This quiz works best with JavaScript enabled. Home > General Knowledge > Economy > Accounting > Accounting – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Accounting Quiz 4 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Amount spent on an advertisement campaign, the benefit of which is likely to last for three years is a A) Deferred revenue expenditure. B) Revenue expenditure. C) Capital expenditure. D) None of the above. Show Answer Correct Answer: A) Deferred revenue expenditure. 2. Capital budgeting involves the A) Planning of expenditure for assets. B) Planning of Purchase. C) Planning of Sales. D) All of the above. Show Answer Correct Answer: A) Planning of expenditure for assets. 3. Operating profit ratio may be calculated by A) 100 - Operating ratio. B) (Operating profit / Net Sales) x 100. C) Both (a) and (b). D) ((Cost of goods sold -Cost of operation)/Sales) x 100. Show Answer Correct Answer: C) Both (a) and (b). 4. Acid test ratio should normally be ..... A) 4 :1. B) 1 : 1. C) 3 :1. D) 2 :1. Show Answer Correct Answer: B) 1 : 1. 5. What does the 'net worth' of a business signify? A) Fixed assets - current assets. B) Total assets. C) Current - total liabilities. D) Total assets - total liabilities. Show Answer Correct Answer: D) Total assets - total liabilities. 6. The formula, $((1 - t_i) EPS / MP )$$\times$ 100, may be used for A) Cost of retained earnings. B) Cost of debt capital. C) Cost of preference share capital. D) Cost of equity capital. Show Answer Correct Answer: A) Cost of retained earnings. 7. Degree of operating leverage can be computed by A) % Sales / % Profit. B) Sales / Fixed Cost. C) Sales /Cost of production. D) ( % $\Delta$ in Operating Income) / ( % $\Delta$ in sales ). Show Answer Correct Answer: B) Sales / Fixed Cost. 8. Which of the following is a type of budget according to function? A) Flexible Budget. B) Fixed Budget. C) Long term Budget. D) Operating Budget. Show Answer Correct Answer: D) Operating Budget. 9. Which of the following statements about partnership firm is not correct? A) It is managed by partners. B) It has no separate legal existence. C) A partner can transfer his interest without the consent of other partners. D) Acts of the partners are binding on the firm. Show Answer Correct Answer: C) A partner can transfer his interest without the consent of other partners. 10. A person may not have assessable income but may still be assessee. A) Is decided by the Assessing Officer. B) False. C) Cannot be said with certainty. D) True. Show Answer Correct Answer: D) True. 11. Which is the merits or advantages of 'Net Present Value Method'? A) This method can be applied where cash inflows are even. B) It takes into account the objective of maximum profitability. C) This method considers the entire economic life of the project. D) All of the above. Show Answer Correct Answer: D) All of the above. 12. Current account deficits are offset by A) Merchandise trade deficits. B) Merchandise trade surpluses. C) Capital/financial account deficits. D) Capital/financial account surpluses. Show Answer Correct Answer: D) Capital/financial account surpluses. 13. Which one is the principle of capital structure? A) Risk principle. B) Cost principle. C) Control principle. D) All of these. Show Answer Correct Answer: D) All of these. 14. A sudden shift from import tariffs to free trade may induce short-term unemployment in A) Import-competing industries. B) Industries that are only exporters. C) Industries that neither import nor export. D) Industries that sell domestically as well as export. Show Answer Correct Answer: A) Import-competing industries. 15. ..... has become a standard model for email marketing. A) Webcasting. B) Permission-based marketing. C) Targeted marketing. D) Netiquette. Show Answer Correct Answer: B) Permission-based marketing. 16. Which of the following is working as demutualized stock exchange since from beginning? A) BSE. B) NSE. C) DSE. D) All of the above. Show Answer Correct Answer: B) NSE. 17. Which type of function may be performed by the finance manager for management of profitability? A) Pricing. B) Cost control. C) Forecasting future Profits. D) All of the above. Show Answer Correct Answer: D) All of the above. 18. Capital budgeting investment decision involve A) Long term assets. B) Capital expenditure. C) A long term function. D) All of the above. Show Answer Correct Answer: D) All of the above. 19. The stock turnover ratio is ..... A) Profitability ratio. B) Solvency ratio. C) Financial ratio. D) Activity ratio. Show Answer Correct Answer: D) Activity ratio. 20. '360' degree method relates to A) Performance appraisal. B) Retrenchments. C) Organization Climate. D) Employees moral. Show Answer Correct Answer: A) Performance appraisal. 