Financial Accounting And Management MCQs Questions

Looking to test your knowledge in financial accounting and management? Our well-selected set of MCQ questions covers essential topics, helping you sharpen your understanding of financial principles and management strategies. Whether you're preparing for exams or just want to enhance your skills, these MCQ questions are designed to challenge and improve your knowledge in Financial Accounting as well as Financial Management.

Financial Accounting And Management MCQs Questions: Sharpen Your Knowledge

Question 1:

As per _____________ accounting concept, the owner of the business is a creditor.

a. Going Concern
b. Matching Concept
c. Entity Concept
d. Accrual Concept

Question 2:

Fixed Assets are recorded at cost minus depreciation, not at a realisable value because of _______.

a. Going Concern Concept
b. Matching Concept
c. Entity Concept
d. Accrual Concept

Question 3:

Select the correct accounting equation:

a. Liabilities = Capital + Assets
b. Capital = Assets + Liabilities
c. Liabilities + Capital = Assets
d. Assets = Capital + Liabilities

Question 4:

Financial Statements consist of _____________, Profit and Loss Account, and the Schedules and Notes forming part thereof.

a. Assets
b. Liabilities
c. Balance Sheet
d. Loans

Question 5:

_____________ is the residual interest of owners in assets over liabilities.

a. Profit
b. Income
c. Expense
d. Sales

Question 6:

Final Accounts must be prepared periodically rather than waiting till the dissolution of the business due to ______________.

a. Dual Concept
b. Cost Concept
c. Accounting Period Concept
d. Money Measurement Concept

Question 7:

Journal is called as _____.

a. Secondary book
b. Book of Prime Entry
c. Petty Cash Book
d. Cash Book

Question 8:

All credit purchase transactions will be recorded in _____.

a. Return Inward Book
b. Purchase Book
c. Cash Book
d. Return Inward Book

Question 9:

_____ records all balance entries.

a. Cash Book
b. Sales Book
c. Ledger
d. Journal Proper

Question 10:

Purchase of Furniture on credit from Sharma Furniture Mart will be recorded in _____.

a. Purchase Book
b. Cash Book
c. Journal Proper
d. Petty Cash Book

Question 11:

Purchase of goods from Ram & Co. for ₹10,000 on credit for 3 months will be recorded in _____.

a. Sales Book
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 12:

Goods sold for ₹20,000 to Rajanish & Co. for cash will be recorded in _____.

a. Sales Book
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 13:

Purchase of goods from Rahim & Co. for ₹10,000 on a cash basis will be recorded in _____.

a. Sales Book
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 14:

_____________is a book of first entry or prime entry.

a. Sales
b. Purchase
c. Primary
d. Journal Proper

Question 15:

If one element of the transaction is debited, another element will undoubtedly be credited to maintain___________.

a. Sales Book
b. Purchase Book
c. Dual Effect
d. Journal Proper

Question 16:

While recording the elements of transactions in journals, an increase in assets and a decrease in liabilities are shown as ______________.

a. Sales
b. Debit
c. Cash
d. Purchase

Question 17:

_______________records goods returned by the customer(s).

a. Return Inward Book
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 18:

_______________records all residual transactions.

a. Journal Proper
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 19:

_______________records cash (and bank) receipts and payments.

a. Sales Day Book
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 20:

_______________records goods returned by the customer(s).

a. Return Inward Book
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 21:

_______________is a self-sufficient secondary book in the sense that all entries in the primary books will be posted, directly or indirectly, in this ledger.

a. General Ledger
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 22:

A _________________will have separate accounts for each customer.

a. Debtors Ledger
b. Purchase Book
c. Cash Book
d. Journal Proper

Question 23:

One important feature of control accounts in the General Ledger is that___________.

a. Entries are posted here individually
b. Entries are not posted here individually
c. Entries are not posted here
d. Entries are posted once

Question 24:

The summary of balances of creditors ledger should tally with the balance shown in the General Ledger.

