Financial Accounting MCQ Quiz - Objective Question with Answer for Financial Accounting - Download Free PDF
Last updated on Jun 12, 2025
Latest Financial Accounting MCQ Objective Questions
Financial Accounting Question 1:
You are an employee of Exelan Co and have been asked to help prepare the end of year statements for the period ended 30 November 20X9 by agreeing the figure for the total receivables.
The following figures, relating to the financial year, have been obtained from the books of
original entry.
| $ | |
|
Purchases for the year |
361,947 |
| Sales |
472,185 |
|
Returns inwards |
41,226 |
|
Returns outwards |
16,979 |
|
Irrecoverable debts written off |
4,586 |
|
Discounts received |
1,864 |
|
Cheques paid to suppliers |
342,791 |
|
Cheques received from customers |
429,811 |
|
Customer cheques dishonoured |
626 |
You discover that at the close of business on 30 November 20X8 the total of the receivables amounted to $50,241. What is the balance on the receivables ledger control account at 30 November 20X9?
Answer (Detailed Solution Below)
Financial Accounting Question 1 Detailed Solution
The Correct Option : 1
The correct answer is: $47,429
| $ | $ | ||
| Balance b/d | 50,241 | Returns inwards | 41,226 |
| Sales | 472,185 | irrecoverable debts written off | 4,586 |
| Cheques dishonoured | 626 | Cheques received | 429,811 |
| Balance c/d | 47,429 | ||
| 523,052 | 523,052 |
Financial Accounting Question 2:
Which of the following costs should be included in valuing inventories of finished goods
held by a manufacturing company, according to IAS 2 Inventories?
(1) Carriage inwards
(2) Carriage outwards
(3) Depreciation of factory plant
(4) Accounts department costs relating to wages for production employees
Answer (Detailed Solution Below)
Financial Accounting Question 2 Detailed Solution
The Correct Option : 3
The correct answer is: 1, 3 and 4 only
Carriage outwards is a Distribution expense.
Financial Accounting Question 3:
Luis sold goods to Pedro in May 20X9 with a list price of $98,000. Luis allowed a trade discount of 10%. Pedro returned goods with a list price of $3,000 on 31 May and returned a further $5,000 of goods at list price on 6 June as they were found to be unsuitable.
How much should Luis record in the sales returns account at 31 May?
Answer (Detailed Solution Below)
Financial Accounting Question 3 Detailed Solution
The Correct Option : 1
The correct answer is: $2,700
Make sure you read the dates carefully as some of the goods are returned after 31 May and we are only concerned with sales returns at that date, which is the goods with a list price of $3,000. The value of the original sale is after the trade discount of 10%, so the actual amount invoiced for those goods is $2,700 ($3,000 × 90%).
Financial Accounting Question 4:
A firm has the following transactions with its product R.
| 1 January 20X1 | Opening inventory: nil |
| 1 February 20X1 | Buys 10 units at $300 per unit |
| 11 February 20X1 | Buys 12 units at $250 per unit |
| 1 April 20X1 | Sells 8 units at $400 per unit |
| 1 August 20X1 | Buys 6 units at $200 per unit |
| 1 December 20X1 | Sells 12 units at $400 per unit |
The Firm uses FIFO to Value its inventory. What is the inventory value at the end of the year?
Answer (Detailed Solution Below)
Financial Accounting Question 4 Detailed Solution
The correct Ans is: $1,700
Closing inventory $1,700.
| Purchases | Sales | Balance | Inventory $ |
Unit cost $ |
| Units | Units | Units | ||
| 10 | 10 | 3,000 | 300 | |
| 12 | 3,000 | 250 | ||
| 8 | 6,000 | |||
| 2,400 | ||||
| 14 | 3,600 | |||
| 6 | 1,200 | 200 | ||
| 20 | 4,800 | |||
| 12 | 3,100 | |||
| 8 | 1,700 |
Note. * 2@$300 + 10@$250 = $3,100
Financial Accounting Question 5:
At 1 January 20X6, a company's capital structure was as follows:
|
|
$ |
|
Ordinary share capital |
|
|
2,000,000 shares of 50c each |
1,000,000 |
|
Share premium account |
1,400,000 |
In January 20X6 the company issued 1,000,000 shares at $1.40 each.
In September 20X6 the company made a bonus issue of one share for every three held
using the share premium account.
What were the balances on the company's share capital and share premium accounts
In January 20X6 the company issued 1,000,000 shares at $1.40 each.
In September 20X6 the company made a bonus issue of one share for every three held using the share premium account.
What were the balances on the company's share capital and share premium accounts after these transactions?
|
Share capital $ |
Share premium $ |
| 4,000,000 | 800,000 |
| 3,200,000 |
600,000 |
| 2,000,000 | 1,800,000 |
| 2,000,000 | 1,300,000 |
Answer (Detailed Solution Below)
Financial Accounting Question 5 Detailed Solution
The Correct Option : 1
|
Share capital $ |
Share premium $ |
| 2,000,000 | 1,800,000 |
| Share Capital | |||
| $m | $m | ||
| Bal b/f | 1.0 | ||
| Share issue (note 1) | 0.5 | ||
| Bal c/f | 2.0 | Bonus (note 2) | 0.5 |
| 2.0 | 2.0 | ||
| Share Premium | |||
| $m | $m | ||
| Bonus (note 2) | 0.5 | Bal b/f | 1.4 |
| Bal c/f | 1.8 | Share issue (note 1) | 0.9 |
| 2.3 | 2.3 | ||
Notes.
1 Share issues of 1,000,000 shares raises $1,400,000. Shares are 50c each, so share capital is $500,000 and share premium $900,000.
2 Share capital is $1.5m or 3m shares. Therefore, the bonus issue is 1m shares.
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
Exercising caution when making judgments under conditions of uncertainty to avoid overstating assets and income
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:
Which of the following is NOT a function of accounting?
Answer (Detailed Solution Below)
Financial Accounting Question 9 Detailed Solution
The correct answer is - None of the above
Key Points
- Maintaining records of business transactions
- One of the primary functions of accounting is to systematically record all financial transactions of a business.
- This involves documenting receipts, payments, sales, purchases, and other financial activities.
- Accurate record-keeping ensures that financial statements reflect the true state of the business.
- Calculating profit or loss
- Accounting involves calculating the profit or loss of a business by preparing income statements.
- This helps businesses understand their financial performance over a specific period.
- It involves deducting expenses from revenues to determine net profit or loss.
- Providing information for decision-making
- Accounting provides crucial financial information that aids management in making informed decisions.
- This includes budgeting, forecasting, and financial analysis.
- Accurate financial data helps in strategic planning and resource allocation.
Additional Information
- Not a function of accounting
- All the options provided (Maintaining records of business transactions, Calculating profit or loss, Providing information for decision-making) are fundamental functions of accounting.
- Therefore, the correct answer is "None of the above," indicating that all listed options are indeed functions of accounting.
Financial Accounting Question 10:
Answer (Detailed Solution Below)
Financial Accounting Question 10 Detailed Solution
The correct answer is option 2, i.e. $331,760
Financial Accounting Question 11:
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 11 Detailed Solution
The correct option is option 1.
Financial Accounting Question 12:
Answer (Detailed Solution Below)
Financial Accounting Question 12 Detailed Solution
Financial Accounting Question 13:
Answer (Detailed Solution Below)
Financial Accounting Question 13 Detailed Solution
Financial Accounting Question 14:
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 14 Detailed Solution
The correct answer is Option 1
($230,400 + $50,000 - $115,200) × 20% = $33,040
Financial Accounting Question 15:
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 15 Detailed Solution
The correct answer is Option 4