Financial Accounting MCQ Quiz - Objective Question with Answer for Financial Accounting - Download Free PDF
Last updated on May 29, 2025
Latest Financial Accounting MCQ Objective Questions
Financial Accounting Question 1:
Which of the following is the correct effect of a business transaction that involves borrowing $10,000 from a bank?
Answer (Detailed Solution Below)
Financial Accounting Question 1 Detailed Solution
The correct option is option 3
Additional Information:
- Cash (asset) increases, and so does the loan (liability).
- The business gets cash and owes the bank.
Financial Accounting Question 2:
A customer returns goods previously bought on credit. Which journal is used?
Answer (Detailed Solution Below)
Financial Accounting Question 2 Detailed Solution
The correct option is option 2
Additional Information:
- Customer returns are recorded in the returns inwards (sales returns) journal.
- It reduces revenue and trade receivables.
Financial Accounting Question 3:
Which of the following is not a source document?
Answer (Detailed Solution Below)
Financial Accounting Question 3 Detailed Solution
The correct option is option 2
Additional Information:
- The trial balance is a report, not a transaction document.
- It summarizes ledger balances; it doesn’t originate a transaction.
Financial Accounting Question 4:
Which of the following would be recorded in the sales journal?
Answer (Detailed Solution Below)
Financial Accounting Question 4 Detailed Solution
The correct option is option 3
Additional Information:
- The sales journal records credit sales of inventory.
- Only credit sales of trading stock go here.
Financial Accounting Question 5:
Which of the following is an example of a cash transaction?
Answer (Detailed Solution Below)
Financial Accounting Question 5 Detailed Solution
The correct option is option 2
Additional Information:
- Cash transactions include payments through bank, cash, or immediate settlement.
- Bank transfers are considered immediate payment (cash transaction).
Top Financial Accounting MCQ Objective Questions
Financial Accounting Question 6:
Which of the following is NOT a qualitative characteristic of accounting information?
Answer (Detailed Solution Below)
Financial Accounting Question 6 Detailed Solution
The correct answer is - None of the above.
Key Points
- Qualitative Characteristics of Accounting Information
- Relevance: Accounting information is relevant if it can influence the economic decisions of users by helping them evaluate past, present, or future events or confirming or correcting their past evaluations.
- Reliability: Reliable accounting information is free from significant error and bias and faithfully represents what it purports to represent. It should be verifiable, neutral, and provide a faithful representation of the transactions and events.
- Comparability: This characteristic allows users to identify and understand similarities and differences among items. Comparability enables users to compare financial information of an entity over time or with other entities.
- The given options (Relevance, Reliability, and Comparability) are all fundamental qualitative characteristics of accounting information.
- Since all given options are qualitative characteristics, the correct answer is 'None of the above', making Option 5 the correct choice.
Additional Information
- Other Key Qualitative Characteristics in Accounting:
- Understandability: Information should be comprehensible to users who have a reasonable knowledge of business and economic activities. Complex matters should not be left out of financial reports simply because they are difficult to understand.
- Timeliness: Timeliness refers to having information available to decision-makers before it loses its capacity to influence decisions. Information that is outdated is of little value.
Financial Accounting Question 7:
Which of the following best describes the prudence concept in accounting?
Answer (Detailed Solution Below)
Financial Accounting Question 7 Detailed Solution
Financial Accounting Question 8:
Which of the following calculates a sole trader's net profit for a period?
Answer (Detailed Solution Below)
Financial Accounting Question 8 Detailed Solution
Opening net assets + profit - drawings + capital introduced = Closing net assets
Therefore, Profit = Closing net assets + drawings - capital introduced - opening net assets
Financial Accounting Question 9:
Answer (Detailed Solution Below)
Financial Accounting Question 9 Detailed Solution
The correct answer is option 2, i.e. $331,760
Financial Accounting Question 10:
Which accounting principle is described by the following statement?
‘Transactions and events are recorded so that assets and income are not overstated whereas and expenses and losses are not understated.’
Answer (Detailed Solution Below)
Financial Accounting Question 10 Detailed Solution
The correct option is option 1.
Financial Accounting Question 11:
Answer (Detailed Solution Below)
Financial Accounting Question 11 Detailed Solution
Financial Accounting Question 12:
Answer (Detailed Solution Below)
Financial Accounting Question 12 Detailed Solution
Financial Accounting Question 13:
Below are extracts of the trial balance of Ryan Co for the year ended 30 June 20X8:
During the year ended 30 June 20X9 a new item of plant and machinery was purchased at a cost of $50,000. Ryan Co. depreciates plant and machinery at 20% per annum using the reducing balance method.
What was the depreciation charge for the year ended 30 June 20X9?
Answer (Detailed Solution Below)
Financial Accounting Question 13 Detailed Solution
($230,400 + $50,000 - $115,200) × 20% = $33,040
Financial Accounting Question 14:
When Bob’s trial balance was extracted, the total of the debit balances was INR 208,462 and the total of the credit balances was INR 208,642. He opened a suspense account for this difference and, upon investigation, he found that:
(i) A cash sale for INR 50 was debited to the cash account, but no entry was made in the sales account;
(ii) the opening inventory figure of INR 1,200 was omitted from the trial balance.
When Bob corrects these errors what was the balance on his suspense account?
Answer (Detailed Solution Below)
Financial Accounting Question 14 Detailed Solution
Financial Accounting Question 15:
In the previous year Simone had a gross profit margin of 10%. In the current year, this increased to 15%. Which one of the following reasons might explain this?
Answer (Detailed Solution Below)
Financial Accounting Question 15 Detailed Solution
- Increased volume of sales would have increased costs too.
- Settlement discounts aren’t part of the cost of sale calculation.
- Higher levels of inventory obsolescence would result in a lower gross profit margin %.