Financial Accounting MCQs

Accounting and Finance

A trader buys goods for $20 000 and then sells three-quarters of them for $32 000. What is her gross profit?

$12 000

$15 000

$17 000

$20 000

Author: rikazzz Comment

Accounting and Finance

A bookkeeper mistakenly treats a revenue expenditure item as capital expenditure. What is the effect of this error?

gross profit is overstated

net profit is understated

total assets are overytated

total assets are understated

Author: rikazzz Comment

Accounting and Finance

On 1 January 2018 the Provision for Doubtful Debts was $1 000. During the year ended 31 December 2018 Bad Debts written off amounted to $500. At 31 December 2018 the trade receivables owed $18 000 and the Provision for Doubtful Debts was $900. What is the net figure for trade receivables in the Balance Sheet at 31 December 2018?

$16 600

$17 000

$17 100

$17 500

Author: rikazzz Comment

Accounting and Finance

A machine bought two years ago for $20,000 is sold for $13,000. Plant and Machinery is depreciated by 10% on cost. What is the balance on the Provision for Depreciation of Plant and Machinery Account after this sale, if provision for depreciation before this sale was $28,000?

$22,000

$24,000

$26,000

$28,000

Author: rikazzz Comment

Accounting and Finance

In the absence of a partnership agreement how should profits be shared?

equally

equally after interest on partners’ capitals

equally after interest on partners’ loans

equally after interest on partners’ capital and partners’ salaries

Author: rikazzz Comment

Accounting and Finance

A machine is purchased at the start of year 1 for $35 000. It is depreciated on the reducing balance method at 20% per year. What is the net book value at the end of year 2?

$17 920

$21 000

$22 400

$28 000

Author: rikazzz Comment

Rectification of Errors

Agreement of trial balance means that there is no error in the books of account.

True

False

Author: rikazzz Comment

Accounting Equations

If total assets increase by $20,000 and total liabilities increase by $12,000, the capital will:

Increase by $32,000

Increase by $8,000

Decrease by $32,000

Decrease by $8,000

Author: rikazzz Comment

Bank Reconciliation Statement

When bank balance increases, it is debited in _______ and credited in ________.

Pass Book; Cash Book

Cash Book; Pass Book

None of the given options

Author: rikazzz Comment

Accounting and Bookkeeping

Select any correct items for which generally accepted accounting principles require disclosure in notes accompanying the financial statements.

A target lawsuit was filed against the company two days after the balance sheet date

The depreciation method in use, given that several different methods are acceptable under generally accepted accounting principles

Whether small but long-lived items, such as electric pencil sharpeners and handheld calculators, are charged to asset or expense accounts

As of year-end, the chief executive officer had been hospitalized due to chest pains

Author: rikazzz Comment