21. Inventory is generally valued as lower of A) Cost and Sales Value. B) Sales Value and Profit. C) Cost and Net Realizable Value. D) Market Price and Replacement Cost. Show Answer Correct Answer: C) Cost and Net Realizable Value. 22. Cost of capital is helpful in corporative analysis of various A) Source of Material. B) Source of Services. C) Product. D) Source of Finance. Show Answer Correct Answer: D) Source of Finance. 23. Capital budgeting is known as A) Capital Expenditure. B) Cost of Sales. C) Cost of Product. D) Profit. Show Answer Correct Answer: A) Capital Expenditure. 24. Which trade policy results in the government levying both a specific tariff and an ad-valorem tariff on imported goods A) Revenue tariff. B) Compound tariff. C) Nominal tariff. D) Effective tariff. Show Answer Correct Answer: B) Compound tariff. 25. The Present values of total cash inflows should be compared with Present value of A) Cash Outflows. B) Investment. C) Cash Inflows. D) Income. Show Answer Correct Answer: A) Cash Outflows. 26. The power to forfeit shares must be provided in the A) Company Law Board. B) Registrar of Companies. C) Memorandum of Association. D) Articles of Association of the company as the Companies Act does not contain any provision regarding forfeiture of shares. Show Answer Correct Answer: D) Articles of Association of the company as the Companies Act does not contain any provision regarding forfeiture of shares. 27. In the calculation of return on shareholders investments the referred investment deals with A) Preference and equity capital only. B) All appropriations. C) All reserves. D) All of the above. Show Answer Correct Answer: D) All of the above. 28. The effect of the most-favored-nation (normal trade relations) clause is to A) Eliminate all tariffs between countries. B) Increase all tariff rates between countries. C) Maintain a discriminatory structure of tariffs. D) Maintain a nondiscriminatory structure of tariffs. Show Answer Correct Answer: D) Maintain a nondiscriminatory structure of tariffs. 29. When prices show a rising trend, which of the following methods of inventory valuation will result in lower income and lower valuation of inventory? A) Simple average method. B) FIFO. C) Weighted average method. D) LIFO. Show Answer Correct Answer: D) LIFO. 30. No. of units of domestic currency required to buy one unit of a foreign currency is known as A) Indirect Route. B) Spot Rate. C) Direct Route. D) Cross-Rate. Show Answer Correct Answer: B) Spot Rate. 31. If forfeited shares are reissued at a discount then the amount of discount should not exceed the A) Actual amount received on forfeited shares. B) Original discount on reissued shares, if any. C) Total amount of (a) and (b). D) 10 % of face value of shares. Show Answer Correct Answer: C) Total amount of (a) and (b). 32. Which one of the following is correct about margin of safety ratio? A) Operating profit / contribution. B) Capital employ / Net worth. C) Contribution / sales value. D) Contribution / Sales of BEP. Show Answer Correct Answer: D) Contribution / Sales of BEP. 33. Cash flows denominated in foreign currency are reported in a manner consistent with A) AS-3. B) AS-11. C) AS-9. D) AS-16. Show Answer Correct Answer: B) AS-11. 34. Right shares can be issued at any time after the expiry of A) One year from the first allotment of shares in the company. B) Two years from the formation of a company. C) (A) or (B) whichever is earlier. D) (A) or (B) whichever is latter. Show Answer Correct Answer: C) (A) or (B) whichever is earlier. 35. When goodwill is received in cash and retained in the business upon admission of a new partner the old partners' capital accounts are credited in the A) Old profit sharing ratio. B) New profit sharing ratio. C) Capital ratio. D) Sacrificing ratio. Show Answer Correct Answer: D) Sacrificing ratio. 36. Which are the determinants of dividend policy? A) Liquidity Position. B) Legal Requirement. C) Working Capital Requirement. D) All of the above. Show Answer Correct Answer: D) All of the above. 37. "Capital budgeting is long term planning for making and financing proposed capital outlays. " Who said? A) Lynch. B) J. Betty. C) Charles T. Horngreen. D) Philippatos. Show Answer Correct Answer: C) Charles T. Horngreen. 38. The dividend on equity shares is only paid when dividend on .....has already been paid. A) Preference Shares. B) Equity Shares. C) Bond. D) Debenture. Show Answer Correct Answer: A) Preference Shares. 39. Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costs are called A) Cash transactions. B) Forward transactions. C) Differential actions. D) Arbitrage. Show Answer Correct Answer: D) Arbitrage. 40. The following item is shown in profit and loss appropriation account. A) Discount of issue of shares. B) Dividends declared. C) Current assets. D) Non-operating expenses. Show Answer Correct Answer: B) Dividends declared. 