This quiz works best with JavaScript enabled. Home > Accounting > Financial Accounting > Financial Accounting – Quiz 38 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 38 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The portion of called-up capital for which the shareholders made payment is called ..... A) Paid-down Capital. B) Subscribed Capital. C) Paid-up Capital. D) Called-up Capital. Show Answer Correct Answer: C) Paid-up Capital. 2. The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is: A) Accrual basis accounting. B) The operating cycle of a business. C) Cash basis accounting. D) The revenue recognition principle. E) The matching principle. Show Answer Correct Answer: A) Accrual basis accounting. 3. An established business will be following which method of accounting? A) Single entry system. B) Double entry system. C) Multiple entry. D) None of above. Show Answer Correct Answer: B) Double entry system. 4. What is the purpose of the statement of retained earnings? A) To calculate the total assets of a company. B) To determine the market value of the company's stock. C) To track the number of employees in the company. D) To show the changes in the retained earnings account over a specific period. Show Answer Correct Answer: D) To show the changes in the retained earnings account over a specific period. 5. Cash and cash equivalents does not include A) Cheques. B) Balance with banks. C) Bank deposits with more than 12 months maturity. D) Inventories. Show Answer Correct Answer: D) Inventories. 6. The balance sheet heading will specify a A) Period Of Time. B) Point In Time. Show Answer Correct Answer: B) Point In Time. 7. This type of accounting is mainly for internal users A) Management Accounting. B) Financial Accounting. Show Answer Correct Answer: A) Management Accounting. 8. On June 1, 2020, Sony acquires 100% of Mel for $ 90, 000. On this date, Mel had assets of $ 60, 000. Assume the book value and fair value of Mel's net assets were equal at the acquisition date. What is the record at Mel when acquired by Sony? A) Dr. Cash in Bank $ 90, 000Cr. Investment in Sony $ 90, 000. B) Dr. Investment in Sony $ 90, 000Cr. Cash in Bank $ 90, 000. C) Dr. Capital Stock $ 90, 000Cr. Cash in Bank $ 90, 000. D) Dr. Cash in Bank $ 90, 000Cr. Capital Stock $ 90, 000. E) None of above. Show Answer Correct Answer: E) None of above. 9. An increase in the balance in a retailer's Merchandise Inventory. A) Operating. B) Investing. C) Financing. D) Supplemental. Show Answer Correct Answer: A) Operating. 10. What are the External Users of Financial Accounting? A) Suppliers. B) Creditors. C) Customers. D) Employees. E) All of the above. Show Answer Correct Answer: E) All of the above. 11. Withdrawals by the proprietor would: A) Reduced both assets and owner equity. B) Reduced assets and increase liabilities. C) Reduced owner equity and increase liabilities. D) None of above. Show Answer Correct Answer: A) Reduced both assets and owner equity. 12. Which of the following is a correct journal entry for the sale of inventory on credit? A) Debit Cash, Credit Sales Revenue. B) Debit Accounts Receivable, Credit Sales Revenue. C) Debit Sales Revenue, Credit Accounts Payable. D) Debit Accounts Payable, Credit Sales Revenue. Show Answer Correct Answer: B) Debit Accounts Receivable, Credit Sales Revenue. 13. Osa started business with Le40, 000cash. The accounting entry is debit A) Cash account; credit capital account. B) Capital account; credit cash account. C) Purchases account; credit cash account. D) Expenses account; credit capital account. Show Answer Correct Answer: A) Cash account; credit capital account. 14. If the company does not record petty cash disbursements from the beginning until the petty cash is replenished then the petty cash cashier is held accountable..... A) Petty cash journal. B) Petty cash card. C) Petty cash voucher. D) Cash disbursement journal. Show Answer Correct Answer: B) Petty cash card. 15. When payment is made to a supplier for goods previously purchased on account, the debit is to: A) An asset account. B) A liability account. C) An owner's equity account. D) An expense account. Show Answer Correct Answer: B) A liability account. 16. What do we call a cheque that the bank refused to pay the payee because the drawer has insufficient funds in his current account? A) Stale cheque. B) Dishonoured cheque. C) Sad cheque. D) Dubious cheque. Show Answer Correct Answer: B) Dishonoured cheque. 17. Identify the type of expenditure. Building extension to warehouse A) Capital. B) Revenue. Show Answer Correct Answer: A) Capital. 18. Account currency determines the currency in which all the transactions are recorded. A) True. B) False. Show Answer Correct Answer: A) True. 19. In the case of cumulative preference shares unpaid dividend is treated as ..... A) Unpaid capital. B) Remuneration. C) Arrears. D) Cumulative preference. Show Answer Correct Answer: C) Arrears. 20. ..... refers to the final section of a Profit and loss account and shows how the net profit after interest and tax is distributed, i.e.dividends to shareholders and/or retained profit kept by the business. A) A balance sheet. B) The appropriation account. C) Cost of goods sold. D) Retained profit. Show Answer Correct Answer: B) The appropriation account. ← 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