This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Accounting > Financial Accounting – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 6 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following statements about basic assumptions is correct A) The monetary unit assumption enables accounting to measure employee morale. B) Partnerships are not economic entities. C) Basic assumptions are the same as accounting principles. D) The economic entity assumptions states that there should be a particular unit of accountability. Show Answer Correct Answer: D) The economic entity assumptions states that there should be a particular unit of accountability. 2. In the accounts of a manufacturing firm, the cost of direct labour ..... A) Should be included as part of the prime cost. B) Should be included in factory overheads. C) Should be included in the Profit and Loss Account. D) Should be divided between the prime cost and the cost of factory overheads. Show Answer Correct Answer: A) Should be included as part of the prime cost. 3. When complete sequence of accounting procedure is done, which happens frequently and repeatedly in same directions then it is called an accounting cycle. A) True. B) False. Show Answer Correct Answer: A) True. 4. Statement showing summary of all the assets and liabilities of a business is known as ..... ? A) Trial Balance. B) Balance Sheet. C) Journal Book. D) Ledger Book. Show Answer Correct Answer: B) Balance Sheet. 5. Cash Sales Recording Journal A) Cash Disbursement Journal. B) Sales Journal. C) Purchasing Journal. D) Cash Receipts Journal. Show Answer Correct Answer: D) Cash Receipts Journal. 6. Regulations can help promote what? A) Standardization. B) Honest behavior. C) Both Standardization and Honest behavior. D) None of the above. Show Answer Correct Answer: C) Both Standardization and Honest behavior. 7. Subscriptions in arrears is treated in the balance sheet as a club as A) Current liability. B) Current assee. C) Fictitious asset. D) Intangible assets. Show Answer Correct Answer: B) Current assee. 8. Resources owned by a company (such as cash, trade receivables, vehicles) are reported on the statement of financial position and are referred to as ..... A) Assets. B) Income. C) Owner's Equity. D) Liabilities. Show Answer Correct Answer: A) Assets. 9. Which one of the following would not be valid grounds for a provision? A) A company has a policy has a policy of cleaning up any environmental contamination caused by its operations, but is not legally obliged to do so. B) A company is leasing an office building for which it has no further use. However, it is tied into the lease for another year. C) A company is closing down a division. The Board has prepared detailed closure plans which have been communicated to customers and employees. D) A company has acquired a machine which requires a major overhaul every three years. The cost of the first overhaul is reliably estimated at $ 120, 000. Show Answer Correct Answer: D) A company has acquired a machine which requires a major overhaul every three years. The cost of the first overhaul is reliably estimated at $ 120, 000. 10. Which accounting that reports to people within the business organizations (typically managers)? A) Financial Accounting. B) Managerial Accounting. Show Answer Correct Answer: B) Managerial Accounting. 11. If equity increases by $ 10, 000 which of the following can NOT be true: A) Liabilities decrease by $ 10, 000. B) Cash increases by $ 10, 000. C) Net income was $ 10, 000 with no contributions or distributions. D) Net income was a net loss of $ 10, 000 with no contributions or distributions. Show Answer Correct Answer: D) Net income was a net loss of $ 10, 000 with no contributions or distributions. 12. Accounting principles are generally based on A) Practicability. B) Subjectivity. C) Objectivity. D) None of above. Show Answer Correct Answer: A) Practicability. 13. Firms must conduct impairment tests more frequently than annually when: A) Using the equity method. B) A more-likely-than-not expectation exists that a reporting unit will be sold or disposed of. C) Other shareholders hold more than 50% interest. D) A specific unit does not have publicly traded stock. Show Answer Correct Answer: B) A more-likely-than-not expectation exists that a reporting unit will be sold or disposed of. 14. Financial analysis is used only by the creditors. A) False. B) True. Show Answer Correct Answer: A) False. 15. Which financial statement is prepared using the balance sheet equation? A) Income statement. B) Retained Earnings Statement. C) Balance Sheet Statement. D) Cash Flow Statement. Show Answer Correct Answer: C) Balance Sheet Statement. 16. If the average variable costs $ 10, average selling price is $ 25 and fixed costs are $ 60, 000, then what is the break-even output? A) 7000. B) 5000. C) 4000. D) 6000. Show Answer Correct Answer: C) 4000. 17. In a manufacturing account, prime cost comprises three cost:direct materials, direct labour and production overheads A) True. B) False. Show Answer Correct Answer: B) False. 18. The process of recording financial transactions:Collect and verify source documents Journalize transactions Post journal transactions to ledger Prepare a trial balance Prepare financial statements Prepare, journalize, and post closing entries Prepare the post-closing trial balance A) Journalizing. B) Accounting Cycle. C) Wash Cycle. D) Trial Balance. Show Answer Correct Answer: B) Accounting Cycle. 19. Income and Expenditure account is ..... A) Personal Account. B) Nominal Account. C) Real Account. D) None of above. Show Answer Correct Answer: B) Nominal Account. 20. All of the following are ways to earn money as a stockholder except: A) Stock splits. B) Getting dividends. C) Selling the stock at a higher value. D) Selling the stock at a lower value. Show Answer Correct Answer: D) Selling the stock at a lower value. 21. Accounting polies used differently in a particular industry refers to which constraint? A) Conservatism. B) Industry practice. C) Materiality. D) Cost benefit. Show Answer Correct Answer: B) Industry practice. 22. Describe the process of closing the books in double-entry accounting. A) Adding up all the transactions for the year. B) Transferring balances of temporary accounts to retained earnings and resetting temporary account balances to zero. C) Closing the physical books and storing them away. D) Transferring balances of permanent accounts to retained earnings. Show Answer Correct Answer: B) Transferring balances of temporary accounts to retained earnings and resetting temporary account balances to zero. 23. A specialized field of accounting concerned mainly with the recording and reporting of financial data and activities to users to facilitate making decisions. A) Management Accounting. B) Audit. C) Financial Accounting. D) Taxation. Show Answer Correct Answer: C) Financial Accounting. 24. Trial balance shows A) Only debit balance. B) Only credit balance. C) Both credit and debit balance. D) None of the above. Show Answer Correct Answer: C) Both credit and debit balance. 25. Interest is charged on the amount A) Outstanding. B) Part. C) None of these. D) None of above. Show Answer Correct Answer: A) Outstanding. 26. Reflect the using up of assets that result in a decrease in equity A) Owner's Equity. B) Expenses. C) Revenue. D) Sales. Show Answer Correct Answer: B) Expenses. 27. In the case of unlimited companies, the liability of members is ..... A) Limited to the extent paid on the shares held by them. B) Limited to the amount which the members undertake to contribute to the event of the winding-up of the company. C) Unlimited. D) Limited to the extent unpaid on the shares held by them. Show Answer Correct Answer: C) Unlimited. 28. In the balance sheet of a social club, subscription owing is treated as a A) Long-term liability. B) Current asset. C) Current liability. D) Tangible assets. Show Answer Correct Answer: B) Current asset. 29. Royalty account is a nominal account in nature. A) False. B) True. Show Answer Correct Answer: B) True. 30. Ascertain purchases from the following:Cost of goods sold 80700Opening stock 5800Closing stock 6000 A) 80900. B) 60900. C) 50900. D) None of above. Show Answer Correct Answer: A) 80900. ← PreviousNext →Related QuizzesAccounting QuizzesFinance QuizzesFinancial Accounting Quiz 1Financial Accounting Quiz 2Financial Accounting Quiz 3Financial Accounting Quiz 4Financial Accounting Quiz 5Financial Accounting Quiz 7Financial Accounting Quiz 8Financial Accounting Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books