This quiz works best with JavaScript enabled. Home > General Knowledge > Economy > Accounting > Accounting – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Accounting Quiz 3 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following describes the relationship between systematic risk and return? A) Arbitrage Pricing Theory. B) Capital Market Line. C) Capital Assets Pricing Model. D) Harry Marketing Model. Show Answer Correct Answer: C) Capital Assets Pricing Model. 2. Which is the determinants of Capital Structure? A) Government Policy. B) Requirement of Investors. C) Tax. D) Control. Show Answer Correct Answer: A) Government Policy. 3. Dividend is Product of A) Productivity. B) Management. C) Dividend Policy. D) Plant and Machinery. Show Answer Correct Answer: C) Dividend Policy. 4. Factoring involves A) Provision of Specialised Services relating to credit investigation. B) Purchase and Collection of debts. C) Sales ledger management. D) All of the above. Show Answer Correct Answer: D) All of the above. 5. In the debt equity ratio, external equity refers to A) Reserves. B) Only Debentures. C) Only current liabilities. D) Debentures and current liability. Show Answer Correct Answer: D) Debentures and current liability. 6. The correct order in which these are to appear in the balance sheet :- 1. Advance salary 2. Copyright 3. Preliminary expenses 4. Loose tools A) 4, 2, 1, 3. B) 2, 4, 1, 3. C) 1, 2, 3, 4. D) 3, 2, 4, 1. Show Answer Correct Answer: B) 2, 4, 1, 3. 7. A company pays dividend at the A) End of the financial year. B) End of the month. C) End of the week. D) All of the above. Show Answer Correct Answer: A) End of the financial year. 8. Which of the following branches of accounting are of recent origin? A) Social responsibility accounting. B) Human resources accounting. C) Both (a) and (b). D) Cost accounting. Show Answer Correct Answer: C) Both (a) and (b). 9. Under the Common Agricultural Policy, exports of any surplus quantities of EU produce are encouraged through the usage of A) Export subsidies. B) Trigger prices. C) Counter trade. D) Variable levies. Show Answer Correct Answer: A) Export subsidies. 10. Consider the following ratios A) Acid test ratio. B) Inventory turnover ratio. C) Both (a) and (b). D) Bad debts to sales ratio. Show Answer Correct Answer: C) Both (a) and (b). 11. Which of the following is not included in the category of 'Intangible Assets'? A) Machinery. B) Copy rights. C) Patents rights. D) Competitive benefit and privileges. Show Answer Correct Answer: A) Machinery. 12. The concept of present value is based on the A) Principle of compound. B) Principle of discounting. C) Both (a) and (b). D) None of the above. Show Answer Correct Answer: B) Principle of discounting. 13. In case the finn is all equity financed, WACC would be equal to A) Cost of Equity. B) Cost of Debt. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: A) Cost of Equity. 14. Which of the following is the benefit of Depositories? A) Reduced Risk of stolen, fake, forged shares. B) Reduction in the share transfer time to the buyer. C) No Stamp duty on transfer of shares in dematerialized form. D) All of the above. Show Answer Correct Answer: D) All of the above. 15. If cash inflows are not uniform, the calculation of pay-back period takes a A) Cumulative Form. B) Common Profit. C) Favourable Position. D) All of the above. Show Answer Correct Answer: A) Cumulative Form. 16. In the computation of the debtors turnover ratio accounts receivable includes A) Debtors and B/R. B) Creditors and B/P. C) Debtors and creditors. D) Bank overdraft and loan. Show Answer Correct Answer: A) Debtors and B/R. 17. The capital structure of any business is an A) Income. B) Interest. C) Appropriate mixture of a number of securities. D) All of the above. Show Answer Correct Answer: C) Appropriate mixture of a number of securities. 18. An expenditure in the nature of revenue enhancing activity is normally regarded as a A) Capital expenditure. B) Revenue expenditure. C) Deferred revenue expenditure. D) None of the above. Show Answer Correct Answer: A) Capital expenditure. 19. The arrangement of working capital and current assets can be done only by A) Financial Plan. B) Short-term sources. C) Long term sources. D) Cost of capital. Show Answer Correct Answer: B) Short-term sources. 20. Public limited companies cannot issue A) Equity shares. B) Deferred shares. C) Sweat equity shares. D) Preference shares. Show Answer Correct Answer: B) Deferred shares. 