Threotical framework Accounts (MCQ)

                                      Threotical Framework - l
                                   Multiple  Choice Questions

1. Which definition of accounting is most appropriate now-a-days-
(a) Accounting involves only the recording of those business
transactions which are of financial character.
(b) Accounting is the art of recording, classifying, summarizing,
analyzing and interpreting the business transactions which are
of financial character.
(c) Accounting is the process of identifying, measuring and
communicating. Economic information to permit informed
judgments and decisions by the users of accounts.
(d) Accounting is basically an art.

2. Accounting covers only the following activities:
(a) Recording and Classifying
(b) Recording, Classifying, Summarizing and Analyzing
(c) Summarizing, Analyzing and interpreting
(d) Identifying, Measuring and Communication

3. Book-keeping covers only the following activities:
(a) Recording and Classifying
(b) Recording, Classifying, Summarizing and Analyzing
(c) Summarizing, Analyzing and Interpreting
(d) Identifying, Measuring and Communication

4. The basic objective of the book-keeping is
(a) To maintain systematic records of financial transactions
(b) T ascertain financial performance
(c) To ascertain financial performance
(d) All of above

5. The basic objective of accounting is-
 (a) To maintain systematic records of financial transactions
 (b) To ascertain financial performance
 (c) To ascertain financial position
 (d) All of above

6. Internal users of accounting information include
(a) Short –term creditors (b) Customers
(c) Long – term lenders (d) Shareholders

7. External users of accounting information include
(a) Shareholders (b) Customers
(c) Management (d) None of these

8. Limitations of accounting include
(a) Ignores Qualitative Elements (b) Ignores price level
changes
(b) Involves subjectively (d)All of above

9. Which of the following is not a sub-field /Branch of Accounting
(a) Cost Accounting (b) Management Accounting
(c) Social Responsibility Accounting (d) Book-Keeping

10. An economic event that involves transfer of money or money’s
worth is-
(a) Financial transaction (b) Barter
(c) Settlement (d) Receipt / Payment

11. Sale of goods to Ram for Rs. 1,000 is
(a) Cash transaction (b) Credit transaction
(c) Barter (d) Internal Event

12. Current assets are those assets-
(a) Which can be converted into cash within 12 months.
(b) Which can be converted into cash within a period normally not
exceeding 12 months
(c) Which can be converted into cash within an operating cycle
which normally does not exceed 12 months.
(d) Which are held for their conversion into cash within an
operating cycle which normally does not exceed 12 months.

13. Fixed Assets are those assets-
(a) Which cannot be converted into cash within 12 months
(b) Which can be converted into cash after 12 months
(c) Which can be converted into cash after the expiry of operating
cycle
(d) Which are not held for their conversion into cash within an
operating cycle which normally does not exceed 12 months

14. Current Liabilities are those liabilities which –
(a) Fall due for payment within a period of not more than 6
months.
(b) Full due for payment within a period of more than 12 months.
(c) Fall due for payment within a period of not more than 12
months.
(d) None of these.

15. Long – terms liabilities are those liabilities which –
(a) Fall due for payment within a period of not more than 6
months
(b) Fall due for payment within a period of more than 12 months.
(c) Fall due for payment within a period of not more than 12
months.
(d) None of these.

16. Capital is the
(a) Excess of external liabilities over the assets
(b) Excess of assets over the external liabilities
(c) Excess of external liabilities over fixed assets
(d) Excess of assets of over internal liabilities

17. Drawing represent:
(a) Cash withdrawn for office use
 (b) Cash withdrawn for personal use
(c) Goods withdrawn for personal use
(d) (b) & (c)

18. A person to whom money is owned by the business
(a) A creditor (b) A debtor
(c) A borrower (d) A customer

19. Gains represent –
(a) All increase in equity
(b) All increase in assets
(c) Increase in equity from any transaction other than revenue
or investment by equity participant
(d) None of these

20. Losses represent –
(a) All decreases in equity
(b) All decrease in assets
 (c) Decrease in equity from any transaction other than from
expenses or distribution of equity participant
(d) None of these

21. Which one of the following is correct?
(a) The term ‘Purchase’ includes the purchase of fixed assets for
cash as well as on credit.
(b) The term ‘Sales’ include the sales of fixed assets for cash as
well as on credit.
(c) The term ‘Opening’ stock means the goods lying unsold at the
end of previous accounting period.
(d) The term ‘Closing Stock’ means the goods lying unsold at the
beginning of current accounting period.

22. Purpose of an accounting system include all of the following except
(a) Interpret and record the effect of business transactions.
 (b) Classify the effects of transactions of facilitate the preparation
of reports.
(c) Summarize communicate information to decision makers.

(d) Dictate the specify types of business enterprises transactions
that the enterprises may engage in

23. Book keeping is mainly concerned with
(a) Recording of financial data
(b) Designing the system in recording, classifying and
summarizing the correct data.
(c) Interpreting the data for internal and external users.
(d) None of these above.

24. Financial accounting information is characterized by all of the
following except-
(a) It is historical in nature
(b) It is factual, so it does not require judgment to prepare.
(c) It results from inexact and appropriate measures.
(d) It is enhanced by management’s explanation.

