Accounting for Managers MCQ Set 10

QN01. Creating Provision against fluctuation in the price of investment is an example of which accounting convention

  1. Convention of conservatism
  2. Convention of full disclosure
  3. Convention of materiality
  4. Convention of consistency
Answer

(A) Convention of conservatism

QN02. Return of goods by a customer should be debited to

  1. Customers account
  2. Sales return account
  3. Goods account
  4. Purchase account
Answer

(B) Sales return account

QN03. Cash discount allowed to a debtor should be credited to

  1. Discount account
  2. Customer’s account
  3. Sales account
  4. Cash account
Answer

(B) Customer’s account

QN04. The concept of separate entity is applicable to which of following types of businesses?

  1. Sole proprietorship
  2. Corporation
  3. Partnership
  4. All of them
Answer

(D) All of them

QN05. Accounting principles are generally based upon:

  1. Practicability
  2. Subjectivity
  3. Convenience in recording
  4. None of the above
Answer

(A) Practicability

QN06. Debit the receiver credit the giver rule for

  1. Real a/c
  2. Personal a/c
  3. Nominal a/c
  4. None of these
Answer

(B) Personal a/c

QN07. Managerial accounting information is generally prepared for

  1. Shareholders
  2. Creditors
  3. Managers
  4. Regulatory agencies
Answer

(C) Managers

QN08. True & fair profit and loss a/c of a company know by

  1. Preparing trial balance
  2. Preparing respective ledger of account
  3. Preparing trading a/c
  4. Preparing trading & profit & loss a/c
Answer

(D) Preparing trading & profit & loss a/c

QN09. Which one of the following items would fall under the definition of a liability

  1. Cash
  2. Debtor
  3. Owner’s equity
  4. None of these
Answer

(C) Owner’s equity

QN10. The basic sequence in the accounting process can best be described as:

  1. Transaction, journal entry, source document, ledger account, trial balance.
  2. Source document, transaction, ledger account, journal entry, trial balance.
  3. Transaction, source document, journal entry, trial balance, ledger account.
  4. Transaction, source document, journal entry, ledger account, trial balance.
Answer

(D) Transaction, source document, journal entry, ledger account, trial balance.

QN11. Amount brought in by proprietor should be credited to

  1. cash account
  2. capital account
  3. drawings account
  4. creditors account
Answer

(B) capital account

QN12. Which of the following is a real (permanent) account?

  1. Goodwill
  2. Sales
  3. Accounts Receivable
  4. Both Goodwill and Accounts Receivable
Answer

(D) Both Goodwill and Accounts Receivable

QN13. Which of the following errors will be disclosed in the preparation of a trial balance?

  1. Recording transactions in the wrong account.
  2. Duplication of a transaction in the accounting records.
  3. Posting only the debit portion of a particular journal entry.
  4. Recording the wrong amount for a transaction to both the account debited and the account credited.
Answer

(C) Posting only the debit portion of a particular journal entry.

QN14. Management Accounting provides invaluable services to management in performing

  1. All management function
  2. Interpret financial data
  3. Controlling function
  4. None of these
Answer

(A) All management function

QN15. If closing stock appears in the trial balance, it should be

  1. Credited to the trading account
  2. Credited to the profit and loss account
  3. Deducted from the purchases in the trading account
  4. Shown on the liability side of the Balance sheet
Answer

(A) Credited to the trading account

QN16. Financial information should be neutral and bias free” is the dictation of which one of the following?

  1. Completeness concept
  2. Faithful representation Concept
  3. Objectivity Concept
  4. Duality Concept
Answer

(C) Objectivity Concept

QN17. Which of the following statements is not an objective of financial reporting?

  1. Provide information that is useful in investment and credit decisions.
  2. Provide information regarding policy of organisation
  3. Provide information that is useful in assessing cash flow prospective
  4. None of theses
Answer

(B) Provide information regarding policy of organisation

QN18. A company’s telephone bill consisting of a Rs.200 monthly base amount, plus long distance charges, would be classified as a:

  1. Variable cost
  2. Committed fixed cost
  3. Direct cost
  4. Semi variable cost
Answer

(D) Semi variable cost

QN19. A book containing a chronological record of business transaction & original record

  1. Journal
  2. Ledger
  3. Trial balance
  4. None of these
Answer

(A) Journal

QN20. Which of these items would be accounted for as an expense?

