MCQs Financial Accounting BSCS

1.
Accounting is a language of:
a. Accountant
b. Business (Correct)
c. Owner of business
d. None of these
2. Book-keeping is first step of:
a. Accounting (Correct)
b. Business
c. Both a & b
d. None of above
3. The branch of accounting which provides information to people outside the business is
called:
a. Accounting
b. Financial accounting (Correct)
c. Tax accounting
d. None of these
4. The branch of accounting that generates information for internal decision makers of
business:
a. Management accounting (Correct)

b. Tax accounting
c. Financial accounting
d. All of above
5. The branch of accounting that provides information needed to prepare income tax returns:
a. Financial accounting
b. Tax accounting (Correct)
c. Cost accounting
d. All of these
6. An economic activity carried with a view to earn profit is called:
a. Accounting
b. Trade
c. Business (Correct)
d. All of these
7. A business which provides services to customer is called:

a. Services business (Correct)
b. Trading business
c. Manufacturing business
d. All of above
8. A business in which first goods are produced from raw material and then sold to customers
is called:
a. Manufacturing business (Correct)

b. Services business
c. Trading business
d. None of these
9. Business documents which convey concise picture of profitability and financial position of
business are called:
a. Accounting
b. Financial statements (Correct)
c. Financial accounting
d. All of these
10. All economic resources owned by a business or entity are called:
a. Assets (Correct)
b. Liabilities
c. Capital
d. None of these
11. Assets which provides benefits for one year or less than one year are called:
a. Fixed assets
b. Fixed tangible assets
c. Current assets
d. Intangible assets
12. Assets which provide benefit for more than one year are called:
a. Current assets
b. Fixed assets (Correct)
c. Intangible assets
d. Fictious assets
13. Fixed assets having physical existence are classified as:
a. Intangible
b. Tangible (Correct)
c. Fictious
d. None of these
14. Fixed assets which do not have physical existence are classified as:
a. Tangible
b. Intangible (Correct)
c. Fictious
d. All of these
15. The claim of creditors/outsiders against business assets is called:
a. Assets
b. Liability (Correct)
c. Capital
d. Drawings
16. Liabilities of business payable in one or less than one year are called:
a. Medium-term
b. Long-term
c. Current (Correct)
d. None of these
17. Liabilities of business payable within 2 to 5 years of time period are called:
a. Current
b. Long-term
c. Medium-term (Correct)
d. All of these
18. Liabilities payable by business after more than five years are called:
a. Long-term (Correct)
b. Medium-term
c. Current
d. All of these
19. When goods or services are exchanged for immediate cash payment, this transaction is
called:
a. Cash transaction (Correct)

b. Credit transaction
c. Internal transaction
d. None of these
20. A transaction in which second party is not involved is called:
a. External transaction
b. Internal transaction (Correct)
c. Credit transaction
d. All of these
21. The term general is referred to:

a. Daily or routine (Correct)
b. Accounting book
c. Accounting
d. None of these
22. The term journal is referred to:

a). Accounting book (Correct)
b). Daily or routine
c). Book-keeping
d). None of these
23. There are amount columns in the journal:

a. One column
b. Two column (Correct)
c. Three column
d. None of these
24. The normal balance of assets account is called:

a. Debit balance (Correct)
b. Credit balance
c. Positive balance
d. All of these
25. The normal balance of liabilities is called:

a. Positive balance
b. Debit balance
c. Credit balance (Correct)
d. All of these
26. The normal balance of owner’s equity is called:

a. Credit balance (Correct)
b. Debit balance
c. Negative balance
d. None of these
27. The normal balance of owner’s drawings is called:

a. Negative balance
b. Credit balance
c. Debit balance (Correct)
d. All of these
28. The normal balance of revenue is called:

a. Negative balance
b. Credit balance (Correct)
c. Debit balance
d. All of these
29. The normal balance of expenses is called:

a. Negative balance
b. Credit balance
c. Debit balance (Correct)
d. All of these
30. Increase in assets is recorded as:

