Financial and Management Accounting MCQ pdf with Answers for the preparation of MBA, BBA, MCOM, BCOM academic examinations.
Financial and Management Accounting MCQs
1. Book keeping ___ the transactions and events, ___ the identified transactions and events in a common measuring unit, records them in proper books of accounts and finally classifies them in the ledger.
Ans. Identifies, measures
2. Accounting in addition to book keeping involves ___ the classified transactions and ___ the summarized results.
Ans. Summarizing, analyzing
3. ___ interprets the analyzed results and communicates the interpreted information to the interested parties.
4. Accounting is a tool for ___ and ___
Ans. Effective planning, controlling
5. Expand SEBI.
Ans. Securities Exchange Board of India
6. Mention any five stakeholders.
Ans. Shareholders, Creditors, Bankers, Government, Employees
7. ___ as the chief provider of risk capital is keen to understand both the return from their investments and the associated risk.
8. ___ use financial reports for negotiating wage package, declaration of bonus, and other benefits.
Ans. Trade Union
9. ___ has a legitimate interest in financial reports of publicly held enterprises to ensure efficient operation of the capital market.
Ans. Stock Exchange
10. The regulatory agencies use ___ to take action against the firm when appropriate returns are not filed in time or when the returns fail to provide the true and fair position of the business or to take appropriate action against the firm when complaints/misappropriation are being lodged.
Ans. Financial Reports
11. Accounting grossly lacks ___ elements
12. The exact picture of the financial situation can be ascertained only on the ___ of an enterprise.
13. The danger of ___ arises when the management decides to incorporate wrong figures to artificially inflate revenue or deflate losses or when there is a threat of hostile takeover.
Ans. Window dressing
14. Accounting ignores the price level changes when financial statements are prepared on ___.
Ans. Historical Cost
15. Accounting principles are ___, associated with theory and practice of accounting.
16. Accounting Principles are classified as ___ and ___.
Ans. Concepts, conventions
17. Assets may be depreciated on fixed installment method or reducing balance method. Is it a concept or a convention?
18. A business is started with an assumption of making a profit. Is this assumption, a concept, or a convention?
19. The purpose of establishing ICAI and ASB is to ___.
Ans. Bring uniformity in accounting terminology and principles
20. How many accounting standards are issued by ASB so far?
21. State true or false:
a. If the household expenses of Rs 25,000 of a proprietor are shown as business expenses, the profit of the business will be understated to the extent of Rs.25,000.
b. If a proprietor invests Rs.1,00,000 in the business, it is deemed that the proprietor has given Rs.1,00,000 to the business and it is shown as an asset in the books of the business.
Ans. a. True, b. False
22. Business and its owner are ___ entities.
23. Profits earned in the business form an addition to the ___ of the owner.
24. Accounting of a small calculator as an expense and not as an asset is the application of principles of prudence.
25. Classification of assets as current and fixed assets is the application of the going concern concept.
26. Purchase a building for your business is made under the assumption that it would last for a long period. This is in accordance with the materiality principle.
27. What is the underlying intention in making a provision every year when an asset is purchased?
Ans. To replace it after a certain period
28. An event or a transaction expressed in monetary value is measured but inflation or changes in the purchasing power are ignored in the money measurement concept. Say yes or no.
29. Transactions or events should be expressed in ___.
Ans. Monetary value
30. Revenues are matched with expenses in accordance with the money measurement principle. State true or false
31. The economic life of the entity is artificially split into periodic intervals in accordance with the periodicity concept. State true or false
32. The accounting data must disclose all relevant information in accordance with the periodicity concept. State true or false
33. The accountants are free to submit financial statements at arbitrary points in time during the life of the entity. This is in accordance with the periodicity concept.
34. Interest earned but not received within an accounting period is called ___.
Ans. Accrued interest
35. Following the straight-line method of depreciation of a particular asset year after year adheres to the consistency concept.
36. Accrued income should be ___ to compute profit and prepaid expenses should be ___ according to the accrual concept of accounting.
Ans. Added, deducted
37. Accrual concept considers not only cash transactions but also ___ transactions.
38. Income is considered as earned only when it is ___.
39. Income is realized whether it is actually received in cash or promised to be received. Is it True or False?
40. Income realized is different from the cash received. Is it true or false?
41. A sale is made on credit. Does it constitute income realization?
42. An order is received for the sale of goods. Is it the realization of income?
43. An order is received with an advance of Rs.100000 cash. Can this be called income?
44. A cash payment may be a revenue payment or capital payment. Is it true or false?
45. A payment that is revenue in nature is expenditure. Is it true or false?
46. Plant is purchased and payment is made. Is it an expenditure or acquisition of an asset?
Ans. Asset Acquisition
47. All revenue expenses are charged against ___.
48. Capital payments resulting in the acquisition of assets appear in the balance sheet. True or False?
49. Matching concept of accounting considers only revenue incomes and expenses relating to a particular accounting period. True or False?
50. Incomes and expenses for an accounting period are considered to compute ___.
Ans. Profit or loss
51. Expenditure paid or payable and revenue earned whether realized or not in cash are taken into account to find out profit or loss. True or False?
52. For the actual revenue received, outstanding incomes are ___ and income received in advance are___ to find out the revenue income for the given period.
Ans. Added, Deducted
53. For the actual revenue expenses (costs) paid during the accounting period, outstanding expenses are ___ and prepaid expenses are ___ to find out expenses for the accounting period.
Ans. Added, Deducted
54. All assets are shown at historical cost in the balance sheet. True or False?
55. Depreciation is charged against the historical cost of assets. True or False?
56. Historical cost is the cost at which an asset is actually purchased. True or False? Ans. True
57. Machinery is bought for Rs.200000 and its market value is Rs.80000. Which of these values do you consider mentioning in the balance sheet according to the cost principle?
58. Inflation accounting has emerged as a result of the limitation of the historical cost concept. True or False?
59. The principle of full disclosure implies that information which is of ___ should be stated in financial statements.
60. The material information that is disclosed should be of great interest to the average investors. True or False?
61. Non-disclosure of material information amounts to ___. Ans. Fraud
62. Disclosing assets without disclosing liabilities is against the principle of full disclosure.
63. Under the dual aspect principle, total benefits received by businesses should match with total benefits given.
64. Total liabilities should be equal to ___ as per the dual aspect principle.
Ans. Total Assets
65. For every debit, there should be an equivalent credit. This is called ___ of accounting.
Ans. Double-entry principle
66. Modifying principle is also known as ___.
Ans. Cost-benefit principle
67. The modifying principles state that benefit derived should overweigh the cost of implementing it.
68. A firm plans to establish a costing department. By doing so it was estimated that the cost of the product would increase by 50%. Is it advisable to have a cost department?
69. Principle of materiality states that relevant information should be given to relevant parties. True or False?
70. Details of debtors should be given to creditors. True or False?
71. The material information to one party need not be so for another party. True or False?
72. The method of depreciation adopted should be disclosed to Income Tax Authorities. True or False?
73. The purpose of the principle of consistency is to help for ___ from one period to another period.
74. Consistency principle helps for the proper assessment of profit or loss. True or False?
75. Provision should be made whenever ___ is anticipated.
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