Accounting for Managers Online MCQ Set 18

QN01. Net present value ______________.

  1. Is equal to the initial investment in a project
  2. Is equal to the present value of the project benefits
  3. Is equal to zero when the discount rate used is equal to the IRR
  4. Is simplified by the fact that future cash flows are easy to estimate
Answer

(B)Is equal to the present value of the project benefits

QN02. Profit maximization is a

  1. Short term concept
  2. Long term concept
  3. Both a & b
  4. None
Answer

(A)Short term concept

QN03. Which of the following is the variability of return on stocks or portfolios associated with changes in return on the market as a whole?

  1. Systematic risk
  2. Standard deviation
  3. Unsystematic risk
  4. Coefficient of variation
Answer

(A)Systematic risk

QN04. When the bond approaches its maturity, the market value of the bond approaches to which of the following?

  1. Intrinsic value
  2. Book value
  3. Par value
  4. Historic cost
Answer

(A)Intrinsic value

QN05. Bonds are hybrid of

  1. Annuity due + Lumpsum amount
  2. Ordinary annuity + Lumpsum amount
  3. Annuity due + Ordinary annuity
  4. Perpetuity + Lumpsum amount
Answer

(B)Ordinary annuity + Lumpsum amount

QN06. Which one of the following can issue the corporate bond?

  1. Individuals
  2. Government
  3. Public limited companies
  4. All of before
Answer

(C)Public limited companies

QN07. A Bond that pays no interest payments and sells at a deep discount is called

  1. Bond
  2. Zero Coupon
  3. Convertible
  4. Tax-free
Answer

(B)Zero Coupon

QN08. Which of the following statements is incorrect?

  1. Assets – Capital = Liabilities
  2. Liabilities + Assets = Capital
  3. Liabilities + Capital = Assets
  4. Assets – Liabilities = Capital
Answer

(B)Liabilities + Assets = Capital

QN09. Given the following, what is the amount of Capital? Assets: Premises £20,000; Stock £8,500; Cash £100. Liabilities: Creditors £3,000; Loan from A Adams £4,000

  1. £21,100
  2. £21,400
  3. £21,600
  4. £32,400
Answer

(C)£21,600

QN10. To find the value of closing stock at the end of a period we

  1. do this by stocktaking
  2. deduct cost of goods sold from sales
  3. deduct opening stock from cost of goods sold
  4. look in the stock account
Answer

(A)do this by stocktaking

QN11. Given figures showing: Sales £8,200; Opening stock £1,300; Closing stock £900; Purchases £6,400; Carriage inwards £200, the cost of goods sold figure is:

  1. Another figure
  2. £6,200
  3. £6,800
  4. £7,000
Answer

(D)£7,000

QN12. When Lee makes out a cheque for £50 and sends it to Young, then Lee is known as:

  1. The payee
  2. The banker
  3. The drawer
  4. The creditor
Answer

(C)The drawer

QN13. 'Posting' the transactions in bookkeeping means:

  1. Making the second entry of a double entry transaction
  2. Entering items in a cash book
  3. Making the first entry of a double entry transaction
  4. Something other than the above
Answer

(A)Making the second entry of a double entry transaction

QN14. Given a purchases invoice showing 5 items of £80 each, less trade discount of 25 per cent and cash discount of 5 per cent, if paid within the credit period, your cheque would be made out for:

  1. £260
  2. £280
  3. £285
  4. None of these
Answer

(C)£285

QN15. We originally sold 25 items at £12 each, less 331/3 per cent trade discount. Our customer now returns 4 of them to us. What is the amount of credit note to be issued?

  1. £36
  2. £30
  3. £32
  4. £48
Answer

(C)£32

QN16. At the balance sheet date the balance on the Accumulated Provision for Depreciation Account is:

  1. Transferred to Depreciation Account
  2. Transferred to the Asset Account
  3. Transferred to Profit and Loss Account
  4. Simply deducted from the asset in the Balance Sheet
Answer

(D)Simply deducted from the asset in the Balance Sheet

QN17. A credit balance brought down on a Rent Account means:

  1. We have paid too little in rent
  2. We have paid too much rent
  3. We owe that rent at that date
  4. We have paid that rent in advance at that date
Answer

(C)We owe that rent at that date

QN18. Which of the following are not true? A Bank Reconciliation Statement is

  1. (i) Part of the double entry system
  2. (ii) Not part of the double entry system
  3. (iii) Sent by the firm to the bank
  4. (iv) Posted to the ledger accounts.
  1. (i), (ii) and (iv)
  2. (i), (iii) and (iv)
  3. (i) and (ii)
  4. (ii), (iii) and (iv)
Answer

(B)(i), (iii) and (iv)

QN19. Which of the following do not affect trial balance agreement?

  1. (i) Sales £105 to A Henry entered in P Henry's account
  2. (ii) Cheque payment of £134 for Motor expenses entered only in Cash Book
  3. (iii) Purchases £440 from C Browne entered in both accounts as £404
  4. (iv) Wages account added up incorrectly, being totaled £10 too much.
  1. (i) and (iii)
  2. (ii) and (iii)
  3. (i) and (iv)
  4. (iii) and (iv)
Answer

(A)(i) and (iii)

QN20. What should happen if the balance on a Suspense Account is of a material amount?

