Accounting and Finance MCQs Test 3

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. Which account usually has a debit balance?
2. X invoices goods to Y They are found to be damaged. Which document will X then send to Y?
3. What is true about cash discounts received? Accounting and Finance MCQs test
4. After the cashbook is updated, a bank reconciliation statement is prepared. What is shown in the bank reconciliation statement? Explanation "B" option is correct as it represents mistake in bank statement. Option "A", "C" & "D" would have already been recorded in the original bank statement and to be recorded in "Adjusted cash book".
5. On 31 July, X's bank statement shows a balance at bank of $2 500, but the cashbook shows a balance at bank of $1 750. X finds cheques totaling $750 have not been presented for payment. Which bank balance figure will appear in X's balance sheet on 31 July?
6. Which transaction is entered in the general journal?
7. Which ledger entries record the purchase of a machine bought on credit?
8. The month's total sales of $2 800 have been debited to the Sales account. What is the effect of this on the sales account balance?
9. After which error will a trial balance still balance?
10. Purchases returns of $150 are wrongly posted to the debit of Sales Returns account. How does this affect the Trial Balance totals?
11. A business receives rent for letting premises. How is this rent classified?
12. A company buys new machinery for its workshop. The cost of the machinery is debited to the Purchases account and is included in the closing inventory. What is the effect on net profit and on non-current assets? Accounting and Finance MCQs Test
13. Motor vehicles are depreciated at 20% per annum using the diminishing (reducing) balance method. A motor vehicle, which cost $20 000, is sold after two years. The sale resulted in neither a profit nor a loss. What was the sale price of the motor vehicle?
14. A computer network costing $100 000 is depreciated by the straight-line method at 25% per annum with no residual value. What will be the net book value at the end of year 3?
15. A non-current asset cost $8 000. It is'sold for $4 800. At the date of its disposal its net book value is $3 000. What is the profit or loss on disposal?
16. A business has a provision for doubtful debts of $30 and trade receivables of $360. The provision is to be made equal to 5% of trade receivables. What is the entry in the Income statement?
17. An electricity accrual of $450 is treated as a prepayment when preparing a trader's Profit and Loss account. What effect does this have on the trade/'s net profit?
18. The difference on a trial balance is entered in a suspense account. It is then found that a page of the sale journal is overcast by $600. What is required to correct the error? Accounting and finance mcqs test
19. What is the effect of making contra entries in the Sales and Purchase Ledger Control accounts? Accounting and Finance mcqs test
20. A company's trial balance includes the following balances Accounting mcqs tests What is the figure for trade receivables in the balance sheet?
21. X has total assets of $17 000 and current liabilities of'$3 000. Y pays $20 000 for X's assets, which Y values at $19 500. Y also takes over X's current liabilities. How much does Y pay for goodwill?
22. In a trading section of income statement, closing inventory of $4 000 has been added to opening inventory and purchases. What is the effect of this on gross profit?
23. A sole trader writes off a bad debt. What will be the effect of this on the balance sheet?
24. What is the purpose of preparing a balance sheet?
25. What is the correct method of valuing inventory?
26. What is shown in a balance sheet as an asset?
27. What does current assets less current liabilities equal?
28. The businesses of sole traders X and Y are valued as follows: Accounting and finance mcqs tests X and Y will enter into partnership and will share profits and losses in the ratio 3:2 respectively. A goodwill account will not be included in the partnership books. What will be the adjusted balances of the capital accounts of X and Y? Accounting and Finance mcqs tests
29. The table gives information for a company's financial year. Accounting and finance mcqs test Insurance is prepaid by $60 and wages outstanding are $1 560. What is the net profit for the year?
30. A food store's net profit for a year was calculated at $5 000. Later it was found that closing inventory of $100 had been overlooked and rent receivable of $150 was owing. What is the correct net profit?
31. A trader wants to increase her provision for doubtful debts by $500 this year. What is the effect on the final accounts? Accounting and Finance mcqs tests
32. The profit of a partnership is $100 000. The partnership agreement provides for interest at 10 percent on partners' capitals, drawings and loans. The following is extracted from the books of the firm. Accounting and Finance mcqs tests What is the residue of profit available for distribution?
33. A partner receives interest on capital. What are the bookkeeping entries? Accounting and Finance mcqs tests
34. Information about a club is given Accounting and finance mcqs test What is the amount of subscriptions shown in the Income and Expenditure account?
35. A clerk has not kept double entry records. He calculates purchases using a total trade payables' account. The account is not correct. Accounting and Finance mcqs tests What is the correct purchases amount?
36. A sole trader provides the following information Accounting and Finance tests mcqs Drawings for the year were $10 000 What was the net profit?
37. Which formula is used to calculate the rate of inventory turnover? Accounting and Finance test mcqs
38. The information in the table relates to X for the last financial year. Accounting and Finance tests mcqs What were the sales for the year?
39. An analysis of a company's accounts over two years has produced the following ratios: Accounting and Finance mcqs tests There have been no changes in selling prices or volume of sales during the two years. What happened in year 2?
40. A business decides to record inventories of stationery as an asset only if they are over $100. Which accounting concept is being applied?

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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 or view his author profiles on Amazon, Nasdaq and Forbes.