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 Commerce students. This Financial Accounting MCQ on Basic is most important for the Newcomer commerce students.

Also Read Financial Accounting MCQ

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

(b) Business

(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

(b) The language of business

(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

(c) Business 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


(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

(a) Business transaction

(b) Non business transaction

(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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