This quiz works best with JavaScript enabled. Home > General Knowledge > Economy > Accounting > Accounting – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Accounting Quiz 7 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following is an advantage of standard costing? A) Determination of variance. B) Facilitates cost control. C) Measuring efficiency. D) All of the above. Show Answer Correct Answer: D) All of the above. 2. The presence of fixed costs in the total cost structure of a firm results into A) Super Leverage. B) Financial Leverage. C) Operating Leverage. D) None of the above. Show Answer Correct Answer: C) Operating Leverage. 3. Return on total assets ratio is equal to ..... divided by total asset A) Current assets. B) Current liabilities. C) Earning per share. D) Net income before preference dividend and interest paid. Show Answer Correct Answer: D) Net income before preference dividend and interest paid. 4. Which is the method of Capital budgeting? A) Rate of Return Method. B) Pay back period Method. C) Net Present Value Method. D) All of the above. Show Answer Correct Answer: D) All of the above. 5. Members of the EU find that trade creation is fostered when their economies are A) Highly competitive. B) Geographically distant. C) Highly noncompetitive. D) Small in economic importance. Show Answer Correct Answer: A) Highly competitive. 6. Contingent liability is shown due to A) Dual aspect concept. B) Convention of full disclosure. C) Convention of materiality. D) Convention of conservatism. Show Answer Correct Answer: C) Convention of materiality. 7. Legal cost incurred in case of disputed land and building is classified as A) Operating activity. B) Investing activity. C) Financing activity. D) All of the above. Show Answer Correct Answer: B) Investing activity. 8. Business loss can be set off against salary income A) False. B) Cannot be said with certainty. C) Is decided by the Assessing Officer. D) True. Show Answer Correct Answer: A) False. 9. After declaration dividends are paid to the shareholders as per the provision of A) RBI Act. B) Indian Companies Act. C) SEBI Act. D) Indian Contract Act. Show Answer Correct Answer: C) SEBI Act. 10. Unabsorbed depreciation which could not be set off in the same assessment year, can be carried forward for A) 8 Years. B) Indefinitely. C) 4 Years. D) 6 Years. Show Answer Correct Answer: B) Indefinitely. 11. This type of growth refers to concentrating activities on markets and/or products that are familiar. A) Diversification. B) Condensive. C) Integrative. D) Intensive. Show Answer Correct Answer: D) Intensive. 12. A balance sheet is A) Trial balance. B) Loss of assets & liabilities. C) Trading account. D) Position statement. Show Answer Correct Answer: D) Position statement. 13. What is customer value? A) Post purchase dissonance. B) Excess of satisfaction over expectation. C) Ratio between the customer's perceived benefits and the resources used to obtained these benefits. D) None of the above. Show Answer Correct Answer: C) Ratio between the customer's perceived benefits and the resources used to obtained these benefits. 14. Acid test ratio is equal to quick current assets divided by ..... A) Current assets. B) Total liabilities. C) Total assets. D) Current liabilities. Show Answer Correct Answer: D) Current liabilities. 15. Holder of an American call option can A) Sell the asset on or before expiration. B) Buy the asset only on expiration. C) Buy the asset on or before expiration. D) Sell the asset only on expiration. Show Answer Correct Answer: C) Buy the asset on or before expiration. 16. The return on equity capital ratio is obtained by dividing net profit (after tax) less preference dividend by A) Current assets. B) Total capital. C) Current liabilities. D) Equity capital. Show Answer Correct Answer: D) Equity capital. 17. Commercial paper is a type of A) Government Bond. B) Unsecured short-term debt. C) Fixed coupon Bond. D) Equity share capital. Show Answer Correct Answer: B) Unsecured short-term debt. 18. Which of the following principles is not related to the preparation of profit and loss account? A) Accrual concept. B) Dual aspect concept. C) Accounting period concept. D) Matching concept. Show Answer Correct Answer: B) Dual aspect concept. 19. Which of the following is a branch of Accounting? A) Cost Accounting. B) Financial Accounting. C) Management Accounting. D) All of the above. Show Answer Correct Answer: D) All of the above. 20. Which accounting standard deals with Earning per share? A) AS-20. B) AS-14. C) AS-9. D) AS-18. Show Answer Correct Answer: A) AS-20. 21. Credit (+) items in the balance of payments correspond to anything that A) Involves payments to foreigners. B) Involves receipts from foreigners. C) Increases the domestic money supply. D) Decreases the demand for foreign exchange. Show Answer Correct Answer: B) Involves receipts from foreigners. 