Accounting and Finance MCQs Test 2

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 12, 2023

About This Quiz:

  • Chapter: Accounting and Finance
  • Quiz Type: Multiple choice questions (MCQs)
  • Number of MCQs: 40
  • Total Points: 40
  • Approximate Time Required: 10 – 15 minutes

1. Goods bought on credit by X from Y are returned before they are paid for. X keeps a full double entry system. Where will X record the return of goods?
2. A firm buys goods on credit. Which document does the firm use to record this?
3. X sends back $800 of faulty goods to Y. In which book of prime entry would Y record this transaction?
4. A supplier offers the following discounts. Trade discounts of 12.5% off list prices and cash discounts of 3%. What is the lowest amount that will be paid for goods with a list price of $1 600?
5. X Ltd receives a cheque for $100, records it in the Cash Book and banks it on the same day. A statement sent by the bank that day does not show this $100. How is this $100 shown on the bank reconciliation statement?
6. A bookkeeper discovers that an amount paid to a supplier has been wrongly entered in another supplier's account. Which book of original entry will the bookkeeper use when correcting this error?
7. A supplier's account in a customer's books, has a credit balance of $8 000. What does this mean?
8. Bob returns goods bought on credit from Tariq. Which ledger account entries record this in Tariq's books? Q-8
9. Which error will be discovered by the preparation of a trial balance?
10. Premises are purchased on 1 January 2009 using a bank loan repayable on 1 January 2019. How will this have affected the balance sheet on 1 January 2009?
11. Which of the following is an item of revenue expenditure?
12. What is the main purpose of charging depreciation?
13. On 1 January a machine is bought for $12 800. Two methods of depreciating the machine being considered as follows: Accounting and Finance mcqs test How will the year's net profit be affected if the reducing balance method is used rather than the straight-line method?
14. At the start of the year a car was purchased for $5 000. By the end of the year it was written down to $4 500 in the books. It was then revalued at the end of the second year at $3 800. Which value will appear in the Balance Sheet at the end of year 2?
15. Details of an electricity account are given. Accounting and Finance Test mcqs What amount will appear in the Income statement in 2019 for electricity?
16. Lee maintains a Bad Debts account and a separate Provision for Doubtful Debts account. He wishes to write off an amount due from Tan that had not been previously provided for. What entries will Lee make? Accounting and Finance MCQs Test
17. The table shows information about a business at 31 December 2018. Accounting and Finance MCQs The Provision for Doubtful Debts at 31 December 2018 is to be of trade receivables. What is the entry in the Income statement for the Provision for Doubtful Debts?
18. Goods sold on credit to Knight are wrongly debited to Smith's account. Which journal entry corrects this error? Accounting and Finance mcqs test
19. Which item will appear on the credit side of a Trade payables Ledger Control account?
20. What is the purpose of control accounts?
21. X Ltd. has the following balance sheet summary. Accounting and Finance mcqs test The non-current assets are valued at $180 000, the net current assets at $20 000. The business is acquired for $225 000. What is the payment for Goodwill?
22. After a trader's net profit has been calculated, it is discovered that the closing inventory was undervalued by $1000. What is the effect of correcting the error? Accounting and Finance MCQs
23. The balance on the bank account in a cash book is $1 200 credit. How is this shown in the Balance Sheet?
24. How is working capital calculated?
25. At what value is inventory stated in a company's Balance Sheet?
26. A Company has capital of $24 400. Its assets are $16 100 and its current liabilities are $4 500. There are no non-current liabilities. What is the amount of its current assets?
27. How should the Goodwill resulting from the admission of a new partner be treated if it is to be retained in the books?
28. A trader's sales for the year were $128 000, and his purchases cost $84 000. The inventory at the beginning of the year was $15 700 and the inventory at the end was $16 300. He had to return S1 300 of goods to his suppliers. What is his gross profit for the year?
29. A business calculates its net profit at $25 000. It is later found that two items had been omitted. Accounting and Finance MCQs Test What is the correct net profit?
30. The current account of a partner of a business is prepared from the following information. Accounting and Finance MCQs Test What is the balance of the account on 31 December?
31. In a partnership a separate capital account and current account is kept for each partner. What are the accounting entries for interest on a loan from a partner? Accounting and Finance MCQs Test
32. The following information is taken from a trader's accounts. Accounting and Finance MCQs Test What is the trader's net profit for the year ?
33. Some of the accounting records of X have been partially destroyed by fire. The remaining records show sales for the year of $85 240. X has a gross profit riargin of 20%. What is the cost of sales for the year?
34. During the year an orchestral society bought $10 000 of new musical instruments, paying by cheque. Where will this item appear?
35. A company is formed with an authorized share capital of 10 million shares of $0.50 each. 6 million shares are issued as fully paid, and two months later another 1 million shares are issued and $0.30 per share is called up. What is the issued share capital of the company?
36. A company makes furniture What will be treated as a direct cost in the company's manufacturing account?
37. A firm's manufacturing costs are shown in the table. -37 20 000 units are manufactured during the year. What is the prime cost?
38. A business with sales of $125 000 sells its goods at a 25% markup on cost. It has overheads of $10 000. What is the net profit as a percentage of sales?
39. The table shows the gross and net profits as percentages of sales for four businesses. From this information, which business controls its overheads most efficiently? Q-39
40. A business does not adjust its final accounts for a prepayment of insurance. What is the effect of this on the profit? Q-40

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About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.