Accounting for Managers Online MCQ Set 19

QN01. Where there is no partnership agreement then profits and losses:

1. Must be shared equally
2. Must be shared in same proportion as capitals
3. Must be shared equally after adjusting for interest on capital
4. None of these

Answer

(A)Must be shared equally

QN02. In a limited company which of the following are shown in the Appropriation Account?

1. (i) Debenture interest
2. (ii) Proposed dividend
3. (iii) Transfers to reserves
4. (iv) Directors' remuneration

1. (i) and (ii)
2. (i) and (ii)
3. (ii) and (iii)
4. (ii) and (iv)

Answer

(C)(ii) and (iii)

QN03. Which of the following is a liability?

1. Motor Vehicles
2. Machinery
3. Creditors for goods
4. Cash at Bank

Answer

(C)Creditors for goods

QN04. Which of the following should not be called 'Sales'?

1. Goods sold for cash
2. Sale of item previously included in 'Purchases'
3. Office fixtures sold
4. Goods sold on credit

Answer

(C)Office fixtures sold

QN05. What would have been the balance on the account of C De Freitas in MC17 on 19 May 20X5?

1. A credit balance of £445
2. A credit balance of £95
3. A credit balance of £265
4. A debit balance of £265

Answer

(D)A debit balance of £265

QN06. Which of these best describes fixed assets?

1. Are bought to be used in the business
2. Are expensive items bought for the business
3. Are items which will not wear out quickly
4. Are of long life and are not bought specifically for resale

Answer

(D)Are of long life and are not bought specifically for resale

QN07. Which of the following are personal accounts?

1. (i) Buildings
2. (ii) Wages
3. (iii) Debtors
4. (iv) Creditors

1. (ii) and (iii) only
2. (i) and (iv) only
3. (ii) and (iv) only
4. (iii) and (iv) only

Answer

(D)(iii) and (iv) only

QN08. Discounts received are:

1. Deducted by us when we pay our accounts
2. Deducted when we receive cash
3. Given by us when we sell goods on credit
4. None of these

Answer

(A)Deducted by us when we pay our accounts

QN09. Entered in the Purchases Journal are:

1. Discounts received
2. Purchases invoices
3. Payments to suppliers
4. Trade discounts

Answer

(B)Purchases invoices

QN10. A firm bought a machine for £3,200. It is to be depreciated at a rate of 25 per cent using the Reducing Balance Method. What would be the remaining book value after 2 years?

1. £2,400
2. £1,800
3. £1,600
4. Some other figure

Answer

(B)£1,800

QN11. A Provision for Doubtful Debts is created:

1. When debtors cease to be in business
2. To provide for possible bad debts
3. When debtors become bankrupt
4. To write off bad debts

Answer

(B)To provide for possible bad debts

QN12. In the business of C Songster, who owns a clothing store, which of the following is Capital Expenditure?

1. Shop fixtures bought
2. Wages of assistants
3. New van bought
4. Petrol for van

1. (ii) and (iv)
2. (i) and (iii)
3. (i) and (ii)
4. (ii) and (iii)

Answer

(B)(i) and (iii)

QN13. Which of the following should be entered in the Journal?

1. Payment for cash purchases
2. Fixtures bought on credit
3. Credit sale of goods
4. Sale of surplus machinery.

1. and (iv)
2. and (iv)
3. and (iv)
4. and (iii)

Answer

(B)(ii) and (iv)

QN14. Which of the following are not errors of principle?

1. Motor expenses entered in Motor Vehicles account
2. Purchases of machinery entered in Purchases account
3. Sale of £250 to C Phillips completely omitted from books
4. Sale to A Henriques entered in A Henry's account.

1. (iii) and (iv)
2. (ii) and (iii)
3. (i) and (ii)
4. (i) and (iv)

Answer

(A)(iii) and (iv)

QN15. Given opening debtors of £11,500, Sales £48,000 and receipts from debtors £45,000, the closing debtors should total:

1. £14,500
2. £83,500
3. £18,500
4. £8,500

Answer

(A)£14,500

QN16. If creditors at 1 January 20X3 were £2,500, creditors at 31 December 20X3 £4,200 and payments to creditors £32,000, then purchases for 20X3 are:

1. £31,600
2. £38,700
3. £33,700
4. £30,300

Answer

(C)£33,700

QN17. The best method of departmental accounts is:

1. To allocate expenses in proportion to purchases
2. To allocate expenses in proportion to sales
3. To charge against each department its uncontrollable costs
4. To charge against each department its controllable costs

Answer

(D)To charge against each department its controllable costs

QN18. Any loss on revaluation is:

1. Debited to old partners in old profit-sharing ratios
2. Credited to old partners in old profit-sharing ratios
3. Credited to new partners in new profit-sharing ratios
4. Debited to new partners in new profit-sharing ratios

Answer

(A)Debited to old partners in old profit-sharing ratios

QN19. The Issued Capital of a company is:

1. Always the same as the Authorized Capital
2. The same as Preference Share Capital
3. Equal to the reserves of the company
4. None of the above

Answer

(D)None of the above

QN20. Which of the following is correct?

