Answer these 90+ General Financial Accounting MCQs and see how sharp is your knowledge of General Financial Accounting.
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A. 12000
B. 8000
C. 10000
D. Cannot be determined
A. Closing Stock
B. Outstanding Expenses
C. Prepaid Expenses
D. Trial Balance
E. Unearned Income
A. Acquiring a loan that is repayable after the next year
B. decreasing current assets
C. increasing current liabilities
D. All of these
A.
A:4000
B:4500
B.
A:4500
B:3500
C.
A:3500
B:4500
D.
A:4500
B:4500
A. 348 units
B. 92 units
C. 256 units
D. 168 units
E. None of These
A. Show it on the asset side of balance sheet as a separate item under trading account
B. Show it on the debit side of Trading account as a separate item
C. Show it on the credit side of Trading account as a separate item
D. Show it as a debit balance on expenses side as a separate item
E. None of these
A. 2160
B. 2164
C. 2000
D. 2138.4
A. 6000
B. 4500
C. 7500
D. Cannot be determined
A. Rs. 1200
B. Rs. 1210
C. Rs. 1600
D. None of these
A. A + B - C - D + E
B. A - B + C + D - E
C. A + B + C + D - E
D. A + B + C + D + E
A. Inventory account
B. Surplus account
C. Expense account
D. Asset account
A. 300 days
B. 100 days
C. 260 days
D. 200 days
A. 7000
B. 9500
C. 6900
D. 4500
A. Only A and B
B. Only B and C
C. Only A and C
D. All of the above
A. Inventory account
B. Inventory deficit account
C. Inventory surplus account
D. Inventory receivables
E. Both A and C
At the beginning of the year, XYZ Company reported a $7,200 balance in its Prepaid Insurance account. At year end, the company reported Insurance Expense of $9,000 in its Income Statement and a balance of $3,800 in the Prepaid Insurance account. What was the cost of the additional insurance that was purchased during the year?
A. $9,000
B. $12,400
C. $5,600
D. $12,800
XYZ Company reported a balance in Accounts Receivable of $40,500 on January 1 of year 2. During Year 2, the company collected $127,500 from its customers who had purchased on account. On December 31 of Year 2, the company reported a balance in Accounts Receivable of $21,250. How much were XYZ Company's credit sales for Year 2?
A. $108,250
B. $129,500
C. $146,750
D. $148,750
The process of recording transactions in the general journal or in a special journal is called ________________.
A. journalizing
B. posting
C. financial reporting
D. cash reporting
Which of the following liabilities would be accounted for at the present value of future cash payments?
A. Accounts Payable
B. Bonds Payable
C. Income Taxes Payable
D. Advances from Customers
Which of the following is a type of liquid asset, such as a demand deposit?
A. Cash
B. Notes Receivable
C. Accounts Receivable
D. Fixed Assets
Amounts due from customers, for which the claim is in the form of a written promise to pay, are called ________________.
A. Trade Payables
B. Accounts Receivable
C. Equity
D. Notes Receivable
A right granted to an individual or company that excludes others from manufacturing, using, or selling a certain process or device is called a _____________.
A. liability
B. trademark
C. tax liability
D. patent
A. $189,000
B. $170,000
C. $149,000
D. $124,000
A. debit and credit respectively
B. credit and debit respectively
C. Both are debit
D. Both are credit
XYZ Company publishes a monthly sports magazine. The company has fiscal year of Jan-Dec. On July 1 of Year 1, the company sold 1000 two-year subscriptions for $200 each. On December 31 of Year 1, the amount reported as a liability on the Balance Sheet and the amount reported as revenue on the Income Statement are, respectively:
A. $0 and $200,000
B. $50,000 and $150,000
C. $100,000 and $100,000
D. $150,000 and $50,000
Which of the following is a permanent account?
A. Accumulated Depreciation
B. Advances from Customers
C. Both a and b
D. Neither a nor b
A. $20,500
B. $22,500
C. $24,500
D. $25,500
The following entry was made on March 12 for XYZ Company:
Dr: Machinery
Cr: ACCounts Payable
For which of the following transactions was this entry made?
A. Payment for purchase of machinery
B. Sale of machinery
C. Depreciation of machinery
D. Purchase of machinery
XYZ Company failed to record the purchase of inventory on account at the end of 2008. In which of the following ways is the Balance Sheet misstated?
