MCQs on Financial Accounting - 2

1. Residual value of an asset is

(a) The amount realized on the sale of an asset
(b) The price paid on the purchase of the asset
(c) Reduced value of the asset every year
(d) one of the above

2. Depreciation account is closed by

(a) Transferring to balance sheet
(b) Transferring to profit & loss account
(c) Transferring to asset account
(d) Totaling

3. In sinking fund method of depreciation, the amount of deprecation

(a) Decreasing every year
(b) Increasing every year
(c) Remains constant every year
(d) Increase or decrease every year

4. Which of the following asset is not subject to depreciation

(a) Plant & Machinery
(b) Land
(c) Loose tools
(d) Furniture

5. The term depletion is used in relation to

(a) Natural resources
(b) Fixed assets
(c) Current assets
(d) None of the above

6. An asset is purchased for Rs.50,000 on which depreciation is provided annually according to the straight line method. the useful life is 10 years and the scrap value is 10,000. The rate of depreciation is

(a) 18%
(b) 8%
(c) 12%
(d) 10%

7. Secret reserve may result by

(a) Creating genera reserve
(b) Overvaluation of stocks
(c) Providing excessive depreciation
(d) Undervaluation of liabilities

8. Gross profit is 25% on sales and cost of goods sold 75,000. The amount of sales will be

(a) 150000
(b) 125000
(c) 80000
(d) 100000

9. Opening capital 9,000; closing capital 16,500; drawings during the year 2,600. The amount of profit will be

(a) 10100
(b) 4900
(c) 9100
(d) 10000

10. Specific donation received should be shown on

(a) Income side of income and expenditure account
(b) The liability side of balance sheet
(c) The assets side of balance sheet
(d) None of the above

More MCQs on Financial Accounting



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