Accounting and Finance MCQs Test 5

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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. Y returns goods to X. Which document will Y send to X?
2. Y sells goods on credit to X, How is this recorded in Y's books? Accounting and Finance MCQs Tests
3. Which of the following accounts normally has a credit balance?
4. A cashbook showed a debit bank balance of $1 234 on 30 June. Items not included on the bank statement at that date were: Unpresented cheques $132 Uncredited deposits $765 What was the balance on the bank statement at 30 June?
5. A business allows a customer a 10% trade discount and 5% cash discount on goods with a list price of $1800. Assuming the customer takes the cash discount, what will be entered in the discount column in the cashbook when the customer pays the invoice?
6. At the end of the year, it was discovered that sales had been overcast by $70. A suspense account had been opened. What are the entries in the General Journal to correct this error?
7. How should the cash purchase of supplies be entered in the ledger? Accounting and Finance MCQs test
8. X owns a shop. To find his selling price he marks up his inventory by 50%. He took inventory for his own use costing $100 but did not pay for it, How should this be entered in the accounts? Accounting and Finance MCQs tests
9. Why does a business prepare a trial balance?
10. Which error will not affect the balancing of the Trial Balance?
11. Which item should be treated as capital expenditure in the accounts of a company?
12. X is a trader in office machinery. On 31 March he purchases an office machine on credit from Y. Which sections will increase on X's Balance Sheet on 31 March?
13. A machine is purchased at the start of year 1 for $35 000. It is depreciated on the reducing balance method at 20% per year. What is the net book value at the end of year 2?
14. A company buys a van for $12 600 and sells it four years later for $3 750 when the provision depreciation is $7 400. What is the entry in the Income statement?
15. The balance on a provision for depreciation of machinery account was $28 000. A machine bought two years ago for $20 000 is sold for $13 000. Plant and Machinery are depreciated by 10% on cost each year. What is the balance on the provision for depreciation of plant and machinery account after this sale?
16. How is the balance of the Bad Debts account treated at the end of the financial year?
17. On 1 January 2018 a company's Provision for Doubtful Debts account was $500. On 31 December 2018 Trade receivables were $20 000. The provision is to be maintained at 2% of Trade receivables. What adjustment to the Provision for Doubtful Debts account is needed?
18. A firm makes up its annual accounts to 30 April. Included in the ledger account balances on 1 May 2018 was insurance (debit) $800. 0n 31 October 2018 the annual insurance premium of $2 100 became due and was paid. What amount is charged for insurance in the Income statement for the year ended 30 April 2019?
19. The rent of X's premises is $700 per month payable quarterly in advance. Accounting and Finance MCQs Tests How much is transferred to the Income statement for the year ending 31 December?
20. After preparing final accounts, X finds she has omitted $129 due for electricity. What is the effect on the final accounts after correcting this error? Accounting and Finance MCQs tests
21. A posting to the ledger from the Sales Journal of $890 is later found to have been incorrectly entered. It should have been posted as $980. Which journal entry is required to correct this error? Accounting and Finance MCQs tests
22. Which item would appear in a Purchase Ledger Control Account?
23. Which total is shown by the closing balance on a Sales Ledger Control Account?
24. The books of a busine$ show premises $20 000 and other net assets $30 000. X buys the business for $60 000 and he values the premises at $28 000. How much does X pay for Goodwill?
25. X provides the following information. Accounting and Finance MCQs tests What is her net profit for July?
26. The following appear in X's Balance Sheet. Accounting and Finance MCQs Test What is X's Working Capital?
27. If current assets are arranged in a Balance Sheet in increasing order of liquidity, which of the following will be true?
28. A business buys an item of capital equipment on credit of 30 days. What is the effect of this transaction on the Balance Sheet?
29. X and Y are partners who share profits and losses equally after allowing for interest on capital and salary. Their net profit for the year is $28 750. The table shows information for the year. Accounting and Finance MCQs test What is the share of profit for each partner?
30. A sole trader takes cash and also goods for his own use from his business. Which of these will affect his capital?
31. At the end of its financial year, a business had trade receivables of $16 000 and a Provision for Doubtful Debts of $640. The provision is to be maintained at 5% of trade receivables. What entry is made in the Income statement?
32. H is a partner in the partnership of H, J and K. The table shows information relating to H for the financial year. Accounting and Finance MCQs The opening credit balance on H's current account is $28 200. What is the closing balance on his current account?
33. What is the purpose of a receipts and payments account?
34. A social club's records for a year show: Q-34 What is the total net income for the year?
35. The following information relates to a business. Q-35 What is the net profit for the year?
36. What appears as the amount of share capital in a limited company's Balance Sheet?
37. How is the factory cost of production calculated?
38. A firm values its inventory at cost. At the end of the year, inventory includes goods which had cost $300 but which, because of damage, will be sold for $100. What happens when this is corrected? Accounting and Finance MCQs Tests
39. In 2018 a business had opening inventory of $10 000 and closing inventory of $15 000. Sales were $100 000 and gross profit 25% of sales. What was the inventory turnover for the year?
40. What is±he meaning of the prudence concept?

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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.