a. Sundry Creditors Account
b. Bank Account
c. Cash Book
d. Journal Proper

Financial Accounting and Financial Management MCQs

Question 25:

The book in which transactions are recorded for the second time is called as ______.

a. Journal
b. Journal Proper
c. Ledger
d. Subsidiary Book

Question 26:

Column of the ledger is used for writing the page number of the Journal.

a. J.F.
b. L.F.
c. Date
d. Particulars

Question 27:

"c/d" indicates ______.

a. Opening
b. Closing balance
c. Positive
d. Negative

Question 28:

In case of a credit transaction, one of the accounts must be a ______ account.

a. Cash
b. Credit
c. Personal
d. Debit

Question 29:

If the total of the debit side of an account is greater than the credit side, the difference is put on the credit side and is called as ______.

a. Credit balance
b. Debit Balance
c. Total Balance
d. Posting

Question 30:

Goods sold to Ram for ₹5,000 on credit will be ______.

a. posted on the Credit side of Ram A/c
b. posted on the Debit side of Ram A/c
c. posted on the Liability side
d. Ignored

Financial Accounting and Management MCQs

Question 31:

______ is prepared to test the arithmetical accuracy of Books of Accounts.

a. Ledger
b. Journal
c. Trial Balance
d. List

Question 32:

A decrease in the value of fixed assets is known as ______.

a. Depreciation
b. Appreciation
c. Combination
d. None of these

Question 33:

The amount spent on installation of new machinery is a ______ expenditure.

a. Revenue
b. Capital
c. Deferred Revenue
d. Payable

Question 34:

If the amount received from Mr. Ram is wrongly posted in the account of Mr Ramesh, it is an error of ______.

a. Principle
b. Compensation
c. Commission
d. Partial omission

Question 35:

Wages paid for the installation of machinery debited to Wages Account is an error of ______.

a. Principle
b. Compensation
c. Commission
d. Partial omission

Question 36:

If the Sales Account is undercast by ₹15,000 and the Salary Account is also undercast by the same amount, such an error is called an error of ______.

a. Principle
b. Compensation
c. Commission
d. Partial omission

Question 37:

Trading A/c, Profit and Loss A/c, and the Balance Sheet are called ___________.

a. Assets
b. Net Profit
c. Final Account
d. Trial Balance

Question 38:

_____________ is arrived at by deducting the direct cost of goods sold from sales proceeds.

a. Assets
b. Income and Expenses
c. Gross Profit
d. Trial Balance

Financial Management MCQs

Question 39:

Liquidity decisions are concerned with ______ management.

a. Fixed assets
b. Current assets
c. Cash
d. Non-Current liabilities

Question 40:

Dividends can be ______ or they can be retained in the business itself.

a. Used for repayment of loan
b. Used for payment of interest
c. Distributed to shareholders
d. Pay off taxes

Question 41:

Financing decisions should be evaluated in terms of _____ and _____.

a. Return; risk
b. Liberal credit terms; restrictive policy
c. Strategic planning; management control
d. Profit maximization; wealth maximization

Question 42:

_________ and __________ are two important aspects of financial goals.

a. Asset Maximization; Value Maximization
b. Profit maximization; wealth maximization
c. Liberal credit terms; restrictive policy
d. Strategic planning; management control

Question 43:

Wealth maximization is also known as ______.

a. Net present worth maximization
b. Asset maximization
c. Profit maximization
d. Rupee maximization

Question 44:

_____ and _____ are two important functions of the top management.

a. Asset Maximization; Value Maximization
b. Profit maximization; wealth maximization
c. Liberal credit terms; restrictive policy
d. Strategic planning; management control

Financial Management Multiple Choice Questions

Question 45:

Liquidity decisions are concerned with ______ management.

a. Fixed assets
b. Current assets
c. Cash
d. Non-Current liabilities

Question 46:

Dividends can be ______ or they can be retained in the business itself.

a. Used for repayment of loan
b. Used for payment of interest
c. Distributed to shareholders
d. Pay off taxes

Question 47:

