R4RIN – MCQs, Mock Tests | MBA MBA Accounting MCQ Question Set 4

Under which concept it is assumed that the enterprises has neither the intention nor the necessity of liquidation or of curtailing materiality the scale of operation

1. Revenue realization concept
2. Matching cost concept
3. Going concern concept
4. None of these

✅ Correct Answer: 3

Bookkeeping is an ______________ of correctly recording of business transition.

1. Art and Science
2. Art
3. Science
4. Art or Science

✅ Correct Answer: 2

Journal Entries are known as book of ______________ Entry.

1. Original
2. Duplicate
3. Personal
4. Nominal a/c

✅ Correct Answer: 1

Fixed assets and current assets are categorized as per concept of:

1. Separate entity
2. Going concern
3. Consistency
4. Time period

✅ Correct Answer: 2

The allocation of owner's private expenses to his/her business violates which of the following?

1. Accrual concept
2. Matching concept
3. Separate business entity concept
4. Consistency concept

✅ Correct Answer: 3

Profit from sale of assets is example for–

1. Revenue Profit
2. Capital Profit
3. Loss
4. None of these

✅ Correct Answer: 2

Book keeping is mainly concerned with

1. Recording of financial data relating to business operation
2. Designing the systems in recording classifying,summarizing the recorded data
3. Interpreting the data for internal and external users
4. Understand the liabilities

✅ Correct Answer: 1

The convention of conservatism when applied to the balance sheet result in.

1. Understand the asset
2. Understand the liabilities
3. Overstatement of capital
4. None of these

✅ Correct Answer: 1

The amount brought in by the proprietor in the business should be credited to

1. Cash a/c
2. Capital a/c
3. Drawing a/c
4. Bank a/c

✅ Correct Answer: 2

The return of goods by the customer should be debited to

1. Customer a/c
2. Sales return a/c
3. Goods a/c
4. Purchase return a/c

✅ Correct Answer: 2

sales made by Mahesh for cash should be debited to

1. Cash a/c
2. Mahesh a/c
3. Sales a/c
4. Sales return a/c

✅ Correct Answer: 1

The rent paid to land lord to be credited to

1. Land lord a/c
2. Rent a/c
3. Cash a/c
4. Tenant a/c

✅ Correct Answer: 3

Which of the following statements are false?

1. All liability is a debt for your business
2. Debtor are a asset for business
3. The accounting equation shows how much of your assets belong to the owner, and how much belong to people outside business
4. None of the above

✅ Correct Answer: 4

Contingent liabilities should be recorded in the accounts when:

1. It is probable that the future event will occur.
2. The amount of the liability can be reasonably estimated.
3. Both (a) and (b).
4. Either (a) or (b).

✅ Correct Answer: 3

Accounting concepts are based on

1. Certain assumptions
2. Certain facts and figures
3. Certain accounting records
4. Practice experience

✅ Correct Answer: 2

Retained earnings statement depicts:

1. Appropriation of profits
2. Estimates of profits
3. Estimates of costs
4. Determination of profit

✅ Correct Answer: 1

Financial accounting deals with:

1. Determination of cost
2. Determination of profit
3. Determination of price
4. Determination of selling price

✅ Correct Answer: 2

Financial account record only

1. Actual figures
2. Budgeted figures
3. Standard figures
4. Management Figure

✅ Correct Answer: 1

Content of income statement

1. Trading account
2. Profit and loss account
3. Balance sheet
4. All of the above

✅ Correct Answer: 4

Depreciation is a ______________

1. Cash operating expenditure
2. Non cash operating expenditure
3. Cash non-operating expenditure
4. Non cash non-operating expenditure

✅ Correct Answer: 2

Outstanding salary account is a ______________ account

1. Nominal account
2. Real Account
3. Artificial person’s account
4. Representative personal account

✅ Correct Answer: 4

The work of factory employees that can be physically associated with converting raw material into finished goods is classified as ––

1. Manufacturing overhead
2. Indirect materials
3. Indirect labour
4. Direct labour

✅ Correct Answer: 4

Aggregate of prime cost and Factory overhead is known as:

1. Work on cost
2. Work Cost
3. Cost of Production
4. Direct Cost

✅ Correct Answer: 2

Conversion cost includes cost of onverting ______________ into ______________

1. Raw material, WIP
2. Raw material, Finished goods
3. WIP, Finished goods
4. Finished goods, Saleable goods

✅ Correct Answer: 2

All costs other than direct materials cost, direct labour cost and direct expenses are known as:

1. Indirect material cost
2. Overhead
3. Indirect labour cost
4. Indirect expenses

✅ Correct Answer: 2

______________ is a summary of all transactions relating to particular account.

1. Balance sheet
2. Trial Balance
3. Ledger
4. Journal

✅ Correct Answer: 3

Amount of salary paid to Suresh should be debited to ______

1. Account of Suresh
2. Salaries account
3. Cash account
4. Outstanding expenses

✅ Correct Answer: 2

Modern Method of Accounting was introduced by

1. M. S. Gosav
2. Wheldon
3. LucoPacioli
4. R. N. Carter

✅ Correct Answer: 3

If a company has contingent liabilities, they appear in the _____

1. Balance sheet
2. Director’s Report
3. Foot note down the balance sheet
4. Chairman’s report

✅ Correct Answer: 1

The use of management accounting is

1. Compulsory
2. Optional
3. Obligation
4. Statutory requirement

✅ Correct Answer: 2

Financial account state the ______________ position of a concern.

