Test your Knowledge in Financial Accounting MCQs Set 2

Lucas Pacioli was born in:


Options are :

  • 1325
  • 1494
  • 1375
  • 1445 (Correct)

Answer : 1445

The liability arising from the purchase of goods on credit is called:


Options are :

  • Payable expenses
  • Accounts Receivable
  • Creditors (Correct)
  • Loan

Answer : Creditors

Assets, which have physical existence, are called:


Options are :

  • Quick Assets
  • Current Assets
  • Intangible Assets
  • Tangible Assets (Correct)

Answer : Tangible Assets

Sales return is also known as:


Options are :

  • Return outward
  • Return inward (Correct)
  • Purchase return
  • None of these

Answer : Return inward

Any written evidence in support of business transaction is called:


Options are :

  • Cash memo
  • None of them
  • Invoice
  • Voucher (Correct)

Answer : Voucher

The Pioneer of Accounting is:


Options are :

  • William Pickles
  • Lucas Pacioli (Correct)
  • Gitman
  • Arthur Field House

Answer : Lucas Pacioli

Which concept represents the assumption of long period existence of a business:


Options are :

  • Matching Concept
  • Dual Aspect Concept
  • Going Concern Concept (Correct)
  • Materiality Concept

Answer : Going Concern Concept

Discount allowed by the trader on list price is:   


Options are :

  • Trade deduction
  • Cash deduction
  • Cash discount
  • Trade discount (Correct)

Answer : Trade discount

Double Entry means:


Options are :

  • Entry at two dates
  • Entry in two aspects of transaction (Correct)
  • Entry for the two aspects of books
  • All of the above

Answer : Entry in two aspects of transaction

Any dealing between two persons or things is called:


Options are :

  • Introduction
  • Meeting
  • Seminar
  • Transaction (Correct)

Answer : Transaction

Accounting is the language of:


Options are :

  • Trade
  • Business (Correct)
  • Commerce
  • Government

Answer : Business

Cash discount is provided on:   


Options are :

  • Payment after due date
  • Also known as trade discount
  • Payment before due date (Correct)
  • Sales

Answer : Payment before due date

Business dealing is known as:


Options are :

  • Posting
  • Transaction (Correct)
  • Purchasing
  • Entry

Answer : Transaction

Assets and owner’s equity would be increased by:


Options are :

  • Earned profit and retained in business (Correct)
  • Owner’s drawings
  • Purchase of Assets on credit
  • Expenses paid

Answer : Earned profit and retained in business

The right of owner against the properties of business is known as:   


Options are :

  • Capital (Correct)
  • Asset
  • Liabilities
  • Drawings

Answer : Capital

Discount allowed by the trader on list price is:


Options are :

  • Trade deduction
  • Trade discount (Correct)
  • Cash discount
  • Cash deduction

Answer : Trade discount

The art of measuring, calculating and conclusion of business activities is called:


Options are :

  • Financial Accounting (Correct)
  • Management accounting
  • Record keeping
  • Cost Accounting

Answer : Financial Accounting

The purchase return is also known as:


Options are :

  • None of these
  • Return inward
  • Return outward (Correct)
  • Sales return

Answer : Return outward

Capital + Liabilities - Assets are equal to :


Options are :

  • 1
  • 3
  • 0 (Correct)
  • 2

Answer : 0

The main function of Accounting is to:


Options are :

  • Record economic data
  • Classify and record business transactions
  • All of the above (Correct)
  • Provide informational basis for action

Answer : All of the above

If assets are Rs.8,000 and capital is Rs.6,000, liabilities will be:


Options are :

  • Rs.2,000 (Correct)
  • Rs.14,000
  • None of these
  • Rs.8,000

Answer : Rs.2,000

Resources owned by the business:


Options are :

  • Assets (Correct)
  • Profit
  • Liabilities
  • Capital

Answer : Assets

Purchase goods on credit and for cash will effect:


Options are :

  • Cash and creditors
  • Cash and Goods
  • Cash, goods and creditors (Correct)
  • Cash, creditors and owner’s Equity

Answer : Cash, goods and creditors

Expenses paid by the business decrease:


Options are :

  • Cash
  • None of these
  • Cash & Capital (Correct)
  • Capital

Answer : Cash & Capital

The expression of the equality of an entity’s assets with the claims against them is referred to as the:


Options are :

  • Accounting equation (Correct)
  • Accountancy
  • Accounting transaction
  • Bookkeeping

Answer : Accounting equation

Sold Goods costing Rs. 20,000 for Rs. 25,000 will effect the owner equity by Rs.


Options are :

  • increase the owner equity by Rs. 10,000
  • Decrease the owner equity by Rs. 4000
  • Decrease the owner equity by Rs. 5000
  • increase the owner equity by Rs. 5000 (Correct)

Answer : increase the owner equity by Rs. 5000

The accounting equation represents:


Options are :

  • Resources in the business are not equal to the source of business
  • Resources in the business are equal to the source of business (Correct)
  • Resources are allocated at cost price
  • Owner’s give money for business

Answer : Resources in the business are equal to the source of business

The accounting equation is:


Options are :

  • None of these
  • Liabilities = Assets + Capital
  • Assets = Liabilities + Capital (Correct)
  • Capital= Assets + Liabilities

Answer : Assets = Liabilities + Capital

According to Accounting Equation, Capital is equal to:


Options are :

  • Liabilities - Assets
  • Expenses – Income
  • Assets + Liabilities
  • Assets - Liabilities (Correct)

Answer : Assets - Liabilities

The excess of assets over liabilities is:


Options are :

  • Profit
  • Loss
  • Capital (Correct)
  • Drawings

Answer : Capital

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