Financing decisions should be evaluated in terms of _____ and _____.

a. Return; risk
b. Liberal credit terms; restrictive policy
c. Strategic planning; management control
d. Profit maximization; wealth maximization

Question 48:

_________ and __________ are two important aspects of financial goals.

a. Asset Maximization; Value Maximization
b. Profit maximization; wealth maximization
c. Liberal credit terms; restrictive policy
d. Strategic planning; management control

Question 49:

Wealth maximization is also known as ______.

a. Net present worth maximization
b. Asset maximization
c. Profit maximization
d. Rupee maximization

Question 50:

_____ and _____ are two important functions of the top management.

a. Asset Maximization; Value Maximization
b. Profit maximization; wealth maximization
c. Liberal credit terms; restrictive policy
d. Strategic planning; management control

Question 60:

The process of estimating the amount of funds that would be required for the purpose and timings when it would be required is called as _____.

a. Dividend calculation
b. Capital structure decision
c. Financial Planning
d. Financial decision

Financial Management and Financial Accounting Multiple-Choice Questions

Question 61:

The organisation’s capital structure refers to:

a. The way a firm invests its assets.
b. The amount of capital in the firm.
c. The mixture of debt and equity used to finance the firm's assets.
d. How much cash the firm holds

Question 62:

______ generally ranges over a period of 2-5 years and over a period of 1-2 years.

a. Short-term plan, Long term plan
b. Long-term plan, short-term plan
c. Long-term purchase, short-term purchase
d. Non-current Asset, current asset

Question 63:

Capitalization includes:

a. Own fund
b. Borrowed fund
c. Both own funds and borrowed funds
d. None of the above

Question 64:

Under the cost approach, the capitalization of a company is based on the cost of acquisition of:

a. Current Assets
b. Intangible Assets
c. Fixed Assets
d. Tangible Assets

Question 65:

Over-capitalization arises when there is _______ in the company than the actual requirement.

a. Excess capital
b. Lower capital
c. Excess loan
d. Excess working capital

Question 66:

Net working capital is_____

a. Current Asset − Quick Asset
b. Current Asset − Current Liabilities
c. Current Asset + Current Liabilities
d. Fixed Asset − Current Liabilities

Question 67:

Gross working capital refers to the firm’s investment in______

a. Total Fixed Asset
b. Total Quick Asset
c. Total Current assets
d. Total Current Liabilities

Question 68:

______is called as conversion of sales into cash

a. Operating Money
b. Operating Cycle
c. Working Capital
d. Fixed Asset

Question 69:

The working capital requirements are_____, if liberal credit terms are available from suppliers

a. Equal to Fixed Asset
b. Lower
c. High
d. Equal to the cash balance

Question 70:

The motives for holding cash are

a. Transaction, speculative
b. Precautionary and compensating
c. Both A & B
d. None of the above

Question 71:

The greater the creditworthiness of the firm in the market, the lesser is the need for ________ balances

a. Transaction
b. Speculative
c. Precautionary
d. Compensating

Question 72:

MO model assumes that cash balances randomly fluctuate between a and a

a. Precautionary and Trade credit
b. Collection float and Trade Credit
c. Upper bound and lower bound
d. Cost of conversion of marketable securities into cash and opportunity cost

Inventory and Credit Management MCQs

Question 73:

The expenses incurred to place an order with suppliers and replenish the inventory of raw materials are known as_____

a. Inventory Cost
b. Carrying cost
c. Ordering Cost
d. Material Cost

Question 74:

The greater the inventory size, the greater is the_____

a. Inventory Cost
b. Carrying cost
c. Ordering Cost
d. Material Cost

Question 75:

ABC analysis is also known as_______

a. Economic Order Quantity Analysis
b. Constant uniform demand Analysis
c. Control by Importance and Exception
d. Weighted Average Analysis

Question 76:

The goods received first are issued first and once the first set of consignment is completely exhausted, the second set is not utilized. This method is called as ___

a. LIFO
b. FIFO
c. Weighted Average cost Method
d. HIFO

Question 77:

