This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Accounting > Financial Accounting – Quiz 18 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 18 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Pragmatic is a study of the behaviour of accountants and non-accountants A) True. B) False. Show Answer Correct Answer: B) False. 2. The rights of creditors that represent a legal obligation to repay an amount borrowed according to terms of the borrowing agreement. A) Liabilities. B) Revenue. C) Expenses. D) Assets. Show Answer Correct Answer: A) Liabilities. 3. Unearned revenue is a liability that is created when a customer pays for a service or product in advance. A) False. B) True. Show Answer Correct Answer: B) True. 4. Which of the following is required when calculating prime cost? A) Factory water charges. B) Office wages. C) Depreciation of machinery. D) Manufacturing wages. Show Answer Correct Answer: D) Manufacturing wages. 5. Which of the following elements of a manufacturing account matches the definition below:The raw materials actually used to manufacture the product (e.g. cloth used to produce shirts, flour used to produce bread) A) Direct expenses. B) Direct wages. C) Direct materials. D) Indirect materials. Show Answer Correct Answer: C) Direct materials. 6. The following are some reasons why companies choose business combination over internal expansion except: A) Reduce competition. B) Increasing competition. C) Cost saving. D) Enter a new geographic region. Show Answer Correct Answer: B) Increasing competition. 7. Amounts owing by the business to its creditors. A) Trade Receivables. B) Owner's Equity. C) Trade Payables. D) Loan from Bank. Show Answer Correct Answer: C) Trade Payables. 8. The financial statement which is an expression of the account equation is the A) Trading account. B) Profit and loss account. C) Balance sheet. D) Statement of casg flow. Show Answer Correct Answer: C) Balance sheet. 9. The purpose of this convention is to communicate all material and relevant facts concerning financial position and results of operations to the users. A) Convention of Materiality. B) Convention of Full Disclosure. C) Convention of Conservatism. D) Convention of Consistency. Show Answer Correct Answer: B) Convention of Full Disclosure. 10. If revenue expenditure transaction is mistakenly classified as capital expenditure, what is the effect on the following items in financial statement? A) Net profit will be reduced. B) Net profit will increase. C) There will be no effect on net profit. D) None of above. Show Answer Correct Answer: B) Net profit will increase. 11. What occurs when a customer has withdrawn more funds than were actually in the banking account resulting in the customer owing money to the bank? A) Credit balance. B) Levies. C) Transactions. D) Overdraft. Show Answer Correct Answer: D) Overdraft. 12. A trader made four transactions.1 paid for repairs to manufacturing equipment2 purchased an item to be used by the business for more than 12 months3 took goods for resale for his own use4 transferred his own vehicle to the businessWhich items are capital expenditure? A) 1 and 2. B) 2 and 3. C) 2 only. D) 3 and 4. Show Answer Correct Answer: C) 2 only. 13. The amount paid at the time of entering the Hire-purchase transaction for the goods purchased is known as A) Down payment. B) First Instalment. C) Hire purchase price. D) Cash price. Show Answer Correct Answer: A) Down payment. 14. Using the Specific Identification inventory system we use the sales records to identify the following:Aug. 14 Sold 8 bikes costing $ 91 each and 12 bikes costing $ 106 each.Aug. 30 Sold 2 bikes costing $ 91 each, 3 bikes costing $ 106 each, 15 bikes costing $ 115 each, and 3 bikes costing $ 119 each.Total cost of 55 units available for sale is $ 5, 990.Calculate cost of the ending inventory. A) $ 2, 408. B) $ 2, 490. C) $ 1, 308. D) $ 1, 408. Show Answer Correct Answer: D) $ 1, 408. 15. State whether each of the following is True or FalseIn a Common size statement each item is expressed as a percentage of some common base. A) False. B) True. Show Answer Correct Answer: B) True. 16. Statement of Financial Position: A) When your total expenses exceed your overall revenues. B) A financial document that provides a snapshot of business assets, liabilities and owner's equity. C) The movement of money in and out of your business. D) None of above. Show Answer Correct Answer: B) A financial document that provides a snapshot of business assets, liabilities and owner's equity. 