  1. Write it off to Profit and Loss Account
  2. Should be written off to the balance sheet
  3. Carry forward the balance to the next period
  4. Find the error(s) before publishing the final accounts
Answer

(D)Find the error(s) before publishing the final accounts

QN21. If opening stock is £3,000, closing stock £5,000, sales £40,000 and margin 20 per cent, then stock turn is:

  1. 7 ½ times
  2. 8 times
  3. 5 times
  4. 6 times
Answer

(B)8 times

QN22. Which of the following should be charged in the Profit and Loss Account?

  1. Carriage on raw materials
  2. Work in progress
  3. Office rent
  4. Direct materials
Answer

(C)Office rent

QN23. You are to buy an existing business which has assets valued at buildings £50,000, Motor vehicles £15,000, Fixtures £5,000 and Stock £40,000. You are to pay £140,000 for the business. This means that:

  1. You have made an arithmetical mistake
  2. You are paying £40,000 for Goodwill
  3. Buildings are costing you £30,000 more than their value
  4. You are paying £30,000 for Goodwill
Answer

(D)You are paying £30,000 for Goodwill

QN24. A company wishes to pay out all available profits as dividends. Net profit is £26,600. There are 20,000 8% Preference shares of £1 each, and 50,000 Ordinary shares of £1 each. £5,000 is to be transferred to General Reserve. What Ordinary dividends are to be paid, in percentage terms?

  1. 40 per cent
  2. 60 per cent
  3. 10 per cent
  4. 20 per cent
Answer

(A)40 per cent

QN25. Which of the following is not an asset?

  1. Buildings
  2. Debtors
  3. Loan from K Harris
  4. Cash balance
Answer

(C)Loan from K Harris

QN26. Which of the following best describes the meaning of 'Purchases'?

  1. Goods bought on credit
  2. Goods paid for
  3. Goods bought for resale
  4. Items bought
Answer

(C)Goods bought for resale

QN27. Which of the following best describes a trial balance?

  1. Shows all the entries in the books
  2. It is a list of balances on the books
  3. Shows the financial position of a business
  4. It is a special account
Answer

(B)It is a list of balances on the books

QN28. The descending order in which current assets should be shown in the balance sheet is:

  1. Debtors, Stock, Bank, Cash
  2. Cash, Bank, Debtors, Stock
  3. Stock, Debtors, Cash, Bank
  4. Stock, Debtors, Bank, Cash
Answer

(D)Stock, Debtors, Bank, Cash

QN29. The Sales Day Book is best described as:

  1. Containing customers' accounts
  2. Containing real accounts
  3. Part of the double entry system
  4. A list of credit sales
Answer

(D)A list of credit sales

QN30. A debit balance of £100 in a cash account shows that:

  1. There was £100 cash in hand
  2. The total of cash received was less than £100
  3. £100 was the total of cash paid out
  4. Cash has been overspent by £100
Answer

(A)There was £100 cash in hand

QN31. Sales invoices are first entered in:

  1. The Cash Book
  2. The Purchases Journal
  3. The Sales Journal
  4. The Sales Account
Answer

(C)The Sales Journal

QN32. Credit notes issued by us will be entered in our:

  1. Sales Account
  2. Returns Outwards Journal
  3. Returns Inwards Journal
  4. Returns Inwards Account
Answer

(C)Returns Inwards Journal

QN33. If an accumulated provision for depreciation account is in use then the entries for the year's depreciation would be:

  1. Credit Asset Account, debit Provision for Depreciation Account
  2. Debit Asset Account, credit Profit and Loss Account
  3. Credit Provision for Depreciation Account, debit Profit and Loss Account
  4. Credit Profit and Loss Account, debit Provision for Depreciation Account
Answer

(C)Credit Provision for Depreciation Account, debit Profit and Loss Account

QN35. If we take goods for own use we should:

  1. Debit Drawings Account: Credit Purchases Account
  2. Debit Drawings Account: Credit Stock Account
  3. Debit Sales Account: Credit Stock Account
  4. Debit Purchases Account: Credit Drawings Account
Answer

(A)Debit Drawings Account: Credit Purchases Account

QN36. A cheque paid by you, but not yet passed through the banking system, is:

  1. A credit transfer
  2. A dishonored cheque
  3. An un-presented cheque
  4. A standing order
Answer

(C)An un-presented cheque

QN37. Given desired cash float of £200, if £146 is spent in the period, how much will be reimbursed at the end of the period?

  1. £53
  2. £146
  3. £254
  4. £200
Answer

(B)£146

QN38. Which of these errors would be disclosed by the trial balance?

  1. A purchase of £250 was omitted entirely from the books
  2. Credit sales of £300 entered in both double entry accounts as £30
  3. Selling expenses had been debited to Sales Account
  4. Cheque £95 from C Smith entered in Smith's account as £59
Answer

(D)Cheque £95 from C Smith entered in Smith's account as £59

QN39. MC83 If cost price is £90 and selling price is £120, then:

  1. (i) Mark-up is 25 per cent
  2. (ii) Margin is 331/3 per cent
  3. (iii) Margin is 25 per cent
  4. (iv) Mark-up is 331/3 per cent
  1. (i) and (ii)
  2. (i) and (iii)
  3. (iii) and (iv)
  4. (ii) and (iv)
Answer

(C)(iii) and (iv)

QN40. A Receipts and Payments Account is one:

  1. In which the surplus of income over expenditure is calculated
  2. In which the opening and closing cash balances are shown
  3. Which is accompanied by a balance sheet
  4. In which the profit is calculated
Answer

(B)In which the opening and closing cash balances are shown

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