# Financial Accounting MCQ on Basic Fundamentals

## Financial Accounting MCQ on Basic Fundamentals

Here we are sharing the best Financial Accounting MCQ for the 12th commerce students and also B.com Commerce students. This Financial Accounting MCQ on Basic is most important for the Newcomer commerce students.

1.  Recording of transactions and events as & when they occur and classifying them into suitable account heading is the subject matter of

(a) Book-keeping

(b) Management Accounting

(c) Cost Accounting

(d) Financial Accounting

`Answer (a) Book-keeping`

2. Book-keeping is mainly concerned with the recording of financial data relating to the in significant and orderly manner.

(a) Company

(c) Monetary

(d) Personal

`Answer (b) Business`

3. Basic function of accounting is to

(a) Summarise the data

(b) Assist the management in performing functions effectively

(c) Interpret the financial data

(d) Record all business transactions of monetary nature

`Answer (d) Record all business transactions of monetary nature`

4. There are two systems of accounting i.e. cash basis system of accounting and basis system of accounting

(a) Dual Aspect

(b) Accrual

(c) Single Entry

(d) Double entry

`Answer (b) Accrual`

5. The alternative to cash basis of accounting is called ……… basis of accounting

(a) Accrual

(b) Due

(c) Receipt

(d) Credit

`Answer (a) Accrual`

6. The system of recording transactions based on dual aspect concept is called

(a) Double Entry System

(b) Single Entry System

(c) Accrual Basis of Accounting

(d) Double Account System

`Answer (a) Double Entry System`

7.  As per dual aspect concept

(a) Assets + Capital Liabilities

(b) Assets + Liabilities = Capital

(c) Assets = Liabilities + Capital

(d) Assets = Liabilities-Capital

`Answer (c) Assets = Liabilities + Capital`

8.  Liabilities of a firm are 8,00,000 and capital of the proprietor is 7,00,000. Then total

assets are:

(a) 2,00,000

(b) 15,00,000

(c) 4,00,000.

(d) 6,00,000

`Answer (b) 15,00,000`

9. Assets are 14,00,000 and liabilities are 6,00,000. His capital would be

(a) 12,00,000

(b) 10,00,000

(c) 2,00,000.

(d) 8,00,000

`Answer (d) 8,00,000`

10. Capital + Liabilities =

(a) Fixed Assets

(b) Current Assets

(c) Losses

(d) Total Assets

`Answer (d) Total Assets`

11.  Which of the following will be goods for a business run by a footwear merchant?

(a) Tables and Chairs

(b) Pens and Pencils

(c) Shoes

(d) Electrical Appliances

`Answer (c) Shoes`

12. Which of the following is not a business transaction?

(a) Goods purchased from 1000

(b) Placed an order for purchasing the goods for 2000

(c) Received interest from Bank 5000

(d) Rent paid to Landlord 3000

`Answer (b) Placed an order for purchasing the goods for 2000`

13. Which of the following item is not financial in nature :

(a) Purchase of machine for cash

(b) Withdrawal of cash by proprietor for his domestic use

(c) Dismissing an employee from job

(d) Purchase of a bike on credit

`Answer (c) Dismissing an employee from job`

14. Total assets of a trader are 7,25,000 and outside liabilities are 4,25,000; owner’s equity will be:

(a) 2,50,000

(b) 3,00,000

(c) None of the above

(d) 6,00,000

`Answer (b) 3,00,000`

15. Maintaining of systematic records of all the business transactions is termed as

(a) Recording

(b) Accounting

(c) Classification of Records

(d) None of the above

`Answer (c) Classification of Records`

16. Accounting in the modern time is treated as

(a) The source of business information

(c) An art of recording, classifying and summarizing transactions in monetary units

