R4RIN – MCQs, Mock Tests | MBA MBA Accounting MCQ Question Set 7

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

✅ Correct Answer: 4

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

✅ Correct Answer: 1

Entered in the Purchases Journal are:

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

✅ Correct Answer: 2

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

✅ Correct Answer: 2

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

✅ Correct Answer: 2

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

✅ Correct Answer: 1

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

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 1

The Issued Capital of a company is:

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

✅ Correct Answer: 4

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

✅ Correct Answer: 2

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.

✅ Correct Answer: 2

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

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 3

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

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 4

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

✅ Correct Answer: 2

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

✅ Correct Answer: 4

When a petty cash book is kept there will be:

1. The same number of entries in the general ledger
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

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 2

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

✅ Correct Answer: 4

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

✅ Correct Answer: 4

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

✅ Correct Answer: 2

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

✅ Correct Answer: 2

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

✅ Correct Answer: 2

Suppliers' personal accounts are found in the:

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

✅ Correct Answer: 3

£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

✅ Correct Answer: 3

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

✅ Correct Answer: 2

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

✅ Correct Answer: 3

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

✅ Correct Answer: 4

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

✅ Correct Answer: 4

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

✅ Correct Answer: 2

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

✅ Correct Answer: 3

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

✅ Correct Answer: 2

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

✅ Correct Answer: 1

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

✅ Correct Answer: 4

Net profit is calculated in the:

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

✅ Correct Answer: 1

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

✅ Correct Answer: 1

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

✅ Correct Answer: 2

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

✅ Correct Answer: 4

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

✅ Correct Answer: 4

An alternative name for a Sales Journal is:

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

✅ Correct Answer: 1

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

✅ Correct Answer: 3

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

✅ Correct Answer: 3

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

✅ Correct Answer: 1

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

✅ Correct Answer: 2

_____ the transactions is known as Book Keeping.

1. Classifyi
2. Recordi
3. Summarisi
4. None of these

✅ Correct Answer: 4