1. Financial
2. Economic
3. Non financial
4. None of these

✅ Correct Answer: 1

Which group of ratios relates profits to sales and investment?

1. Liquidity ratios
2. Debt ratios
3. Coverage ratios
4. Profitability ratios

✅ Correct Answer: 4

Process that involves decision making with respect to investment in fixed asset

1. Valuation
2. Breakeven analysis
3. Capital budgeting
4. Material management decision

✅ Correct Answer: 3

When a Bond's Yield to Maturity is greater than the Bond's Coupon Rate, the Bond

1. Is selling at a Premium
2. Has reached its Maturity Date
3. Is priced at Par
4. Is selling at a Discount

✅ Correct Answer: 4

The ______________ is a common term for the market consensus value of the required return on a stock.

1. Dividend payout ratio
2. Intrinsic value
3. Market capitalization rate
4. Plowback rate

✅ Correct Answer: 3

Current ratio is 2:5.Current Liability is Rs.30,000.The Net working Capital is

1. Rs. 18,000
2. Rs. 45,000
3. Rs. (45,000)
4. Rs. (18000)

✅ Correct Answer: 4

______________ means expanding the number of investments which cover different kinds of stocks.

1. Diversification
2. Standard deviation
3. Variance
4. Covariance

✅ Correct Answer: 1

What is the value of a $1,000 Face Value Bond that has twenty years remaining to Maturity, 10 % Coupon (paid annually), and is priced to yield 6%?

1. $ 980
2. $ 1,000
3. 1,263
4. None

✅ Correct Answer: 4

One of the problems with attempting to forecast stock market values is that

1. There are no variables that seem to predict market return
2. The earnings multiplier approach can only be used at the firm level
3. The level of uncertainty surrounding the forecast will always be quite high
4. Dividend payout ratios are highly variable

✅ Correct Answer: 3

Which of the following is a characteristic of a coupon bond?

1. Pays interest on a regular basis (typically every six months)
2. Does not pay interest on a regular basis but pays a lump sum at maturity
3. Total payment must be made at the end of period
4. All of above statement are correct

✅ Correct Answer: 1

When the market's Required Rate of Return for a particular Bond is much less than its Coupon Rate, the Bond is selling at

1. Premium
2. Discount
3. Par
4. Face

✅ Correct Answer: 1

____ is responsible for financial inventory, management, financial planning etc.

1. Shareholders
2. Treasurer
3. Controller
4. Board of Directors

✅ Correct Answer: 2

Which group of ratios measures a firm's ability to meet short-term obligations?

1. Liquidity ratios
2. Debt ratios
3. Coverage ratios
4. Profitability ratios

✅ Correct Answer: 1

Which one of following is not Direct Claim Security?

1. Bonds
2. Option
3. Shares
4. Stock

✅ Correct Answer: 2

ABC’s and XYZ’s debt-to-total assets ratio is 0.4. What is its debt-to-equity ratio?

1. 0 .2
2. 0 .77
3. 0.667
4. 0.333

✅ Correct Answer: 3

The Future Value (FV) of $1000 in 5 years at 5% interest rate will be:

1. $1,000.00
2. $1,276.28
3. $999.99
4. $1,500.52

✅ Correct Answer: 2

Which of the following is an advantage of a corporation that is NOT an advantage as in a partnership?

1. Limited liability
2. Capital shortage
3. Single taxation
4. All of the above

✅ Correct Answer: 1

You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of Rs. 3 in the upcoming year while Stock Y is expected to pay a dividend of Rs. 4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X:

1. Will be greater than the intrinsic value of stock Y
2. Will be the same as the intrinsic value of stock Y
3. Will be less than the intrinsic value of stock Y
4. Cannot be calculated without knowing the market rate of return

✅ Correct Answer: 3

Financial leverage means

1. Use of more debt capital to increase profit
2. High degree of solvency
3. Low bank finance
4. None of the above

✅ Correct Answer: 1

A capital budgeting technique that is NOT considered as discounted cash flow method is:

1. Payback period
2. Internal rate of return
3. Net present value
4. Profitability index

✅ Correct Answer: 1

The coupon is the

1. Amount of discount received when a Bond is purchased
2. Amount paid to a Bond dealer when a Bond is purchased
3. Difference between the Bid and Ask Price
4. Stated Interest Payment on a Bond

✅ Correct Answer: 4

You wish to earn a return of 10% on each of two stocks, C and D. Each of the stocks is expected to pay a dividend of Rs2 in the upcoming year. The expected growth rate of dividends is 9% for stock C and nine percent for stock D. The intrinsic value of stock C ______________.

1. Will be the same as the intrinsic value of stock D
2. Will be less than the intrinsic value of stock D
3. Cannot be calculated without knowing the rate of return on the market portfolio
4. None of the above is a correct statement

✅ Correct Answer: 1

Which of following is (are) Direct Claim Security?

1. Bonds
2. Option
3. Shares
4. a and c

✅ Correct Answer: 4

The ______________ is defined as the present value of all cash proceeds to the investor in the stock.

1. Dividend payout ratio
2. Intrinsic value
3. Market capitalization rate
4. Plowback ratio

✅ Correct Answer: 2

Break even analysis is also called

1. Contribution Margin
2. Unit sales
3. Cost-Volume-Profit analysis
4. None of the above

✅ Correct Answer: 3