1. Which of the following is a current asset?
a) Land
b) Building
c) Patent
d) Stock-in-trade
Answer: d) Stock-in-trade
2. Which of the following is an example of an indirect expense?
a) Rent
b) Wages
c) Electricity bill
d) Commission paid
Answer: a) Rent
3. Which accounting principle states that an asset should be recorded at its cost price?
a) Matching Principle
b) Consistency Principle
c) Cost Principle
d) Realization Principle
Answer: c) Cost Principle
4. Which of the following is not a subsidiary book?
a) Sales Book
b) Cash Book
c) Ledger Book
d) Purchase Book
Answer: c) Ledger Book
5. What is the formula for calculating gross profit?
a) Gross Profit = Sales – Cost of Goods Sold
b) Gross Profit = Cost of Goods Sold – Sales
c) Gross Profit = Sales – Operating Expenses
d) Gross Profit = Operating Expenses – Sales
Answer: a) Gross Profit = Sales – Cost of Goods Sold
6. What is the journal entry to record the payment of rent?
a) Rent A/c Dr. To Bank A/c
b) Bank A/c Dr. To Rent A/c
c) Rent A/c Dr. To Cash A/c
d) Cash A/c Dr. To Rent A/c
Answer: d) Cash A/c Dr. To Rent A/c
7. Which of the following is not a cash equivalent?
a) Bank Overdraft
b) Treasury Bills
c) Money Market Funds
d) Cheques
Answer: a) Bank Overdraft
8. Which of the following is not a source of long-term finance?
a) Debentures
b) Equity Shares
c) Bank Overdraft
d) Retained Earnings
Answer: c) Bank Overdraft
9. Which of the following statements is true about goodwill?
a) Goodwill is a fictitious asset
b) Goodwill is a tangible asset
c) Goodwill is a current asset
d) Goodwill is an intangible asset
Answer: d) Goodwill is an intangible asset
10. What is the formula for calculating Return on Investment (ROI)?
a) ROI = Net Profit / Total Assets
b) ROI = Gross Profit / Sales
c) ROI = Operating Profit / Sales
d) ROI = Net Profit / Shareholders’ Equity
Answer: a) ROI = Net Profit / Total Assets
11. Which of the following is an example of capital expenditure?
a) Payment of rent
b) Purchase of raw materials
c) Purchase of a building
d) Payment of wages
Answer: c) Purchase of a building
12. What is the formula for calculating Working Capital?
a) Working Capital = Current Assets + Current Liabilities
b) Working Capital = Total Assets - Total Liabilities
c) Working Capital = Gross Profit - Operating Expenses
d) Working Capital = Net Profit / Total Assets
Answer: a) Working Capital = Current Assets + Current Liabilities
13. Which accounting principle states that the business is assumed to continue in operation for the foreseeable future?
a) Going Concern Principle
b) Cost Principle
c) Consistency Principle
d) Realization Principle
Answer: a) Going Concern Principle
14. Which of the following is not a fixed asset?
a) Land
b) Machinery
c) Furniture
d) Stock-in-trade
Answer: d) Stock-in-trade
15. What is the formula for calculating Net Profit?
a) Net Profit = Gross Profit - Operating Expenses - Interest
b) Net Profit = Sales - Cost of Goods Sold
c) Net Profit = Operating Profit - Taxes
d) Net Profit = Total Revenue - Total Expenses
Answer: a) Net Profit = Gross Profit - Operating Expenses - Interest
16. Which of the following is not a type of financial statement?
a) Income Statement
b) Balance Sheet
c) Trial Balance
d) Cash Flow Statement
Answer: c) Trial Balance
17. What is the journal entry to record the purchase of goods on credit?
a) Purchases A/c Dr. To Cash A/c
b) Purchases A/c Dr. To Bank A/c
c) Purchases A/c Dr. To Creditor A/c
