This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Accounting > Financial Accounting – Quiz 72 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Accounting Quiz 72 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. John owes Sally $ 500. John is Sally's ..... A) Business partner. B) Accountant. C) Creditor. D) Debtor. Show Answer Correct Answer: D) Debtor. 2. Return on sales (ROS) is the ratio of net income to total sales. A) False. B) True. Show Answer Correct Answer: B) True. 3. Double entry system keeps record of A) Personal a/c. B) Real a/c. C) Nominal a/c. D) All of thease. Show Answer Correct Answer: D) All of thease. 4. A merger between 2 or more people (entities) to jointly own and run a company in order to gain profit or gain is..... A) Federation. B) Liquidation Guild. C) Joint Venture. D) Consignment. Show Answer Correct Answer: A) Federation. 5. Which of the following users are considered as internal user? A) Owner. B) Middle management. C) Buyer. D) Bank. Show Answer Correct Answer: B) Middle management. 6. Bernard plans to start a business. The cost to start the business is $ 5 000. He has $ 2 600 to invest, how much money does he need to borrow to start the business? A) $ 2 500. B) $ 7 600. C) $ 2 600. D) $ 2 400. Show Answer Correct Answer: D) $ 2 400. 7. The formula for the straight line method is..... A) Residual Value= Economic Life-Acquisition Price/Depreciation. B) Depreciation= Cost-Residual Value/Economic Life. C) Acquisition Price:Residual Value-Depreciation/Economic Life. D) Economic Life = Residual Value-Acquisition Price/Depreciation. E) Depreciation = Residual Value-Acquisition Price/Economic Life. Show Answer Correct Answer: B) Depreciation= Cost-Residual Value/Economic Life. 8. In the absence of partnership deed, interest on loan of a partner is allowed: A) @8% per annum. B) @6% per annum. C) No interest is allowed. D) @12% per annum. Show Answer Correct Answer: B) @6% per annum. 9. The primary book used to record the acquisition of fixed assets on credit is A) Purchases journal. B) Cash book. C) Journal proper. D) Returns outward book. Show Answer Correct Answer: C) Journal proper. 10. The basic principles of accounting are ..... A) Historical cost and fair value. B) Economic entity, going concern, and accrual. C) Measurement, revenue recognition, expense recognition and full disclosure. D) Assets, liabilities, equity, income and expenses. Show Answer Correct Answer: C) Measurement, revenue recognition, expense recognition and full disclosure. 11. The primary objective of GAAP is to provide accounting information that is: A) Comparability. B) Usefulness for decision making. C) Freedom from bias. D) Neutral. E) Timeliness. Show Answer Correct Answer: B) Usefulness for decision making. 12. In the absence of a partnership deed the partners are entitles to interest on capital at the rate of A) 12%. B) 6%. C) Nil. D) 9%. Show Answer Correct Answer: C) Nil. 13. If a company plans to differentiate its products by offering low prices and discounts for items packaged in bulk (like a discount retailer that requires memberships for its customers), which component in the ROA profit driver analysis is the company attempting to boost? A) Net profit margin. B) Asset turnover. C) Financial leverage. D) All of the above. Show Answer Correct Answer: B) Asset turnover. 14. Why is issuing a receipt after a sale always important? A) Without a receipt you cannot return your purchase. B) The receipt is the only record that the sale was made. C) The receipt helps enforce separation of duties procedures. D) Without a receipt you increase the likelihood of fraud or theft. Show Answer Correct Answer: B) The receipt is the only record that the sale was made. 15. Receipts and Payments Account is a A) Personal Account. B) Real Account. C) Nominal Account. D) Real and Nominal Account, both. Show Answer Correct Answer: B) Real Account. 16. The statements below refer to the characteristics of a type of business. # Widely scattered in Malaysia# Solely owned business# Profit gained or loss suffered by the owner itself Which business meets the above characteristics? A) Public limited company. B) Partnership. C) Sole proprietorship. D) Private limited company. Show Answer Correct Answer: C) Sole proprietorship. 17. The owner's capital amount reported on a balance sheet is calculated as capital account balance less drawing account balance plus net income. A) False. B) True. Show Answer Correct Answer: B) True. 18. On Jan 1, 2018, Rey acquires 100% of Jul for $ 150, 000. Assume the book value and fair value of Jul's net assets were 140, 000 and 165, 000, respectively. What is the record by Rey when acquiring Jul? A) Dr. Investment in Jul $ 140, 000Cr. Cash in bank $ 140, 000. B) Dr. Investment in Jul $ 165, 000Cr. Gain on bargain purchase $ 15, 000Cr. Cash in bank $ 150, 000. C) Dr. Investment in Jul $ 165, 000Cr. Cash in bank $ 165, 000. D) Dr. Investment in Jul $ 160, 000Cr. Gain on bargain purchase $ 10, 000Cr. Cash in bank $ 150, 000. E) Dr. Investment in Jul $ 150, 000Cr. Cash in bank $ 150, 000. Show Answer Correct Answer: B) Dr. Investment in Jul $ 165, 000Cr. Gain on bargain purchase $ 15, 000Cr. Cash in bank $ 150, 000. 19. Depreciation can be described as A) The original cost of the asset. B) An increase in the value of an asset over time. C) A reduction in the value of an asset over time, due in particular to wear and tear. D) The net book value of an asset. Show Answer Correct Answer: C) A reduction in the value of an asset over time, due in particular to wear and tear. 20. Which of the following is found in a receipts and Payments Account A) Depreciation of fixed assets. B) Purchase of fixed assets. C) Accruals. D) Prepayments. Show Answer Correct Answer: B) Purchase of fixed assets. 21. What is carrying amount A) Cost-Depreciation charge. B) Cost-Residual value. C) Cost-Accumulated depreciation. D) Cost-Selling price. Show Answer Correct Answer: C) Cost-Accumulated depreciation. 22. If Partnership Deed is silent, Rate of Interest on loan by firm to a Partner shall be 6% p.a. A) False. B) True. Show Answer Correct Answer: A) False. 23. The formula for calculating the net income ratio is net income divided by total sales. A) False. B) True. Show Answer Correct Answer: B) True. 24. Choose which is incorrect about selling agency branch A) All instruction from Head Office. B) Accounting records maintained by Head Office. C) Activities controlled by Head Office. D) Branch may make local purchase. Show Answer Correct Answer: D) Branch may make local purchase. 25. Journal Entry for Cash Withdrawn by Owner is? A) Drawing A/c Dr. To Cash A/c. B) Capital A/c Dr To Cash A/c. C) Drawing A/c Dr. to Capital A/c. D) Cash A/c Dr. To Drawing A/c. Show Answer Correct Answer: A) Drawing A/c Dr. To Cash A/c. 26. The movement of cash into and/or out of a company. A) Cash Flow. B) Net revenue. C) Net loss. D) Let's spend it all on a party!!. Show Answer Correct Answer: A) Cash Flow. 27. Bad debts recovered is credited to debtor's personal account. A) True. B) False. Show Answer Correct Answer: B) False. 28. An increase in Accounts Receivable is recorded by a ..... entry in the account. A) Credit. B) Debit. Show Answer Correct Answer: B) Debit. 29. With reference to accounting principles, every transaction has minimum 3 effects A) True. B) False. Show Answer Correct Answer: B) False. 30. One company buying (acquiring) > 50% of the shares of another company is called..... A) Merger. B) Consignment. C) Consolidation. D) Acquisition. Show Answer Correct Answer: D) Acquisition. ← 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