a. Debit (Correct)
b. Credit
c. Positive
d. None of these
31. Increase in liabilities is recorded as:

a. Debit
b. Credit (Correct)
c. Negative
d. None of these
32. When an expense is paid, it is recorded as:

a. Negative
b. Positive
c. Credit
d. Debit (Correct)
33. When a revenue is earned, it is recorded as:

a. Negative
b. Positive
c. Credit (Correct)
d. Debit
34. When cash is used by the owner for household purpose, it is debited to:
a. Cash
b. Capital
c. Drawing (Correct)
d. All of these
35. As per traditional classification of accounts, cash account is a:

a. Personal account
b. Nominal account
c. Real account (Correct)
d. None of these
36. As per traditional classification of accounts, drawing account is a:

a. Real account
b. Personal account (Correct)
c. Nominal account
d. All of these
37. As per traditional classification of accounts, expense account is a:

a. Nominal account (Correct)
b. Real account
c. Personal account
d. None of these
38. As per traditional classification of accounts, revenue account is a:

a. Personal account
b. Real account
c. Nominal account (Correct)
d. None of these
39. Decrease in liabilities is recorded as:

a. Debit (Correct)
b. Credit
c. Negative
d. All of these
40. Decrease in assets is recorded as:

a. Positive
b. Negative
c. Debit
d. Credit (Correct)
41. If amount in debit column of ledger is greater than its credit column the balance is called:
a. Positive
b. Debit (Correct)
c. Negative
d. Credit
42. If amount is credit column of ledger is greater than its debit column, the balance is called:
a. Positive
b. Debit
c. Negative
d. Credit (Correct)
43. The process of recording information from journal to ledger is called:
a. Recording
b. Journalizing
c. Positing (Correct)
d. All of these
44. The process of totaling the ledger balances is called:

a. Casting (Correct)
b. Posting
c. Journalizing
d. None of these
45. A trail balance is prepared to prove:

a. Equality of debit & credit
b. Accuracy of ledger (Correct)
c. Accuracy of Balance sheet
d. All of these
46. The book-keeper task is finished after preparation of a:

a. General journal
b. Ledger
c. Trial balance (Correct)
d. None of these
1. Business in which goods are purchased for resale is called:

a. Manufacturing business
b. Trading business (Correct)
c. Service business
d. All of these
2. Gross profit/loss is determined through:

a. Profit & Loss account
b. Trading account (Correct)
c. Cash account
d. None of these
3. Net profit/loss are determined through:

a. Trading account
b. Balance sheet
c. Profit and loss account (Correct)
d. A & C
4. Sales discount is contra to:

a. Purchases
b. Credit purchases
c. Sales (Correct)
d. All of these
5. Sales return & Allowance is a contra to:

a. Purchases
b. Credit purchases
c. Sales (Correct)
d. All of these
A company purchases land with an office building. The building has a useful life of 20 years.
How should the land be depreciated?
(a) Depreciate over 20 years
(b) Depreciate over useful life of the land
(c) Don’t depreciate the land (Correct)
(d) None of these
If an asset is idle then?

(a) Depreciation is paused
(b) Depreciation for the entire period
(c) Depreciation is ignored
(d) Depreciation continues (Correct)
Medium Ltd. purchases the car for Rs. 2,200,000. It has an estimated salvage value of Rs.
200,000 and a useful life of five years. What is the depreciation charge for the first year
under the straight line method?
(a) Rs. 400,000 (Correct)
(b) Rs. 555,555
(c) Rs. 666,667
(d) None of the above
How often should the useful life of an asset be reviewed?