17. The process of converting raw materials into finished goods that are produced on a large scale called: A) Information technology. B) Electronic industry. C) Factory. D) Manufacturing. Show Answer Correct Answer: D) Manufacturing. 18. Limit of Maximum Number of Partners is Fixed by A) Companies Act 2013. B) Agreement Act 2000. C) Companies Act 1956. D) Partnership Act 1932. Show Answer Correct Answer: A) Companies Act 2013. 19. Information users for financial accounting comprise of both internal (management, shareholders, employees etc) and external (creditors, suppliers, banks, tax authorities). A) False. B) True. Show Answer Correct Answer: B) True. 20. When Allotment money is received, the entry will be ..... A) Debit:Share Capital Credit:Share Allotment Account. B) Debit:Share Allotment Account Credit:Share Capital. C) Debit:Cash Account Credit:Share Allotment Account. D) Debit:Share Allotment Credit:Cash Account. Show Answer Correct Answer: C) Debit:Cash Account Credit:Share Allotment Account. 21. How many accounts, at a minimum, are required for accounting entries? A) 1. B) 4. C) 2. D) 3. Show Answer Correct Answer: C) 2. 22. Manufacturing Account does not include A) Direct and Indirect cost. B) Prime and Factory Overhead cost. C) Administrative & Selling cost. D) Direct & Indirect cost. Show Answer Correct Answer: C) Administrative & Selling cost. 23. When a company repurchases its own stock it is referred to as: A) Treasury stock. B) Preferred stock. C) Retained earnings. D) Common stock. Show Answer Correct Answer: A) Treasury stock. 24. This type of accounting is used for decision making A) Financial Accounting. B) Management Accounting. Show Answer Correct Answer: B) Management Accounting. 25. To form an incorporated public company, a group of ..... persons should subscribe their names to the Memorandum of Association. A) 14. B) 10. C) 7. D) 6. Show Answer Correct Answer: C) 7. 26. Net profit is the surplus, if any, from sales revenues after all expenses are accounted for. A) False. B) True. Show Answer Correct Answer: B) True. 27. At December 31, 2017, the fair value of available-forsale securities is $ 41, 300 and the cost is $ 39, 800. At January 1, 2017, there was a credit balance of $ 900 in the Fair Value Adjustment-Available-for-Sale account. The required adjusting entry would be: A) Debit Fair Value Adjustment-Available-for-Sale for $ 1, 500 and credit Unrealized Gain or Loss-Equity for $ 1, 500. B) Debit Fair Value Adjustment-Available-for-Sale for $ 600 and credit Unrealized Gain or Loss-Equity for $ 600. C) Debit Fair Value Adjustment-Available-for-Sale for $ 2, 400 and credit Unrealized Gain or Loss-Equity for $ 2, 400. D) Debit Unrealized Gain or Loss-Equity for $ 2, 400 and credit Fair Value Adjustment-Available-forSale for $ 2, 400. Show Answer Correct Answer: C) Debit Fair Value Adjustment-Available-for-Sale for $ 2, 400 and credit Unrealized Gain or Loss-Equity for $ 2, 400. 28. Costs incurred or the using up of assets as a result of the main operations of a business are called: A) Equity. B) Liabilities. C) Revenues. D) Net losses. E) Expenses. Show Answer Correct Answer: E) Expenses. 29. Which is the correct definition of a provision? A) A possible obligation arising from past event. B) A liability of uncertain timing or amount. C) An obligation to transfer funds to an entity. D) A liability which cannot be easily measured. Show Answer Correct Answer: B) A liability of uncertain timing or amount. 30. Where is the fare received from an incomplete journey shown as Voyage-in-Progress? A) Debit side of voyage account. B) On credit side of voyage account. C) Debit side of profit loss account. D) In the credit side of profit and loss account. Show Answer Correct Answer: A) Debit side of voyage account. ← PreviousNext →Related QuizzesAccounting QuizzesFinance QuizzesFinancial Accounting Quiz 1Financial Accounting Quiz 2Financial Accounting Quiz 3Financial Accounting Quiz 4Financial Accounting Quiz 5Financial Accounting Quiz 6Financial Accounting Quiz 7Financial Accounting Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books