2. Introduction To Financial Accounting - Part 2


25 Questions MCQ Test Financial Accounting | 2. Introduction To Financial Accounting - Part 2


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This mock test of 2. Introduction To Financial Accounting - Part 2 for Finanace & Accounting helps you for every Finanace & Accounting entrance exam. This contains 25 Multiple Choice Questions for Finanace & Accounting 2. Introduction To Financial Accounting - Part 2 (mcq) to study with solutions a complete question bank. The solved questions answers in this 2. Introduction To Financial Accounting - Part 2 quiz give you a good mix of easy questions and tough questions. Finanace & Accounting students definitely take this 2. Introduction To Financial Accounting - Part 2 exercise for a better result in the exam. You can find other 2. Introduction To Financial Accounting - Part 2 extra questions, long questions & short questions for Finanace & Accounting on EduRev as well by searching above.
QUESTION: 1

Which accounting assists in analyzing the expenditure for ascertaining the cost of various products manufactured or services rendered by the firm and the fixation of prices thereof.

Solution:

Cost accounting assists in analyzing the expenditure for ascertaining the cost of various products manufactured or services rendered by the firm and the fixation of prices thereof.

QUESTION: 2

Which of the following is/are the Qualitative Characteristics of Accounting Information

Solution:

In order to assess whether accounting information is decision-useful, it must possess the characteristics of reliability, relevance, understandability, and comparability.

QUESTION: 3

What are the new areas of accounting which have also gained prominence?

Solution:

The scope of accounting has become so vast, that new areas like human resource accounting, social accounting, responsibility accounting have also gained prominance.

QUESTION: 4

To be comparable, accounting reports must belong to a  _________ period and use ________ unit of measurement and format of reporting.

Solution:

To be comparable, accounting reports must belong to a common period and use common unit of measurement and format of reporting.

QUESTION: 5

Which of the following is/are the primary objectives of accounting

Solution:

The primary objectives of accounting includes: Maintenance of Records of Business Transactions, Calculation of Profit and Loss, Depiction of Financial Position and Providing Accounting Information to its Users

QUESTION: 6

Which accounting assists in keeping a systematic record of financial transactions the preparation and presentation of financial reports in order to arrive at a measure of organizational success and financial soundness.

Solution:

Financial accounting assists in keeping a systematic record of financial transactions the preparation and presentation of financial reports in order to arrive at a measure of organizational success and financial soundness.

QUESTION: 7

If the total revenue of a given period is ₹6,00,000 and total expenses are ₹5,40,000, identify Profit or Loss for the said Period? 

Solution:

Since, Total Revenu exceeds Total expense, hence, the profit will
be equal to ₹60,000(₹6,00,000 – ₹5,40,000). 

QUESTION: 8

A proper record of resources owned by a business organization (Assets) and claims against such resources (Liabilities) facilitates the preparation of a statement known as the ________________ position statement.

Solution:

A proper record of resources owned by a business organization (Assets) and claims against such resources (Liabilities) facilitates the preparation of a statement known as the balance sheet position statement.

QUESTION: 9

Match the Stakeholder group with their interest

Solution:

Government is interested in VAT and other tax liabilities of the firm  
Customers is interested in Firms ability to provide service or produce product 
Social Responsibility Group is interested in Ethical or Environmental activities of the firm  
Lenders is interested in Whether the firm has a long-term future 

QUESTION: 10

Which of the following is not a business transaction?

Solution:

Paid sons fees from her personal bank account ₹20,000 is not a business transaction

QUESTION: 11

Which of the following is not a Non-Current Liability

Solution:

QUESTION: 12

Which of the following is regarded as a language of business?

Solution:

Acounting is regarded as a language of business because it describes and analyses a mass of data of an enterprise through measurement, classification and summarisation, and reduces those date into reports and statements, which show the financial condition and results of operations of that enterprise.

QUESTION: 13

Which of the following is a limitation of Accounting/Accounting Information?

Solution:

Accounting information relates to the past transactions and is quantitative and financial in nature, it does not provide qualitative and non-financial information. These limitations of accounting must be kept in view while making use of the accounting information.

QUESTION: 14

Which accounting deals with the provision of necessary accounting information to people within the organization to enable them in decision-making, planning, and controlling business operations.

Solution:

Management accounting deals with the provision of necessary accounting information to people within the organization to enable them in decision-making, planning, and controlling business operations.

QUESTION: 15

Which of the following is not an Expense

Solution:

Costs incurred by a business in the process of earning revenue are known as expenses. Generally, expenses are measured by the cost of assets consumed or services used during an accounting period. The usual items of expenses are: depreciation, rent, wages, salaries, interest, cost of heater, light and water, telephone, etc.

QUESTION: 16

Which of the following is not a Non-Current Asset

Solution:

QUESTION: 17

Use of common unit of measurement and common format of reporting promotes;

Solution:

Comparability:  It is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time period and with other entities. To be comparable, accounting reports must belong to a common period and use common unit of measurement and format of reporting.

QUESTION: 18

Which of the following is considered as a Transaction?

Solution:

Transaction is an event involving some value between two or more entities. It can be a purchase of goods, receipt of money, payment to a creditor, incurring expenses, etc. It can be a cash transaction or a credit transaction.

QUESTION: 19

Which of the following is not a Current Asset

Solution:

QUESTION: 20

If the benefit of an expenditure lasts for more than a year, it is treated as an _________________ (also called ____________________) 

Solution:

Spending money or incurring liability for some benefit, service, or property received is called expenditure. E.g. Purchase of goods, purchase of machinery, purchase of furniture.

If the benefit of expenditure is exhausted within a year, it is treated as an expense (also called revenue expenditure).

On the other hand, if the benefit of an expenditure lasts for more than a year, it is treated as an asset (also called capital expenditure) such as purchase of machinery, furniture, etc.

QUESTION: 21

Amount invested by the owner in the firm is known as ______________

Solution:

Amount invested by the owner in the firm is known as capital. It may be brought in the form of cash or assets by the owner for the business entity capital is an obligation and a claim on the assets of business. It is, therefore, shown as capital on the liabilities side of the balance sheet.

QUESTION: 22

Which of the following is not a Current Liability

Solution:

QUESTION: 23

Which of the following is not a Revenue

Solution:

Revenue are the amounts of the business earned by selling its products or providing services to customers, called sales revenue. Other items of revenue common to many businesses are: commission, interest, dividends, royalities, rent received, etc. Revenue is also called income.

QUESTION: 24

If the benefit of expenditure is exhausted within a year, it is treated as an _____________ (also called _______________).

Solution:

Spending money or incurring liability for some benefit, service, or property received is called expenditure. E.g. Purchase of goods, purchase of machinery, purchase of furniture.

If the benefit of expenditure is exhausted within a year, it is treated as an expense (also called revenue expenditure).

On the other hand, if the benefit of an expenditure lasts for more than a year, it is treated as an asset (also called capital expenditure) such as purchase of machinery, furniture, etc.

QUESTION: 25

Which qualitative characteristics of accounting information is reflected when accounting information is clearly presented?

Solution:

Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent. Accountants should present the comparable information in the most intenlligible manner without sacrificing relevance and reliability.