d) Creditor A/c Dr. To Purchases A/c
Answer: c) Purchases A/c Dr. To Creditor A/c
18. Which of the following is not a type of accounting ratio?
a) Profitability Ratio
b) Liquidity Ratio
c) Efficiency Ratio
d) Sales Ratio
Answer: d) Sales Ratio
19. Which of the following is an example of a contingent liability?
a) Bank Loan
b) Accounts Payable
c) Lawsuit
d) Salaries Payable
Answer: c) Lawsuit
20. What is the formula for calculating Debt-Equity Ratio?
a) Debt-Equity Ratio = Total Liabilities / Shareholders’ Equity
b) Debt-Equity Ratio = Total Assets / Shareholders’ Equity
c) Debt-Equity Ratio = Total Liabilities / Total Assets
d) Debt-Equity Ratio = Shareholders’ Equity / Total Liabilities
Answer: a) Debt-Equity Ratio = Total Liabilities / Shareholders’ Equity
21. Which accounting concept states that the assets and liabilities should be recorded at their original cost?
a) Going Concern Concept
b) Money Measurement Concept
c) Cost Concept
d) Conservatism Concept
Answer: c) Cost Concept
22. Which of the following is not an example of a revenue expenditure?
a) Payment of rent
b) Purchase of raw materials
c) Payment of wages
d) Purchase of a machine
Answer: d) Purchase of a machine
23. Which of the following is a non-current liability?
a) Accounts Payable
b) Bank Overdraft
c) Accrued Expenses
d) Long-Term Loan
Answer: d) Long-Term Loan
24. What is the journal entry to record the payment of a creditor's bill?
a) Creditor A/c Dr. To Bank A/c
b) Cash A/c Dr. To Creditor A/c
c) Bank A/c Dr. To Creditor A/c
d) Creditor A/c Dr. To Cash A/c
Answer: b) Cash A/c Dr. To Creditor A/c
25. What is the formula for calculating Gross Profit Ratio?
a) Gross Profit Ratio = Gross Profit / Total Revenue × 100
b) Gross Profit Ratio = Gross Profit / Cost of Goods Sold × 100
c) Gross Profit Ratio = Total Revenue / Gross Profit × 100
d) Gross Profit Ratio = Cost of Goods Sold / Gross Profit × 100
Answer: b) Gross Profit Ratio = Gross Profit / Cost of Goods Sold × 100
26. What is the formula for calculating Return on Investment (ROI)?
a) ROI = Net Profit / Total Revenue × 100
b) ROI = Net Profit / Total Assets × 100
c) ROI = Operating Profit / Total Revenue × 100
d) ROI = Total Assets / Net Profit × 100
Answer: b) ROI = Net Profit / Total Assets × 100
27. What is the journal entry to record the sale of goods on credit?
a) Bank A/c Dr. To Sales A/c
b) Sales A/c Dr. To Creditor A/c
c) Debtor A/c Dr. To Sales A/c
d) Sales A/c Dr. To Cash A/c
Answer: c) Debtor A/c Dr. To Sales A/c
28. What is the formula for calculating Quick Ratio?
a) Quick Ratio = Current Assets / Current Liabilities
b) Quick Ratio = Current Liabilities / Current Assets
c) Quick Ratio = Total Assets / Current Liabilities
d) Quick Ratio = Total Liabilities / Current Assets
Answer: a) Quick Ratio = Current Assets / Current Liabilities
29. Which accounting principle states that the revenues should be recognized when earned, not when cash is received?
a) Matching Principle
b) Conservatism Principle
c) Realization Principle
d) Going Concern Principle
Answer: c) Realization Principle
30. What is the formula for calculating Return on Equity (ROE)?
a) ROE = Net Profit / Total Assets × 100
b) ROE = Net Profit / Shareholders’ Equity × 100
c) ROE = Operating Profit / Total Assets × 100
d) ROE = Total Assets / Shareholders’ Equity × 100
Answer: b) ROE = Net Profit / Shareholders’ Equity × 100
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