A. Assets and liabilities are both understated.
B. Assets are understated and liabilities are overstated.
C. Assets and shareholders' equity are both understated.
D. Assets, liabilities, and shareholders' equity are all correctly stated.
Temporary revenue and expense accounts may be closed _________________.
A. individually by separate entries to Retained Earnings
B. in a single entry to Retained Earnings
C. to a temporary "Income Summary" account
D. Any of the above methods is acceptable.
Payments made in advance for goods or services a firm will receive at a later date are called ______________.
A. Deferred Income
B. Deferred Tax liability
C. Advances to Suppliers
D. Unearned Revenue
Deduction or valuation accounts that accumulate amounts subtracted from other accounts are called _____________________.
A. contra accounts
B. depreciation accounts
C. asset accounts
D. Owners Equity2
XYZ Company purchased a 1-year insurance policy for $3,000 on April 1 of Year 1. The amount of prepaid insurance reported on the Balance Sheet and the amount of insurance expense reported on the Income Statement on December 31 of Year 1 are, respectively:
A. $750 and $2,250
B. . $2,250 and $750
C. $1,000 and $2,000
D. $2,000 and $1,000
Which of the following accounts is not closed during the closing process?
A. Wage Expense
B. Interest Expense
C. Utility Expense
D. Accumulated Depreciation
The balance in all asset accounts combined is $100,000 on December 1. During December, the following transactions took place:
- Purchase of $10,000 of inventory for cash
- Purchase of $15,000 of machinery on account
- Retirement of $20,000 in bonds with cash
Given this information, what is the combined balance in the asset accounts on December 31?
A. $80,000
B. $115,000
C. $105,000
D. $95,000
Which of the journal entries below is incorrectly recorded?
A. Dr: Cash, Cr: Investment in ABC Co. - Sale of an investment for cash
B. Dr: Prepaid Insurance, Dr: Cash - Paid in advance for a 1-year insurance policy
C. Dr: Accounts Receivable, Cr: Merchandise Inventory - Returned defective merchandise for credit
D. Dr: Machinery, Cr: Notes Payable - Gave a 1-year note to acquire machinery
Amounts received for the par value of a firm's voting stock are called
A. Common Stock
B. Accounts Receivable
C. Preferred Stock
D. Retained Earnings
Amounts received for the par value of a firm's voting stock are called ___________.
A. Equity
B. Accounts Receivable
C. Cash
D. Accounts Payable
XYZ Company purchased some equipment for $120,000 on July 1 of Year 1. The equipment has an estimated useful life of 10 years and an estimated salvage value of $7,500. XYZ Company computes depreciation on a straight-line basis. How much depreciation should be recorded for Year 1?
A. $12,000
B. $11,250
C. $6,000
D. $5,625
XYZ Company is interested in disposing of one of its subsidiaries and is trying to decide on the maximum price it might be able to charge. Which valuation method below would the company be most likely to use?
A. Acquisition Cost
B. Net Realizable Value
C. Present Value
D. Replacement Cost
Which of the following statements about the rules of debit and credit is incorrect?
A. Credits always mean decreases.
B. Debits reduce shareholders' equity.
C. Assets have debit balances.
D. Debits are always recorded on the left.
The Accumulated Depreciation account reflects _____________________.
A. depreciation for the current accounting period only
B. cumulative depreciation on the asset since acquisition
C. the amount of depreciation that can be taken in future periods
D. None of the above
A manufacturing firm's cost of producing its product is called ______________.
A. direct labor
B. product costs
C. indirect labor
D. overhead
The Balance Sheet reflects the application of various valuation methods. Which of the following methods may be used on a Balance Sheet that follows generally accepted accounting principles?
A. Acquisition cost
B. Current cash equivalent value
C. Present value of future cash flows
D. All of the above
A. $15,000
B. $25,500
C. $4,500
D. $16,500
Stocks and bonds that can be readily converted into cash are called _____________.
A. Current Assets
B. Current Liabilities
C. Marketable Securities
D. Treasury Stock
The balance in the ______ account reflects the cumulative depreciation of an asset since its acquisition.
A. Depreciation Expense
B. Income Tax Liability
C. Rent Expense
D. Accumulated Depreciation
Which of the following accounts is NOT an expense?
A. Depreciation
B. Sales Salaries
C. Dividends Declared
D. Delivery Expense
A. Treasury Stock
B. Common Stock
C. Preferred Stock
D. Retained Earnings
The estimated and unpaid liability for current income taxes is called ______________.
A. Tax Expense
B. Accounts Payable
C. Income Taxes Payable
D. Cash