What does accounting and finance do?

Accounting and finance involves the study of money, business and management. Accounting relates to the analysis of information for different aspects of a business, while finance solely concerns a business monetary funds.

Which pays more, finance or accounting?

According to NACE data, in 2019 the median starting salary for people with a bachelor's degree in finance was $57,750. In the same year, people with an accounting degree typically had a median starting salary of $57,250.

Why is accounting better than finance?

While accounting provides a snapshot of a company's financial standing in a given moment, finance is more concerned with forecasting and planning for the future. Finance also deals heavily with capital management and allocation.

Are finance and accounting the same?

Finance is a broader term for the management of assets and liabilities and the planning of future growth, whereas accounting focuses on the day-to-day flow of money in and out of a company or institution.

Why is financial accounting important?

Financial accounting is important for businesses because it helps management make sound decisions on how to allocate their resources. In addition, financial accounting helps you communicate your business finances to outside parties such as creditors and investors.

Accounting and Finance MCQ Quiz With Answers Test 3

1. Which account usually has a debit balance?

capital account
purchases account
purchases returns account
sales account

2. X invoices goods to Y They are found to be damaged. Which document will X then send to Y?

copy invoice
credit note
debit note
statement of account

3. What is true about cash discounts received? Accounting and Finance MCQs test

A
B
C
D

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".

bank charges debited in the bank statement
cheques debited in the bank statement in error
dividends received credited directly by the bank
standing orders paid directly by the bank

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?

$1 000
$1 750
$2 500
$3 250

6. Which transaction is entered in the general journal?

credit sale of goods
goods returned to supplier
purchase of a non-current asset on credit
purchase of inventory for cash

7. Which ledger entries record the purchase of a machine bought on credit?

debit trade payables, credit machinery
debit machinery, credit trade payables
debit trade payables, credit purchases
debit purchases, credit trade payables

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?

overstated by $2 800
overstated by $5 600
understated by $2 800
understated by $5 600

9. After which error will a trial balance still balance?

an error in adding up a trade receivable's account
an error in entering an item on a sales invoice
an error in extracting the balance of a non-current asset acCount
an error in recording cash received in the cashbook

10. Purchases returns of $150 are wrongly posted to the debit of Sales Returns account. How does this affect the Trial Balance totals?

The credit side exceeds the debit side by $150
The debit side exceeds the credit side by $150
The credit side exceeds the debit side by $300
The debit side exceeds the credit side by $300

11. A business receives rent for letting premises. How is this rent classified?

capital expenditure
revenue expenditure
capital income
revenue income

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

A
B
C
D

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?

$7 200
$12 000
$12 800
$16 000

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?

$ nill
$25 000
$50 000
$75 000

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?

loss $200
loss $ 1800
profit $200
profit $1 800

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?

$12 credit
$18 credit
$12 debit
$18 debit

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?

It is overstated by $450
It is understated by $450
It is overstated by $900
It is understated by $900

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

A
B
C
D

19. What is the effect of making contra entries in the Sales and Purchase Ledger Control accounts? Accounting and Finance mcqs test

A
B
C
D

20. A company's trial balance includes the following balances Accounting mcqs tests

What is the figure for trade receivables in the balance sheet?

$15 105
$15 600
$16 005
$16 500

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?

$500
$2 500
$3 000
$3 500

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?

It is overstated by $4 000
It is understated by $4 000
It is overstated by $8 000
It is understated by $8 000

23. A sole trader writes off a bad debt. What will be the effect of this on the balance sheet?

capital reduced and assets reduced
liabilities increased and assets reduced
liabilities reduced and assets increased
no effect on assets or liabilities

24. What is the purpose of preparing a balance sheet?

to check the accuracy of the books
to give details of the owners' capital
to measure the performance of the business
to show the financial state of the business

25. What is the correct method of valuing inventory?

at a valuation decided by the management
at the lower of cost or net realisable value
at the net book value of the inventory
at the purchase price of the inventory

26. What is shown in a balance sheet as an asset?

bank balance overdrawn
rates paid in advance
rent received in advance
wages due but unpaid

27. What does current assets less current liabilities equal?

capital employed
liquid assets
net assets
working capital

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

A
B
C
D

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?

$4 750
$4 950
$5 050
$5 250

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?

$4 750
$4 950
$5 050
$5 250

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

A
B
C
D

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?

$55 000
$85 000
$90 000
$105 000

33. A partner receives interest on capital. What are the bookkeeping entries? Accounting and Finance mcqs tests

A
B
C
D

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?

$11 600
$12 400
$12 800
$13 200

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?