_________refers to the failure of customers to meet their obligations when payment on credit sales becomes due after the expiry of the credit period

a. Carrying cost
b. Ordering Cost
c. Delinquency Cost
d. Default cost

Question 78:

The credit policy to be adopted in businesses largely depends upon the____

a. Buyer’s Strategies
b. Delinquency Cost
c. Default cost
d. Competitors’ strategies

Financial Ratios and Analysis MCQs

Question 79:

_____ is a proportion between two figures.

a. Ratio
b. Percentage
c. Percentile
d. Division

Question 80:

Turnover ratios are expressed in _____.

a. Ratio
b. No of times
c. Percentage
d. None of the above

Question 81:

Current Ratio = _____ / Current Liabilities

a. Fixed Assets
b. Quick Assets
c. Current Assets
d. None of the above

Question 82:

Current Ratio shows _____ solvency position.

a. Long-term
b. Mid Term
c. Short Term
d. None of the above

Question 83:

_____ are near cash assets.

a. Quick Assets
b. Liquid Assets
c. Current Assets
d. None of the above

Question 84:

Working capital is an excess of current assets over __.

a. Current Liabilities
b. Fixed Assets
c. Liquid Assets
d. None of the above

Question 85:

The equity ratio shows the proportion between __________.

a. Short-term debt equity
b. Long-term debt equity
c. Current Liabilities and Share Capital
d. Pref. Capital and equity capital

Question 86:

The cost of goods sold is divided by the average stock to get _____.

a. Stock Turn Over
b. Debt-Equity
c. Proprietary
d. Capital Gearing

Fund Flow Statement MCQs

Question 87:

From the following options, which combinations are the correct examples for liabilities with respect to the funds’ flow statement?

a. Lenders, fixed assets, inventory, receivables and vendors
b. Employees, vendors, cash equivalents as well as cash and fixed assets
c. Inventory, fixed assets, customers and lenders
d. Creditors, employees and vendors

Question 88:

Formula for calculation of the working capital with respect to the fund flow statement

a. Working capital = current assets + current liabilities
b. Working capital = Current assets − current liabilities
c. Working capital = Current assets / current liabilities
d. Working capital = Current liabilities − Current assets

Question 89:

Which of the following would be included in a fund flow statement?

a. Depreciation charges
b. Dividends
c. Goodwill wrote off
d. Patent amortization

Question 90:

Which of the following would be considered a use of funds?

a. A decrease in accounts receivable
b. A decrease in cash
c. An increase in accounts payable
d. An increase in cash

Question 91:

Fund flow statement reveals the effects of transactions involving the movement of cash. This statement is:

a. True
b. False
c. Partially True
d. Not relevant

Question 92:

An examination of the sources and uses of funds statement is part of:

a. A forecasting technique
b. A funds flow analysis
c. A ratio analysis
d. Calculations for preparing the balance sheet

Cash Flow Statement MCQs

Question 93:

Cash Flow Statement is also known as____.

a. Statement of Changes in Financial Position on Cash basis
b. Statement of accounting for variation in cash
c. Both a and b
d. None of the above

Question 94:

Cash Flow Statement is based upon____.

a. Accrual basis of accounting
b. Cash basis of accounting
c. Credit basis of accounting
d. Sales basis of accounting

Question 95:

Which of the following statement is True?

a. Cash flow only when actual payments are made but not when received.
b. Cash flow and profit are same.
c. Profit is the result of deducting expenses from sales
d. Cash flow results from the difference between all cash with organization and cash payments

Question 96:

Increase in amount of prepaid Insurance leads to:

a. Decrease in cash
b. Increase in cash
c. Increase in profit
d. Cash balance remain same

Question 97:

Cash from operating activities decreases because of___:

a. Purchase of Asset
b. Payment of taxes
c. Loan taken
d. Dividend received

Question 98:

______is not an application of cash.

a. Redemption of Preference Share
b. Redemption of Debenture
c. Share Premium
d. Interest paid on loan

