MBA MCQ Quiz Hub

1. Which of these best describes fixed assets?
Are bought to be used in the business
Are expensive items bought for the business
Are items which will not wear out quickly
Are of long life and are not bought specifically for resale

2. Discounts received are:
Deducted by us when we pay our accounts
Deducted when we receive cash
Given by us when we sell goods on credit
None of these

3. Entered in the Purchases Journal are:
Discounts received
Purchases invoices
Payments to suppliers
Trade discounts

4. A firm bought a machine for £3,200. It is to be depreciated at a rate of 25 per cent using the Reducing Balance Method. What would be the remaining book value after 2 years?
£2,400
£1,800
£1,600
Some other figure

5. A Provision for Doubtful Debts is created:
When debtors cease to be in business
To provide for possible bad debts
When debtors become bankrupt
To write off bad debts

6. Given opening debtors of £11,500, Sales £48,000 and receipts from debtors £45,000, the closing debtors should total:
£14,500
£83,500
£18,500
£8,500

7. If creditors at 1 January 20X3 were £2,500, creditors at 31 December 20X3 £4,200 and payments to creditors £32,000, then purchases for 20X3 are:
£31,600
£38,700
£33,700
£30,300

8. The best method of departmental accounts is:
To allocate expenses in proportion to purchases
To allocate expenses in proportion to sales
To charge against each department its uncontrollable costs
To charge against each department its controllable costs

9. Any loss on revaluation is:
Debited to old partners in old profit-sharing ratios
Credited to old partners in old profit-sharing ratios
Credited to new partners in new profit-sharing ratios
Debited to new partners in new profit-sharing ratios

10. The Issued Capital of a company is:
Always the same as the Authorized Capital
The same as Preference Share Capital
The same as Preference Share Capital
None of the above

11. Which of the following is correct?
Profit reduces capital
Profit increases capital
Capital can only come from profit
Profit does not alter capital

12. Gross profit is:
Cost of goods sold + Opening stock
Excess of sales over cost of goods sold
Sales less Purchases
Net profit less expenses of the period.

13. The credit entry for net profit is on the credit side of:
The trading account
The drawings account
The capital account
The profit and loss account

14. When banking money in to your current account you should always use:
A general ledger
A cheque book
A cash book
A paying-in slip

15. The total of the Sales Journal is entered on:
The debit side of the Sales Account in the General Ledger
The credit side of the General Account in the Sales Ledger
The credit side of the Sales Account in the General Ledger
The debit side of the Sales Day Book

16. Depreciation is:
The salvage value of a fixed asset
The amount of money spent in replacing assets
The part of the cost of the fixed asset consumed during its period of use by the firm
The amount spent to buy a fixed asset

17. When the final accounts are prepared, the Bad Debts Account is closed by a transfer to the:
Trading Account
Provision for Doubtful Debts Account
Balance Sheet
Profit and Loss Account

18. When the final accounts are prepared, the Bad Debts Account is closed by a transfer to the:
Trading Account
Provision for Doubtful Debts Account
Balance Sheet
Profit and Loss Account

19. Capital Expenditure is:
The costs of running the business on a day-to-day basis
Money spent on buying fixed assets or adding value to them
Money spent on selling fixed assets
The extra capital paid in by the proprietor

20. A Bank Reconciliation Statement is a statement:
Sent by the bank when we have made an error
Drawn up by the bank to verify the cash book
Sent by the bank when the account is overdrawn
Drawn up by us to verify our cash book balance with the bank statement balance

21. When a petty cash book is kept there will be:
The same number of entries in the general ledger
The same number of entries in the general ledger
Fewer entries made in the general ledger
More entries made in the general ledger

22. If a trial balance totals do not agree, the difference must be entered in:
The Profit and Loss Account
A Nominal Account
The Capital Account
A Suspense Account

23. Given cost of goods sold £16,000 and margin of 20 per cent, then sales figure is:
£21,000
£20,000
£13,600
£20,160

24. Given opening capital of £16,500, closing capital as £11,350 and drawings were £3,300, then:
Profit for the year was £8,450
Loss for the year was £8,450
Profit for the year was £1,850
Loss for the year was £1,850

25. In the Manufacturing Account is calculated:
The production costs paid in the year
The total cost of goods produced
The gross profit on goods sold
The production cost of goods completed in the period

