Accounting for Managers Online MCQ Set 13

QN01. The practice of appending notes regarding contingent liabilities in accounting statements is in pursuance to:

  1. Convention of consistency
  2. Money measurement concept
  3. Convention of conservatism
  4. Convention of disclosure
Answer

(D) Convention of disclosure

QN02. Sales are equal to:

  1. Cost of goods sold + gross profit
  2. Cost of goods sold – gross profit
  3. Gross profit- Cost of goods sold
  4. None of the above
Answer

(B) Cost of goods sold + gross profit

QN03. Identify which is wrong rule

  1. Nominal account- debit all expenses & losses
  2. Real account- credit what comes in
  3. Nominal account- credit all incomes & gains
  4. Personal account- debit the receiver
Answer

(B) Real account- credit what comes in

QN04. The work of factory employees that can be physically associated with converting raw material into finished goods is classified as-

  1. Manufacturing overhead
  2. Indirect materials
  3. Indirect labour
  4. Direct labour
Answer

(D) Direct labour

QN05. ______________ cost will still be incurred although a plant is shut down temporarily.

  1. Cost of raw material
  2. Advertising
  3. Depreciation
  4. Carriage
Answer

(D) Depreciation

QN06. According to which concept business is treated as a unit apart from owner

  1. Dual concept
  2. Divider concept
  3. Entity concept
  4. Landlord concept
Answer

(C) Entity concept

QN07. Variable cost per unit

  1. Remains fixed
  2. Fluctuates with volume of production
  3. Varies in consideration with the volume of sales
  4. None of the above
Answer

(B) Fluctuates with volume of production

QN08. Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount is an example for which concept

  1. Conservatism concept
  2. Continuity concept
  3. Realization concept
  4. All of these
Answer

(A) Conservatism concept

QN09. liabilities in balance sheet include the following items

  1. Long term loan
  2. Short term loan
  3. Owner’s fund
  4. All of these
Answer

(D) All of these

QN10. Net profit is calculated in

  1. Trading a/c
  2. Balancesheet
  3. Profit & loss a/c
  4. Trial balance.
Answer

(C) Profit & loss a/c

QN11. The going concern concept assumes that

  1. The entity continue running for foreseeable future
  2. The entity continue running until the end of accounting period
  3. The entity will close its operating in 10 years
  4. The entity can’t be liquidated
Answer

(A) The entity continue running for foreseeable future

QN12. Accounting principles are divided into two types. These are ______________

  1. Accounting Concepts
  2. Accounting Conventions
  3. Accounting Standards
  4. Accounting Concepts &Accounting Conventions
Answer

(D) Accounting Concepts &Accounting Conventions

QN13. Which expenses is a Capital Nature?

  1. Depreciation
  2. Wages
  3. Salary
  4. Stationary
Answer

(A) Depreciation

QN14. The basic function of financial accounting is to

  1. Record all business transaction
  2. Interpret financial data
  3. Assist the management in performing function effectively
Answer

(B) Interpret financial data

QN15. Accounting principles are generally based on

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

(A) Practicability

QN16. According to the money measurement concept the following will be recorded in the books of accounts of the business

  1. Health of the managing director of the company
  2. Quality of company goods
  3. Value of plant and machinery
  4. Health of labour in factory
Answer

(C) Value of plant and machinery

QN17. In case of a debt becoming bad, the amount should be credited to

  1. Debtors Accounts
  2. Bad debts a/c
  3. Sales a/c
Answer

(A) Debtors Accounts

QN18. Accountant should follow the same principles of accounting continuously is as per which accounting convention

  1. Convention of conservatism
  2. Convention of full disclosure
  3. Convention of consistency
  4. None of these
Answer

(C) Convention of consistency

QN19. A system in which accounting entries are made on the basis of amounts having become due for payment or receipt is called

  1. Cash concept
  2. Accrual concept
  3. Matching concept
  4. On-going concept
Answer

(B) Accrual concept

QN20. Debit all expenses and losses Credit all gains and income.