Cash Flow Statement MCQs

Question 93:

The Cash Flow Statement is also known as____.

a. Statement of Changes in Financial Position on Cash basis
b. Statement of accounting for variation in cash
c. Both a and b
d. None of the above

Question 94:

Cash Flow Statement is based upon____.

a. Accrual basis of accounting
b. Cash basis of accounting
c. Credit basis of accounting
d. Sales basis of accounting

Question 95:

Which of the following statements is True?

a. Cash flow only when actual payments are made but not when received.
b. Cash flow and profit are the same.
c. Profit is the result of deducting expenses from sales
d. Cash flow results from the difference between all cash with organization and cash payments

Question 96:

An increase in amount of prepaid Insurance leads to:

a. Decrease in cash
b. Increase in cash
c. Increase in profit
d. The cash balance remains same

Question 97:

Cash from operating activities decreases because of___:

a. Purchase of Asset
b. Payment of taxes
c. Loan taken
d. Dividend received

Question 98:

______is not an application of cash.

a. Redemption of Preference Share
b. Redemption of Debenture
c. Share Premium
d. Interest paid on loan

Cost Accounting MCQs

Question 99:

Cost accounting is an important system developed for_____.

a. Shareholders
b. Management
c. Government
d. Financial institutions

Question 100:

Timber in furniture is a _____ .

a. Indirect material
b. Spare part
c. Direct material
d. Finished Product

Question 101:

Factory Rent is a ____ .

a. Variable cost
b. Fixed cost
c. Prime cost
d. Indirect cost

Question 102:

Cost which can be identified with the output is called as _____ Cost.

a. Product
b. Fixed
c. Direct
d. Indirect

Question 103:

Prime cost is equal to:

a. Direct cost
b. Direct cost + Factory overheads
c. Factory cost
d. Cost of production

Question 104:

Direct labour and factory overheads is called _____ cost.

a. Conversion
b. Direct
c. Packing
d. Indirect

Question 105:

______is useful for short-term assessment of profitability.

a. Cost Sheet
b. Process Costing
c. Marginal Costing
d. Standard Costing

Marginal Costing MCQs

Question 106:

Under marginal costing, the product cost is equal to:

a. Direct materials + Direct labour
b. Direct materials + Direct labour + Variable production overheads
c. Direct materials + Direct labour + Variable production overheads + Fixed production overhead
d. None of these

Question 107:

Marginal costing technique helps the management in deciding:

a. To fix the price of the product
b. To accept fresh orders at low prices
c. To make or buy
d. All of these

Question 108:

Marginal costing is also known as:

a. Direct costing
b. Variable costing
c. Both a and b
d. None of these

Question 109:

________ is the excess of sales over the break even sales.

a. Actual sales
b. Net sales
c. Total Sales
d. Margin of safety

Question 110:

If production is nil, the loss will be equal to_______:

a. Variable cost
b. Zero
c. Fixed cost
d. None of these

Question 111:

The profit at which total revenue is equal to total cost is called:

a. Break-even analysis
b. Break Even Point
c. The margin of safety
d. None of these

Question 112:

________ is the excess of sales over the break-even sales.

a. Actual sales
b. Net sales
c. Total Sales
d. Margin of safety

Budgeting MCQs

Question 113:

_____ is an example of a Functional Budget:

a. Flexible Budget
b. Sales Budget
c. Fixed Budget
d. Current Budget

Question 114:

______ is assisted by the team called Budget Committee:

a. Management
b. Shareholders
c. Budget Controller
d. Manager

Question 115:

Revision of budgets is:

a. Not required
b. Required
c. Not possible
d. Inadequate data

Question 116:

The budgets are classified on the basis of:

a. Period
b. Function
c. Capacity
d. All of the above

Question 117:

The sales budget shows the sales details as:

a. Month wise
b. Product wise
c. Area wise
d. All of the above

Question 118:

The production budget is dependent on:

a. Purchase budget
b. Capital Expenditure budget
c. Sales budget
d. Cash Budget