This quiz works best with JavaScript enabled. Home > Accounting > Financial Accounting > Financial Accounting – Quiz 101 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 101 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The Business entity assumption requires that the activities A) Of a sole proprietorship cannot be distinguished from the personal economic events of its owners. B) Must be reported to the Securities and Exchange Commission. C) Of an entity be kept separate from the activities of its owner. D) Of different entities can be combined if all the entities are corporations. Show Answer Correct Answer: C) Of an entity be kept separate from the activities of its owner. 2. Life membership fee may be capitalized and shown in balance sheet in liabilities side. A) True. B) False. Show Answer Correct Answer: A) True. 3. What does GAAP stand for? A) Generally Accounting Accepted Principles. B) Generally Association of Accepted Practices. C) Generally Accepted Association of Practitioners. D) Generally Accepted Accounting Principles. Show Answer Correct Answer: D) Generally Accepted Accounting Principles. 4. Vertical analysis is reporting an amount on a financial statement as a percentage of another item on the same financial statement. A) True. B) False. Show Answer Correct Answer: A) True. 5. If the machinery is purchased on credit then A) Vendor a/c will be dr. and Machinery a/c will be cr,. B) Purchase a/c will be and Vendor a/c will be cr,. C) Machinery a/c will be dr. and Vendor a/c will be cr,. D) Purchase a/c will be dr. and Machinery a/c will be cr,. Show Answer Correct Answer: C) Machinery a/c will be dr. and Vendor a/c will be cr,. 6. Excess of hire purchase price over cash price is known as Interest. A) True. B) False. Show Answer Correct Answer: A) True. 7. Discount on Creditors is A) Deducted from Debtors. B) Deducted from Creditors. C) Added to debtors. D) Added to Creditors. Show Answer Correct Answer: B) Deducted from Creditors. 8. The sale of goods on credit for a non-VAT registered company is recorded in the accounts as: A) Dr Trade receivable Cr Bank. B) Dr Sale accountCr Cash sale. C) Dr Sale accountCr Trade receivable. D) Dr Trade receivableCr Sales. Show Answer Correct Answer: D) Dr Trade receivableCr Sales. 9. The balance on a firm's debtors control account at the end of a year should agree with ..... A) The total of the firm's sales for that year. B) The amount of money received from debtors during the year. C) The total of debtors which are outstanding for more than one year. D) The total of its list of debtors outstanding at the year-end. Show Answer Correct Answer: D) The total of its list of debtors outstanding at the year-end. 10. A person who invests and becomes an owner of the corporation is called ..... A) Stockholder. B) Investor. C) Owner. D) Corporators. Show Answer Correct Answer: A) Stockholder. 11. The question of when revenue should be recognized on the income statement (according to GAPP) is answered by the: A) Revenue recognition principle. B) Going concern principle. C) Monetary unit value. D) Business entity principle. E) Cost principle. Show Answer Correct Answer: A) Revenue recognition principle. 12. In the absence of an agreement to the contrary, the partners are A) Entitled for 6% interest on their capitals, only when there are profits. B) Entitled for 9% interest on their capitals, only when there are profits. C) Entitled for interest on capital on the bank rate, only when there are profits. D) Not entitled for any interest in their capitals. Show Answer Correct Answer: D) Not entitled for any interest in their capitals. 13. The first step in the accounting cycle is transaction analysis. A) True. B) False. Show Answer Correct Answer: A) True. 14. Prepaid Rent is an item of A) Asset. B) Liability. C) Deferred Revenue Expenditure. D) None of the Above. Show Answer Correct Answer: A) Asset. 15. Wall Company leased office premises to Fox Company for a five-year term beginning January 1, 2018. Under the terms of the operating lease, rent for the first year is P800, 000 and rent for years 2 through 5 is P1, 250, 000 per annum. However, as an inducement to enter the lease, Wall granted Fox the first six months of the lease rent-free. What amount should be reported as rental income for 2018? A) 1, 200, 000. B) 1, 160, 000. C) 1, 080, 000. D) 800, 000. Show Answer Correct Answer: C) 1, 080, 000. 16. In financial accounting, reports are published daily, weekly, or monthly depending on managerial requirements. A) True. B) False. Show Answer Correct Answer: B) False. 17. At the end of the fi rst year of operations, the total cost of the trading securities portfolio is $ 120, 000. Total fair value is $ 115, 000. The financial statements should show: A) A reduction of an asset of $ 5, 000 and a realized loss of $ 5, 000. B) A reduction of an asset of $ 5, 000 and an unrealized loss of $ 5, 000 in the stockholders' equity section. C) A reduction of an asset of $ 5, 000 in the current assets section and an unrealized loss of $ 5, 000 in "Other expenses and losses.". D) A reduction of an asset of $ 5, 000 in the current assets section and a realized loss of $ 5, 000 in "Other expenses and losses.". Show Answer Correct Answer: C) A reduction of an asset of $ 5, 000 in the current assets section and an unrealized loss of $ 5, 000 in "Other expenses and losses.". 18. Top managers who run the company and are responsible for its success or failure. A) Executives. B) General Manager. C) Operations Manager. D) Cashier. Show Answer Correct Answer: A) Executives. 19. IMPAIRMENT OF ASSETS APPLY TO A) INVENTORIES. B) FINANCIAL ASSETS. C) ASSETS HELD FOR SALE. D) PROPERTY PLANT AND EQUIPMENT. Show Answer Correct Answer: D) PROPERTY PLANT AND EQUIPMENT. 20. Bichon Company purchased equipment for $ 6, 720 on December 1. It is estimated that annual depreciation on the equipment will be $ 1, 680. If financial statements are to be prepared on December 31, the company should make the following adjusting entry: A) Debit Depreciation Expense, $ 1, 680; Credit Accumulated Depreciation, $ 1, 680. B) Debit Depreciation Expense, $ 140; Credit Accumulated Depreciation, $ 140. C) Debit Depreciation Expense, $ 5, 040; Credit Accumulated Depreciation, $ 5, 040. D) Debit Equipment, $ 6, 720; Credit Accumulated Depreciation, $ 7, 200. Show Answer Correct Answer: B) Debit Depreciation Expense, $ 140; Credit Accumulated Depreciation, $ 140. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Accounting Quiz 1Financial Accounting Quiz 2Financial Accounting Quiz 3Financial Accounting Quiz 4Financial Accounting Quiz 5Financial Accounting Quiz 6Financial Accounting Quiz 7Financial Accounting Quiz 8Financial Accounting Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books