This quiz works best with JavaScript enabled. Home > Economy > Accounting > Accounting – Quiz 17 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Accounting Quiz 17 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Capital gearing ratio indicates the relationship between A) Assets and capital. B) Loans and capital. C) Debentures and share capital. D) Equity shareholders fund and long term borrowed funds. Show Answer Correct Answer: D) Equity shareholders fund and long term borrowed funds. 2. Which of the following is an intangible asset? A) Goodwill. B) Furniture. C) Land & Building. D) Plant & Machinery. Show Answer Correct Answer: A) Goodwill. 3. Change in the constitution of the firm may be due to A) The death of a partner. B) The retirement of a partner. C) The admission of a new partner. D) All of the above. Show Answer Correct Answer: D) All of the above. 4. Which of the following Accounting standards is recommendatory and not mandatory? A) AS -3 - Cash Flow Statement. B) AS - 4 - Contingencies and Events occurring after the Balance Sheet date. C) AS - 2 (Revised) - Valuation of inventories. D) AS - 1 - Disclosure of accounting policies. Show Answer Correct Answer: A) AS -3 - Cash Flow Statement. 5. Which method of inventory valuation is very useful when prices are falling? A) Average cost. B) First-in-first-out. C) Last-in-first-out. D) Base stock method. Show Answer Correct Answer: A) Average cost. 6. Spot exchange rate is the rate of exchange between two currencies A) For future delivery. B) For immediate delivery. C) For delivery at a particular spot in future. D) None of the above. Show Answer Correct Answer: B) For immediate delivery. 7. Antidumping duties applied to imported goods A) Result in lower-priced goods for domestic consumers. B) Are abolished by the World Trade Organization. C) Are imposed by industrial countries but not developing countries. D) Result in decreases in consumer surplus for domestic households. Show Answer Correct Answer: D) Result in decreases in consumer surplus for domestic households. 8. Depreciation is incorporated in cash flows because it A) Is a cash flow. B) Reduces tax liability. C) Involves an outflow. D) Is unavoidable cost. Show Answer Correct Answer: B) Reduces tax liability. 9. A, B and C were partners sharing profits in the ratio of 3 : 5 : 7. C retires and his share were taken up by A and B in the ratio of 3: 2. What is new ratio? A) 1 : 11. B) 2 : 12. C) 2 : 13. D) 3 : 14. Show Answer Correct Answer: C) 2 : 13. 10. ..... is said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries in favor of member countries. A) Trade creation. B) Trade diversion. C) Trade exclusion. D) Trade distortion. Show Answer Correct Answer: B) Trade diversion. 11. Dividends are the ..... of a company distributed amongst members in proportion to their shares. A) Reserve. B) Divisible Profits. C) Undivisible Profits. D) Assets with Cash and Bank. Show Answer Correct Answer: B) Divisible Profits. 12. Which of the following is not included in the assumption on which Myron Gorden proposed a model on Stock valuation A) Taxes do not exist. B) Finite Life of the firm. C) Constant rate of return on firms investment. D) Retained earning the only source of financing. Show Answer Correct Answer: B) Finite Life of the firm. 13. Inventory is valued at cost or market price whichever is lower. This principle of valuation is based on the accounting convention of A) Materiality. B) Consistency. C) Conservatism. D) Full disclosure. Show Answer Correct Answer: C) Conservatism. 14. In a diversified portfolio, a new security adds A) Liquidity Risk. B) Systematic Risk. C) Unsystematic Risk. D) None of the above. Show Answer Correct Answer: B) Systematic Risk. 15. Which method of inventory valuation helps in reducing the burden of income tax in times of rising prices? A) Average cost. B) First-in-first-out. C) Last-in-first-out. D) Base stock method. Show Answer Correct Answer: C) Last-in-first-out. 16. The ratios which measure the relative contribution of financing by owners and financing provided by outsiders are called A) Activity ratios. B) Liquidity ratios. C) Leverage ratios. D) Profitability ratios. Show Answer Correct Answer: C) Leverage ratios. 17. In Accounting equation approach for recording business transactions all accounts are divided into three categories, namely A) Expenditure, Revenue and Loss. B) Assets, Liabilities and Capital. C) Personal, Real and Nominal. D) None of the above. Show Answer Correct Answer: B) Assets, Liabilities and Capital. 18. Which one of the following is an example of sources of funds? A) Increase in fixed assets. B) Decrease in share capital. C) Increase in long-term liabilities. D) Decrease in long-term liabilities. Show Answer Correct Answer: C) Increase in long-term liabilities. 19. Which country is not a member of the European Union A) Spain. B) Iceland. C) France. D) Germany. Show Answer Correct Answer: B) Iceland. 20. Cost of goods sold equals A) Sales - Gross Profit. B) Opening stock + Purchases + Direct expenses + Manufacturing expenses - Closing stock. C) Both (a) and (b). D) Sales - Net Profit. Show Answer Correct Answer: C) Both (a) and (b). ← PreviousNext →Related QuizzesEconomy QuizzesAccounting Quiz 1Accounting Quiz 2Accounting Quiz 3Accounting Quiz 4Accounting Quiz 5Accounting Quiz 6Accounting Quiz 7Accounting Quiz 8Accounting Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books