22. If a particular current asset in the current year is more than what was in the previous year, then the change in the current assets results in of working capital. A) Zero. B) Increase. C) Decrease. D) None of these. Show Answer Correct Answer: B) Increase. 23. Consider the following Accounting Concepts A) Business Entity Concept. B) Going Concern Concept. C) Money Measurement Concept. D) All of the above. Show Answer Correct Answer: D) All of the above. 24. Which of the following are the qualitative characteristics of financial statements? A) Relevance. B) Reliability. C) Comparability. D) All of the above. Show Answer Correct Answer: D) All of the above. 25. The significance of capital budgeting arises mainly due to the A) Large Investment. B) Irreversible in nature. C) Complicacies of Investment decisions. D) All of the above. Show Answer Correct Answer: D) All of the above. 26. In 'Percentage of Sales' method of preparation of Projected Financial Statements, the Operating Expenses should be projected on the basis of A) % of Profit before tax. B) % of Cost of goods Sold. C) % of Gross Profit. D) % of Sales. Show Answer Correct Answer: D) % of Sales. 27. Advantages of Budgetary control include A) Reduces Cost. B) Corrective Action. C) Maximization of Profit. D) All of the above. Show Answer Correct Answer: D) All of the above. 28. Discounted cash flow criteria for investment appraisal does not include A) Net present value. B) Benefit cost ratio. C) Internal rate of return. D) Accounting rate of return. Show Answer Correct Answer: B) Benefit cost ratio. 29. Consider the following statements: Redeemable preference shares can be redeemed out of A) Profits available for dividends. B) Sale proceeds of the new issue of shares. C) All of the above. D) None of these. Show Answer Correct Answer: C) All of the above. 30. Which method does not consider the time value of money A) Average rate of return. B) Profitability Index. C) Internal Rate of Return. D) Net present value. Show Answer Correct Answer: A) Average rate of return. 31. Which ratio explains that how much portion of earning is distributed in the form of dividend? A) Equity-Debt Ratio. B) Earning Yield Ratio. C) Dividend-Debt Ratio. D) Pay-out Ratio. Show Answer Correct Answer: D) Pay-out Ratio. 32. Which of the following is the test of the long term liquidity of a business? A) Current ratio. B) Interest coverage ratio. C) Operating ratio. D) Stock turnover ratio. Show Answer Correct Answer: B) Interest coverage ratio. 33. The role of ..... is to direct one nation's savings into investments of another nation A) Capital flows. B) Services flows. C) Current account flows. D) Merchandise trade flows. Show Answer Correct Answer: A) Capital flows. 34. "Capital budgeting as acquiring inputs with long run return" . Who said? A) Lynch. B) J. Betty. C) Richard and Green. D) Charles Horngreen. Show Answer Correct Answer: C) Richard and Green. 35. Which of the following is the variability of the return from a share associated with the market as a whole? A) Avoidable. B) Systematic. C) Unsystematic. D) None of the above. Show Answer Correct Answer: B) Systematic. 36. Which of the following is not available in India? A) Index Futures. B) Index Options. C) Commodity Options. D) Commodity Futures. Show Answer Correct Answer: C) Commodity Options. 37. Profit and Loss Account is also called A) Income Statement. B) Cash Flow Statement. C) Funds Flow Statement. D) None of the above. Show Answer Correct Answer: A) Income Statement. 38. Capital Employed is A) Assets + Cash. B) Bank. C) Cash + Bank. D) Shareholders Funds + Long Term Funds. Show Answer Correct Answer: D) Shareholders Funds + Long Term Funds. 39. The fund as used in funds flow statement means A) Current assets. B) Cash. C) Current assets minus current liabilities. D) Current liabilities. Show Answer Correct Answer: C) Current assets minus current liabilities. 40. Ageing schedule incorporates the relationship between A) Average Age of Directors. B) Average Age of All Employees. C) Debtors and Days Outstanding. D) Creditors and Days Outstanding. Show Answer Correct Answer: C) Debtors and Days Outstanding. 41. Which of the following pairs is not correctly matched? A) Accrual concept: Recognising revenue on receipt of cash. B) Accounting equation: Assets = Liabilities + Capital. C) Cost concept: Recognising transactions at historical cost. D) Accounting year: 1st April to 31st March. Show Answer Correct Answer: A) Accrual concept: Recognising revenue on receipt of cash. 42. In case of a limited company, the term financial statements includes A) Profit and loss account, profit and loss appropriation account and balance sheet. B) Balance sheet. C) Profit and loss and balance sheet. D) None of the above. Show Answer Correct Answer: A) Profit and loss account, profit and loss appropriation account and balance sheet. 