(d) All of the above

`Answer (d) All of the above`

17.External users of accounting information may involve

(a) Purchase Manager

(b) Sales Manager

(c) Customer

(d) Board of Directors

`Answer (c) Customer`

18. Which is not dependent on accounting?

(a) Book keeping

(b) Cost accounting

(c) Financial accounting

(d) Management decision making

`Answer (a) Book keeping`

19. Accounting is treated as both science and an

(a) Economics

(b) Commerce

(c) Science

(d) Art

`Answer (d) Art`

20. Book Keeping is made to maintain a detail record of

(a) None of the above

(b) College transaction

(d) Selling transaction

`Answer (c) Business transaction`

21. The primary objective of accounting is to.

(a) Abnormal records

(b) Normal records

(c) Unsystematic record

(d) Systematic record

`Answer (d) Systematic record`

22. Users of accounting informations are classified in to two parts i.e. External Users and

(a) Share holder

(b) Customer

(c) Internal users

(d) External users

`Answer (c) Internal users`

23. Book Keeping is regarded as the step of accounting.

(a) Fourth

(b) Secondary

(c) Third

(d) Primary

`Answer (d) Primary`

24.The actual record making phase (l.e. accounting is usually called. recording, classifying and summarising) of accounting is called

(a) Trail balance

(b) Ledger

(c) Book keeping

(d) Accounting

`Answer (c) Book keeping`

25. Accounting is both

(a) None of the above

(b) History and geography

(c) Commerce and management

(d) Arts and science

`Answer (d) Arts and science`

26. There are three approaches to accounting which are widely accepted: (a) Cash basis (b)

(a) Book keeping

(b) Accrual basis and Accounting basic

(c) Mixed or hybrid

(d) None of the above

`Answer (c) Mixed or hybrid`

27. Under which basis of accounting actual cash receipts and actual cash payments are

Recorded.

(a) Noncash

(b) Cash

(c) Accrual

(d) All of the above

`Answer (b) Cash`

28. The alternative to cash basis of accounting is called basis of accounting

(a) Hybrid

(b) Accrual

(c) Cash

(d) None of the above

`Answer (b) Accrual`

29. The system of accounting in which only personal accounts with or without subsidiary books are maintained is known as

(a) Double

(b) Triple

(c) Single entry

(d) None

`Answer (c) Single entry`

30. This method of writing every transaction in two accounts is known as

(a) Double entry

(b) Triple

(c) Single entry

(d) None

`Answer (a) Double entry`

31. Under which basis of accounting both cash basis and accrual basis are followed

(a) Accrual basis

(b) Cash basis

(c) Mixed or hybrid

(d) None of the above

`Answer (c) Mixed or hybrid`

32. Any exchange of money or money’s worth between two parties is called

(c) Register transaction

(d) None of the above

`Answer (a) Business transaction`

33. In accounting, transactions of similar nature are added or subtracted at a particular place.

known as

(a) Khata

(b) Account

(c) Register

(d) Book

`Answer (b) Account`

34. A person to whom money is owing or payable is called a

(a) Creditor

(b) Debtor

(c) Owner

(d) None of the above

`Answer (a) Creditor`

35. owner’s financial interest or holding in the business and is represented by the value of net assets (L.e., total assets less liabilities.) is termed as

(a) None of the above

(b) Liability

(c) Assets

(d) Capital

`Answer (d) Capital`

36. Any physical thing or right owned that has a money value is an

(a) Assets

(b) Liabilities

(c) Money

(d) All of the above

`Answer (a) Assets`

37. A claim which can be enforced against the assets of the firm is called

(a) Debenture

(b) Money

(c) Equity

(d) None of the above

`Answer (c) Equity`

38.  An inflow of assets which results in an increase in the owner’s equity is termed as

(a) Liability

(b) Expenses

(c) Income

(d) None of the above

`Answer (c) Income`

39. Any amount or goods withdrawn by the owner of a business for personal use is called

(a) Drawing

(b) Liability

(c) Expenses

(d) Income

`Answer (a) Drawing`

40. Any written document in support of a business transaction is called a

(a) Voucher

(b) Bill

(c) Account

(d) Register

`Answer (a) Voucher`
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