21. Which accounting standard deals with accounting for amalgamations? A) AS-10. B) AS-22. C) AS-18. D) AS-14. Show Answer Correct Answer: D) AS-14. 22. Which is the type of leverage? A) Financial leverage. B) Operating leverage. C) Both (a) and (b). D) None of the above. Show Answer Correct Answer: C) Both (a) and (b). 23. Working capital can be used for the purchase of A) Goodwill. B) Machinery. C) Raw material. D) Land & building. Show Answer Correct Answer: C) Raw material. 24. Adjustment in Exchange Rates due to different inflation rates in two countries is known as A) On Price Rate. B) Purchasing Power Parity. C) Interest Rate Parity. D) Exchange Power Parity. Show Answer Correct Answer: B) Purchasing Power Parity. 25. Debt financing is a cheaper source of finance because of A) Time value of Money. B) Dividends not payable to lenders. C) Rate of Interest. D) Tax deductibility of Interest. Show Answer Correct Answer: D) Tax deductibility of Interest. 26. Any amount to be written off after the admission of a partner is transferred to the capital accounts of all partners in A) New profit sharing ratio. B) Their capital ratio. C) Old profit sharing ratio. D) Sacrificing ratio. Show Answer Correct Answer: A) New profit sharing ratio. 27. If the intrinsic value of a share is less than the market price, which of the most reasonable? A) That market is over valuing the shares. B) That market is undervaluing the share. C) That shares have lesser degree of risk. D) That the company is high dividend paying. Show Answer Correct Answer: A) That market is over valuing the shares. 28. The relationship between the cost of equity and financial leverage in accordance with MM proposition II can be expressed by A) R = Equity /100. B) R = Equity / Income. C) R = (Equity / Debt) x 100. D) None of these. Show Answer Correct Answer: C) R = (Equity / Debt) x 100. 29. In the debt equity ratio, equity refers to A) Only reserves. B) Only equity capital. C) Only preference capital. D) Both preference and equity capitals plus all reserves. Show Answer Correct Answer: D) Both preference and equity capitals plus all reserves. 30. Which factor determines dividend policy? A) Public Opinion. B) Debt Repayment. C) Stability of Income. D) All of the above. Show Answer Correct Answer: D) All of the above. 31. According to guidelines issued by SEBI, a new company set up by entrepreneurs without a track record can issue capital to public only A) At par. B) At discount. C) At premium. D) All of the above. Show Answer Correct Answer: A) At par. 32. Financial Management is the A) Art of recording. B) Application of costing system. C) Application of cost plan in respect of production. D) Application of Planning and Control Function to the Finance Function. Show Answer Correct Answer: D) Application of Planning and Control Function to the Finance Function. 33. Capital budgeting is A) A long term investment. B) A irreversible decisions. C) A strategic investment decisions. D) All of the above. Show Answer Correct Answer: D) All of the above. 34. Income and Expenditure Account is prepared on the basis of A) Cash system of accountancy. B) Credit system of accountancy. C) Mercantile system of accountancy. D) None of these. Show Answer Correct Answer: C) Mercantile system of accountancy. 35. The major sources where from debentures can be redeemed are A) Profits. B) Capital. C) Provisions made for redemption. D) All of the above. Show Answer Correct Answer: D) All of the above. 36. YTM of a Bond is not affected by A) Issue Price. B) Coupon Rate. C) Redemption Value. D) Interest Amount. Show Answer Correct Answer: A) Issue Price. 37. Which accounting standard deals with Interim Financial Reporting? A) AS-19. B) AS-21. C) AS-23. D) AS-25. Show Answer Correct Answer: D) AS-25. 38. Which of the following is not a capital budgeting decision? A) Merger. B) Expansion programme. C) Replacement of an asset. D) Inventory level. Show Answer Correct Answer: D) Inventory level. 39. There should be a provision in the .....of the company for capitalisation of reserves A) Prospectus. B) Articles of Association. C) Memorandum of Association. D) None of these. Show Answer Correct Answer: B) Articles of Association. 40. Which method of capital budgeting called benefit cost ratio? A) Net present value method. B) Profitability Index method. C) Pay back period method. D) Payout period method. Show Answer Correct Answer: B) Profitability Index method. 