This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Accounting > Financial Accounting – Quiz 58 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 58 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Bank Reconciliation Statement is not a part of the process of Accounts. A) True. B) False. Show Answer Correct Answer: A) True. 2. Many industries tend to come together to make use of the advantages offered by the urban centres. This is known as ..... A) Holding together. B) Agglomeration economics. C) Coming together. D) Joint sector if economics. Show Answer Correct Answer: B) Agglomeration economics. 3. Branch Account is a A) Real Account. B) Personal Account. C) Nominal. D) None of the above. Show Answer Correct Answer: C) Nominal. 4. The business of a company is being carried out by ..... A) Shareholders. B) Capital. C) Partners. D) Board of directors. Show Answer Correct Answer: D) Board of directors. 5. How many golden rules in Accounting? A) 3. B) 6. C) 4. D) 7. Show Answer Correct Answer: A) 3. 6. Which of the following ratios measure the ability of a firm to meet short term obligation? A) Net profit margin. B) Turnover ratio. C) Creditors ratio. D) Quick assets ratio. Show Answer Correct Answer: D) Quick assets ratio. 7. 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) Debtequity hypothesis. B) Equity hypotesis. C) Bonus plan hypothesis. D) Cost politics hypothesis. Show Answer Correct Answer: A) Debtequity hypothesis. 8. 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. 9. 10 What is the purpose of making a provision for depreciation in the accounts? A) To make a provision for repairs. B) To make cash available to replace fixed assets. C) To charge the cost of fixed assets against profits. D) To show the current market value of fixed asset. Show Answer Correct Answer: C) To charge the cost of fixed assets against profits. 10. 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. 11. Records revenue only when the cash is received A) Cash Accounting. B) Managerial Accounting. C) Financial Accounting. D) Accrual Accounting. Show Answer Correct Answer: A) Cash Accounting. 12. 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 Prepaid Insurance, $ 10, 400; Credit Insurance Expense, $ 10, 400. B) Debit Insurance Expense, $ 15, 400; Credit Prepaid Insurance, $ 15, 400. C) Debit Insurance Expense, $ 5, 000; Credit Prepaid Insurance, $ 5, 000. 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. 13. Cost of goods sold and turnover are one and the same A) False. B) True. Show Answer Correct Answer: A) False. 14. 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. 15. 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. 16. WHICH OF THE FOLLOWING ENHANCES THE RELEVANCE OF ACCOUNTING INFORMATION A) UNDERSTABILITY. B) MONETARY UNIT. C) PREDICTIVE VALUE. D) NEUTRALITY. Show Answer Correct Answer: A) UNDERSTABILITY. 17. 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. 18. Outstanding Expenditure is A) Asset. B) Liability. C) None. D) None of above. Show Answer Correct Answer: B) Liability. 19. On June 1, 2019, Pet Company acquired 100% of Sor Inc. for $ 150, 000. On this date, Sor had the fair values of assets and liabilities $ 180, 000 and $ 30, 000, respectively, while retained earnings of $ 70, 000. What is the record by Pet when acquiring Sor? A) Dr. Investment in Sor $ 150, 000Cr. Gain on bargain purchase $ 80, 000Cr. Cash in bank $ 70, 000. B) Dr. Investment in Sor $ 150, 000Cr. Cash in bank $ 150, 000. C) Dr. Investment in Sorrell $ 70, 000Cr. Cash in bank $ 70, 000. D) Dr. Investment in Sor $ 180, 000Cr. Cash in bank $ 180, 000. E) Dr. Investment in Sor $ 180, 000Cr. Gain on bargain purchase $ 30, 000Cr. Cash in bank $ 150, 000. Show Answer Correct Answer: B) Dr. Investment in Sor $ 150, 000Cr. Cash in bank $ 150, 000. 20. During 2017, Susi sold goods costing $ 1, 500 to its subsidiary, Kiki, at a gross profit of 25%. Kiki had none of this inventory on hand at the end of 2017. What is the elimination worksheet entry to eliminate intercompany sales? A) Dr. Sales $ 2, 000Cr. CoGS $ 2, 000. B) Dr. CoGS $ 1, 500Cr. Inventories $ 1, 500. C) Dr. Sales $ 2, 000Cr. Cash in Bank $ 2, 000. D) Dr. CoGS $ 2, 000Cr. Sales $ 2, 000. E) Dr. CoGS $ 1, 500Cr. Inventories $ 1, 500. Show Answer Correct Answer: A) Dr. Sales $ 2, 000Cr. CoGS $ 2, 000. 21. We have shown all items of machinery costing less than $ 100 as machinery operating expenses. What accounting concept is being applied? A) Going concern. B) Historical cost. C) Materiality. D) Prudence. Show Answer Correct Answer: C) Materiality. 22. Main objective of analysis of financial statements is A) To know the financial strength. B) To make a comparative study with other firms. C) To know the efficiency of management. D) All of the Above. Show Answer Correct Answer: D) All of the Above. 23. In the accounts of a manufacturing firm, 'production cost' equals ..... A) The cost of direct materials acquired. B) The sum of direct material costs and direct wages. C) The sum of direct expenses, direct material costs, direct wages and production overheads. D) The sum of direct expenses, direct material costs, direct wages, production overheads and administration expenses. Show Answer Correct Answer: C) The sum of direct expenses, direct material costs, direct wages and production overheads. 24. Which of the following correctly identifies normal balances of accounts? A) Assets Debit Liabilities Credit Owner's Capital Credit Revenues Credit Expenses Credit. B) Assets Credit Liabilities Debit Owner's Capital Debit Revenues Credit Expenses Debit. C) Assets Debit Liabilities Credit Owner's Capital Credit Revenues Credit Expenses Debit. D) Assets Debit Liabilities Credit Owner's Capital Credit Revenues Debit Expenses Credit. Show Answer Correct Answer: C) Assets Debit Liabilities Credit Owner's Capital Credit Revenues Credit Expenses Debit. 25. A debt or obligation owed to others. A) Liabilities. B) Assets. C) Owner's Equity. D) None of above. Show Answer Correct Answer: A) Liabilities. 26. How do you calculate the gross profit? A) Sales + Cost of Sales = gross profit. B) Sales-Cost of Sales = gross profit. C) Sales / Cost of Sales = gross profit. D) Sales x Cost of Sales = gross profit. Show Answer Correct Answer: B) Sales-Cost of Sales = gross profit. 27. Which one does not belong to the features of company A) Sole Ownership. B) Legal Person. C) Perpetual Succession. D) Body Corporate. Show Answer Correct Answer: A) Sole Ownership. 28. Purchasing plant or intangible assets to grow a business would be considered which type of business activity? A) Operating. B) Financing. C) Accounting. D) Investing. Show Answer Correct Answer: D) Investing. 29. A government enforced contribution of money typically based on some measure of value. Typically are used to pay for community services such as schools, roads, social security, court systems, and police. A) Social Justice Reform. B) Welfare. C) Subsidy. D) Tax. Show Answer Correct Answer: D) Tax. 30. Which of the following is NOT a normal function of a financial analyst? A) Issue earnings forcasts. B) Examine the records underlying the financial statements to certify their conformance with GAAP. C) Make buy, hold, and sell recommendations on companies' stock. D) Advise institutional investors on their securities holdings. Show Answer Correct Answer: B) Examine the records underlying the financial statements to certify their conformance with GAAP. ← 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