This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Accounting > Financial Accounting – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Goodwill WILL BE INCLUDED A) PERSONAL ACCOUNT. B) NOMINAL ACCOUNT. C) REAL ACCOUNT. D) NONE OF THE ABOVE. Show Answer Correct Answer: C) REAL ACCOUNT. 2. Which of the following is one of the possible nonrecurring items that must be shown in a separate line item BELOW the Income from Continuing Operations subtotal in the income statement? A) A. Gains and losses from the sale of fixed assets. B) B. Discounted operations. C) C. Extraordinary items. D) Both A and B. Show Answer Correct Answer: B) B. Discounted operations. 3. Types of Accounts? A) Personal. B) Real. C) Nominal. D) All the above. Show Answer Correct Answer: D) All the above. 4. It is a measurement of financial position of the company. A) Adequate disclosure Principle. B) Balance Sheet. C) Income Statement. D) Cash Flow Statement. Show Answer Correct Answer: B) Balance Sheet. 5. At the time of partnership liquidation, which credits shall be settled first? A) Those amounts owing to third persons. B) Those amounts owing to partners other than capital contribution and share in profit. C) Those amounts owing to partners with respect to capital contribution. D) Those amounts owing to partners with respect to share in profit. Show Answer Correct Answer: A) Those amounts owing to third persons. 6. An expense is termed an accrual because it A) Is yet to be paid for. B) Is a profit and loss account item. C) Must appear in the balance sheet. D) Is a trading account item. Show Answer Correct Answer: A) Is yet to be paid for. 7. What is the correct adjusting entry for accumulated depreciation? A) Dr Accumulated DepreciationCr Depreciation Expense. B) Dr LandCr Accumulated Depreciation-Land. C) Db Depreciation ExpenseCr Cash. D) Dr Depreciation ExpenseCr Accumulated Depreciation. Show Answer Correct Answer: D) Dr Depreciation ExpenseCr Accumulated Depreciation. 8. Which statement looks at Costs, Expenses and Sales revenue at the end of a fiscal period? A) Balance Sheet. B) Cash Flow. C) Income statement. D) None of above. Show Answer Correct Answer: C) Income statement. 9. A receivables confirmation letter that is sent back to the Public Accountant to provide a response that the receivables data sent is incorrect is a confirmation letter A) End of year. B) Negative. C) Positive. D) Accounts receivable balance. Show Answer Correct Answer: B) Negative. 10. A weakness of the accrual basis accounting system is that it takes the focus off of: A) Notes payable. B) Cash. C) Stock. D) Inventory. Show Answer Correct Answer: B) Cash. 11. Parallel accounting consists of implementing multiple ledgers and using each ledger for different purposes. A) False. B) True. Show Answer Correct Answer: B) True. 12. Employees always receive the company's accounts and an employee report A) TRUE. B) FALSE. Show Answer Correct Answer: B) FALSE. 13. Cash at bank is ..... a/c A) Personal a/c. B) Expenses a/c. C) Real a/c. D) Nominal a/c. Show Answer Correct Answer: C) Real a/c. 14. Records revenue when it is earned and matches expenses against the revenue they generate, even if cash is not received. A) Depreciation. B) GAAP. C) Net Income. D) Accrual accounting. Show Answer Correct Answer: D) Accrual accounting. 15. The best interpretation of the word credit is the A) Increase side of an account. B) Right side of an account. C) Decrease side of an account. D) Offset side of an account. Show Answer Correct Answer: B) Right side of an account. 16. Which side does Receipts from debtors belong? A) Debit. B) Credit. Show Answer Correct Answer: B) Credit. 17. Oracle Corporation reports information about pending lawsuits in the notes to its financial statements. A) Historical Cost. B) Full Disclosure. C) Revenue Recognition. D) Matching. Show Answer Correct Answer: B) Full Disclosure. 18. The balance sheet is a snapshot of the organization at a point in time. A) True. B) False. Show Answer Correct Answer: A) True. 19. Cash discount is classified into ..... A) 4. B) 2. C) 3. D) 1. Show Answer Correct Answer: B) 2. 20. Financial reports that summarize the financial condition and operations of a business A) Ethics. B) Withdrawals. C) Equities. D) Financial statements. Show Answer Correct Answer: D) Financial statements. 21. Where is depreciation recorded A) Current liability. B) Current asset. C) Not a current asset. D) OE. Show Answer Correct Answer: C) Not a current asset. 22. An AllIn company purchases goods on credit. What are the two moving accounts A) Clients/stocks. B) Purchase of goods/operating suppliers. C) Achat marchandises/clients. D) Achat marchandises/banque. Show Answer Correct Answer: B) Purchase of goods/operating suppliers. 23. A debit to an asset account indicates A) A credit was made to a liability account. B) An increase in liability. C) A credit was made to a liability account. D) An increase in the asset. Show Answer Correct Answer: D) An increase in the asset. 24. The following figures have been taken from the accounts of a manufacturing organization:$ Cost of raw materials used 90 000Direct wages 50 000Indirect wages 30 000Direct expenses 40 000Indirect expenses 20 000 Which of the following figures represents the manufacturers' prime cost? A) $ 180 000. B) $ 90 000. C) $ 230 000. D) $ 140 000. Show Answer Correct Answer: A) $ 180 000. 25. The main purpose of cost Accounting is to ..... A) Help in inventory. B) Provide information to management for decision making. C) Maximize profits. D) Aid in the fixation of Selling price. Show Answer Correct Answer: B) Provide information to management for decision making. 26. Purchases returns is also known as ..... A) Sales returns. B) Return outwards. C) Returns inwards. D) Discount allowed. Show Answer Correct Answer: B) Return outwards. 27. Sale of finished goods will be recorded in A) Trading account debit side. B) Profit and loss account debit side. C) Profit and loss account credit side. D) Trading account credit side. Show Answer Correct Answer: D) Trading account credit side. 28. What is the difference between cash basis and accrual basis accounting? A) Cash basis accounting records transactions only when loans are exchanged, while accrual basis accounting records transactions when they occur, regardless of when the loans are exchanged. B) Cash basis accounting records transactions only when checks are exchanged, while accrual basis accounting records transactions when they occur, regardless of when the checks are exchanged. C) Cash basis accounting records transactions only when cash is exchanged, while accrual basis accounting records transactions when they occur, regardless of when the cash is exchanged. D) Cash basis accounting records transactions only when credit is exchanged, while accrual basis accounting records transactions when they occur, regardless of when the credit is exchanged. Show Answer Correct Answer: C) Cash basis accounting records transactions only when cash is exchanged, while accrual basis accounting records transactions when they occur, regardless of when the cash is exchanged. 29. The process of bringing a zero balance to all temporary accounts by crediting debit balances and debiting credit balances and transferring those balances to the capital account. A) Closing the books. B) Trial Balance. C) Balancing the books. D) None of above. Show Answer Correct Answer: A) Closing the books. 30. Accounting Principles are, the Rules of Action or the Methods and Procedures of Accounting commonly adopted while recording Business transactions. A) False. B) Situation based. C) True. D) Can't say. Show Answer Correct Answer: C) True. 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