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

Answer

(B)Profit increases capital

QN21. Gross profit is:

1. Cost of goods sold + Opening stock
2. Excess of sales over cost of goods sold
3. Sales less Purchases
4. Net profit less expenses of the period.

Answer

(B)Excess of sales over cost of goods sold

QN22. The credit entry for net profit is on the credit side of:

1. The trading account
2. The drawings account
3. The capital account
4. The profit and loss account

Answer

(C)The capital account

QN23. When banking money in to your current account you should always use:

1. A general ledger
2. A cheque book
3. A cash book
4. A paying-in slip

Answer

(D)A paying-in slip

QN24. The total of the Sales Journal is entered on:

1. The debit side of the Sales Account in the General Ledger
2. The credit side of the General Account in the Sales Ledger
3. The credit side of the Sales Account in the General Ledger
4. The debit side of the Sales Day Book

Answer

(C)The credit side of the Sales Account in the General Ledger

QN25. Depreciation is:

1. The salvage value of a fixed asset
2. The amount of money spent in replacing assets
3. The part of the cost of the fixed asset consumed during its period of use by the firm
4. The amount spent to buy a fixed asset

Answer

(C)The part of the cost of the fixed asset consumed during its period of use by the firm

QN26. When the final accounts are prepared, the Bad Debts Account is closed by a transfer to the:

1. Trading Account
2. Provision for Doubtful Debts Account
3. Balance Sheet
4. Profit and Loss Account

Answer

(D)Profit and Loss Account

QN27. Capital Expenditure is:

1. The costs of running the business on a day-to-day basis
2. Money spent on buying fixed assets or adding value to them
3. Money spent on selling fixed assets
4. The extra capital paid in by the proprietor

Answer

(B)Money spent on buying fixed assets or adding value to them

QN28. A Bank Reconciliation Statement is a statement:

1. Sent by the bank when we have made an error
2. Drawn up by the bank to verify the cash book
3. Sent by the bank when the account is overdrawn
4. Drawn up by us to verify our cash book balance with the bank statement balance

Answer

(D)Drawn up by us to verify our cash book balance with the bank statement balance

QN29. When a petty cash book is kept there will be:

1. No entries made at all in the general ledger for items paid by petty cash
2. The same number of entries in the general ledger
3. Fewer entries made in the general ledger
4. More entries made in the general ledger

Answer

(C)Fewer entries made in the general ledger

QN30. If a trial balance totals do not agree, the difference must be entered in:

1. The Profit and Loss Account
2. A Nominal Account
3. The Capital Account
4. A Suspense Account

Answer

(D)A Suspense Account

QN31. Given cost of goods sold £16,000 and margin of 20 per cent, then sales figure is:

1. £21,000
2. £20,000
3. £13,600
4. £20,160

Answer

(B)£20,000

QN32. Given opening capital of £16,500, closing capital as £11,350 and drawings were £3,300, then:

1. Profit for the year was £8,450
2. Loss for the year was £8,450
3. Profit for the year was £1,850
4. Loss for the year was £1,850

Answer

(D)Loss for the year was £1,850

QN33. In the Manufacturing Account is calculated:

1. The production costs paid in the year
2. The total cost of goods produced
3. The gross profit on goods sold
4. The production cost of goods completed in the period

Answer

(D)The production cost of goods completed in the period

QN34. Assets can be revalued in a partnership change because:

1. The depreciation charged on them needs to be reversed
2. It helps prevent injustice to some partners
3. The law insists upon it
4. Inflation affects all values

Answer

(B)It helps prevent injustice to some partners

QN35. Is it true that the trial balance totals should agree?

1. No, there are sometimes good reasons why they differ
2. Yes, always
3. Yes, except where the trial balance is extracted at the year end
4. No, because it is not a balance sheet

Answer

(B)Yes, always

QN36. Carriage inwards is charged to the trading account because:

1. Carriage outwards goes in the profit and loss account
2. It is an expense connected with buying goods
3. It is not part of motor expenses
4. It should not go in the balance sheet

Answer

(B)It is an expense connected with buying goods

QN37. Suppliers' personal accounts are found in the:

1. Sales ledger
2. Nominal ledger
3. Purchases ledger
4. General ledger

Answer

(C)Purchases ledger

QN38. £50 cash taken from the cash till and banked is entered:

1. Debit cash column £50: Credit bank column £50
2. Debit bank column £50: Credit bank column £50
3. Debit bank column £50: Credit cash column £50
4. Debit cash column £50: Credit cash column £50

Answer

(C)Debit bank column £50: Credit cash column £50

QN39. The total of the 'Discounts Allowed' column in the Cash Book is posted to:

1. The debit of the Discounts Received account
2. The debit of the Discounts Allowed account
3. The credit of the Discounts Allowed account
4. The credit of the Discounts Received account

Answer

(B)The debit of the Discounts Allowed account

QN40. The total of the Purchases Journal is transferred to the:

1. Credit side of the Purchases Account
2. Credit side of the Purchases Book
3. Debit side of the Purchases Account
4. Debit side of the Purchases Day Book

Answer

(C)Debit side of the Purchases Account