This quiz works best with JavaScript enabled. Home > Accounting > Financial Accounting > Financial Accounting – Quiz 16 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 16 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Identify the type of expenditure. Transportation costs on purchases A) Capital. B) Revenue. Show Answer Correct Answer: B) Revenue. 2. Short workings irrecoverable are transferred to A) Profit and loss a/c. B) Minimum Rent a/c. C) Royalty a/c. D) Land Lord a/c. Show Answer Correct Answer: A) Profit and loss a/c. 3. Capital Receipts and Payments appear in A) Trading Account. B) Profit and Loss Account. C) Balance Sheet. D) All. Show Answer Correct Answer: C) Balance Sheet. 4. Subject to a higher income tax rate and has limited powers. A) Partnership. B) Corporation. C) Sole Proprietorship. D) None of above. Show Answer Correct Answer: B) Corporation. 5. Sales deduct Cost of sales = A) Net profit/ (loss). B) Gross profit. C) Gross (loss)/ Profit. D) Marginal loss. Show Answer Correct Answer: C) Gross (loss)/ Profit. 6. Royalty account is a real account in nature. A) True. B) False. Show Answer Correct Answer: B) False. 7. Define the term 'depreciation' in accounting. A) The process of recording revenue from the sale of an asset. B) Allocation of the cost of a tangible asset over its useful life. C) The increase in value of an asset over time. D) Selling an asset at a higher price than its original cost. Show Answer Correct Answer: B) Allocation of the cost of a tangible asset over its useful life. 8. Which of the following errors is not disclosed in the trial balance? A) Entries made to wrong side of the each account. B) Transactions omitted entirely or put in twice. C) A transaction posted to only one account. D) Entries made in the wrong account but on the correct side. Show Answer Correct Answer: C) A transaction posted to only one account. 9. Which of the following should be charged as an expense in the profit and loss account of a manufacturing firm? A) Office rent. B) Work in progress. C) Direct material costs. D) Carriage charged on raw materials purchased. Show Answer Correct Answer: A) Office rent. 10. A credit to an asset account increases the balance. A) True. B) False. Show Answer Correct Answer: B) False. 11. Interest on Drawings is ..... to drawings and deducted from capital A) Deducted. B) Added. C) Simplified. D) None. Show Answer Correct Answer: B) Added. 12. Explain the concept of goodwill in accounting. A) Goodwill is the total revenue generated by a business in a year. B) Goodwill is the amount of money a business has in its bank account. C) Goodwill is the value of a business's physical assets such as buildings and equipment. D) Goodwill represents the value of a business's reputation, customer base, and other intangible assets. Show Answer Correct Answer: D) Goodwill represents the value of a business's reputation, customer base, and other intangible assets. 13. From an investor's point of view, a liquidating dividend from an investee is: A) A dividend declared by the investee in excess of its earnings in current year. B) A dividend declared by the investee in excess of its earnings since acquisition by the investor. C) Any dividend declared by the investee since acquisition. D) A dividend declared by the investee in excess of the investee's retained earnings. Show Answer Correct Answer: B) A dividend declared by the investee in excess of its earnings since acquisition by the investor. 14. A receipt of $ 15, 700 cash from a customer as a payment on account was incorrectly credit to service revenue. Which is the effect of this error on the company's financial statements? A) Assets are understated by $ 31, 400 and liabilities are understated by $ 31, 400. B) Assets are overstated by $ 15, 700 and owners' equity is overstated by $ 15, 700. C) Assets are overstated by $ 31, 400 and owners' equity is overstated by $ 31, 400. D) Assets are understated by $ 15, 700 and owners' equity is understated by $ 15, 700. E) Assets are understated by $ 15, 700 and liabilities are understated by $ 15, 700. Show Answer Correct Answer: B) Assets are overstated by $ 15, 700 and owners' equity is overstated by $ 15, 700. 15. Under hire purchase system buyer becomes the owner A) On payment of down payment. B) After receipts of goods. C) On payment of last instalment. D) On payment of first instalment. Show Answer Correct Answer: C) On payment of last instalment. 16. In closing entries, there are several accounts that are not closed, except ..... A) All asset accounts. B) All liability accounts. C) All revenue account. D) Owner's capital accounts. Show Answer Correct Answer: C) All revenue account. 17. Deposits in transit A) Have been recorded on the company's books but not yet by the bank. B) Have been recorded by the bank but not yet by the company. C) Have not been recorded by the bank or the company. D) Are checks from customers which have not yet been received by the company. Show Answer Correct Answer: A) Have been recorded on the company's books but not yet by the bank. 18. Though financial statements are useful, they are limited because A) Reports are based on current market value. B) They do not use estimates. C) Non-financial success factors cannot be measured and reported monetarily. D) There are no standards for reporting the economic events of a business. Show Answer Correct Answer: C) Non-financial success factors cannot be measured and reported monetarily. 19. Three factors that contribute to fraudulent activity, except ..... A) Opportunity. B) Financial Pressure. C) Rationalization. D) Integrity. Show Answer Correct Answer: D) Integrity. 20. Define the chart of accounts for cash. A) No. 101. B) No. 1101. C) No. 2101. D) No. 1201. Show Answer Correct Answer: B) No. 1101. ← 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