Accounting for Managers Online MCQ Set 20

QN01. A firm bought a machine for £16,000. It is expected to be used for 5 years then sold for £1,000. What is the annual amount of depreciation if the straight line method is used?

  1. £3,750
  2. £3,100
  3. £3,200
  4. £3,000
Answer

(D)£3,000

QN02. Working Capital is a term meaning:

  1. The total of Fixed Assets – Current Assets
  2. The capital less drawings
  3. The amount of capital invested by the proprietor
  4. The excess of the current assets over the current liabilities
Answer

(D)The excess of the current assets over the current liabilities

QN03. If £500 was shown added to Purchases instead of being added to a fixed asset:

  1. Net profit only would be overstated
  2. Both gross and net profits would be understated
  3. Net profit only would be understated
  4. It would not affect net profit
Answer

(B)Both gross and net profits would be understated

QN04. The Journal is:

  1. Used when other journals have been mislaid
  2. A supplement to the Cash Book
  3. Not part of the double entry system
  4. Part of the double entry system
Answer

(C)Not part of the double entry system

QN05. Errors are corrected via the Journal because:

  1. It saves the bookkeeper's time
  2. It provides a good record explaining the double entry records
  3. It saves entering them in the ledger
  4. It is much easier to do
Answer

(B)It provides a good record explaining the double entry records

QN06. In a Sales Ledger Control Account the Bad Debts written off should be shown in the account:

  1. As a credit
  2. As a debit
  3. As a balance carried down
  4. Both as a debit and as a credit
Answer

(A)As a credit

QN07. Prime cost includes:

  1. Direct labour
  2. Factory overhead expenses
  3. Raw materials consumed
  4. Direct expenses
  1. (i), (iii) and (iv)
  2. (i), (ii) and (iii)
  3. (ii), (iii) and (iv)
  4. (i), (ii) and (iv)
Answer

(A)(i), (iii) and (iv)

QN08. If it is required to maintain fixed capitals then the partners' shares of profits must be:

  1. Credited to capital accounts
  2. Debited to capital accounts
  3. Debited to partners' current accounts
  4. Credited to partners' current accounts
Answer

(D)Credited to partners' current accounts

QN09. Net profit is calculated in the:

  1. Profit and loss account
  2. Balance sheet
  3. Trial balance
  4. Trading account
Answer

(A)Profit and loss account

QN10. The costs of putting goods into a saleable condition should be charged to:

  1. Trading account
  2. Profit and loss account
  3. Balance sheet
  4. None of these
Answer

(A)Trading account

QN11. If you want to make sure that your money will be safe if Cheques sent are lost in the post, you should:

  1. Always pay by cash
  2. Cross your Cheques 'Account Payee only, Not Negotiable'
  3. Always take the money in person
  4. Not use the postal service in future
Answer

(B)Cross your Cheques 'Account Payee only, Not Negotiable'

QN12. A credit balance of £200 on the cash columns of the cash book would mean:

  1. We have £200 cash in hand
  2. Someone has stolen £200 cash
  3. We have spent £200 more than we have received
  4. The bookkeeper has made a mistake
Answer

(D)The bookkeeper has made a mistake

QN13. A cash discount is best described as a reduction in the sum to be paid:

  1. If payment is made by cash, not cheque
  2. If purchases are made for cash, not on credit
  3. If payment is made either by cash or cheque
  4. If payment is made within a previously agreed period
Answer

(D)If payment is made within a previously agreed period

QN14. An alternative name for a Sales Journal is:

  1. Sales Day Book
  2. Sales Ledger
  3. Sales Invoice
  4. Daily Sales
Answer

(A)Sales Day Book

QN15. The total of the Returns Outwards Journal is transferred to:

  1. The debit side of the Returns Outwards Account
  2. The credit side of the Returns Outwards Book
  3. The credit side of the Returns Outwards Account
  4. The debit side of the Purchases Returns Book
Answer

(C)The credit side of the Returns Outwards Account

QN16. In the trial balance the balance on the Provision for Depreciation Account is:

  1. Not shown, as it is part of depreciation
  2. Sometimes shown as a credit, sometimes as a debit
  3. Shown as a credit item
  4. Shown as a debit item
Answer

(C)Shown as a credit item

QN17. A debit balance brought down on a Packing Materials Account means:

  1. We have a stock of packing materials unused
  2. We are owed for packing materials
  3. We have lost money on packing materials
  4. We owe for packing materials
Answer

(A)We have a stock of packing materials unused

QN18. Which of these best describes a balance sheet?

