28 Oct 2014

Introduction to Accounting And its Terminology Mcqs with answer

Financial Accounting Multiple Choice Questions (MCQS) Page. The Following Financial Accounting Mcqs are Collected from different Past papers and from Accounting Mcqs Bank. These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for  Cost Accountant.  

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The accounting process involves in recording:

A) Quantifiable economic event

B) Non quantifiable economic event

C) All of them

D) None of them


In accounting an Economic event is referred to as:

A) Cash

B) Bank statement

C) Transaction

D) Exchange of money


Identify the correct sequence of accounting process

A) Communicating→Recording→Identifying

B) Recording→Communicating→Identifying

C) Identifying→communicating→recording

D) Identifying→recording→communicating


Bookkeeping mainly concerns with which part of accounting process?

A) Analysing

B) Preparing financial statements

C) Recording financial information

D) Auditing the books of accounts


Financial accounting provides financial information to all of the following external users except:

A) Government agencies

B) investors

C) Creditors

D) Managers


For which step of accounting process the accountants of business entity prepare financial statements?

A) Identification of economic event

B) Communication of financial information

C) Recording financial information

D) Making decisions about business


Keeping the log of financial information in books of original entries is called

A) Recording

B) summarizing

C) Grouping

D) Processing


Auditing is what?

A) Reporting the financial information

B) Examination of financial statements

C) Preparation financial statements

D) maintaining the ledger records


Which of the following is the external user of financial statements?

A) Manager of the business

B) CEO of the business

C) Creditor of the business

D) Controller of the business


Which of the following is the internal user of financial statements?

A) Creditor of the business

B) Government agency

C) Shareholder of the business

D) Manager of the business


_________ is the first phase of accounting cycle

A) Identifying an economic event or transaction

B) Preparing journals

C) Posting entries to ledger accounts

D) Making decisions about business


Financial statements differ from management account because

A) They are mainly prepared for external users of financial information

B) They are more complex and hard to prepare

C) The are the summary of accounting data

D) The are prepared on basis of actual concept


________ is a separate legal entity that Total capital can be divided in many shares

A) Partnership

B) Sole proprietorship

C) Company

D) Non-profit organization


An asset posses which of the following?

A) Future economic benefits for the business

B) All kind of benefits for the business

C) Expenses for the business

D) Merits and Demerits for the business


Liabilities are which of the following?

A) Resources

B) Obligations

C) Future benefits

D) Expenses


________ is the gross inflow of economic benefits

A) Assets

B) Liabilities

C) Income

D) Expenses


The gross decrease in economic benefits for the business are what?

A) Expenses

B) Obligations

C) Creditors

D) Income or gain


An asset must be _______ by the business to be shown as an asset in its "balance sheet"

A) Possessed

B) Owned

C) Controlled

D) Used


Liability are arisen from which of the following events?

A) Present event

B) Future event

C) Past event

D) Non of them


Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting?

A) Identifying transactions

B) Preparing "T Accounts"

C) Preparing financial statements

D) Preparing trial balances


Which is the most important characteristic that all assets of a business have?

A) Long life of assets

B) Value of assets

C) Intangible nature of assets

D) Future economic benefits


What is the basic accounting equation?

A) Capital+Liabilities=Assets

B) Assets+ liabilities =Capital

C) Capital+assets=liabilities

D) Liabilities+Capital


Which of the following is a liability?

A) Cash

B) Equipment

C) Debtors

D) Creditors


What is equity?

A) Cash from the business

B) liability of a business

C) Owner's claim on total assets

D) Owner's claim on total liabilities


Identify the asset from the following

A) Cash and cash equivalent

B) Creditors

C) Notes payable

D) Bank loan


_______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use

A) Depreciation

B) Drawings

C) Outflow of cash

D) Appreciation


Net loss occurs when

A) Expenses are greater than Income

B) Expenses are less than Income

C) Expenses=Income

D) Liabilities are greater than income


Double entry implies that

A) Recording entries in journal

B) Recoding entries in Ledger account

C) Recording two aspects of every transaction

D) Recording every transaction in books


Identify the nominal account

A) Machinery account

B) Building account

C) Creditors account

D) Rent expenses account


Which of the following accounts can be classified as a real account?

A) Rent expenses account

B) Rent income account

C) insurance expenses account

D) Cash account


1 A 2 C 3 D 4 C 5 D 6 B 7 A 8 B 9 C 10 D

11 A 12 A 13 C 14 A 15 B 16 C 17 A 18 C 19 C 20 C

21 D 22 A 23 D 24 C 25 A 26 B 27 A 28 C 29 D 30 D


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