R4RIN – MCQs, Mock Tests | MBA MBA Accounting MCQ Question Set 6

If bank giving 12% interest rate per year, then per month it will be

1. 1%
2. 12%
3. 5%
4. 6%

✅ Correct Answer: 1

Market value determines

1. On running business
2. When company closedown
3. Before establishment of business
4. When asset sold individually

✅ Correct Answer: 1

The Yield to Maturity on a bond is

1. Equal to the Coupon Rate divided by the Market Price
2. The Current Required Market Rate
3. Equal to the Annual Interest divided by the Face Value
4. Another name for the coupon rate.

✅ Correct Answer: 2

Muhammad Ali just received an interest payment that is equal to 7 percent of his Rs. 20,000 in Bond investment. This 7 percent is best described as a

1. Real Return
2. Deflated Return
3. Coupon Return
4. None

✅ Correct Answer: 3

A decrease in the firm's receivable turnover ratio means that ______

1. Inventories have gone up
2. It is collecting credit sales more slowly than before
3. Cash sales have gone down
4. None of Above

✅ Correct Answer: 2

Marketable Securities, Account Receivables and Inventory are listed as

1. Current Asset
2. Current Liabilities
3. Long Term Asset
4. Long term liabilities

✅ Correct Answer: 1

The Coupon Rate for a Bond is best defined as the

1. Annual interest divided by the current market price
2. Annual interest divided by the face value
3. Annual interest divided by the clean market price
4. all of above

✅ Correct Answer: 2

Which of the following is considered a Profitability measure?

1. Days Sales in Inventory
2. Fixed Asset Turnover
3. Cash Coverage Ratio
4. Return on Assets

✅ Correct Answer: 4

Quick ratios are also called ______

1. Super ratios
2. Acid-test ratios
3. Cash ratios
4. None of the above

✅ Correct Answer: 2

Bond secured by lien on real property is

1. Debenture
2. Euro bond
3. Mortgage bond
4. Convertible bond

✅ Correct Answer: 3

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

✅ Correct Answer: 2

Profit maximization is a

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

✅ Correct Answer: 1

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

✅ Correct Answer: 1

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

✅ Correct Answer: 1

Bonds are hybrid of

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

✅ Correct Answer: 2

Which one of the following can issue the corporate bond?

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

✅ Correct Answer: 3

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

✅ Correct Answer: 2

Which of the following statements is incorrect?

1. Assets - Capital = Liabilities
2. Liabilities + Assets = Capital
3. Liabilities + Capital = Assets
4. Assets - Liabilities = Capital

✅ Correct Answer: 2

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

✅ Correct Answer: 3

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

✅ Correct Answer: 1

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

✅ Correct Answer: 4

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

✅ Correct Answer: 3

'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

✅ Correct Answer: 1

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

✅ Correct Answer: 3

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

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 2

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

1. Carriage on raw materials
2. Carriage on raw materials
3. Office rent
4. Direct materials

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 1

Which of the following is not an asset?

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

✅ Correct Answer: 3

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

✅ Correct Answer: 3

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

✅ Correct Answer: 2

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

✅ Correct Answer: 4

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

✅ Correct Answer: 4

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

✅ Correct Answer: 1

Sales invoices are first entered in:

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

✅ Correct Answer: 3

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

✅ Correct Answer: 3

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

✅ Correct Answer: 3

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

✅ Correct Answer: 1

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

✅ Correct Answer: 3

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

✅ Correct Answer: 2

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

✅ Correct Answer: 4

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

✅ Correct Answer: 2

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

✅ Correct Answer: 1

Which of the following is a liability?

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

✅ Correct Answer: 3

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

✅ Correct Answer: 3

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

✅ Correct Answer: 4