(a) Every six months
(b) As and when the market value will significantly change
(c) At least at each financial year end (Correct)
(d) Never
Operating expenses in often named as:

(a) Manufacturing cost plus commercial expenses
(b) Prime cost plus factory overheads
(c) Direct material plus direct labor
(d) Selling plus administrative expenses (Correct)
Discount for quick repayment of debt is normally referred as:

(a) Trade discount
(b) Prompt payment discount
(c) Cash discount (Correct)
(d) Bulk discount
Identify the asset from the following

(a) Prepayment (Correct)
(b) Creditors
(c) Notes payable
(d) Bank loan
A debit entry usually represents:

(a) Assets & Expenses (Correct)
(b) Assets & Income
(c) Liabilities & Income
(d) Expenses and Capital
Revenue is generally recognized being earned at the point of time when:

(a) Cash is received
(b) Billed to customers
(c) Goods are delivered (Correct)
(d) None of above
Sales return to Usman for cash should be debited to:
(a) Cash account
(b) Usman account
(c) Sales returns account (Correct)
(d) Sales account
The rent paid to landlord should be credited to:

(a) Landlord’s account
(b) Rent account
(c) Cash account (Correct)
Cash discount is provided on:

(a) Prompt payment (Correct)
(b) sales
(c) purchases
(d) Cash Sales
Any written evidence in support of a business transaction is called:

(a) Journal
(b) Ledger
(c) Voucher (Correct)
(d) All of above
Income received in advance is shown on ……….side of Balance sheet.

(a) assets
(b) liabilities (Correct)
(c) income
(d) Expenses
Prepaid expenses should appear as………. in Balance sheet.

(a) assets (Correct)
(b) liabilities
(c) income
(d) Owner’s equity
In case a debt becoming bad, the amount should be credited to:
(a) Debtor’s account (Correct)
(b) Bad debts account
(c) Sales account
(d) None of above
Depreciation arises because of:

(a) fall in market value of asset
(b) Physical wear & tear and obsolesce (Correct)
(c) fall in market value of money
(d) Change of taste of people
Depreciation charged on a machinery will be debited to:

(a) Machinery account
(b) Cash account
(c) Depreciation account (Correct)
(d) Accumulated depreciation

MCQs Financial Accounting BSCS

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1.

Accounting is a language of:

2. Book-keeping is first step of:

a. Management accounting (Correct)

6. An economic activity carried with a view to earn profit is called:

7. A business which provides services to customer is called:

a. Manufacturing business (Correct)

10. All economic resources owned by a business or entity are called:

13. Fixed assets having physical existence are classified as:

15. The claim of creditors/outsiders against business assets is called:

a. Cash transaction (Correct)

21. The term general is referred to:

22. The term journal is referred to:

23. There are amount columns in the journal:

24. The normal balance of assets account is called:

25. The normal balance of liabilities is called:

26. The normal balance of owner’s equity is called:

27. The normal balance of owner’s drawings is called:

28. The normal balance of revenue is called:

29. The normal balance of expenses is called:

30. Increase in assets is recorded as:

31. Increase in liabilities is recorded as:

32. When an expense is paid, it is recorded as:

33. When a revenue is earned, it is recorded as:

35. As per traditional classification of accounts, cash account is a:

36. As per traditional classification of accounts, drawing account is a:

37. As per traditional classification of accounts, expense account is a:

38. As per traditional classification of accounts, revenue account is a:

39. Decrease in liabilities is recorded as:

40. Decrease in assets is recorded as:

44. The process of totaling the ledger balances is called:

45. A trail balance is prepared to prove:

46. The book-keeper task is finished after preparation of a:

1. Business in which goods are purchased for resale is called:

2. Gross profit/loss is determined through:

3. Net profit/loss are determined through:

4. Sales discount is contra to:

5. Sales return & Allowance is a contra to:

If an asset is idle then?

How often should the useful life of an asset be reviewed?

Operating expenses in often named as:

Discount for quick repayment of debt is normally referred as:

Identify the asset from the following

A debit entry usually represents:

Revenue is generally recognized being earned at the point of time when:

The rent paid to landlord should be credited to:

Cash discount is provided on:

Any written evidence in support of a business transaction is called:

Income received in advance is shown on ……….side of Balance sheet.

Prepaid expenses should appear as………. in Balance sheet.

Depreciation arises because of:

Depreciation charged on a machinery will be debited to:

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