Here are 100 MCQs covering the full spectrum of Basic financial accounting topics.
📘 Basic financial accounting concepts MCQs (1–100)
🔹 Equity Shares, Preference Shares, Debentures, Bonds
1. A company issues equity shares with voting rights. A shareholder demands fixed returns. Which instrument is more suitable?
A. Equity shares
B. Preference shares
C. Debentures
D. Bonds
Answer:
2. A company issues non-convertible debentures. What is the key obligation?
A. Dividend payment
B. Interest payment
C. Bonus shares
D. Voting rights
Answer:
3. Preference shareholders receive dividends:
A. After equity shareholders
B. Before equity shareholders
C. Only on liquidation
D. Never guaranteed
Answer:
4. A bond issued at discount implies:
A. Coupon rate > market rate
B. Coupon rate < market rate
C. No interest
D. Zero risk
Answer:
5. Convertible debentures provide:
A. Voting rights
B. Conversion into equity
C. Guaranteed dividend
D. Tax exemption
Answer:
🔹 Interest & Dividend
6. A company skips dividend due to losses. This affects:
A. Interest expense
B. Equity holders only
C. Debenture holders
D. Tax liability
Answer:
7. Interest on debentures is:
A. Appropriation of profit
B. Expense
C. Contingent liability
D. Capital item
Answer:
🔹 COGS & Gross Margin
8. Opening stock = 50,000; Purchases = 2,00,000; Closing stock = 70,000. COGS?
A. 1,80,000
B. 2,20,000
C. 1,80,000
D. 1,70,000
Answer:
9. Gross margin increases when:
A. Sales decrease
B. COGS decreases
C. Expenses increase
D. Assets increase
Answer:
🔹 Financial Statements
10. Which item appears in balance sheet?
A. Sales
B. Wages
C. Cash
D. Discount allowed
Answer:
11. Cash flow from operating activities includes:
A. Loan repayment
B. Purchase of machinery
C. Net profit adjustments
D. Share issue
Answer:
🔹 Current Assets & Liabilities
12. Cash equivalent includes:
A. Inventory
B. 3-month treasury bills
C. Land
D. Machinery
Answer:
13. Accounts payable is:
A. Current asset
B. Current liability
C. Long-term asset
D. Equity
Answer:
🔹 Contingency
14. A lawsuit outcome uncertain. Treatment?
A. Recognize liability
B. Disclose contingency
C. Ignore
D. Capitalize
Answer:
🔹 Accounting Theories
15. Proprietary theory focuses on:
A. Entity
B. Owner
C. Creditors
D. Government
Answer:
16. Residuary theory applies to:
A. Sole proprietorship
B. Corporations
C. Partnership
D. NGO
Answer:
🔹 Depreciation & Assets
17. Double declining method results in:
A. Higher early depreciation
B. Equal depreciation
C. Lower early depreciation
D. No depreciation
Answer:
18. Sum-of-years-digits is:
A. Straight-line
B. Accelerated
C. Depletion
D. Amortization
Answer:
🔹 Liquidity, Solvency, Profitability
19. Current ratio measures:
A. Profitability
B. Liquidity
C. Efficiency
D. Leverage
Answer:
20. Debt-equity ratio measures:
A. Liquidity
B. Solvency
C. Profitability
D. Turnover
Answer:
🔹 Stock Dividend, Split
21. Stock dividend affects:
A. Cash
B. Share capital
C. Liability
D. Expenses
Answer:
22. Stock split results in:
A. Increase in total capital
B. Decrease in share price
C. Increase in reserves
D. Increase in assets
Answer:
🔹 Revenue Recognition
23. Revenue is recognized when:
A. Cash received
B. Earned
C. Invoice raised
D. Order placed
Answer:
🔹 Amortization & Depletion
24. Depletion applies to:
A. Buildings
B. Patents
C. Natural resources
D. Machinery
Answer:
🔹 Accruals & Prepayments
25. Prepaid expense is:
A. Liability
B. Asset
C. Income
D. Expense
Answer:
🔹 Leverage & Capital Structure
26. Trading on equity means:
A. Using debt to increase returns
B. Selling shares
C. Issuing bonds
D. Dividend payment
Answer:
27. Debt trap occurs when:
A. High profits
B. High debt with low returns
C. Low assets
D. No liabilities
Answer:
🔹 Shareholder Rights
28. Preemptive rights allow:
A. Sell shares
B. Buy new shares first
C. Vote
D. Dividend claim
Answer:
29. Voting rights belong to:
A. Debenture holders
B. Equity shareholders
C. Creditors
D. Employees
Answer:
🔹 Net Worth
30. Net worth =
A. Assets – liabilities
B. Profit – expenses
C. Revenue – COGS
D. Equity – debt
Answer:
🔹 Listing & Stock Exchange
31. Listing provides:
A. Liquidity
B. Fixed return
C. Tax exemption
D. No regulation
Answer:
🔹 Interest Capitalization
32. Interest during construction is:
A. Expense
B. Capitalized
C. Ignored
D. Liability
Answer:
🔹 Credit Loss
33. Allowance for credit loss follows:
A. Cash basis
B. Accrual basis
C. Matching principle
D. Prudence
Answer:
🔹 Bad Debts
34. Recovery of bad debts is:
A. Expense
B. Income
C. Liability
D. Capital
Answer:
🔹 Dividends
35. Interim dividend declared:
A. End of year
B. During year
C. After liquidation
D. Never
Answer:
🔹 Annual Report
36. Key section for investors:
A. Auditor report
B. Notes to accounts
C. Both
D. None
Answer:
🔹 Stakeholders
37. Employees focus on:
A. Dividends
B. Job security
C. Tax
D. Interest
Answer:
38. Creditors focus on:
A. Profit
B. Liquidity
C. Dividend
D. Share price
Answer:
🔹 Conflict & Governance
39. Fiduciary duty means:
A. Personal gain
B. Acting in best interest
C. Avoiding taxes
D. Maximizing debt
Answer:
🔹 Accounting Standards
40. US GAAP is issued by:
A. IASB
B. FASB
C. SEC
D. RBI
Answer:
🔥 Continue (41–100 Quick Advanced Mix)
41. Operating leverage relates to****(variable /fixed) costs
42. Financial leverage relates to ****(Equity/debt)
43. Gross profit = Sales – COGS → True or False
44. Cash flow investing includes asset purchase → True or False
45. Accrual income recorded before cash → True or False
46. Amortization for intangibles → True or False
47. Straight-line depreciation gives equal charge → True or False
48. Liquidation pays creditors first → True or False
49. Preference shares priority in liquidation → True or False
50. Bonds classified as***(current /non current)liabilities.
51. Deferred revenue is liability → True or False
52. Inventory is current asset → True or False
53. Quick ratio excludes inventory → True or False
54. Working capital = CA – CL → True or False
55. Bonus shares from***(current profit/security premium)
56. Retained earnings part of ****.
57. EPS important for ****(employee/investors)
58. Capital maintenance protects capital → true or false
59. Depletion reduces natural resource value → True or False
60. Contingent asset not recognized → True or False
61. Write-off ****(added/reduces) receivable → A
62. Cash discount affects revenue → true or false
63. Trade discount not recorded → true or false
64. Debenture interest tax deductible → true or false
65. Dividend not tax deductible → true or false
66. Equity risk higher than debt → true or false
67. High leverage increases risk → true or false
68. ROE measures profitability → true or false
69. Inventory turnover measures efficiency of operation→ true or false
70. Capital gain from share sale → true or false
71. Market value differs from book value → True or False
72. Cash flow indirect starts with net profit → True or False
73. Depreciation non-cash expense → True or False
74. Revenue recognition under performance obligation → true False
75. Matching principle aligns expense with revenue → True or False
76. Conservatism recognizes losses early → True or False
77. Going concern assumes ****(liquidation/continuity)
78. Historical cost principle related to financial position→ True or False
79. Fair value used in financial instruments → True or False
80. Lease liability recognized → True or False
81. Goodwill is intangible asset → True or False
82. Impairment reduces asset ***(fair value/book value)
83. Cash flow financing includes dividends received → True or False
84. Preference dividend is variable → True or False
85. Callable bonds redeemable early → True or False
86. Convertible bonds lower interest → True or False
87. Treasury shares reduce equity → True or False
88. Net income affects retained earnings → True or False
89. Earnings management impacts statements → True or False
90. Auditor ensures compliance. True/False
91. Internal control reduces fraud risk. True/False
92. Segment reporting improves transparency True/False
93. Cash budget forecasts liquidity True/False
94. Capital budgeting uses NPV True/False
95. Break-even depends on fixed cost Yes/No
96. Contribution margin = Sales – variable cost True/False
97. Financial statements interlinked..Yes/No
98. Deferred tax arises****(accounting /timing) differences
99. Earnings quality important for ****(bankers/investors )
100. Compliance with standards ensures******(transparency /comparability )
✅ You can solve all questions ‼️ submit on what's up 9773464206,today before 4pm.Try to solve mocktest without any reference source, Average time allowed to complete mocktest is 40 minutes.
No comments:
Post a Comment