Accounting and Finance MCQs Test 4

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. What is the purpose of double entry bookkeeping?
2. X sells goods on credit to Y. Y returns some of these goods to X. Which document will X send to Y?
3. X sells goods to Y on 15 February at a list price of $3 600 but subjects to a trade discount of and a cash discount of 5% for settlement within 28 days. Y paid on 20 April. How much will X receive for the goods?
4. Which of the following is part of the double entry system?
5. A business maintains a two-column cashbook. At 1 June the debit balance of the bank column was $500. Transactions during June were Accounting and finance mcqs test What was the debit balance of the bank column at the end of June?
6. What is a cashbook? Accounting MCQs tests
7. Which item will be entered in the General Journal?
8. The owner of a business has taken goods for personal use but not recorded this in the books. Which journal entries must be made at the end of the year? Accounting and finance mcqs test
9. The following balances were extracted from Harry's Purchases and Sales Ledgers. Accounting and finance mcqs How much does Harry owe?
10. After which error will a trial balance still balance?
11. A trial balance failed to agree and a Suspense Account was opened. Later it was found that Discount Received of $390 had been debited to the Discounts Allowed account. What are the entries required correcting this error? Accounting MCQs Tests
12. A bookkeeper mistakenly treats a revenue expenditure item as capital expenditure. What is the effect of this error?
13. A garage business buys a motor van that will be used for business purposes only. Which account in the general ledger will contain this transaction?
14. A business depreciates its non-current assets using the straight-line method. Assuming there is no scrap value, on which amount is the annual depreciation charge calculated?
15. A machine costing $60 000 is depreciated by 25% per annum on the diminishing balance method. What is the depreciation charge at the end of the second year?
16. At the beginning of the year the balance on the Provision for Doubtful Debts account was $3 000. At the end of the year it is decided to write off a bad debt of $250 and to have a Provision for Doubtful Debts of $2 000. What will be the net effect of these decisions on the net profit of the business?
17. A business creates a Provision for Doubtful Debts. How is this recorded in the ledger?
18. In 2000 a business paid $3 000 for electricity. On 1 January 2018 $600 was owed for electricity. On 31 December 2018 $1 300 was owed for electricity. How much is charged for electricity in the Income statement for 2018?
19. A business has paid rent of $3 200 for the year 1 April 2018 to 31 March 2019. What adjustment is needed to the rent account at the end of the financial year on 31 December 2018?
20. A business allowed Smith, a customer, $30 cash discount. This was entered correctly in the Discount Allowed Account, but omitted from Smith's account. A suspense account was opened. Which correcting entries are required to close the suspense account?
21. At the end of the year it was discovered that the Purchase Returns account had been undercast by $50. A Suspense account had been opened. Which entries are required to correct this error?
22. A purchase Ledger Control Account is prepared from relevant figures in the following list. Accounting and Finance MCQs tests What is the closing balance?
23. X buys $860 worth of goods on credit from Y and makes payment 7 days later. He is allowed discount of 5%. What entries must be made in X's books to record this payment? Accounting and Finance MCQs Tests
24. The table shows the assets and liabilities of X on 31 December 2018. Accounting and Finance MCQs Test On I January 2001, Y purchased X's business for $93 000. Y took over all the assets of X at balance sheet valuation, but did not take over the liabilities. What is the value of Goodwill?
25. A trader buys goods for $20 000 and then sells three-quarters of them for $32 000. What is her gross profit?
26. On 1 January 2018 the Provision for Doubtful Debts was $1 000. During the year ended 31 December 2018 Bad Debts written off amounted to $500. At 31 December 2018 the trade receivables owed $18 000 and the Provision for Doubtful Debts was $900. What is the net figure for trade receivables in the Balance Sheet at 31 December 2018?
27. How is a prepayment by X shown in X's Balance Sheet?
28. On which basis should inventory be valued?
29. X and Y are in partnership sharing profits equally and receiving 10% interest on capital. On 31 December 2018 their capital and current accounts show the following credit balances. Accounting and Finance MCQs Test What will be the total interest on capital allowed for the year?
30. At 1 January 2000 X had machinery costing $45 000 which had been depreciated by $13 500. In the Income statement for the year ended 31 December 2018, depreciation was charged at 25% on the straight-line method instead of 30% on the diminishing (reducing) balance method. As a result of this error, the net profit is:
31. X rent premises at a quarterly rent of $1 200. On 1 January 2018 she owes $800. She makes the following payments in 2018. $2 000 on 3 January $1 200 on 1 April $1 200 on 1 July She fails to pay the rent due on 1 October. How much is debited in the Income statement for the year ended 31 December 2018?
32. What does a credit balance on a partner's current account represent to a business?
33. What is similar to a club's accumulated fund?
34. The table shows information relating to the subscription income of a club for a financial year Accounting and Finance MCQs Tests During the year, subscriptions amounting to $1 700 were received. How much should be credited .to the Income and Expenditure account?
35. The following information is taken from a sole trader's accounts: Accounting and Finance MCQs What is the trader's net profit?
36. What is a limited company's issued capital?
37. At the end of the financial year, a manufacturer has inventories of finished goods, raw materials and work-in-progress. Which inventories will appear in the Manufacturing Account? Accounting and Finance MCQs tests
38. A firm's sales are $150 000, the cost of sales is $90 000 and the expenses are $45 000. What is the net profit as a percentage of the sales?
39. The following relates to X's last financial year. Accounting and Finance MCQs Tests What were the sales for the year?
40. Two companies buy identical computer equipment. The larger company writes it off immediately, but the smaller company treats it as a non-current asset. Which accounting concepts are the companies applying?

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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.