  1. Repayment of bank Loan
  2. Dividend to stock holders
  3. The purchase of land
  4. Payment of current period rent
Answer

(D) Payment of current period rent

QN21. The amount of salary paid to Suresh should be debited to

  1. The account of Suresh
  2. Salaries a/c
  3. Cash a/c
  4. Bank a/c
Answer

(B) Salaries a/c

QN22. The cash discount allowed to a debtor should be credited to

  1. Discount a/c
  2. Customer a/c
  3. Sales a/c
  4. None of these
Answer

(B) Customer a/c

QN23. Accounting does not record non-financial transactions because of:

  1. Accrual concept
  2. Cost concept
  3. Continuity concept
  4. Money measurement concept
Answer

(D) Money measurement concept

QN24. The concept of separate entity is applicable to which of following types of businesses?

  1. Sole proprietorship
  2. Corporation
  3. Partnership
  4. All of them
Answer

(D) All of them

QN25. Accounting is the process of matching

  1. Benefits & Costs
  2. Revenues & Costs
  3. Cash Inflow & Cash Outflow
  4. Potential & Real Performance
Answer

(B) Revenues & Costs

QN26. The primary objective of cost accounting is

  1. Ascertain the cost of goods and services
  2. Ascertain the profit
  3. Presentation of all data
  4. None of these
Answer

(A) Ascertain the cost of goods and services

QN27. Of the following account types, which would be increased by a debit?

  1. Liabilities and expenses.
  2. Assets and equity.
  3. Assets and expenses.
  4. Equity and revenues.
Answer

(C) Assets and expenses.

QN28. Which of the following statements about differences between financial and managerial accounting is incorrect?

  1. Managerial accounting information is prepared primarily for external parties such as stockholders and creditors; financial accounting is directed at internal users.
  2. Financial accounting is aggregated; managerial accounting is focused on products and departments.
  3. Managerial accounting pertains to both past and future items; financial accounting focuses primarily on past transactions and events.
  4. Financial accounting is based on generally accepted accounting practices; managerial accounting faces no similar constraining factors.
Answer

(A) Managerial accounting information is prepared primarily for external parties such as stockholders and creditors; financial accounting is directed at internal users.

QN29. Custom and traditions which guide the accountant while preparing the accounting statements

  1. Accounting convention
  2. Accounting concepts
  3. Accounting principles
  4. None of these
Answer

(C) Accounting principles

QN30. Balance Sheet is a statement of

  1. Assets
  2. Liabilities
  3. Capital
  4. All of these
Answer

(D) All of these

QN31. The convention of disclosure implies that all material information should be

  1. Disclosed in the account
  2. Disclosed in the accounts which is required to owner
  3. Not disclosed
  4. None of these
Answer

(A) Disclosed in the account

QN32. Outstanding salary is shown as:

  1. An asset in the balance sheet
  2. A liability
  3. By adjusting it in the P & L a/c
  4. Both a and c above
  5. Both b and c above
Answer

(E) Both b and c above

QN33. Proprietor (owner) is treated as creditor of business due to:

  1. Periodicity concept
  2. Materiality Principle
  3. Entity Concept
  4. Consistency concept
Answer

(C) Entity Concept

QN34. Which of the following is correct

  1. Profit does not alter capital
  2. Capital can only come from profit
  3. Profit reduces capital
  4. Profit increases capital
Answer

(D) Profit increases capital

QN35. Interest, rent, electricity bill are types of account

  1. Personal a/c
  2. Impersonal a/c
  3. Real a/c
  4. Nominal a/c
Answer

(D) Nominal a/c

QN36. Cost of asset should always be equal to the cost of the liabilities. This concept is

  1. Double Entry Bookkeeping
  2. Matching Concept
  3. Consistency
  4. Money measurement Concept
Answer

(B) Matching Concept

QN37. P& l a/c is prepared for a period of one year by following:

  1. Consistency concept
  2. Conservatism concept
  3. Accounting period concept
  4. Cost Concept
Answer

(C) Accounting period concept

QN38. Prepaid expense is treated as

  1. Current asset
  2. Current liability
  3. Short term liability
  4. None of these
Answer

(A) Current asset

QN39. Which of the following is a liability?

  1. Loan from Mr.Y
  2. loan to Mr.y
  3. Both (a) (b)
  4. None of these
Answer

(A) Loan from Mr.Y

QN40. Advantages of cost accounting accrue:

  1. Only to workers
  2. Only to government
  3. Only to consumers
  4. To management, workers, consumers and government
Answer

(D) To management, workers, consumers and government

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