41. Which one of the following is correct A) Role of thumb for current ratio is 2: 1. B) Liquid ratio is also known as acid test ratio. C) A ratio is an arithmetical relationship of one number to another number. D) All of the above. Show Answer Correct Answer: D) All of the above. 42. The first computerised online stock exchange in India was A) OTCEI. B) BSE. C) NSE. D) MCX. Show Answer Correct Answer: A) OTCEI. 43. Interest coverage Ratio is given by A) Net profit / Interest on Debt. B) Debt capital / Interest on Debt. C) Profit Before Tax / Interest on Debt. D) Earning Before Interest and Tax / lnterest on Debt. Show Answer Correct Answer: D) Earning Before Interest and Tax / lnterest on Debt. 44. What does the ROI take into account? A) Net fixed assets. B) Net worth. C) Shareholder's investment. D) Operating expenses. Show Answer Correct Answer: A) Net fixed assets. 45. Closing stock is valued at A) Cost or market price whichever is lower. B) Market value. C) Cost. D) None of the above. Show Answer Correct Answer: A) Cost or market price whichever is lower. 46. Valuation of inventory is dealt with in A) AS-1. B) AS-3. C) AS-2. D) AS-4. Show Answer Correct Answer: C) AS-2. 47. Difference between the bank balance as per Cash Book and Pass Book may be due to A) Float. B) Factoring. C) Overdraft. D) None of the above. Show Answer Correct Answer: A) Float. 48. Accounting is concerned with A) Monetary transactions. B) Non-monetary transactions. C) Monetary and non-monetary transactions. D) None of the above. Show Answer Correct Answer: A) Monetary transactions. 49. What does creditors turnover ratio take into account? A) Total credit purchase. B) Total cash purchases. C) Total credit sales. D) Total cash sales. Show Answer Correct Answer: A) Total credit purchase. 50. Standard deviation can be used to measure A) Risk of an investment. B) Return of an investment. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: A) Risk of an investment. 51. Which of the following reserves are free reserves that can be used for issue of bonus shares? A) General reserve. B) Surplus in profit and loss account. C) Securities premium collected in cash only. D) All of the above. Show Answer Correct Answer: D) All of the above. 52. Accounting rules, practices and conventions should not change from one year to another as per the A) Convention of conservatism. B) Convention of materiality. C) Convention of full disclosure. D) Convention of consistency. Show Answer Correct Answer: D) Convention of consistency. 53. Which is the form of dividend? A) Cash dividend. B) Bond dividend. C) Stock dividend. D) All of these. Show Answer Correct Answer: D) All of these. 54. The investment of long term funds is made after a careful assessment of the various projects through A) Sales. B) Cost of capital. C) Capital budgeting. D) Fund flow. Show Answer Correct Answer: C) Capital budgeting. 55. Most tariffs have A) Only revenue effects. B) Only protective effects. C) Both protective and revenue effects. D) Neither protective or revenue effects. Show Answer Correct Answer: C) Both protective and revenue effects. 56. Budgets can be classified according to A) Time. B) Flexibility. C) Functions. D) All of the above. Show Answer Correct Answer: D) All of the above. 57. Expenditure incurred on research is an example of A) Deferred revenue expenditure. B) Revenue expenditure. C) Partly capital expenditure are partly revenue expenditure. D) Capital expenditure. Show Answer Correct Answer: A) Deferred revenue expenditure. 58. The exchange rate is kept the same across geographically-separate markets by A) Speculation. B) Arbitrage. C) Government regulation. D) Hedging. Show Answer Correct Answer: B) Arbitrage. 59. Which is the step of capital budgeting process? A) Project Selection. B) Project Evaluation. C) Project Generation. D) All of the above. Show Answer Correct Answer: D) All of the above. 60. What are the ways of creating secret reserves? A) By charging excessive depreciation. B) By overvaluing stock in trade and goodwill. C) By showing a contingent liability as a real liability. D) All of the above. Show Answer Correct Answer: D) All of the above. ← PreviousNext →Related QuizzesEconomy QuizzesGeneral Knowledge QuizzesAccounting Quiz 1Accounting Quiz 2Accounting Quiz 4Accounting Quiz 5Accounting Quiz 6Accounting Quiz 7Accounting Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books