43. A contract which gives the holder a right to buy a particular asset at a particular rate on or before a specified date is known as A) Strangle. B) American Option. C) Straddle. D) European Option. Show Answer Correct Answer: B) American Option. 44. Which of the following reserves cannot be utilised for making the partly paid up shares fully paid up? A) Plant Revaluation Reserve. B) Securities Premium Account. C) Capital Redemption Reserve Account. D) All of the above. Show Answer Correct Answer: D) All of the above. 45. The ideal ratio between total long term funds and total long terms loan is ..... A) 2:1. B) 4:1. C) 3 :1. D) 1 : 1. Show Answer Correct Answer: A) 2:1. 46. Two mutually exclusive projects with different economic lives can be compared on the basis of A) Profitability Index. B) Internal Rate of Return. C) Net Present Value. D) Equivalent Annuity value. Show Answer Correct Answer: D) Equivalent Annuity value. 47. Dividend policy of a company mainly concern with (i) dividend payout and (ii) Stability of dividend A) Only (i) is correct. B) Only (ii) is correct. C) Both (i) and (ii) are correct. D) Both (i) and (ii) are incorrect. Show Answer Correct Answer: C) Both (i) and (ii) are correct. 48. Which financial instrument provides a buyer the right to purchase or sell a fixed amount of currency at a prearranged price, within a few days to a couple of years A) Foreign currency option. B) Cable transfer. C) Letter of credit. D) Bill of exchange. Show Answer Correct Answer: A) Foreign currency option. 49. The gross profit ratio is the ratio of gross profit to A) Net credit sales. B) Net cash sales. C) Closing stock. D) Net total sales. Show Answer Correct Answer: D) Net total sales. 50. Dividend is the portion of A) Debt. B) Current Assets of the company. C) Assets of the company. D) Profit. Show Answer Correct Answer: D) Profit. 51. A very important component of management accounting is A) Contract accounting. B) Management auditing. C) Financial accounting. D) Cost accounting. Show Answer Correct Answer: D) Cost accounting. 52. Which of the following aspects of revenue recognition is not dealt by AS-9? A) Revenue arising from governments grants and other similar subsidies. B) Revenue arising from hire-purchase, lease agreements. C) Revenue arising from construction contracts. D) All of the above. Show Answer Correct Answer: D) All of the above. 53. Before expiry date, the time value of a call option is A) Market Premium - Intrinsic Value. B) Strike Price - Spot Price. C) Intrinsic Value. D) Spot Price - Strike Price. Show Answer Correct Answer: A) Market Premium - Intrinsic Value. 54. Business Plans designed to achieve the organisation objective is called A) Human Resource Planning. B) Human Resource forecasting. C) Strategic plan. D) Corporate Development Plan. Show Answer Correct Answer: C) Strategic plan. 55. Which of the following Iiabilities are taken into account for the quick ratio? A) Bills payable. B) Bank overdraft. C) Sundry Debtors. D) All of the above. Show Answer Correct Answer: D) All of the above. 56. Income and Expenditure Account is prepared in non-trading concerns in lieu of A) Cash book. B) Trading account. C) Profit and loss account. D) Manufacturing account. Show Answer Correct Answer: C) Profit and loss account. 57. Capital employed equals A) Fixed Assets + Working Capital. B) Tangible Fixed and Intangible Assets + Current Assets - Current liabilities. C) Long-term debt + Share Capital + Reserves & Surplus - Fictitious Assets - Non-business Assets. D) All of the above. Show Answer Correct Answer: D) All of the above. 58. The cost of capital declines when the degree of financial leverage increases 'who advocated it'. A) Traditional Approach. B) Modigliani - Miller approach. C) Net operating income approach. D) Net income approach. Show Answer Correct Answer: D) Net income approach. 59. Cost of Capital for Bonds and Debentures is calculated on A) After Tax basis. B) Before Tax basis. C) Risk-free Rate of Interest basis. D) None of the above. Show Answer Correct Answer: A) After Tax basis. 60. Capital Budgeting is a part of A) Capital Structure. B) Investment Decision. C) Marketing Management. D) Working Capital Management. Show Answer Correct Answer: B) Investment Decision. ← PreviousNext →Related QuizzesEconomy QuizzesGeneral Knowledge QuizzesAccounting Quiz 1Accounting Quiz 2Accounting Quiz 3Accounting Quiz 4Accounting Quiz 5Accounting Quiz 6Accounting Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books