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Accounting and Finance Test

Amity International Business School

This is an online accounting and finance test for all the International Business champs
to test your proficiency, basic knowledge and I.Q in the subject. Welcome you all in the
world of numbers and money. So attempt safe otherwise you will lose . All the very
best !!!!
1. Cost sheet consists of
a) Prime cost
b) Factory cost
c) Office cost
d) All of above
2. Elements of cost are
a) Material
b) Labor
c) Expenses
d) All of above
3. Cost appropriation
a) Cost Accounting
b) Cost control
c) Cost Reduction
d) Cost appropriation
4. Management accounting is concerned with
a) the provisions and use of accounting information to managers within
b) to provide them with the basis to make informed business decisions
c) allow them to be better equipped in their management and control
d) all of above
5. Process of winding up of company is:
a) Promotion
b) Incorporation
c) Commencement of business.
d) Liquidation
6. Accounting is an art of:
a) Recording
b) Classifying
c) Interpretating
d) All of above

7. For each & every transaction there is an effect on both Assets & Liabilities:

a) Business Entity Concept

b) Money Measurement Concept.
c) Cost Concept.
d) Dual-Aspect Concept.
8. Consistency in Financial Statements means:
a) Same accounting practices must be followed in years to come.
b) All significant information must be disclosed.
c) It must not be window dressed.
d) None of above.

9. It is the document which serves as an evidence for transaction

a) Transaction
b) Voucher
c) Journal
d) Ledger
10. The tangible property held for sale in the ordinary course of business or for
consumption in the production of the goods or services.
a) Stock
b) Plant
c) Machinery
d) Furniture
11. Which of the following is correct?
a) Assets = Liabilities Capital
b) Assets = Capital Liabilities
c) Assets = Liabilities + Capital
d) Assets = External Equities
12. Which of the following is correct?
a) Profit/loss = Closing Capital + Additional Capital - Drawings made Opening Capital
b) Profit/loss = Closing Capital - Additional Capital - Drawings made Opening Capital
c) Profit/loss = Opening Capital + Drawings made - Additional Capital Closing Capital.
d) Profit/loss = Closing Capital - Additional Capital + Drawings made Opening Capital
13. The liabilities of a firm are Rs.6000 and the capital of the proprietor is Rs.4000.
The total assets are:
a) Rs.6000
b) Rs.10000
c) Rs.2000

14. If a firm borrows a sum of money, there will be:

a) Increase in capital
b) Decrease in capital
c) No effect on capital
15. Company is
a) an association of persons
b) formed for common object
c) does not have physical existence
d) all of above
16. Statutory Company is a company:
a) Formed by special Act
b) In which at least 51% paid up share capital is held by Government
c) Registered under Companies Act.

17. Share Capital consists of

a) Equity shares
b) Preference Shares
c) Shares & Debentures
d) Equity shares & Preference shares
18. Preference Shares have:
a) Preferential right of fixed dividend
b) Preferential right to repayment of capital in the event of company's
winding up
c) All of the above
19. Share Capital can be classified as:
a) Equity share & preference share
b) Authorized, issued & subscribed
c) Equity share, preference share, debentures
d) None of above
20.Debenture is a document which:
a) Creates a debt or acknowledges it
b) Form the capital of the company.
c) Cannot be transferred
d) Does not have first right to be repaid at the time of liquidation of company.
21. Which of the following ratios indicates a firms ability to pay its debts in the short
a) Liquidity ratios
b) Turnover ratios
c) Coverage ratios
d) Profitability ratios
e) Leverage ratios.

22. A trader must record all the financial information about her business if she wants
to know the
amount of
a) her bank balance.
b) her debtors.
c) her drawings.
d) her profit.
23. What is net profit?
a) the amount of money taken out of the business by the owner during the
b) the cash in the business bank account
c) the difference between sales and cost of sales
d) sales revenue less cost of sales and expenses
24. Anytime an owner removes any asset for personal use it is recorded as:
a) a withdrawal.
b) payment of a liability.
c) an investment.
d) an expense.
25. The increase or decrease in the owners equity is reported on the:
a) statement of owners equity.
b) income statement.
c) balance sheet.
d) all of these
26. The purpose of the accounting process is to provide financial information on:
a) large corporations.
b) small businesses.
c) individuals.
d) All of these answers are correct.
27. Which of the following is not a business organization form?
a) Corporation
b) Sole proprietorship
c) Operation
d) Partnership
28.Owners withdrawals:
a) increase expenses.
b) increase liabilities.
c) increase assets.
d) decrease owners equity.
29. Cater Right, with total assets of $50,000, borrows $15,000 from the bank.
Which of the following is a True statement upon borrowing the money?
a) Total assets are now $35,000.
b) Owners equity is $15,000 more.
c) Total assets are now $50,000.
d) Total assets are now $65,000.
30. Mark paid $500 rent for the month. Identify the accounts affected.