25. Financial statements only consider-
(a) Assets expressed in monetary terms
(b) Liabilities expressed in monetary terms.
(c) Assets expressed in non-monetary terms.
(d) Assets and liabilities expressed in monetary terms.

26. Financial Position of the business is ascertained on the basis of
(a) Records prepared under book-keeping process
 (b) Trial balance
(c) Accounting reports
 (d) None of the above

27. Book keeping is mainly concerned with.
(a) Recording of financial data.
(b) Designing the systems in recording, classifying and
summarizing the recorded data.
(c) Interpreting the data for internal and external users.
(d) none of the above

28. Financial statements are part of
(a) Accounting (b) Book-Keeping
(c) All of the above (d) None of the above

29. Financial position of the business is ascertained on the basis of
(a) Record prepared under book-keeping process.
(b) Trial balance
(c) Accounting reports
(d) None of the above.

30. On March 31, 2006 after sale of goods worth Rs. 2,000, he is left
with the closing stock of Rs. 10,000. This is
(a) An event
(b) A transaction
(c) A transaction as well as an event.
(d) Neither a transaction nor an event

31. What is the method of summarizing and classifying the record of
financial transaction in monetary terms?
(a) Book Keeping
(b) Auditing
(c) Accountancy
(d) Cost Accountancy

32. Accounting means recording
(a) Transactions
(b) Events
(c) Both (a) and (b)
(d) Neither (a) nor (b)

33. Money owed from an Outsider is a:
 (a) Asset (b) Liability
(c) Expense (d) Capital



34. The obligation of an enterprise other than owner’s fund are known
as
(a) Assets (b) Liabilities
(c) Capital (d) None of these

35. Unpaid expenses are
(a) Outstanding liabilities (b) Prepaid expenses
(c) Unaccrued expenses (d) All of these

36. Which of the following transaction would cause decrease in owner’s
equity?

(a) Withdrawal of cash for self use by the proprietor
(b) Withdrawal of goods for self use by the owner
(c) Payment of personal expenses of the proprietor
(d) All the three

37. Which of these transaction would cause Increase in owner’s
equity ?
(a) Profit from a successful business operation
(b) Fresh investment made by the owner
(c) Bringing in new asset in the business
(d) All the three

38. An exchange of gods between two parties
(a) Barter (b) Transaction
(c) Sale (d) Transfer

39. Are the business performance of trading activities

(a) Book Keeping (b) Transaction
(c) Accounting (d) Event

40. On 31st December ,2010 Ashok Ltd. Purchased a Machine from
Mohan Ltd. For Rs. Rs.1,75,000. This is (year-end 31st December)
(a) A transaction. (b) An event.
(c) None of these (d) Both Transaction as well as Event.

41. On January 1, Sohan paid rent of Rs. 5,000. This can be classified
us
(a)An Event
(b)A Transaction
(c) A transaction as well as an Event
(d)Neither a transaction as well as an Event

42. __________are the end result of Transaction
(a) Book Keeping (b) Transaction
(c) Accounting (d) Event

43. On 31st March ,2010 a Trader , after sale of goods , is left with the
closing stock of Rs.10,000. This closing stock is termed as.
(a)An event
(b)A transaction.
(c) A transaction as well as an event.
(d)Neither a transaction nor an event

44. On March 31st ,2010 Narain Enterprises Purchased a vehicle from
Huundai . For Rs. Rs.1,75,000 .This is
 (a) An event. (b) A transaction.
(c) A transaction as well as an event. (d) Neither a transaction nor
an
 Event

45. An Economic event that involves transfer of money or money’s
worth
(a) Barter (b) Credit transaction
(c) Cash Transaction (d) Financial transaction

46. Exchange of financial benefit (goods, services property or loan) for
cash

(a) Financial cash transaction (b) Financial credit transaction
(c) Barter transaction (d) Not a transaction


47. Financial Statements are a part of:
(a) Accounting (b) Book-keeping
(c) Both (d) None

48. Financial position of the business is ascertained on the basis of
(a) Record prepared under book keeping process
(b) Trial balance
(c) Balance Sheet /Profit & Loss A/c
(d) None of the above

49. Which of these is not available in the Financial Statement of a
company
(a) Total Sales (b) Total Profit and Loss
(c) Loss from Fire (d) None of the above

50. Financial position of the business is ascertained on the basis of
(a) Records prepared under book keeping process
(b) Trial balance
(c) Balance sheet /Profit and Loss A/c
(d) None of the above


ANSWER
1. (c) 2. (d) 3. (a) 4. (a) 5. (d) 6. (d)
7. (b) 8. (d) 9. (d) 10. (a) 11. (a) 12. (d)
13. (d) 14. (c) 15. (b) 16. (b) 17. (d) 18. (b)
19. (c) 20. (c) 21. (c) 22. (d) 23. (a) 24. (b)
25. (d) 26. (c) 27. (a) 28. (a) 29. (c) 30. (a)
31. (c) 32. (c) 33. (a) 34. (b) 35. (a) 36. (d)
37. (d) 38. (a) 39. (b) 40. (d) 41. (b) 42. (d)
43. (a) 44. (c) 45. (d) 46. (a) 47. (a) 48. (c)
49. (d) 50. (c)