Financial accounting

1.Recording of transactions and events as Answer (d) Record all business

& when they occur and classifying them transactions of monetary nature
into suitable account heading is the subject
matter of 4. There are two systems of accounting i.e.
cash basis system of accounting and basis
(a) Book-keeping system of accounting

(b) Management Accounting (a) Dual Aspect

(c) Cost Accounting (b) Accrual

(d) Financial Accounting (c) Single Entry

Answer (a) Book-keeping (d) Double entry

2. Book-keeping is mainly concerned with Answer (b) Accrual

the recording of financial data relating to
the in significant and orderly manner. 5. The alternative to cash basis of
accounting is called ……… basis of
(a) Company accounting

(b) Business (a) Accrual

(c) Monetary (b) Due

(d) Personal (c) Receipt

Answer (b) Business (d) Credit

3. Basic function of accounting is to Answer (a) Accrual

(a) Summarise the data 6. The system of recording transactions

based on dual aspect concept is called
(b) Assist the management in performing
functions effectively (a) Double Entry System

(c) Interpret the financial data (b) Single Entry System

(d) Record all business transactions of (c) Accrual Basis of Accounting

monetary nature
(d) Double Account System
 Financial accounting
Answer (a) Double Entry System 10. Capital + Liabilities =

7. As per dual aspect concept (a) Fixed Assets

(a) Assets + Capital Liabilities (b) Current Assets

(b) Assets + Liabilities = Capital (c) Losses

(c) Assets = Liabilities + Capital (d) Total Assets

(d) Assets = Liabilities-Capital Answer (d) Total Assets

Answer (c) Assets = Liabilities + Capital 11. Which of the following will be goods
for a business run by a footwear
8. Liabilities of a firm are 8,00,000 and merchant?
capital of the proprietor is 7,00,000. Then
total (a) Tables and Chairs

assets are: (b) Pens and Pencils

(a) 2,00,000 (c) Shoes

(b) 15,00,000 (d) Electrical Appliances

(c) 4,00,000. Answer (c) Shoes

(d) 6,00,000 12. Which of the following is not a business

transaction?
Answer (b) 15,00,000
(a) Goods purchased from 1000
9. Assets are 14,00,000 and liabilities are
6,00,000. His capital would be (b) Placed an order for purchasing the
goods for 2000
(a) 12,00,000
(c) Received interest from Bank 5000
(b) 10,00,000
(d) Rent paid to Landlord 3000
(c) 2,00,000.
Answer (b) Placed an order for purchasing
(d) 8,00,000 the goods for 2000

Answer (d) 8,00,000

 Financial accounting
13. Which of the following item is not 16. Accounting in the modern time is
financial in nature : treated as

(a) Purchase of machine for cash (a) The source of business information

(b) Withdrawal of cash by proprietor for his (b) The language of business
domestic use
(c) An art of recording, classifying and
(c) Dismissing an employee from job summarizing transactions in monetary
units
(d) Purchase of a bike on credit
(d) All of the above
Answer (c) Dismissing an employee from
job Answer (d) All of the above

14. Total assets of a trader are 7,25,000 17.External users of accounting

and outside liabilities are 4,25,000; owner’s information may involve
equity will be:
(a) Purchase Manager
(a) 2,50,000
(b) Sales Manager
(b) 3,00,000
(c) Customer
(c) None of the above
(d) Board of Directors
(d) 6,00,000
Answer (c) Customer
Answer (b) 3,00,000
18. Which is not dependent on accounting?
15. Maintaining of systematic records of all
the business transactions is termed as (a) Book keeping

(a) Recording (b) Cost accounting

(b) Accounting (c) Financial accounting

(c) Classification of Records (d) Management decision making

(d) None of the above Answer (a) Book keeping

Answer (c) Classification of Records 19. Accounting is treated as both science

and an
 Financial accounting
(a) Economics (b) Customer

(b) Commerce (c) Internal users

(c) Science (d) External users

(d) Art Answer (c) Internal users

Answer (d) Art 23. Book Keeping is regarded as the step of

accounting.
20. Book Keeping is made to maintain a
detail record of (a) Fourth

(a) None of the above (b) Secondary

(b) College transaction (c) Third

(c) Business transaction (d) Primary

(d) Selling transaction Answer (d) Primary

Answer (c) Business transaction 24.The actual record making phase (l.e.
accounting is usually called. recording,
21. The primary objective of accounting is classifying and summarising) of accounting
to. is called

(a) Abnormal records (a) Trail balance

(b) Normal records (b) Ledger

(c) Unsystematic record (c) Book keeping

(d) Systematic record (d) Accounting

Answer (d) Systematic record Answer (c) Book keeping

22. Users of accounting informations are 25. Accounting is both

classified in to two parts i.e. External Users
and (a) None of the above

(a) Share holder (b) History and geography

 Financial accounting
(c) Commerce and management (c) Cash

(d) Arts and science (d) None of the above

Answer (d) Arts and science Answer (b) Accrual

26. There are three approaches to 29. The system of accounting in which only
accounting which are widely accepted: (a) personal accounts with or without
Cash basis (b) subsidiary books are maintained is known
as
(a) Book keeping
(a) Double
(b) Accrual basis and Accounting basic
(b) Triple
(c) Mixed or hybrid
(c) Single entry
(d) None of the above
(d) None
Answer (c) Mixed or hybrid
Answer (c) Single entry
27. Under which basis of accounting actual
cash receipts and actual cash payments 30. This method of writing every
are transaction in two accounts is known as

Recorded. (a) Double entry

(a) Noncash (b) Triple

(b) Cash (c) Single entry

(c) Accrual (d) None

(d) All of the above Answer (a) Double entry

Answer (b) Cash 31. Under which basis of accounting both

cash basis and accrual basis are followed
28. The alternative to cash basis of
accounting is called basis of accounting (a) Accrual basis

(a) Hybrid (b) Cash basis

(b) Accrual (c) Mixed or hybrid

 Financial accounting
(d) None of the above (d) None of the above

Answer (c) Mixed or hybrid Answer (a) Creditor

32. Any exchange of money or money’s 35. owner’s financial interest or holding in
worth between two parties is called the business and is represented by the
value of net assets (L.e., total assets less
(a) Business transaction liabilities.) is termed as

(b) Non business transaction (a) None of the above

(c) Register transaction (b) Liability

(d) None of the above (c) Assets

Answer (a) Business transaction (d) Capital

33. In accounting, transactions of similar Answer (d) Capital

nature are added or subtracted at a
particular place. 36. Any physical thing or right owned that
has a money value is an
known as
(a) Assets
(a) Khata
(b) Liabilities
(b) Account
(c) Money
(c) Register
(d) All of the above
(d) Book
Answer (a) Assets
Answer (b) Account
37. A claim which can be enforced against
34. A person to whom money is owing or the assets of the firm is called
payable is called a
(a) Debenture
(a) Creditor
(b) Money
(b) Debtor
(c) Equity
(c) Owner
(d) None of the above
 Financial accounting
Answer (c) Equity

38. An inflow of assets which results in an

increase in the owner’s equity is termed as

(a) Liability

(b) Expenses

(c) Income

(d) None of the above

Answer (c) Income

39. Any amount or goods withdrawn by the

owner of a business for personal use is
called

(a) Drawing

(b) Liability

(c) Expenses

(d) Income

Answer (a) Drawing

40. Any written document in support of a

business transaction is called a

(a) Voucher

(b) Bill

(c) Account

(d) Register

Answer (a) Voucher