Cash and Rent Expenses increase.

Cash and Capital increase.
Cash decreases, and Rent Expense decreases.
Cash decreases, and Rent Expense increases.

31. If Suite Dream Toys revenues are less than its expenses during the accounting
a) the business will incur a loss.
b) owners withdrawals decrease owners equity.
c) owner withdrawals decrease net income.
d) net income causes liabilities to decrease.
32. The financial statement that shows revenue and expenses for a period of time is
a) statement of owners equity.
b) balance sheet.
c) statement of liabilities and capital.
d) income statement.
33. The purchase of a truck with a down payment was recorded as a pure cash
purchase. This error would cause:
a) liabilities were understated.
b) assets were overstated.
c) owners equity was overstated.
d) None of the above are correct.
34. The business provided services to a credit customer.
a) Assets and owners equity increase.
b) Assets and revenue increase.
c) Liabilities and owners equity increase.
d) None of the above are correct.
35. Which of the following transactions would cause an asset to increase and the
owners equity to increase?
a) The business bought supplies on account.
b) The owner invested cash in the business.
c) The business incurred an expense on credit.
d) The owner withdrew cash from the business.
36. Which of the following would result if the business provided services to a
customer collecting cash?
a) Cash would increase and Revenue would decrease.
b) Since the cash was collected there is no need to record this.
c) Cash would increase and Capital would increase.
d) Cash would increase and Revenue would increase.
37. A formal account that has columns for date, explanation, post reference,
debit, and credit is called the:
a) T account.
b) ledger.
c) chart of accounts.

d) standard account form.

38.A listing of all the accounts from the ledger with their ending balances is
called a:
a) Anormal balance.
b) trial balance.
c) footing.
d) chart of accounts.
39. Which of these items would be accounted for as an expense?
a. Repayment of a bank loan.
b. Dividends to stockholders.
c. The purchase of land.
d. Payment of the current period's rent.
40.Which of the following transactions would have no impact on stockholders'
a. Purchase of land from the proceeds of a bank loan.
b. Dividends to stockholders.
c. Net loss.
d. Investments of cash by stockholders.
41. Which of the following would not be included on a balance sheet?
a. Accounts receivable.
b. Accounts payable.
c. Sales.
d. Cash.
42. The financial statement which reflects the static picture of the sources and uses of
funds is
a) Funds flow statement
b) Cash flow statement
c) Balance sheet
d) Bank reconciliation statement
e) Prospectus.
43. The amount earmarked for distribution to the shareholders is known as
a) Profit after tax
b) Retained earnings
c) Dividends
d) Operating profit
e) Profit before tax.
44.Based on which of the following concepts, is share capital account is shown on
the liability side of a balance sheet?
a) Business entity concept
b) Money measurement concept
c) Cost concept
d) Going concern concept
e) Conservatism concept.

45. Which of the following concepts is not considered as basic principles of

a) Materiality concept
b) Cost concept
c) Consistency concept
d) Matching concept
e) Logical
46.Which of the following events/transactions is not recorded in the books of
account of a business?
a) Withdrawal of goods by the proprietor for personal consumption
b) Sale of an asset on credit
c) Purchase of a new asset in exchange of an old asset
d) Receipt of interest by proprietor on bank fixed deposit held jointly with
e) Loss of stock by fire.
47. Which of the following is a method of financial statement analysis which
highlights the
interrelationships in the contents of financial statements?
a) Du Pont analysis
b) Common size analysis
c) Time series analysis
d) Index analysis
e) Break-even analysis.
48.In double entry system of book-keeping, every business transaction affects
a) Two accounts
b) The same account on two different dates
c) Two sides of the same account
d) Two accounts on two different dates
e) Two accounts on the same side.
49.Which of the following is/are source(s) of funds?
a) Disposal of an asset
b) Payment to creditors
c) Acceptance of bills payable
d) Purchase of an asset
e) Both (a) and (c) above.
50.Which of the following concepts assumes that a business will last indefinitely?
a) Business entity
b) Going concern
c) Periodicity
d) Duality
e) Consistency.