which does not result in an increase in capacity or in reduction of day-to-day expenses
(D) All of the above
Answer:
(C) Expenditure which does not result in an increase in capacity or in reduction of day-to-day expenses

Question 72.
Depreciation on fixed assets is
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Answer:
(B) Revenue expenditure

Question 73.
All sums spent up to the point an asset is ready for use should also be treated as
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Answer:
(A) Capital expenditure

Question 74.
Amounts paid for wages, salary, carriage of goods, repairs, rent, and interest, etc. are items of
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) None of the above
Answer:
(B) Revenue expenditure

Question 75.
The fee paid to a lawyer for checking whether all the papers are in order before the land is purchased is ______ But if later a suit is filed against the purchaser, the legal costs will be______
(A) Capital expenditure, Revenue expenditure
(B) Revenue expenditure, Revenue expenditure
(C) Deferred revenue expenditure, Revenue expenditure
(D) Revenue expenditure, Capital expenditure
Answer:
(A) Capital expenditure, Revenue expenditure

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