This quiz works best with JavaScript enabled. Home > Accounting > Financial Accounting > Financial Accounting – Quiz 87 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 87 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The characteristic of writing off receivables using the allowance method is the existence of an account..... A) Bad Debt Expense. B) Allowance for Doubtful Debt. C) Accounts Receivable. D) Merchandise Inventory. Show Answer Correct Answer: B) Allowance for Doubtful Debt. 2. Expenses that have been paid by the company but have not been recognized as expenses in the period concerned that have benefits beyond one accounting period are called..... A) Accrued expense. B) Accrued revenue. C) Unearnes revenue. D) Prepaid expense. E) Operating expense. Show Answer Correct Answer: D) Prepaid expense. 3. Bank Reconciliation Statement is not a part of the process of Accounts. A) True. B) False. Show Answer Correct Answer: A) True. 4. Many industries tend to come together to make use of the advantages offered by the urban centres. This is known as ..... A) Agglomeration economics. B) Coming together. C) Holding together. D) Joint sector if economics. Show Answer Correct Answer: A) Agglomeration economics. 5. Branch Account is a A) Real Account. B) Personal Account. C) Nominal. D) None of the above. Show Answer Correct Answer: C) Nominal. 6. The business of a company is being carried out by ..... A) Shareholders. B) Partners. C) Board of directors. D) Capital. Show Answer Correct Answer: C) Board of directors. 7. How many golden rules in Accounting? A) 4. B) 7. C) 3. D) 6. Show Answer Correct Answer: C) 3. 8. Which of the following ratios measure the ability of a firm to meet short term obligation? A) Net profit margin. B) Quick assets ratio. C) Turnover ratio. D) Creditors ratio. Show Answer Correct Answer: B) Quick assets ratio. 9. The higher the company's debt to equity ratio, the greater the possibility for managers to choose accounting methods that can increase profits. This reasoning includes hypotheses..... A) Bonus plan hypothesis. B) Cost politics hypothesis. C) Equity hypotesis. D) Debtequity hypothesis. Show Answer Correct Answer: D) Debtequity hypothesis. 10. Which of the following statements in not true about Financial Accounting? A) The accounts are for external purposes. B) The accounts present a historical record for the enterprise. C) It is not essential to comply with concepts and conventions. D) Financial accounts must comply with the Statements of Principles. Show Answer Correct Answer: C) It is not essential to comply with concepts and conventions. 11. 10 What is the purpose of making a provision for depreciation in the accounts? A) To charge the cost of fixed assets against profits. B) To show the current market value of fixed asset. C) To make cash available to replace fixed assets. D) To make a provision for repairs. Show Answer Correct Answer: A) To charge the cost of fixed assets against profits. 12. The balance sheet discloses the financial position of a business A) For a given period. B) At a specific point of time. C) On a certain fixed date. D) All of the above. Show Answer Correct Answer: B) At a specific point of time. 13. Records revenue only when the cash is received A) Accrual Accounting. B) Managerial Accounting. C) Financial Accounting. D) Cash Accounting. Show Answer Correct Answer: D) Cash Accounting. 14. What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $ 15, 400, and unexpired amounts per analysis of policies of $ 5, 000? A) Debit Insurance Expense, $ 5, 000; Credit Prepaid Insurance, $ 5, 000. B) Debit Insurance Expense, $ 15, 400; Credit Prepaid Insurance, $ 15, 400. C) Debit Prepaid Insurance, $ 10, 400; Credit Insurance Expense, $ 10, 400. D) Debit Insurance Expense, $ 10, 400; Credit Prepaid Insurance, $ 10, 400. Show Answer Correct Answer: D) Debit Insurance Expense, $ 10, 400; Credit Prepaid Insurance, $ 10, 400. 15. Cost of goods sold and turnover are one and the same A) True. B) False. Show Answer Correct Answer: B) False. 16. When using the allowance method, as bad debt expense is recorded A) Total assets remain the same and stockholders' equity remains the same. B) Total assets decrease and stockholders' equity decreases. C) Total assets increase and stockholders' equity decreases. D) Total liabilities increase and stockholders' equity decreases. Show Answer Correct Answer: B) Total assets decrease and stockholders' equity decreases. 17. Financial accounting is best defined as A) Recording economic events of entities. B) Examining future events for economic decisions. C) Generally accepted accounting principles of a country. D) Recording, summarising and communicating economic events of entities. Show Answer Correct Answer: D) Recording, summarising and communicating economic events of entities. 18. WHICH OF THE FOLLOWING ENHANCES THE RELEVANCE OF ACCOUNTING INFORMATION A) MONETARY UNIT. B) UNDERSTABILITY. C) NEUTRALITY. D) PREDICTIVE VALUE. Show Answer Correct Answer: B) UNDERSTABILITY. 19. The following intangible asset should not be amortized: A) Goodwill. B) Copyrights. C) Trademarks. D) All of the above. Show Answer Correct Answer: A) Goodwill. 20. Outstanding Expenditure is A) Asset. B) Liability. C) None. D) None of above. Show Answer Correct Answer: B) Liability. ← 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