This quiz works best with JavaScript enabled. Home > Accounting > Financial Accounting > Financial Accounting – Quiz 61 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 61 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be A) Offset against interest cost incurred during construction. B) Recognized as revenue of the period. C) Increase the cost of assets being constructed. D) Multiplied by an appropriate interest rate to determine the interest to be capitalized. Show Answer Correct Answer: A) Offset against interest cost incurred during construction. 2. Accounting is defined as a process of the following, except ..... A) Recording. B) Recognizing. C) Summarizing. D) Classifying. Show Answer Correct Answer: B) Recognizing. 3. A cash book with a credit balance indicates a bank ..... A) Asset. B) Loan. C) Account. D) Overdraft. Show Answer Correct Answer: D) Overdraft. 4. Choose enhancing qualitative characteristics. A) Verifiability. B) Understandability. C) Timeliness. D) All of these. Show Answer Correct Answer: D) All of these. 5. Goodwill may be brought into the books when A) No partner retires. B) Assets are more than liabilities. C) Profit for the period is high. D) A new partner is admitted. Show Answer Correct Answer: D) A new partner is admitted. 6. What is the purpose of a trial balance? A) To ensure the accuracy of entries in a company's bookkeeping system. B) To record all cash and bank transactions. C) To keep track of all sales and revenue. D) To contain all impersonal accounts. Show Answer Correct Answer: A) To ensure the accuracy of entries in a company's bookkeeping system. 7. Which of the following is a direct cost? A) Factory rent. B) Production workers' wages. C) Factory supervisor's salary. D) Factory machine maintenance. Show Answer Correct Answer: B) Production workers' wages. 8. True or False. It is possible for a company to be profitable but have negative cash flows. A) True. B) False. Show Answer Correct Answer: A) True. 9. ..... concept has the basic of Continuity of life. A) Going concern concept. B) Business entity concept. C) None of the above. D) None of above. Show Answer Correct Answer: A) Going concern concept. 10. Which of the following statements best explains the principle of faithful representation in relation to the preparation of the annual financial statements? A) Transactions are presented any way that is considered appropriate. B) Transactions are presented in such a way as to maximise profit for the year. C) Transactions are presented in such a way to maximise asset values in the statement of financial position. D) Transactions are presented to reflect their commercial substance of a transaction rather than their legal form. Show Answer Correct Answer: D) Transactions are presented to reflect their commercial substance of a transaction rather than their legal form. 11. Which book of original entry records all the purchase invoices for goods and services supplied on credit to the firm? A) Sales Returns Daybook. B) Purchases Daybook. C) Sales Daybook. D) Purchases Returns Daybook. Show Answer Correct Answer: B) Purchases Daybook. 12. What are the basic principles of financial accounting? A) Principles of irregularity, inconsistency, insincerity, impermanence of methods, compensation, recklessness, discontinuity, unpredictability, and bad faith. B) Principles of accuracy, flexibility, honesty, changeability, compensation, risk-taking, discontinuity, unpredictability, and bad faith. C) Principles of regularity, consistency, sincerity, permanence of methods, non-compensation, prudence, continuity, periodicity, and good faith. D) Principles of regularity, inconsistency, insincerity, impermanence of methods, non-compensation, recklessness, discontinuity, unpredictability, and bad faith. Show Answer Correct Answer: C) Principles of regularity, consistency, sincerity, permanence of methods, non-compensation, prudence, continuity, periodicity, and good faith. 13. Property and equipment are examples of current assets A) True. B) False. Show Answer Correct Answer: B) False. 14. Book-Keeping is the first stage of accounting A) True. B) False. C) Partial True. D) None of the above. Show Answer Correct Answer: A) True. 15. Double entries of buying goods with cash from Abu A) Dr. PurchasesCr. Abu. B) Dr. PurchasesCr. Cash. C) Dr. AbuCr. Purchases. D) Dr. CashCr. Purchases. Show Answer Correct Answer: B) Dr. PurchasesCr. Cash. 16. There are three parts of accounting standards, EXCEPT A) Description of the problem to be tacked. B) A discussion or ways of solving the problem. C) Making a conclusion without any discussion. D) A line with decision or theory, the prescribed solution. Show Answer Correct Answer: C) Making a conclusion without any discussion. 17. The following defines Accounting except: A) A service activity. B) An information that is collected is primarily numerical. C) An information system. D) An art of recording, classifying and summarizing. Show Answer Correct Answer: B) An information that is collected is primarily numerical. 18. The corporate financial reporting practices of Malaysia are primarily governed by the Companies Act 1965 (now, Companies Act 2016), the Securities Commission Act 1993, the Kuala Lumpur Stock Exchange (KLSE) Listing Requirements and the Companies Commission of Malaysia. A) True. B) False. Show Answer Correct Answer: A) True. 19. You want to know how much cash came out from the business to the suppliers. What is the financial statement that you need to check? A) Income Statement. B) Balance Sheet. C) Cash Flow Statement. D) Statement of Owner's Equity. Show Answer Correct Answer: C) Cash Flow Statement. 20. This is applied when there is uncertainty of the accounting choice to be used. A) Cost benefit. B) Materiality. C) Conservatism. D) Industry practice. Show Answer Correct Answer: C) Conservatism. ← 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