26. Assets can be revalued in a partnership change because:
The depreciation charged on them needs to be reversed
It helps prevent injustice to some partners
The law insists upon it
Inflation affects all values

27. Is it true that the trial balance totals should agree?
No, there are sometimes good reasons why they differ
Yes, always
Yes, except where the trial balance is extracted at the year end
No, because it is not a balance sheet

28. Carriage inwards is charged to the trading account because:
Carriage outwards goes in the profit and loss account
It is an expense connected with buying goods
It is not part of motor expenses
It should not go in the balance sheet

29. Suppliers' personal accounts are found in the:
Sales ledger
Nominal ledger
Purchases ledger
General ledger

30. £50 cash taken from the cash till and banked is entered:
Debit cash column £50: Credit bank column £50
Debit bank column £50: Credit bank column £50
Debit bank column £50: Credit cash column £50
Debit cash column £50: Credit cash column £50

31. The total of the 'Discounts Allowed' column in the Cash Book is posted to:
The debit of the Discounts Received account
The debit of the Discounts Allowed account
The credit of the Discounts Allowed account
The credit of the Discounts Received account

32. The total of the Purchases Journal is transferred to the:
Credit side of the Purchases Account
Credit side of the Purchases Book
Debit side of the Purchases Account
Debit side of the Purchases Day Book

33. A firm bought a machine for £16,000. It is expected to be used for 5 years then sold for £1,000. What is the annual amount of depreciation if the straight line method is used?
£3,750
£3,100
£3,200
£3,000

34. Working Capital is a term meaning:
The total of Fixed Assets - Current Assets
The capital less drawings
The amount of capital invested by the proprietor
The excess of the current assets over the current liabilities

35. If £500 was shown added to Purchases instead of being added to a fixed asset:
Net profit only would be overstated
Both gross and net profits would be understated
Net profit only would be understated
It would not affect net profit

36. The Journal is:
Used when other journals have been mislaid
A supplement to the Cash Book
Not part of the double entry system
Part of the double entry system

37. Errors are corrected via the Journal because:
It saves the bookkeeper's time
It provides a good record explaining the double entry records
It saves entering them in the ledger
It is much easier to do

38. In a Sales Ledger Control Account the Bad Debts written off should be shown in the account:
As a credit
As a debit
As a balance carried down
Both as a debit and as a credit

39. If it is required to maintain fixed capitals then the partners' shares of profits must be:
Credited to capital accounts
Debited to capital accounts
Debited to partners' current accounts
Credited to partners' current accounts

40. Net profit is calculated in the:
Profit and loss account
Balance sheet
Trial balance
Trading account

41. The costs of putting goods into a saleable condition should be charged to:
Trading account
Profit and loss account
Balance sheet
None of these

42. If you want to make sure that your money will be safe if Cheques sent are lost in the post, you should:
Always pay by cash
Cross your Cheques 'Account Payee only, Not Negotiable'
Always take the money in person
Not use the postal service in future

43. A credit balance of £200 on the cash columns of the cash book would mean:
We have £200 cash in hand
Someone has stolen £200 cash
We have spent £200 more than we have received
The bookkeeper has made a mistake

44. A cash discount is best described as a reduction in the sum to be paid:
If payment is made by cash, not cheque
If purchases are made for cash, not on credit
If payment is made either by cash or cheque
If payment is made within a previously agreed period

45. An alternative name for a Sales Journal is:
Sales Day Book
Sales Ledger
Sales Invoice
Daily Sales

46. The total of the Returns Outwards Journal is transferred to:
The debit side of the Returns Outwards Account
The credit side of the Returns Outwards Book
The credit side of the Returns Outwards Account
The debit side of the Purchases Returns Book

47. In the trial balance the balance on the Provision for Depreciation Account is:
Not shown, as it is part of depreciation
Sometimes shown as a credit, sometimes as a debit
Shown as a credit item
Shown as a debit item

48. A debit balance brought down on a Packing Materials Account means:
We have a stock of packing materials unused
We are owed for packing materials
We have lost money on packing materials
We owe for packing materials

49. Which of these best describes a balance sheet?
A statement of assets
A listing of balances
An account proving the books balance
A record of closing entries

50. _____ the transactions is known as Book Keeping.
Classifyi
Recordi
Summarisi
None of these