This quiz works best with JavaScript enabled. Home > Accounting > Financial Accounting > Financial Accounting – Quiz 47 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 47 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Principle that prohibits adding fake positive items on financial statement to counterbalance real negative items. A) Principle of noncompensation. B) Principle of sincerity. C) Principle of prudence. D) None of above. Show Answer Correct Answer: A) Principle of noncompensation. 2. Before an adjusting entry for accrued salaries is made, the amount in Salaries Expense is understated and the amount in Salaries Payable is also understated. A) True. B) False. Show Answer Correct Answer: A) True. 3. Suspense account is usually closed when ..... A) Accounts are finalised. B) Accounts are audited. C) All the errors are rectified. D) Unbalanced account. Show Answer Correct Answer: C) All the errors are rectified. 4. Which of the following are the disadvantage of Corporation? A) Double Taxation. B) Limited Life. C) Great capacity of raising capital. D) Easy transfer of Ownership. Show Answer Correct Answer: A) Double Taxation. 5. Which of the following statements is false? Consolidated financial statements are useful to: A) Determine the profi tability of specifi c subsidiaries. B) Determine the total profi tability of companies under common control. C) Determine the breadth of a parent company's operations. D) Determine the full extent of total obligations of companies under common control. Show Answer Correct Answer: A) Determine the profi tability of specifi c subsidiaries. 6. Which one of the following industries manufactures telephones, computers etc. A) Cement. B) Iron and steel. C) Electronic. D) Chemical. Show Answer Correct Answer: C) Electronic. 7. Petty cash method where journalizing is done when replenishing A) Imprest Fund System. B) Fluctuative Fund System. C) Direct Write Off Method. D) Allowance Method. Show Answer Correct Answer: A) Imprest Fund System. 8. From an accounting standpoint, cash includes which of the following? A) Credit accounts. B) Checks. C) Payments on credit. D) Physical assets. Show Answer Correct Answer: B) Checks. 9. Discuss the limitations of double-entry accounting. A) Complexity, cost, and potential for human error. B) Simplicity, low cost, and accuracy. C) Transparency, reliability, and ease of use. D) Flexibility, efficiency, and reduced risk. Show Answer Correct Answer: A) Complexity, cost, and potential for human error. 10. What is the name of the accounting method created by Luca Pacioli? A) Triple entry system. B) Single entry system. C) Matching entry system. D) Double entry system. Show Answer Correct Answer: D) Double entry system. 11. Liabilities are resources owned by the business with the purpose of using it for generating future profits. A) True. B) False. Show Answer Correct Answer: B) False. 12. What is the role of GAAP (Generally Accepted Accounting Principles) in financial accounting? A) GAAP is not important in financial accounting. B) GAAP provides a standard framework for financial reporting. C) GAAP is only applicable to small businesses. D) GAAP is a flexible set of guidelines with no standard framework. Show Answer Correct Answer: B) GAAP provides a standard framework for financial reporting. 13. The system of acquiring a business as a going concern by another business is (a) business consideration (b) goodwill (c) redemption reserve (d) purchase of business. A) Business consideration. B) Goodwill. C) Redemption reserve. D) Purchase of business. Show Answer Correct Answer: D) Purchase of business. 14. According to traditional classification, the nature of consignee account is: A) Real. B) Valuation. C) Nominal. D) Personal. Show Answer Correct Answer: D) Personal. 15. When Capital is increased by an amount, it is recorded on the: A) Right or debit side of the account. B) Left or credit side of the accoun. C) Left or debit side of the account. D) Right or credit side of the account. Show Answer Correct Answer: D) Right or credit side of the account. 16. The financial statement that reports revenue and expenses on a specific date. A) Worksheet. B) Balance sheet. C) Income statement. D) None of above. Show Answer Correct Answer: C) Income statement. 17. Qwik Company showed the following balances at the end of its first year:Cash $ 8, 700Prepaid insurance 9, 400Accounts receivable 7, 000Accounts payable 5, 800Notes payable 9, 400Owner's Capital 2, 300Owner's Drawings 1, 400Revenues 44, 000Expenses 35, 000What did Qwik Company show as total credits on its trial balance? A) 52, 400. B) 61, 500. C) 62, 900. D) 70, 900. Show Answer Correct Answer: B) 61, 500. 18. In cash book, discount allowed on a dishonored cheque is cancelled by A) Crediting the bank column. B) Crediting discount column. C) Journal entry. D) Debiting the discount column. Show Answer Correct Answer: C) Journal entry. 19. The Income Summary Account is A) A temporary account. B) The account from which the amount of profit or loss is transferred to the owners' capital accounts in a partnership. C) Not a permanent account. D) Used in the closing process to summarize the amounts of revenues and expenses. E) All of the above. Show Answer Correct Answer: E) All of the above. 20. Which term refers to an ordered listing of accounts that comprise a company's general ledger? A) General ledger. B) Balance sheet. C) Bank ledger. D) Chart of accounts (COA). E) None of the above. Show Answer Correct Answer: D) Chart of accounts (COA). ← 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