Accounting and Finance MCQs Test 6

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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. A business bought a computer for the office and paid by cheque. How will the business record this transaction? Accounting and Finance MCQs test
2. X buys goods on credit from Y What is the name of the document used by X to settle the liability to Y?
3. In which book of account is cash discount received first recorded?
4. X sells goods with a list price of $5'000 to a credit customer. The customer is allowed a 5% trade discount and a further 2%% cash discount if payment is within 20 days of the invoice date. What amount should be credited to the Sales account of X?
5. A bank reconciliation statement starts with the cash book balance. How are uncredited deposits and un-presented cheques shown in the bank reconciliation statement? Accounting and Finance MCQs Tests
6. Which should be recorded in the general journal?
7. Which account could have a credit balance?
8. Y's account apears in the ledger of X as follows. Accounting and Finance MCQs Test Which statement is true?
9. A bookkeeper recorded the receipt of a cheque for $245 in the cashbook as $425. What kind of error was this?
10. A business received $123 from X. The entry in the cashbook was correct but it was debited as $132 in X's account. What is the difference between the totals of the trial balance?
11. Which item is capital income?
12. A builders' charges for work on XY Company's offices are as follows. Accounting and Finance MCQs How much should be entered in the XY Company's Income statement?
13. A business buys a delivery van for $12 000. Its estimated useful life is four years, after which its scrap value is estimated to be $4 000. Depreciation is charged on the straight-line basis. What is the annual amount of depreciation?
14. Two companies each purchase a car for $10 000 at the beginning of year 1. Company G uses the straight-line method of depreciation at a rate of 15% per annum, while Company H uses the reducing balance method at a rate of 20% per annum. What will be the difference in the depreciation charge between the two companies for year 2?
15. At 31 December a firm's Balance Sheet shows Accounting and Finance MCQs Depreciation for the year is calculated at 20% on cost. After the Balance Sheet is prepared it is found that the machinery repairs costing $2 000 have been debited to the Machinery account. What should be the corrected balance on the Provision for Depreciation of Machinery account?
16. Susan owes a business $100. The business is not sure if Susan will pay. Which ledger entries should the business make? Accounting and Finance MCQs Tests
17. A trader provides the following information relating to insurance. Q-17 Which amount should be shown in the trader's Income statement for insurance for 2018?
18. The difference on a trial balance is entered in a Suspense account. It is later found that the purchases journal has been undercast. Which ledger entries are required to correct the error? Q-18
19. A trader's net profit was calculated at $27 000. Later it was found that depreciation of $2 000 had been omitted and that the rent payable included a prepayment of $750. What is the correct net profit?
20. A cheque received by X from a trade receivable is later dishonored. How is this shown in X's control accounts?
21. Entries in control accounts are made from
22. X pays $20 000 for the purchase of a business. The purchase price includes equipment worth $9 000 and inventory valued at $4 000. X deposits $2 000 of his own money into the business bank account. What is X's capital?
23. Which error may cause an increase in the gross profit?
24. Which is a current asset?
25. How are non-current assets normally shown in a Balance Sheet?
26. A business has working capital of $6 000 at 31 January. On 2 February trade receivables pay $1 150 in full settlement of debts $1 200 and damaged inventory costing $200 is written off. What is the working capital at close of business on 2 February?
27. In the absence of a partnership agreement how should profits be shared?
28. The owner of a business takes goods costing $6 000 from his shop for his own use. What are the book keeping entries? Q-28
29. A trader accepts $500 from a trade receivable in full settlement of a debt of $650. What effect will this have on the owner's capital?
30. A partner has to pay interest on drawings. What is the entry in the personal account of the partner?
31. How will interest on capital and share of profit appear in a partner's current account? Accounting and Finance MCQs test
32. The financial year of a drama club ends on 31 December The club rents a theatre at an annual rent of $3 600. on 1 January 2018 rent accrued amounted to $300. During 2018 a total of $4 500 rent was paid. How much will be shown for rent in the club's Receipts and Payments account for the year ended 31 December 2018?
33. A sports club includes the purchase of a new rowing machine costing $5 000 in its Income and Expenditure account. What is the effect of this error? Q-33
34. The books of business show the following. Accounting and Finance MCQs Test What are the total sales for the year?
35. What is a limited company's authorized capital?
36. What does prime cost in a Manufacturing Account include?
37. A manufacturing firm's costs were as follows. Q-37 There was closing work-in-progress of $12 400. What was the factory cost of production?
38. Which ratio can be calculated from the details in a sole trader's Balance Sheet?
39. X had a net profit of $40 000, which was 20% of sales. The cost of goods sold was 75% of sales. What was X's gross profit?
40. Which accounting concept is a business following when it includes a provision for doubtful debts in its annual accounts?

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About the Author

True Tamplin, BSc, CEPF®

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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.

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