41. If the annual cash inflows are constant, the pay-back period can be computed by clividing cash outlay by A) Annual cash inflow. B) Annual Sales flows. C) Expenses. D) Profit. Show Answer Correct Answer: A) Annual cash inflow. 42. Which of the following term is used to represent the proportionate relationship between debt and equity? A) Cost of capital. B) Capital structure. C) Assets Structure. D) Capital Budgeting. Show Answer Correct Answer: B) Capital structure. 43. Suppliers and creditors of a firm are interested in A) Profitability position. B) Market share position. C) Liquidity position. D) Debt position. Show Answer Correct Answer: C) Liquidity position. 44. The implementation of a common market involves all of the following except A) A common tax system and monetary union. B) Prohibition of restrictions on factor movements. C) A common tariff levied in imports from non-members. D) Elimination of trade restrictions among member countries. Show Answer Correct Answer: A) A common tax system and monetary union. 45. The degree of financial leverage reflects the responsiveness of A) EPS to change in EBIT. B) EPS to change in total revenue. C) Operating income to change in total revenue. D) None of the above. Show Answer Correct Answer: A) EPS to change in EBIT. 46. If the equity shareholder purchases the shares of the company at more than the face value of the share then the.....is calculated. A) Payout Ratio. B) Dividend Yield Ratio. C) Earnings Yield Ratio. D) Debt Equity Ratio. Show Answer Correct Answer: C) Earnings Yield Ratio. 47. Which is a approach of valuation? A) Asset based approach to valuation. B) Earnings based approach to valuation. C) Market value based approach to valuation. D) All of the above. Show Answer Correct Answer: D) All of the above. 48. The stock turnover ratio may be calculated as ..... A) Turnover at cost / stock at cost. B) Cost of goods sold / Average stock. C) Turnover at selling price /Stock at selling price. D) Any of the above. Show Answer Correct Answer: B) Cost of goods sold / Average stock. 49. Current Ratio can be computed by A) Current Assets / Current Liabilities. B) Stock / Debtors. C) Assets / Stock. D) (Stock + Cash + Share) /100. Show Answer Correct Answer: A) Current Assets / Current Liabilities. 50. The equation for the Debt equity ratio is A) Liquid Assets / Current Liability. B) Current Assets / Current Liability. C) Long term Debt / Equity Capital. D) Net Profit / Net Sales. Show Answer Correct Answer: C) Long term Debt / Equity Capital. 51. The main objective of providing depreciation is A) To reduce tax burden. B) To show the true financial position in the balance sheet. C) To calculate true profit. D) To provide funds for replacement of fixed assets. Show Answer Correct Answer: B) To show the true financial position in the balance sheet. 52. Accelerated depreciation method is also called A) Annuity Method. B) Insurance Policy method. C) Fixed installment method. D) Sum of the years digit method. Show Answer Correct Answer: D) Sum of the years digit method. 53. General donations of relatively large amount is recorded on the A) Liabilities side of Balance Sheet. B) Receipts side of Receipts and Payments Account. C) Both (a) and (b). D) Income side of Income and Expenditure Account. Show Answer Correct Answer: C) Both (a) and (b). 54. Which factor determines capital structure? A) Risk. B) Cost of Capital. C) Trading on Equity. D) All of the above. Show Answer Correct Answer: D) All of the above. 55. A firm is compulsorily dissolved when A) The business becomes illegal. B) All the partners become insolvent. C) All the partners except one become is insolvent. D) All of the above. Show Answer Correct Answer: D) All of the above. 56. A short-term lease which is often cancellable is known as A) Leverage Lease. B) Net Lease. C) Operating Lease. D) Finance Lease. Show Answer Correct Answer: C) Operating Lease. 57. For the purpose of calculating ROI capital employed means A) Gross Block. B) Current assets - current liabilities. C) Net Fixed assets. D) Fixed assets + current assets - current liabilities. Show Answer Correct Answer: D) Fixed assets + current assets - current liabilities. 58. Dividend is income for the A) SEBI. B) Company. C) Goods Suppliers. D) Shareholders. Show Answer Correct Answer: D) Shareholders. 59. Which of the following is a type of partner? A) Minor. B) Nominal. C) Sleeping or Dormant. D) All of the above. Show Answer Correct Answer: D) All of the above. 60. Which of the following statements is true in relation to liabilities? A) Currently existing obligations which the firm intends to meet at some time in the future. B) It must be capable of being expressed in money terms. C) Claims against the resources. 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 3Accounting Quiz 5Accounting Quiz 6Accounting Quiz 7Accounting Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books