  1. A statement of assets
  2. A listing of balances
  3. An account proving the books balance
  4. A record of closing entries
Answer

(B)A listing of balances

QN19. ______________ the transactions is known as Book Keeping.

  1. Classifyi
  2. Recordi
  3. Summarisi
  4. None of the
Answer

(B)Recordi

QN20. Goodwill account is related to ______________

  1. Nominal account
  2. Personal account
  3. Real account
  4. Tangible account
Answer

(C)Real account

QN21. The credit balance of bank account indicates ______________

  1. amount payable by the bank
  2. amount payable to the bank
  3. cash at bank
  4. loan from bank
Answer

(B)amount payable to the bank

QN22. The statement sent along with purchase return is ______________

  1. credit note
  2. bills payable book
  3. debit note
  4. purchases return book
Answer

(A)credit note

QN23. Depreciation is provided on ______________

  1. working capita
  2. current asset
  3. fixed asset
  4. intangible assets
Answer

(C)fixed asset

QN24. An example of revenue expenditure is ______________

  1. Purchase of land
  2. Salaries
  3. Lease
  4. Purchase of buildings
Answer

(B)Salaries

QN25. At the time of endorsement of a bill, the drawer credits ______________

  1. the .drawee
  2. endorsees personal account
  3. bills receivable account
  4. bills for collection account
Answer

(C)bills receivable account

QN26. In accounting the benefit receiving aspect is said to be

  1. Debi
  2. Credi
  3. Debit and Credi
  4. none of thes
Answer

(A)Debi

QN27. Summary of all balances is known as

  1. Ledge
  2. Journa
  3. Subsidiary book
  4. Trial Balance
Answer

(D)Trial Balance

QN28. The excess of current assets over current liabilities is called ______________.

  1. Net tangible worth
  2. Networth
  3. Gross working capital
  4. Net working capital
Answer

(C)Gross working capital

QN29. Bills payable book is a ______________.

  1. subsidiar
  2. a. principal book
  3. a. ledger
  4. a. memorandum book
Answer

(A)subsidiar

QN30. Bank Reconciliation statement is ______________

  1. ledger account
  2. part of the cash book
  3. separate statement
  4. a sub division of the journal
Answer

(C)separate statement

QN31. The distinction between capital and revenue is necessary for the preparation of ______________.

  1. fund flow statement
  2. receipts and payment account
  3. final accounts
  4. cash flow statement
Answer

(B)receipts and payment account

QN32. If payment is made on the average due date it results in ______________

  1. loss of interest to the creditor
  2. loss of interest to the debtor
  3. no loss of interest to either of them
  4. loss of interest to both the creditor and debtor
Answer

(C)no loss of interest to either of them

QN33. A sale of goods to vidhya for cash should be debited to ______________.

  1. Vidhya account
  2. Cash account
  3. Sale of goods accoun
  4. Purchases account
Answer

(B)Cash account

QN34. Purchases for office furniture on account is recorded in ______________.

  1. general journal
  2. cash book
  3. purchases book
  4. sales book
Answer

(B)cash book

QN35. Payment of compensation to a worker who has been discharged from service is a ______________.

  1. capital expenditure
  2. revenue expenditure
  3. deferred revenue expenditure
  4. partly capital expenditure
Answer

(B)revenue expenditure

QN36. The following items are shown in profit and loss appropriation account ______________

  1. Dividend declared
  2. Discount on issue of shares
  3. Non-operating expenses
  4. Current assets
Answer

(A)Dividend declared

QN37. Wages paid to workers must be debited to ______________ account

  1. Wages
  2. Machinery
  3. Factory expenses
  4. Offices expenses
Answer

(A)Wages

QN38. Receipts and payment account record receipt and payments of ______________.

  1. revenue nature only
  2. capital nature only
  3. both revenue and capital nature
  4. capital receipts
Answer

(C)both revenue and capital nature

QN39. In a receipts and payments account the payments are recorded on the ______________ side.

  1. credit
  2. debit
  3. Upper
  4. Lower
Answer

(A)credit

QN40. Any revenue expense for when a separate fund is available will be ______________.

  1. debited to the separate fund
  2. debited to income and expenditure account
  3. capital issued and shown in the balance sheet
  4. credited to the separate fund
Answer

(A)debited to the separate fund

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