Accountancy is referred to as the process of recording financial transactions that take place in a business. The Accounting process involves summarizing, reporting and analyzing the information to be used by various users of Accounting information.Following are some of the Accounting multiple choice questions and answers that will help the students in brushing up their understanding of the concept of Accounting.

Financial Accounting MCQ

Question 1

Accounting furnishes data on

1. A) Income and cost for the managers
2. B) Financial conditions of the institutions
3. C) Company’s tax liability for a particular year
4. D) All the above

Answer: D

Question 2

Long term assets having no physical existence but, possessing a value are called

1. A) Intangible assets
2. B) Fixed assets
3. C) Current assets
4. D) Investments

Answer: A

Question 3

The assets that can be easily converted into cash within a short period, i.e., 1 year or less are known as

1. A) Current assets
2. B) Fixed assets
3. C) Intangible assets
4. D) Investments

Answer: A

Question 4

Copyrights, Patents and Trademarks are,

1. A) Current assets
2. B) Fixed assets
3. C) Intangible assets
4. D) Investments

Answer: C

Question 5

The debts which are to be repaid within a short period (a year or less) are referred to as,

1. A) Current Liabilities
2. B) Fixed liabilities
3. C) Contingent liabilities
4. D) All the above

Answer: A

Question 6

Gross profit is

1. A) Cost of goods sold + Opening stock
2. B) Excess of sales over cost of goods sold
3. C) Sales fewer Purchases
4. D) Net profit fewer expenses of the period

Answer: B

Question 7

Net profit is computed in the

1. A) Profit and loss account
2. B) Balance sheet
3. C) Trial balance
4. D) Trading account

Answer: A

Question 8

In order to find out the value of the closing stock during the end of the financial year we,

1. A) do this by stocktaking
2. B) deduct the cost of goods sold from sales
3. C) deduct opening stock from the cost of goods sold
4. D) look in the stock account

Answer: A

Question 9

Which of these best explains fixed assets?

1. A) Are bought to be used in the business
2. B) Are expensive items bought for the business
3. C) Are items which will not wear out quickly
4. D) Are of long life and are not purchased specifically for resale

Answer: D

Question 10

The charges of placing commodities into a saleable condition should be charged to

1. A) Trading account
2. B) P & L a/c
3. C) Balance Sheet
4. D) None of the above

Answer: B