Introduction to Accounting And its Terminology Mcqs with answer

Financial Accounting Multiple Choice Questions (MCQS) Page. The Following Financial Accounting Mcqs are Collected from different Past papers and from Accounting Mcqs Bank. These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for  Cost Accountant.  

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1) The accounting process involves in recording: A) Quantifiable economic event B) Non quantifiable economic event C) All of them D) None of them 2) In accounting an Economic event is referred to as: A) Cash B) Bank statement C) Transaction D) Exchange of money 3) Identify the correct sequence of accounting process A) Communicating→Recording→Identifying B) Recording→Communicating→Identifying C) Identifying→communicating→recording D) Identifying→recording→communicating 4) Bookkeeping mainly concerns with which part of accounting process? A) Analysing B) Preparing financial statements C) Recording financial information D) Auditing the books of accounts 5) Financial accounting provides financial information to all of the following external users except: A) Government agencies B) investors C) Creditors D) Managers 6) For which step of accounting process the accountants of business entity prepare financial statements? A) Identification of economic event B) Communication of financial information C) Recording financial information D) Making decisions about business 7) Keeping the log of financial information in books of original entries is called A) Recording B) summarizing C) Grouping D) Processing 8) Auditing is what? A) Reporting the financial information B) Examination of financial statements C) Preparation financial statements D) maintaining the ledger records 9) Which of the following is the external user of financial statements? A) Manager of the business B) CEO of the business C) Creditor of the business D) Controller of the business 10) Which of the following is the internal user of financial statements? A) Creditor of the business B) Government agency C) Shareholder of the business D) Manager of the business 11) _________ is the first phase of accounting cycle A) Identifying an economic event or transaction B) Preparing journals C) Posting entries to ledger accounts D) Making decisions about business 12) Financial statements differ from management account because A) They are mainly prepared for external users of financial information B) They are more complex and hard to prepare C) The are the summary of accounting data D) The are prepared on basis of actual concept 13) ________ is a separate legal entity that Total capital can be divided in many shares A) Partnership B) Sole proprietorship C) Company D) Non-profit organization 14) An asset posses which of the following? A) Future economic benefits for the business B) All kind of benefits for the business C) Expenses for the business D) Merits and Demerits for the business 15) Liabilities are which of the following? A) Resources B) Obligations C) Future benefits D) Expenses 16) ________ is the gross inflow of economic benefits A) Assets B) Liabilities C) Income D) Expenses 17) The gross decrease in economic benefits for the business are what? A) Expenses B) Obligations C) Creditors D) Income or gain 18) An asset must be _______ by the business to be shown as an asset in its "balance sheet" A) Possessed B) Owned C) Controlled D) Used 19) Liability are arisen from which of the following events? A) Present event B) Future event C) Past event D) Non of them 20) Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting? A) Identifying transactions B) Preparing "T Accounts" C) Preparing financial statements D) Preparing trial balances 21) Which is the most important characteristic that all assets of a business have? A) Long life of assets B) Value of assets C) Intangible nature of assets D) Future economic benefits 22) What is the basic accounting equation? A) Capital+Liabilities=Assets B) Assets+ liabilities =Capital C) Capital+assets=liabilities D) Liabilities+Capital 23) Which of the following is a liability? A) Cash B) Equipment C) Debtors D) Creditors 24) What is equity? A) Cash from the business B) liability of a business C) Owner's claim on total assets D) Owner's claim on total liabilities 25) Identify the asset from the following A) Cash and cash equivalent B) Creditors C) Notes payable D) Bank loan 26) _______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use A) Depreciation B) Drawings C) Outflow of cash D) Appreciation 27) Net loss occurs when A) Expenses are greater than Income B) Expenses are less than Income C) Expenses=Income D) Liabilities are greater than income 28) Double entry implies that A) Recording entries in journal B) Recoding entries in Ledger account C) Recording two aspects of every transaction D) Recording every transaction in books 29) Identify the nominal account A) Machinery account B) Building account C) Creditors account D) Rent expenses account 30) Which of the following accounts can be classified as a real account? A) Rent expenses account B) Rent income account C) insurance expenses account D) Cash account ANSWER: 1 A 2 C 3 D 4 C 5 D 6 B 7 A 8 B 9 C 10 D 11 A 12 A 13 C 14 A 15 B 16 C 17 A 18 C 19 C 20 C 21 D 22 A 23 D 24 C 25 A 26 B 27 A 28 C 29 D 30 D