In the name of ALLAH, the most beneficient, the most merciful

Financial Accounting (MGT101)

Multiple Choice Questions (MCQs)

Objective Questions

  1. The main purpose of ___________ is to ascertain true result of the business operation during particular period of time.

    1. Cost Accounting
    2. Financial Accounting
    3. Managerial Accounting
    4. Tax Accounting
  2. An accounting system is used by a business to:

    1. Analyze transactions
    2. Handle routine bookkeeping tasks
    3. Structure information
    4. All of the given
  3. Generally Accepted Accounting Principles (GAAP) are necessary because financial statements

    1. are publicly available
    2. should be standardized
    3. should be understandable
    4. All of the given
  4. Which of the following methods of inventory valuation shows a lower cost of goods sold when prices are rising with the passage of time?

    1. FIFO method
    2. LIFO method
    3. Weight average method
    4. Specific identification method
  5. Which of the following particular is NOT included in journal voucher?

    1. Name of organization
    2. Bank receipt number
    3. Debit amount
    4. Credit amount
  6. Which of the following should be credited on sale of completed goods on cash basis in manufacturing concern?

    1. Material account
    2. Sales account
    3. Finished goods account
    4. Cash account
  7. Which of the following should NOT be recorded in journal voucher?

    1. Receipt of cash
    2. Depreciation
    3. Charge of interest payable
    4. Correction of errors
  8. Which of the following should be shown on debit column of Trial Balance by considering the balance as normal?

    1. Sales on cash basis
    2. Sales on credit basis
    3. Utility expenses
    4. Creditors/payables
  9. Which would be the value of Total Factory Cost, if cost of raw material, direct labor, and manufacturing overhead are Rs.80,000, Rs.50,000, and Rs.60,000 respectively?

    1. Rs. 130,000
    2. Rs. 110,000
    3. Rs. 140,000
    4. Rs. 190,000
  10. Which of the following should be credited on sale of completed goods on credit basis in manufacturing concern?

    1. Debitors account
    2. Sales account
    3. Creditors account
    4. Cash account
  11. A manufacturing concern has Raw material of worth Rs. 100,000, Direct Labor Rs. 75,000 and Factory Overhead Rs. 50,000. The amount of Prime cost will be:

    1. Rs. 150,000
    2. Rs. 175,000
    3. Rs. 125,000
    4. Rs. 225,000
  12. Which of the following should be shown on credit side of cash account?

    1. Collection from customers
    2. Sales on cash basis
    3. Sales on cedit basis
    4. Payment of loan
  13. Depriciation is mainly a process of ________ of cost of Fixed Asset over the useful life.

    1. Allocation
    2. Valuation
    3. Calculation
    4. None of the given
  14. All of the following are Non-commercial (Non-Profit Oriented) organizations, EXCEPT:

    1. NGO's (Non-government Organizations)
    2. Trusts
    3. Limited Companies
    4. Societies
  15. What does single entry accounting mean?

    1. It means to record debit only
    2. It means to record one side of entry only
    3. It means to record cash only
    4. It means to record credit only
  16. Commercial Accounting is done through a system that is known as:

    1. Single entry system of Accounting
    2. Accrual system of Accounting
    3. Double Entry system of Accounting
    4. Cash system of Accounting
  17. The journal entry to record purchase of furniture on credit would include a:

    1. Credit to furniture A/c
    2. Credit to Cash A/c
    3. Credit to Payables A/c
    4. Credit to Receivables A/c
  18. Another name of net income or positive financial return is:

    1. Profit
    2. Contribution Margin
    3. Revenue
    4. Credit
  19. The proper classification of Suppliers account is:

    1. Assets
    2. Expenses
    3. Revenues
    4. Liabilities
  20. Find out the missing value of an Accounting Equation with the help of given data: Owner’s equity Rs. 22,500 Total Liabilities Rs. 80, 385 Cash Rs. 1,000 Bank Rs. 2,000 Debtors Rs. 500

    1. Rs. 102,885 other assets
    2. Rs. 102,885 current liabilities
    3. Rs. 99,885 current liabilities
    4. Rs. 99,385 other assets
  21. A sum of Rs. 8,000 paid as wages to repair the office furniture should be debited to:

    1. Repair Account
    2. Furniture Account
    3. Cash Account
    4. Office expense Account
  22. At the end of accounting period a list of all ledger balances is prepared. This list is called ______.

    1. Journal
    2. Ledger
    3. Cash Book
    4. Trial Balance
  23. If debit side of a ledger is greater than credit side, the balance will be called as:

    1. Debit Balance
    2. Credit Balance
    3. Excess Balance
    4. None of the given
  24. Which of the following is used to calculate Gross Profit?

    1. Expenses + Revenues
    2. Assets – Liabilities
    3. Revenue – Labor
    4. Net Revenue – Cost of Goods Sold
  25. Revenues, expenses and net profit are found on a:

    1. Statement of Cash Flows
    2. Income Statement
    3. Statement of Owner’s Equity
    4. Balance Sheet
  26. Which of the following expenses are called financial expenses?

    1. Payment of rent & Salary expense
    2. Markup on loan& Bank Charges
    3. Interest & advertisement expense
    4. Wages and Depreciation expense
  27. A Balance Sheet discloses the financial position of a firm:

    1. For a certain given period
    2. At a particular point of time
    3. After the fixed date
    4. None of the given options
  28. Following information is extracted from Mr. A’s balance sheet: Cash Rs.100 Accounts Receivable 500 Accounts Payable 2 00 Bank Loans 1,000 Based on the information provided, what are Mr. A’s assets?

    1. Rs.200
    2. Rs. 600
    3. Rs. 900
    4. Rs. 1700
  29. What will be debited, If Mr. “A” started business with Rs. 2, 00,000.

    1. Capital account
    2. Cash account
    3. Mr. A’s account
    4. Business account
  30. In which of the following statement opening stock is shown?

    1. Profit and loss account
    2. Balance sheet
    3. Cash flow statement
    4. Owner’s equity
  31. Which one of the following is INCORRECT about closing Stock?

    1. It is added into current assets
    2. It is deducted from Material available for use
    3. It becomes opening stock of next year
    4. It reduces the resources of business
  32. Working capital Rs. 20,000, Current liabilities Rs. 30,000 and fixed assets Rs. 100,000; calculate current assets?

    1. Rs. 10,000
    2. Rs. 50,000
    3. Rs. 110,000
    4. Rs. 120,000
  33. ________ is the basic part of an item, which is processed to make a complete item:

    1. Factory overhead
    2. Raw material
    3. Finished goods
    4. Work in process
  34. Cost of goods manufactured + opening finished goods – ending finished goods =?

    1. Total factory cost
    2. Cost of goods sold
    3. Prime cost
    4. Conversion cost
  35. The total of all costs incurred to convert raw material into finished goods is known as:

    1. Prime cost
    2. Conversion cost
    3. Sunk cost
    4. Opportunity cost
  36. According to diminishing balance method of charging depreciation:

    1. The amount of depreciation remains constant every year
    2. The rate percent as well as amount reduces every year
    3. The amount of depreciation reduces year to year
    4. The rate percent of depreciation declines year to year
  37. Total depreciation of an asset can not exceed its:

    1. Scrap value
    2. Residual value
    3. Market value
    4. Depreciable value