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

(C) Nominal a/c

QN21. Transferring the debit and credit item from the journal to the respective accounts is called

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

(B) Ledger

QN22. A statement containing the various ledgers balances on particular date

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

(C) Trial balance

QN23. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?

  1. Net Loss
  2. Net income
  3. Dividend
  4. Investment by share holder
Answer

(B) Net income

QN24. The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?

  1. All information related to an entity’s business and operating objectives is required to be disclosed in the financial statements.
  2. Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements.
  3. Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision.
  4. Disclosure of any financial facts significant enough to influence the judgment of an informed reader
Answer

(D) Disclosure of any financial facts significant enough to influence the judgment of an informed reader

QN25. The trial balance is ______________

  1. Is a formal financial statement.
  2. Is used to prove that there are no errors in the journal or ledger.
  3. Provides a listing of every account in the chart of accounts.
  4. Provides a listing of the balance of each account in active use.
Answer

(D) Provides a listing of the balance of each account in active use.

QN26. Investment in Bonds should be disclosed on the balance sheet.

  1. On liability side of balance sheet
  2. On Assets side of balance sheet
  3. On both side of Balance sheet
  4. None of these
Answer

(B) On Assets side of balance sheet

QN27. Which of the following functions is managerial accounting intended to facilitate?

  1. Planning
  2. Decision making
  3. Control
  4. All of these
Answer

(D) All of these

QN28. Accounting principles are

  1. As definite as principles of physics and chemistry
  2. Unlike principles of physical sciences.
  3. Verifiable through observations and records
  4. Thoughts of accountant
Answer

(B) Unlike principles of physical sciences.

QN29. Business entity concept distinguishes between:

  1. Individual and business
  2. Business and business
  3. Owners
  4. Debtors and creditors
Answer

(A) Individual and business

QN30. Financial account provide summary of:

  1. Asset
  2. Liability
  3. Accounts
Answer

(C) Accounts

QN31. User of financial statement is:

  1. Management
  2. Creditors
  3. Bankers
  4. All of the above
Answer

(D) All of the above

QN32. Inventory accounts should be classified in which section of a balance sheet?

  1. Current assets
  2. Investments
  3. Property, plant, and equipment
  4. Intangible assets
Answer

(A) Current assets

QN33. The Cash account on the balance sheet should not include which of the following items?

  1. Travel advances to employees
  2. Currency
  3. Money orders
  4. Deposits in transit
Answer

(A) Travel advances to employees

QN34. In accounting all business transaction are recorded as having

  1. Single aspect
  2. Dual aspect
  3. Triple aspect
  4. None of these
Answer

(B) Dual aspect

QN35. Which of the following equations properly represents a derivation of the fundamental accounting equation?
Assets + liabilities = Owner Equity
Asset = OwnerEquity
Cash = Assets
Assets – Liabilities = Owner Equity

  1. Only (a)
  2. Both (a) (b)
  3. All (a)(b)(c)(d)
  4. None of these
Answer

(D) None of these

QN36. Which of the following would not be included on a balance sheet?

  1. Accounts payable
  2. Accounts receivable
  3. Sales
  4. Cash
Answer

(C) Sales

QN37. Contingent liabilities should be recorded in the accounts when:

  1. It is probable that the future event will occur.
  2. The amount of the liability can be reasonably estimated.
  3. Both (a) and (b).
  4. Either (a) or (b).
Answer

(C) Both (a) and (b).

QN38. The cost concept records the figures at

  1. Market values
  2. Actual amount paid
  3. Actual amount or market values whichever is less.
  4. MRP maximum retail price
Answer

(B) Actual amount paid

QN39. Financial statements are:

  1. Estimates of facets
  2. Anticipated facts
  3. Recorded facts
Answer

(C) Recorded facts

QN40. The term Management Accounting was first used in

  1. 1910
  2. 1939
  3. 1950
  4. 1960
Answer

(C) 1950

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