Introduction to Financial Accounting MCQs | Financial Accounting MCQs Part 1 | Multiple Choice Questions and Answers

 Introduction to Financial Accounting MCQs
Multiple Choice Questions and Answers
Financial Accounting MCQs (Part 1) 

1. Who is considered the father of modern accounting?

a)    Luca Friar Pacioli

b)   J. Betty

c)    Henry Fayol

d)   Gestonburg

2. Who is considered the father of accounting in India?

a)    Chankya

b)   Aryabhatt

c)    Sri Kalyan Subramani Aiyar

d)   A. P. J Abdul Kalam

3. Give some examples of Personal account.

Ans: Drawings, Capital, Loan etc

Note: Personal Accounts includes mainly debtors, creditors, outstanding expenses, prepaid expenses, accrued income, overdraft, Name of companies-schools-colleges-or any institutions or any naming word.

4. Give some examples of real account.

Ans: Goodwill, Patents, Trade Mark, Copyright, Land and Building, Furniture, Fixtures, Cash, Bills receivable etc.

5. Which of the following is not a real account?

a)    Cash account

b)   Stock account

c)    Machinery account

d)   Reserve for discount on creditors

6. Which of the following is not a real account?

a)    Patents account

b)   Goodwill account

c)    Petty cash account

d)   Petty cash expenses account

7. Which of the following is not a personal account?

a)    Capital Account

b)   Drawings Account

c)    Bills Payable Account

d)   Bills receivable Account

e)   All of the above

8. Which of the following is not a personal account?

a)    Arihant Jewelers Ltd.

b)   Punjab National Bank

c)    Tinsukia College

d)   Reserve for discount on creditors Account

9. Which of the following statement is correct?

a)    Book keeping is very old

b)   The work of book-keeping is usually entrusted to junior employees

c)    Function of book-keeping is performed by the book-keeper

d)   All of the above

10. “Accounting is an art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are of a financial character and interpreting the result thereof.” This definition is given by:

a)    American Institute of Certified Public Accountants

b)   J. Betty

c)    Henry Fayol

d)   Gestonburg

11. A list of assets, liabilities and owner’s equity of a business enterprise as of a specific date is:

a)    Income Statement

b)   Cash Flow Statement

c)    Balance-Sheet

d)   Profit & Loss Account

12. The balance-sheet is related to the income statement in the same way that –

a)    A point in time is related to period of time

b)   A period of time is related to a point in time

c)    A point in time is related to another point in time

d)   A period of time is related to another period of time

13. The properties own by business enterprises are called:

a)    Assets

b)   Liabilities

c)    Capital

d)   Owner’s Equity

14. Which of the following is an important reason for studying accounting?

a)    The information provided by accounting is useful in making many economic decisions.

b)   Accounting plays an important role in society

c)    The study of accounting could lead to challenging career

d)   All of the above.

15. Statement of changes in financial position shows:

a)    Sources and uses of funds

b)   Assets and Liabilities

c)    Income and Expenses

d)   Losses and Gains

16. Which of the following statements is false?

a)    Accounting is the language of business.

b)   Accounting is as old as money itself.

c)    Accounting is a service function.

d)   Accounting involves only the recording of business transactions.

17. Which of the following statements are false?

a)    Accounting may be described as an information system which has its inputs, processing methods and outputs.

b)   Accounting records only those transactions and events which are of financial nature.

c)    Accounting is both art and science.

d)   Accounting means recording transactions and events, not their interpretation.

18. Which of the following is not a characteristic of accounting information?

a)    Relevance

b)   Reliability

c)    Comparability

d)   Matching

19. Which of the following is not a branch of accounting?

a)    Financial accounting

b)   Cost accounting

c)    Management Accounting

d)   Responsibility accounting

20. The last step in accounting process is:

a)    Identifying the business transactions and events

b)   Recording of business transactions

c)    Classifying the business transactions

d)   Communication of financial statements

ALSO READ: MULTIPLE CHOICE QUESTIONS AND ANSWERS

State whether the following statements are true or false:

21. Book-keeping and accounting are one and the same thing. False

22. Accounting is useful only to the businessman. False

23. Book keeping is limited upto recording of business transactions.        True

24. Sub-fields of accounting are book-keeping and financial accounting True

25. Book-keeping is only the art of recording. False

26. Book-keeping ends where accounting starts. True

27. First step in accounting process is identification of business transactions and events.                True

28. Provision for bad debt, provision for discount on debtors, provisions for depreciation accounts are also called contra accounts.             True

Fill in the blanks:

29. Book-keeping is a systematic record of all financial transactions.

30. Scope of accountancy is larger than that of book-keeping.

31. Accounting records can be produced as evidence in a court of law.

32. In every transaction at least two parties are involved.

33. Accounting is a Discipline whereas Accountancy is a Profession.

34. Amount payable by the entity to the outsiders in termed as Liability.

35. Revenue is the monetary value of the products or services sold to the customers during the year.